Cintas Corporation

This is our first report on Cintas Corporation, a specialized provider of uniform rental services. The company has a leading market position in its domain and delivered an all-around beat in its last result as it continues to recover well after the pandemic headwinds. Its revenue increased 13.1% to $2.17 billion in the second quarter and each segment experienced double-digit revenue growth. Cintas has strong operating leverage because of solid volume growth from new clients and the penetration of existing clients with more goods and services. The Uniform Rental and Facility Services operational segment’s revenue increased from $1.54 billion to $1.71 billion. The organic revenue growth rate was 11.3%, driven by volume growth. Moreover, price hikes made a greater contribution to the quarter. First Aid and Safety Services revenue were $236.0 million. The rate of increase in organic revenue was 15.1%. This growth rate illustrates the First Aid cabinet business’s ongoing pace, which is still growing by more than 20%. Furthermore, Personal Protection Equipment levels decreased little on a sequential basis even though they were still higher than pre-COVID levels. We initiate coverage on the stock of Cintas Corporation with a ‘Hold’ rating.