Cintas Says Volume, Not Price Hikes, Is Powering Its Growth

Cintas Corporation (NASDAQ:CTAS) reported better-than-expected fiscal 2027 first-quarter results on Wednesday, with quarterly revenue surpassing $3 billion for the first time.

The company also raised its fiscal 2027 outlook and increased its quarterly dividend. Sales rose 10.9% year over year to $3.014 billion, beating the $2.984 billion estimate.

Adjusted earnings of $1.39 per share beat the analyst estimate of $1.35.

Organic revenue increased 8.9%, excluding acquisitions, foreign currency fluctuations and workday differences.

During the earnings call, Cintas said its growth is being driven primarily by volume rather than price increases. Management said pricing remains consistent with prior years, while new business, customer retention and cross-selling have all improved.

The company added that new business remains its biggest growth driver, with about two-thirds coming from customers that previously managed services internally.

Profitability Improves, Dividend Rises

Operating income increased 15.2% to $711.9 million. Excluding Unifirst Corporation (NYSE:UNF) transaction-related expenses, operating income rose 17.6%.

Adjusted operating margin increased 90 basis points to 23.6%. An additional workday provided a 50-basis-point benefit, while UniFirst transaction-related expenses reduced margin by 50 basis points.

Cintas spent $107.5 million on capital expenditures during the quarter, mainly on technology, automation, capacity expansion and infrastructure.

The company raised its regular quarterly dividend by 15.6%.

Cintas also repurchased $544.7 million of shares during the first quarter and through Sept. 22.

UniFirst Deal Remains On Track

Cintas said it remains confident in the long-term value of its planned combination with UniFirst.

The transaction remains subject to U.S. and Canadian regulatory approvals and other closing conditions. Management expects the deal to close by the end of calendar 2026.

Segment Growth Remains Strong

Organic revenue increased 8% in Uniform Rental and Facility Services, 14.2% in First Aid and Safety Services, 9.2% in Fire Protection Services and 9.6% in Uniform Direct Sale.

Company-wide gross margin reached a record 51.5%.

Gross margins were 50.8% for Uniform Rental and Facility Services, 57.6% for First Aid and Safety Services, 52.8% for Fire Protection Services and 38.9% for Uniform Direct Sale.

Uniform Rental and Facility Services gross margin increased 110 basis points to 50.8%, supported by revenue growth and technology investments. First Aid and Safety Services margin rose 80 basis points.

Cintas Raises Fiscal 2027 Outlook

Cintas raised its fiscal 2027 adjusted earnings forecast to $5.45-$5.54 per share from $5.36-$5.50. The midpoint of the new range is slightly below the $5.50 analyst estimate.

The company also increased its fiscal 2027 revenue outlook to $12.15 billion-$12.27 billion from $12.10 billion-$12.25 billion. The midpoint of the new range is slightly below the $12.221 billion analyst estimate.

CTAS Price Action: Cintas shares were down 1.09% at $196.64 at the time of publication on Wednesday, according to Benzinga Pro data.

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