Cintas' Q2 Earnings Surpass Estimates, Revenues Increase Y/Y

Core Insights - Cintas Corporation (CTAS) reported Q2 fiscal 2026 earnings of $1.21 per share, exceeding the Zacks Consensus Estimate of $1.19, with an 11% year-over-year increase despite rising operating costs [1] - Total revenues reached $2.80 billion, surpassing the consensus estimate of $2.76 billion, marking a 9.3% year-over-year growth driven by higher segmental revenues [1] Segmental Results - The Uniform Rental and Facility Services segment, accounting for 77% of net sales, generated revenues of $2.16 billion, an 8.3% increase year over year, exceeding the estimate of $2.13 billion [2] - The First Aid and Safety Services segment, representing 12.2% of net sales, reported revenues of $342.2 million, up 14.3% year over year, slightly below the estimate of $345.9 million [3] - Revenues from All Other businesses, making up 10.8% of net sales, totaled $302.4 million, reflecting an 11.2% year-over-year increase, surpassing the estimate of $282.2 million [3] Margin Profile - Cintas' cost of sales rose 8% year over year to $1.39 billion, constituting 49.6% of net sales, while gross profit increased 10.6% to $1.41 billion, resulting in a gross margin of 50.4%, up from 49.8% in the previous year [4] - Selling and administrative expenses totaled $756.8 million, a 10.4% increase from the prior year, representing 27% of net sales [5] - Operating income grew 10.9% year over year to $655.7 million, with an operating margin of 23.4%, down from 26.8% in the year-ago quarter [5] Balance Sheet & Cash Flow - As of the end of the first six months of fiscal 2026, Cintas had cash and cash equivalents of $200.8 million, down from $264 million at the end of fiscal 2025, while long-term debt increased slightly to about $2.43 billion [6] - The company generated net cash of $945.7 million from operating activities, a 4.5% increase year over year, with capital expenditures totaling $208.2 million, up 7.2% [7] - Free cash flow rose 3.8% year over year to $737.5 million, with share repurchases amounting to $901.7 million compared to $651.5 million in the previous year [7] FY26 Guidance - For fiscal 2026, Cintas expects revenues between $11.15 billion and $11.22 billion, an increase from the previous guidance of $11.06 billion to $11.18 billion [9] - Earnings per share are projected to be in the range of $4.81 to $4.88, up from the earlier estimate of $4.74 to $4.86 [9] - The company anticipates net interest expenses of approximately $104 million, compared to $95 million in fiscal 2025, with an expected effective tax rate of 20% [9]