Cintas Corporation (NASDAQ:CTAS) stock fell 1.18% (As on September 29, 11:40:54 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the first quarter of FY 23. Revenues from the Uniform Rental and Facility Services segment (representing 78.4% of the reported quarter’s net sales) were $1,697.77 million, increasing 12.6% year over year. Revenues from the First Aid and Safety Services segment (representing 10.8% of the reported quarter’s net sales) totaled $234.16 million, increasing 17.6% year over year. Revenues from the All Other business (representing 10.8% of the reported quarter’s net sales) were $226.25 million, increasing 23.7% year over year. Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 14.5% year over year to $1,138.34 million. It represented 52.5% of net sales. Gross profit increased 13.9% to $1,028.1 million. The gross margin was 47.5%, down from 47.6% in the year-ago quarter. High energy costs played spoilsports in the quarter. In the fiscal first quarter, CTAS generated net cash of $298.16 million from operating activities, increasing 13.7% from the year-ago period. Capital expenditure totaled $70 million, reflecting a year-over-year increase of 43.6%. Free cash flow increased 6.9% to $228.14 million in the reported quarter. At the end of the fiscal first quarter, Cintas had cash and cash equivalents of $74.56 million, down 17.6% sequentially. Long-term debt was $2,484.60 million, flat sequentially.

CTAS in the first quarter of FY 23 has reported the adjusted earnings per share of $3.39, beating the analysts’ estimates for the adjusted earnings per share of $3.15, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 35.9 percent to $2.17 billion in the first quarter of FY 23, beating the analysts’ estimates for revenue of $2.08 billion.

Cintas improved its fiscal 2023 outlook. The company now expects revenues of $8.58-$8.67 billion in fiscal 2023 compared with $8.47-$8.58 billion anticipated earlier. The Zacks Consensus Estimate for the same stands at $8.52 billion. Earnings are estimated in the range of $12.30-$12.65 per share compared with $11.90-$12.30 expected earlier. The Zacks Consensus Estimate for the same stands at $12.15.

For fiscal 2023, Cintas expects adjusted operating income between $1.72 billion and $1.76 billion ($1.55 billion reported in fiscal 2022). Adjusted effective tax rate in the period is expected to be approximately 20% compared with 17.9% in fiscal year 2022. The company expects this higher tax rate to impact earnings by around 32 cents. Due to higher interest rates, interest expenses are expected to increase to approximately $110 million in fiscal 2023 from $88.8 million in fiscal 2022.