DOW JONES NEWSWIRES
Cintas Corp.'s (CTAS) fiscal first-quarter profit rose 14%
following prior-year charges as core results fell slightly further
than expected.
The uniform and business-supplies company's results could
complicate what seemed to be a nascent recovery for the company,
which endured two years of rough business in recession when high
unemployment stifled demand for corporate uniforms and business
supplies.
While profit fell short, the most recent period posted
better-than-expected revenue growth. Chief Executive Scott D.
Farmer said the company was delivering on its plan to focus on
adding new customers and adding new products and services with
existing customers, rather than relying on job creation for
business growth.
However, margins reverted. The figure had been improving because
of cost cuts in recent periods, but in the third quarter gross
margin fell to 42.6% from 42.9%.
For the period ended Aug. 31, the company posted a profit of
$61.3 million, or 40 cents a share, up from $54 million, or 35
cents a share, a year earlier. The latest results included a 3-cent
boost from resolving several tax audits, while the previous year's
results included 8 cents in legal charges.
Revenue increased 3.6% to $923.9 million.
Analysts surveyed by Thomson Reuters expected earnings of 38
cents on revenue of $915 million.
Rentals, which provide the most of Cintas's revenue, were steady
with a 0.3% increase. Services revenue jumped 13%, though the
segment suffered a 16% decline in the prior-year quarter.
Looking ahead, Cintas increased its outlook for earnings this
year because of effects from stock repurchases. Tuesday, it
forecast earnings of $1.55 to $1.63 a share, up a nickel from
July's projection.
Cintas shares were up 0.4% at $28 after hours. In the last year,
the stock has lost 6% of its value, while the broader market is
positive.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com