Cintas To Close Laurel Processing Plant To Boost Efficiency
Zacks Investment Research | Mar 28, 2018 09:30PM ET
Cintas Corporation (NASDAQ:CTAS) , a leading business service provider, recently announced that it will close the processing plant in Laurel, MD, by the end of June to improve its overall efficiency levels. Consequently, the company will lay off about 47 employees, who would be given an opportunity to apply for other suitable positions within the organization or be provided with severance packages along with optional healthcare and job placement services.
The processing plant was mostly utilized for cleaning and repairing uniforms for delivery to customers. With the closure of the processing facilities, the plant would be converted for uniform pick-ups and drop-offs. The company revealed that the decision was purely based on its operating economics and was in no way related to the viability of the region. Management believed that the company had ample space at separate locations to economically process the uniforms, thus offering it an opportunity to be more efficient.
Cintas aims to continually achieve revenue build-up by increasing penetration levels at existing customers and broadening the customer base to include fresh business segments. It also identifies additional product and service opportunities for its current and future customers to expand its portfolio. From fiscal 2010-2017, revenues of the company have witnessed a compounded annual growth rate of 5.2%.
In addition, Cintas has a strong balance sheet with adequate liquidity to meet its working capital requirements. Over the years, the company has consistently returned significant cash to its shareholders through dividends and share repurchases. Its investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to focus on the relative value of the various sectors within the broader industry.
With a diligent execution of operational plans, Cintas has outperformed the Zacks Investment Research
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