Cintas Q1 Profit Tops View, But Trims 2015 Outlook

(RTTNews) - Specialty products and services provider Cintas Corp. (CTAS) reported Monday a profit for the first quarter increased 42 percent from last year, reflecting improved margins and revenue growth. Adjusted earnings per share for the quarter topped analysts' expectations, while quarterly revenues matched their estimates. The company also trimmed its earnings and revenue forecast for the full-yea 2015.

"Our first quarter results reflect the continued good execution by our employees, who we call partners. We have focused on selling good, profitable business over the past few years, as well as managing our cost structure and continuously improving the efficiency of our processes. This focus has resulted in improved margins and better customer retention," CEO Scott Farmer in a statement.

The Cincinnati, Ohio-based corporate uniform supplier reported net income of was $110.11 million or $0.93 per share for the first quarter, higher than $77.75 million or $0.63 per share in the prior-year quarter.

Results for the latest quarter included a $0.15 per share gain from the sale of stock in an equity method investment and a gain from receiving additional proceeds relating to the Shred-it deal.

Excluding items, adjusted net income for the quarter was $92.4 million or $0.78 per share, compared to $76.5 million or $0.62 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.75 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenues for the quarter edged up 0.2 percent to $1.102 billion from $1.10 million in the same quarter last year, and matched thirteen Wall Street analysts' consensus estimate of $1.10 billion.

Organic revenue growth, which adjusts for the impacts of acquisitions and the Shred-it Transaction, was 7.2 percent.

Segment-wise, rental uniforms and ancillary products revenues grew 8.1 percent to $856.87 million, while revenues for other services declined 20.2 percent to $245.21 million in the prior-year quarter.

As a percentage of revenues, gross margin for the quarter improved 190 basis points to 43.4 percent from the comparable quarter a year ago.

Looking ahead to fiscal 2015, the company trimmed its adjusted earnings guidance to a range of $3.05 to $3.14 per share from the prior forecast of $3.06 to $3.15 per share. The company also projects revenues between $4.40 billion and $4.475 billion, down from the previous projection between $4.425 billion and $4.525 billion.

Street is currently looking for full-year 2015 earnings of $3.09 per share, on annual revenues of $4.50 billion.

"We are encouraged by the solid start to our fiscal 2015 year. When we introduced our fiscal 2015 guidance in July, we indicated that we were still looking for more consistency in the U.S. economy. We continue to see inconsistent employment figures resulting in no real change to our customers' hiring patterns, and we see heightened global uncertainty that may affect U.S. businesses," Farmer added.

CTAS closed Monday's regular trading session at $65.95, down $0.32 or 0.48% on a volume of 0.69 million shares. However, the stock gained $0.70 or 1.06% in after-hours trading.