Cintas Tops, Guides for 2012 - Analyst Blog
September 23 2011 - 10:45AM
Zacks
Cintas Corporation (CTAS) reported earnings of
52 cents per share for fiscal first quarter 2012 ending August 31.
Results comfortably surpassed the Zacks Consensus Estimate of 47
cents and were 30% higher than 40 cents earned in the year-ago
quarter.
Strong performance across all the business segments helped the
company to deliver better-than-expected results.
Operational Update
Total revenue in the quarter under review increased 10.1% to
$1.02 billion from $0.92 billion in the year-ago quarter, striding
ahead of the Zacks Consensus Estimate of $0.998 billion. A
double-digit growth from Other services coupled with high
single-digit growth in Rental uniforms and ancillary products led
to the overall climb. The quarter marks second consecutive period
of double-digit revenue growth
Cintas' cost of goods sold increased 9% year over year to $578
million during the quarter. Selling general and administrative
expenses rose 5.8% on a year-over-year basis to $311 million.
Operating income during the quarter improved 28.3% to $128.6
million. Operating margin expanded 170 basis points year over year
to 12.6%.
Interest expense shot up 41.2% to $17.3 million in the
quarter.
Net income was $68.6 million, an improvement of 12% from $61.3
million in fiscal first quarter 2011. Net margin improved 10 basis
points year over year to 6.7%
Segment Update
Rental uniform and ancillary products revenue
of $719.4 million in the quarter increased 9.4% from $657.6 million
in the year-ago quarter.
Uniform Direct Sales revenue during the quarter
grossed to $101.7 million, up 2.9% from $98.8 million in the
year-ago quarter.
First Aid, Safety and Fire Protection revenue
was $103.7 million, up 10.9% from $93.5 million in the year-earlier
quarter.
Document Management revenue of $91.5 million in
the quarter shot up 24.7% from $74.0 million in the year-ago
quarter.
Financial Position
Cintas exited the quarter with cash and cash equivalent of
$150.3 million, a substantial decline from $438.1 million at fiscal
2011 end.
Long-term debt declined to $1.1 billion at quarter end from $1.3
billion at fiscal 2011 end.
As of August 31, 2011, the debt-to-capitalization ratio
increased to 37.8% from 24.2% as of August 31, 2010
Cash flow from operations was $56.6 million in the quarter, up
sharply 60% year over year.
Capital expenditure was less at $44.4 million from $48.2 million
in the year-ago quarter.
Free cash flow was a positive $12.1 million compared with a
negative $12.9 million in fiscal first quarter of 2011.
Looking Ahead
Cintas, in fiscal 2012, expects to generate revenue in the band
of $4.0 billion to $4.1 billion and guides earnings to a range of
$1.97 to $2.05 per share.
The company expects capital expenditure to be between $180
million and $200 million in fiscal 2012.
We retain our Outperform rating on Cintas Corporation. The
quantitative Zacks #2 Rank (short term Buy rating) for the company
indicates upward pressure on the stock over the near term.
Cincinnati, Ohio-based Cintas Corporation designs, manufactures
and implements corporate identity uniform programs, and provides
entrance mats, restroom supplies, promotional products, and first
aid and safety products for approximately 900,000 businesses.
Cintas competes with G&K Services Inc. (GKSR)
and privately held Alsco Inc. and ARAMARK Corporation.
CINTAS CORP (CTAS): Free Stock Analysis Report
G&K SVCS A (GKSR): Free Stock Analysis Report
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