Cintas Corporation Announces Fiscal 2024 Fourth Quarter and Full Year Results

Cintas Corporation (NASDAQ:CTAS) today reported results for its fiscal 2024 fourth quarter ended May 31, 2024. Revenue for the fourth quarter of fiscal 2024 was $2.47 billion compared to $2.28 billion in last year's fourth quarter, an increase of 8.2%. The organic revenue growth rate for the fourth quarter of fiscal 2024, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations and workday differences, was 7.5%.

Gross margin for the fourth quarter of fiscal 2024 was $1,215.4 million compared to $1,088.8 million in last year's fourth quarter, an increase of 11.6%. Gross margin as a percentage of revenue was 49.2% for the fourth quarter of fiscal 2024 compared to 47.7% in last year's fourth quarter, an increase of 150 basis points.

Operating income for the fourth quarter of fiscal 2024 was $547.6 million compared to $470.8 million in last year's fourth quarter, an increase of 16.3%. Operating income as a percentage of revenue was 22.2% in the fourth quarter of fiscal 2024 compared to 20.6% in last year's fourth quarter.

Net income was $414.3 million for the fourth quarter of fiscal 2024 compared to $346.2 million in last year's fourth quarter. Fourth quarter of fiscal 2024 diluted earnings per share (EPS) was $3.99 compared to $3.33 in last year's fourth quarter, an increase of 19.8%.

For the fiscal year ended May 31, 2024, revenue was $9.60 billion compared to $8.82 billion for fiscal 2023, an increase of 8.9%. Operating income for fiscal 2024 was $2.07 billion compared to $1.80 billion for fiscal 2023, an increase of 14.8%. Operating income as a percent of revenue was 21.6% in fiscal 2024 compared to 20.4% in fiscal 2023. Diluted EPS for fiscal 2024 was $15.15 compared to $12.99 in fiscal 2023, an increase of 16.6%.

Cash flow from operating activities was $2.08 billion in fiscal 2024 compared to $1.60 billion in fiscal 2023, an increase of 30.2%. Cintas spent $409.5 million on capital expenditures in fiscal 2024, which is 4.3% as a percentage of revenue. Cintas acquired businesses for a total of $186.8 million in fiscal 2024. During fiscal 2024, Cintas paid cash dividends of $530.9 million, an increase of 18.0% over fiscal 2023. During fiscal 2024, and as of July 17, 2024, Cintas purchased 1,623,870 shares of Cintas common stock at an average price of $609.04 per share, for a total purchase price of $1.0 billion.

Todd M. Schneider, Cintas' President and Chief Executive Officer, stated, "Our strong fourth quarter results conclude another successful fiscal year of robust revenue growth and margin expansion, including an all-time high in operating income as a percent of revenue. Strong cash generation continued to fuel our balanced capital allocation strategy, focusing on new products and services for our customers and new technology to further enhance our position for the long-term, investing in strategic acquisitions and on returning capital to shareholders. We believe our results demonstrate the Cintas value proposition continues to resonate - we have a product or service to help nearly every business across North America focus on what they do best, while we take care of their image, safety, cleanliness and compliance needs."

"Our fiscal 2025 outlook reflects our continued confidence in our strategy. We remain focused on delivering outstanding customer experiences, nurturing the differentiated Cintas culture that drives our employee-partners and our success, and achieving growth and margin expansion aided by superior operations and investments in technology."

For fiscal 2025, revenue is expected to be in the range of $10.16 billion to $10.31 billion. Please keep in mind there are two fewer workdays in fiscal 2025 compared to fiscal 2024. The following table helps illustrate the impact of two fewer workdays:

Please note the following regarding the total revenue guidance:

• Guidance does not assume any future acquisitions;
• Guidance assumes a constant foreign currency exchange rate.

For fiscal 2025, diluted EPS is expected to be in the range of $16.25 to $16.75.

Please note the following regarding diluted EPS guidance:

• Fiscal year 2025 interest, net is expected to be approximately $106.0 million compared to $95.0 million in fiscal year 2024, predominately as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks through July 17, 2024. This may change as a result of future share buybacks or acquisition activity;
• Our fiscal 2025 effective tax rate is expected to be 20.4%, the same compared to fiscal 2024;
• Guidance does not include any future share buybacks or significant economic disruptions or downturn.

On May 2, 2024, Cintas announced that its Board of Directors approved a four-for-one split of its common stock. Shareholders of record, as of September 4, 2024, will receive three additional shares for each share held, which will be distributed after market close on September 11, 2024. Cintas anticipates its common stock to begin trading at the split-adjusted price on September 12, 2024. Our financial results for the first quarter of fiscal 2025 will be reported after the completion of the stock split.

The following table shows our fiscal 2024 diluted EPS and our fiscal 2025 diluted EPS outlook on a proforma basis after the impact of the recently announced common stock split.

Cintas

Cintas Corporation helps more than one million businesses of all types and sizes get Ready^™ to open their doors with confidence every day by providing products and services that help keep their customers' facilities and employees clean, safe and looking their best. With offerings including uniforms, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday^®. Headquartered in Cincinnati, Cintas is a publicly held Fortune 500 company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of both the Standard & Poor's 500 Index and Nasdaq-100 Index.

Cintas will host a live webcast to review the fiscal 2024 fourth quarter and fiscal year results today at 10:00 a.m., Eastern Time. The webcast will be available to the public on Cintas' website at www.Cintas.com. A replay of the webcast will be available approximately two hours after the completion of the live call and will remain available for two weeks.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Press Release contains forward-looking statements regarding our future business plans and expectations. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as "estimates," "anticipates," "predicts," "projects," "plans," "expects," "intends," "target," "forecast," "believes," "seeks," "could," "should," "may" and "will" or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions; supply chain constraints and macroeconomic conditions, including inflationary pressures and higher interest rates; fluctuations in costs of materials and labor, including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; our ability to meet our aspirations relating to environmental, social and governance (ESG) opportunities, improvements and efficiencies; the cost, results and ongoing assessment of internal controls for financial reporting; the effect of new accounting pronouncements; risks associated with cybersecurity threats, including disruptions caused by the inaccessibility of computer systems data and cybersecurity management, the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events including global health pandemics; the amount and timing of repurchases of our common stock, if any; changes in global tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made, except otherwise as required by law. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2023 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us, or that we currently believe to be immaterial, may also harm our business.

CINTAS CORPORATION SUPPLEMENTAL DATA

Gross Margin and Net Income Margin Results

Reconciliation of Non-GAAP Financial Measures

The press release contains non-GAAP financial measures within the meaning of the rules promulgated by the U.S. Securities and Exchange Commission. To supplement its consolidated condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides these additional non-GAAP financial measures of free cash flow and organic revenue growth. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. A reconciliation of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables below.

Computation of Free Cash Flow

Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.

Computation of Organic Revenue Growth

Management believes that organic revenue growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days and excludes the impact from acquisitions and foreign currency exchange rate fluctuations.

SUPPLEMENTAL SEGMENT DATA

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