Cintas (CTAS) 13 Jul 232023 Q4 Earnings call transcript

Company Profile

Participants

Jared Mattingley	VP, Treasurer and IR
Todd Schneider	President and CEO
J. Michael Hansen	EVP and CFO
Andrew Steinerman	JPMorgan
Faiza Alwy	Deutsche Bank
Ashish Sabadra	RBC Capital Markets
Manav Patnaik	Barclays
Joshua Chan	UBS
Justin Hauk	R.W. Baird
George Tong	Goldman Sachs
Tim Mulrooney	William Blair
Kartik Mehta	Northcoast Research
Seth Weber	Wells Fargo
Heather Balsky	Bank of America Merrill Lynch
Scott Schneeberger	Oppenheimer & Co.
Shlomo Rosenbaum	Stifel, Nicolaus & Company
Toni Kaplan	Morgan Stanley

Call transcript

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Operator

Good day, everyone, and welcome to the Cintas Corporation announces Fiscal 2023 Fourth Quarter and Full Year Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Mr. Jared Mattingley, Vice President, Treasurer and Investor Relations. Please go ahead, sir.

Jared Mattingley

us. joining for you Thank results. With me and Financial Chief Officer; fourth President who Todd Hansen, Executive Schneider, quarter 'XX Mike fiscal Chief discuss and Vice will Executive our is President Officer, and from After our commentary, will open analysts. to the call we questions

Private forward-looking of provides forward-looking statements as the current Harbor Reform that a statements. This to Act for views and These civil reflect statements litigation forward-looking Litigation financial future conference Securities Safe and XXXX from subject from discuss. could discussion differ call you are performance. events Securities in and contains actual cause the Exchange which the with contained and to uncertainties, those risks Commission. our results to filings most on to I materially these points may recent company's we refer

the I'll call Todd. over to now turn

Todd Schneider

revenue rate Fourth of the was for grew to Jared. which growth exchange $X.XX impacts organic you, quarter currency billion. fluctuations, rate, foreign XX.X% The Thank adjusts XX.X%. acquisitions and total

businesses each with pleased coming these are our in level, highest high at off We grow fiscal results, our especially growth fourth where and a quarter execute of continue 'XX. quarter to

year. of XX.X%. increased Fourth quarter from to Fourth income of an quarter margin of prior prior billion. $X.XX year. increase from prior quarter over of fourth XX.X% fiscal $XXX.X $XXX.X XXX income XX.X% an the the in million 'XX increase for XX.X%, margin basis XXX the XX.X% gross net Operating increased was year. basis the Operating XX.X% increased over XX.X% margin points to million, points was Gross

fiscal growth the increase Organic These over quarter record every XX.X% following: diluted revenue accomplishments, for $X.XX was Fiscal organic an share quarter We year. billion, a of also $X.XX, results year year prior saw fiscal XX.X% during including significant fourth per the the of double-digit was year 'XX. XX.X%. an fourth for quarter. the growth of were Earnings for conclude a increase 'XX

year. consecutive prestigious honor be Fortune It successful to recognized to sixth XXX most We among for the again the named companies. the is were once an respected and

for $XX.X year. the you $XX.X XX.X% investment grew assets EPS on grew grew an 'XX, and When We the grew increased prior years. year dividend income gains, the both fiscal on income our exclude excluding operating gain year share XX.X% XX.X%. gain previously since XX.X%. consecutive method Operating quarterly equity million going per is year, the transaction, which sale mentioned We've of a operating for XX.X%. public, dividend EPS our by every XX increased million

issued continue our governance, our of Each or the and year, part robust. report report. As steadfast third to responsibility, we environmental, corporate ESG social we commitment to make more

was Cintas model. business sustainable a founded on

Our what results corporate these right partners. based to employees and improve. and whom proud our we is is doing call We're the on of of ourselves efforts challenging culture

our to over quarter call the results. provide details turn now of I'll fourth to Mike,

J. Michael Hansen

Thank you, good and Todd, morning.

of Uniform fiscal currency rate Our revenue rate, last $X.XX was billion billion to $X.X 'XX Services was fluctuations year. compared the billion compared XX.X%. The rate foreign fourth and exchange quarter Facility growth was quarter year. 'XX revenue growth for revenue fiscal The for to acquisitions was adjusted X.X%. Rental organic segment billion fourth operating revenue organic and last $X.XX $X.XX

fluctuations and the Facility Uniform quarters. mind, mix I the share in in there quarter. for of between past, in the done will can Keep mix we've As operating revenue Rental fourth Services small segment be

across X%. revenue all and products XX%, dust to consistent includes hygiene was XX%, our towels was XX%, and the with which last These and of which shop X%, robust catalog XX%, [ph] was Uniform linen, wipes, year, services. are percentages aprons was Rental speaks towels was microfiber were demand

revenue Safety revenue million organic last growth million $XXX.X XX.X%. was to compared the and Aid for year. operating segment quarter The First Our $XXX.X Services rate fourth was

was Direct revenue reported Uniform compared $XXX.X year. Other and revenue in organic fire year. to growth Uniform Services the our was million All million, these rate the business finish Direct million The revenue are last businesses and XX.X% XX.X%. performance Sale services. the segment. The was was $XXX.X expectations business robust million, resulting revenue Our All demand to Fire $XX $XXX.X and rate Other strong and strong Sale This Protection organic growth as products continued in for a exceeded the was

of year, the an margin Gross fiscal 'XX a an revenue last 'XX increase XX.X% XX.X% was was XX.X%. compared of Gross compared growth expenses million last volume of $XXX.X from penetration XXX $X.XX of XX electricity with quarter fiscal the and more and margin new as products tailwind, generate basis customers decreasing a increase percent Energy the quarter were existing fourth to for of basis billion, to year, from of of for fourth last help great and Strong services customers year. comprised points. operating gasoline, gas natural leverage. points

and for Aid First Services, for Rental Direct Services, Protection Facility Uniform XX.X% and Uniform for percentage XX% margin business Fire Gross and was Safety XX% Services sale. XX.X% by for

XXX and our quarter from was initiatives, to We've costs were insurance invest higher. branding continued XX.X%, which last was and in year. points Fourth basis SG&A up selling resources

We from are insurance self-insured, fluctuate costs which our quarter-to-quarter. means can

was last XX.X% revenue Operating compared percent of quarter Fourth a income in to fourth quarter was of to quarter. fourth million million year's income operating $XXX.X last compared XX.X% the 'XX year. in fiscal $XXX.X as

Our XX.X% rate year's year. year. to fourth last for compared for compared quarter quarter $XXX.X million was diluted was last fourth to quarter fourth the $X.XX compared EPS $X.XX year. effective This last $XXX.X million income tax the was Net to XX.X%

to back call expectations I'll fiscal financial and Todd to thoughts now the 'XX. for turn provide our over his

Todd Schneider

you, Thank Mike.

a excited will about 'XX, company. excited XXth the publicly we we traded that we then, celebrate are were move into anniversary Back fiscal laid Today, we about of opportunities our ahead. future significant As what holds. the being equally

to safety, with workday. freeing help We need build the and strong, remains for Every concentrate to has better, our image, perform cleanliness businesses a or proposition the more We profitable core providing continued products on are better for great. work producing provide business value their prospects competency. is them growth and Our and and goods services compliance. service a faster businesses economically

year ago, branding, us marketplace I'm progress priorities: the help technology our provide each our drive these differentiate key competitive to pleased focus, and I with of in three advantages. in A ESG continue increased introduced to areas. and

Our for branding we them businesses efforts ready how continue workday. more and have more get learned as can help the

and ESG customers their solutions them We our sustainability continue with textiles. progress on and achieve our solutions we sustainable These and make on recycling continue our help reusing, to reducing, initiatives. our to resonate as focus prospects repurposing goals

are particular, spend We've far on journey. in minute using to do and us. technology, My routes want with facilities, our our via technology, customers business of been Cintas trucks out efficiencies successful which makes portal, technology our thus our transformation very in Smart innings early proprietary a with I for the our speaking digital drive in efficiencies to to it in production customer the about our Truck we easier

excited efficiencies As we look partners provide Verizon, the and us future, great within SAP to very experience to helping which have to our a we're are in and improve business. customer technology better

Cloud with additional that we announce Google, excited their strategic partner technology an platform. to are today leveraging Google have We

the of a it forefront result positions innovation. at As of us these relationships, technology

our of excited transformation we total. are and customers very our our stages early journey, still impact in are the We and the about have it digital in company on will

be and technology into us will confident We future. the well competitive a advantage now for are

provide 'XX. guidance I will now our for fiscal

to fiscal X.X% fiscal billion, we be X.X%. growth our to of the 'XX, total rate $X.XX for billion expect 'XX $X.X -- Our range year our a revenue year of in to

year million in as X.X% expect $XX to debt. We the following: result be variable a This of diluted $XX.XX, EPS fiscal may $XXX.X Please of rate share or XX.X%. approximately as note a the acquisition lower to rate to be to interest year is $XX.XX predominantly of compared to result 'XX growth in future fiscal of activity. expense million buybacks range a expected 'XX, change

the Our basis negatively higher fiscal EPS XXX effective does about to rate fiscal year future to share fiscal and our bright. more XX.X% excited any tax 'XX fiscal 'XX include Guidance of workday in We're effective comes $X.XX in economic or rate impact guidance Cintas having future The or extra about EPS significant and The by quarter. guidance downturns. includes compared beyond. about next impacts And growth This XX.X% compared third of workday is 'XX. 'XX a remains fiscal expected buybacks to points. be one fiscal tax diluted for disruptions 'XX. by not rate of

turn call over to I'll back Jared. the

Jared Mattingley

prepared our concludes That remarks.

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

Operator

comes JPMorgan Steinerman And Andrew Instructions] from first our question Securities. [Operator today with

Andrew Steinerman

overall, down remind me, obviously, the gas in to as puts need the fourth think surcharge I'd year-over-year. customers net I no has the there's think that into And organic to might how And Hi. price are growth costs? in that revenue but does Cintas raising quarter input just Cintas versus talk terms factor of like how price BXB to you of their on, into realized guide. And part the and done explicit prices gas I pricing? about

Todd Schneider

inputs return certainly Yes, yesterday our the our that moving a in out are past cost it has PPI Good have to 'XX quarters, When will because similar spoken above in CPI pricing historical as the saw that expect this came morning, that from inputs. 'XX, cost in question. what the will out good closer you look is about forward think question. been Andrew, as in and we like came our during needed thanks -- a that to report standpoint, guide, pricing about the report be for we and We're morning. we spot, historical pricing fiscal of as

We are down. inflation coming seeing

team chain our amazing has us. operational both pretty but of job team costs, our has which managing our think supply I a benefited input team really done

-- to to the do upon rely only we it's not expand lever pricing gain as margin. So leverage

reflects it to going out and inefficiencies committed margins, our business, seen to our guide for in seeing incremental 'XX. successfully, our we're in are fiscal And extracting expand and you've that us going expect to 'XX to incremental attractive We margins. help And and fiscal in do that business that. we're -- you're inefficiencies

J. Michael Hansen

offsetting Margin Andrew, two points. margins the think things. of surcharge. guidance our might were for implies basis up I the a up we price best improvement I fuel have for about and you year. fourth -- XX were points increases you, secondly, One, do And add the the costs guidance input in to that specifically, is a just XXX about Thank way and throughout made our basis year comment think margin next 'XX fiscal quarter range the not

mind et that cetera, we as we're think versus about raising margins. still margins, keep pricing in improving input So, costs,

Andrew Steinerman

Thank Great. you.

Operator

Faiza come next from with Our will Alwy Bank Securities. question Deutsche

Faiza Alwy

that said about downturn significant economic wanted talk that in or good morning. us the of guide. you're sense give I know of to embedding Hi, economic environment but environment economic you're assumed, type a you or your not disruptions of type Yes. is assuming? I macro what

Todd Schneider

question. a haven't you you in indicators which We're much very I economic towards is Trying thank in can disruption. our on, going we the what seeing predict customer significant behavior. business, economic to Faiza, challenging. we're guiding for tell But is not our certainly change what's seen

Our sales very is productivity good.

Our and sell. customer products that our levels Know of is retention really still we strong. in are -- there And accounts there's majority quite very new there's still programmers remain our well. still the And services. going good the interest

like and that the are in pie seeing like customers expanding value providing. what we we're much. So We very those

working quite -- been our vertical that nicely strategy like the that vertical also sales We us. has for strategy

business so reasonably say, not in expect. there is ups recognize we're we economic We and downturn. would downs guiding environments, I be usual anything any but -- macro would as will what So towards

Faiza Alwy

be think you if over mentioned you. just partnership. years? few I next then of transformation sense about digital where Great. your the strategy? Maybe see a the And of -- you What benefits follow partnership the might up going could you some give Thank Google that us the on as

Todd Schneider

Certainly.

and large Google. Our data. so our relationship way due now relationship a us with of have it relationship store do gives the faster, much Google in because that part Google SAP and But SAP as to smarter, with with we more, can cheaper the has we critical better, it see

it have strategic all successful more very that we relationship. customer past As know, much It's you we've a over is in a decade vendor had a now. just relationship with SAP a relationship. than And for spoken the

capabilities. advanced going a have months do partnership. that to they that combine going couple learning ago, it's machine and connected technology, with the and data just Google access be And SAP our of that's their SAP and with you an to expanded to what to which announced Google AI Data will Cloud us allow give is analytics So

that. type about come relationship. excited It's we we're benefit can many for going of to this So to -- think we as years

a few asked Faiza you examples. for But

So more see team help to front a having it. sales try the our of sell of little you to connected, these give say, I'll instead around push who we sales our have a for technologies front on color services call in calling, technologies of to them. to give put I'll few to our opportunity next We in best it to blindly to, prospect organization real

go have think an significant you time. things. and and We productivity, can spend your where our our Here's impact that's on all retention and productivity morale those

Next product best the for customer.

is that talking would trying and we customers that for use of that Maps allows and even We could instead Truck time, upon our customers the functions team Google our coming service see save the put time all which saves can our to figure our next be service will us that more to based certain of nicely make saves more we Google behaviors. front us opportunity over -- So to think Maps, instead to -- in in an out, enhanced technology of routing to the customer other our -- of team us There even customer dynamic, fit front further energy, on years. about Smart leverage enhance to we sure to product they're just best make road. sales

they're just customers. of they're see that, in team, say to blessed more, them. service -- at-risk potential leverage the at the to with need one in sure that to our And front want right in direction would and point them to to customers we then type the them we right sure I that that the that a And is lot with any customers of spending make the customers enhance have people of We technology time. to focused of the right front make on they're effort we're

-- So it. we see years, think we this we this impactful Again, around can hopefully, an our not is that see and process little our and color event, coming a as gives you as a for it don't customers. this very be business the

Faiza Alwy

so you much. Really Thank Great. it. appreciate

Operator

from comes with Sabadra question Ashish RBC. Next

Ashish Sabadra

down Services I talk wondering taking growth for Safety turn First question. to acceleration into Thanks some my do 'XX forward? about out? call strength. that takes any as Thanks. I saw wanted and then if was there. in you we think that And think about the going we that you Aid what's puts material and about would can driving Or momentum you how

Todd Schneider

really First back I'll growth we're going Ashish. The Mike chime and -- growth if and now, margin. repeat that really is some like, are see about and Thank is in you, We start, it's real sale in there, is wants now we leverage was get the to really but there. the a mix safety spoke We've what to getting opportunities of business sales. -- well. there significant business of And peaks in. cabinet nature like future the us And the PPE very business. that pandemic attractive. mix quite higher Safety Aid helping is strong more really sales leverage and We the the during we

mix, So the total really like great. we growth is the but in

that we're is in And trying that tell as strongly that reinvesting resonating inefficiencies is also leveraging to have you marketplace, well. is and value -- And make our top they're I a and in that, that resonating benefiting from of would Health we're sure wellness the business people. in we the concept are their customers really on very that. and proposition that

our the to we we're tailwinds like in, future we the margins. going health extracting us the is think have bright we're and the we and wellness, But area. like So inefficiencies. They're out we help in with expand quite position to continue those that

Ashish Sabadra

then vertical color. wanted success to mentioned that pretty helpful the good down I wondering you're very just strategy. I you seeing Thanks. also if any but drill That's on the further on on those out? some you front. Obviously, sales verticals. key was also initiative, your down that care drill would other trending, verticals health are further could And you how on call

Todd Schneider

Certainly.

care, time our We've focusing health we're where is and verticals education those organized government. around key verticals. Our

continue Certain are them. And as invest much We continue they're to to Certainly, and customer into good. benefiting demographics in and these we real the a good, are and us to them. for from very have a invest really dedicated to quite areas. result, think And here is business new result, they're smart services doing those we're attractive. opportunity But is that think growing education in. future. functions we're service well to products going that attractive that health the of a care government it. to And in to as are verticals And in really And addition, attractively. we there's retention invest long

it's dividends So us. for paying

Ashish Sabadra

Thank helpful very color. very That’s much. you

Operator

Manav Your next with question comes Barclays. Patnaik from

Manav Patnaik

Good.

historically, is two-thirds organizations? two-thirds you've new and of your two of almost environment the changes? sales come Have those comps, known the update obviously, changes tied competitive there's What of that. that think of I kind to wanted any on just from talked like? to look I public at going about Because been programmers. a how each that of lot there --

Todd Schneider

a well. attractive have me hear couldn't we are try Yes, to your them. And going be if I And significant we were services to historically question. a answer of programmers it we think that And then portion are and part, significant -- sell. to first -- I'll it. I of know. portion continues sell, Manav, don't, I what been what quite you it's The has understand please and it products the let know but I

to at skilled say, identifying folks. I'd is, that effort the sales and message a have those We delivering

it's incremental not just is new cases, to -- able are them. cases, Many, somewhere would -- always that it's many those understand And spend I it to programmers, dollars important spending all in I they're to with many image on say they're save competitor, know types rarely we think result, of compliance to and dollars and with not other money safety spending the to redirect those direct cases, things. vendors, a maybe cleanliness, we're And many as those money. in able but us, and a

So it opposite. end be quite there economy my programmers because runway the as, the to to know very, -- going long stress of is a we that sell oh any all not very an in to don't it there. -- gosh, that able We're they're there's if there, think see

So that's attractive.

I we I in competitive operate competitive very as a would the As far mean, from say environment. competitive the changes seen landscape a set, to industry, competitive that standpoint. I very any haven't

So that. I'll leave it at

Manav Patnaik

of then time just one understand when follow-up you line? data potentially the this of And with cloud I when does you benefits? happening, I the that get think any quick seeing partnership I start some Google sense benefits the on these and it had, Okay. brings start then the Like

Todd Schneider

be we're not Well, with see we certainly them But down it's We here. some out. is path, guess I low-hanging going going to with a the are But our where have into to gone as process. ideas this recently. to just I go them We've fruit, an talk relationship entered say It's we it's And more to about a event. coming it. process. way best mentioned, meetings as had

some much So I there. into we see can we detail won't because benefit with this come years competitive advantages think too we go opportunity. to for just And

long the as we'll is to runway attractive. ourselves. so we and keep think a And But result, those

Manav Patnaik

Okay. you. Thank

Operator

our question next UBS. with Josh comes And Chan from

Joshua Chan

you entirely of run much Hi, you? Fire, question, and when on from Jared, to don't good new selling first First existing And and it gets kind that uniform basically My growth adjacent quarter. congrats how you of morning, selling that how those Todd, of customers businesses, a much customers? strong Aid is are Mike

Todd Schneider

and it's is overlap, over And us Cross-sell we Yes. a customers. be. good some number Aid, years very the but Josh, new It's to mix. last has love First of will there a the been continue question. complete helpful for overlap. Fire and not But

with get us allows have may into that. to all. to first they And speaking about done the so us business time at And customers it

an then sales customer prospect. a enterprise So -- or will that we we and organization -- have call separately

And the business frankly, do us the start really it what a and customer It's start us to whatever in. if -- If rental their customer go from any there. matter then with garments, out interest is in they expand in that to doesn't and or is relationship doesn't they with. want interested wonderful, is or then First we interest wonderful, it's Fire, Aid, we where

and we new it crazy. fact that into So opportunities gets like then and the love there complete overlap, us cross-sell we isn't

Joshua Chan

And got between at pretty climbed makes your Great. Thanks look I follow-up, guess through price better my color. That incremental you for assume sense. steadily cost. the I for XXXX. alignment and margin, I if if it's

thinking XXXX? how about are margins incremental you of into So the cadence looking

J. Michael Hansen

in Josh, year. up quarter-to-quarter the our fiscal or in the be was Josh, we see. -- a incremental and 'XX in cost XX.X%, margin from that previous there from it's little for company bit way And ups invest the total can the we downs that

can not we don't do initiatives roll to And within range at one we believe necessarily that XX% certainly business, margins may going incremental the get or go up time. on based to so may a to what but quarter-to-quarter from generally, down, we are XX% doing that we again, it's out. try and in some predict quarter operating We

is enough it incremental goal improves margins to is focus us over year. the attractive on for So and the bigger get full our the year, that those

call managing all, the call based business. So be we're to at how it wouldn't going I linear I on wouldn't it It's flat.

Joshua Chan

That’s color great. your time. thanks for Thanks for the and

Operator

Your R.W. next Baird. Hauk Justin question comes from with

Justin Hauk

off in guess, really your X% strong did of is of pull you the everyone. kind just I out question, and of just kind follow-up 'XX, off morning, XX% was guess, And takes, the on kind X% coming here first with a maybe puts a that revenue I you growth, the historical question, growth. more, in XX%. implied can Good that's long-term to of -- line maybe Andrew's I in on my of XXXX. but a organic already wanted

takes. trying just pricing give So and can the new for sales very it sounds because still all just like to delta retention are understand existing all us your business the accounts I'm you the maybe that -- kind it pieces? puts moving and and Is of so And strong?

Todd Schneider

Thanks for it. expand to upon try see question, Justin. to and if Mike I'll the answer wants

think strong last especially growth considering was So our year of our a year, XX.X%, is when of about comp you that of which around growth, XX%, QX growth, nice which strongest growth the year. really was

compare and that to mentioned we top the CPI saw see the earlier, benefit you you the seeing or report I'll you saw in of And levels. XX% And the in if energy I in report cost higher our pricing we're And we've received mid-Xs the that the you this in as can -- So easing that to earlier, to seen, and really it of of also inflation. drop that Xs, returning yesterday can QX. today. the -- historical PPI is it that back we guide in call end we think I closer of as the mentioned an that as the as reason to appropriate see

expansion. historical still. is operating and so. margin being of volume towards we're closer -- margins said, to said, will all more you we So type I a -- growth But still appropriately we're will historical and towards appropriately guiding have that growth mean, Pricing return really as incremental guiding good

a only is but margins. order us not our it's lever available in pricing to to So lever, expand

Justin Hauk

in what magnitude just an how increase, I that much kind of of of a change. was cost insurance guess, kind but that the were Okay. and revenue the clarify on of the was implying, that's the I that's impact I SG&A percentage guess No, to second the wanted that, you question, as I maybe mean general, of quarter? in helpful.

kind face next your is, SG&A you'll pretty of implying of ask a And as levels. margin And percentage then that expansion obviously, is headwind rate run kind I is low why but here, pre-COVID revenue versus still that year? of reason the a you're

trying And a understand much of normalized SG&A you versus so more level? structural gain returning just have leverage to here to how

J. Michael Hansen

say couple claims related they we can It's There's we because down self-insured, -- move can us to those throughout of We Justin, product XXX about and in you've at a kind this. a years, structural last that. ended nothing basis would year the XX.X% and are lower just speak of that up the points than in pre-COVID year. being of is, few gosh, is self-insured. the heard that SG&A, maybe

to don't want we've and hard Look, to we get levels. back to historical to worked it get level, that

So our going SG&A, continue better G&A leverage to margin expansion it find contributes to to into we're the to is that make particularly ways our to expectation sure future.

hard to return higher to we're do in we to and to it it to places expect So going look bring opportunities for to XX down not those continue that work were pre-COVID.

Justin Hauk

Great.

appreciate I it. Thank you. Okay,

Operator

And from Sachs. Goldman Tong with George we'll hear next

George Tong

thanks. Hi, Good morning.

are seeing. much how customer current You behaviors you're elaborate mentioned sales change you there based sales with the what hasn't been pipeline on environment? Can evolving in on customer budgets, cycles the in

Todd Schneider

pretty generally based sales we're upon what we've We're a -- significantly. appropriately. the have products hasn't the the spot the is like got speaking, of and medium, business type sales health process It's But varies small, services. morning, The of things. environment in We And invested of changed very -- the types large, Good right geographic, in, those customers George. elongated and pipe right has good. in. the we not looks they're

be We've watching way we that are to our find as have very for the earlier, make to future. business, positioned right term. on sure and the but closely we're not we're hoping will got that forecasting I trying and as sailing we're the we focus business past. ahead successful well economic making to an sure trying be we we're think that with are the we economy. long certainly customers, the in for clear mentioned we And a And -- That our said, for being planning

George Tong

and provided you And is the what into which I what lift business business certainly COVID down health you it. drill mix on the represent? like your to growing, a currently to Got trends vertical, little notable how health helpful. That's revenue we bit business. care wanted there quickly touched health care new care about of then a look further Can earlier, talk

Todd Schneider

George. Certainly, services, us focus, And those for years. part customers, service health strong having been not our organization. of organizing number around care his but products, a in for business a sales large has The just

So is growing it to it's And we more than long as just there. a sales. growth at -- it's runway very rates. business. our making that It accretive look We see it's a sure

really we're and sure are investment I mentioned years making the And robust. As really the see because positioned, earlier, sales of growth pipeline well of of demographics continuing. looks But that's attractive. that in we

George Tong

the just revenue? Got it. of mix And

J. Michael Hansen

front now. that have growing faster In that us, George, I'd the X%. don't it's past, in about -- than average. And it's of it's say been I right

George Tong

it. Got you. Thank

Operator

Your next William Blair. from Tim Mulrooney question comes with

Tim Mulrooney

Yes. Good morning.

First mean micro on big Or bit went the from you Aid sitting at now this build at They give and guess, 'XX. year? tie several sell that's made But specifically, you're XX%. lower-margin business, the through were gains those PP&E XX%. do and a point? to pre-pandemic closer of Would some XXX margin like know 'XX from in a I keep I basis margins a levels. down points. On I it you back expect that expect, jump pre-pandemic little to a operating looks you've

Todd Schneider

total on we've maintain to extracting attractive to and the expect mix inefficiencies wellness and to of expect those benefits out the focused Yes, certainly business in important and in Tim, we fundamentally on not give people And do the being health the leveraging business. improvements. The we're we being marketplace. build back, growth, of

we're those back. giving So not -- and

is business. bright the we yes, for So see that future

Tim Mulrooney

Yes.

It mix. It some more was structural Okay. just like than things. you sounds sales did

J. Michael Hansen

safety first big a mentioned, being lot from we've -- lot partners improving part of productivity about certainly a better have aid a returning, sales lot -- of business our going as routing the in sourcing that's We talk penetration and mix But to it. of in that's There's going to on better a improvement on business. terms Todd things opportunities to opportunities. that

efficiencies in that height business to today. are you're the for don't seeing we to it's resonating that These attributed in underinvesting and that lot and love the are and we the growing our the important has real the we've are that you're terms correct, think on to about first get nothing to revenue structural billion business exciting a long-term improvements the And that business of in that's $X sustainable. There's been And mix, about that of it's or with And prospects business. it give has going in been there's we that. time. our what topping But to And expect that's 'XX a these working is the why lot, margins. customers. pretty underspending fiscal back. nicely, in business create towards improvements pandemic that's also It

love there's business, So we going work the and of on there. a lot good do

Tim Mulrooney

I That color appreciate extra just clear. could the that's is and really quickly. exciting, I there. Mike, shift gears very If

come they was commented But more of little retention saw when over okay, recently rates a customer One of kind it competitors your a several of years, normalization, good. were that down following boost recently. bit a things the like last

similar if that to fiscal guys you kind of historical see that And speak, saw seen Now have jump are degree, of something you you or and did up 'XX? pull curious recently? rates investors you. bit so some normalize, retention material Thank back kind any to a and 'XX back more little in towards curious I'm rates.

Todd Schneider

Tim. question, Great

levels about and years, and we our at a over pandemic. we've thought we've saw of think that And retention the improvement customer satisfaction satisfaction that seen same past time. customer we same long term. levels to really to the go our And that retention few see continued strategically, the through scores levels. We customer handle up nice So those intelligently

always So -- customers staying is and that making we seen we taking we're our attentive and business great to have change working makes a standpoint. not improving their care focused of of sure a our are super we're sure on part needs, on attention making And successful. that no, us from what big

So we've sure on we're focused seen that not happen. and change, a doesn't making

Tim Mulrooney

Got you. it. Thank

Operator

Research. next from Mehta Kartik hear We'll Northcoast with

Kartik Mehta

or slow we down for though And hiring. Good that's seems guidance I'm morning. into what the your impact wanted their to in of I ask expectations wondering anticipating? as starting type stops to ad as 'XX. companies what go you're It are included fiscal

Todd Schneider

in dependent change We're just that it upon metrics And stops not of have customer ad diversity not a good because that, continue. are base, and services the our is not stops of part broadness we area of being our -- seen metrics, will We're expecting the Kartik, we producing to that providing on and customer path. grow GDP. expect will said, any of particular its all base. our multiples expect and to that one we we and continue of

Kartik Mehta

'XX just Perfect. versus in energy impact if anticipated. this, from said already FY you've 'XX, included you this. I what the And or costs apologize have might then FY talked you Mike, But so about

J. Michael Hansen

numbers. X.X% a company -- the me you quarter. total give I'll let energy was fourth of So Fourth total the quarter for for couple

the X.X%. For that year, was

points. this to year year for So it basis was fiscal down the XX 'XX 'XX, -- -- compared

So flattish. it's roughly

June pump look, As about of prices 'XX, year. we last the in the at spiked think

our last first high. numbers of fairly so year quarter were And

our a may turn And roughly bit so is in get we and a expectation flattish. little then tailwind of we'll QX

Kartik Mehta

I appreciate really you Thank Okay. much. it. very

Operator

hear Next, Wells Fargo. Weber from we'll with Seth

Seth Weber

there to like morning. point Good be I'm it and to above seems back the think Safety three range a to you X% Fire First just momentum of Aid kind of or have to so kind trying of I First guide, that understand momentum, and whether second. construct range? strong Fire Safety guidance business. some it to that all out I'm segments to put some again be to very business wanted the Aid -- in revenue the X% X% below just X% revenue sounds Because the will circle and just lot in both the there's still of for a like will

Todd Schneider

businesses. momentum Well, all We in the our morning. of Seth, good like

below? can probably earlier, and that above are So above mid-to-high -- generally being being some we're against it well be would now in it. speaking, the it's Yes. I historical pricing -- to you digits comps past, as because And historical. historical, the closer see where there -- up but mentioned the some in significant, partly of above, of think it's be But single we will

Seth Weber

And just -- it that capacity that CapEx. again. about where whether Is color can or spending It's be 'XX? think my going just on whether what Okay. give from whatnot? pushing the number perspective for might that or that's of kind way right question fiscal follow-up you Maybe, us brick-and-mortar Mike, up then just on to any towards that a X%ish

J. Michael Hansen

X.X% we've a expect capacity business, continue growth. to of places. but our X% Capacity growth, we of Sure. in is to invest had needs. really have for in of Yes, when good we we volume revenue. couple want years would And local certain we Look, to have needs capacity

specific capacity washers everything continue and alleys there and the buildings to and of some to need business us have grow. the in we And be so and a added wash investments will that dryers bricks to from mortar new few other to allow

our range. that So be it to X% That X.X% back would kind historical is of to expectation.

Seth Weber

appreciate Got it. much. very guys. Thank you I

Operator

with move we'll Heather next to And Balsky of Bank America.

Heather Balsky

taking of related got Hi, thank the on you question. and I'm know in difference is the sort you've my I curious, about a to question business. for uniforms the pricing. trend specifically earlier sales focusing

curious past that pre-COVID period. just You've what's if going organically kind few last And -- well to you of were enabled that sustainable quarters. I'm COVID and outperformance X% forward? been recovery to the drive presumably you versus the levels? think XX% growing If

Todd Schneider

morning, Heather. Good

performing that is there's appropriately -- levels like there. Uniform our that organization. and sure make we We organization really continued yes, that They've to go invested whether our the the to like we think sales launch, more people, going we we driving Rental it's plenty it's of So the have quite productivity well. items services levels. of productivity we're We in that where We've of make products to successful. we're leadership them the business And inputs retention the up. launch,

making earlier, highs. it's an result lost of near to satisfaction are retention, scores customer no, service and way that, our customer all-time retention, And our our going job mentioned the a appropriate customer organization it. sure, our well, So as doing business, with say is outstanding as I

Our customer attractive. retention really is

up retention pre-COVID improved So is levels. over new is our and our customer

So business. those having impact and on really positive are big us a the for

Heather Balsky

really AI here. have Great. I like helpful. feel Thank That's to you. question And ask I an

You of type just the behind at investments talked your about side in in the Are on early scenes digital looking any transformation of being benefit? guys you Thanks. journey. sort I'm terms and guys efficiencies curious. AI

Todd Schneider

Heather, -- partners, think certainly When we we about and our partners. with us those Yes, to a customer in and strategic help those we're and our as three technology think we're investing strategic Verizon, us And just -- think -- helping with have SAP Google, we're investigating don't having relationship right they're opportunities in the they have leverage right with technology we vendor and opportunities. the you marketplace. folks. And we them, the a with them, relationship will the are

specifics many, are -- of we that opportunity we'll you, to think years will being a -- pay to be invest we to lay legs about tell big you I in it. so real we we a it think lot dividends. see this, the will So for That benefit doing has just we're said, -- many this it be has because speaking can't come appropriately area, for out the but because I'll and

Heather Balsky

really That’s you. helpful. Thank

Operator

Your next question comes from Scott Schneeberger with Oppenheimer.

Scott Schneeberger

not levers you economic the going question. expects at on us you'll Thanks if to -- you your no give good, hear of line? would side? like as what a just plan and good the curious efficiency sounds What in getting economy, are much. pretty to things how feel be really cautionary recent indicators on It top are the softness should very kind Guys, well of what been the get but guidance Thanks. looking pull able some the leverage assurance you're shape in if you've is

Todd Schneider

make understand. let sure Scott, me I

economic we if the get You're saying can't changes? if environment leverage to or

Scott Schneeberger

financial status guys leverage to economic of environment really of deteriorate, would quo sense? in pull and what maintain kind you the the curious just below dips If kind

Todd Schneider

and have it, be like we've name in very Certainly. question. we cycles. team, to leadership expect -- it, It been seems Yes. a very management you Good tenured, environments. that through I team we experienced through the successful been has all

it? your be economic one the deep And -- economic How tough in is is that question we because Now a environments. all successful the downturn, long to But to broad? is How -- how it? so challenging. understand trying is expect answer to so

we're But do be ready. massive different. 'XX, in might 'XX, about talking you're know that We how this. downturn a to If

our successful in be have these environments. different all We ability of demonstrated types to economic and

find in -- so and fight do absolutely economic expectation we profits to grown XX have in XX be and will And years. in environment. and We a my the our we last sales successful way is and will whatever

we've And team available manage of we that. levers place in to plenty So the think got to us. right

Scott Schneeberger

you that. any will day your curious, us appreciate that the balance then second I thoughts if in be, 'XX, head you -- your just fiscal to capital And Thanks. fiscal one remind was on would and And into that follow-up, 'XX for of a uses what one that thanks on other look for two-parter what as we other Seth's bit CapEx, cleanup answering of I it's just -- a question housekeeping. buybacks, sheet extra on is impact a then quantitative part just on the considering? were versus could M&A, thoughts on one 'XX? workday like,

J. Michael Hansen

to 'XX. is debt. good a cash our that flow From XX, I'll of have sheet great with May we be shape. no variable fiscal to And in continue -- start in expectation Sure. secondly, is our as capital We very is going allocation, balance

a good put right that could opportunity. do we it we form things we making that great and love as we'll certainly can M&A balance of And to great can flow great love is terms for cash can balance opportunity, with sheet. cash buyback. if great looking cash value, of again, come come work, another they opportunities a with flow Buyback and aggressive along, use a We would the sure them be that on but a the lot of to be that and at do as in we we the so in and and sheet,

look sheet 'XX. with capital balance with our again, and philosophy can and strategy fiscal -- changed. do we flow, forward And we good a healthy healthy look, hasn't allocation a some to cash that with as So, things

the a for of think would workday growth. it operating bottom basis as -- on question basis And on one benefit to this In a XX second be line about a point fiscal about Your benefit case, growth sales XX it about year. point margin.

Scott Schneeberger

Appreciate the color. all thanks. Great,

Operator

with from comes Shlomo Nicolas. Stifel question next Rosenbaum Your

Shlomo Rosenbaum

at clients. Hi, just ask more thank bit the you kind little on for a taking my hiring questions. environment your to wanted I of

It's there it terms particularly just company's do very in a that last lot kind You of think it's clients kind environment hiring way some about strong that it initial change. a the dip environment in expecting the and since I and Uniforms for hiring in COVID. follow-up. Is of in own of growth, you a of revenue of not terms adding division? Or pricing? have years of personnel said several been Rental you're mind finding the in your to strong the that driving think more you efforts new really Then cross-selling, a customers

Todd Schneider

more question, when love our flattish ways the it is Shlomo. to find more customers But job we've employees allows even a to Good value downstream customers still type in when million openings. hiring We add got said, almost to XX little bit there and are That they're then. environment. certainly it you being to swim

very So encouraging. that's

way We'd rapid that a love is successful. are business And ability but way But may maybe unit, selling would our we're services jobs our to to find to they cross-sell, lower to value a that going we with items. those other whether rates, just products business at -- it impacted within and much -- by call bring be in hiring more have that to the new we customers to more to customers we're maybe at filled. are be see going rates find or successful a unit

we're -- services that resonating love the with economic or there's improve. And people. certainly think like that in. we we And value a But and products of the that it. we're we proposition So we're would and spot and continue lot how the even to the inputs providing is categorize to

Shlomo Rosenbaum

despite had looking investments Rental insurance talk could you that the on the can of if Just a of you on decline hit up Or there a follow-up. Or to right And Safety. just about is a what's some Uniforms First going revenue kind the was with going of color a something on go a that at in just give you sequential Great. other margins? bit a continuing and margin Okay. up? And then the now? the have divisions? Maybe you then particular little going particular division, Aid sequential on the other on there sequential on bit side the little basis operating are

J. Michael Hansen

Look, QX, invest noteworthy the gross still good, -- very really we Aid healthy is to was is and Shlomo. very still in First still margin for is growth margin And growth the nothing continue Sure, other good, to place a future. than at be. XX.X% organic

nothing So there. noteworthy

was perspective, in business XX other over in place X.X%. so margin From great sale operating a The and us the for was the all Fire that slightly that's QX business. direct

more volatility bit can move have up nature the it. an other business because have So It the than sort And can bit quite the businesses business. and that down of a fourth outsized love of lower. the mix and in operating just it quarter. a We and of effect grew did nicely, margin still that little but on

a still 'XX. Aid forward, move positive we the well few to we like we've we to fiscal still we've very in as that continue Fire very, First expect perspective, As expect margins from discussed it minutes has really And perform ago. a seen

Shlomo Rosenbaum

you. Thank

Operator

Kaplan from from Toni Morgan comes Your Stanley. next question

Toni Kaplan

Thanks for me in. wanted First squeezing follow up I on growth. to Aid

sort is I during of product to can it growing? share? relatively Or you'd growth penetration an to contributing been call is cabinets? COVID. talk could is XX% any again, investing how a sense well? you are and hoping sell you sort know about that on long your you're the Thanks. Have in was out the wanted industry it as You new. taking cabinets Cabinet of set you in force I talked are which it Just factors business sort of if great. incentivizing get there other about, more is And sales the continue

Todd Schneider

significant those -- -- cabinet safety, Toni. what see wash a whether Aid items doing. they yes. changing. be health, in other First there's above services, sell about, vast to AEDs, long that see don't our All opportunity to tailwind, a We're North Thank There's First is we're business. as you, We in we stations, there think services XX do-it-yourself. million -- And but as the that runway people America, the is that sell we the answer what the majority We that is Aid compliance are types well, of our you have really of businesses value are customers.

People investing really we see that are and and for to come tailwind in market the is years as many a really, organizations, their big.

that the we're that's love to that So we're that where seeing in continues. and business, growth continuing we to make -- we're appropriately invest sure it

Toni Kaplan

about Terrific. short should maybe the you hoping business sensitivity And one, talk inflation. from of a this be but the could

presumably, there? comes how frame down or for down, be impact inflation like should the come if you your about Thanks. want So down maybe margin point inflation we sensitivity as however so thinking each to to costs the comes

J. Michael Hansen

about you our cost we've Toni, that's inflation thing cost I'd structure, of to a think a of really to That's types, you difficult say equals will. this. pretty really margin. But say do. got to points When nice one point difficult try x of maybe mix if

a coming say. five our labor they spot. any are and very, we're we accordingly. years, on pressures. last cost But to part over And plan have allows that effectively So inflationary we I would the good us things certainly impacts work inflationary then also the that impacted we are have for in is hard large that coming by it if them this like of structure see amortizing. And of And course very

for in we of we our that may terms in approach, for so of terms pricing And that plan plan may other initiatives.

those can is, us, and can during get costs, to a while to we that of time, and we we're amortizing period But plan the takes because it anticipate point for better. inflation

a on bucket, global nice our supply say single we're of job chain I being really sourced. not that While would does

in has single are little the there the or important it high our choices. the in ability important pressures flex, for have environment. of to a bit years move over And And volume supply that's we inflationary so for the us have two And we're in source, the when course inflationary last some been in parts because chain, we us. of not various world

bucket And XXX-plus it that then years. the sort last third a well, infrastructure, really over the of out And infrastructure. done large are got that few nicely, would and the the course leveraging very, locations we're when growing throw we've we is country. very We've that I around of

product us lever margin And company inflation. is have hear not talk to And that pricing a is get so today's that Toni, affected we're we by dramatically about you just improvement. one

And initiatives it we've of, and And got the lot of this that's choices. that's that key because gives working really of that's a And two, structure. inflation. -- one, diverse things number in And terms of fighting sort the us number cost we've on. we're for got us

hopefully, the So cost us depends that question. easy answers that comes also the not an initiatives It's where the we inflation have, it structure because that on we for metric have and the of from. and

Toni Kaplan

lot. Super. Thanks a

Operator

our any closing additional concludes call or this session. the to turn I'd to Mattingley back And remarks. like Mr. question-and-answer for

Jared Mattingley

you for this joining Thank us morning.

to We We September. at will financial in that results fiscal with you first time. speaking issue 'XX Thanks. again forward our quarter look

Operator

conference attending. you today's concludes for This Thank call.

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