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Cintas (CTAS) Q1 Earnings & Revenues Beat, Increase Y/Y

Zacks Equity Research

Cintas Corporation CTAS posted better-than-expected first-quarter fiscal 2020 (ended August 2019) results, with both earnings and revenues surpassing the Zacks Consensus Estimate.

Earnings/Revenues

Net income from continuing operations for the quarter jumped 18% to $250.8 million from $212.5 million in the year-ago quarter. Notably, adjusted earnings came in at $2.32 per share, up 20.2% year over year. Also, the bottom line surpassed the Zacks Consensus Estimate of $2.14.

Revenues increased 6.7% year over year to a record level of $1,811.1 million. The metric also improved 8.3% organically. Moreover, the top line surpassed the consensus estimate of $1,785 million.

Cintas Corporation Price, Consensus and EPS Surprise

Cintas Corporation Price, Consensus and EPS Surprise

Cintas Corporation price-consensus-eps-surprise-chart | Cintas Corporation Quote

Segmental Breakup

The Uniform Rental and Facility Services segment generated revenues worth $1,454.5 million in the fiscal first quarter, up 5.8% year over year. First Aid and Safety Services segment’s top line increased 12.2% to $172.1 million. Aggregate revenues from Other businesses came in at $184.5 million, up 8.8%.

Costs/Margins

Aggregate cost and expenses for the fiscal first quarter were $1,505 million, up 5% year over year. Gross profit margin improved 130 basis points (bps) to 46.9%.

Selling and administrative expenses were up 7.6% year over year to almost $543 million in the reported quarter. Operating margin was 16.9%, up 130 bps.

Balance Sheet/Cash Flow

At the end of the fiscal first quarter, cash and cash equivalents came in at $102.1 million compared with $96.6 million at the end of fourth-quarter fiscal 2019. Long-term debt increased to $3,488.3 million from $3,306.2 million sequentially.

For first three months of fiscal 2020, the company generated $276.9 million cash from operating activities, up 69.9% year over year. Capital expenditures were $64.7 million, up 0.3%.

In the fiscal first quarter, Cintas repurchased common stock worth $256.8 million under its buyback program.

Outlook

Cintas updated revenue guidance for fiscal 2020 (ending May 2020) in the range of $7.28-$7.32 billion from the previous view of $7.24-$7.31 billion. Notably, adjusted earnings view for the fiscal has been raised from $8.30-$8.45 per share to $8.47-$8.57.

Zacks Rank & Key Picks

Cintas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Industrial Products sector are Zebra Technologies Corporation ZBRA, Brady Corporation BRC and Lakeland Industries, Inc. LAKE. While Zebra Technologies currently sports a Zacks Rank #1 (Strong Buy), Brady and Lakeland Industries carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zebra Technologies delivered average positive surprise of 5.61% in the trailing four quarters.

Brady came up with average beat of 9.68% in the preceding four quarters.

Lakeland Industries pulled off average positive surprise of 325.89% in the last four quarters.

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