Cintas Corp. (CTAS: Quote) Monday reported a 11 percent increase in fourth-quarter profit, driven mainly by higher revenues. The uniforms supplier's earnings came in line with analysts' estimates, while revenues fell shy of expectations.
Going forward, Cintas detailed a weak guidance for the fiscal year 2013, citing weak economic conditions and the unimpressive growth in employment level.
Chief Executive Scott Farmer said, "In an increasingly challenging economy, we are pleased to report record quarterly revenue and solid operating results..."
Cintas, which also provides fire protection products, entrance mats and restroom supplies, said its revenues for the fourth quarter grew 4.1 percent to $1.05 billion, but fell short of analysts' estimate of $1.07 billion.
Rental uniforms and ancillary products, which represents about 70 percent of revenues, grew 5.2 percent year-over-year, while other services revenues rose 1.4 percent.
Gross margin, the percentage of sales left after deducting production costs, dropped to 42.1 percent from 42.8 percent last year.
The Cincinnati, Ohio-based company's fourth-quarter net profit improved to $78.6 million or $0.60 per share from $70.8 million or $0.49 per share last year. On average, 14 analysts polled by Thomson Reuters expected earnings of $0.60 per share for the quarter. Analysts' estimates typically exclude special items.
Moving ahead, the company expects fiscal year 2013 earnings in a range of $2.47 to $2.55 per share, on revenues of $4.25 billion to $4.35 billion. Analysts currently estimate earnings of $2.54 per share on revenues of $4.33 billion.
The company said its guidance assumes no further deterioration in the U.S. economy and some improvement in recycled paper prices from fourth quarter level.
Commenting on the tepid guidance, CEO Farmer said, "We enter fiscal 2013 in a U.S. economy without momentum. The U.S. job growth has significantly slowed to the point of only adding 225,000 jobs in the past three months. Many forecasts indicate U.S. GDP growth during our fiscal year 2013 to be less than 2%. Because of these factors, combined with the uncertainty of potential changes in tax law for 2013, we view fiscal year 2013 with caution..."
CTAS closed Monday's trading on the Nasdaq at $39.41, down $0.46 or 1.15%, on a volume of 0.9 million shares. The stock further lost 1.12% in after-hours.
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by RTT Staff Writer
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