) reported third-quarter fiscal 2012 (ending February 29, 2012)
earnings of 58 cents per share, 41.5% higher than 41 cents earned
in the year-ago quarter. The results surpassed the Zacks Consensus
Estimate of 52 cents.
Total revenues in the reported quarter increased 7.9% year over
year to $1.012 billion, beating the Zacks Consensus Estimate of
$1.008 billion. Organic growth in the quarter was 5.9%.
Cost of rental uniforms and ancillary products increased 7.8%
year over year to $409.9 million and cost of services rose 6.4% to
$176.2 million during the quarter. Selling, general and
administrative expenses increased 1.9% on a year-over-year basis to
Operating income for the third quarter also improved 26.3% to
$137.5 million. Consequently, operating margin expanded 200 basis
points (bps) year over year to 13.6%.
Rental uniforms and ancillary product revenues of $721 million
for the quarter increased 8.4% from $665 million in the year-ago
quarter. Gross profit increased to $311.1 million in the quarter
from $284.8 million in the prior-year quarter. Gross margin
increased 30 bps year over year to 43.1%.
Uniform Direct Sales revenues grossed $109.1 million, increasing
6.4% from $102.6 million in the year-ago quarter. Gross profit for
the segment was $33.2 million, up from $30.2 in the year ago
quarter. Gross margin increased 100 bps year over year to
First Aid, Safety and Fire Protection revenues were $101.4
million, up 11.2% from the year-earlier quarter. Gross profit
increased to $43.8 million from the year ago quarter of $37.9
million. Gross margin improved 170 bps year over year to 43.2% in
Document Management revenues of $80.6 million for the quarter
increased 2% from $79.1 million in the year-ago quarter. Gross
profit, however, declined to $37.9 million from the prior-year
quarter of $39.1 million. The segment's gross margin decreased 240
bps year over year to 47%.
Cash and cash equivalents were $217.9 million as of February 29,
2012, decreasing from $438.1 million as of May 31, 2011. Long-term
debt was $1.06 billion as of February 29, 2012 compared to $1.28
billion as of May 31, 2011. As of February 29, 2012, the
debt-to-capitalization ratio decreased to 36.9% from 37.9% as of
November 30, 2011. Cash flow from operations was $307.7 million
during the first nine months of fiscal 2012, up from $207.9 million
in the year-ago comparable period.
Cintas, in fiscal 2012, expects to generate revenues in the band
of $4.9 billion to $4.12 billion, up from the previous expectation
of $4.075 billion to $4.125 billion. Earnings are now expected in
the range of $2.24 to $2.27 versus the prior range of $2.16 to
$2.20 per share.
The company expects capital expenditure to be between $160
million and $170 million in fiscal 2012.
Cintas performed well in the third quarter of fiscal 2012. The
company experienced robust organic growth and improved margin
expansion in almost all the segments except Document Management.
Lower prices of recycled paper negatively affected the Document
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.
) and privately held Alsco Inc. and ARAMARK Corporation.
Currently, we have an Outperform recommendation on Cintas, which
is backed by a short-term Zacks #2 Rank (Buy).
CINTAS CORP (
): Free Stock Analysis Report
G&K SVCS A (
): Free Stock Analysis Report
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