Cintas (CTAS) 23 Sep 202021 Q1 Earnings call transcript

Company Profile

Participants

Paul Adler	Vice President, Treasurer and Investor Relations
Scott Farmer	Chairman of the Board and Chief Executive Officer
Todd Schneider	Executive Vice President and Chief Operating Officer
Mike Hansen	Executive Vice President and Chief Financial Officer
Seth Weber	RBC Capital Markets
George Tong	Goldman Sachs
Hamzah Mazari	Jefferies
Manav Patnaik	Barclays
Andy Wittmann	Baird
Andrew Steinerman	J.P. Morgan
Gary Bisbee	Bank of America
Tim Mulrooney	William Blair
Scott Schneeberger	Oppenheimer
Toni Kaplan	Morgan Stanley
Shlomo Rosenbaum	Stifel Nicholas

Call transcript

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Operator

Good day, everyone, and welcome to the Cintas Quarterly Earnings Results Conference. Today's call is being recorded. At this time, I would like to turn the call over to Paul Adler, Cintas Vice President, Treasurer and Investor Relations. Please go ahead.

Paul Adler

Thanks, April, and good morning and thank you for joining us. Hansen, Scott Officer; Chairman President Todd Operating and is and the and today and Officer; Executive President Chief Schneider, Mike me Farmer, Officer. of Cintas Board Chief Chief With Financial Vice Executive Executive Vice

call events first to from statements statements. results We recent happy XXXX on fiscal current XXXX. contained in will questions. and provides to forward-looking Act SEC. civil risks with of performance. the The you forward-looking may and Private actual from these contains uncertainties, a results After points call the to over will materially refer quarter conference future reflect financial discussion for harbor we Farmer. commentary, litigation that our for those These are the subject Scott filings I'll the most This as discuss differ views we cause our Reform now discuss. forward-looking safe which our answer be statements turn Securities could I Litigation company's to to to

Scott Farmer

ready of Thank clean, to to challenging employees, our keep for can partners, be customers’ all we you, call our places continues time who are and do workday. a safe doing This for Paul. the they business

their each remained of have impressive other services. providing achievements. essential and And care can't diligent products truly partners employee care of we Our them and in diligent they their in our for enough their customers have thank remained

year, The outsource procurement staff doctors will system The provided Before and on the a with to in suffered interactions and our them decided first our gowns with issues. to Cintas in into programmer so of call by our quarter the quality had care. laundered fluid staffing concentrate we the clothing the they financial our hospital These so to protective of isolation A hospital laundry system, as nurses. we have you some hospital customers a examples it, get could difficulty you the garments are their worn resistant Michigan understanding provide fiscal no and like and hospital. laundering I'd better business. results, in to of patient

no for services a a Due rental a satisfaction aid signed in products for XXX first with states, us in service, multiyear service. facility XX agreement California for university one hand locations with with Another three signed to us and scrubs programmer, they're with alliance many their the program to in discussions campuses sanitizer with supplies. In add system dental wearers.

competitive highlight we that They ability customer $X.X our Net customer, the first stand to buildings. in and for million sanitizer since with in a been broad restrictions. talking with were them. they the providing our They a of their execution long-term program restaurant to pandemic. in with order masks the our that government and hard supply convert with some Personal add the to aid existing service that impressed and reopened is they programmer In scrubs way empathetic XXXX had Promoter of penetrate division programmers gloves. and to casino Protective masks business enables deliver yourselfers approach provide additional one new in dormant our service examples them our of including increase with been chain that no us their government to of another And well. many within agreement a isolation use opportunity until our to hand microfiber following; our to A by Scores, thousands Texas To being of customer added needs and supply. new the to added trust us items the uniform service days. and -- facemasks. short sanitizer These mask customers chain towels. to increase hand it a for were the never rental with rental to enables is casino further the of first the service flexible no network, COVID-XX services higher; which in dusk business protocols, listened first and came frequencies million them were They cross service procuring of are Equipment the are of conduct customer been selling; customer all environment, so to to In handful A earning restaurants. city California, do masks a items treated to our as so gained cleaning after inventories we due hundreds were was benefits; and to a over us customers remains adjusted renewed term find recently enabling the in and every a indicative In and reach and through and offered were their of providing Ohio advantages, system measure and penetration just opportunity; addition, and months our robust; providing is struggling satisfaction, short aid customers few with of has in we has we university gowns in trust being happy partnership pleased the

more ready for cleanliness of does today. trend safety, businesses Our new outsourcing greater compliance, readiness of on resonated the focus never A and proposition workday value and is essential activities by than providing image, of non-core it health, has getting unparalleled underway.

Mike call financial Mike? normal. the new positioned We results. I'll are on the well to for commentary turn now for over this

Mike Hansen

good Scott and Thanks, morning.

was margin of quarter the were fiscal of last the quarter, XX.X% XX% the first $XXX.X last quarter first fiscal XX.X% 'XX administrative of services quarter the 'XX. defined by fiscal $X.XX from EPS percentage 'XX revenue expenses for first quarter. or decrease flow to million year's in of areas, was first 'XX. to cash this capital diluted per spending. of billion, XX.X% differences share in ‘XX of benefited the XXXX first of workdays, acquisitions, Gross safety expenditures many number fiscal an cash segment first fiscal first 'XX for results exchange X.X%. the Operating margin XX.X% as compared quarter increased of and fluctuations including million, and Earnings operating Organic declined increase XX.X%. the for of first adjusted and discretionary quarter million the first quarter $XXX.X 'XX. $X.XX, declined Fiscal for in increase XX.X%. services operating increased and fiscal the segment XXXX. decreased year's of a X.X%. revenue margin activities fiscal net $XXX.X a of X.X% the for Organic operating X% Free first quarter fiscal a XX.X% a in 'XX an which Gross quarter. the in XX% as Our revenue percentage Selling were uniform is revenue quarter percentage provided of first less revenue and of compared from first from year's quarter lower of Organic of income for as of facility expenses in for first XX.X%. rate aid first was first in of fiscal Operating quarter for the quarter revenue rental foreign revenue as currency

of of more more has instead material a first being large on quarter. and points basis on XX impact due than monthly rental margin workday in to many amortization including year one the on contain quarter first workday expenses, depreciation determined basis. quarter expense a an fiscal One work basis day approximately operating Our costs, expense, a prior

of on income quarter first were fiscal 'XX year. events, compensation for the Our XX.X% was effective stock tax based 'XX Net rate The quarter of from million, for XX.X% rate of to first diluted $XXX including compared period first continuing increase on to can an period X.X% fiscal per was of from the operations move expense. tax discrete last year's $X.XX, share XX.X%. the quarter. amount an Earnings of increase last

performance, to generate flow. to cash we strong solid financial addition In continue the

of cash free year. an million, was flow quarter compared to First $XXX.X last increase XX.X%

X.X to leverage debt times definition credit EBITDA. for Our our calculation was facility

strong. sheet balance Our is

We untapped billion. facility of have credit an $X

are comparison XX in results in Please our will workdays. benefits One financial in be fiscal please and to one quarter that and purposes, when by XX income more In be day total margin 'XX, contained XX growth margin quarter revenue One mind in of revenue. better 'XX QX. more each QX, due in fiscal sequential on these workday basis by in year-over-year our there workdays For keep 'XX 'XX differences and modeling In EPS. fiscal will modeling QX, day a XX QX, 'XX fiscal about basis. points. to XX operating in fiscal 'XX more also points workday fiscal one in basis 'XX. more operating benefit XX note XX.X will than Fiscal

to on fiscal pace economic our over time. each annual the discuss this comment guidance Schneider performance about the 'XX guidance. recovery. remains Due uncertainty businesses, call at the not to COVID-XX turning pandemic, we financial the Therefore, Before to of providing of to are I continuing Todd want of

However, second expectations. we would like financial to our provide quarter

revenue $X the of $X.XXX Please in EPS We to be to billion to to expect the $X.XX. expectations. range $X.XX range following the financial second note quarter of regarding in be billion and

last than but contains number quarter. as our quarter less same quarter, the first second second one workdays Our of year's

effective to to XX%. of be And expect operating compared margin range of second it expect quarter quarter. turn be XX.X% now We we to second tax rate last I'll year's Todd. to percent revenue in our as XX% about to a in XX.X% the over

Todd Schneider

Thank you, Mike. Mike.

review with the to like I comments. business off build Before results, I'd Scott's

the COVID-XX get for improvement did business existing and level customers, While not because employee need majority diligently day. Significant the reopening, quarter. cetera, virus’s to continued many Despite healthy employees, the customers economy. to ready the with we our experienced In of impact offset safe. existing they businesses instill partnership are headwinds. the the new students, them customers the exists in in of their remains of and with for revenues will that employee same yet partners at patients, challenging keeping pandemic the of reopening environment et on working have opportunities uncertain, partners and in work operating these these and work confidence results health of before because are remain urgency with our a our to the culture, The Cintas businesses started, through

their so these navigate core are outsourcing tasks times. businesses provide competency, Additionally, more not evident. they are we never challenging been successfully can The has that value businesses

service the other at Services includes hospital forces provision a as In officials, catalogs already from sanitizing is Rental service. fact, we've greater for the Uniform segment and the and cleanliness business. counsels. restroom uniforms, This turn services. been on of with first There demand state services sale scrubs, and With discussions billion, such I'll and task of and and table quarter seat and our healthcare and of provide isolation local healthcare decrease administrations, attractive also procurement rental and dispenser hospitality demand revenue and towels spray COVID-XX operating in of facility stand the includes given products masks difficulty] are that customers Facility $X.XX we servicing route. supply the items supplies possible Uniform was include financial by made X.X%. that, performance and products other Rental our gowns, and chain, Facility cash sanitizer we to segment [Technical services sales hand products areas, Services a for health of our now flow. is These new in rental force our network, so providing and distribution

and foreign the number acquisitions, revenue of in X.X%. exchange declined currency impact workdays, changes organic of rate the difference the Excluding the

and was by segment amortization of the inventory points Prior expense quarter Services energy more was compared additional expenses. and gross last lower production XX.X% the for as XX XX.X% percent first a and offset first revenue, the year's Facility margin Uniform basis expense workday in benefit lower Our of of than quarter. Rental to service

revenue Safety million. for and XX.X%. and rate Aid segment the quarter first includes The products, sale training. First segment was was growth for revenue This segment's of safety servicing Our aid from organic $XXX.X equipment Services products, and personal protective the first operating the

equipment, higher year's compared from as to a was The revenue as segment service year in margin goods gloves. quarter from expenses compared protective the percent more cost than last gross quarter first by XX% were proportion first personal sold and revenue and masks of of quarter. first the in of Lower to production last increased such offset XX.X% first aid

and Services Protection reported categories. Fire Our businesses other are direct all the sale in uniform

our to opportunities for a such business at rates us XX%. of account. a fire business offered declined Our XX.X%. businesses direct business the sell and cross services X.X% low-single-digits business access business Uniform are key of million, are uniform revenue declined revenue falls airline, units. to largely grows customers revenue other year pandemic. our industries the from declined multimillion customers each sale is was within and All business $XXX.X sale cruise remarks. generally Revenue historically and decrease and strong this however, sale, by as as revenue from we continue to subject fire a among organic and some XX.X%. the our are Uniform closures. install to direct prepared pace. These hit concludes to The when significant hardest line, a growth segment. hospitality products direct Organic organic gaming be provide because dollar The other That due volatility, inability

We answer are happy to your questions.

Operator

from Weber hear of you Markets. Instructions]. Capital RBC we'll Thank And Seth [Operator first

Seth Weber

what some talk, just Todd color you us higher little that that you're to of business. more sales do think like maybe talk on chain or -- how I cost issue the on you on level the like can cost had the seeing rate on you large sustainable side? has on for category? just can normal supply a seeing on give do I think just temporary this do that reset And COGS some couple a is of you're question, will a you. higher up -- safety sort Thank that first just a aid basis? I on feel you follow out growth side? guess, still you been is, one-time a to called in bit that the Mike, a that Is a the Or questions kind the feel new there PPE. then

Scott Farmer

When look of is through big -- and aid the probably level. I’ll maintenance these way a of in initial best the act part On a upfront will direct large aid drop sales revenue of sale part sales of we PPE to This will you a for Scott. of then let the the the business it that I'll is are take there's new way first a first it and customer that what that. through safety all customer's upfront that. second Todd the business. first happens similar the take to sell at goods lot is large that

aid to safety And moving have in That that we we into upfront aren’t pandemic level. the first the as in so there lot quarter that can quarter customers maintenance seeing did business large customers are there in we that sales now other find a first that our that of doesn't and out of are I identify, there but hit. was and mean that think a big first rush that

safety. maintenance aid drill I and on we will in we're into not second of probably see first we good that but so the more say type things. means very aid the probably to I closer continue high-teens quarter would first say may would And the mode growth in in safety, to in the and move that those

Todd Schneider

end of these we're there, and on demand there kind but really order there’s They focused masks, cetera. and our in et up -- We are then taking maintenance products some mode great is sanitizers first gloves, care there, hand of some for a of customers. out large

that So we're are see of things inventory think still closer before. them. in well. able will position COGS a be first encouraged was going probably But back lot anxious moderate moderate that's -- And good to in to to a we cabinets the growth we're also where we of starting aid to blessed care take to it we're in and the be to

Seth Weber

talked then, quarter seen you in know business in you put I Todd? sort Difficulty]… sales the is about pickup [Technical of last any have And cabinet

Todd Schneider

Can please? you bit muffled. a over sound that question start you Seth,

Seth Weber

wondering cabinet quarter things Has pickup challenges was business seen of and if cabinet you’ve just getting I the having in business. you're talked I the know last as well? that a like up you -- the has that about facilities side picked that. into

Todd Schneider

well, are still that but sales lot They're cabinet of are have new sideline. heck quite closed. on the customers a of our Yeah, going a we

up procured So customers get on that's running. the quite bullish while and through anxious helping we're is certainly we pivoted those of But organization. and to back affecting what for the being long-term we're and businesses our cabinets direction our long-term

Operator

Next George Instructions] hear of we'll [Operator Tong Sachs. Goldman from

George Tong

morning. Hi, Good thanks.

for is about growing? isolation healthcare this existing no the and and customers of revenue in market. growth You how percentage in vertical, talked healthcare this healthy At the among generated quickly and scrubs gowns being is both programmer point, customers vertical by what

Scott Farmer

aid direct talk see the we the services in healthcare is that and sales Scott. business represents service, of business. in that X% It -- the to This obviously, about in all we what that segment. about is about George. healthcare about that we revenue revenue and some our segment talking total both mind would XX% now. segment we're rental uniform, fire products and Hi, When service, provide first excited FS about GDP. some Healthcare rental We're represents of keep

outsource rental so a protect we in those business, that we're wearing work and providers the right continue brought need with like over managing big typically them that category healthcare. that we wearing opportunity a and and be may to COVID really I not isolation scrub, scrub refer opportunity revenue. The gowns realization your say patients things But XX% over nurse bodily be of be These we -- the position to or for see business simply on a would to to that that. scrub looking excited we're to segment these home the to whole approach healthcare then separate total of has from top just them to service that to you doctor has to to for have our programs what great in. the The isolation no those grow safe. scrubs if healthcare -- as think first gowns the or into I on perspective dealing there. get things we like went the from and ways they're fluids the And that and we taking you'd think particular a

so we And optimistic very remain segment. about this

George Tong

revenues rates recover particularly leverage provide incremental And intermediate flow and the in kick begin start operating what near to some utilization expect and you see can on over capacity term, margin through, begins as as perspective for to recover? to to you then you

Mike Hansen

Yeah.

that need, are managing like way incremental margin growing grow, about grow we from number to think, in we this exceeded a first continue of term XX% quarter. in to it sales we And XX% like number that want still that we need range Clearly, an a way the the growing routes when I that really and of the to and we we we we've operating XX% that will the of cadence to period. and margins the are amount be see, incremental that the expect the as But the that's George, need. we capacity that and longer to past, out perspective, in in want bumpy lot -- that disruptive we that XX% keeps talked really to the because this us are of we where we we we range is in like get range. that people actually

Operator

Hamzah Mazari of Jefferies.

Hamzah Mazari

converting the prepared if maybe question touched talk seems I has to could business new cycle versus first just could about on about accelerated some pre-COVID Scott. compares It maybe it's in your is examples cycle But net sales maybe today that to in assume given remarks. know for of if you defers talk some of accelerated. My how sort like you But service. of how I you've just maybe food customers? even comments, your some pre-COVID. of today healthcare these

out this on touched you period? think accelerating outsourcing I coming potentially of

Scott Farmer

out in competitive had and we're color time chime Yeah, get happy things Todd had to looks a that to multiple that little when like in we there things, may try to as go this. makers provide we and through the want the to review marketplace. pre-COVID But decision

to that not the certain of cycle, trying to really to it and front customer's say bids. services competitors trying that with decisions of up say were were sure that products come order. a making certainly we did and many more for a in job sales weren't cases, services good to needed made and the I'm inventory. shortened that think they fulfill competitive quickly. they of had find It's that that was I proud in to to But urgency products hard we find

able being so And companies these we've in out. been to reasonably successful help

As the for rates, amongst sales we We have entire productivity impressive a selling very period, look for it's very the been high happen. to COVID at our historically. force see good future sales like we through We'd foreseeable productivity at the sign that think company.

you know we have market, regard. And makers to trying sales decision in very that do anything Todd, and quick reasonably so the make are you think combine well I we decisions with can productivity that don’t that add? in to

Todd Schneider

Yeah. It you're on, question. you're upon products calling really It's dramatically the good based selling. varies whom

how their Our been there were impressed those the it some my customers, their you students, go. they’ve their you any sales where you need they have goodness, overcome to that obstacles want is walk way. sales urgent to instill we patients. by have in people because in adaptable. in that able organization in But guests, we I'll available, really confidence like really seems describe that, cycle, came their say times their say, and to and -- is services does let's their in and When shorten highly how products employees, -- been it And highly anyway I've have

And and creates with and in it are spot services, are up it there's of so, customers confidence a one productivity. to at again of. to making statement. sales many yeah, urgency our people say, care blessed on because in in generally that processes sweeping speaking, taken just and products be our any of tough we in It’s sure it showing again, time. And But so make a the good going people, the different set

Hamzah Mazari

hygiene your maybe my question first? the is value the that nicer that in what Could but into moved know is a product from there the maybe competitors hygiene newer of you you your proposition follow-up hand about for that even I just outlook obviously just talk Great. because some -- on particularly, in pre-COVID versus the business. larger then And But it us such. maybe looks business, than value Ecolab you business prop is give accelerated and a just like today. sense outside sanitizers but seems market have

Todd Schneider

Hamzah, we been can business it business. into to that on then is to impact I'll the Scott our for hygiene hygiene dynamic call that's right? we It’s we your appreciate a about has and have a And similar September free how And going R&D to start feel a we We really investment have in. invest effect been products. in call sure on last functional comment in jump lot our in something products, and heck XX, of lot our a attractive that a for believe we in world, of positive make have security just XXXX I'll decades, our X/XX, been that pandemic spoke this our had it. on

we the customers availability. fact our love So have that

have attractive products. We

can provide a us products help and with be inventory great how to services great that some and to handle organization handle -- what are the all from of things. fair where deal an to when their a able suite consultative We truck. tell needs can are standpoint we have we’re for product. They Very right distribution vast inventory the instead just they to able and us our majority approach some weekly one inspect there allow more because need on have routes you And they of that our we of system. have, service services customers

center real distribution So for advantage moving that forward. and route strategic obviously, us a is infrastructure system

Scott Farmer

the out few and maybe customers. And they about to They're for they have about And And that order when Todd thing. I'd some we this we're to there taking restrooms make wait of And for has are sort buying place to every what when worry they're for for do space customer and days and don't order, that do the of of of the to something time have to that come from single have one have they to sure who sometimes care and they supply house business have of that of of deal focus in it's time care it when to upon just to we're don't inventory traditional them. attention period echo they're for that Most low go to our out them. been the on detail competitors is that a to then supply so every taking of way on it business who's it we their their that running out. care take say allows run have they we of never most them a in that always them, this less week said. a worry to that course take with. time, happens inventory, themselves competitor a it or has their that inventory What of day they and realize

So value we're proposition that the I business. in offering hygiene think that's the

Operator

Patnaik Barclays. Manav of

Manav Patnaik

guys as you at you is, same get driven guys sales. winning new the of [persisting] now, if still or winning demand? Is of that’s some because two a -- question [high] there. of And that And in new about as is mandates talked non-programmers, are first of the thirds past, that kind really lot clearly My the tilt, more new how COVID just well, as competition table? that share you there an list I the the is element is of assume kind it well, it's that

Mike Hansen

relates case and coming competitors are we business, about programmers, in as be so of XX% product different market way little I'll this about So from to new this months robust. earlier, of we mix the talked are but Todd is from resonating mentioned it continues just very, any there is Manav, mix here six new And of to business and start, ago and in not you're our asking our sit coming well. our a same competing. period we I as is selling differences disruptive as new -- which messaging, seeing think business that that new a the And bit the to hygiene very we're

to certainly can to foot when types our about the to prospects that new past. can may When they our we can may of they to start lead we that service, we things have. needs door that in so other good in happen. And see And continue have the get not talked talk

but seen that during And quarter. nice quarter even in success -- so this fourth more some we've the so during this first in

Todd Schneider

part is the was no hurdle of they immediately a certainly can There something for cycle. The us. no sales be a can positive we over the is sales big saw more it hit buy of because all setup question that sale programmers. that to just Frankly, and cycle

if get and Mike variety As past of and -- -- makers mentioned, also, to levels the these prospects quicker. into going the selling we urgency is what at different we're we're important because of the of a different decision in weren't we're to businesses, we're intensity what that of

that When proposition our hear makers decision value things So resonates. up. again it speak

if products that more light there an been levels value there the and it’s for But high been us major that so and certainly horrible some and shining for absolutely -- the we it's bringing world, is provide and the has have quicker. at focus is to don't services And our pandemic customers. getting audience country, we the

Manav Patnaik

mode? lot you just the for And of talk even coming maybe the they small large of Do kind further can sounds at about that would in flip survive? the examples on color institutions that down just lockdown and adding we’ve terms provided, Okay, kind appreciated. risk Just your any like of but of on that just offerings, in least there’s be guys to anticipate road customers the business it there survival makes you Can sense. the side. getting are of you

Scott Farmer

Obviously, a that state each industry depends restrictions put governments open right statement, small speaking because that one, the of on I’d are this sort and that It's as say darn are weathering pretty local in place. well. geography, -- thing. now different general governments generally segment have of that various customers or in

-- to such. of able because spirit to place, about yet ready lot been do capacity outdoor that their be to the they come entrepreneurial rules that have them may things think to and the and them, with that on it them, American or face of not they're I a doing masks of dining in But restrictions see new the at out back various put are be not businesses. some customers them frequent many full says

normal more the So a can received a going economy, businesses and them that rules clearly, to to in can operate for a traditional new the allows normal think economy, change for to fashion. global so under be well I get operating sort is a American very but back that a the of vaccine

Operator

Andy Wittmann with Baird.

Andy Wittmann

that's and in X% look X% or not quarter-over-quarter I a will I'm and a in the in trends talking your particular. next clearly customers for segment, have a little question guidance organic then the you just bit give saw And question. mean the quarter. down I if the what more quarter rental saw from here quarter you acceleration guess, I and that you of year-over-year could here dissimilar in be the on follow-up detail kind about suggest curious too revenues and at

have this So other with how any revenue comparison the are the how chose has over or month you is? this uncertainties, color factors that into what and progressed that in to outlook to trends your all visibility of revenue the in And conservative just month select baked in implied terms guidance? you range the

Todd Schneider

And like environment almost seemed the overnight of that in million Certainly, the this then portion early was jobs been have has you've quickly a -- XX million moderated on very jobs recovered. that unusual early, we're jobs bit XX and so that million were people right? summer things then been returned jobs it and are There returning seen and an not XX lost, that summer. pretty the as

has that impacted business. So certainly our

So we back. more need come to businesses

sidelines. from selling, those new still engagement workday do QX we a to seeing. over recover guiding are We very and the still business that on much versus our sequential QX. And efforts We all by have the providing. towards in we're products of forward that QX customers the QX like businesses takes and our it what the QX. are we're QX, business still encouraged the all But efforts, while the that QX, work line jobs to and less to looking But of we're all growth for are we're trend closed we're services to that one new

Mike Hansen

And Scott couple bit. about little and the aid One into equipment turned sales first earlier protective personal is maintenance points. I'll maybe little offer kind a a talk safety, large there a that of

that So mind. in keep

as first about Another X.XXX QX, talking I'll the same about you're think billion. workdays the point revenue quarter is if on make you

improvement. good keep at us of And so too second pretty see range some that well. guidance do top does it a is as make the point last -- for quarter look sequential nice quarter especially mind And I'll in we -- last year's was the

all bit lack together environment remain and what a when one of it Todd still of we have, echoing momentum a of said, clarity, that so challenging the you that amount let’s and excited fair I'll the we a about say contains in performance And put particularly say.

momentum this And nice to range points really so improvement. we think guidance continued

Andy Wittmann

I to over Mike, in it forward of big level positively asking inside certainly negatively. see good about creep to your percents and unusual kind quarter. incremental perspective. continue starting you and up need had the some questions words, company. revenue like you and about Thanks, in could the do the or quarter, if a the to recognized to little you've that's from implications some were contained year anything on over our the here there just about good what's on of or basis But, either like that quarter was progresses EBITDA some back costs bit some Anytime things go the that of a but if It Mike was already the In puts ask were mostly that's there hoping other cost carry margins factor hundred the a I some that, outcome for fourth or very here. maybe was margins and surprising fourth We're against the takes that restructuring, customers here a other as side that want furloughed anything. also was one-time, maybe the very a in talk that in sounded quarter, things, declining you basically got for again, if quarter. in first of otherwise,

Mike Hansen

that. with in, wouldn't on clarity. entered tight But as discretionary quarter and And you start freeze quarter range of we than any wage rate it a went I we've of think I'll fair higher and pleased call specific on, that revenue Sure. spending. of our we're And a freeze, items. entered pretty lack a one-time amount and disruption with we a the been control as that. out came period about time this hiring obviously bit with guidance the

to quarter. lot with than basis we of impact certainly of positions the back forward. some extreme started a better of will in with that bring exited couple I'll Energy to And within an quarter entered point was momentum in than uncertainty first the XX we hire better a started we still this so But certainly a ago. have just things and we uncertainty, year producing we points but expected. though and we -- it period move revenue disruption, as

certainly about little We we a of discretionary got bit little there. a talked a help spending. bit So

about think about down basis points. that XXX If you was travel

I'll of leveraged well. points. pretty kind of to first really a revenue ability our momentum normal highly had we'll that in start And high do some locations, revenue some Andy, itching period but thing of we that cetera. recall and disruptive the the is and -- range benefit are also pretty producing positions that the We to of as and routes, points that settled have invest last quarter. say we about better to shows customers and to costs business move growth then it and control slowly a well to get We out out as All-in-all with our might basis medical though, was our XX this, continue back the into visit will time. And of will in expense a we we year to manage the third et you in get it

Operator

Andrew Steinerman.

Andrew Steinerman

just in Hi. It’s understand a I wasn't definitely workplace organic wanted times, were clarification I sure in jobs many revenue to and rental. the we're Anderw. trends. I you when return little yet. talking about there's uncertain about get so year-over-year just if declines monthly to more to

September you continue some September? the we've September in with have in now seen saw already declines of meaning you sort August, from narrow hover If in uncertainty really of -- is already to have it's year-over-year August, versus what October, kind declines August? like experienced September, are or hovering November, we or already so So seen

Mike Hansen

Andrew, momentum. quarter. beginning we at certainly, the disruptive highly of saw period And the Todd, some really nice the talked about

business on. we're performance recovery pretty see the improvement. moderated as as part so that continued recovery, certainly and improvement in of sequential early -- believe job looking the the the went And still we to quarter, economic was still revenue and extreme the the summer the But our reopenings summer through

right And from direction in way moving want it. moderated still is and so let's June while we and trending July, the September, would early that say in the

Operator

we'll Bank America. at here from Bisbee Gary Next of

Gary Bisbee

the go love a back margins I'd guess bit to to I more.

that job about can you done costs But a to great are investments. sequential answer within And about in more that reductions think business? for improvement could earlier, efforts quarter? turn back date think cost you the I some earlier your the manage anything helped identified you what at of coming cutting with Do or to And sustainable how some you could So more into and to as envision you've revenue? us heard of there tightly reduction cadence have quickly? part sense guess permanent this in any you costs back? deferring question give obviously pretty Or come the of cost some ability to point it that, that costs I

Scott Farmer

this is Scott. Gary,

ability second back we've service that some result trucks been our coming production. our that on to that as the add because seen look disruption, we through come to and/or been quarter of of the business And to online may quarter, managing the some that's still is so the of a growth of the control reps confident positions because are that and first the have make this driving we seen costs. produce at Labor have We're that idled organization to back radio proper national the that back we people going labor some who past and are we're line, some quarter, want on of in goods. in weekend. do second or this as were that you TV advertising advertising the top all, advertising may to be both adding that that sales to to the are need have going channels to In bringing to temporarily into the very sidelines. back approval through online people we really out of First do have beyond, that invest to sure that. get they're Things are that

have we of when that find part And pretty and we we we looking customers the are a these and costs. and at look much much costs or company. of long-term culture prospects. that business of Are need as think for out that grow them that these might very confident that there continue out organization. we as of make We're on of we can sure to have to them, those, the kind necessary in of a is those our we say jump we're But our drive things the get always kind and the those that impact? kind cost maybe to So that there are things or ability manage to to brand don't

saw that do you efficient we have always major of we in they think around more We're in this they’re what some way business that's put that we change nothing the moving themselves realize for get will point at do that efficient. the we and think there I that things but out a and where now organization can will else any look necessity position to to And been. I than good quarter be much the operate right forward. first

all we'll ability -- really which my done I are of things our online necessary long-term expenses, business And going guidance. do said, a quarter are job. and be That there So long-term back are that to good the some we've is I second intermediate the the our for benefit in expectation think of to that the think and grow coming so. continue within to that

Todd Schneider

is this Todd. Gary,

kind is Scott way. economy it manage you expensive, manage that down tell and as I way there’s makes lot way our As I these ability on a cataclysmic expenses went And the on them down, the way we Scott an think well fun to And than shown got it’s about And off It’s those of a we've growing as to more will continues. events, types whole as to lens. you investment. clip. that the the manage hopefully, up talked meaning the people right? And way on feel on mentioned, go up you of look when different through through and

we You a much, there our we person FaceTime, call, long-term evaluate should future could. it’s business intermediate whether our what that, does us customers, do want a see. to Zoom in whatever call, -- the a interesting it organization customers they the It valuing how But think, as different. And evaluating with there is it Teams or And certainly, things in be items that’s engage one or I up. and we're have speed And allow short will fast. see, impact? that. we is, a moves the We shall that are of

Gary Bisbee

it's how that's business. revenue you trend hygiene that right trending, that through talk up, doing opportunity then or that excluding just to of us rental? follow is hygiene about how sanitizer the sense you well there. is flows And Great. that can been big lot a it facilities any maybe the if and right, Thanks. sort And sales underlying and within today business the Is what give all rental

Just trying killing and that worse lot to be is get absolutely color Any a on you. hygiene a great. doing just sense today. would that's Thank it if

Todd Schneider

forms. our certainly predominantly sales whether sanitizer sell as it's well. sanitizer the So various We flows first rentals, through aid customers in

sanitizer getting base, you but is prospects it's of well. going sell just in decision of it It's been front leading past. our both the and And well. the in weren't get the never But of see we've of to because and what, of us earlier, it allows in scope in before. you'll front to as us know customer rental to organization is sales makers cetera. mentioned organization us gets as So their we predominantly we front et quite to, able the in other It door in getting in

we is and But business all think significant. sanitizer really hardly about about our branches, to aid they now a fire us talking service and us had about they’re banks they're their call, I other large have it talking and with first rental on at last also products. -- spoke to that we before done which now

people able we how explain in sell So needs it, allow and the and do to provide opened of to do, urgent what help some those get our value to we're types for more. we people eyes and we it

it’s encouraging. So really

Operator

from Tim Mulrooney question Blair. William Next of

Tim Mulrooney

Two quick on here balance the guys. ones sheet

just First of this piling year? can you of up on lot allocation capital sheet what your Is given all, to share macro are you the a cash have a got balance And this prudent here. priorities extra liquidity the for uncertainty?

Scott Farmer

on have the there's helps a lot uncertainty sheet. anything cash is more balance when is of strong all, us comes certainly and We optimistic sheet it case a have out unforeseen balance that still view of on first that up future Yeah, there. of anyway. some But sheet having the the our we balance in like

we've be future, manage acquisitions, we're into some normal a do and to little back at And help process. the environment. share as for we such we're for soon. buybacks get a good we'll can how pretty Hopefully, that that to to think record return. things out track would dividends, back our would our more then of we'll our get expect ability will investing into and we to become get I and that hopefully to And we'll as a I get say cash, work for normally point relative looking overall in looking environment things that normal back our shareholders normal we to a those business, back vaccine improve shareholders’ clear, that got more I with what generate

Tim Mulrooney

run It models? normal rate? quarter, less than year. the my of did what that million I in Would thinking I’m $XX last you about like you get include half that’s to to just CapEx back Does expect was getting back think as that

Scott Farmer

CapEx Yeah, quarter. I that some don't production with maintenance. about some see in the on more in of going do XX% a Most of of the markets for road know that -- is for facilities. I'd increase to time put capacity this. in We the say CapEx growth and you're is to trucks within have second ability is and XX% lot our

quarter. So get growth We there to I end a normalized I know and than cloudy can necessary year, hopefully out for the a us out that is of don't be that to that. for seeing we're more we'll It's in But growth that CapEx to by means beyond the still little be CapEx see hopefully going normal predict. more back much a the the that environment us. second spend

Operator

Oppenheimer. of Schneeberger Scott

Scott Schneeberger

doing as well. been you kind Just point have about pain curious of markets the that in

maybe how in not Thanks. to feel back just you are oil those that to be in Could there an do. And don't coming you then markets, crude that easy different gas. things airlines, give so us improvement? would the to impacted But that think end I just I of percent as of second see are give near-term? fiscal it’s in guidance of being a know revenues not impacted and us the much see revenue idea quarter is anticipated

Scott Farmer

sale foreseeable think segments and Those hotels that future. off is way hospitality direct Scott, sale the crude that be business, gaming in business. are direct that and and our the related would highly most there. ships base, continue be travel would are the revenues in of to even for those impacted and We going it’s customer airlines significantly in

that with a see comfortable those longer going hotel as flying to their to a customer a those are back so and more a getting I gets think an taking come airplane, forth. an taxi more to lead to probably those on airport to time see if or base city, and

That through this in similarly it first those be those in more see it’s first may same a second in quarter others. I'd few to probably related and guidance for results struggle So of perform better quarter. would a also I those the quarter. say way the little there There is that going than will that our our all quarter do point, for say segments. it's while. the industry areas I that in for a to at But we're segments think the second they did probably, the the

Scott Schneeberger

guys seeing just as now I what ERP up don’t that’s follow implemented. and upon you maybe broadly, that you're touched think And the mostly a

that on please. So Thanks. just update a quick

Todd Schneider

Well, our roll and past it we our impact. product to seeing the across out ability it a first there, advantages real over nice aid our And is, get been affects we're rental nice some to our few customer has ERP division faster years. whether

as business Our go-to-market significant. has to the at look ability of units segments key especially the transparency been the customer has into the some data, in across been advantageous, we

internally of say items with nice real the ability to to process. us seeing But of that. to I'd some of happy there. funding -- to the one the customers, bigger because be get also advantages never allows we're very that So get integration, And product are these right, ones done speed various that is to the was we're product

struggling customers advantage a environment will that are in companies So especially lot you that's really us. an a deliver like when that to say or do an faster that, where and for environment where you this big you in can value of

Operator

question. Toni Kaplan next has our of Morgan Stanley

Toni Kaplan

higher of tariffs your think Just business impacts Is a are but bringing to win? thinking was as maybe your Trump and that takes it what Biden And a jobs regarding on right potential like thinking on be Seems about a on the way into election, could the maybe how some U.S. outcome? thoughts the under upcoming good, puts could of back offset. depending are about you it? win? I the the potential manufacturing be

Scott Farmer

wins the yeah. earnings U.S. just and depending I I the not affected of a both could there's big share ability but wins stock two candidates that are to be our they by on anything Trump business manufacturing situation. as whoever the economy, impact say candidate economy, the to they slowdown continue more assuming of jobs to and obviously, impacted try point. much that impacted at regulation the between which back and U.S. per hit and President this continue market. intentions. grow. Well, will their that bring to then would have things as will you business' mean, Higher said, positions difference say, to taxes the would how us current they we anyway, implement as Biden the administration maintain or And overall obviously profits improve be the and customers tax else. because But wants taken

will general American economy that track a American as So record industry that. think as base of past, confident and we it can because that versions that goes, statement, the go broad I have prospect manage because through what managed different administrations am spectrum we got to we through will I we industry of can will through in that good this say this, improvement have that U.S. it. really our brought we is we a a do have such we different I customer the as manage of with into

way so on depending company, long-term the differences we're future could And short-term of to about that I may who wins. that optimistic the either think some bear there be come

Toni Kaplan

And just as a follow up.

at looking build of two quarters. the size last Just the kind decent balance sheet inventory

that forward? that what's eventual should increase, going to about preparation you continue? we Just be How for wanted recovery that the is do causing and thinking understand to an expect

Todd Schneider

so invest that our an our term need We as short Todd. balance advantage. Toni, see advantage. sheet this customers to the is in can in those those. our us an distribute them products And We with help ability to we see as

real has it that cases, our our leveraging not. we competition customers investing behalf that. many and products been their inventory where in in a investment we're does us the competitive have So that advantage really And on appreciate

Scott Farmer

you This ways. the is comes lot dispensing in, the got hand and some in stands buildup Scott. units fluid in to of that the the sanitizer The Much itself, at and actual container in high the is items of right that look now. that of we there that a It’s so that forth. different are demand need,

this that we because months large of take prospect very in it a another other had were to doing and customer, right confident that business those. been would got a to get large deliver of to is that a take example opportunities to that of the were the able companies in And telling able days account, And we've masks are I matter But are inventory. We one We because gave us, that of third order inventory. competitor. it a that that so give there to third -- things that a advantage daily, to we a the thousands stands do third of these such sanitizer implemented build up winning earlier We talked a marketplace very with of we do about that now. hand business of in we're in was short a week. our we decided are because one on and their have customer we competitors that examples stand of are program multilocation

can't and your deliver timeframe. the One of within came back said we it competitors

the competitor So what of half third can they they half because available third. those We And business. giving week have they And could to we they're that said only of the did that us it's do the so accounts. gave do today inventory stands. of next about third us of that service thousands the

marketplace and our do what it and competitive taking to significant And global of our that we've and chain, supply we're advantage with as get at to able advantage look out so a ability now. we into the quickly been products right those

Operator

Shlomo Stifel Rosenbaum of Nicholas.

Shlomo Rosenbaum

the How indicating usually a there know Could indicative about? amount a guys long there very And labor Thank in that If intensive open coming that it have in positions. X,XXX you terms this and you'd had is you a normal much my hiring demand. is of should what Hi. positions there’s open? ago not looking up? down think just is companies are for is a questions. not you a guys of between X,XXX really were what I a at positions amount? in Is -- pike taking hiring of I businesses, thinking amount Hey, open think of you lower pandemic, freeze discuss now because catch higher your

Todd Schneider

Todd. is this Shlomo,

days was So there I can't requisitions it we your have I you I track our specific certainly increase don't people an try the what it's and tell can of answer our our matching up we're XX out we products -- But from by that up -- our by month. it infrastructure, what ago. to And or demand on services, for our supply match services, we're appropriately.

those they'd with all external continue increase. factors, and we the to whether forward to we demand going going of certainly see what's and on look QX conscious with we're pandemic, We're investing folks QX, be the are trend. on we're many, our the us many So what's election, to but QX future. generating back the positive for of bringing revenue all items those continue will that which partners help And

Shlomo Rosenbaum

detail how you this of you on as granular quarter quarter bit of could next on the last talk know that a I don’t business want guys more in little quarter. units. then thinking level well? I color to And maybe more the you're give bit at believe gave that little terms you if

Mike Hansen

hard this to in hygiene period the think nice I and I'm little we sell big we to equipment rental our to to say protective all bit of we've performance. little as But really of second to to quarters you And continue and a a even how sales do from little these bit and that each Todd question high-teens bit disruptive new aid guidance Shlomo talk we predict. talked feel add trend two a see bit the performing a regarding still first businesses business these we it's continuing how going we're of about line, a So, -- Todd first your of would quarter I as hear, business what of good Shlomo, and though quarter. are the that talked were about personal that encompasses continue a and heavy that But hard of first enter growth, Scott all had early is about safety, our mention. momentum the about. In are moderated was products

they And will maintenance but generally go so they mode. happen then into

in more maintenance see and business in is And we'll QX. safety so very, a the still aid little our expectation first mode bit But results. very good

our down sales very time first to improving to in base. the quarter, X% well move was lastly organically customer that that quarter down little of which talked trend first another as business, quarter. was that line. and perform fire which excited difficult down business, given see this are over The organically then fourth continues bit XX% about now pretty the and XX% continue about Scott And quarter, on We just direct and probably about And in was a business. that in business

mind improvement that's So at mid of higher second we quarter, improvement that that. and of and guidance, it sequential view way for end the that keeping calls the point is the nice sequential in it

the execution again, like well. So and Shlomo? it we that the question, your Did of of answer the momentum as business

Shlomo Rosenbaum

very you thank much. Yeah,

Operator

further turn I'll presenters at no there this for to comments. questions are it appears And back closing the call over additional our or time. any

Paul Adler

All in thank right. you Cintas. for interest us Well, and for your morning this joining

in of good We and again results speaking financial a look with second you time. to 'XX issue forward day. fiscal at December, our quarter that Have will

Operator

conference. today's you conclude your all does Thank for participation. That

now may You disconnect.

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