Cintas (CTAS) Q2 Earnings & Revenues Top Estimates, View Raised
Cintas Corporation CTAS reported second-quarter fiscal 2024 (ended Nov 30, 2023) earnings of $3.61 per share, which beat the Zacks Consensus Estimate of $3.48. The bottom line increased 15.7% year over year despite an increase in operating costs.
Total revenues of $2,377.2 million outperformed the Zacks Consensus Estimate of $2,336 million. The top line climbed 9.3% year over year, driven by higher segmental revenues. Organic sales were also up 9% year over year.
Segmental Results
The company has two reportable segments — Uniform Rental and Facility Services and First Aid and Safety Services. Other businesses like Uniform Direct Sale and Fire Protection Services are included in All Other. Quarterly sales data is briefly discussed below.
Revenues from the Uniform Rental and Facility Services segment (representing 77.8% of the reported quarter’s net sales) totaled $1,850.5 million, up 8.2% year over year. Our estimate for segmental revenues was $1,826.3 million.
Revenues from the First Aid and Safety Services segment (representing 11.2% of the reported quarter’s net sales) totaled $266.4 million, up 12.9% year over year. Our estimate for segmental revenues was $259.8 million.
Revenues from All Other business (representing 11% of the reported quarter’s net sales) totaled $260.2 million, up 13.7% year over year. Our estimate for segmental revenues was $245.3 million.
Cintas Corporation Price, Consensus and EPS Surprise
Cintas Corporation price-consensus-eps-surprise-chart | Cintas Corporation Quote
Margin Profile
In the quarter under review, Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 7.2% year over year to $1,235.6 million. It represented approximately 52% of net sales. Gross profit increased 11.8% to $1.14 billion. The gross margin was 48% in the reported quarter compared with 47% in the year-ago period. Our estimate for the gross margin was pegged at 47.7% for the quarter.
Selling and administrative expenses totaled $641.9 million, reflecting an 11.1% increase from the year-ago figure. It represented 27% of net sales. The operating margin in the reported quarter was 21% compared with 20.5% in the year-ago quarter. Interest expenses decreased 8.1% to $26.6 million.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Cintas had cash and cash equivalents of $85.6 million compared with $124.1 million at the end of fiscal 2023. Long-term debt was $2.474.3 million compared with $2,486.4 million at the end of fiscal 2023.
In the first six months of fiscal 2024, CTAS generated net cash of $729.6 million from operating activities, up 17.8% from the year-ago period. Capital expenditure in the same period totaled $200.5 million, up 37% year over year. Free cash flow inched up 11.9% year over year to $529.1 million.
In the first six months of fiscal 2024, the company repurchased shares worth $423.1 million compared with $348.7 million in the year-ago period. In the same period, dividend payments totaled $255.8 million, up approximately 19% year over year.
Fiscal 2024 Guidance Raised
For fiscal 2024, Cintas now expects revenues of $9.48-$9.56 billion compared with $9.40-$9.52 billion anticipated earlier. The mid-point of the guided range — $9.52 billion — indicates year-over-year growth of 7.9%. Earnings per share are estimated to be in the range of $14.35-$14.65 compared with $14.00-$14.45, estimated earlier. The mid-point of the guided range — $14.50 — reflects a year-over-year increase of 11.6%.
Cintas predicts interest expense of approximately $100 million in fiscal 2024. This compares with the interest expense of $109.5 million recorded in fiscal 2023. The effective tax rate is expected to be 21.3% compared with 20.4% recorded in fiscal 2023.
Zacks Rank & Stocks to Consider
Cintas carries a Zacks Rank #3 (Hold).
Some better-ranked companies within the broader Industrial Products sector are as follows:
Graham Corporation GHM currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
The company pulled off a trailing four-quarter earnings surprise of 264.8%, on average. Graham has an estimated earnings growth rate of 933.3% for the current fiscal year.
Flowserve Corporation FLS presently carries a Zacks Rank #2 (Buy). The company pulled off a trailing four-quarter earnings surprise of 27.3%, on average.
Flowserve has an estimated earnings growth rate of 84.6% for the current year.
Kadant Inc. KAI currently carries a Zacks Rank #2. It delivered a trailing four-quarter average earnings surprise of 17.3%.
Kadant has an estimated earnings growth rate of 5.5% for the current fiscal year.
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