Cintas Corporation
CEO : Mr. Todd M. Schneider
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2025 Q2 | 7.8% YoY | 18.4% | -221.7% | 2024-12-19 |
Todd Schneider says,
Second Quarter Financial Highlights
- Total revenue increased by 7.8% to reach an all-time high of $2.56 billion.
- Organic growth rate was recorded at 7.1%, adjusting for acquisitions and foreign currency fluctuations.
- Gross margin expanded by 11.8% year-over-year to 49.8%, slightly below the previous quarter’s record.
- Operating income set a record at 23.1% of revenue, up 18.4% from last year.
- Diluted EPS grew substantially by 21.1% to $1.09.
Cash Flow and Capital Allocation
- Free cash flow increased by 34.9% over the prior year for the first six months.
- Prioritized capital deployment for business investments, customer and employee engagement, and strategic acquisitions.
- A quarterly dividend of $0.39 per share was paid, with a focus on continued share buybacks.
Technology and Operational Efficiency
- Continued investments in technology, particularly in SAP systems, to standardize operations and enhance efficiency.
- Emphasis on operational excellence improved supply chain, routing, and energy optimization.
- These initiatives are enhancing customer experience and positively impacting the margin profile.
Updated Financial Guidance for Fiscal Year
| Metric | Previous Expectations | Updated Expectations |
|---|---|---|
| Annual Revenue | $10.22 billion to $10.32 billion | $10.255 billion to $10.32 billion |
| Revenue Growth Rate | 6.9% to 7.5% | 6.9% to 7.5% |
| Annual Diluted EPS | $4.17 to $4.25 | $4.28 to $4.34 |
| EPS Growth Rate | 12.9% to 14.5% | 12.9% to 14.5% |
Strategic Focus and Outlook
- Strengthened positioning in core verticals: healthcare, hospitality, education, and government sectors.
- Commitment to superior products and services, contributing to sustainable growth and shareholder value.
- Continued focus on delivering outstanding customer experiences and making strategic business investments.
Mike Hansen says,
Revenue and Organic Growth
- Fiscal 2025 second quarter revenue was $2.56 billion, up from $2.38 billion last year.
- Organic revenue growth rate, adjusted for acquisitions and foreign currency exchange rate fluctuations, was 7.1%.
| Business Segment | Organic Growth Rate |
|---|---|
| Uniform Rental and Facility Services | 6.9% |
| First Aid and Safety Services | 12.3% |
| Fire Protection Services | 10% |
| Uniform Direct Sale | -9.2% |
Gross Margin Analysis
- Gross margin for the second quarter was $1.28 billion, an increase of 11.8% from last year.
- Gross margin as a percent of revenue rose to 49.8% from 48%, reflecting an increase of 180 basis points.
| Business Segment | Gross Margin Percentage | Increase from Last Year |
|---|---|---|
| Uniform Rental and Facility Services | 49.1% | 170 basis points |
| First Aid and Safety Services | 57.3% | 280 basis points |
| Fire Protection Services | 49.9% | Not specified |
| Uniform Direct Sale | 41.2% | Not specified |
Operating Income and Expenses
- Operating income for the second quarter was $591.4 million, up from $499.7 million last year.
- Operating income as a percent of revenue increased to 23.1%, an improvement of 210 basis points from 21% last year.
- Selling and administrative expenses as a percent of revenue remained relatively stable at 26.8%.
Net Income and Earnings Per Share
- Net income for the second quarter was $448.5 million, compared to $374.6 million last year.
- This resulted in a diluted EPS of $1.09, compared to $0.90 last year, marking a 21.1% increase.
Cash Flow and Financial Guidance
- Free cash flow for the first six months increased by 34.9% over the prior year.
- A total of $1.3 billion in capital has been deployed across capital expenditures, M&A, dividends, and share buybacks.
- Fiscal 2025 net interest expense is expected to be approximately $101 million, up from $95 million in fiscal ’24.
- The fiscal ’25 effective tax rate is expected to be 20.2%.
Q & A sessions,
Revenue and Earnings Growth
- Second quarter total revenue grew 7.8% to $2.56 billion, an all-time high for the company.
- Organic growth rate, adjusting for acquisitions and currency fluctuations, was 7.1%.
- Gross margin increased by 11.8% year-over-year, reaching 49.8%.
- Operating income as a percentage of revenue was 23.1%, a record increase of 18.4% over the prior year.
- Diluted EPS grew by 21.1% to $1.09.
Guidance and Financial Expectations
- Updated annual revenue expectations to a range of $10.255 billion to $10.32 billion, reflecting a growth rate of 6.9% to 7.5%.
- Organic growth rate expectations are set at 7.0% to 7.7%.
- Annual diluted EPS expectations updated to a range of $4.28 to $4.34, indicating a growth rate of 12.9% to 14.5%.
- Continued focus on operational excellence and strategic investments.
Strategic Initiatives and Investments
- Emphasis on cross-selling across business segments and adding new customers.
- Investment in technology such as the SAP system and SmartTruck for operational efficiency.
- Focus on acquiring quality businesses to enhance customer base and employee partners.
- myCintas portal facilitates customer interaction and improves relationship management.
Operational Efficiencies and Cost Management
- Efforts in managing rental costs through better material sourcing, garment sharing, and production automation.
- SmartTruck technology aids in route optimization and energy efficiency, reducing service costs.
- Improved operating leverage and sourcing benefits enhancing gross margins.
- Incremental margins remain strong despite challenges in obtaining price increases.
Vertical Focus and Market Opportunities
- Focus on expanding business within healthcare, hospitality, education, and state and local government verticals.
- Potential for significant growth by tapping into the 60 million businesses in North America, with current service to over one million businesses.
- Introduction of innovative products like privacy curtains to address customer compliance needs.
No bad stock 