Cintas (NASDAQ:CTAS) reported fiscal 2026 third-quarter results highlighted by record revenue, expanded gross margin, and higher earnings per share, while management also discussed the company’s recently announced agreement to acquire UniFirst and raised full-year guidance.
Quarterly results: record revenue and margin expansion
President and CEO Todd Schneider said the company delivered “another successful quarter,” citing resilience in its value proposition and continued investment for future growth. Total revenue increased 8.9% year over year to $2.84 billion, while organic revenue growth (excluding acquisitions and foreign currency effects) was 8.2%.
Operating income increased to $659.9 million, up 8.2% year over year. Management noted that adjusting for a one-time gain recognized in the prior-year third quarter, operating income would have increased 11%. Diluted EPS was $1.24, up 9.7% from $1.13, and would have increased 12.7% excluding the prior-year one-time gain.
Segment performance and profitability drivers
Executive Vice President and COO Jim Rozakis said the company continues to add new customers and cross-sell additional solutions into its existing base, while “retention remains at record levels” and pricing is consistent with historical norms.
Management provided organic growth rates by business:
- Uniform Rental Facility Services: 7.3%
- First Aid and Safety Services: 14.6%
- Fire Protection Services: 10%
- Uniform Direct Sale: 3.1%
Gross margin percentages by business were:
- Uniform Rental Facility Services: 50.3% (up 30 basis points year over year and a segment record)
- First Aid and Safety Services: 58.1% (record)
- Fire Protection Services: 50.5%
- Uniform Direct Sale: 41.4%
Rozakis pointed to technology investments, including SAP, and supply chain performance as advantages in the Uniform Rental business, while noting First Aid and Safety is investing in route capacity, leadership and management trainees, advanced technology, and selling resources to support growth. He also cautioned that margins can fluctuate quarter to quarter due to factors such as revenue mix and timing of investments.
On gross margin expansion, Rozakis said there were no meaningful “one-timers” in the quarter. He emphasized revenue growth as a key driver of leverage, ongoing initiatives to remove inefficiencies, favorable revenue mix in First Aid and Fire, and the timing of investments.
SG&A, taxes, cash flow, and capital returns
EVP and CFO Scott Garula said the quarter’s revenue growth and gross margin expansion translated into “continued strength in operating margins and cash flow.” Selling and administrative expense was 27.8% of revenue, up 60 basis points year over year; however, Garula said that excluding the prior-year one-time gain, SG&A would have been flat year over year. Garula also noted that Cintas’ third fiscal quarter is typically seasonally higher for certain expenses, including payroll tax resets.
Operating income as a percentage of revenue was 23.2%, compared with 23.4% in the prior-year quarter; excluding the one-time gain last year, operating margin would have increased 40 basis points year over year. The effective tax rate was 20.6%, compared with 21% last year, with both quarters impacted by discrete items tied primarily to stock-based compensation tax accounting. Net income was $502.5 million versus $463.5 million a year earlier.
Garula also said that during the first nine months of fiscal 2026, Cintas returned $1.45 billion to shareholders through dividends and share repurchases.
Raised full-year guidance; UniFirst deal and related costs
Schneider said Cintas raised fiscal 2026 guidance, now expecting:
- Revenue: $11.21 billion to $11.24 billion (8.4% to 8.7% total growth)
- Adjusted diluted EPS: $4.86 to $4.90 (10.5% to 11.4% growth)
Management stated that the adjusted EPS guidance excludes non-recurring transaction expenses related to the UniFirst acquisition. Garula estimated transaction costs incurred during fiscal 2026 are expected to reduce diluted EPS by $0.03 to $0.04, and clarified on the call that the estimate relates to the fourth quarter and the full-year guide, with any costs incurred in the third quarter described as “immaterial.” Beginning in the fourth quarter, the company plans to break out these costs as a separate income statement line item to provide visibility.
Regarding guidance assumptions, Garula said the outlook assumes no future acquisitions, constant foreign exchange rates, net interest expense of approximately $101 million, an effective tax rate of 20%, and excludes the impact of any future share buybacks or significant economic disruptions or downturns. Both fiscal 2025 and fiscal 2026 were also noted to have the same number of workdays for the year and by quarter.
On the UniFirst transaction, Schneider reiterated that the deal is subject to UniFirst shareholder approval, regulatory clearance in the U.S. and Canada, and other customary closing conditions. Management said the companies have begun the process to satisfy those conditions but will not provide additional commentary “to avoid creating speculation,” adding that updates will be provided as appropriate. Rozakis said the company anticipates the transaction will close in the second half of calendar 2026.
Garula said Cintas’ capital allocation approach positions it to finance the transaction, with leverage expected to be about 1.5 times debt to EBITDA at closing. When asked about repurchases, Garula said there are restrictions from signing through the expected UniFirst shareholder votes and noted buybacks were also limited during the third quarter due to a quiet period during negotiations and due diligence; he said the company would remain opportunistic once restrictions are lifted.
In Q&A, management also addressed fuel and energy costs. Garula said energy costs were 1.7% of revenue in the quarter, flat year over year and up 10 basis points sequentially. He added that about 60% of energy costs are vehicle fuel, and estimated that a sustained 30% increase in fuel costs over a full quarter would add about 30 basis points of cost. Schneider said the company does not use a fuel surcharge and aims to manage impacts by extracting inefficiencies elsewhere, with increased fuel contemplated in guidance.
Looking ahead, the company said it will report fourth-quarter fiscal 2026 results in July.
About Cintas (NASDAQ:CTAS)
Cintas Corporation (NASDAQ: CTAS) is a provider of business services and products focused on workplace appearance, safety and facility maintenance. The company is best known for its uniform rental and corporate apparel programs, which include rental, leasing and direct-purchase options, laundering and garment repair. Cintas markets its services to a wide range of end-users, including manufacturing, food service, healthcare, hospitality, retail and government customers.
Beyond uniforms, Cintas offers a suite of facility services and products designed to help organizations maintain clean, safe and compliant workplaces.
