Cintas Q1 Earnings Call Highlights

Key Points

• Cintas delivered record first-quarter results: Revenue rose 10.9% year over year to $3.01 billion, organic growth reached 8.9%, and adjusted diluted EPS increased 15.8% to $1.39.
• Growth and profitability were broad-based: First Aid and Safety led organic growth at 14.2%, while gross margin reached a record 51.5% and adjusted operating margin expanded 90 basis points.
• Management raised fiscal 2027 guidance: Revenue is now expected at $12.15 billion to $12.27 billion and adjusted EPS at $5.45 to $5.54; the proposed UniFirst acquisition remains subject to regulatory approval and is expected to close by the end of calendar 2026.

Cintas NASDAQ: CTAS reported fiscal 2027 first-quarter revenue of $3.01 billion, up 10.9% from a year earlier and marking the first time the company exceeded $3 billion in quarterly revenue. Organic revenue growth, which excludes acquisitions, foreign currency movements and workday differences, was 8.9%.

Chief Executive Officer Todd Schneider said the results reflected demand for outsourced services that help businesses manage image, safety, cleanliness and compliance needs. He said Cintas continues to benefit from new customer wins, expansion within existing accounts and customer retention.

Diluted earnings per share rose 13.3% year over year to $1.36. Excluding expenses related to Cintas' proposed UniFirst transaction, adjusted diluted EPS was $1.39, up 15.8% from the prior-year quarter.

Growth Across Business Lines

President and Chief Operating Officer Jim Rozakis said the company’s growth was primarily volume-driven rather than pricing-driven. Pricing remained consistent with prior years, he said, while new business, retention and cross-selling each improved.

More than two-thirds of Cintas’ new business comes from converting “non-programmers” — businesses that manage their own uniforms, facility supplies or related needs — to managed service solutions, Schneider said. Rozakis added that the company serves about 1 million customers, compared with an estimated 16 million to 20 million businesses in its addressable market.

• Uniform Rental and Facility Services organic growth was 8.0%.
• First Aid and Safety Services organic growth was 14.2%.
• Fire Protection Services organic growth was 9.2%.
• Uniform Direct Sale organic growth was 9.6%.

Rozakis said Uniform Rental growth benefited from solid new-business performance, slightly improved retention and better cross-selling. He noted that the segment also faced a favorable comparison with the prior-year first quarter, when organic growth was 7.3%, and said quarterly growth rates can vary even as the company targets mid- to high-single-digit organic growth in the business.

The company said its selected verticals — healthcare, hospitality, state and local government, and education — all continued to perform above the company average. Management also said it had not observed longer sales cycles or broad changes in customer buying behavior amid macroeconomic uncertainty.

Margins Reach New High

Gross margin reached an all-time high of 51.5% of revenue. By segment, gross margin was 50.8% in Uniform Rental and Facility Services, 57.6% in First Aid and Safety Services, 52.8% in Fire Protection Services and 38.9% in Uniform Direct Sale.

Uniform Rental and Facility Services gross margin increased 110 basis points year over year, while First Aid and Safety gross margin rose 80 basis points. Rozakis attributed the gains to revenue leverage and technology investments that improve operations and customer service.

First-quarter operating income increased 15.2% to $711.9 million. Excluding UniFirst transaction-related expenses, operating income rose 17.6%. Operating margin was a record 23.6%, compared with 22.7% in the prior-year period.

Executive Vice President and Chief Financial Officer Scott Garula said the quarter included one additional workday, which contributed 50 basis points to operating margin. That benefit was offset by 50 basis points of UniFirst transaction-related expenses. On an adjusted basis, operating margin expanded 90 basis points year over year.

Selling and administrative expense was 27.4% of revenue, a 10-basis-point improvement from the prior year. Management said it continues to invest in technology, sales resources and management capacity to support growth.

Fire Protection Services posted strong first-quarter margins, though Rozakis cautioned that segment results may fluctuate based on work mix and investments. The company expects to continue adding specialized technicians, leadership capacity and new locations as it expands its national footprint. Cintas is also piloting an SAP system in the Fire Protection business and expects to begin rolling it out during fiscal 2027.

Updated Outlook and Capital Allocation

Cintas raised its fiscal 2027 revenue outlook to a range of $12.15 billion to $12.27 billion, from a prior range of $12.10 billion to $12.25 billion. The revised range represents total growth of 7.9% to 8.9%.

The company also increased its adjusted diluted EPS outlook to $5.45 to $5.54, from $5.36 to $5.50 previously. The new forecast implies growth of 10.3% to 12.1%.

Garula said the outlook assumes one more workday in fiscal 2027 than in fiscal 2026, contributing an estimated 40 to 50 basis points to annual revenue growth, 10 to 15 basis points to operating margin and 100 to 125 basis points to incremental margins. The company expects net interest expense of approximately $103 million and an effective tax rate of 20.4% for the fiscal year.

The guidance assumes constant foreign exchange rates and excludes future acquisitions, future share repurchases, significant economic disruptions and nonrecurring costs tied to the UniFirst transaction.

Capital expenditures were $107.5 million during the quarter, or 3.6% of sales, focused on technology, automation, capacity and infrastructure. Cintas increased its regular quarterly dividend by 15.6% and had repurchased $545 million of shares through the date of the call. Schneider said the company has raised its dividend every year since going public 43 years ago.

UniFirst Transaction Remains Pending

Schneider said Cintas continues to work through regulatory clearance processes in the U.S. and Canada for its proposed acquisition of UniFirst. He said the company remains optimistic the transaction will close by the end of calendar 2026, but declined to provide additional details to avoid speculation.

Management said it expects to issue fiscal 2027 second-quarter results in December.

About Cintas (NASDAQ:CTAS)

Cintas Corporation is a provider of workplace products and services for businesses across North America. The company helps organizations manage employee appearance, workplace cleanliness, safety, and compliance through a range of recurring service programs.

Its offerings include uniform rental and workwear, branded apparel, entrance mats, restroom supplies, and facility cleaning services. Cintas also provides first-aid and safety products, training, and fire protection services, including inspection and maintenance programs for fire extinguishers, sprinkler systems, alarms, and related equipment.

Headquartered in Mason, Ohio, Cintas traces its roots to a family-operated industrial laundry business established by Richard T.

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