# How Cintas makes money

CXProWealth Business Lens · Cintas (CTAS) · Q1 FY2027

Read from the 10-Q for the period 2026-06-01 to 2026-08-31, filed 2026-10-07 with the SEC (accession 0000723254-26-000047): https://www.sec.gov/Archives/edgar/data/723254/000072325426000047/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $3.0B (+10.9% on the year)
- Operating income: $711.9M (operating margin 23.6%)
- Net income: $551.7M (net margin 18.3%)
- Gross margin: 51.5%
- Free cash flow: $464.8M (15.4% of revenue)
- Cash conversion (operating cash flow / net income): 1.04x
- Capital expenditure: 3.6% of revenue

## Where the money goes (Q1 FY2027)

- Uniform Rental and Facility Services → Total revenue: $2.3B
- Other → Total revenue: $719.2M
- Total revenue → Cost of revenue: $1.5B
- Total revenue → Gross profit: $1.6B
- Gross profit → Selling and administrative expenses: $827.2M
- Gross profit → UniFirst Corporation transaction expenses: $14.4M
- Gross profit → Operating income: $711.9M
- Operating income → Interest expense: $24.7M
- Operating income → Income before income taxes: $687.2M
- Interest income → Income before income taxes: $2.6M
- Income before income taxes → Income taxes: $138.1M
- Income before income taxes → Net income: $551.7M

## Where the revenue comes from

### Products and services (CONSOLIDATED CONDENSED STATEMENTS OF INCOME)

| Member | Value | Share |
|---|---:|---:|
| Uniform Rental and Facility Services | $2.3B | 76.1% |
| Other | $719.2M | 23.9% |

The members sum to total revenue.

### Segments (Revenue Recognition - Schedule of Disaggregated Revenue (Details))

| Member | Value | Share |
|---|---:|---:|
| Uniform Rental and Facility Services | $2.3B | 76.1% |
| First Aid and Safety Services | $388.5M | 12.9% |
| Fire Protection Services | $252.3M | 8.4% |
| Uniform Direct Sales | $78.4M | 2.6% |

The members sum to total revenue.

### ConsolidationItems (Segment Information - Schedule of Information Related to Operating Segments (Details))

| Member | Value | Share |
|---|---:|---:|
| Operating Segments | $2.3B | 76.1% |
| Corporate | $0 | 0.0% |

The members do not sum to total revenue.

## Income statement, as filed

| Line | Q1 FY2027 | Of revenue |
|---|---:|---:|
| Total revenue | $3.0B | 100% |
|   Uniform Rental and Facility Services | $2.3B | 76.1% |
|   Other | $719.2M | 23.9% |
| Cost of revenue | $1.5B | 48.5% |
|   Uniform Rental and Facility Services | $1.1B | 37.5% |
|   Other | $331.6M | 11.0% |
| Selling and administrative expenses | $827.2M | 27.4% |
| UniFirst Corporation transaction expenses | $14.4M | 0.5% |
| **Operating income** | $711.9M | 23.6% |
| Interest income | ($2.6M) | 0.1% |
| Interest expense | $24.7M | 0.8% |
| **Income before income taxes** | $689.8M | 22.9% |
| Income taxes | $138.1M | 4.6% |
| **Net income** | $551.7M | 18.3% |
| Basic earnings per share (in dollars per share) | $1 | 0.0% |
| Diluted earnings per share (in dollars per share) | $1 | 0.0% |
| Dividends declared per share (in dollars per share) | $1 | 0.0% |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2009 | $3.8B | $409.1M | $226.4M | $523.5M | $160.1M | $363.4M |
| FY2010 | $3.5B | $390.8M | $215.6M | $565.7M | $111.1M | $454.6M |
| FY2011 | $3.8B | $440.3M | $247.0M | $340.9M | $182.6M | $158.3M |
| FY2012 | $4.1B | $539.6M | $297.6M | $469.9M | $160.8M | $309.1M |
| FY2013 | $4.2B | $566.0M | $315.4M | $552.7M | $196.5M | $356.3M |
| FY2014 | $4.2B | $602.7M | $374.4M | $606.0M | $145.6M | $460.4M |
| FY2015 | $4.4B | $683.6M | $430.6M | $580.3M | $217.7M | $362.6M |
| FY2016 | $4.8B | $768.9M | $693.5M | $465.8M | $275.4M | $190.5M |
| FY2017 | $5.3B | $773.7M | $480.7M | $763.9M | $273.3M | $490.6M |
| FY2018 | $6.5B | $949.8M | $842.6M | $964.2M | $271.7M | $692.5M |
| FY2019 | $6.9B | $1.1B | $885.0M | $1.1B | $276.7M | $791.1M |
| FY2020 | $7.1B | $1.2B | $876.0M | $1.3B | $230.3M | $1.1B |
| FY2021 | $7.1B | $1.4B | $1.1B | $1.4B | $143.5M | $1.2B |
| FY2022 | $7.9B | $1.6B | $1.2B | $1.5B | $240.7M | $1.3B |
| FY2023 | $8.8B | $1.8B | $1.3B | $1.6B | $331.1M | $1.3B |
| FY2024 | $9.6B | $2.1B | $1.6B | $2.1B | $409.5M | $1.7B |
| FY2025 | $10.3B | $2.4B | $1.8B | $2.2B | $408.9M | $1.8B |
| FY2026 | $11.3B | $2.6B | $2.0B | $2.3B | $395.1M | $1.9B |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +8.9% (year before +7.7%): steady
- Operating income: +10.5% (year before +14.1%): slowing
- Net income: +10.4% (year before +15.3%): slowing
- Free cash flow: +7.1% (year before +5.9%): steady

## Operating figures stated in the filing

- Organic revenue growth rate: 8.9% (as of 2026-08-31). "The organic revenue growth rate, which adjusts for the impact of acquisitions, workday differences and foreign currency exchange rate fluctuations, was 8.9%." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF)
- Organic revenue growth rate, Uniform Rental and Facility Services: 8.0% (as of 2026-08-31). "The organic revenue growth rate for the reportable operating segment was 8.0%." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF)
- Organic revenue growth rate, First Aid and Safety Services: 14.2% (as of 2026-08-31). "The organic revenue growth rate for the reportable operating segment was 14.2%." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF)
- Organic revenue growth rate, other revenue: 11.9% (as of 2026-08-31). "The organic revenue growth rate for other revenue was 11.9%." (Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF)

## Key insights

### Margin gain came from cost of revenue, not overhead

Cost of revenue grew 8.1% against revenue growth of 10.9%, so gross margin widened 1.27 points while selling costs held their share.

Gross profit rose 13.7% to $1.55B, and gross margin reached 51.5% against 50.3% a year earlier. Selling and administrative expenses grew 10.5%, almost exactly in step with revenue, and stayed at 27.4% of revenue against 27.5%. Operating income grew 15.2% to $711.9M and operating margin rose 0.89 points to 23.6%. _(from the filing)_
The filing attributes the improvement to 'more efficient usage of in-service inventory, strategic sourcing initiatives, efficiency gains and improved leverage of fixed costs.' In the rental segment, cost of revenue was $1.13B, 49.2% of the segment's $2.29B revenue, and that cost includes the amortization of uniforms, mats and towels in service. _(from the filing)_
The operating margin gain came after absorbing $14.4M of UniFirst transaction expenses, 0.48% of revenue and 2.0% of operating income. The filing books them in a corporate line, outside the segments, so the segments' own margins widened by more than the consolidated figure shows. _(from the filing)_
Analysis: a gain built on using rented stock longer and buying it better has natural limits, since garments wear out and customers notice worn stock. The test in later quarters is whether cost of revenue keeps growing slower than revenue once these practices are fully in place. _(analysis)_

### First aid grows fastest and earns the highest margin

First Aid and Safety grew 14.2% organically, against 8.0% for uniform rental, and its 25.6% segment margin is above the rental core's 25.1%.

First Aid and Safety Services earned $99.5M of operating income on $388.5M of revenue, a 25.6% margin. Uniform Rental and Facility Services earned $575.1M on $2.29B, a 25.1% margin. First aid is 12.9% of revenue but 14.0% of operating income. _(from the filing)_
The filing attributes first aid's growth to new business sold by sales representatives, penetration of additional products and services into existing customers, price increases and strong customer retention, and its wider gross margin to a favorable sales mix, efficiency gains and strategic sourcing. _(from the filing)_
The wider non-uniform group is shifting the mix: other revenue grew 14.7% to $719.2M, with organic growth of 11.9%, and rose 0.79 points to 23.9% of total revenue. _(from the filing)_
Analysis: first aid is sold into the same accounts the rental routes already serve, so its growth needs little new customer acquisition. If its faster growth persists, more of the company's profit would depend on sourcing and restocking products than on laundering garments. _(analysis)_

### Cash flow outran profit, partly on timing

Free cash flow reached $464.8M against $312.5M a year earlier while net income rose 12.3%, and the filing credits part of it to working capital.

Operating cash flow was $572.3M against $414.5M a year earlier, while net income was $551.7M against $491.1M, so operating cash flow reached 1.04 times net income. Capital spending was $107.5M, 3.6% of revenue and 18.8% of operating cash flow, leaving free cash flow of $464.8M, 15.4% of revenue against 11.5% a year earlier. _(from the filing)_
The filing attributes the change to higher net income and favorable working capital, specifically accounts payable, accrued liabilities and income taxes, partly offset by prepaid expenses and other current assets and by accounts receivable. _(from the filing)_
The same quarter a year earlier was the weakest of that year for cash: free cash flow of 11.5% of revenue, against 16.7% for the full year, when free cash flow was $1.88B on revenue of $11.26B. This quarter's 15.4% sits close to that full-year level. _(from the filing)_
Analysis: payables, accruals and taxes owed tend to move back, so part of this quarter's jump is timing rather than a new level of cash generation. The steadier gauge is free cash flow as a share of revenue across the full year, while the company also funds buybacks, a higher dividend and the pending UniFirst purchase. _(analysis)_

### A higher tax rate trimmed the profit gain

Pre-tax income rose 15.8%, but the effective tax rate climbed to 20.0% from 17.6%, so net income grew a slower 12.3%.

Income taxes rose 31.8% to $138.1M on pre-tax income of $689.8M, an effective rate of 20.0% against 17.6% a year earlier. The filing says both periods were moved by discrete items, mainly the tax accounting for stock-based compensation. _(from the filing)_
Diluted earnings per share rose to $1.36 from $1.20, and the dividend declared rose to $0.52 per share from $0.45. The filing says earnings per share rose primarily because of the increase in net income. _(from the filing)_
Analysis: the stock-compensation effect depends on the share price and on when employees exercise options, so the tax rate can swing between quarters for reasons unrelated to how the business runs. Operating income is the cleaner read of the quarter's performance. _(analysis)_

### Competitive edge

- **Rental route earns 80.8% of operating profit** Uniform Rental and Facility Services is 76.1% of revenue but 80.8% of operating income, earning a 25.1% margin on its own sales.
- **Margins have widened year after year, not just this quarter** Operating margin rose from 16.4% in the earliest year shown to 23.1% in the latest full year, as revenue grew from $6.89B to $11.26B.

### What to watch

- **UniFirst deal is pending and already costs money** The UniFirst acquisition has not closed, faces an FTC Second Request, and put $14.4M of expenses into this quarter's operating income.
- **Fuel, labor and materials would hit the line that improved** The quarter's gain came from cost of revenue falling to 48.5% of sales, the line the filing's named cost risks would push back up.
- **Growth rests on new accounts, retention and price** Organic growth was 8.9%, and the filing credits new business, added products, price increases and retention, each exposed to the demand risks it lists.

## Operating income by segment

- Uniform Rental and Facility Services: $575.1M (80.8% of operating income)
- First Aid and Safety Services: $99.5M (14.0% of operating income)
- All Other: $51.7M (7.3% of operating income)

## Investor view

**Operating income grew 15.2%, faster than revenue, as Cintas got more out of the garments and routes it already runs**

### How it makes money

Cintas rents and services uniforms, mats, mops, shop towels and restroom supplies, and sells first aid, safety and fire protection products and services. The filing says nearly all revenue comes from fees for route servicing performed by a Cintas employee-partner at the customer's location, with the service period matching the monthly invoice. Uniform Rental and Facility Services brought in $2.29B of the quarter's $3.01B revenue, 76.1%. _(from the filing)_
The other $719.2M of revenue comes from First Aid and Safety Services at $388.5M (12.9% of revenue), Fire Protection Services at $252.3M (8.4%) and Uniform Direct Sales at $78.4M (2.6%). First aid and fire protection follow the same pattern as rental: a scheduled visit by Cintas staff to the same site. Uniform Direct Sales is the one line that is a plain product sale. _(from the filing)_
The rental route is where the profit is. Uniform Rental and Facility Services earned $575.1M of operating income, 80.8% of the company's $711.9M, a 25.1% margin on its own revenue. First Aid and Safety Services earned $99.5M, a 25.6% margin, and All Other $51.7M. The segments add to more than the total because the $14.4M of UniFirst transaction expenses sits in a corporate line. _(from the filing)_
The cost of the rental business is mostly production, delivery and the amortization of garments, mats and towels in service, the filing says. That cost was $1.13B, 49.2% of the segment's revenue. Selling and administrative expenses, which carry the sales force and the amortization of capitalized commissions, were $827.2M, 27.4% of total revenue. _(from the filing)_

### What shifted

Revenue rose 10.9% to $3.01B from $2.72B. The filing puts organic growth at 8.9%; the rest came from one more workday than a year earlier and small acquisitions, slightly offset by currency. Organic growth was 8.0% in Uniform Rental and Facility Services, 14.2% in First Aid and Safety Services, and 11.9% for other revenue as a whole. _(from the filing)_
Costs grew slower than sales. Cost of revenue rose 8.1% while revenue rose 10.9%, so gross margin widened 1.27 points to 51.5% and gross profit grew 13.7%. The filing attributes the gain to 'more efficient usage of in-service inventory, strategic sourcing initiatives, efficiency gains and improved leverage of fixed costs.' _(from the filing)_
Operating income grew 15.2% to $711.9M and operating margin rose 0.89 points to 23.6%, after absorbing $14.4M of UniFirst transaction expenses, about 0.5% of revenue. Selling and administrative expenses grew 10.5%, in line with revenue, so the widening came from the gross margin line, not from overhead. _(from the filing)_
Tax took part of the gain. Income taxes rose 31.8% to $138.1M, an effective rate of 20.0% against 17.6% a year earlier; the filing says both periods were moved by discrete items, mainly the tax accounting for stock-based compensation. Net income still grew 12.3% to $551.7M, and diluted earnings per share rose to $1.36 from $1.20. _(from the filing)_
Mix moved toward the non-uniform lines: other revenue grew 14.7% and its share of revenue rose 0.79 points to 23.9%. Operating cash flow was $572.3M against $414.5M a year earlier, which the filing credits to higher net income and to working capital, chiefly payables, accrued liabilities and income taxes. Free cash flow was $464.8M, 15.4% of revenue. _(from the filing)_

### Risks in the filing

The filing names the UniFirst transaction as a source of risk: it may not close when expected or at all, regulators may attach conditions that hurt the combined company, integration may fail or cost more than planned, the new Cintas shares issued in the deal dilute existing holders, and the process diverts management's time from the business. _(from the filing)_
Cost risks recur through the list: energy and fuel, materials and labor including medical costs, higher sourcing or distribution costs, supply chain constraints, tariffs and other limits on trade, and inflation and higher interest rates. _(from the filing)_
On demand, the filing lists lower sales volumes, loss of customers due to outsourcing trends, and competitors' reactions on price and service. On people and rules: union organizing, employment, pay and safety regulation, environmental remediation, cybersecurity, litigation, and changes in tax and labor law. The debt agreements require a maximum debt to EBITDA ratio, and the filing notes that lower credit ratings would raise its cost of funds. _(from the filing)_
Of these, the numbers show two so far: the UniFirst process already costs money inside operating income, and the tax rate rose. Cost pressure from fuel, labor and materials does not show yet, since cost of revenue grew slower than revenue and selling costs held their share. If it arrives, the first place it would appear is cost of revenue rising relative to sales. _(analysis)_

## Founder view: mechanisms

### Route density turns one visit into many sales

Cintas sends the same service professional to the same customer on a regular schedule. The truck, the driver's time and the plant behind the route are largely fixed. Every extra item on a stop, a mat, a restroom refill, a first aid cabinet, adds revenue with little added cost, and every new customer on an existing street raises revenue per mile driven. Margin grows with stops per route and items per stop, not with size alone. _(analysis)_

### Rented goods earn many times before they are replaced

Cintas owns the uniforms, mats and towels and charges for them every service cycle. The cost of each item is spread over its life in service, so the longer it lasts and the more often a returned item is reissued to a new wearer, the lower the cost behind each invoice. Laundering, repair, tracking and reissue are where the margin is made. _(analysis)_

### The route is a channel for new products

The filing calls the distribution system and frequent customer contact 'a platform from which we launch additional products and services.' Cintas attaches first aid, safety, water and fire protection to accounts it already serves. The cost of winning the customer was paid once; each added product rides on the existing relationship and, where it fits, the existing visit. _(analysis)_

### Recurring contracts turn profit into cash

Route service is billed monthly under contracts, so revenue repeats without a new sale each month. The filing says commissions paid to win a route contract are capitalized and expensed over time, which treats the sale as an investment that pays back. The result is cash generation that tracks earnings closely, with capital spending concentrated in plants, trucks and garments. _(analysis)_

## Member research

Signed-in members read, on the page: what Cintas's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Cintas 10-Q for the period to 2026-08-31: https://www.sec.gov/Archives/edgar/data/723254/000072325426000047/ (2026-10-07)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02 · as of 2026-11-02