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Cintas Corporation (CTAS - Free Report) reported third-quarter fiscal 2023 (ended Feb 28, 2023) earnings of $3.14 per share, beating the Zacks Consensus Estimate of $3.01. This compares to our estimate of $2.97. The bottom line increased year over year despite high costs.
Total revenues of $2,190 million outperformed the Zacks Consensus Estimate of $2,145 million. Our estimate for fiscal third-quarter revenues stood at $2,128.7 million. The top line climbed 11.7% year over year due to higher segmental revenues. Organic sales were up 11.8% 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.
Cintas Corporation Price, Consensus and EPS Surprise
Revenues from the Uniform Rental and Facility Services segment (representing 78.4% of the reported quarter’s net sales) reached $1,716.17 million, increasing 10.5% year over year.
Revenues from the First Aid and Safety Services segment (representing 10.6% of the reported quarter’s net sales) totaled $231.61 million, increasing 18.8% year over year.
Revenues from the All Other business (representing 11.1% of the reported quarter’s net sales) reached $242.22 million, increasing 29.2% year over year.
Margin Profile
In the quarter under review, Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 8.8% year over year to $1,155.96 million. It represented approximately 53% of net sales. Gross profit increased 15% to $1,034.03 million. The gross margin was 47.2%, up from 45.8% in the year-ago fiscal quarter.
Selling and administrative expenses totaled $ 587.22 million, reflecting a 19.7% increase from the year-ago figure. It represented 26.8% of net sales. The operating margin in the reported quarter declined 40 basis points to 20.4%. Interest expenses increased 30.8% to $28.82 million.
Balance Sheet and Cash Flow
Exiting the fiscal third quarter, Cintas had cash and cash equivalents of $88.56 million, down 2.1% from the figure reported at the end of the fourth quarter of fiscal 2022. Long-term debt was $2,486 million, almost flat from the figure reported at the end of the fourth quarter of fiscal 2022.
At the end of the fiscal third quarter, CTAS generated net cash of $1,044.19 million from operating activities, increasing 5.8% from the year-ago period. Capital expenditure totaled $224.12 million in the period, up 35.1% year over year. Free cash flow was almost flat at $820.07 million in the first nine months of fiscal 2023.
In the first nine months of fiscal 2023, the company repurchased shares worth $370.92 million, down from $1,221.84 million in the year-ago period. Dividend payments totaled $332.42 million in the same period, up 20% year over year.
Fiscal 2023 Outlook Improved
Cintas raised its fiscal 2023 earnings and revenue guidance. The company now expects revenues of $8.74-$8.80 billion for the current fiscal year, compared with $8.67-$8.75 billion anticipated earlier. The Zacks Consensus Estimate for the same stands at $8.72 billion.
CTAS expects earnings of $12.70-$12.90 per share for the ongoing fiscal year compared with $12.50-$12.80 estimated earlier. The Zacks Consensus Estimate for the same stands at $12.68.
For fiscal 2023, adjusted operating income is expected to be $1.77-$1.80 billion ($$1.55 billion was reported in fiscal 2022). The effective tax rate is expected to be 20.7% in fiscal 2023 compared to 17.9% reported in fiscal 2022.
Zacks Rank & Key Picks
Cintas carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Deere has an estimated earnings growth rate of approximately 31% for the current fiscal year. The stock has gained 18.4% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of approximately 7% for the current year. The stock has rallied 29.4% in the past six months.
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Cintas (CTAS) Q3 Earnings & Revenues Beat, FY23 View Raised
Cintas Corporation (CTAS - Free Report) reported third-quarter fiscal 2023 (ended Feb 28, 2023) earnings of $3.14 per share, beating the Zacks Consensus Estimate of $3.01. This compares to our estimate of $2.97. The bottom line increased year over year despite high costs.
Total revenues of $2,190 million outperformed the Zacks Consensus Estimate of $2,145 million. Our estimate for fiscal third-quarter revenues stood at $2,128.7 million. The top line climbed 11.7% year over year due to higher segmental revenues. Organic sales were up 11.8% 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.
Cintas Corporation Price, Consensus and EPS Surprise
Cintas Corporation price-consensus-eps-surprise-chart | Cintas Corporation Quote
Revenues from the Uniform Rental and Facility Services segment (representing 78.4% of the reported quarter’s net sales) reached $1,716.17 million, increasing 10.5% year over year.
Revenues from the First Aid and Safety Services segment (representing 10.6% of the reported quarter’s net sales) totaled $231.61 million, increasing 18.8% year over year.
Revenues from the All Other business (representing 11.1% of the reported quarter’s net sales) reached $242.22 million, increasing 29.2% year over year.
Margin Profile
In the quarter under review, Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 8.8% year over year to $1,155.96 million. It represented approximately 53% of net sales. Gross profit increased 15% to $1,034.03 million. The gross margin was 47.2%, up from 45.8% in the year-ago fiscal quarter.
Selling and administrative expenses totaled $ 587.22 million, reflecting a 19.7% increase from the year-ago figure. It represented 26.8% of net sales. The operating margin in the reported quarter declined 40 basis points to 20.4%. Interest expenses increased 30.8% to $28.82 million.
Balance Sheet and Cash Flow
Exiting the fiscal third quarter, Cintas had cash and cash equivalents of $88.56 million, down 2.1% from the figure reported at the end of the fourth quarter of fiscal 2022. Long-term debt was $2,486 million, almost flat from the figure reported at the end of the fourth quarter of fiscal 2022.
At the end of the fiscal third quarter, CTAS generated net cash of $1,044.19 million from operating activities, increasing 5.8% from the year-ago period. Capital expenditure totaled $224.12 million in the period, up 35.1% year over year. Free cash flow was almost flat at $820.07 million in the first nine months of fiscal 2023.
In the first nine months of fiscal 2023, the company repurchased shares worth $370.92 million, down from $1,221.84 million in the year-ago period. Dividend payments totaled $332.42 million in the same period, up 20% year over year.
Fiscal 2023 Outlook Improved
Cintas raised its fiscal 2023 earnings and revenue guidance. The company now expects revenues of $8.74-$8.80 billion for the current fiscal year, compared with $8.67-$8.75 billion anticipated earlier. The Zacks Consensus Estimate for the same stands at $8.72 billion.
CTAS expects earnings of $12.70-$12.90 per share for the ongoing fiscal year compared with $12.50-$12.80 estimated earlier. The Zacks Consensus Estimate for the same stands at $12.68.
For fiscal 2023, adjusted operating income is expected to be $1.77-$1.80 billion ($$1.55 billion was reported in fiscal 2022). The effective tax rate is expected to be 20.7% in fiscal 2023 compared to 17.9% reported in fiscal 2022.
Zacks Rank & Key Picks
Cintas carries a Zacks Rank #3 (Hold).
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Deere & Company (DE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Deere has an estimated earnings growth rate of approximately 31% for the current fiscal year. The stock has gained 18.4% in the past six months.
Ingersoll Rand (IR - Free Report) presently flaunts a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of approximately 7% for the current year. The stock has rallied 29.4% in the past six months.