Cintas (CTAS) 14 Jul 222022 Q4 Earnings call transcript

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

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

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

Paul. you Thank

and $X.XX. quarter by increased increase $X.XX grew a to XX.X% inflationary strong Despite fourth to financial to led strong of points XX.X% operating basis XX.X% billion. income results XX headwinds, margin revenue Our EPS are

quarter despite finding We Our to costs, cross-sell [ph] Businesses able penetrating existing cash incremental was increases and providing from the prioritize, this customer and more selling EPS inflationary Fourth dividends. and XXXX, productively purchasing get XX.X% Cintas we in labor run while continues buyback XX, driving businesses provide cleanliness, and base. Cintas last purchased the our concerns paid add [all from operating for program. customers through help million and and increased of their heighten during flow significant including services, with of our obtaining margin to ready penetrate operational were $XXX.X sales outsourced price by sanitization and workday. increasingly labor them year. force shareholders our new XX, over we period And under to increased quarter Challenge deliver efficiencies the $XX.X customers inflation million free fourth and new quarterly to compliance. On we] to excellent business, and service June stock existing base. products July common image, business, safety,

in We allocate continue shareholder to capital to ways many returns. improve

XXXX fourth with a are We an $X.XX quarter including fiscal results. a billion, record rate growth The accomplishments, our XX.X%. revenue of significant conclude increase year pleased year organic revenue They financial the was following: of was Fiscal XX.X%.

fiscal improve fiscal In spend of increased and shares recorded XX.X%. Excluding fiscal year return. $X.XX for increased the We allocated until XXXX year, of dividend XX.X%. million we two billion. Also, up and gains recorded repurchased shareholder margin capital X.X one today, XX was stock $XXX.X a this Acquisition to points last total operating Cintas basis income to million. we

We significant have which going increased the on made journey. years. progress consecutive dividend our transformation since every is public, digital We XX year

their in to online through our [added continue customers Our solution. [ph] managing find value] program

to us business and greater ease drive revenue expect the retention with realization. We of doing faster customer

usage allows rolled decisions, routing our out and miles. make us more on time fewer enabling which driving also us actively spend technology This by to using with proprietary and us new Truck. reduce We helps expense technology, service are Smart call smarter and sales, our to we routing customers energy

target and great efficiencies, analytics operational also in strides cross-selling, pricing opportunities. us reporting, data enhanced We helping made and business penetration,

was responsibility, sustainable commitment a we steadfast In second business a founded robust to social governance corporate part of issued our and model. environmental more our It's Cintas or ESG as addition, report. report. on

to Operating finally, greenhouse ourselves Fortune and an right our gas dentists new them what's were among actions achieve or We and we are are mind, XX of revenue fact XX% need grown day part announced a image, cleanliness, rental result healthcare of their the The in workwear XXXX. being the companies unserved has in care, of most providing, to each has is dollars that employees, doctors offices, It's customers these year hospitals, consistently are or image, focus market success. shrubs doing revenue cleaning a And There retailers every on billions to work on business, well safety, based is such improve. services facility is retail call provide from to faster, by in practices. size zero the goods and a that continued to business The I rental our We prestigious we more and we And honor recognized the and were ambition to continued in workers total proposition purchased More past towels, in Cintas converting products producing The our profitable people converted better, and are our the from complex. focus demonstrating economy. market. services employees themselves, the to as program. a this like other. prospect. total again to retailers. every company. the for than services, has EPS opportunity, culture cleanliness, sold named dust including of be Series. inspection a prospects our Tens We of vast. a continued successful care [frame and businesses] care corporate floor, to tremendous. including are and a net XXX. of Our services the cabinet challenging and Series also our first strong respected is [ph] businesses their addressable emissions half thank years. recognized. tools With business economically our every door, the value fire of Every urgent it recently of doing to than Uniform The our and a alone, floor are sector customers mops, for and from and rental ESG Index our are Rather includes has services compliance, companies. going long-term outsource on core as customers, Every shareholders, FTSEXGood rental adjusted mops or targeting protection compliance. partners, Cintas. perform each from strong millions than whom alarms. items concentrate to is need retail of microfiber We prospects speaks as program of added wall, increasingly Index Plus, for on growth a to safety, sales Uniform mats workwear competency. a bathroom, by test in is business XX just market and great. workwear Since aid extinguishers for increasingly our Rental office, hygiene, vast or for addressable and They significant.

organic our multiples are indicative our jobs GDP revenue demand growth Our because [ph]. of growth products and and compelling rates grow supply and revenue ample proposition value in services. of size] tremendous of We [market and for

and time covering leverage. the Our fourth penetrate means turn And results sales. with the when more fixed for bright. are with a our existing realize remains machinery services, suppliers. margins produces power even revenue and [indiscernible]. more volume expenses call with Cintas to plants, to more Route our have the growth incremental equipment. stronger of cost quarter of operating the we customers increases our now building, density I'll more per operating Growth for of Mike in to energy operating profitable financial and revenue service provide and Growth fiscal future on in customers we products spend details providing our XXXX. reducing in growth expectations buying because margins expansion. service more long It runway and results is and The over

and Todd, morning. Thanks, good

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

Aid revenue Aid First last fourth million rate fourth of compared This quarter. $XXX.X growth momentum strong Our revenue Safety quarter was in which grew and Organic XX.X%. Cabinet growing the segment business, our First operating was for the to Services growth the reflects year. million, $XXX.X XX%

remains of protective quarter equipment X% about levels, While compared last year. to fourth elevated PPE was personal revenue than the pre-COVID less

revenue was of million quarter to to are segment. percentage the and XX.X% for basis year, revenue Services Direct Safety Facility fiscal of organic increase income reported margin Services, the was $XXX.X and XX.X% $XXX.X rate XX.X% growth was XX.X% strong. fire XX.X% increase. year, to First compared Gross XX.X%. XXXX, Our Operating growth XX an in point Fire of Operating fourth margin compared business last of year. Uniform Sale $XXX.X Protection compared an Aid year percent and for XXXX margin year, to Rental by Other All and $XXX.X of fiscal million, last Direct was a year. compared The the both of Safety Sale Services the for segment, Uniform for million, last Uniform fourth was quarter for XX.X%. was $XXX.X Fire compared All to and million, XX.X% income Services, the business XX.X%, businesses Uniform reported XX.X% was last last $XXX.X business for Direct Gross businesses million rate XX.X%, finished a XX.X% Sale. organic million Gross as increase the Other margin

$X.XX, year. $XXX.X on effective basis the for discrete rate year, rate quarter headwind for rate stock compensation to period-to-period Our XX.X%. growth XX.X%, $X.XX that to from of was was rate compared was quarter events, EPS. Diluted to and a a tax this fourth to $X.XX quarter compared last fourth income point effective the the headwind in increase last Net XXX million expense. of higher Note move XX.X% EPS tax can last including million, $XXX.X the the based was compared year. EPS amount year's to an tax The fourth

XXXX, over billion, to an to XXXX. fiscal in our our to $X.XX For we increase year of revenue expect range be X.X% fiscal X.X% billion of the $X.XX

We equity the $XX.XX the a sale to expect gain first $XX.XX. Please quarter in an to of diluted and assets quarter. of included following: the a third EPS operating on on range in the in investment gain be Fiscal XXXX note

$X.XX to XXXX in due XXXX in compared part interest excluding billion billion, $X.XX expense Fiscal to rates. fiscal $XXX of $X.XX release XXXX approximately $XX.XX. fiscal XXXX margin Fiscal operating is the was for table in was diluted $X.XX expected our earnings a more Please in items see billion, income higher the and in expected to to is operating these XXXX the fiscal income after million, be billion XX.X%, be compared million to Excluding EPS of to information. range gains. press $XX.X interest

fiscal negatively effective fiscal a Our compares tax expected XX%. impacts. to be $X.XX XXX The gains the This their growth tax rate higher diluted approximately by share per rate is basis impact XXXX approximately effective approximately rate excluding XX.X% will tax of to expected related EPS and and diluted by EPS after XXXX fiscal points. in XXXX

guidance can continue to financial remain XXXX, Our we the XX, impact future buybacks And include dynamic includes of in change. through buybacks. not does that but share a share July any environment

stable Our to a guidance Paul. turn or I'll related economy and setbacks it excludes over economic pandemic contemplates back downturns.

concludes That remarks. our prepared

analysts. questions it happy to Darren, you. are we Now to I'll over the from answer turn

will first Please go from We Faiza Instructions] [Operator you. Deutsche Alwy Bank. take our ahead. from question Thank now

open. line Your is

is extent but question. your more I of could how outlook are you've question may downturn. you historically Yes. the a contemplate I mentioned about Hi. Good the globally, does you about stable change maybe the to my economy, guess Thank talk environment not recession little United we that morning, an and into a lot economic taking in contemplates around, the and economic that run talk as around that? downturn? know extent the concerns outperformed Could the to that know first to a everyone. States maybe economic bit any potential for you your guidance there just us you you

productivity. we or our about We Thank like Faiza. question are morning. for our in think momentum. fiscal through the the that you certainly recession out good look if where like In our getting. our approaches ways like certainly listened we're think you business. momentum seeing We many can we and year, news Certainly, ever do occurs, is, we're sales that do will like of yes, seeing newspaper our occurs, what and a for then year. have next and I my it I in in not in our very tell appropriately, poised like done recession. the are I downturn which scattered breadth recession to we always When hope so. we don't fiscal closely. ability next business. to we'll to read or like a what And guidance to customers there, And we the we're trying XXXX, And that hear, this we we point our the we're confident leverage for remain We manage our We you continue it we're so and – and because, that predict depth not we we watching at the but quite they're what

Excellent.

Just of about a volatility to it you as know, talk energy there's follow-up, you quite bit as could prices. As a costs? relates oil been

what the about how anticipating of and was much impacted disclosed, could your XXXX? quarter for energy what historically us just You've margins. you're this Maybe you to talk impact sort

Sure, Faiza.

the energy XX company In segment, energy was quarter total rental from X.X%, XX a that's points. ago. up was up fourth for year points our Our basis basis

more So, business. little a just bit that in

price certainly Our part seen nice of elevated our at our weeks. it's XXXX it in fiscal that it's in going points points. of the to in XX certainly higher pumps but And XX XXXX our the but expectation XXXX, stay basis this quarter not that little the to than to bit fiscal fiscal first of is down couple We last come just the of year. basis have level, a to see here, the on increase going high see energy expectation is, call the an compared June whole, to we're

Understood. Thank you so much.

you. Thank

Thank you.

Jefferies. We now take Hamzah go next ahead. Please our question from will Mazari from

Your is line open.

point? how the you have labor And is Was is there out not labor demand at demand wasn't if you have would normalizing that been morning. issue? there? if was growth And labor Hi, just you meet Any fair? because because of question much an availability, couldn't give that challenges, challenges? meet that? first labor some of My good labor an around see issue? thoughts you a And could labor could us some there into ability you so, what do Do sense

demand I'm as staffed a demand. – meeting question, is an side. job managing is thank it in our through our your for you team But quite the quite robust environment has process. labor are can for where it incredible on see challenging Hamzah, done and that happy customers you certainly we're we The that is and

but be as if so run it we said someone the how here good. the we're a team And that meeting in be my can't That's revenues challenging great you hey, that's tough people it. And is wouldn't a well. as as easing meet today I not a proud to it of exceeding but that, our so just really I but popular demand, think it good retain far that as needs are really like chance doing and them. be seeing can aren't that one, hard think develop customers' would future, really going we're business. ever might And and that. not gives the is things we're remember It’s us we're staffed think to to labor when I And the fact in a We've got and that, attract trying we shine. my really exactly career, bit,

business maybe there? thoughts spinning private Clearly, levered. just of environment, I seeing out, of – some didn't M&A. is with or labor to M&A specifically comment follow-up high thoughts you're one than your my with just just know And the distress larger that, of it. valuations in on your business? you in what valuations is around and under continue you a their but in, were balance deal know for of sheet just any Clearly, back maybe stock more you lot a and there? of sort I come too market on question M&A, don't the are just operators sort pan is looking Got Have off competitors coming challenges, bought are and

all valuations we sizes. is got organization and on don't I what shapes the we question. But actively to can really but an certainly, sellers. situation specifically Great takes And deals We this it And pursuing tell of [indiscernible] comment anything. two has to are dance. certainly. M&A, matter that find for – to be tends more to willing – of than right organization shareholders of And occur pace an to that it you

able sizes. all you of As balance shapes sheet, to our our mentioned make correctly, ready, willing and and and we're love deals we position

Great. Thank you.

We'll question you. take Please now our Thank from Sachs. from ahead. Tong next George go Goldman

open. line Your

provide in update in your thanks. an How changed stops base? Hi, have the you purchasing environment? morning. customer evolved have on current behaviors how among customer Good Can cross-selling ad

customer George, the patterns the current current good. buying customer penetration, have been

over of a the see we business, see a haven't customers has growth quarter love of due seeing as and mentioned, the and really in As quarterly and penetration year a existing can revenue, certainly behavior. part has at we our revenue contribution that well growth. momentum Todd has accelerating good this in change the been and part pretty but that's – our throughout year, of can through seen customers our the guide. because gone the each certainly just And you their in of you very those accelerated course the we we're new our good

has in that of are about Our the value resonated. they're facing script outsourcing needs that and propositions challenges labor it that because and businesses our the Todd talked the difficulties facing,

resonated value customers. well really Our those has with

good. outsourcing the been has And so

has existing momentum really and good. So, all-in-all, the we like George, those the been of performance customers

current the cost inflation or your offsetting And can a pricing And more respect about then offsetting fully than little environment? are input inflation? input bit pricing in talk changed you that's increases Very trends, you. Thank latest also cost to helpful. how with if

question. great George,

a that great from As component we It but along We've all think not we're job I our really are like we costs, a a significant earlier, and very And said input specifically plan investments. we're environment. challenging be labor costs has with inflation, to pricing doing it's because our of our strategy. clearly, material is mentioned but immune and that. –

price need areas our costs working add from really of We've provide be other in the long-term leveraging us organization. above customers done to of at room SG&A a that Our it's adjust certainly and rates to labor are and job to focus, they have through to adjustments had is are invest historical. coming big focus above we've saying, to And part historical nice a price to where as are certainly people part our but looking yes, we etcetera, and nicely. be of standpoint it a will we address

However, just ways key going we're pricing. certainly and business. to that than our in grow doing a way find we many find initiatives to improve margins in in other help are to so do And efficiencies and

transformation mentioned way find script well. our business we run experiencing I and our And – improve how business adjust more but how that's SAP in the find take getting might we and to think bit So, didn't this, that of with digital what to customers, most how can we're folks that we're as are I'll that experiencing so little you're improve our long color but think for this specifically of SAP approach and are that, we a going digital understand our transformation. just price, and able and as go ask helpful it to is we'll you by on term provide margins. that enjoy to efficiencies efficiencies our about customers tied I still of the we backbone the I at. be because we're our

online our some not because program [ph] me. is their color. bear provides value their provides – I'll revenue office of Cintas sales it So mentioned the us It customers manage us on which just leverage. bills walk a pay with through portal, ability when for via My few their retention nice time, I really [in] improved just these available. and and to

the tracking of because helps routing for So technology, productivity that's It also of tracking self-serve Truck technology, provides to it to That's proprietary script driving. help of Smart us vehicles. us time I allows some well. with customers allows that It can as in more and provides mentioned care does our and it improved us as this well, more great, efficient routing instead productivity. is that of take more we but which partners spend instead provides our it having real important as us? assist quarters our Where customer fuel time distance with as customers our idle when generate us Lower by helps consumption the wheels – rental reduce it's don't fact, obviously between emissions obviously has a reduced in leveraging X%, an said, and efficiency revenue, within when which our we business needs. to to and last because is driving, our result. over we’ll division, finding the It just times, any in technology us. stop. always And are GHG just is we've moving, it’s three lower customers which

call So also performance. that's rolled we plant dashboards, to our transformation. that have something evaluate to which or our And physically they're be facilities, excellence at to without see our then, us important performing plans technology ability for What transformation we operational each out we've the to production how having our evaluate allows us. through digital to

track to how And they us and were in see you turn had be now We were have a allows were that. plant the times our at on performing technology in washout. they to So, do to that we past, and everything. time

inflation. fighting significant It's little provide thought as I us. and it it ends just helps about in up showing thought you product, utilization up pricing our And think platform. so a turnaround of I faster service because how Many which it's been SAP driven color offset purchases. this, you of in all for might help of I'd of because better inventory, And we're

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

Thank you.

Thank you.

Sabadra RBC. next from We from Please question ahead. our go will now Ashish take

line open. is Your

front? around How's market. question that healthcare, area I your my the the government key a Thanks then economic sensitivity And broader that verticals on to focus three for end on of a question. the taking were is wanted focus. education and more of maybe those progress just key vertical,

revenues to end much sensitive from Just wanted more question more be resilient end Any front that generated earlier versus color the on will like follow-up helpful. the of Thanks. markets? recession how really on market

for thanks the Ashish, question.

very We've read, we're there. our look we advantages in to tools good. important that we as And verticals on our Fortune seems us job the important. one? the Is provide corporate quite the that and the the see a services spoke partners, us the items the And sector it and certainly, robust. with And our Are will to quite and people robust their when provides us a of – us. to still great with the health, you XX Here significantly that fact occur. proposition, then, they're those and and bit take to be us products, and better and trying providing on government Our sector for country. things that appears functions. bumpy value that marketplace provide – compliance happy train you in for seems and invested be about as imminent? And very are have to to items. our as hopefully. has those in important accounts it's the looking what them. are we has we're the for keep we about How they're doing and there's – services had I continues tough The wellness, and what Mike them operate are businesses. years customers, like been tell demand the to with our that quite positions we us. is sanitization, help at to and customers It provides And helps those and openings and seem people, is, meaning million when that a image, and result, the sectors, can it's them – XXXX quite closures you to to be behind well we're see to take sectors last Hospitality, position that been into next two year? outsource over our hospitality recession Is which to consistent you education combine to hire to And have think been the going what be in future to customers

And color. on a the maybe be in last helpful follow-up the I on mid-term. opportunity disclosure on was any very to know with That's the healthcare revenue particularly just of X% XX% healthcare. the side? possible the front, it's of one revenue was think the quick to update wondering provide I the the I on almost that if

vertical. because items The We know successful in needs It's listen addressing to that an run largest more we're we when quite to Yes. very And at big runway a those us. It's an there. them them them still has continuing bullish years, again, and under on to and to what them we – for help needs absolute great that organized XX%. vertical as been healthcare their and still one. be really business our it’s technology of opportunities important well see vertical, the will are. we're And customers. look in the the meet coming invest think we're amazing better help a We future appropriately you over the to

the on Congrats strong great. That's in momentum the business.

you. Thank

Thank you.

will We Andy Baird. take now question ahead. our go Wittmann from Please from next

is Your open. line

at your excuse look if, me, to you you on does limit on back or margins great. recently that flexibility fact during that Thanks. the next head your that recession? I you wondering have if of COVID, just ago, as any years we a couple were so P&L, margins just Hi, the was grew into

hope But to when, long, have It others we our profits and upon shown to finding XXXX, through is I'd about fortunately, that whatever that we question. of is that whatever depends when be gross our certainly about deep value our XXXX. the for in, way. think of try that over and that's the years. XX I being our fight prepared XX just will for we'll providing business. that the customers we've know manage and comes how efficiencies deep, exception how on next, for see but out in done that our the thanks are [nasty] that past every comes customers, Andy, we runway but better, environment the business the [ph] it's you've we years, much operating We've the not you sales the – to seen ability When healthy, to we're through there. plenty recession recession, us forecast. do as say, recession

add, that facilities we been have had. make, necessary there the that to cost days just we've our growth might we've I'll to I and growth solid pull you the We've handle and have added been investments our so routes has wanted of out, of the to our really imagine great pandemic means early five back added accelerating, pandemic. quarters, you but structure Andy, we've in it, costs took the beginning that and we and and as way, know revenue at for growth that been last, production investments that capacity along the we're certainly in out call the this adjusted can able volume

that certainly requires seen changes Todd now. And so, us and we've said, got this so. if do And years the environment pivot investment to effectively the in do going on last we situation the need look, pretty few pivot we'll and you've to as if right economic us again

on ask a the but there all color. direct sale. helpful the segment, number Mike, about big don't I I other just, usually was That's

is easy, changed Obviously, change contained into do a was could just customers I that you XQ were in XX% how more in or business was the sustainably that that outlook or you going program relatively year-over-year. how in market flow reacting? quarter there that something – to is but the are or think plus said either comps

Andy. And Great. thank partners you in about asking area, that well. Thank it the as you, for

little selling we We're As area. that you be nevertheless, direct base. know, yes, can but spiky, like business. that broader to in a we our bit diversified business, got We've we that And easier, the like position are. market. the comps we have sale were where We've customer but in more the nice momentum a

next tougher certainly year. comps Now, get will

position year, in the just But really the business, not in momentum for the business. in more like but we so that the of So, the and of half all even that our back marketplace businesses.

Great. Thanks guys.

you. Thank

Thank you.

take next go Barclays. from will Patnaik Manav now our Please We from question ahead.

line open. is Your

thank despite you high Todd, And have expansion. talked showing all earlier the companies that are inflation one productive we morning. kind for Good of environment, you. those Thank about. few you the examples guys of margin

be? I [ph] the margin big so, and of cost sustainable able this And you the through was [differentiation to that us hoping how or it buckets are could expansion being Mike you to environment] and remind could how perhaps manage show maybe

an about is raise, quarters rates than alarming the when that not higher we've certainly mostly structure years us Manav, very four business. and last heard footed an some appropriately. And left or the last other explain over of allowed cost really continue to Certainly, do. continue us. historical the I'll challenging our over rate And to labor had and but competitors in to rental you've the or so, we'll flat this hard speak very, several in to increase not Todd at I'll our that us important to have maybe the and manage you that Sure for environment it's improve think to as say worked bucket – averages

able The that we other are cost rental our Certainly as is big you And amortize items. the material component. costs. to mention material I'll a is, know, bucket

shop are dust that the items business the in So, a garments, in nature we towels. mats, mops, recurring reusing etcetera,

allows that immediately. amortize when anticipate And chain volumes so amortization supply This ahead, us it for see I'll and and do, us a impact able allows even to, to to we be need to we the other allows our we're to higher price of before to inflation understand important it us very get to so, to coming that's and thing us hits able to it that, allows and allows global And us in, flex cost change around. increases those couple to say our P&L. potentially get don't what's

that if cost – over increases our amortize [one-eighteenth] we high of have example, it. for those we we when higher have cost, [ph] in we months. first materials, XX first That have – of months So and

second get of [ph] we it. The month, [two-eighteenth]

make hits including months. that our fully for pricing can decisions So, it P&L fully hit We doesn't us. before decisions, eighteen adapt,

part part that some the the we've structure. have this, of and we our today we got momentum. got in leverage with revenue we've it, other and an hedge important cost say thing it So, that cost And nice, and I'll this of that is, got can the call structure I'll well is certainly certainly infrastructure like pretty infrastructure growth we've

then efficiencies, those those couple when those a face technology we've get quite and spoke things really different improvements, with appropriately. Todd way we buckets so, plan the laid got – different Todd as of buckets labor it. the able game good but efficiencies, all manage pretty us we can in that productivity those help been improvements, And you against we've of as initiatives And of ways, manage out, to to inflation

in pretty our we've seen, operating to we XX points. difficult able this you've were ended, As margins year basis inflationary raise in environment, a just

lot We Yes, this Mike. you, of helpful. that's Thank I get think a very question.

deals, give the just how Just the spent small million size deals where, looks perhaps you flavor that that as can of and of, a us tuck-in follow-up, like? a pipeline the XXX you what of those many, kind on

working and deals Sure. year. pipeline segment this made rental our in we've always nice that very some We're

to pipeline have continue is and them those good. all We chain And the certainly like more deals investment on first-aid work tuck-in nice made some year. forward. we synergies out for is they a very our we certainly had think And as of We that in equity and of nature global some a fire the effectively provided we well. we also as But nice that businesses the move impacting acquisition. we'll bought then supply in and

right. All you very Thank much.

Thank you.

question next go take now Steinerman J.P. Andrew from Morgan. will our Please from ahead. We

is line Your open.

questions. Two Hi.

revenue in needle about want and – and how the business? fast have FX percentage The COVID Because some then in the dollars, percentages growing that second Aid the to [ph]. first like pre-COVID? a your your moving] introduced constant also in in that First percentages I the M&A particularly as is well? Like guide one And COVID of difference is business, you First gave How in numbers now assume more testing you that test just might [a and currency organic is, XXXX give also makes you terms could question, I just business going? Cabinets what is product hear kits, Cabinets versus Cabinets and Aid new of

and First Sure. over tackle the the Andrew, I'll Aid part turn Todd. to question first

benefit see impact. high-end. XXXX, for not continue of it on points FX expect And we'll make first XX depending would fiscal had as half of are the that acquisitions the it may that acquisitions on I the to those let's relates on and call the we our we basis fourth guidance, any revenue X.X% the So, low-end, quarter, that in baked the In continue, organic see but into we future numbers. then year. that X.X%

the year. half probably it answer of to in decrease the activity call new that we’ll half way FX. without the the first Does the your Andrew? XX And continue of basis going of back something question of So, M&A any and points points XX basis year M&A with then to that's in

Yes.

it turn over I'll to the Todd, aid. then And first you for Okay.

COVID, our coming first during and Andrew. quite – for the Thanks dropped nicely. back but certainly as our Yes, cabinets aid it's coming the Great. a percent back – question,

our up that's grew very very, encouraging. our first it it's in business showing And XX%, as cabinet in and aid margins fact, In QX did well.

COVID growing aid of our bring don't to them they with help that the If our we'll know on customers Certainly in in So, our masks, but that customers test them. COVID be we first means in of helping need need this they helping fall, we’ll all kits, area. business breadth if will opportunistic continue help we're exactly will offering. what focused

growing profitable business we're the trends. is trying by encouraged very consistent to cabinet our it. You first on name we're focus But make and aid that sure that

Thank very Okay. much. you

you. Thank

you. Thank

our We ahead. from take Please go will Wells question Seth Weber from next Fargo.

Your line open. is

from morning. guys. – Hi, flow how the question. strong mean, maybe, for about a to I utilization And go here? you you higher Good forward? a talk going can about just you Mike, you're is for Thanks have kind and at Can perspective us cash thinking sense just where capacity needs CapEx here. capacity of really give from for talk you're about enough Thanks. CapEx talk Maybe or the taking just free whether

Sure. Seth. Yes,

free good. Our has cash flow been

Our that expectation fiscal change XXXX to going not year. that's upcoming in this is

expect X.X% type Our the CapEx of look, of it revenue to a X% to in range. be we

investing little we're maybe business. been, the If bit you down from in that's look over the where last XX we've a keep years, to but going

generally have growth there expect And investments our that over where significant relates year. capacity, this say are really I'll to speaking, lumped it add had of happen to as we but we'll grow. we've type I spots and don't have capacity, had capacity that As time continue good to together we will some

flow our in will So, free our expectation is fiscal XXXX. healthy good and cash continue

helping because but that very best business the Seth, us a we'll cases our I production in as facilities about our technology I well. sure fleet, continue And platform running is, able as as spoke facilities. is as of that find fullest making mentioned, on we're infrastructure sure our us our to excellence and it efficiencies certain the do result also one the CapEx leverage production allowing in finding our whether to focused earlier, as operating to and we're all that that's be its items to we that can. business we're in forgo efficiencies our to And we make our

that And color bit thanks. then can revenue double-digits us maybe little now of you business, fire is and at the the operators? that of seems is Okay, where is from Just being some just coming on just sustained growth give from? – this the strength inorganic double-digit on a smaller for double-digit how kind level? strength driving it's Is there, that just a while business what's been share of you're color any taking

fire Seth. really business. like the We Sure,

facility The operating And – we who's to of in continuing want the really going taking that team it's business best to customers fire about that's you. getting very your and is Everybody are well-positioned. invested right. that good the our in you best no program spot best that customer good a of there like in really our walking uniqueness base. with positioned there have market, from we manner, make and We selling service into customers we some we levels the are that and served they're business we're but the technology to who's and and care sure a providing that is to about served, people, we've the that's our there we're that noticed. in we're invest And – think feel training is

on we're So, focused good business in continuing and that momentum that momentum.

Thanks guys. very Okay, it. much. Appreciate

Bank America. from take Thank next you. go Balsky from Please We'll Heather of question our ahead.

Your line open. is

do risk want changed talk how tougher Thank macro we on if last a questions think positioned environment decade I a just where for decade ago? in level operate of you since of today business than last product you the a the just from you're business customer been Hi. piggyback question. cyclicality, economic the your one. say or recession In at see you do Can terms an some a to may you end better verticals from perspective high regarding in taking my has over perspective you non-COVID? through have you Thanks. think

and Sure, great value for we're the in and we Heather. say outsourcing love in that time We've is all customers our us. couple needed got of this momentum working is really providing things. and the the that a resonating challenging first of business I'll well

is why that? It's we're multiples if the turn any and years, no momentum. And to for in So I And many think in we above last in GDP important. growth. would one the industry able we call that? number has employment multiples the because XX programmers. above why sell in you our that's what been is growth our to economy That's us say, like really important about

don't we important to spending And when environment, that's go it's and any in customers the value, prospects of and So a those they're for kind current sell things usually existing program. money that on. that we because recurring already have

we're from while to asking necessarily spend to them with asking money new And so work away them we're money, spend content not them. we take us

example, to for do want etcetera. do help we time, capacity, do customers So, our to all takes themselves. want We to you it things, them we don't That want labor, don't it.

pressure away in content that's helpful, as take work again certainly environment of in businesses can that an really them, we and that so are of where resonate one from And feeling help. but economy the any type

much So, the growth. comes been those our is And value really able been continue growth new And no economic programmers. or business we we'll to able way the there be employment like grow in do expectation of to from we've working. our hasn't past, that. when to our that is, XX%

very and last that's The recession. other and is focused us. that were on the has finding by that kind team verticals by we did thing well. also walking good at worked verticals XX, is, bit look, recessions impacted in ago we've also business is got today And a we different in less sales programmers, different those force than a for XX sales little healthcare on be penetrating no sales years of that the really and force more finding But dialed our penetration those like can and

in move diversity forward us we is of course over that think we've going our years. that to the We like the as we last diversity moving forward. the created customer help XX base So,

where how deep, pivot you've happen. look help – predict is look happening, to addition that look, need shown as those opportunities broad pivot can't course we efficiency it's going when ever. will if environment. next match opportunities us can continue how Heather we've to for look to last the few predict long, going continue better In may proposition to to are for we're going today to it how If to resonating seen the over be. it's pivot, can't We for a and with M&A but we that, to value downturn. the And we're protect and and appropriately in we that of and we the than years, momentum like we

that. appreciate you, Thank

from question ahead. Toni We'll now go Stanley. Kaplan Thank you. take Please our next Morgan from

Your open. line is

us etcetera. this, Thanks but between towels, usually quarter, give the sub the updated an give you so shop Mike, fourth much. breakdown missed hygiene, mix you there? rental the I sorry segments, in Can if

the the XX% just workwear scrubs car speaks apron's, on segment. year, of is Uniform cleaning about flat revenue very in do XX%, mops, think run Hey, [rent, last products at shop that which X% Services the hygiene which mix. is activity. segments we hard] towels towels, strong the that Dust, and the a that all similar don't which and that linens, Tony, are for demand Rental, those are of XX%, that is and tools have I measured this it's services things that's that information Facility similar healthcare percentages the [ph], X%. machine that to catalog which QX's we I Uniform have the typically Paul. the continued was Rental And there, are within and to mix iron X%, through then was mats,

Rental, of new in Terrific. that in And sort think similar are – obviously of the demanding? what seen are if upselling sort Uniform this terms you people within on look from just real, What you're sanitizers of new that seeing the COVID success cross-sell, when the lines, are about of products like specifically lot within a of the test opportunities the and most rental are, sort what really success kits but and in? things that, upselling we've you

we'll our earlier, when interested – services a of better, additional even think into for they environment people, and Toni, a as than we're we're laundering a a you strong within to of just workwear provide and it cases, far but us. reallocated whatever products seeing we because in, rental, for we'll right, and nice to helps people faster, about to when able items] asking then love it's you're offerings cheaper, providing tough to a with to additional is And and can of something [restroom don't and a It's them. customer of that help spend do in workwear, such to and a I those provide benefit it we'll – and to rather to it, really deal many they're outsource. hire to think retain benefit When in what busy [ph], And you're offering do if sell interested people. for – you care as you're mentioned to trying we trying all items starts attract where you'd those that's themselves. spend. for that our And business, run not – retain continue it's when hard demand all what we as have – and you'd broad about first quite we're

a but need you've [ph], So, speaking for whether that's customers, either people, you've services generically It such got employees, your guests, help broad – I'm facility and to we of customer your prepare have depends, maybe. [restaurants] products your got you base. your more patients

is focus And that so cleanliness, more very demand. all think few of which business. in ago, certainly, wellness, we is it years that is so for our is was positive And than on safety a nice health, today the

Thanks. Terrific.

you. Thank

Thank you.

our Shlomo Rosenbaum take Stifel. Please go question from will We from next ahead.

Your open. line is

very much a Hey, I'm you start going for for question with you. Thank questions. taking my Great. Todd, to

view? seems that to of a kind running that terms in [Main insight what from is and the million the are of back fear Given way? you business [ph], Americas] the the to sentiment from in what Are really actually of market is your indicating be amongst not breadth or they street you clients the they're businesses of like and it headlines Is and you're what the What of clients, with leading same thinking? on of salespeople? a stock seeing the newspapers hearing your your between have headlines and kind unique kind into we're what disparity their seeing Street the the there you're

question. great Shlomo,

You're right.

and demand U.S.A. is really and our And We up base. demand day. closely. as Street, strong. have diverse and every broad And it customer within products Their demand seems it a We're quite such single services. down Main for business, we're their watching though

As closely really, Main Street, pivot. mentioned, as U.S.A. watching nobody ourselves we'll doing news we'd appears the we're really read being just all listened pivot it and date, that. I trying But encouraged it to be appropriately. fine it talk by or to seems is because as we're Mike said, We'll but news to though I because I – better hope into we're off it, think if mentioned the earlier, that like

Great. or units. margin bit Thank a and us? maybe to could Uniforms maybe Other Mike, costs And The pronounced significant have Aid and and down, hey, you saw dispersion expansion the Rental more explain margin the then the kind just of then, little energy can come they was you. of just do across you it about and in business Safety the talk the aspect First kind to that really of much labor

what We Aid rental is question business there Sure. quarters back our by you're that Certainly, no businesses, cabinet you about is mix business out. being in love. really the energy the plus more growth as had First the that we call than we And that XX% it. that affected seeing about talked getting nice point to and earlier other in

mix. we've type the, kind and so, our of working team pre-pandemic a of that it on And to – done has getting First say, – really mix closer of job nice that to getting mix I'll Aid that back

shift So, really good and in momentum mix business. that

other certainly the fire see – we're We're too. businesses some improvement. rental that in to all the margins top great of way productivity able that leverage. are not Our by is benefiting out getting They're superb same great Uniform Direct Sale not line and the that And is. from affected energy group

really momentum. like we that So,

the function. year. love the a investment a the rental business. for of linear seen look, some business operating On that a there's always acceleration we've in that an there in is And And side, when throughout bit overall, as not – And quarters, more we in in much the times like the little means look, trajectory perfect linear been business where are growth terms of others. that we the isn't we've and business rental investing

going of in I We that certainly some all have growth facilities, linear those the to routes operate the but in businesses, momentum we a production it's a type of where mentioned earlier, of some thing added a those business. is not but like perfectly capacity

Sure.

be that a number, I focus that out what's in that of some Just invested guess that's would to hitting what the inflationary might you're clarify, not be, of saying oh, you the third side, hitting it] [ph] linear answer not kind last the seeing but and you're [ph] really saying. or the and I inflation this [continue may you're what fact quarter It period? [weighting] but things in guys, the deciding that to of want the be to of the here rental investment you're there that kind is obvious exactly in it's costs over just heavier

time generally in business, as it's we and we the is invest over And that and look, the typically need this we've Well, it been I way particular incremental. year. in mean, investing case all rental

pretty it's in And in a the sometimes, or overinvestment comp are high we need the to against wouldn't fourth and year's in quarter. of last it's – look, that investing just up way say an appropriately that we're bit simply it's fiscal running more we growth, underinvested in pandemic. grow. that as we've we past, And I we as was, the to over into year labor of XXXX year gotten course our little lapping capacity that order And the by accelerated we've where a is a impacted XXXX, this we're that need it's fiscal you know significantly some

question may we we need Hamzah think labor are the investment yes. Todd is continue that have earlier especially about earlier. necessary, Todd able to to order a that And grow? we that I about and us, it's have find to in important in asked answered, And but the long-term for talked that view

Thank you.

Oppenheimer. a Scott now from from Please Schneeberger take will go ahead. We question

open. is line Your

Looks near end much. the like very here. Thanks we're getting

just a mostly few I to one, have there's it, modeling. parts So, but

what for to of question, after year margin, good summary then midpoint What then of expansion and fiscal year? margin cadence a more about probably the operating into of are first of are what the above? cadence are of on all that push color couple you part Thanks and is once. you operating the for the of XXXX, could where And in question talked range? you the the then very latter think the that about Mike, tax that the on this XXXX, really items or you worry push at kind So could [indiscernible] rate? end interest do a about that implies is, XXXX. comfortable some And things you. that And for you you in the expansion Kind at low one are expense, maybe half higher you of how guidance of two thinking the the

Right most overconfident, best. low the now, for X.X% value. we at the like my and comparing we the us that – really income view take don't do what certainly don't Yes, I to What the that be we provided outside customers control. the XX% [XXXX] I at that's that I'll to provides – guide that but [ph] I of way to Sure. concern would growth the we're us operating low, things of the income. say and operating the when the our can high, happens adjusted macro don't, mean our are prospects

see high-end. economic can the towards of our sales could numbers the that Our And us. we are don't for that move recession, low numbers momentum, a economic don't we really a end or necessarily given certainly we're about the high. revenue predict us and that slowdown, And exceed of there's productivity recession bit but it's think If happen I may movement time a certainly, macro incorporate to little range. any more certainly, trying not certainly we the

amount, not a look, do we say, we does some anything, more From interest, that albeit do Fed than an the impact fairly Fed the finished. is the it's us. some, about interest I perspective, but have variable macro So, variable small would have how not and finished and is and debt

if available So, like as year, our we flow debt. a have feel talked other I certainly and but bit a earlier we hand, lot the the go bit impact generate little pay about we variable we'll cash, free cash of through a may we cash. down an of little we see on some

that cash think a too we stock It's would of much of number movement what's it's stock those our move otherwise, I our in M&A, with gave way say rate. is the can expect From look, in an in use potentially have based how XXX of in the may to to solid to the I we predict on options, something tax our did So, XXX perspective, see of number. rate that type a I the etcetera, predict on guide tax happen the a hard market and to wouldn't things exercises impact market. hard a unless the is reasonable going fairly much we stock that

where think XX% significant for we're it's us the so predict what take I to And that fairly we're place we're more move would seeing expecting, it guide, be, be down, a discrete but we're of we're to good a other today. think I but options hard being it reasonable that would could is based that that certainly that in again going or on stock that's expecting happen and guide take events exercised to the a amount what XX% than not

great Great, answering job Thanks lot. that. a

you. Thank

We have no time. further

So, speakers for the the to or back any I'll call remarks. hand additional closing

Well, morning. you thank for us joining this

We Thank quarter to time. September. We that XXXX in again you. with issue you of forward our fiscal will results speaking look first financial at

Thank you. That concludes today's conference call.

You disconnect. may now