Uniform supplier Cintas Corp. (CTAS), Tuesday reported a lower third-quarter profit, as increased expenses offset growth in sales. Cintas quarterly earnings missed Street estimates, while sales exceeded expectations.
Moving ahead to fiscal year 2013, Cintas slashed its earnings outlook, while tightening its sales expectations.
Cintas, which also provides fire protection products, entrance mats and restroom supplies, said revenues for the quarter rose 6.3 percent to $1.08 billion from $1.01 billion a year ago. Analysts polled by Thomson Reuters expected revenues of $1.06 billion for the quarter.
Sales of rental uniforms and ancillary products, which represents most of the business, rose 3.9 percent from last year, and other services revenues grew 12.3 percent.
But results were impacted by cost of rental uniforms and ancillary products that spiked 6 percent from last year to $435 million. Other services cost increased 13 percent to $199 million, and selling and administrative costs were higher by 7 percent at $309 million.
Gross margin for the quarter shrunk to 41.1 percent from 42.1 percent last year.
As a result, the Cincinnati, Ohio-based company's quarterly profit declined to $74.7 million from $76 million last year. However, on a per share basis, earnings for the quarter rose to $0.60 from $0.58 last year, due to a lower share count.
Analysts on consensus expected earnings of $0.61 per share for the quarter. Analysts' estimates typically exclude special items.
For fiscal year 2013, Cintas now expects earnings of $2.50 to $2.54 per share on sales of $4.3 billion to $4.325 billion. Earlier it estimated earnings of $2.50 to $2.58 per share on sales of $4.275 billion to $4.325 billion.
Analysts currently expect earnings of $2.55 per share on revenues of $4.28 billion for 2013.
CTAS closed Tuesday at $45.93, up 0.99%, on a volume of 1.2 million shares, on the Nasdaq.
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