Cintas Corporation Announces Fiscal 2023 First Quarter Results
Cintas Corporation (CTAS) reported a strong fiscal 2023 first quarter, with revenue rising to $2.17 billion, a 14.2% increase from $1.90 billion in the prior year. The company achieved organic revenue growth of 13.9%, while operating income grew 15.2% to $440.1 million. Net income reached $351.7 million, resulting in a diluted EPS of $3.39, up from $3.11. Cintas raised its full-year revenue guidance to between $8.58 billion and $8.67 billion, and adjusted diluted EPS guidance to $12.30 to $12.65.
- Revenue increased 14.2% year-over-year to $2.17 billion.
- Organic revenue growth recorded at 13.9%.
- Operating income rose 15.2% to $440.1 million.
- Net income of $351.7 million, up from $331.2 million.
- Diluted EPS increased to $3.39 from $3.11.
- Raised full-year revenue guidance to $8.58 billion - $8.67 billion.
- Increased diluted EPS guidance to $12.30 - $12.65.
- Gross margin as a percentage of revenue slightly decreased to 47.5% from 47.6%.
Gross margin for the first quarter of fiscal 2023 was
Operating income for the first quarter of fiscal 2023 was
Net income was
Fiscal 2023 first quarter net cash provided by operating activities was
The following table provides a comparison of fiscal 2022 revenue and diluted EPS to our updated fiscal 2023 guidance.
|
|
|
|
Fiscal 2023 |
Fiscal 2023 |
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Revenue Guidance ($s in millions) |
Fiscal 2022 |
|
|
Low End
|
Growth vs.
|
High End
|
Growth vs.
|
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|
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|
|
|
|
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|
|
|
|
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|
||||||||||||||||||
Total Revenue |
$ |
7,854.5 |
|
|
|
$ |
8,580.0 |
9.2 |
% |
$ |
8,670.0 |
10.4 |
% |
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Fiscal 2022 |
Fiscal 2023 |
Fiscal 2023 |
||||||||||||||||||||||
Earnings Per Share Guidance ($s in millions, except EPS) |
Operating
|
Tax
|
EPS |
Low End
|
Growth vs.
|
High End
|
Growth vs.
|
||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||
Reported |
$ |
1,587.4 |
|
17.5 |
% |
$ |
11.65 |
|
|
|
|
|
|||||||||||||
Q1 Gain on Sale of Operating Assets |
|
(12.1 |
) |
0.1 |
% |
|
(0.09 |
) |
|
|
|
|
|||||||||||||
Q3 Gain on an |
|
(30.2 |
) |
0.3 |
% |
|
(0.28 |
) |
|
|
|
|
|||||||||||||
After Above Items |
$ |
1,545.1 |
|
17.9 |
% |
$ |
11.28 |
|
$ |
12.30 |
|
9.0 |
% |
$ |
12.65 |
|
12.1 |
% |
-
Fiscal year 2023 operating income is expected to be in the range of
to$1.72 billion compared to$1.76 billion in fiscal year 2022, adjusted to exclude the gains in the table above.$1.55 billion
-
Fiscal year 2023 interest expense is expected to be approximately
compared to$110.0 million in fiscal year 2022, due in part to higher interest rates.$88.8 million
-
Fiscal year 2023 effective tax rate is expected to be approximately
20.0% compared to a rate of17.9% in fiscal year 2022, after excluding the gains in the table above and their related tax impacts from the reported rate of17.5% . The expected higher effective tax rate will negatively impact fiscal year 2023 diluted EPS by approximately and diluted EPS growth by approximately 290 basis points.$0.32
- Our diluted EPS guidance includes no future share buybacks.
- We remain in a dynamic environment that can continue to change. Our guidance assumes a stable economy and excludes COVID-19 pandemic-related setbacks or economic downturns.
Cintas
Cintas will host a live webcast to review the fiscal 2023 first quarter results today at
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks including the risk of recession; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting; the effect of new accounting pronouncements; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events including viral pandemics such as the COVID-19 coronavirus; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended
Consolidated Condensed Statements of Income (Unaudited) (In thousands except per share data) |
||||||||||
|
|
|||||||||
|
Three Months Ended |
|||||||||
|
|
|
|
|
%
|
|||||
Revenue: |
|
|
|
|
|
|||||
Uniform rental and facility services |
$ |
1,697,772 |
|
|
$ |
1,508,176 |
|
|
12.6 |
% |
Other |
|
468,682 |
|
|
|
388,774 |
|
|
20.6 |
% |
Total revenue |
|
2,166,454 |
|
|
|
1,896,950 |
|
|
14.2 |
% |
|
|
|
|
|
|
|||||
Costs and expenses: |
|
|
|
|
|
|||||
Cost of uniform rental and facility services |
|
890,766 |
|
|
|
779,301 |
|
|
14.3 |
% |
Cost of other |
|
247,576 |
|
|
|
214,893 |
|
|
15.2 |
% |
Selling and administrative expenses |
|
587,992 |
|
|
|
508,655 |
|
|
15.6 |
% |
|
|
|
|
|
|
|||||
Operating income |
|
440,120 |
|
|
|
394,101 |
|
|
11.7 |
% |
|
|
|
|
|
|
|||||
Interest income |
|
(155 |
) |
|
|
(56 |
) |
|
176.8 |
% |
Interest expense |
|
27,720 |
|
|
|
21,854 |
|
|
26.8 |
% |
|
|
|
|
|
|
|||||
Income before income taxes |
|
412,555 |
|
|
|
372,303 |
|
|
10.8 |
% |
Income taxes |
|
60,866 |
|
|
|
41,124 |
|
|
48.0 |
% |
Net income |
$ |
351,689 |
|
|
$ |
331,179 |
|
|
6.2 |
% |
|
|
|
|
|
|
|||||
Basic earnings per share |
$ |
3.45 |
|
|
$ |
3.19 |
|
|
8.2 |
% |
|
|
|
|
|
|
|||||
Diluted earnings per share |
$ |
3.39 |
|
|
$ |
3.11 |
|
|
9.0 |
% |
|
|
|
|
|
|
|||||
Basic weighted average common shares outstanding |
|
101,428 |
|
|
|
103,295 |
|
|
|
|
Diluted weighted average common shares outstanding |
|
103,337 |
|
|
|
105,944 |
|
|
|
CINTAS CORPORATION SUPPLEMENTAL DATA
Gross Margin and Net Income Margin Results |
|||||
|
|
||||
|
Three Months Ended |
||||
|
|
|
|
||
|
|
|
|
||
Uniform rental and facility services gross margin |
47.5 |
% |
|
48.3 |
% |
Other gross margin |
47.2 |
% |
|
44.7 |
% |
Total gross margin |
47.5 |
% |
|
47.6 |
% |
Net income margin |
16.2 |
% |
|
17.5 |
% |
Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure
The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the
Operating Income Results |
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|
|
|||||||||||||||
|
|
Three Months Ended |
|||||||||||||||
(In thousands) |
|
|
|
% of
|
|
|
|
% of
|
|
Growth vs.
|
|||||||
|
|
|
|
|
|
||||||||||||
Operating income |
$ |
440,120 |
20.3 |
% |
$ |
394,101 |
|
20.8 |
% |
11.7 |
% |
||||||
Gain on sale of operating assets |
|
|
|
(12,178 |
) |
|
|
||||||||||
Operating income excluding above item |
$ |
440,120 |
|
20.3 |
% |
$ |
381,923 |
|
20.1 |
% |
15.2 |
% |
Earnings Per Share Results |
||||||||||
|
Three Months Ended |
|||||||||
|
|
|
|
Growth vs.
|
||||||
|
|
|
|
|
||||||
Diluted EPS |
$ |
3.39 |
|
$ |
3.11 |
|
9.0 |
% |
||
Pre-tax gain and the related tax benefit on sale of certain operating assets |
|
|
|
(0.09 |
) |
|
||||
Diluted EPS excluding above item |
$ |
3.39 |
|
|
$ |
3.02 |
|
12.3 |
% |
Computation of Free Cash Flow |
|||||||
|
|
||||||
|
Three Months Ended |
||||||
(In thousands) |
|
|
|
||||
|
|
|
|
||||
Net cash provided by operations |
$ |
298,156 |
|
|
$ |
262,141 |
|
Capital expenditures |
|
(70,016 |
) |
|
|
(48,748 |
) |
Free cash flow |
$ |
228,140 |
|
|
$ |
213,393 |
|
Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.
SUPPLEMENTAL SEGMENT DATA
(In thousands) |
Uniform Rental
|
|
First Aid
|
|
All
|
|
Corporate |
|
Total |
||||||||||
For the three months ended |
|
|
|
|
|
|
|
|
|||||||||||
Revenue |
$ |
1,697,772 |
|
$ |
234,161 |
|
$ |
234,521 |
|
$ |
— |
|
|
$ |
2,166,454 |
|
|||
Gross margin |
$ |
807,006 |
|
|
$ |
116,137 |
|
|
$ |
104,969 |
|
|
$ |
— |
|
|
$ |
1,028,112 |
|
Selling and administrative expenses |
$ |
442,235 |
|
|
$ |
75,291 |
|
|
$ |
70,466 |
|
|
$ |
— |
|
|
$ |
587,992 |
|
Interest income |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(155 |
) |
|
$ |
(155 |
) |
Interest expense |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
27,720 |
|
|
$ |
27,720 |
|
Income (loss) before income taxes |
$ |
364,771 |
|
|
$ |
40,846 |
|
|
$ |
34,503 |
|
|
$ |
(27,565 |
) |
|
$ |
412,555 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
For the three months ended |
|
|
|
|
|
|
|
|
|||||||||||
Revenue |
$ |
1,508,176 |
|
|
$ |
199,116 |
|
|
$ |
189,658 |
|
|
$ |
— |
|
|
$ |
1,896,950 |
|
Gross margin |
$ |
728,875 |
|
|
$ |
89,275 |
|
|
$ |
84,606 |
|
|
$ |
— |
|
|
$ |
902,756 |
|
Selling and administrative expenses |
$ |
399,493 |
|
|
$ |
63,547 |
|
|
$ |
45,615 |
|
|
$ |
— |
|
|
$ |
508,655 |
|
Interest income |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(56 |
) |
|
$ |
(56 |
) |
Interest expense |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
21,854 |
|
|
$ |
21,854 |
|
Income (loss) before income taxes |
$ |
329,382 |
|
|
$ |
25,728 |
|
|
$ |
38,991 |
|
|
$ |
(21,798 |
) |
|
$ |
372,303 |
|
Consolidated Condensed Balance Sheets (In thousands except per share data) |
|||||||
|
|
|
|
||||
|
|
|
|
||||
|
(Unaudited) |
|
|
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
74,558 |
|
|
$ |
90,471 |
|
Accounts receivable, net |
|
1,082,783 |
|
|
|
1,006,220 |
|
Inventories, net |
|
473,888 |
|
|
|
472,150 |
|
Uniforms and other rental items in service |
|
953,717 |
|
|
|
916,706 |
|
Income taxes, current |
|
— |
|
|
|
21,708 |
|
Prepaid expenses and other current assets |
|
162,844 |
|
|
|
124,728 |
|
Total current assets |
|
2,747,790 |
|
|
|
2,631,983 |
|
|
|
|
|
||||
Property and equipment, net |
|
1,329,131 |
|
|
|
1,323,673 |
|
|
|
|
|
||||
Investments |
|
239,335 |
|
|
|
242,873 |
|
|
|
3,037,278 |
|
|
|
3,042,976 |
|
Service contracts, net |
|
379,379 |
|
|
|
391,638 |
|
Operating lease right-of-use assets, net |
|
174,697 |
|
|
|
170,003 |
|
Other assets, net |
|
353,416 |
|
|
|
344,110 |
|
|
$ |
8,261,026 |
|
|
$ |
8,147,256 |
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
292,321 |
|
|
$ |
251,504 |
|
Accrued compensation and related liabilities |
|
176,865 |
|
|
|
236,992 |
|
Accrued liabilities |
|
543,566 |
|
|
|
588,948 |
|
Income taxes, current |
|
35,783 |
|
|
|
— |
|
Operating lease liabilities, current |
|
43,539 |
|
|
|
43,872 |
|
Debt due within one year |
|
507,467 |
|
|
|
311,574 |
|
Total current liabilities |
|
1,599,541 |
|
|
|
1,432,890 |
|
|
|
|
|
||||
Long-term liabilities: |
|
|
|
||||
Debt due after one year |
|
2,484,602 |
|
|
|
2,483,932 |
|
Deferred income taxes |
|
487,755 |
|
|
|
473,777 |
|
Operating lease liabilities |
|
134,010 |
|
|
|
129,064 |
|
Accrued liabilities |
|
325,492 |
|
|
|
319,397 |
|
Total long-term liabilities |
|
3,431,859 |
|
|
|
3,406,170 |
|
|
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Preferred stock, no par value: |
|
— |
|
|
|
— |
|
100,000 shares authorized, none outstanding |
|||||||
Common stock, no par value, and paid-in capital: |
|
1,878,837 |
|
|
|
1,771,917 |
|
425,000,000 shares authorized |
|||||||
FY 2023: 191,654,188 issued and 101,532,642 outstanding |
|||||||
FY 2022: 190,837,921 issued and 101,711,215 outstanding |
|||||||
Retained earnings |
|
8,953,391 |
|
|
|
8,719,163 |
|
|
|
(7,690,726 |
) |
|
|
(7,290,801 |
) |
FY 2023: 90,121,546 shares |
|||||||
FY 2022: 89,126,706 shares |
|||||||
Accumulated other comprehensive income |
|
88,124 |
|
|
|
107,917 |
|
Total shareholders’ equity |
|
3,229,626 |
|
|
|
3,308,196 |
|
|
$ |
8,261,026 |
|
|
$ |
8,147,256 |
|
Consolidated Condensed Statements of Cash Flows (Unaudited) (In thousands) |
|||||||
|
|
||||||
|
Three Months Ended |
||||||
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
351,689 |
|
|
$ |
331,179 |
|
|
|
|
|
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation |
|
63,057 |
|
|
|
60,955 |
|
Amortization of intangible assets and capitalized contract costs |
|
36,989 |
|
|
|
36,994 |
|
Stock-based compensation |
|
26,282 |
|
|
|
36,496 |
|
Gain on sale of operating assets |
|
— |
|
|
|
(12,178 |
) |
Deferred income taxes |
|
14,829 |
|
|
|
22,887 |
|
Change in current assets and liabilities, net of acquisitions of businesses: |
|
|
|
||||
Accounts receivable, net |
|
(79,397 |
) |
|
|
(27,742 |
) |
Inventories, net |
|
(2,476 |
) |
|
|
14,986 |
|
Uniforms and other rental items in service |
|
(39,327 |
) |
|
|
(39,274 |
) |
Prepaid expenses and other current assets and capitalized contract costs |
|
(63,641 |
) |
|
|
(36,724 |
) |
Accounts payable |
|
41,681 |
|
|
|
(26,272 |
) |
Accrued compensation and related liabilities |
|
(59,957 |
) |
|
|
(85,834 |
) |
Accrued liabilities and other |
|
(49,105 |
) |
|
|
(24,342 |
) |
Income taxes, current |
|
57,532 |
|
|
|
11,010 |
|
Net cash provided by operating activities |
|
298,156 |
|
|
|
262,141 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Capital expenditures |
|
(70,016 |
) |
|
|
(48,748 |
) |
Purchases of investments |
|
(5,930 |
) |
|
|
(8,738 |
) |
Proceeds from sale of operating assets, net of cash disposed |
|
— |
|
|
|
15,070 |
|
Acquisitions of businesses, net of cash acquired |
|
(7,060 |
) |
|
|
(35,725 |
) |
Other, net |
|
(3,589 |
) |
|
|
(6,180 |
) |
Net cash used in investing activities |
|
(86,595 |
) |
|
|
(84,321 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Issuance of commercial paper, net |
|
196,000 |
|
|
|
326,000 |
|
Repayment of debt |
|
— |
|
|
|
(250,000 |
) |
Proceeds from exercise of stock-based compensation awards |
|
1,047 |
|
|
|
72,896 |
|
Dividends paid |
|
(97,655 |
) |
|
|
(79,135 |
) |
Repurchase of common stock |
|
(320,334 |
) |
|
|
(659,235 |
) |
Other, net |
|
(5,257 |
) |
|
|
(610 |
) |
Net cash used in financing activities |
|
(226,199 |
) |
|
|
(590,084 |
) |
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents |
|
(1,275 |
) |
|
|
(1,627 |
) |
|
|
|
|
||||
Net decrease in cash and cash equivalents |
|
(15,913 |
) |
|
|
(413,891 |
) |
Cash and cash equivalents at beginning of period |
|
90,471 |
|
|
|
493,640 |
|
Cash and cash equivalents at end of period |
$ |
74,558 |
|
|
$ |
79,749 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220928005124/en/
Source:
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