CINCINNATI, September 28, 2022 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2023 first quarter ended August 31, 2022. Revenue for the first quarter of fiscal 2023 was $2.17 billion compared to $1.90 billion in last year’s first quarter, an increase of 14.2%. The organic revenue growth rate for the first quarter of fiscal 2023, which adjusts for the impacts of acquisitions, divestitures and foreign currency exchange rate fluctuations, was 13.9%.
Gross margin for the first quarter of fiscal 2023 was $1,028.1 million compared to $902.8 million in last year’s first quarter, an increase of 13.9%. Gross margin as a percentage of revenue was 47.5% for the first quarter of fiscal 2023 compared to 47.6% in last year's first quarter. Energy expenses comprised of gasoline, natural gas and electricity were 30 basis points higher during the first quarter of fiscal 2023 compared to last year's first quarter.
Operating income for the first quarter of fiscal 2023 was $440.1 million compared to $394.1 million in last year's first quarter. Operating income as a percentage of revenue was 20.3% in the first quarter of fiscal 2023 compared to 20.8% in last year's first quarter. Fiscal 2022 first quarter operating income included a $12.1 million gain on the sale of operating assets which was recorded as a reduction of selling and administrative expenses. Excluding the fiscal 2022 first quarter gain, fiscal 2023 first quarter operating income increased 15.2% and operating income as a percentage of revenue increased 20 basis points to 20.3% from 20.1% in last year's first quarter.
Net income was $351.7 million for the first quarter of fiscal 2023 compared to $331.2 million in last year's first quarter. First quarter of fiscal 2023 diluted earnings per share (EPS) was $3.39 compared to $3.11 in last year's first quarter. Fiscal 2022 first quarter diluted EPS included $0.09 from the gain on the sale of operating assets and related income tax impact. Excluding the fiscal 2022 first quarter gain and the related income tax impact, fiscal 2023 first quarter diluted EPS of $3.39 increased 12.3% compared to $3.02 in last year's first quarter.
Fiscal 2023 first quarter net cash provided by operating activities was $298.2 million compared to $262.1 million in last year's first quarter, an increase of 13.8%. On June 15, 2022, Cintas paid shareholders an aggregate of $97.7 million in quarterly cash dividends. During the first quarter of fiscal 2023, Cintas purchased $210.8 million of Cintas common stock under its buyback program.
Todd M. Schneider, Cintas' President and Chief Executive Officer, stated, "We are pleased with our fiscal 2023 first quarter financial results. Each of our operating segments grew revenue at a double-digit rate. Adjusted diluted EPS also increased by double-digits, benefiting from operating income margin expansion despite high inflation. These financial results are the product of the continued focus of our employee-partners on providing businesses with the image, safety, cleanliness and compliance needed to help our customers get Ready for the Workday®."
Mr. Schneider concluded, "We are increasing our full fiscal year financial guidance. We are raising our annual revenue expectations from a range of $8.47 billion to $8.58 billion to a range of $8.58 billion to $8.67 billion and diluted EPS from a range of $11.90 to $12.30 to a range of $12.30 to $12.65."
The following table provides a comparison of fiscal 2022 revenue and diluted EPS to our updated fiscal 2023 guidance.
- Fiscal year 2023 operating income is expected to be in the range of $1.72 billion to $1.76 billion compared to $1.55 billion in fiscal year 2022, adjusted to exclude the gains in the table above.
- Fiscal year 2023 interest expense is expected to be approximately $110.0 million compared to $88.8 million in fiscal year 2022, due in part to higher interest rates.
- Fiscal year 2023 effective tax rate is expected to be approximately 20.0% compared to a rate of 17.9% in fiscal year 2022, after excluding the gains in the table above and their related tax impacts from the reported rate of 17.5%. The expected higher effective tax rate will negatively impact fiscal year 2023 diluted EPS by approximately $0.32 and diluted EPS growth by approximately 290 basis points.
- Our diluted EPS guidance includes no future share buybacks.
- We remain in a dynamic environment that can continue to change. Our guidance assumes a stable economy and excludes COVID-19 pandemic-related setbacks or economic downturns.
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 2023 first quarter 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
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; 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 including the risk of recession; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting; the effect of new accounting pronouncements; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; 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 viral pandemics such as the COVID-19 coronavirus; the amount and timing of repurchases of our common stock, if any; changes in federal and state 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. 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, 2022 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.
For additional information, contact:
J. Michael Hansen, Executive Vice President and Chief Financial Officer - 513-972-2079
Paul F. Adler, Vice President - Treasurer & Investor Relations - 513-972-4195