Uniforms and business service provider Cintas Corp. (CTAS) said its profit for the third quarter declined due mainly to lower revenues, which were negatively impacted by the continued sluggishness in job recovery, weather difficulties and holiday shut downs. Nevertheless, earnings came in ahead of estimates, while revenues fell short. Looking ahead, Cintas also reaffirmed its fourth quarter earnings outlook.
Cintas' net income for the third quarter declined to $48.98 million or $0.32 per share from $71.81 million or $0.47 per share in the comparable quarter a year-ago.
On average, eleven analysts polled by Thomson Reuters expected the company to earn $0.30 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue for the quarter declined to $861.81 million from $908.63 million a year-ago. Seven Wall Street analysts estimated revenues of $853.61 million for the quarter.
The third quarter of fiscal year 2010 had one fewer workday than last year's fiscal third quarter. Adjusted for the one fewer workday in this year's third quarter, revenues were 3.7% less than last year's third quarter.
While revenue from rental uniforms and ancillary products declined to $622.45 million from $674.70 million a year-ago, revenue from other services increased to $239.35 million from $233.93 million a year-ago.
Cost of rental uniforms and ancillary products declined to $356.75 million from $379.46 million a year-ago. The cost of other services declined to $145.45 million from $152.73 million a year-ago.
Selling and administrative expenses for the quarter increased to $275.59 million from $257.12 million in the prior year period.
The company last week paid annual dividend to shareholders amounting to $0.48 per share, an increase from $0.47 paid last year.
Scott Farmer, Chief Executive Officer said, "We are encouraged that job losses appear to be moderating from what we saw in calendar year 2009. However, we believe job recovery will continue to be sluggish and thus our revenues will be slow to return to prior levels. Despite the weather difficulties and holiday shut downs during our third quarter, our revenues and margins met our internal plan."
Looking ahead to the fourth quarter, the company said it continues to expect earnings to be in the range of $0.30 to $0.34 per share on revenues that are expected to be in the range of $870 million to $890 million. Wall Street analysts estimate earnings of $0.33 per share on a revenue of $878.58 million for the fourth quarter.
For the nine months ended February 28, 2010, Cintas' net income declined to $160.14 million or $1.04 per share from $222.28 million or $1.45 per share in the comparable period a year-ago.
Year-to-date total revenue declined to $2.63 billion from $2.89 billion in the year-ago period.
Cash and cash equivalents at the end of the period increased to $406.50 million from $54.25 million a year-ago.
On January 26, market rival G&K Services, Inc. reported a decrease in profit for its second quarter, hurt by a sharp decline in rental revenues that primarily reflected lower customer employment levels and pricing as well as decreased new account sales, amid continued weak economic conditions. Net income for the quarter decreased to $7.17 million or $0.39 per share from $9.54 million or $0.52 per share in the same quarter last year. Adjusting for the one-time gain, net income for the quarter declined to $5.66 million or $0.31 per share. G&K's revenue for the quarter decreased to $206.36 million from $241.75 million in the prior-year period.
CTAS closed Thursday's trade at $27.79, up $0.28 or 1.02%, on a volume of 2 million shares on the Nasdaq. In after hours, the stock traded down $0.19 or 0.68%.
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