CINTAS CORP (CTAS) Q2 2025 Earnings Summary

Executive Summary

Revenue grew 7.8% to $2.56B with organic growth of 7.1%; operating margin hit an all-time record 23.1% and diluted EPS rose 21.1% to $1.09 .
Guidance: fiscal 2025 revenue range tightened at the low end to $10.255–$10.320B (from $10.220–$10.320B), and diluted EPS raised to $4.28–$4.34 (from $4.17–$4.25); effective tax rate lowered to 20.2% .
Free cash flow YTD climbed to $713.8M; quarterly dividend of $158.0M paid Dec 13, 2024 (approx. $0.39 per share) .
Call themes: margin strength from sourcing, route optimization (SmartTruck), SAP-enabled efficiencies; price increases back to historical 0–2% range; Uniform Direct Sale softness; active M&A across rental, fire, and first aid .
Potential stock catalysts: record margins and raised EPS guidance vs slight fine-tuning of organic growth high end and top-line range .

What Went Well and What Went Wrong

What Went Well

Record profitability: operating margin expanded to 23.1% (+210 bps YoY) and gross margin reached 49.8% (+180 bps YoY), driven by volume leverage and efficiency initiatives .
Segment execution: First Aid and Safety Services organic growth +12.3% with gross margin 57.3%; fire protection +10% organic; rental gross margin +170 bps YoY .
Strong cash generation and capital deployment: YTD free cash flow $713.8M (+35% YoY), enabling capex, M&A, dividends, and buybacks; strategic technology investments (SAP, SmartTruck) improving processes and routing .

Management quote: “Our strong earnings growth reflects our operational excellence via sourcing and supply chain initiatives, route and energy optimization and technology-enabled efficiency in our facilities” — CEO Todd Schneider .

What Went Wrong

Pricing environment normalized: price increases now back to historical 0–2% range, making incremental pricing more challenging and requiring growth to come from mix/volume and efficiencies .
Uniform Direct Sale softness: UDS down 9.2% organically in Q2; business remains strategic but inherently lumpy with tough comps across airlines/hospitality/casinos .
Guidance fine-tune: organic revenue growth guide eased at the high end (from 8.1% to 7.7%) and revenue low-end nudged up with implied H2 incremental margins trending back toward long-term 25–35% range vs outsized first-half incrementals .

Financial Results

Consolidated Quarterly Comparison

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$2.47	$2.50	$2.56
Gross Margin %	49.2%	50.1%	49.8%
Operating Income ($USD Millions)	$547.6	$561.0	$591.4
Operating Margin %	22.2%	22.4%	23.1%
Net Income ($USD Millions)	$414.3	$452.0	$448.5
Net Income Margin %	16.8%	18.1%	17.5%
Diluted EPS ($USD)	$3.99 (pre split)	$1.10 (post split)	$1.09 (post split)

Note: Q4 2024 EPS is pre-4-for-1 stock split; Q1/Q2 2025 reflect split-adjusted EPS .

Segment Breakdown

Segment	Q1 2025 Revenue ($MM)	Q1 2025 Operating Income ($MM)	Q2 2025 Revenue ($MM)	Q2 2025 Operating Income ($MM)
Uniform Rental & Facility Services	$1,933.8	$446.4	$1,990.4	$472.4
First Aid & Safety Services	$292.6	$71.3	$299.4	$75.2
All Other	$275.2	$43.3	$272.0	$43.8
Total	$2,501.6	$561.0	$2,561.8	$591.4

KPIs and Operating Metrics

KPI	Q4 2024	Q1 2025	Q2 2025
Organic Revenue Growth %	7.5%	8.0%	7.1%
Effective Tax Rate %	—	15.8%	20.7%
Free Cash Flow ($MM)	Full-year FY24: $1,670.3	Q1: $373.8	YTD (6 months): $713.8
Dividend Paid ($MM)	—	$157.9 (Sep 3, 2024)	$158.0 (Dec 13, 2024)
Total Gross Margin %	49.2%	50.1%	49.8%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY2025	$10.220–$10.320B	$10.255–$10.320B	Raised low end; high end maintained
Diluted EPS	FY2025	$4.17–$4.25	$4.28–$4.34	Raised
Organic Revenue Growth	FY2025	7.0%–8.1%	7.0%–7.7%	Lowered high end
Workday-Adjusted Revenue Growth	FY2025	7.3%–8.4%	7.7%–8.4%	Raised low end
Net Interest Expense	FY2025	≈$101M	≈$101M	Maintained
Effective Tax Rate	FY2025	20.4%	20.2%	Lowered
Assumptions	FY2025	No acquisitions; constant FX	No acquisitions; constant FX; no significant disruptions	Expanded assumptions

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Technology initiatives (SAP, SmartTruck, automation)	Focus on margin expansion and tech investments; raised FY25 outlook	SAP standardization; SmartTruck route optimization; automated sortation improving plant efficiency	Strengthening operational leverage
Supply chain & sourcing	Strong FY24 cash generation; balanced cap allocation	Global supply chain driving sourcing benefits and garment sharing reducing amortization	Continuing benefits
Pricing/macro	FY25 outlook positive; no FX acquisitions assumed	Pricing back to historical 0–2% range; inflation deceleration; growth via efficiency/mix	Normalizing pricing environment
Tariffs/regulatory	—	Monitoring proposed tariffs; diversification across geographies; amortization buffers cost timing	Risk monitored; mitigated by processes
Product performance (First Aid, Fire)	Other segment strength in FY24	First Aid organic +12.3%, margin +280 bps; Fire +10% organic; recurring revenues (AED rentals, eyewash, Waterbreak)	Durable double-digit growth
M&A activity	FY24 acquisitions $186.8M	Active across rental, fire, first aid; ~Q2 acquisitions cited; synergy focus	Elevated, complementary deals
Vertical focus (healthcare, hospitality, education, state/local govt)	Broad-based growth narrative	All four focused verticals performing above normal growth; innovations (privacy curtains, scrubs dispensing, microfiber mops)	Continued outperformance

Management Commentary

“Second quarter total revenue grew 7.8% to $2.56 billion… Operating income… 23.1%… Diluted EPS grew… 21.1% to $1.09. Our strong earnings growth reflects… sourcing and supply chain initiatives, route and energy optimization and technology-enabled efficiency in our facilities” — Todd Schneider, CEO .
“Organic growth by business was 6.9% for Uniform Rental… 12.3% for First Aid… 10% for Fire… Uniform Direct Sale was down 9.2%. Gross margin… 49.8%… robust volume growth, operating leverage and continued operational efficiencies helped generate this strong gross margin” — Mike Hansen, CFO .
“We are updating our annual revenue expectations… $10.255B to $10.320B… and diluted EPS… $4.28 to $4.34” — CEO .

Q&A Highlights

Organic growth guide: high end reduced to 7.7%; implied H2 organic 6.6–7.9% and workday-adjusted 7.3–8.6% essentially unchanged vs prior quarter; Q2 organic 7.1% mid-range .
Incremental margins: outsized in H1; management expects reversion toward 25–35% long-term in H2; no one-offs cited; leverage and efficiency drove strength .
Pricing: now back to historical 0–2% range; more challenging than earlier in the year; still achieving margin gains via efficiencies .
M&A: active across rental, first aid, fire; local/regional high-quality targets; synergy capture expected; valuation details not disclosed .
Tariffs: monitoring proposals; diversified sourcing (>90% multisource); amortization of rental materials helps manage timing of cost recognition .
Vertical innovation: healthcare solutions (privacy curtains, scrubs dispensing, microfiber mops) and cross-selling opportunities highlighted .

Estimates Context

S&P Global consensus EPS and revenue for Q2 FY2025 were not retrievable at time of analysis due to data access limits; therefore, a quantified beat/miss versus consensus is unavailable. Analysts on the call noted incremental EBITDA margins “well above Street expectations,” but no specific consensus figures were discussed .
Where estimate comparisons are required in future updates, we will anchor to S&P Global consensus once accessible.

Key Takeaways for Investors

Margin engine intact: record 23.1% operating margin with structural gains from sourcing, garment sharing, SAP and SmartTruck; gross margin 49.8% underscores durability .
Guidance quality improved: EPS range raised to $4.28–$4.34 and revenue low end nudged up; tax rate lowered to 20.2% offering tailwind .
Growth mix: organic growth moderating at high end due to normalized pricing (0–2%); growth driven by volume, mix and operational excellence, not price .
First Aid and Fire resilience: double-digit organic growth and margin expansion in First Aid with recurring revenue products; Fire at +10% organic despite tough comps .
Cash returns and reinvestment: YTD FCF $713.8M supports balanced deployment across capex, M&A, dividends ($158.0M in Q2) and buybacks .
M&A as a lever: ongoing tuck-ins across routes to deepen local scale and cross-sell potential; watch for synergy realization .
Near-term trading: positive bias on raised EPS and record margins vs slight top-line fine-tune; monitor H2 incremental margin normalization and pricing environment .

Appendix: Press Release and 8-K Data Points

Revenue $2.5618B (+7.8%), organic +7.1%; gross margin 49.8%; operating income $591.4M; net income $448.5M; diluted EPS $1.09 .
Dividend $158.0M (Dec 13, 2024); split-adjusted EPS references clarified .
FY2025 guidance: revenue $10.255–$10.320B; EPS $4.28–$4.34; interest ≈$101M; ETR 20.2%; assumptions noted .