Cintas (CTAS) 26 Sep 232024 Q1 Earnings call transcript

Company Profile

Participants

Jared Mattingley	executive
Todd Schneider	executive
J. Hansen	executive
Faiza Alwy	analyst
Manav Patnaik	analyst
Joshua Chan	analyst
Heather Balsky	analyst
Justin Hauke	analyst
Keen Fai Tong	analyst
Samuel Kusswurm	analyst
Andrew Steinerman	analyst
Seth Weber	analyst
Stephanie Benjamin Moore	analyst
Scott Schneeberger	analyst
Shlomo Rosenbaum	analyst
Kartik Mehta	analyst
Toni Kaplan	analyst

Call transcript

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Operator

Good day, everyone, and welcome to the Cintas Corporation Announces Fiscal 2024 First Quarter Earnings Release Conference Call. Today's call is being recorded. At this time, I would 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; first President who Todd Hansen, Executive Schneider, quarter XXXX 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

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

Todd Schneider

you, Jared. Thank

to XXXX. with We year fiscal pleased our are start

to quarter to our X.X% First high strong Each to income all-time through of and benefits level. volume revenue and basis continue XX.X%, to EPS at our diluted growth of XXX line. to revenue points businesses total a margin Operating X.X% bottom The of an flow high grew $X.XX our grew billion. increased execute $X.XX.

employees, organic was fiscal our last revenue billion Services our operating of revenue compared we customers, thank segment Their other. quarter whom their Rental billion was on for 'XX Facility and growth I the to X.X%. our call year. each continued focus partners, Uniform shareholders and $X.XX for rate $X.X first

from increased continues growth levels, mostly moved volume. driven increases price While historical be revenue near to

cross-sell we customers customer image, new cleanliness provide, our existing all compliance. Businesses Our sales base. force continues add and and safety, including prioritize penetrate to and

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

remains of Health operating Our Aid First top and value Services safety resonate to continues and Safety of employees proposition segment. mind. in our

in We that access workplace. the effective quick and and to with businesses and products services provide well-being promote health

and Services revenue reported Protection $XXX.X $XXX.X All last are Fire Direct Other to million All million Other compared Uniform year. businesses was Sale the Our in segment.

The Fire $XXX.X XX.X%. revenue organic was million, Direct down ] was Sale The was Uniform growth their revenue revenue rate was [ business and to year. compared X.X% million, $XX.X business which last organically

our Mike Now our details to first turn our call results, provide over to I'll for before of I fiscal the quarter updated financial provide year. expectations

our are financial guidance. We increasing

raising billion revenue a a $XX.XX, X%. to XX.X%. growth raising expectations diluted from Also, growth X.X% range $XX.XX $XX.XX we of a from to to are $X.XX a X.X% a billion of range billion expectations are billion, to Mike? rate range $X.X our EPS $XX of our range a annual of to to to to We annual of total $X.X $X.XX of rate

J. Hansen

Thanks, good Todd, and morning.

compared Gross fiscal currency Our fiscal rate, last $X.XX was billion year, increase of $X.XX first fluctuations year. an was XX%. compared X.X%. The rate foreign first and exchange billion the growth billion quarter XXXX revenue 'XX revenue to for to acquisitions was adjusted margin of billion $X.XX quarter organic for $X.XX last

record year. operational of Gross revenue last decreasing margin gas of from expenses gross for XX.X% points. comprised XXX 'XX, fiscal continued and XX basis compared gasoline, high year, of as helped Energy points first a quarter volume efficiencies the generate to a was natural margin. Strong an last an were percent all-time and growth of electricity of XX.X% tailwind, increase basis this

and Rental and in was benefit we've ago. a the a percentage margin year Uniform also that business seen from some energy $XXX.X the Direct to XX.X% Operating Services, in to benefit technology. Uniform in first million increase drop keep prices last Sale. Operating efficiencies XX% of result Aid is of to fiscal mind of Facility our of income compared year. income Services, first Protection XX.X% First proprietary year's SmartTruck quarter compared by $XXX.X for was the of Fire the we've basis million in revenue XX.X% pump with Gross a XX.X% 'XX of for and at quarter, as Please created last compared Services for points. XX.X% for Safety an Certainly, a percentage XXX

tax quarter rate first XX.X% year. for to the last Our was compared XX.X% effective

accounting compensation. an both quarter was were income remains strong. in of diluted increase impacted $X.XX for quarter to X.X%. quarters of Net the last primarily million impact rates year. certain tax This $XXX.X compared $X.XX tax stock-based items, by discrete first $XXX.X year's The EPS compared Cash million the first year, for to last flow

in first the the XX.X% year. shareholders Net an the annual our cash paid September paid XX, grew in activities financial September. provided quarterly by million On previous XX% prior dividends, of $XXX.X from amount guidance. over quarter operating provided the Todd increase we

million following: $XX 'XX be to compares million 'XX rate a of of is fiscal This expense result fiscal the rate fiscal variable predominantly fiscal a the our expected to debt; tax to expected rate please is in XX.X%. Related interest be note compared as 'XX, XX.X% lower effective $XXX.X in 'XX. guidance, to to

$X.XX and effective The growth about points. EPS EPS XXX negatively higher by impacts rate diluted fiscal tax basis guidance 'XX by about

of any the fiscal fiscal our in extra 'XX This guidance impact quarter. third day share financial having comes include more fiscal the buybacks. not work of in impact to future Jared? Guidance one work compared does 'XX. day includes Our

Jared Mattingley

prepared concludes remarks. our That

Now Instructions] the we answer to from questions are analysts. happy [Operator

Operator

[Operator comes our question Bank. And first Faiza Alwy from from Deutsche Instructions]

Faiza Alwy

Certainly, new your customers in color change of I are business wanted any the to macro terms talking to see environment. you every day. if if And a more guys environment. you the could provide bit noticed you've on

around So what bit seeing more marketplace. the you're perspective just out there a in

Todd Schneider

our they quite our new scope. focus sales Great. the good. the of We organization, Yes, business the state that pipeline have, is love

is growth business continuing. new that a that's big you're of see so and we driver and good, that And seeing quite our

say, last. is any it our behavior, environment, haven't macro since -- we I reported in change as real far we As seen would customers'

consistent monitoring move. we over pretty have we seen watching very quarters. few with And as it's are what we it the past closely it very, So and

Operator

from question next Manav comes Patnaik Barclays. Our from

Manav Patnaik

I just wanted us then terms and I give the strategy think, more volume color, you could also pricing see to growth. of a the strong in if little

back historical think pricing you levels. I said to is So

guessing average. that's that down camp every So low pricing single-digit about I'm in talking than guess, versus and almost I still, above company other higher

about pricing So we it just just your is do maybe the here? how first question strategy think

Todd Schneider

and we Yes, new But and upon and attractively, growing we're being upon it robust that that. business very based fact levels, we we our That's, levels, of cost continue proud business this customer based as think, retention to we're inputs. closer our the our is like appropriate certainly historical can good we being think very well.

well. the And the we're that they're our customers have past. status continuing satisfaction scores customer And they is our in in the on as then -- in as of operating seeing environment

we're the So like bodes our -- as like momentum the future. we and we in think we're positioned. where how well it's it growing like business, We it for we well, and

J. Hansen

not improvement, but can our I way Manav, And for I be only just operating just add within a might add us that, And we to margins. past, as pricing strategy. about in Manav, to might the -- improve It's asked the talked right? is that, our we've other margin goal levers. lever have you pricing

quarter that And increasing, sort just on. And great to going that levels. lot shows of it's of operating good And we've again, margins increased got so things a nicely as where We we pricing back quite historical returning strategy is record of think about that pricing margin to level. of a a part that this the is strategy. even is still

Manav Patnaik

impressive. And gains? quite you Any how maybe strong that maybe make color volume that? Yes, provide then on new of business, is the color on around That's share that just growth. help sense. Could cross-selling, just some much

Todd Schneider

mean, Yes. Good I it's question, Manav. everything.

mentioned, good. our I new As quite is

satisfied. Our our we're do good And and happy and results, -- we're to we're retention progress We're customers, to levels, through make with we're continuing resonating make with us it's our again value very up our various in we're easier there. bullish. think never showing business cross-selling. we've is I trying And proposition with, it and But technologies. to

Operator

And from Chan our from Josh next UBS. question comes

Joshua Chan

could that guess how across And coming labor, transpire material? the over I what ask your different I expect of well? seeing and inflation kind you're as energy, about to quarters you buckets, cost

Todd Schneider

as is environment to because still Labor start, I'll to so Yes, Mike's quite Mike But finding higher an is productivity part standpoint. it improve and wants that is in what of ways point chime well. than to attractive. margin we're we're Yes, in And still. cost historical. seeing input from earlier, operating

-- very well. levels And we're good trying is good with position that to successful more for levels. it's partners partners historical in for of can customers and the they employee be as so them obviously, for retention our back And which our much employee our being marketplace, ourselves. good That's that close to

Other QX subject year you you was at a was energy over because That price pump saw really year, if very input the recall the costs, where high. last down is prior.

bit we little we And be year. got so of fiscal that through muted a of the balance But pretty think tailwind a will there. the

costs. And then last, material

chain doing how spoken in sourced. very that a of our to of to are is and about percentage global in very competitive job we've all product. team access Our have products And the prices sure that positioned well supply heck we're trying small one a make to past single

rates. but also access being well us positions having competitive giving that them So as product, very far at as to

Joshua Chan

for follow-up, you could investing expectations your projects are and types you're about that guess my CapEx of kind talk I this the of And what year in?

J. Hansen

see increase Sure. an in a QX. of bit We in little did CapEx

SAP couple we Fire of supply deliver Protection the had we've talked, disruption first last some in implementing that In -- saw our their of over to are -- ability also little as are example. trucks the We our best a in midst quarter, business years, being for the CapEx. chains, the of and we have bit vendors adds

a of first saw terms the little quarter, more those in receiving of a trucks. of in we catch-up us And bit

that increase of be we saw year. around because and sort catch-up I to term, to too year And an X.X% little there expect might so quarter. X% X%. we But bit the a for that X%. the closer likely of SAP of going to believe in Longer this a right still we're be first

Operator

And comes America. Balsky from our next of Heather question Bank from

Heather Balsky

current was where some And you to you're softness two, in could great? you're exposure and auto about the just your disruption? could the end may I areas then hoping, areas you if to, are have exposure through guess, there markets, would talk of and macro, first, this strength where talk any you be any the seeing I about sector seeing

Todd Schneider

watching whatsoever. but Heather. it going what's is on auto material with affecting any not us we're the certainly in worker Yes, way strike,

very any affecting not whatsoever. a it's customer of that, to have result as us a degree broad-based We base. And material

our of X% mind we and sector And that NAICS XX% revenue X-digit customer one in that's than for no than codes. keeping greater no have even greater that's

So that and a us us helps insulates that. from all bit

upon providing. the far but goods really they're whether geography, macro or still environment, labor little the As as But market varies it is the easier, easy. it based a not producing sector, services --

the attract what with see job X.X that customer we've you We what affects them job trying through we from And would because filled in And general. reading of people. openings, we're that our still for -- the base good retain a the -- really and jobs think openings. standpoint love million would our be those to customers that and for to economy see

Operator

from Justin Baird. question RW next from comes our And Hauke

Justin Hauke

to where historically ask that that and kind of point is, had the was kind now it the and years, higher Facility and been because point margins. out for business of like where building the business Uniform were Services has And sustainably it I the you question lower really a wanted very the Uniform guess business? Are the has First segment. been margin comparable I I mean, scale comparable to a they reached about you than Aid sustainably more Rental to have margins where at it Rental it

Todd Schneider

business. with like -- other like it's returned helping we just the a Aid our strong customer Safety. closer it They that extract is mean businesses, value technologies historical The revenue to First we're Yes, out proposition business. And Justin, our inefficiencies Aid has growth. various -- and First base. really I mix our using with to of resonates our

think exception and benefiting yes, sourcing no job I a that But -- done there. global product, there that certainly, business supply is being in sourcing chain to a -- excess sustainable team our -- in certainly said, certainly that great there's see running that But linear. doing margins business. And mentioned we're in we are XX we that. from not is gross of has

Justin Hauke

did -- of $XX kind acquisitions I in than I guess. But then bit cash Do is is where looks like one from And which about revenue guys spending any the the the it what you should last on you Great. flow it? more Okay. guess you procedural, comments we quarter, on of million flow a have typically where was, kind little that see do. higher on the

Todd Schneider

acquisitions were that you and and route-based. sheet leverage I'll Well, Mike fact as use start, that to segments love it's that are we some the the -- X X, acquisitive all know, M&A. cash, And deploy able of in of we're a for chime QX. very so in can And of balance Justin, we The cash leveraging great to we with -- our operating happy think opportunity. And all we made we in. are in our

for opportunity those those Cintas. the those those with So us fold and -- now are think that that, customers more customers into value partners will bring and fold, the cross-sell provide of to great a we're employee and to part we partners, pleased into that is

Operator

And from Goldman our next George Tong question from comes Sachs.

Keen Fai Tong

these you've strong markets care, past, from seeing the trends you the the fueling the discuss talked health in what's you're and end latest education about demand Can government growth? Rental's in Uniform In driving growth. verticals and

Todd Schneider

economy. us. Yes, mean, the of great X American they're segments great I verticals those are for North X

than We've And so, We've markets. them. got yes, got about for it's chatted in in past, we're And still products just we've organized seeing more We've growth outsized them. the around effort. technologies them. sales a those for as

customer base. is that resonating And with that

them. them runway all quite plenty of and in So there's of we think chosen we've well,

the again, on those quite future we're, bullish segments. of So

Keen Fai Tong

gross year-over-year that discuss Got from it. you beyond bps of and margins, with your seeing expanded respect segment. driven takes additional and your above costs? that the lower in you're Most the this And for year puts quarter be remainder margins over and gross XX then in margin Uniform of around lower by opportunities to comes to tailwinds Uniform costs. margins appears energy expansion Can energy

Todd Schneider

towards nature of around our George, the the it. a being businesses, guiding percentage -- Yes. expansion of the for balance large Rental for we margin obviously not energy year. of the we're is business the tailwind And do we're math the a year. see And

we're going based certainly to But of proud upon on business. helpful. inefficiencies the So those expansion as we earlier, expect of margin be mentioned that's out we're leverage our revenue growth, And extracting Mike operating returning grow still levels margin is back attractive levels, margin to fact that historical at but gross operating highs. that pricing are we're levels and very to to and able margin -- all-time

high And So that's a that team our and actually level, continue. part is very of at expect will our plan. we that, treating

J. Hansen

is just mentioned because really working that in like that the might are that mind getting our initiative. I in SmartTruck George, energy keeping prepared benefit at remarks reiterate what partly are hard we the things we I

efficiency, better continue you as if to creates to So and with in trucks we as don't other grow need and words, we our network. fuel that in routes then nicely past, throughout the as we really volumes, many have add will,

down. get SmartTruck And it one is a -- that is to technology. initiative proactive of so And through ways energy those proactive a that's

Todd Schneider

and And that's for that that in employee we're add our certainly customers extract because those front them Mike, might spend much productive, of and inefficiencies it good out, our more them better instead on when more time our because our them for we makes partners, of able partners the to for road. better It's organization. I that's

environment. for good the really it's And

many up. benefiting the So hard we and of lot think -- P&L and And showing in checked let's say a more that boxes the in fashion, ways. but over not we've technology it's just on there's simplistic years, a it's there, worked

Operator

from question next Blair. comes from William Tim Mulrooney Our

Samuel Kusswurm

programmers is? your of I'd penetration you convert. already I Tim. as verticals? here. health want know think question is Sam more Kusswurm as But a care another guess do relates clients, I other guess operators with rate might here, I care start to compare like the health some for care those health your But service no that about opportunity your lot what for how it to to customer who partner, you've use This a And especially on talked to

Todd Schneider

have more the care. And our a find this. I of with that's that's that we me. innings early of coming front health up products and services culture. question. good know Sam, in We're with they attractive. that in we're But don't part And

get business. from We then will enter into behind we a go out But our desk and customers. we our time with spend

our speaking help And what where partners. when on in various taking interested and find areas we and by we our most action can to are we're customers find that them, we there. from hearing to the answers And and they employee we're them, them

again runway our will long that be part go to So we very again, a that's forward. and in of of culture moving how and vertical, part market

Samuel Kusswurm

you. any of about Maybe quarter another like I'm the variable more. last us Got your just just one as mainly break again it the it. see you wondering in a Appreciate previously? branding percentage guess margins. there to was selling I picked SG&A if up help was sales investments expenses? the quick on costs talked I Maybe compared out if little and of you've some Or a insurance for could that year.

J. Hansen

about relates and in takes, the any We in structural. normal. unusual fourth to some back claims to something but -- nothing down quarter We see come saw the the we significance. higher, getting But just not those talked quarter. quarter, of as Nothing it some did more the puts

to and that. we're to at of particularly to is leverage the work that, goal to continue going Our G&A continue piece

Operator

Andrew our question comes Securities. from Steinerman And next from JPMorgan

Andrew Steinerman

the targeted XX% margins, in about know, super year-over-year I to were and strong margins. basis. as a be on appropriate. definitely feels that like XX% quarter not where Cintas the XX%, are as right of has to might of talk incremental it incremental to which we kind range wanted the given of low last quarter I kind end now, range, surely a for historically you But

is, up? been my medium-term has so And your question for margins incremental range creeping

Todd Schneider

We QX there's linear. to target. will in margins. was But certainly always to every margin we range XX% XX% quarter expect our incremental is our and we as a business lower. Yes. year the attractive XX% I And for the -- as is be Running we to XX% not than think guide And are in speaks improvement in mentioned. a I puts that -- and very attractive takes where like higher I range. well. will that

Operator

our Weber from from next Seth comes Wells And Fargo. question

Seth Weber

small ask in anything down growth It's Uniform was else in quarter. organic to out there just the I Direct call hard. that you'd there while. Is about first, wanted we've tick a decline business? Sales the the seen I in for comp I know here the there that think, that

Todd Schneider

from tends we is Certainly, the that Direct -- of rollouts upon a And business past seen outstanding the customer. spoken Sale large based X bit lumpier but as -- to really we've years. programs, XXXX-type in what Fortune have it's a business the little or it hospitality about be performance past, over Uniform whether

still of and more than on the business moving We forward. bullish are future year that. for nothing that and So the

Seth Weber

do Todd, flattish that's think or you do business of think, Or that you Do the up kind could think be you down? year? for

Todd Schneider

-- I of would our expect businesses all well, to grow. we suspect

the we've see I seen you'll in back came set the But that the level couple that just it where that So vertical, of the of wouldn't we we would last of expect Fortune in level I hospitality near strongly. XXXX, would of up. that dealt grow. in years, suspect but with to with growth so comps what level employees we anywhere that suspect the see are

J. Hansen

pandemic fiscal In 'XX, have organically -- point years a of in that last I almost period it of have XX%. time. sort we significant over what fiscal out in lost of our grew XX%; was X Seth, 'XX, that business recapture might that the they been

but So a mind but grower it mid-single-digit on, there Todd in of a single-digit our lot for was grow, more low it's business, of keep to that longer-term to that recapture going our portfolio. in probably goal expects

Seth Weber

Right.

in Aid about more seeing the to Understood. there, any First the players Safety given you space regional active? space? can any just trying Are getting seeing bigger that talk are seeing players on that smaller And Okay. you strength maybe get you margin that you're then and competition into incremental or business, just

Todd Schneider

Aid a see those question, many, delivered it's of name you hundreds or Good products, it Seth. whether it very products, marketplace is Yes. There's e-commerce, competitors many Certainly, and Safety we competitive it, van there procure products, be there. there. ways out First to

the resonating But of -- as health into market. businesses attracts care employees a of of safety the occurs, plenty employees is And when item the that #X of are about it people folks. proposition that, a very it's great there's focused that of competitive being And the on. result we've taking certainly talked marketplace because value and with

it competitive be. will so very yes, I'm to continue And it's a and environment, sure

Operator

And Moore our next Jefferies. question Stephanie from comes from

Stephanie Benjamin Moore

nonprogrammers, that of Actually, there. what landscape Uniform and last to are little talk business, Is regional you larger segment? you're a color helpful. players, on be product some ancillary there maybe would players? Could new where majority competitive it the win the As Any about terms you you coming continue continuing new seeing of core question of from? bit that in more the seeing your business

Todd Schneider

Uniform to in sure been be seen it that always entire landscape. in my career, I've I'm and the my really will we XX change It's So career, haven't years. the and It's continue competitive. a way. highly Facility Services competitive entire Rental business But been

with that is program the And our organization being skilled. -- said, there So know no highly opportunity a sales we market. is what massive is, we

are centralized buying the And no do company, program mean -- buying are focused the the through they're about may expanding themselves. a catalog, They be may for they pie, And it exactly -- those they at they a has are on years, for that. it to we might a it pie, our garments, when them. purchasing -- -- they It's they're wearing been right? and but organization programmer but be be expanding employees continuing talk

they're really products Chef and branded Carhartt good market really no-program offer, or great And But then Works products us, what whether to or we the offering. is with sees we unique value the services attractive we're that we that programs. in provide find and for Landau, like market them more value

So we're that expanding and on that focused continue. will high,

Stephanie Benjamin Moore

Got just if may. follow-up, it. I And a

the You curious, force current do your with willingness just continue kind just nice them be to the resonating Is you of on noted is product to environment, on that work your in customers of resonating that retention offering, I'm sales kind goes in? think to really most level. I'd price? your your what Is level to with what this think high. the is you the most scale? love do get it thoughts a retention drive such it

Todd Schneider

question, Great to then But them starts services, have tools that. That's because great it just not very only care that on the retaining of of product, But best to they exactly the highly and intent a people. incredibly customers, giving very focused take taking good but so can with our do Stephanie. so attracting our and answer customers Yes. being inputs complicated care there's many it.

to really them But a high customers a it on do focus service and and that they're really that executing down great then the And gets and we -- that into products with it -- executing good -- So gets that. our mentioned us. to I making easier our care tools really, that that we're make take business positioning the of to people level. earlier, at or

chance heck it's to products, is people hard customers. it's And often are of people, -- hard procure the when we attract marketplace, in doing our of about a us things gives to when to shine. a it's through. challenging, operate it markets are in one talk shining our And hard care job taking when And culture our when when to

Operator

our from And Schneeberger from question Scott comes Oppenheimer. next

Scott Schneeberger

speak because sounds I'm going where room it of you still and here, add it you to been run. sounds going just you've been want automation very -- was certainly see like that's facilities. more you getting well. on hoping on is SmartTruck you've to And where could Guys, a update to kind really I like also efficiencies nice to going here an I'm

get you you put know year quantification for there play any Is on how do. margins help what's that? just looking But an of much up I can overall you're and at idea us maybe there business. this can

Todd Schneider

like in business call and if and can as focused you been you our technology, start. would it all well, automation, all and that you it digital. call I'll to chime can areas on technology, businesses that We're we've across We're you deploying for Scott, can call Mike, across of years. there. it deploying of our

is And seeing of there come real are see with our and efficiencies in functions. with with with -- our of we're -- -- -- our Verizon. certainly still plenty benefits But there's to we to some that business SAP, certain there and our partnerships those investments it's investment with Google to there opportunities improve the automate

can but care of it invest it because sheet short our well. to it's it term, the positions we think incredibly use customers. more it of And an our The just and as we -- well great not customers make good our easier for balance we long do for call there, take business make easier for employee us the our to term partners

J. Hansen

that Todd the put details talked on really go about, to Yes. There are that it's of it. number into hard so a that all just many things

heard you've is as is, us goal improve margins. say, Our to continue

different number levers to do We of so. have a

to goal range, Our in we're XX% of today. is incrementals the that XX% that range recognizing at bottom

what But left because a it's put working what's -- are can always And more many we're details do. working number we on. we're and so specific many on on projects different hard there to so what's

the continued think we and margin last that's over it. year, imply So about for does our guide improvement way certainly

Scott Schneeberger

year? The you spend come? the that are just sense projects much we range have see -- on years mean, speak working on implementation CapEx that. How Could SAP, of this going referenced you you to Appreciate and side I what Great. forward. to some in year, mentioned may the going have -- Just a you of Fire the just be end high tail would more for to a to next SAP -- segment.

J. Hansen

From we implementation. of the perspective, the the midst -- innings the early a in of are Fire

bit little margins pressure in bit see the a year. this a not of It's we'll switch. so and come and next flip the Fire And don't benefits the little a some The synergies overnight. year

First Rental platform. we using before and takes to just start and did like onto Aid First -- then see really we the like to just Rental. really It And so at business the the with the good a get get have that, we of we business benefits platform, to we in accelerate time the bit need and little Aid

a but we that's a part of Fire expect smaller will benefits our those -- come. Now is certainly business, that

is the not are are from it constant -- learn to though and on, -- on our working for will create There after be SAP business a that we in we gets Fire As are are SAP SAP, different and relates things most SAP Google it's Protection to even SAP. And of things. and right? with business and new new initiatives there Verizon journey,

look so initiatives largest about Todd's this And I think we in at his terms of as technology. talked of -- it one

a it's We It's and flip And journey. turn switch. on here of new the a not systems there.

So going future. to in midst is, our continue of We'll to the it's of invest all bring expectation we're benefits the to And that. continue in that. into

Todd Schneider

as benefits journey. -- on Scott, well. said, journey, But you're upon is that it tail a when Mike there long long, what of to benefits expand is a

appropriately. And invest so we will continue to

to at relationships part going very of We those for that's us. it's bear each level a organizations, of and plan. in fruit high have our And

but shown that of digest our not It's team then to them. challenging through the change, not very go these the to has leverage wherewithal front processes. are easy. the It's in only But opportunities

Operator

Rosenbaum. next our comes Shlomo from question And

Shlomo Rosenbaum

to more you stuff side? the that onion it maybe like the and just low optimization? little But some course wondering I know bit margin do -- peel back the XXs there can First you on Todd, the pointed of to that. on Aid sourcing from seems something to with mid-teens the gone in And is the has I business was if year. there like route a

easier need? you it Are just pricing? significant Anything source the labor mix environment you that, Is that you after to And for is guys yourselves? operationally I people a difference? related, guys what -- a you made on for it else for question such have

Todd Schneider

we're the and so leveraging Yes. Aid Good really many and we them all. question, the -- growth, margin starts revenue inputs to that's It Again, Shlomo. with good in value marketplace, But expansion, we're we're love to there's challenging. business. products, First attract a retain seeing And that is services and people resonating, the still trying big offer in we is the proposition because way that. the

to we're are business really benefiting trying exactly trying customers of better. that them good are take people. care And people from their and accomplish run we're their And to them We're helping -- that. helping

those helpful. The clubs items. lot has much it on pandemic, focused that's the sanitizer and types so more and a lot of So during a back was safety certainly of you as -- products, mix, of know,

partners, to and has that absolutely our position and it of leveraging is our the those more to technology yes, on First focused to And a mix types easier back business, more And also revenue are to make to we value partners our abated Aid bit, employee customers. recurring type. but products, do provide

of out. because not And the make money SmartTruck are when when energy have We little pump. we of is cited also the of how are did around price a always all because make money as XX wheels the bit about moving. inefficiencies points. don't But that's wheels that. stop. We the talk is earlier, here the That we we extracting a at component Mike tailwind, basis And

they're better high That's as the we that job. mentioned, the has contributing. They executing for team customers, great partners. done The leveraging a a in better that And our and supply then employee chain leverage And for there. business, get level. all they more our is larger I are at lastly, opportunities that's have, our

what's And but those we the -- to is, contributing that in continue an -- see inputs encouraging future. opportunity the having -- to it, so are really many and

of process. So a more is event certainly, no

Shlomo Rosenbaum

you're the like then for labor own, the environment your sourcing? people that on just And

Todd Schneider

Yes. me. Pardon

So a yes. standpoint, labor from

proposition it as As people but have but a are is I value which we earlier, to but else, well. We want people. mentioned -- easier, we only for somewhere not And is we very not happily challenging. employed, are easy. great employed that hire great looking employee And think

highly that. so we're focused on And

been was historically, ago So challenging challenging. But my year it's was not but it -- a always once ago. easier bit career, more it little yes, or It's Shlomo, than has so. a it what but than a throughout year been

Operator

Kartik Research. Northcoast question comes from And our Mehta from next

Kartik Mehta

have and then, new look wondering, move of if as forward? to I'm take questions again. maybe Cintas back recession back and for lessons from sales that there's did to if new you XXXX a I And sales. never know thoughts hopefully on what go at lot perform But you XXXX, of any happens new And kind you how sales? would we that

Todd Schneider

Kartik. Yes,

than all, we a in of XXXX. company were First we're today XXXX, different really

We're goods customers XX% today base. is service much are a now -- of diversified providing, customer XX% our more are have producing. We

government. that care, verticals have significant have education, we well, as We didn't health

well 'XX with propositions running And we're still so rates. value we I and next our recession the we new business. we attractive remember 'XX, So really for I did is. the back resonated sales people, And still think whenever sold then. organization And positioned at because was

for As money. I mentioned, we asking it's not new always are

purchasing us, redirection it's a Sometimes take in a maybe also not direct facilities. items to somewhere else but care the those of from clothing, competitor -- just to they're a standpoint, of only they're purchasing

well our through us. mention, didn't And think it, whenever focused a the positioned. I that -- about up sheet. is, on care whatever having we've recession we specifically opportunities but taking environment we're care might employee economic the So open love might of that fact organization is partners. for taking we we of also our you think the is great And our balance customers, fighting pristine great just next ask

the environment successful to XX whatever it. And in going economic of we that believe last sales grown we've XX be is, we we're years. suspect the And in

J. Hansen

broader value Todd team that Kartik, is in a bit environment, the show bit tough organization. customer he back that little And really sales difficult I talked little continued our as sales He as running their and might he than add, about, a our and quite internal different. a to goals was even It also mentioned. Todd is and and team be modest. base exceeded might times, a it then, was was

really seen we'd broadest the a a the have. recession longest, of sold the deepest, it's then, in good is reflection back new business. And we even proposition But lot of news value still that in XXX nice we years,

Kartik Mehta

follow-up, percentage a way Aid certain and say would it. just And you Yes. certain a standpoint? there really contracts percentage if is in recurring? well know a First a you're a you seen Do Is have recurring? business, consider I the But demand look at long-term don't you in at to that from doing Safety you standpoint business. historical look as just a and what you've from

Todd Schneider

has closer that supplies, good -- much even repeat historical don't higher have but it's question. type see to Kartik, returned as And I be the know they or customers, me, -- Yes, value WaterBreak services front to just it, a it want. recurring of product revenue. far provide it's we the through to we what Aid it a to access water in eyewash provide, stations, to what I as from our access AEDs, of nature of whatever want It's First we whether to offering. access clean

Those are really so that are important we pre-pandemic, and continue. more that than customers that, all think they will items to were our today trend

Operator

Morgan question Kaplan comes from next from Toni Stanley. And our

Toni Kaplan

are products. that they're been that? talk What has your the to use So a have you strategy when their about one found you don't talking incentivizing drivers strategy? doing Can why cross-sell about you disadvantages that competitors where of using

Todd Schneider

you We've Yes. them service I'm started sales we job because my been them it via sure -- the as in on Great our before representatives. well. and was Toni. asked well I glad And been was since our cross-selling I'm first products years cross-selling started, call place our trucks. I question, have XX ago we

are see in lots, roll parking taking we XX,XXX our those they're on of -- businesses. care of or that parking lots that the great focused that day our every those so when customers, roll fact time trucks have out we So of single out they spending

services have eyes. our been and they in leverage on as be interested and going they the see they lead in. provide it because that those advantage. more component service what's will see sure we always they that key to make based the have products provide they and and customer the product we services trajectory upon real a provide those a ears, it of or nature and more have that businesses, always And And of They And and minds, might products has either providers, infrastructure a be opportunities. see they growth

J. Hansen

Toni, about last And customers verticals, et cetera. the a XX all we've than over we've years, -- got sizes, different of more talked this lot

others, and just do than sell, larger others. expect certainly penetrate service that to those are And so businesses while we sales recognize we continue reps than some complex to are more

for it through, a there's be sometimes, might opportunity. And enhance so health example, to in care. And strategy that

the decision do We to have people dedicated that reach really out makers.

also service different those and other people not it's it's sales looking that relationship just for have responsibilities opportunities. So but rep, new that the are penetration

an all different. say going as go into customer have just not each rep go a and It's in to service it, simple simply we're so to and or sales customers are SSR sell

need strategy so and types of a And we that we do. all attack can customers,

Todd Schneider

service leverage providers. scores our complicated. customer, And they our And bit that cross-sell service like in satisfaction service that. via one type frontline that's larger like really And really large A we our whether a people. providers, because smaller we good. know we more -- provider. mentioned, it a Toni, can are be, our part They customer as little the a more Mike

But for important there. some need always help air been a be and our component some strategy for might cover, be. an always of will that's There nevertheless,

Toni Kaplan

also that there sort. That guess, are either -- things are internally you've capabilities basically ask, even calls, any been technology and that M&A still have there maybe through is and M&A? Like would talking maybe -- you be the need getting maybe or done super it, capabilities do, of technology helpful. think I and about few new you you've this doing that technology you I or yet that to through you people technology helped hiring hiring but technology still think last I to you wanted Will need? more investments any, Are people?

Todd Schneider

Toni, great question. Yes,

always and build for that So platform discern technology for with But those our really a time we the we in on our are answer employee have strong opportunities. we who we know off the is think that can of. lookout with ones the interested those are what customers are partners spending opportunities. our We customers,

-- come business, do to us. do any we it information, void? how have our easier easier most now, make that with business to asking from, trying always we're been there is that's So make to where of do frankly, And what it investments

of experience for for be it customers in but trying easier partners, that makes a providers makes our employee to service our those a world-class that easier service strong search always to business it incredibly provider, world-class with an So technology us, to platform create our do customers. for we're having

bolt all on we're whether are of forward. we'll it or and it's in it of or our we we we to moving interest those ourselves, buy -- platform yes, us, to be So created search of current

Operator

there time, to turn are over like back call closing to the Jared no Mattingley for I'd remarks. this questions. further At

Jared Mattingley

for us joining you this Thank morning.

you fiscal We will issue our at speaking financial second quarter 'XX Thank December. of in to with results again look time. you. that forward We

Operator

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

You disconnect. may now

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