Wednesday, business services provider Cintas Corp. (CTAS) reported that its first quarter profit dropped 31.3% from a year ago, hurt by lower revenue and charges related to restructuring, impairment of long-lived assets and inventory valuation. However, the company's quarterly earnings per share, excluding items, beat analysts' estimate.
The Cincinnati, Ohio-based company reported net income for the first quarter of $53.98 million or $0.35 per share, compared to $78.64 million or $0.51 per share in the year-ago quarter.
The first quarter net income included a legal settlement charge in the current quarter and a restructuring, fixed asset impairment and inventory valuation charge in the fourth quarter of last year. Excluding the charges, first quarter net income was $66 million or $0.43 per share.
On average, ten analysts polled by Thomson Reuters expected the company to earn $0.39 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter decreased 11% to $891.57 million from $1.00 billion in the prior-year quarter. Seven analysts had a revenue consensus of $879.57 million for the first quarter.
Rental uniforms and ancillary products revenue for the quarter fell 9.1% year-over-year to $655.64 million, while other services revenue dropped 16.0% to $235.93 million.
Scott Farmer, chief executive officer, commented, "Over the last twelve months, the U.S. economy has shed employment at levels not experienced since the Great Depression. These job losses make year over year comparisons difficult as our customers continued to shed jobs throughout the year.
In August 2009, the number of unemployed persons increased by 466,000 to 14.9 million, and the unemployment rate rose by 0.3% percentage point to 9.7%. The rate had been little changed in June and July, after increasing 0.4 or 0.5 percentage point in each month from December 2008 through May.
"While we gain some solace in the recent moderation of job loss, market conditions remain difficult and will continue to impact our businesses. However, we continue to be a market leader in our businesses, with state-of-the-art technology, extremely efficient operations and very dedicated employee-partners," Farmer added.
Cost of rental uniforms and ancillary products for the first quarter decreased 10.9% to $362.93 million from $407.29 million in the first quarter of 2009. While cost of other services fell 41.1% to $145.85 million from $169.81 million in the same quarter last year.
Selling and administrative expenses were $264.43 million, down 8.0% from $287.30 million in the similar quarter last year.
Among the others in the industry, G&K Services Inc. (GKSR) posted fourth-quarter net income of $2.84 million or $0.16 per share, compared to $10.6 million or $0.55 per share in the prior year quarter. On an adjusted basis, net income totaled $4.86 million or $0.27 per share for the three months ended June 27, 2009. Total revenues for the latest quarter declined to $217.9 million from $252.2 million in the same quarter of last year.
Cintas shares, which have traded in a range of $18.09 to $30.00 over the past year, closed Wednesday's regular trading session at $28.35, down $1.43or 4.80%. The stock is currently gaining $0.35 or 1.23% in after hours trading.
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