Cintas (CTAS) 22 Dec 212022 Q2 Earnings call transcript

Company Profile

Participants

Paul Adler	VP, IR and Treasurer
Todd Schneider	CEO
Mike Hansen	CFO
Manav Patnaik	Barclays
Andrew Steinerman	JPMorgan
Mario Cortellacci	Jefferies
George Tong	Goldman Sachs
Ashish Sabadra	RBC Capital Markets
Andy Wittmann	Baird
Toni Kaplan	Morgan Stanley
Scott Schneeberger	Oppenheimer
Shlomo Rosenbaum	Stifel

Call transcript

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Operator

Good day, everyone. And welcome to the Cintas Second Quarter Fiscal Year 2022 Earnings Release Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Paul Adler, Vice President and Treasurer, Investor Relations. sir. ahead, go Please

Paul Adler

And Schneider, for Officer; President Vice Financial Hansen, Vanasan. me and us. is Executive Officer. Chief and Todd and President thank you, joining you With Mike Thank Chief Executive

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

Todd Schneider

Paul. you, Thank

quarter by increase our X.X%. strong second financial led of results revenue Our were

are to results times focusing total partners. our outstanding our of on growth through thank line. value customers. line employee flowed proposition, for of financial markets challenging to and bottom Our of the our addressable execution partners our benefits The I navigate our indicative these continuing compelling vast our by strong top

in and operating XX.X%. assets margin related from Rental results Excluding last EPS year, Uniform tax certain income quarter year's $XX on especially and hit segment second These XX-year basis billion increased operating of million tax Facility last we grew points are sale Rental and Facility benefits, The Services high. gain last a and U.S. XX segment the in the was operating year. is billion that which X.X%. period labor -- $X.XX a significant Services growth challenging. to revenue Organic they market $X.XX Uniform and were was compared revenue achieved given inflation

can for And a competencies of for not environment. amid and still their current million. concerned core hasn't infections. which openings the they Businesses and COVID benefiting increasingly the to that awareness so about heightened understaffed. pre-pandemic the scarcity are Businesses focus jobs However, have sanitize we the with Workday. to the growth of Ready labor, worth totaled opportunity many it jobs, XX be job and cleanliness are safety Cintas, revenue represents outsourcing properly recovered persistent about is left businesses has with X million in Return of ability struggling their are and on are Also, Cintas. U.S.

Services Our Organic the $XXX.X million growth last First operating to year. second $XXX.X revenue quarter Aid and Safety million for X.X%. segment was compared revenue was

protective last Second expected. and sales was of year-over-year In high time, declined At as or The personal quarter mix. Safety PPE that compressed up quarter, revenue business the COVID-XX second against equipment, comparison. year's a of very outsized PPE the pandemic, First end to amount Aid response Services revenue percentage organic has of were PPE grew in difficult XX.X%. an revenue

larger percentage a the was are However, pre-COVID. of remains COVID mix prevalent still infections revenue PPE and that

the recurring service period same first the increased. Over cabinet time, has revenue of business aid

from margins a than in Aid profit it higher mix business because shift We service has cabinet this and fact, year. up last is stream is In consistent welcome XX% First PPE. revenue more

in segment. and million economic part improved Uniform was Sale The $XXX.X revenue Fire XX.X%, revenue an Direct are businesses businesses All All was compared growth in last Protection from rate Fire Our Services Other business growth to the Both year. $XXX.X million environment. Other Sale XX.X%. reported business rate Direct organic the and was Uniform benefited

and financial remains sheet balance position flow, our our Regarding cash strong.

million $XX.X on XX% cash dividend. increased December improved represents free Recently, The $X.XX in common cash XX.X% XX%. of year previous Second dividends. and the flow increase per share paid over from a last operating company's flow XX quarterly quarterly paid stock of shareholders quarter amount we

continue capital We to allocate to return. improve shareholder

that Mike, before the report. issued we was recently and Now want highlight over social sustainable founded governance model. our to turning XXXX environmental, call Cintas to business on I a

We are X committed and water our provides to in Scope enhancing report, emissions. including and information second accountability. maintaining protecting The and consecutive energy the usage, environment, expanded reductions data, and X consumption humanity our Scope

to Our improve I'll our turn over based Mike. on to competitive is advantage. challenging and doing corporate ESG culture that now is the illustrates further call what right a ourselves

Mike Hansen

Thank you, Todd. And morning. good

$XXX.X revenue fiscal $X.XX rate million Our revenue Services, 'XX compared year. compared for Gross foreign fiscal fluctuations percentage second year. adjusted of last second revenue anticipated and First reported organic fiscal for X.X%. a as points Direct margin Protection of year. million margin Uniform of compared a Also, XX.X% last XX.X% $XXX.X support Operating was Gross million the million for growth. Facility year. XX.X% XX% last and margin XXXX to percentage to quarter for to XX investments the the billion Operating was XX.X% Selling Rental Safety from XX.X% XX.X% as acquisitions, our services second quarter XX.X% $XXX.X quarter last to quarter to Sale. was income to Aid and headwind, Energy-related in basis for to The $X.XX Uniform Services, year. business divestitures in labor last margin Gross compared increasing billion to $XXX.X administrative compared expenses year. XX.X% was improved for strong was current rate, year. Fire last last compared revenue and and were percent exchange we a growth expenses revenue 'XX second XX.X% by was for currency of of and made income

$XX grew year's were second margin gain quarter XX selling million increased sale basis of second this year's last income and which operating assets, and Excluding in certain administrative operating income XX.X% quarter points. expenses, on recorded

including period stock compensation tax The from can the XX.X% to year. rate effective for last move events, was of quarter compared rate tax period XX% Our amount discrete expense. on the second to based

million, the quarter million year's In quarter second last year. a of from last last XXX addition, income was year. assets. basis rate was benefit $X.XX included point EPS $X.XX Diluted to second $XXX.X compared for to Net compared the $XXX.X sale certain tax

last EPS year's an year's XX.X%. of gain by and $X.XX. which related quarter EPS impacted increase $X.XX, the second quarter tax $X.XX This benefits, to diluted diluted second Excluding of compares

We are increasing financial our guidance. fiscal 'XX

about guidance: $X.XX $XX.XX $XX.XX. billion annual Please from expected diluted a to We revenue to uneven compared share effective our is to and growth guidance are a XX.X% And note an XX% billion tax to a rate EPS of negatively of 'XX buybacks. a EPS our 'XX. raising 'XX XXX range to effective impacts tax following the billion. fiscal be billion rate about $XX.XX of by from for basis guidance of to of EPS any $X.XX assumes approximately range expectations Guidance a range to range caused $X.XX And by The diluted $XX.XX COVID-XX. $X.X rate Fiscal by points. future economic does include diluted $X.XX higher to recovery regarding not fiscal

government COVID-XX stay-at-home to However, guidance comply significant with mandates. setbacks costs or orders does not contemplate such as necessary COVID-XX pandemic-related

spike equipment, COVID-XX able in gloves, in fiscal personal last provided fiscal to by in our modeling We in a in various by quarter, third were than particular. supplies that more note cases them respond that to other. when any we providing year's protective help quarter, quarter results personal 'XX our protective equipment with customers please financial Finally, of

Excluding range. we of half to don't repeat, of the the X% guidance our growth PPE revenue expect over the that our at second is end year top

Paul Adler

our prepared remarks. concludes That

you. the questions Please answer we analysts. single are a and question from needed. happy Thank to if Now just one ask follow-up

Operator

go Instructions] and question ahead Manav with Patnaik from our [Operator We'll Barclays. first take

Manav Patnaik

people you. terms you Thank with of of near-term in the reactions along could here? much. in Omicron? in kind chugging just Or of if Thank behavior? seeing hoping kind visibility your any more from your was just I spread very And the you change you're just address customers are

Todd Schneider

with usual is at little question. of -- customers, forward this for Good as result seen this point back our it's Todd. customer we're early and to Manav, haven't But would we say I to it's a this base year. our morning. tell, the of It's business nevertheless, certainly. our a point, Omicron. half At Thanks as change the in -- looking a your

Manav Patnaik

maybe as pressures a like well. out follow-up, which just sounds tied And handling inflation, the other to is just then it there, it. you that Got guys are

the investments force. managing these you to what and referred broadly forward labor in address is feel Can you You as going well? that inflation just about how pressures

Todd Schneider

we've quite in competitive wages advantage of great think managing over well. years, in We a been is real, but Yeah, spoken fortunately, the we've we're organization real these calls. supply a it that cases. the past do as have chain And world-class addressing about couple is Inflation question. past certainly I

above be it in anticipated wage wages. as are certainly, growth flat-footed we're our more but historical, increases relates investing based we're which service excited very able a to caught still growth, that about. we So our and to infrastructure is -- our current weren't upon so our little customers And -- our to the

Todd Schneider

you. Thank

Todd Schneider

Thank you.

Operator

our take Steinerman next Andrew from question and ahead JPMorgan. go We'll with

Andrew Steinerman

just to Andrew. modestly which And second I the is wanted XX.X%, get the margins into It's up to Hi. I try If back operating in year-over-year. full I guide, half year margins. as puts half to the make of the sure go and the that maybe on through do kind takes you'd operating same way of those you math kind of some second

Mike Hansen

Good morning, Andrew.

We growth in referred is margin managing year terms guidance margin mentioned, pretty sure little inflationary is still the as aware very for of our our closer second say the higher and operating which a challenging, inflation. you going an see of year, to. expect we're at some environment than to the better But would expectation nice we back in year And the bit to stated margin think the we're look, Todd pressures. -- that even as XX.X%. operating I'm the Our than And XX.X% what the you're you that XX.X%. half even implied the it the improvement. in of like of We we for is half

Andrew Steinerman

I customer now make increasing to you a I gone? has you've were increases inflationary XX.X% the of because prices is to just they of for process kind of maybe in side, BXB environment? the the understanding And of -- that comment of company, on And and increases how total wanted Are the and kind hiatus, out the assume. customers on

Todd Schneider

the addressed that million question, things pricing, understand all throughout prices important time. of I'll We customers the take to the don't that's increasing to X that the Andrew. a out same is letter on the we issue simply all Mike. at one the send one, Certainly, for Thanks year.

So the pricing to that. is local said past, -- also, And as see it's subject. continue a in we you'll

struggling. are industries Some still

Some quite are doing well.

others not are back geographies ahead are still curve. to pre-COVID the nicely Some of

conversations bit the it's generally with our it and on And you time and in every like are better in scores which, long-term customers, a than little results historical highs. as we that being inflation I'd -- seems of our value on news. know, headline turn our we every the and is lifetime a say are as as well focus approach customers But our well. Now NPS going all-time result, is you the in reflected at frankly, a area take

face margins and at very Now growing high, all in said, that. are being a about income inflation the our attractive at rates, XX-year excited we incremental of operating we're that being and

Andrew Steinerman

Right. And company, right? was confirm then total just XX.X%

Mike Hansen

Yeah. last against just It was company under year total a of XX%.

in higher be basis a record pretty levels. we And improvement. last points were healthy let's what year's again, than XXX margins keep pre-pandemic think and to margin margins So mind,

in with this the headed where with -- So margins back half we're year. of the we the like

Andrew Steinerman

Thank said. very much. Well you

Operator

Okay. question Hamzah from take Mazari our with Jefferies. go ahead We'll next and

Mario Cortellacci

Hi. for Hamzah. in This Mario Cortellacci is filling

you haven't your my the the Just maybe And first labor you could on like on not how inflation pricing just was? Maybe around in you're update X since business years, you just the I through any can regarding labor question looks that? through past that what really price that, to portion, in it and taken labor. then also, of kind but availability also strategy believe especially your us managing tie guys

Todd Schneider

Todd. This Mario. is Yes,

than we a that. very we labor as and pay past very there. that's in competitive we benefits. our far out general. And the like. wage we're year levels, choice. think reflecting well of attractive And competing competing It's we're in well, and like quite a challenging more But employer an certainly quite staffing As availability, we're in We this which

customer have you'll how that -- As the there's throughout year. And Again, look because, look it it see at in sales we are mentioned, going of But in I with is over the in a aware spot. far flat on being well. And a inflation as at something from increases it's I'm addressing far years customer. pricing? we us what's pressure. we reason by we're a a as think the than being wage as a pressures do because -- customers we prevented is -- in value few been good the thankful of it very and the subject. that it's And local it's the little we look we at long-term footed because bit we're under as and customers. as being result, of And But wage historical. wind your past general coming doing as have real better highly

Mario Cortellacci

what any have And API Fire space? for of players within not markets getting adjacencies in then you in business do comment other Fire just top the that currently for into Group just in? my Great. the And Can the business you some larger other and intend strategy done follow-up. that your as play or fire on to such you're

Todd Schneider

Mario. Yes,

the continuing our as far business, to Fire we're build out As footprint.

very our very it's and are the model wins to new liked customers. providing in you're the we up found that growth. showing service We we have it business levels seeing that retention, nicely much in and And

as in we that even of today with but rate far going business there's an type adjacencies, always have certainly those, incredible this. adjacency, always but into without evaluating we're evaluating we're we run As think strategy the

Mario Cortellacci

Great. Thank much. you I all holiday. have And a you hope great very

Todd Schneider

you. Thank

too. You

Operator

take next from Sachs. our go And ahead with we'll George Tong and question Goldman

George Tong

Hi, morning. thanks. Good

and the segment XX guidance year-over-year Your you your bit margins? bps gross for performance margin on Rental margins segment. Uniform a Can elaborate contracted gross implies in Uniform there what

Todd Schneider

and can so obviously chime up Mike general, start is basis that's just Gross to I'll Todd. due then headwind. in. points is in This George. margin energy Certainly, XX alone, a

quantities, revenue of -- The revenue that now, you that seeing there But a With nice to that, we're is the of happy in bit I the you think traditional basis let points, very we're XX% take the making customers. cases work. the simply et PPE to gas balance along coming. But was me last drop doesn't that able ship, of with much were And just year for better. stand-alone a need drop ship our that, whole they mix. think many you I George, the to partners see is drop we that, obviously with year-over-year. it'll a lot a maybe up growth employee in -- it. It's little far It's that an those as and revenue, we're then closer revenue And because help in ship when with XX from the large those the it to our year. we little investments understand cases, customers you're different demand as growth help and different a to service last book give just significant our those example additional cetera.

service simply work. uniforms, the level cabinets, partners more think required to safety first aid and You it versus of that is facility of takes that employee services,

the provides business as have they shift this drop a it stickier welcome and customers more margin. better simply long-term, we However, ship. than It's value to

it. knew for know like We All been and that, inflation like XX-year was we coming, and we've staffing switch, for at and said, we that So high. a that guiding it. we as it is that

As basis mentioned, is points. I energy XX up

year, last Our -- gain you growth and our are onetime quite operating the onetime and were up our future. gain points our margins margins exclude our for the today basis of from strong. XX investment if And incremental in operating

had exactly I describe I we're would the hoped guess, So would and planned doing what for, be way we it.

George Tong

helpful. That's it. Got

broader hygiene and and boost and you about demand care talk the health in have seeing care seen you're opportunity Can a hygiene? in trends health businesses COVID. Your with

Todd Schneider

a care subject health is all is across businesses. But vertical, hygiene right? connected, they're to care, Health Certainly.

health far continuing and in like we're strong as rooms as help demand. items see gowns. So we're scrubs customers to with vertical, the We to care other patient to isolation addition what providing rooms clean

vertical. of we that all So very to be health -- care the about is bullish continue

lump Health hygiene I'll as safety. sanitization of hygiene, all far cleanliness, As and and with that

believe, you and focus can hygiene, of our because something to that maybe at segment, on see wellness our is think on a the very Services of customers, and health sales Rental, Uniform also we right, see been health, Facility is our in their -- people that are focused wind the people their a their of We business. First People of us. but good have safety. has that going change and patients sanitizing, and certainly forever, we as All that be safety Aid And their result, that's see guests. for

George Tong

Very it. Thank Got helpful. you.

Todd Schneider

Thank you.

Operator

we'll our Sabadra next Ashish ahead question And go RBC. from and with take

Ashish Sabadra

on just the and could question. Thanks. the that across health the follow wondering I opportunities education made care, the the the pipelines taking was for comments wanted on I but larger on just verticals, if larger comment health on those to vertical. you up opportunities. for you care, X focus Thanks government

Todd Schneider

Yeah.

Ashish, all good. feel the pipeline those looks for quite strong verticals. We

is organization operating really a sales like wins we area. high new our that and business in Our very at level

very retention attractive. is Our

you at business So wins you say strong. new that, very are all our look

are And And Our strength very the to retention we think as is we get strong. full to us. for that bodes future for back well our well. excited customers for

Ashish Sabadra

some the on how provide And automation preview year? color. of That's about that talk technology over call, And inflationary you last I about front, Thanks. to the just come. the the next talked maybe could the what SAP on and next -- technology offset see we the benefits on was if you wondering implementation doing front, had pressure? more should some very few about talking on could what help of you're helpful

Todd Schneider

question. Yeah. Great

items operational business, to investing us. our are it technology because improve we're notice and make Those the and that things top see provide X of trying efficiencies obviously, the customers we efficiencies, to to So easier but leverage. priorities business with our is that do recognize in also in opportunity

a communications that I of think by is we're a SAP example partnering company. with leveraging good leveraging technology and

We collects a data technology, to much create have call launched analyzes more and Truck what Smart we routing structure. which efficient

this to between only when and do are moving, what -- reduce to of allows as us When business expense. of instead say, driving fuel in the money wheels the stop. that's the this time spend just stops. instead with So is make in we we customers more expense And wheels

an see improve to operational that opportunity as to efficiencies. we leverage So technology

What to us hours. do marketplace. them that with don't contrary business we to normal as And for -- customers competitive hours. have what in want ago, we're have is doing see What seeing we're from request advantage portal normal is the our the a business We outside business their to of their example, launched years during they're in another our business which on we allows do is a customers well over always half online, interested that of are business is requests seeing time. is people

customers make So business online. bills being advantage their technology We see We easier their pay with with, business it's changes and when do to marketplace requests to in making items easier really to these us allow it with. All the we to do to a see them and easier that to get find excited program. allow the as customers us. an them advantage business are do

Ashish Sabadra

and helpful color. Thank holidays. That’s very happy you

Todd Schneider

you. Thank

Operator

Wittmann take with from go our next We'll and Andy ahead Baird. question

Andy Wittmann

the I guidance quarter. of looks is EPS just tax you guidance the wanted Thanks it versus change little side guess bit like my this on quarter Mike, for taking a gave new last just a the get in to little biggest kind subjective rate. lower comments I the question.

fundamental Is today? for the see a for like kind looking On business hasn't outlook of operating the you quarterly, the core in but and the guidance, margin way quarter that guide Or changed. consensus, you change right side, that at the factoring revenue did into it? the guidance materially don't of the the business you're fundamentals it feels revenue beat updated

Mike Hansen

is quarter last of Andy, number to second our of about had And and excess That's hit about the midway I expect in at what that the initial the X%. change you of year. to margins assessment quarter, growth. that basis remember, a lot part we coming of half did in roughly growth improvement. it we bit talked If that that we've would fair the think and third little in of, top is continuing that's much point half we've that we performance from earlier, in improvement Ex fourth perspective growth XX talked the the call continue same a might a year gain quarter, adjusted talked year. point the of we of is the year about the be pretty of the first in margin a I strong big expect half and talking margin basis be PPE improvement been to in kind not the showing of year XX back growth of a And the the certainly year. in and through talking roughly guide. the And about that XX X from been the that's basis we're early XX.X% I'll point of on at the a top at right through that the for

so improvement assessment the healthy a Pretty a record is margin of margin But nice of taxes, ago. is little and from Andy. on margins little a bit a growth your bit fair, improvement. generally year maybe speaking, movement And

Andy Wittmann

Yeah.

this margin and that is natural as Mike. now talked kind the previously leverage price of just just in the talked margins, you go just for there making you call, average. as driving talked progression guess of leverage? and performance that the from talked are Are operating speak business? cost things helping think above about Are little I fixed that, performance? for Thanks price/cost themselves. besides any bit question just about into or that this there a Okay. -- being actions But my Or then you're the I other -- margin and you follow-up these are they then and investments well price you other

Todd Schneider

this Good Yeah. is Andy, question. Todd.

getting always investing help going mentioned that in just business. it's is I that the Truck Smart we operational normal leverage think it's efficiencies. for we're I in XXX record think our various margin. we're to what operation continue of to still to We're another that as we're, off exciting take of And Mike that, But face a basis the general technology the us. challenging and improvement be very the And point going excited I step items forward think coming of operating said, a this very the We're in is environment. year. about

Mike Hansen

Andy, a throw and couple it of process at and at really different pretty and that when seeing and route our at rep I might talked to our and route nice bit good as Todd into has buckets service And improvements. good already little have some well those mean we reiterating laundry of is sales is as And to the a productivity about a we're our -- business. innovation in look what Todd leverage that growth leverage I get continues and Look, talked grow automation. levels, levels. -- improvement that. we we've improve from about, I to as we facilities, the productivity benefit, improvements productivity, strong pretty

difficult Look, up we'd many strong. very not year, our those. made rather cost some is productivity so pretty And changes some structure. And of cuts last we to give Efficiencies. cost

the for talked we'll bucket little last managing out bit have a to a about see see bit cost this and pricing is we maybe the so started then we've in, pricing -- still travel, quite look, of year. And I'll we're while structure -- resuming there come very tightly. bit throw start little is a helping while to And example, we

of those increases in even it point I leading improvement, And to margin so inflationary and energy X -- And we face can good certainly throw in is factors. some buckets. it would pretty it's think basis say performance certain in the XX other I

Andy Wittmann

for Thanks the holidays. Great. Happy Yeah. comprehensive guys. answer

Mike Hansen

You too, Andy.

Operator

next And take from with we'll Mulrooney our go Blair. ahead William Tim question and

Unidentified Analyst

relative real Thanks in very but still Rental questions operating hit year-over-year, In margins to taking again. margin down historical filling Uniform strong the here. wanted I inflation, [indiscernible] environment? of quick segment, we this perspective, kind for structure is Is margins that standards. This should Tim. was more to from higher maintaining on think of margin year-over-year but of normalized a about how maybe segment's a 'XX capable cost because in down long-term for

Mike Hansen

Well, might a couple of make. points that I

of First gain little we a the a the of year on all, assets ago. sale from bit about talked

And all you recorded SG&A within in so that if take rental. that, was

If compared our XX% gain, you that second last was year's to take this out the quarter impact year. of XX.X%

So XX basis improvement. point a

we're healthy XX% So improvement. for year-over-year going last in little to above ups generally environment, look, we'll in we going X been because stay to but that the the number. is business where speaking, a Look, is and rental quarters. is expectation business see we've above -- challenging some pretty downs periodically, this some see expectation a rental running the like such our our we're And is And that segment. XX% bit

Unidentified Analyst

XXXX X% like be I be you Can bit. PPE in will expectation just think gears changing Excellent. the on here? Maybe a PPE sounds It fiscal maybe think could a us in of headwind about year, XXXX. you expected you switching headwind what back to the fiscal the PPE. update Earlier that for

Mike Hansen

the the year. the for -- take half high I look X.X% of the Well, I think for year. growth last guidance, end, over the at believe if at revenue a our back you example, is

you growth if of think comment half So we're the being we about in about back points of the the year. made X% XXX talking basis

year. So for think the can points about basis you full XX

say would the bit where year, back-end far more. we loaded but we're about I not little a on early from in So certainly, it's talked

Unidentified Analyst

Thanks. you. for color. Got the Thanks

Operator

Stanley. with and ahead Toni Kaplan next question go from we'll our And take Morgan

Toni Kaplan

Wanted question. ask an Thank ESG-related you. to

Given vehicles shift the size a fleet, meaningful. your pretty seems electric to of like be it would

report, by January, vehicles. you ESG expect indicated know you in that XX I to so electric And your deploy

been talk think about programs initiated? curious the of out to this this if the just so about And how should if could entire fleet? we potential rolling And you

Todd Schneider

is this for Todd. Toni, you question. Yeah. Thank the

the fleet. about electrifying So yes, excited we're

plan right as on testing. schedule We for what are as we far

and We is our diverse important large some at trucks the excited we're But important have the various working well. about trucks as fleet will levels, a aid rental to very We well. the employee fire of it's the trucks our partners we're as to types customers, we first manufacturers and of that's important partners, the very high think that future because we with as very shareholders that. be and have, to that, and think it relates our to it something trucks, and

diverse that important of doing and with and challenges that this to -- curve dealing so So associated we the we're believe high with to the out and at with which weight our access are operate, ahead supply, is getting all committed that levels. the getting vehicles us, is of we also and the size the of to group with why working a that fleet we're

So good an that way, position in as we're organization. a

Toni Kaplan

getting And been recently helpful. ability question That's one the do around is M&A. to large-scale you for I've

And market, or because seems to deals fragmented it still longer do maybe you for around get deal? to think to least done a And get the valid say some that. for right harder also able or be I'd now potential large Do there's you at skepticism to approved. a of that's little

wanted thoughts just So M&A. to hear around large-scale your

Todd Schneider

Yes, Toni.

of garments the were massive people representative in significant is a our marketplace, all we're to we behind out investing if business priority that is capital a and as sizes. market. business. meaning, have it that market of in right reminder, a think size, wearing excited you about is new just that's use how about in -- shapes M&A in our blessed And second And So are of uniforms M&A many We're our wins have.

new programs. that accounts are in that no call of all we -- thirds bring are people -- customers two our what we about are the that So

that That Nevertheless, walk unvended. It's people uniform being they that, than different more in a do. uniform don't bit the Some call out, complicated but when a we program they industry simply market. and have said, walk that's net-net. we little when the in,

Fire addressable to markets we headwind a or with sanitation, is business all obviously is facility a everybody way and And market services. law business. vast excuse Our in First simply me, it required all that safety, tailwinds Same the are services other see Aid have whether market, hygiene. those it's because the health, the are and the just -- behind massive just business, products by from that

because because are the it of of interested of those think our is is That in absolutely to medium M&A good appropriate. such market an about think incredibly that and and position of leads size. I us small, in large potential the yeah, So in we're businesses think we all the excited -- M&A all we market we're

Toni Kaplan

holidays. Happy you. Thank helpful. Very

Todd Schneider

Thank you.

Operator

ahead And Schneeberger take we'll with next Scott our Oppenheimer. go from question and

Scott Schneeberger

morning. And it Thanks looks what would question follow-up. the better, has have Pre-pandemic, that? like? or the I'm of can a anything is to now that the very quick of much it much. Good contents has And margin cabinet curious a and then to items your that? changed their of Thanks. How I inside in how what then can average profile to assume cabinet? pricing look this speak level the share but change Aid. customer -- First I'll detail like you of you on

Todd Schneider

Okay, Scott. This Todd. is

whether it services far that in compliance We bringing our by an and our appropriately. well we're As that are which to AEDs, is as required stations, cabinet serviced other OSHA as business. constantly Aid new and First business, component as be be offer cabinet, eyewash out that for training products important of

a that customers, exciting seeing all with back we're us. is of is to -- our on return to a that So focus which

that the type cabinet have new it's well a of products As the situation. far pretty itself, launched, besides as traditional we

Now those as ship and a the predictable, provides First is health think what guest, And types is more profitable. PPE of spoken on type Aid we've customers, the more as about, business things. a of more customer is is of the patients, to the result, good for safety First cabinet changing drop and that's we business. focus And Aid value than employees,

and that to then I back positive continuing very be that safety work, and that's of think going trend more as as to are you So business. for people health the see

Mike Hansen

I might add a couple of things.

Just Scott, XX% year-over-year in First I mentioned reminding that you, think second Todd Aid up quarter. is our cabinet business that

we the we're really in we improved. of do you're margin And quite think the like momentum pre-pandemic, back So material this we in seeing about What when business, towards But has of really the movement gross not cost like the the it. spending that that to but mix terms is both of we're mix. half the bit capacity, the growth this we've building anticipated the that for some current but for of second of about particular the little talked quarter that investments Todd of growth. service that year on had, a labor also improvement certainly in

First just really to partners and wanted to. Aid and by it like Safety performance performance and the expected we improving our like So nice is we just

Scott Schneeberger

all Great. that appreciate Thanks. same the I color. follow-up And is on the subject.

the You Safety get or can why back and think matter a year guys higher not? to Do are you level? or you. a X, First Aid you And within running below what why were pre-pandemic Thank of peak margins.

Todd Schneider

is Todd. Scott, this Yes,

on mentioned, that. So our And we're us. is the for I the wellness revenue at of sales marketplace to be think -- very will and the out very positive win focus on look that as in positive. focused also health going and folks be we mix We the behind

we traditional going nice as that tech then on business. towards to in focus that revenue see rebalances, mix a think margins continue to you're net So trend more area, I

Scott Schneeberger

guys. Appreciate Great. holidays. Happy

Todd Schneider

Thank you, Scott.

You too.

Operator

Rosenbaum next And with question from we'll Stifel. Shlomo our take

Shlomo Rosenbaum

in back terms fragmented like competitiveness necessarily is in wouldn't Hi. guys to seen a to you Good the on that for so make I to little a market you of you couple that years. a last change you turnaround in be difference trying Hey, to the of Or a competitive guys? all. the a terms been morning. you Thank at environment. to I the more you for have Have competitive? does if taking or filter bit to market guys that wanted Todd, execute know questions. change Aramark that my want ask has

Todd Schneider

for a say, I Nothing competitive. would Shlomo, the always in, thanks operating the in though, good question. noteworthy change. The environment It's we're question. it's

as I and coming strong. focused there things customers customers. do strong top new that well. is, And providing value just of And more the for. could rates walk -- type areas you When so do we mentioned, in, new competition. in what are the of the we're example. uniforms that are they're an that give vast you retention I very wins out revenue to the as it I'll on we X market just for When And didn't it from Our know walk we wow, those all hear back programmers than from to business very our much speaks I think

So surprised. they're

service other you that didn't but is might have the size. of for we be that know people. XX And the to X,XXX items customer hear a you One XXX us, something have perception customer we wearers. average-sized have people, that to They is, able that of is our would like an

are there's that that And -- wind right little behind see we in So to a market we're also on we certainly what now. value attacking customer sees sales provide. tough there talent the it's because our attract

the we think So wearers. people. exciting being attractive a to in millions provide the very to tens many working out something of are able And that provide to service It's this and that service people about that's you how of is the fact like for future. can more marketplace

massive. result as pressures, really of so because we're retaining on on and the and -- just market competitive those it, And we so a focus customers, growing focused it more focused on more how our we're it's

Shlomo Rosenbaum

one maybe Okay. for is this then Great. And Mike.

margin it's operating just us couple back give a a going there quarter-over-quarter couple takes other lower what's operating margin quarters. comparing in sequentially, make of revenue, And puts some which quarters. the last the segments, you in -- besides definitely of I a the margin? and the difference terms the in kind there's Just of the of quarter Could obviously, know this of versus is something the just of margins volatility impacting

Mike Hansen

compared we Shlomo, that a of first on when the call some gain quarter keep referred QX QX at look mind in to assets. sale to you in

million So in was there a in first that $XX.X -- the quarter, gain.

this an of of and healthy. say remains in we've particular I'd this. And Fire that So performing we The little business had XX.X% nicely. a been very very, growth bit quarter anomaly quarter. has seen organic

about Todd in both also Aid And I for growth. -- certainly we're businesses things that we the And and anticipated but for some growth. first Fire the that current have growth seeing are talked with in some of current for that on business going great investing the

So know, the we're And quite seeing there. investment a the then be Sale Uniform little business Direct can Shlomo, bumpy. bit as of you

is But Other the All to be so pretty pre-pandemic. segment from relative good in this And to as volatility more I'd going for business. a XX.X% a well, quarter-to-quarter quarter quarter still there's workday XX-day on say this

So again, the other these like and like performance. businesses in like the the we businesses, just momentum we

Shlomo Rosenbaum

to completely You the just XQ see bigger Uniform day volatility is a trying bit 'XX business? appreciate extra detail get say, little a impact? in that And versus, more the Direct

Mike Hansen

an of more The be sale. Direct is Uniform the Direct The to the direct is bumpy -- within be to business program. of Direct current timing the could biggest Fire of within those a than just the I would -- customer impact say that the on item the day based a new rollout tends sale it sale. It's Uniform Uniform That's volatility sales programs.

Shlomo Rosenbaum

Great. Thank you.

Operator

to no for are questions remarks. Mr. any at time. closing there turn this appears to It the right. All back you Adler, like conference or more I'd additional

Paul Adler

Okay. Well, us everyone. for thank this morning, you joining

in fiscal you We day. again at good a look to Have third financial forward time. our 'XX speaking issue will March. quarter that with results We

Operator

you for all Thank participation. concludes today's call. This your

You may now disconnect.

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