DOW JONES NEWSWIRES
Cintas Corp.'s (CTAS) fiscal fourth-quarter profit surged
following year-earlier charges plus revenue and margin growth,
although the uniform and business-supplies company warned it
believed that a recovery in the U.S. private sector would be
sluggish.
"While we are poised to take advantage of opportunities
presented by any employment improvement, we will not rely only on
job creation for growth," said Chief Executive Scott Farmer.
Instead, Farmer said the company would focus on adding new
customers and penetrating existing customer accounts with
additional products and services.
The company said after two years of difficult economic times,
Cintas expects a return to growth in sales and profit this fiscal
year. It projected earnings of $1.50 to $1.58 a share on revenue of
$3.55 billion to $3.75 billion. Analysts surveyed by Thomson
Reuters expected $1.60 and $3.66 billion, respectively.
Cintas's profit has deflated during the economic slowdown as
high unemployment and the weak economy hurt demand for uniforms and
other business supplies. The company has cut jobs and other costs
to cope with the sluggish job recovery.
Meanwhile, economists have grown increasingly worried that U.S.
growth may start to slow down in the second half of the year. The
monthly jobs report recently showed the unemployment rate fell to
9.5%, although the drop was attributed to a decline in the size of
the work force instead of better labor conditions.
For the quarter ended May 31, Cintas posted a profit of $55.5
million, or 36 cents a share, up from $4.1 million, or 3 cents a
share, a year earlier. Excluding restructuring-related and other
items, earnings fell to 35 cents from 38 cents, though revenue
increased 3.5% to $909.4 million.
In March, the company backed its February forecast of earnings
of 30 cents to 34 cents on revenue of $870 million to $890 million,
largely below analysts' initial view.
Gross margin widened to 42.4% from 38.1%.
Rental fees, which provide the bulk of Cintas's revenue, were
roughly flat from a year ago, while services revenue increased
13%.
Cintas' shares were inactive after-hours after closing at
$25.93.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com