Cintas Corporation (CTAS Quick QuoteCTAS - Free Report) has delivered impressive results for the fourth quarter of fiscal 2021 (ended May 31, 2021). Its earnings surpassed the Zacks Consensus Estimate by 6% and sales surpassed the same by 13.3%.

The company’s earnings in the reported quarter were $2.47 per share, surpassing the Zacks Consensus Estimate of $2.33. On a year-over-year basis, the bottom line increased 83% from the year-ago figure of $1.35. The impact of the sales increase was partially offset by higher costs and expenses.

For fiscal 2021, the company’s earnings were $10.24, up 26.3% from the previous year. Also, the bottom line beat the Zacks Consensus Estimate of $10.08.

Revenue Details

In the quarter under review, Cintas’ net sales were $1,835.7 million, reflecting growth of 13.3% from the year-ago quarter. Organic sales in the reported quarter were up 11.5% year over year. The top line surpassed the Zacks Consensus Estimate of $1,824 million.

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 79.9% of the reported quarter’s net sales) were $1,466.9 million, increasing 15.4% year over year. Organic sales in the quarter under review were up 13.7% year over year.

Revenues from the First Aid and Safety Services segment (representing 10.2% of the reported quarter’s net sales) totaled $186.9 million, decreasing 4.8% year over year. Organic sales in the quarter under review decreased 6.8% year over year.

Revenues from the All Other business (representing 9.9% of the reported quarter’s net sales) were $181.9 million, increasing 19.4% year over year.

For fiscal 2021, the company’s net sales were $7,116.3 million, up 0.4% from the previous year. Also, the top line marginally surpassed the Zacks Consensus Estimate of $7.10 billion.

Margin Profile

In the quarter under review, Cintas’ cost of sales (comprising costs related to uniform rental and facility services as well as others) increased 7.1% year over year to $976.6 million. It represented 53.2% of net sales. Gross profit in the reported quarter increased 21.4% year over year to $859.1 million. Gross margin was at 46.8%, up 310 basis points (bps) year over year.

Selling and administrative expenses totaled $502.6 million, reflecting a 0.4% increase from the year-ago figure. It represented 27.4% of net sales. Operating margin in the reported quarter increased 660 bps year over year to 19.4%. Interest expenses decreased 5.4% to $24.6 million.

Balance Sheet and Cash Flow

Exiting the fiscal fourth quarter, Cintas had cash and cash equivalents of $493.6 million, down 10.8% from $553.6 million at the end of the previous quarter. Long-term debt was at $1,642.8 million, reflecting a 28.3% decline from the previous quarter.

In fiscal 2021, the company generated net cash of $1,360.7 million from operating activities, increasing 5.4% from the previous year. Capital expenditure totaled $143.5 million, reflecting a year-over-year decline of 37.7%. Free cash flow increased 14.7% year over year to $1,217.3 million.

In the fiscal year, the company repurchased shares worth $554.1 million, up 19.3% from the previous year. Dividend payments totaled $451.3 million versus $268 million in fiscal 2020.

Outlook

For fiscal 2022 (ending May 2022), Cintas anticipates revenues of $7.53-$7.63 billion and earnings per share of $10.35-$10.75.

Tax rate for the fiscal year is expected to be 19.5-20.5%, up from 13.7% recorded in fiscal 2021. High taxes are predicted to lower earnings by 85 cents per share and year-over-year earnings growth by 800 bps.