The Document Management segment of
) has commenced its hard drive destruction program that destroys
hard drives safely and securely. The program destroys the hard
drives through a compliant recycling process and minimizes the
risks of potential fines for improper destruction process.
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Conventional hard drive destruction methods are generally time
consuming and involve the risks of human error as well as
non-compliance with disposal laws. The process, if not compliant
with the data confidentiality rules, ends up with serious financial
The penalties include the Health Insurance Portability and
Accountability Act (HIPAA) that levy fines of up to $250,000 along
with a 10-year imprisonment for each violation of patient health
information privacy rules, and Gramm-Leach-Bliley Act that imposes
penalties of up to $100,000 per violation by financial
Moreover, the discarded hard drives contain information that is
confidential and recoverable. Therefore, any loss of sensitive data
will have a material impact on the business reputation.
The hard drive destruction program provided by Cintas also
guarantees that the confidential files are not exposed and are
compliant with data privacy standards. Moreover, the customers can
view all hard drives to ensure that they are destroyed before the
Cintas truck leaves the customers' parking lot.
Based in Cincinnati, Ohio, Cintas provides specialized services to
businesses of all types throughout North America. The company
designs, manufactures, implements corporate identity uniform
programs, and provides entrance mats, restroom supplies,
promotional products and first aid and safety products.
Cintas' first-quarter fiscal 2013 (ended August 31, 2012) earnings
were 60 cents per share, beating the Zacks Consensus Estimate by a
penny. Total revenues improved 3.4% year over year to $1.05
billion, missing the Zacks Consensus Estimate of $1.06 billion.
One of the important raw materials used in Document Management is
recycled paper. Gross margin in the second quarter slipped 80 basis
points year over year due to lower recycled paper prices. If paper
price remains low then it may weigh on the company's revenues going
forward. Moreover, Cintas faces tough competition from leading
ABM Industries Incorporated
The company retains a short-term Zacks #2 Rank (Buy). We have a
long-term Neutral recommendation on the stock.