Q4 2024 Cintas Corp Earnings Call

July 18, 2024

At this time I would like to turn the meeting over to Mr. Jared Mattingly, Vice President and Treasurer Investor Relations. Please go ahead Sir.

Speaker Change: Thank you Ross. Thank you for joining US with me is Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer, who will discuss our fiscal 2000 and for fourth quarter and full year results. After our commentary we will open the call to questions from analysts.

Speaker Change: Private Securities Litigation Reform Act of 1095 provides a safe harbor from Civil litigation for forward looking statements. This conference call contains forward looking statements that reflect the company's current views as to future events and financial performance. These forward looking statements are subject to risks and uncertainties, which could cause.

Speaker Change: Cause actual results to differ materially from those we may discuss I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission I will now turn the call over to Todd.

Todd: Thank you Jared.

Todd: Our fourth quarter performance marked a strong finish to another successful year for Cintas.

Todd: Fourth quarter total revenue grew eight 2% to two $4 7 billion.

Speaker Change: And all time high for revenue in a quarter.

Speaker Change: The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations was seven 5%.

Speaker Change: And importantly, each of our businesses continue to perform well and execute at a high level.

Speaker Change: Fourth quarter gross margin was 122 billion, an increase of 11, 6% over the prior year.

Speaker Change: Gross margin increased 150 basis points from 47, 7% to 49, 2%.

Speaker Change: Operating income for the fourth quarter of $547 6 million increased 16, 3% over the prior year.

Speaker Change: Operating margin increased 160 basis points.

Speaker Change: 222, 2% from 26% in the prior year.

Speaker Change: Fourth quarter net income was $414 3 million an increase of 19, 7%.

Speaker Change: Earnings per diluted share for the fourth quarter were $3 99.

Speaker Change: An increase of 19, 8% over the prior year fourth quarter.

Speaker Change: These results conclude a strong fiscal year marked by significant accomplishments, including robust revenue growth and margin expansion and excellent cash generation, which continued to fuel our balanced capital allocation strategy.

Speaker Change: The following are specific highlights of fiscal 'twenty four.

I'd like to begin with revenue.

Speaker Change: Fiscal year revenue was a record $9 6 billion.

An increase of eight 9%.

Speaker Change: Organic growth was 8% for the year.

Speaker Change: Our first aid and safety services operating segment exceeded $1 billion in annual revenue for the first time.

Speaker Change: Our topline growth as a function of the total value proposition, we offer customers of all sizes and across industries in a unique cintas culture that drives our partners to deliver an outstanding customer experience.

Speaker Change: Business across our focused verticals of healthcare hospitality education.

Speaker Change: And state and local government continued to perform well.

Speaker Change: We experienced strong demand for our services not only from existing customers, but across our new business pipeline.

Speaker Change: About two thirds of our new customers continue to come from no programmers underscoring our ability to capitalize on the vast growth opportunity that remains ahead.

Speaker Change: In addition, our retention rates remained strong.

Speaker Change: Our strong revenue performance also translated into continued growth in profits and earnings.

Speaker Change: Including the following highlights.

Speaker Change: Fiscal 'twenty four operating income grew 14, 8% for the year and our operating margin of 21 versus 21, 6% was an all time high.

Speaker Change: <unk> grew 16, 6% for the year.

Speaker Change: Our enhanced profitability and earnings growth is a reflection of our relentless focus on operational excellence in every aspect of our business.

Speaker Change: Spanning strategic sourcing and supply chain initiatives.

Speaker Change: <unk> energy optimization opportunities with smart truck and leveraging the SAP system to support greater stockroom visibility and efficient garment sharing.

Operator: Today's call is being recorded. At this time, I would like to turn the meeting over to Mr. Jared Mattingley, Vice President and Treasurer, Investor Relations. Please go ahead, sir. Thank you, Ross.

As our partners to deliver an outstanding customer experience.

Business across our focused verticals of healthcare hospitality education and.

Our cash flow from operating activities exceeded $2 billion for the first time.

And state and local government continued to perform well.

Jared Mattingley: Thank you for joining us. With me is Todd Schneider, President and Chief Executive Officer, and Mike Hanson, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2024 fourth quarter, and full year results. After our commentary, we will open the call to questions from analysts. Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Speaker Change: Strong cash generation provides us even greater flexibility to deploy capital across each of our capital allocation priorities throughout the year.

We experienced strong demand for our services not only from existing customers, but across our new business pipeline.

About two thirds of our new customers continue to come from no programmers underscoring our ability to capitalize on the vast growth opportunity that remains ahead.

Speaker Change: Our number one capital allocation priority is investing back in the business.

Speaker Change: We prioritize investments in technology infrastructure and people to support to support our sustained growth and value creation over the long term.

In addition, our retention rates remained strong.

Our strong revenue performance also translated into continued growth in profits and earnings including the following highlights.

Speaker Change: As we continue to grow and create value capital is required to add capacity in a number of ways, including new facilities, new equipment, new vehicles as well as technologies to make our partners more successful.

Fiscal 'twenty four operating income grew 14, 8% for the year and our operating margin of 21 21, 6% was an all time high.

Speaker Change: We spent $186 8 million in fiscal 'twenty four on acquisitions.

EPS grew 16, 6% for the year.

Our enhanced profitability and earnings growth is a reflection of our relentless focus on operational excellence in every aspect of our business spam.

Speaker Change: This is the most we've spent on acquisitions since fiscal 2017.

Speaker Change: We love acquisitions as they provide us with new customers, where we can offer a broader range of products and services.

Todd Schneider: Thank you, Jared. Our fourth quarter performance marked a strong finish to another successful year for Cintas. Fourth quarter total revenue grew 8.2% to $2.47 billion, an all-time high for revenue in a quarter. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 7.5%, and importantly, each of our businesses continue to perform well and execute at a high level. Fourth quarter gross margin was $1.22 billion, an increase of 11.6% over the prior year. Gross margin increased 150 basis points from 47.7% to 49.2%. Operating income for the fourth quarter of $547.6 million increased 16.3% over the prior year. Operating margin increased 160 basis points to 22.2% from 20.6% in the prior year. Fourth quarter net income was $414.3 million, an increase of 19.7%.

Spanning strategic sourcing and supply chain initiatives.

Speaker Change: Sometimes they can bring needed capacity that can also bring attractive synergies that involve leveraging our existing route structures, providing more time with customers and less time driving.

Speaker Change: <unk> energy optimization opportunities with smart truck and leveraging the SAP system to support greater stockroom visibility and efficient garment sharing.

Speaker Change: Another of our priorities is returning capital to our shareholders through dividends and share buybacks.

Speaker Change: Our cash flow from operating activities exceeded $2 billion for the first time.

Speaker Change: In fiscal 'twenty, four we increased our quarterly per share dividend by 17, 4%, marking the 14th consecutive year that we've increased our dividend, including every year since going public.

Speaker Change: Strong cash generation provides us even greater flexibility to deploy capital across each of our capital allocation priorities throughout the year.

Speaker Change: Our number one capital allocation priority is investing back in the business.

Speaker Change: We also we also bought back $1 billion of shares during fiscal 'twenty, four and up through yesterday.

Speaker Change: We prioritize investments in technology infrastructure and people to support to support our sustained growth and value creation over the long term.

Speaker Change: Lastly, we renamed to the prestigious Fortune 500 for the eighth consecutive year. It is an honor to be recognized among the most successful and respected companies.

Speaker Change: We're proud of these results and the value we continue to deliver for the Cintas shareholders.

Speaker Change: That performance reflects the focus and great execution by our employees, whom we call partners.

Speaker Change: We spent $186 8 million in fiscal 'twenty four on acquisitions.

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

Speaker Change: This is the most we've spent on acquisitions since fiscal 2017.

Speaker Change: Thanks, Todd and good morning, all.

Mike: Fiscal 'twenty four fourth quarter revenue was $2 $47 billion compared to $2 two $8 billion last year, the organic revenue growth rate adjusting for acquisitions and foreign currency exchange rate fluctuations was seven 5%.

Speaker Change: We love acquisitions as they provide us with new customers, where we can offer a broader range of products and services.

Todd Schneider: Earnings per diluted share for the fourth quarter were $3.99, an increase of 19.8% over the prior year. Fourth quarter, these results conclude a strong fiscal year marked by significant accomplishments, including robust revenue growth, margin expansion, and excellent cash generation, which continue to fuel our balanced capital allocation strategy. The following are specific highlights of fiscal 2024. I'd like to begin with revenue. Fiscal year revenue was a record $9.6 billion, an increase of 8.9%. Organic growth was 8% for the year. Our First Aid and Safety Services operating segment exceeded $1 billion in annual revenue for the first time. Our top line growth is a function of the total value proposition we offer customers of all sizes and across industries and a unique Cintas culture that drives our partners to deliver an outstanding customer experience.

Earnings per diluted share for the fourth quarter were $3.99, an increase of 19.8% over the prior year. Fourth quarter, these results conclude a strong fiscal year marked by significant accomplishments, including robust revenue growth, margin expansion, and excellent cash generation, which continue to fuel our balanced capital allocation strategy. The following are specific highlights of fiscal 2024. I'd like to begin with revenue. Fiscal year revenue was a record $9.6 billion, an increase of 8.9%. Organic growth was 8% for the year. Our First Aid and Safety Services operating segment exceeded $1 billion in annual revenue for the first time. Our top line growth is a function of the total value proposition we offer customers of all sizes and across industries and a unique Cintas culture that drives our partners to deliver an outstanding customer experience.

Speaker Change: Gross margin for the fourth quarter of fiscal 'twenty, four was $1 billion to $2 billion.

Speaker Change: Another of our priorities is returning capital to our shareholders through dividends and share buybacks.

Speaker Change: Compared to $1.09 billion last year, an increase of 11, 6%.

Speaker Change: Gross margin as a percent of revenue was 49, 2% for the fourth quarter of fiscal 'twenty four compared to 47, 7% last year, an increase of 150 basis points.

Speaker Change: We also we also bought back $1 billion of shares during fiscal 'twenty, four and up through yesterday.

Speaker Change: Strong growth from new customers and the penetration of existing customers with more products and services helped generate great operating leverage aided by the performance of our global supply chain and focused efforts to extracting efficiencies from the business via our six Sigma and engineering teams as well as technologies like Smart truck.

Speaker Change: Lastly, we renamed to the prestigious Fortune 500 for the eighth consecutive year. It is an honor to be recognized among the most successful and respected companies.

Speaker Change: We're proud of these results and the value we continue to deliver for the Cintas shareholders.

Speaker Change: That performance reflects the focus and great execution by our employees, whom we call partners.

Speaker Change: The uniform rental and facility services operating segment revenue for the fourth quarter of fiscal 'twenty four was $1 $91 billion.

Todd Schneider: Business across our focus verticals of healthcare, hospitality, education, and state and local government continue to perform well. We experienced strong demand for our services not only from existing customers, but across our new business pipeline. About 2/3 of our new customers continue to come from no programmers, underscoring our ability to capitalize on the vast growth opportunity that remains ahead. In addition, our retention rates remain strong. Our strong revenue performance also translated into continued growth in profits and earnings, including the following highlights. Fiscal 2024 operating income grew 14.8% for the year, and our operating margin of 21.6% was an all-time high. EPS grew 16.6% for the year. Our enhanced profitability and earnings growth is a reflection of our relentless focus on operational excellence in every aspect of our business, spanning strategic sourcing and supply chain initiatives, route and energy optimization opportunities.

Business across our focus verticals of healthcare, hospitality, education, and state and local government continue to perform well. We experienced strong demand for our services not only from existing customers, but across our new business pipeline. About 2/3 of our new customers continue to come from no programmers, underscoring our ability to capitalize on the vast growth opportunity that remains ahead. In addition, our retention rates remain strong. Our strong revenue performance also translated into continued growth in profits and earnings, including the following highlights. Fiscal 2024 operating income grew 14.8% for the year, and our operating margin of 21.6% was an all-time high. EPS grew 16.6% for the year. Our enhanced profitability and earnings growth is a reflection of our relentless focus on operational excellence in every aspect of our business, spanning strategic sourcing and supply chain initiatives, route and energy optimization opportunities.

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

Mike: Thanks, Todd and good morning, our fiscal 'twenty four fourth quarter revenue was $2 $47 billion compared to $2 two $8 billion last year, the organic revenue growth rate adjusting for acquisitions and foreign currency exchange rate fluctuations was seven 5%.

Speaker Change: Compared to $1 $77 billion last year.

Speaker Change: The organic revenue growth rate was seven 1%.

Speaker Change: As we have done in the past I will share revenue mix of the uniform rental and facility services operating segment for the fourth quarter keep in mind, there can be small fluctuations in mix between quarters.

Speaker Change: Gross margin for the fourth quarter of fiscal 'twenty, four was $1 billion to $2 billion.

Speaker Change: Uniform rental was 48%.

Speaker Change: Compared to $1.09 billion last year, an increase of 11, 6%.

Speaker Change: <unk> was 19% hygiene was 16%.

Speaker Change: Shop towels were 4% linen, which includes microfiber wipes towels, and <unk> was 10% and catalog revenue was 3%.

Speaker Change: Gross margin as a percent of revenue was 49, 2% for the fourth quarter of fiscal 'twenty four compared to 47, 7% last year, an increase of 150 basis points.

These percentages are consistent with last year and demonstrate we are experiencing strong demand across all our products and services.

Speaker Change: Gross margin for the uniform rental and facility services operating segment was 48, 6% compared to 47, 7% last year.

Todd Schneider: With SmartTruck and leveraging the SAP system to support greater stockroom visibility and efficient garment sharing, our cash flow from operating activities exceeded $2 billion for the first time. Strong cash generation provides us even greater flexibility to deploy capital across each of our capital allocation priorities throughout the year. Our number one capital allocation priority is investing back in the business. We prioritize investments in technology, infrastructure, and people to support our sustained growth and value creation over the long term. As we continue to grow and create value, capital is required to add capacity in a number of ways, including new facilities, new equipment, new vehicles, as well as technologies to make our partners more successful. We spent $186.8 million in fiscal 2024 on acquisitions. This is the most we've spent on acquisitions since fiscal 2017.

With SmartTruck and leveraging the SAP system to support greater stockroom visibility and efficient garment sharing, our cash flow from operating activities exceeded $2 billion for the first time. Strong cash generation provides us even greater flexibility to deploy capital across each of our capital allocation priorities throughout the year. Our number one capital allocation priority is investing back in the business. We prioritize investments in technology, infrastructure, and people to support our sustained growth and value creation over the long term. As we continue to grow and create value, capital is required to add capacity in a number of ways, including new facilities, new equipment, new vehicles, as well as technologies to make our partners more successful. We spent $186.8 million in fiscal 2024 on acquisitions. This is the most we've spent on acquisitions since fiscal 2017.

Speaker Change: This 90 basis point improvement was the result of good topline growth that continued to generate great operating leverage and excellent sourcing and process improvements, which continued to create additional efficiencies such as garmin sharing and smart truck.

Speaker Change: The uniform rental and facility services operating segment revenue for the fourth quarter of fiscal 'twenty four was $1 $91 billion.

Speaker Change: Compared to $1 $77 billion last year.

Speaker Change: Our first aid and safety services operating segment revenue for the fourth quarter was $277 6 million.

Speaker Change: The organic revenue growth rate was seven 1%.

As we have done in the past I will share revenue mix of the uniform rental and facility services operating segment for the fourth quarter keep in mind, there can be small fluctuations in mix between quarters.

Speaker Change: Compared to $249 $8 million last year.

Speaker Change: The organic revenue growth rate was 11, 1% capping off another year of double digit organic growth.

Speaker Change: Uniform rental was 48%.

Speaker Change: Gross margin for the first aid and safety services operating segment was 55, 4% compared to 51% last year.

Speaker Change: <unk> was 19% hygiene was 16%.

Speaker Change: Shop towels were 4% linen, which includes microfiber wipes towels, and <unk> was 10% and catalog revenue was 3%.

Speaker Change: This 440 basis point improvement was the result of our double digit revenue growth that created solid solid operating leverage.

Speaker Change: An improved sales mix of dedicated first aid distribution center that has lowered costs as well as efficiencies from our smart truck technology.

These percentages are consistent with last year and demonstrate we are experiencing strong demand across all our products and services.

Speaker Change: Gross margin for the uniform rental and facility services operating segment was 48, 6% compared to 47, 7% last year.

Speaker Change: Our fire protection services and uniform direct sale businesses are reported in the all other segment.

Todd Schneider: We love acquisitions as they provide us with new customers where we can offer a broader range of products and services. Sometimes they can bring needed capacity. They can also bring attractive synergies that involve leveraging our existing route structures, providing more time with customers and less time driving. Another of our priorities is returning capital to our shareholders through dividends and share buybacks. In fiscal 2024, we increased our quarterly per share dividend by 17.4%, marking the 40th consecutive year that we've increased our dividend, including every year since going public. We also bought back $1 billion of shares during fiscal 2024 and up through yesterday. Lastly, we were named to the prestigious Fortune 500 for the eighth consecutive year. It is an honor to be recognized among the most successful and respected companies.

We love acquisitions as they provide us with new customers where we can offer a broader range of products and services. Sometimes they can bring needed capacity. They can also bring attractive synergies that involve leveraging our existing route structures, providing more time with customers and less time driving. Another of our priorities is returning capital to our shareholders through dividends and share buybacks. In fiscal 2024, we increased our quarterly per share dividend by 17.4%, marking the 40th consecutive year that we've increased our dividend, including every year since going public. We also bought back $1 billion of shares during fiscal 2024 and up through yesterday. Lastly, we were named to the prestigious Fortune 500 for the eighth consecutive year. It is an honor to be recognized among the most successful and respected companies.

Speaker Change: All other revenue was $282 1 million compared to $261 $5 million last year.

This 90 basis point improvement was the result of good topline growth that continued to generate great operating leverage and excellent sourcing and process improvements, which continued to create additional efficiencies such as garmin sharing and smart truck.

Speaker Change: The fire protection revenue was $197 9 million and the organic revenue growth rate was 12, 9%, resulting in another year of double digit organic growth.

Speaker Change: Our first aid and safety services operating segment revenue for the fourth quarter was $277 6 million.

Speaker Change: The uniform direct sale revenue was $84 2 million and organic revenue decreased four 4%.

Speaker Change: Compared to $249 $8 million last year.

Speaker Change: The organic growth rate in uniform direct sales can vary from quarter to quarter.

Speaker Change: The organic revenue growth rate was 11, 1% capping off another year of double digit organic growth.

Speaker Change: Gross margin for fire protection services was an all time high of 50% compared to 47, 9% last year. This 210 basis point improvement was primarily the result of robust revenue growth that generated strong operating leverage along with route productivity improvements.

Speaker Change: Gross margin for the first aid and safety services operating segment was 55, 4% compared to 51% last year.

Todd Schneider: We're proud of these results and the value we continue to deliver for the Cintas shareholders. That performance reflects the focus and great execution by our employees whom we call partners. I'll now turn the call over to Mike to provide details of our Q4 results.

We're proud of these results and the value we continue to deliver for the Cintas shareholders. That performance reflects the focus and great execution by our employees whom we call partners. I'll now turn the call over to Mike to provide details of our Q4 results.

Speaker Change: This 440 basis point improvement was the result of our double digit revenue growth that created solid solid operating leverage.

Speaker Change: Gross margin for uniform direct sales was 49% compared to 36% last year.

Speaker Change: An improved sales mix of dedicated first aid distribution center that has lowered costs as well as efficiencies from our smart truck technology.

Speaker Change: This 490 basis point improvement was the result of higher margin accounts from a disciplined approach to the market.

Jared Mattingley: Thanks Todd and good morning. Our fiscal 2024 fourth quarter revenue was $2.47 billion compared to $2.28 billion last year. The organic revenue growth rate adjusted for acquisitions and foreign currency exchange rate fluctuations was 7.5%. Gross margin for the fourth quarter of fiscal 2024 was $1.22 billion compared to $1.09 billion last year, an increase of 11.6%. Gross margin as a percent of revenue was 49.2% for the fourth quarter of fiscal 2024 compared to 47.7% last year, an increase of 150 basis points. Strong growth from new customers and the penetration of existing customers with more products and services helped generate great operating leverage aided by the performance of our global supply chain and focused efforts to extract inefficiencies from the business via our Six Sigma and engineering teams as well as technologies like SmartTruck.

Mike Hansen: Thanks Todd and good morning. Our fiscal 2024 fourth quarter revenue was $2.47 billion compared to $2.28 billion last year. The organic revenue growth rate adjusted for acquisitions and foreign currency exchange rate fluctuations was 7.5%. Gross margin for the fourth quarter of fiscal 2024 was $1.22 billion compared to $1.09 billion last year, an increase of 11.6%. Gross margin as a percent of revenue was 49.2% for the fourth quarter of fiscal 2024 compared to 47.7% last year, an increase of 150 basis points. Strong growth from new customers and the penetration of existing customers with more products and services helped generate great operating leverage aided by the performance of our global supply chain and focused efforts to extract inefficiencies from the business via our Six Sigma and engineering teams as well as technologies like SmartTruck.

Speaker Change: Our fire protection services and uniform direct sale businesses are reported in the all other segment.

Speaker Change: Fourth quarter, selling and administrative expenses as a percent of revenue was 27%, which was a 10 basis point improvement from last year, we were able to create leverage with these costs, while continuing to invest in technology of selling resources.

Speaker Change: All other revenue was $282 $1 million.

Speaker Change: Compared to $261 $5 million last year.

Speaker Change: The fire protection revenue was $197 $9 million and the organic revenue growth rate was 12, 9%, resulting in another year of double digit organic growth.

Speaker Change: Fourth quarter operating income was $547 6 million compared to.

Speaker Change: <unk> $478 million last year.

Speaker Change: The uniform direct sale revenue was $84 2 million and organic revenue decreased four 4%.

Speaker Change: Operating income as a percentage of revenue was 22, 2% in the fourth quarter of fiscal 'twenty four compared to 26% in last year's fourth quarter.

Speaker Change: The organic growth rate in uniform direct sales can vary from quarter to quarter.

Speaker Change: The fourth quarter marks the first time that all three operating segments uniform rental and facility services first aid and safety services and fire protection services exceeded 22% and operating income in the same quarter.

Speaker Change: Gross margin for fire protection services was an all time high of 50% compared to 47, 9% last year is 210 basis point improvement was primarily the result of robust revenue growth that generated strong operating leverage along with route productivity improvements.

Speaker Change: Our effective tax rate for the fourth quarter was 21, 4% compared to 22, 4% last year.

Speaker Change: Gross margin for uniform direct sales was 49% compared to 36% last year.

Jared Mattingley: The uniform rental and facility services operating segment revenue for the fourth quarter of fiscal 2024 was $1.91 billion compared to $1.77 billion last year. The organic revenue growth rate was 7.1%. As we have done in the past, I will share revenue mix of the uniform rental and facility services operating segment for the fourth quarter. Keep in mind there can be small fluctuations in mix between quarters. Uniform rental was 48%, dust was 19%, hygiene was 16%, shop towels were 4%, linen which includes microfiber wipes, towels, and aprons was 10%, and catalog revenue was 3%. These percentages are consistent with last year and demonstrate we are experiencing strong demand across all our products and services. Gross margin for the uniform rental and facility services operating segment was 48.6% compared to 47.7% last year.

The uniform rental and facility services operating segment revenue for the fourth quarter of fiscal 2024 was $1.91 billion compared to $1.77 billion last year. The organic revenue growth rate was 7.1%. As we have done in the past, I will share revenue mix of the uniform rental and facility services operating segment for the fourth quarter. Keep in mind there can be small fluctuations in mix between quarters. Uniform rental was 48%, dust was 19%, hygiene was 16%, shop towels were 4%, linen which includes microfiber wipes, towels, and aprons was 10%, and catalog revenue was 3%. These percentages are consistent with last year and demonstrate we are experiencing strong demand across all our products and services. Gross margin for the uniform rental and facility services operating segment was 48.6% compared to 47.7% last year.

Speaker Change: Net income for the fourth quarter was $414 3 million compared.

Speaker Change: Compared to $346 $2 million last year.

Speaker Change: This 490 basis point improvement was the result of higher margin accounts from a disciplined approach to the market.

Speaker Change: This year's fourth quarter diluted EPS was $3 99.

Speaker Change: Fourth quarter, selling and administrative expenses as a percent of revenue was 27%.

Speaker Change: Compared to $3 33 last year, an increase of 19, 8%.

Speaker Change: It was a 10 basis point improvement from last year, we were able to create leverage with these costs, while continuing to invest in technology of selling resources.

Todd: I'll now turn the call back over to Todd to provide his thoughts on next year and our financial expectations for fiscal 'twenty five.

Todd: Thank you Mike as.

Speaker Change: Fourth quarter operating income was $547 6 million.

Todd: As we move into fiscal 'twenty, five we expect to exceed $10 billion in annual revenue for the first time.

Speaker Change: Compared to $478 million last year.

Todd: This outlook, coupled with our strong fiscal 'twenty four results demonstrate that our value proposition continues to resonate.

Speaker Change: Operating income as a percentage of revenue was 22, 2% in the fourth quarter of fiscal 'twenty four compared to 26% in last year's fourth quarter.

Every business in North America goods, producing or services, providing has a need for image safety cleanliness and compliance.

Todd: We help our customers meet those needs. So they can focus on running their businesses.

Todd: As we deliver on our customers' needs our culture remains our greatest competitive advantage that drives our focus on continuous improvement and evolving for the future.

Speaker Change: Our effective tax rate for the fourth quarter was 21, 4% compared to 22, 4% last year.

Jared Mattingley: This 90 basis point improvement was the result of good top line growth that continues to generate great operating leverage and excellent sourcing and process improvements, which continue to create additional efficiencies such as garment sharing and SmartTruck. Our First Aid and Safety Services operating segment revenue for the fourth quarter was $277.6 million compared to $249.8 million last year. The organic revenue growth rate was 11.1%, capping off another year of double digit organic growth. Gross margin for the First Aid and Safety Services operating segment was 55.4% compared to 51% last year.

This 90 basis point improvement was the result of good top line growth that continues to generate great operating leverage and excellent sourcing and process improvements, which continue to create additional efficiencies such as garment sharing and SmartTruck. Our First Aid and Safety Services operating segment revenue for the fourth quarter was $277.6 million compared to $249.8 million last year. The organic revenue growth rate was 11.1%, capping off another year of double digit organic growth. Gross margin for the First Aid and Safety Services operating segment was 55.4% compared to 51% last year.

Todd: We will continue to prioritize investments in technology infrastructure and people.

Speaker Change: Net income for the fourth quarter was $414 3 million compared.

Todd: Our technology investments include our continued investment in SAP.

Speaker Change: Compared to $346 $2 million last year.

Todd: With our fire Division currently going through the implementation process.

This year's fourth quarter diluted EPS was $3 99.

Todd: Additionally, SAP, we have partnered with Verizon and Google to deploy technology solutions that make that make it easier for our partners to run their business and easier for our customers to do business with us.

Speaker Change: Compared to $3 33 last year, an increase of 19, 8%.

Todd: I'll now turn the call back over to Todd to provide his thoughts on next year and our financial expectations for fiscal 'twenty five.

Todd: In addition technology initiatives, such as smart truck and Garmin sharing are helping to drive customer satisfaction as well as efficiencies throughout the organization.

Todd: Thank you Mike as.

As we move into fiscal 'twenty, five we expect to exceed $10 billion in annual revenue for the first time.

Todd: Our working partners really are the key to our success.

Todd: We know that when we take care of our partners. They will in turn take great care of our customers.

Todd: This outlook, coupled with our strong fiscal 'twenty four results demonstrate that our value proposition continues to resonate.

Jared Mattingley: This 440-basis-point improvement was the result of our double-digit revenue growth that created solid operating leverage, an improved sales mix, a dedicated first aid distribution center that has lowered costs, as well as efficiencies from our SmartTruck technology. Our Fire Protection Services and Uniform Direct Sale businesses are reported in the All Other segment. All Other revenue was $282.1 million compared to $261.5 million last year. The Fire Protection revenue was $197.9 million, and the organic revenue growth rate was 12.9%, resulting in another year of double-digit organic growth. The Uniform Direct Sale revenue was $84.2 million, and organic revenue decreased 4.4%. The organic growth rate in Uniform Direct Sales can vary from quarter to quarter. Gross margin for Fire Protection Services was an all-time high of 50% compared to 47.9% last year.

This 440-basis-point improvement was the result of our double-digit revenue growth that created solid operating leverage, an improved sales mix, a dedicated first aid distribution center that has lowered costs, as well as efficiencies from our SmartTruck technology. Our Fire Protection Services and Uniform Direct Sale businesses are reported in the All Other segment. All Other revenue was $282.1 million compared to $261.5 million last year. The Fire Protection revenue was $197.9 million, and the organic revenue growth rate was 12.9%, resulting in another year of double-digit organic growth. The Uniform Direct Sale revenue was $84.2 million, and organic revenue decreased 4.4%. The organic growth rate in Uniform Direct Sales can vary from quarter to quarter. Gross margin for Fire Protection Services was an all-time high of 50% compared to 47.9% last year.

Todd: We are investing in training, our partners and giving them the best and latest tools to make their jobs easier. While also investing in talent acquisition in order to ensure we are properly staffed to support our growth initiatives.

Speaker Change: Every business in North America goods, producing or services, providing has a need for image safety cleanliness and compliance.

Todd: The future Cintas remains bright and our fiscal 'twenty guidance reflects that outlook.

Speaker Change: We help our customers meet those needs. So they can focus on running their businesses.

Speaker Change: As we deliver on our customers' needs our culture remains our greatest competitive advantage and it drives our focus on continuous improvement and evolving for the future.

Todd: For fiscal 'twenty five we expect our revenue to be in the range of $10 $1 6 billion.

Todd: To $10 three 1 billion.

Todd: Total growth rate of five 9% to seven 4%.

Speaker Change: We will continue to prioritize investments in technology infrastructure and people.

Please note the following.

Speaker Change: Our technology investments include our continued investment in SAP.

Todd: Fiscal 'twenty five we will have two fewer workdays compared to fiscal 'twenty four.

Speaker Change: With our fire Division currently going through the implementation process.

Todd: Each quarter of fiscal 'twenty, five we'll have 65 workdays.

Speaker Change: In addition to SAP, we have partnered with Verizon and Google to deploy technology solutions that make that make it easier for our partners to run their business and easier for our customers to do business with us.

Todd: The two fewer workdays will impact the first and fourth quarters by one day each.

Todd: The revenue growth rate in each of those two quarters will be negatively affected by about 160 basis points.

Speaker Change: In addition technology initiatives, such as smart truck and garment sharing are helping to drive customer satisfaction as well as efficiencies throughout the organization.

Please keep that in mind when modeling.

Todd: Adjusting for the impact of two fewer workdays acquisitions already completed and a constant currency. Our total organic growth rate for next year is expected to be six 4% to 8%.

Speaker Change: Our working partners really are the key to our success.

Jared Mattingley: This 210 basis point improvement was primarily the result of robust revenue growth that generated strong operating leverage along with route productivity improvements. Gross margin for uniform direct sales was 40.9% compared to 36% last year. This 490 basis point improvement was the result of higher margin accounts from a disciplined approach to the market. Fourth quarter selling and administrative expenses as a percent of revenue was 27%, which was a 10 basis point improvement from last year. We were able to create leverage with these costs while continuing to invest in technology and selling resources. Fourth quarter operating income was $547.6 million compared to $470.8 million last year. Operating income as a percentage of revenue was 22.2% in the fourth quarter of fiscal 2024 compared to 20.6% in last year's fourth quarter.

This 210 basis point improvement was primarily the result of robust revenue growth that generated strong operating leverage along with route productivity improvements. Gross margin for uniform direct sales was 40.9% compared to 36% last year. This 490 basis point improvement was the result of higher margin accounts from a disciplined approach to the market. Fourth quarter selling and administrative expenses as a percent of revenue was 27%, which was a 10 basis point improvement from last year. We were able to create leverage with these costs while continuing to invest in technology and selling resources. Fourth quarter operating income was $547.6 million compared to $470.8 million last year. Operating income as a percentage of revenue was 22.2% in the fourth quarter of fiscal 2024 compared to 20.6% in last year's fourth quarter.

Speaker Change: We know that when we take care of our partners. They will in turn take great care of our customers.

Todd: We expect diluted EPS to be in the range of 16 or $16 25 to.

Speaker Change: We are investing in training, our partners and giving them the best and latest tools to make their jobs easier. While also investing in talent acquisition in order to ensure we are properly staffed to support our growth initiatives.

To $16 75.

Todd: Our growth rate of seven 3% to 10, 6%.

Todd: Fiscal 'twenty five net interest expense is expected to be approximately $106 million compared.

Speaker Change: The future Cintas remains bright and our fiscal 'twenty guidance reflects that outlook.

Speaker Change: For fiscal 'twenty five we expect our revenue to be in the range of $10 $1 6 billion.

Todd: Compared to $95 million in fiscal 'twenty four.

Todd: Predominantly as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks.

Speaker Change: To $10 three 1 billion.

Speaker Change: Total growth rate of five 9% to seven 4%.

Todd: Our fiscal 'twenty five effective tax rate is expected to be 24% the same compared to our fiscal 'twenty four.

Speaker Change: Please note the following.

Speaker Change: Fiscal 'twenty five we will have two fewer workdays compared to fiscal 'twenty four.

Speaker Change: Each quarter of fiscal 'twenty, five we'll have 65 workdays.

Todd: Guidance guidance does not include any future share buybacks or significant economic disruptions or downturns.

Speaker Change: The two fewer workdays will impact the first and fourth quarters by one day each.

Speaker Change: I want to end by thanking our partners for their tremendous efforts to achieve a successful fiscal 'twenty four as.

The revenue growth rate in each of those two quarters will be negatively affected by about 160 basis points.

Speaker Change: As we look ahead to fiscal 'twenty five.

Speaker Change: Outlook reflects our continued confidence in our strategy.

Speaker Change: Please keep that in mind when modeling.

Jared Mattingley: The Q4 marks the first time that all three operating segments, Uniform Rental and Facility Services, First Aid and Safety Services, and Fire Protection Services, exceeded 22% in operating income in the same quarter.

The Q4 marks the first time that all three operating segments, Uniform Rental and Facility Services, First Aid and Safety Services, and Fire Protection Services, exceeded 22% in operating income in the same quarter.

Speaker Change: We remain focused on delivering outstanding customer experiences.

Speaker Change: Adjusting for the impact of two fewer workdays acquisitions already completed and a constant currency. Our total organic growth rate for next year is expected to be six 4% to 8%.

Speaker Change: Forcing the unique cintas culture that drives our success, while making the necessary investments in the business to sustain our growth through fiscal 'twenty five and long beyond.

Speaker Change: We expect diluted EPS to be in the range of 16 or $16 25 to.

Speaker Change: I'll now turn the call back over to Jared.

Todd Schneider: Our effective tax rate for the fourth.

Our effective tax rate for the Q4 was 21.4% compared to 22.4% last year. Net income for the fourth quarter was $414.3 million compared to $346.2 million last year. This year's fourth quarter diluted EPS was $3.99 compared to $3.33 last year, an increase of 19.8%. I'll now turn the call back over to Todd to provide his thoughts on next year and our financial expectations for fiscal 2025.

Jared Mattingley: Quarter was 21.4% compared to 22.4% last year. Net income for the fourth quarter was $414.3 million compared to $346.2 million last year. This year's fourth quarter diluted EPS was $3.99 compared to $3.33 last year, an increase of 19.8%. I'll now turn the call back over to Todd to provide his thoughts on next year and our financial expectations for fiscal 2025.

Jared: That concludes our prepared remarks now we are happy to answer questions from the analysts. Please ask just one question and a single follow up if needed. Thank you.

Speaker Change: To $16 75.

Speaker Change: Our growth rate of seven 3% to 10, 6%.

Speaker Change: Fiscal 'twenty five net interest expense is expected to be approximately $106 million compared to $95 million in fiscal 'twenty four predominantly as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad now.

Speaker Change: Please be prepared to ask your question. When prompted you will also be allowed to ask one follow up question. Once again, if you would like to ask a question. Please press star one on your phone.

Speaker Change: Our fiscal 'twenty five effective tax rate is expected to be 24% the same compared to our fiscal 'twenty four.

Speaker Change: And our first question comes from Joshua <unk> from UBS. Please go ahead Joshua.

Todd Schneider: Thank you, Mike. As we move into fiscal 2025, we expect to exceed $10 billion in annual revenue for the first time. This outlook coupled with our strong fiscal 2024 results demonstrate that our value proposition continues to resonate. Every business in North America, goods producing or services providing has a need for image, safety, cleanliness, and compliance. We help our customers meet those needs so they can focus on running their businesses. As we deliver on our customers' needs, our culture remains our greatest competitive advantage and it drives our focus on continuous improvement and evolving for the future. We will continue to prioritize investments in technology, infrastructure, and people. Our technology investments include our continued investment in SAP with our FIRE division currently going through the implementation process.

Joshua: Hi, Good morning, Todd, Mike and Jarrod, Congrats on a strong quarter.

Guidance guidance does not include any future share buybacks or significant economic disruptions or downturns.

I was wondering if you guys could comment on your retention rates I know that you've said, it's generally stable.

Speaker Change: I want to end by thanking our partners for their tremendous efforts to achieve a successful fiscal 'twenty four as.

Joshua: Seen any slight uptick in industry churn or.

Speaker Change: As we look ahead to fiscal 'twenty five.

Speaker Change: Yeah downtick in retention I guess.

Speaker Change: Outlook reflects our continued confidence in our strategy.

Speaker Change: How are you seeing.

Speaker Change: We remain focused on delivering outstanding customer experiences.

Speaker Change: Customers behave in this environment.

Speaker Change: Good morning, Josh and thanks for your comments were.

Speaker Change: We really haven't seen a change in our customer behavior.

Speaker Change: <unk> mentioned, our retention rates are still at very attractive levels.

Speaker Change: I'll now turn the call back over to Jared.

Speaker Change: And when you have as broad of a.

Jared: That concludes our prepared remarks now we are happy to answer questions from the analysts. Please ask just one question and a single follow up if needed. Thank you.

Speaker Change: Our customer base as we do there are certainly some aspects that are doing that are thriving and some that are struggling.

Speaker Change: It varies based upon industry and varies based upon geography.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad now.

Speaker Change: But when you speak as a whole.

Todd Schneider: In addition to SAP, we have partnered with Verizon and Google to deploy technology solutions that make it easier for our partners to run their business and easier for our customers to do business with us. In addition, technology initiatives such as SmartTruck and garment sharing are helping to drive customer satisfaction as well as efficiencies throughout the organization. Our working partners really are the key to our success. We know that when we take care of our partners, they will in turn take great care of our customers. We are investing in training our partners in giving them the best and latest tools to make their jobs easier while also investing in talent acquisition in order to ensure we are properly staffed to support our growth initiatives. The future of Cintas remains bright, and our fiscal 2025 guidance reflects that outlook.

In addition to SAP, we have partnered with Verizon and Google to deploy technology solutions that make it easier for our partners to run their business and easier for our customers to do business with us. In addition, technology initiatives such as SmartTruck and garment sharing are helping to drive customer satisfaction as well as efficiencies throughout the organization. Our working partners really are the key to our success. We know that when we take care of our partners, they will in turn take great care of our customers. We are investing in training our partners in giving them the best and latest tools to make their jobs easier while also investing in talent acquisition in order to ensure we are properly staffed to support our growth initiatives. The future of Cintas remains bright, and our fiscal 2025 guidance reflects that outlook.

I would say our customer bases.

Speaker Change: We haven't seen much change in it so far.

Speaker Change: That's great to hear and then for my follow up could you just kind of talk about your reasoning behind choosing that six 4% to 8% organic growth for next year I guess in the context of just doing seven 5% in Q4, what are the scenarios that would lead you to the bottom and the top end of the growth.

Speaker Change: And our first question comes from Joshua <unk> from UBS. Please go ahead Joshua.

Joshua: Hi, Good morning, Todd, Mike and Jarrod, Congrats on a strong quarter.

Joshua: I was wondering if you guys could comment on your retention rates I know that you've said, it's generally stable.

Range then thank you so much.

Well Josh.

Speaker Change: We really like.

Speaker Change: <unk> seen any slight uptick in industry churn or.

Speaker Change: Where we are our guide as we like where our businesses.

Speaker Change: Yeah downtick in retention I guess.

Speaker Change: And that's where we that's.

Speaker Change: How are you seeing custom.

Speaker Change: Customers behave in this environment.

Speaker Change: Kind of where we target our business to grow with those types of levels.

Good morning, Josh.

Josh: Sure comments.

Certainly.

Josh: We really haven't seen a change in our customer behavior is.

Todd Schneider: For fiscal 2025 we expect our revenue to be in the range of $10.16 billion to $10.31 billion, a total growth rate of 5.9% to 7.4%. Please note the following. Fiscal 2025 will have two fewer workdays compared to fiscal 2024. Each quarter of fiscal 2025 will have 65 workdays. The two fewer workdays will impact the first and fourth quarters by one day each. The revenue growth rate in each of those two quarters will be negatively affected by about 160 basis points. Please keep that in mind when modeling, adjusting for the impact of two fewer workdays, acquisitions already completed, and a constant currency. Our total organic growth rate for next year is expected to be 6.4% to 8%. We expect diluted EPS to be in the range of $16.25 to $16.75, a growth rate of 7.3% to 10.6%.

For fiscal 2025 we expect our revenue to be in the range of $10.16 billion to $10.31 billion, a total growth rate of 5.9% to 7.4%. Please note the following. Fiscal 2025 will have two fewer workdays compared to fiscal 2024. Each quarter of fiscal 2025 will have 65 workdays. The two fewer workdays will impact the first and fourth quarters by one day each. The revenue growth rate in each of those two quarters will be negatively affected by about 160 basis points. Please keep that in mind when modeling, adjusting for the impact of two fewer workdays, acquisitions already completed, and a constant currency. Our total organic growth rate for next year is expected to be 6.4% to 8%. We expect diluted EPS to be in the range of $16.25 to $16.75, a growth rate of 7.3% to 10.6%.

Speaker Change: We read.

Speaker Change: The overall macro data that we that you all read about what's going on in the economy.

Josh: I mentioned, our retention rates are still at very attractive levels.

Josh: And when you have as broad of a.

Speaker Change: So we watch that.

Josh: Our customer basis, we do there are certainly some aspects that are doing that are thriving and some that are struggling it varies based upon industry and varies based upon geography.

Speaker Change: But we don't expect much change.

Speaker Change: At this point and as a result, I would say, we expect to be right in in that guide.

Speaker Change: We'd love for the economy to go even faster.

Josh: But when you speak as a whole.

Josh: I would say our customer bases.

Speaker Change: But nevertheless, we find ways to be successful.

We haven't seen much change in it so far.

Speaker Change: Our value proposition is resonating.

Speaker Change: That's great to hear and then for my follow up could you just kind of talk about your reasoning behind choosing that six 4% to 8% organic growth for next year I guess in the context, that's just doing seven 5% in Q4, what are the scenarios that would lead you to the bottom and the top end of the growth.

Speaker Change: We have we service a little over 1 million customers or 16 million businesses.

Speaker Change: In our market.

Speaker Change: And we have all kinds of ways to grow.

Speaker Change: And I think we've shown net that we have the ability to exceed GDP growth and exceed.

Speaker Change: Range then thank you so much.

Speaker Change: Employment growth so.

Josh: Well Josh.

Speaker Change: We would certainly love for our customers to be.

Speaker Change: We really like.

Speaker Change: Thriving and.

Speaker Change: Where we are our guide as we like where our businesses.

Speaker Change: <unk>.

Speaker Change: And adding people.

Speaker Change: And that's where we are.

All over the place.

Speaker Change: But nevertheless, we're going to find a way to be successful and we're we're confident in our in our guidance.

Speaker Change: Kind of where we target our business to grow with those types of levels.

Todd Schneider: Fiscal 2025 net interest expense is expected to be approximately $106 million compared to $95 million in fiscal 2024, predominantly as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks. Our fiscal 2025 effective tax rate is expected to be 20.4%. The same, compared to our fiscal 2024 guidance, does not include any future share buybacks, or significant economic disruptions, or downturns. I want to end by thanking our partners for their tremendous efforts to achieve a successful fiscal 2024. As we look ahead to fiscal 2025, our outlook reflects our continued confidence in our strategy. We remain focused on delivering outstanding customer experiences, reinforcing the unique Cintas culture that drives our success, while making the necessary investments in the business to sustain our growth through fiscal 2025 and long beyond. I'll now turn the call back over to Jared.

Fiscal 2025 net interest expense is expected to be approximately $106 million compared to $95 million in fiscal 2024, predominantly as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks. Our fiscal 2025 effective tax rate is expected to be 20.4%. The same, compared to our fiscal 2024 guidance, does not include any future share buybacks, or significant economic disruptions, or downturns. I want to end by thanking our partners for their tremendous efforts to achieve a successful fiscal 2024. As we look ahead to fiscal 2025, our outlook reflects our continued confidence in our strategy. We remain focused on delivering outstanding customer experiences, reinforcing the unique Cintas culture that drives our success, while making the necessary investments in the business to sustain our growth through fiscal 2025 and long beyond. I'll now turn the call back over to Jared.

Speaker Change: Certainly.

Speaker Change: We read.

Speaker Change: And our next question comes from Heather <unk> from Bank of America. Please go ahead Heather.

Speaker Change: The overall macro data that we that you all read about what's going on in the economy.

Heather: Hi, Thank you so much for taking my question.

Speaker Change: So we watch that.

Heather: Can you just kind of update us on how you're thinking about incremental margin.

Speaker Change: But we don't expect much change.

Speaker Change: At this point and as a result, I would say, we expect to be right in in that guide.

Heather: And how youre thinking about the margin story for 2025, and what are the bigger tailwind what are you most excited about.

Speaker Change: We'd love for the economy to go even faster.

Speaker Change: But nevertheless, we find ways to be successful.

Speaker Change: And anything going on in the cost environment well. Thank you.

Speaker Change: Our value proposition is resonating.

Speaker Change: Well I'll start Heather and good morning.

We have we service a little over 1 million customers through <unk> 16 million businesses.

Speaker Change: <unk>.

Speaker Change: As we think about margin expansion and.

Speaker Change: Our guide.

Speaker Change: In our market.

Speaker Change: Reflects margin expansion.

Speaker Change: And we have all kinds of ways to grow.

Speaker Change: The first item, we think about as it comes to that is leverage leverage on revenue growth.

Speaker Change: And I think we've shown net that we have the ability to exceed GDP growth and exceed.

Speaker Change: And.

Speaker Change: Employment growth so.

Speaker Change: We've demonstrated that we have the ability to do that and that will continue to do that.

Speaker Change: We would certainly love for our customers to be.

Jared Mattingley: That concludes our prepared remarks. Now we are happy to answer questions from the analysts. Please ask just one question and a.

Speaker Change: Thriving and.

Speaker Change: And that's easy to say hard to do better job of the team has done an incredible job.

Speaker Change: <unk>.

Speaker Change: And adding people.

Speaker Change: All over the place.

Operator: Single follow up if needed.

Speaker Change: And so many areas starting with our global supply chain, which is a competitive advantage in the marketplace.

Speaker Change: But nevertheless, we're going to find a way to be successful and we're we're confident in our in our guidance.

Todd Schneider: Thank you.

Operator: If you would like to ask a question, please press star one on your telephone keypad now. Please be prepared to ask your question when prompted. You will also be allowed to ask one follow up question. Once again, if you would like to ask a question, please press star one on your phone now. And our first question comes from Joshua Chan from UBS. Please go ahead. Joshua. Hi, good morning, Todd, Mike, and Jared. Congrats on a strong quarter.

Speaker Change: How they go about their jobs.

Speaker Change: And our next question comes from Heather <unk> from Bank of America. Please go ahead Heather.

Speaker Change: The fact that they have.

Speaker Change: Dual source or many sources for 90% or more of the products that we source.

Hi, Thank you so much for taking my question.

Heather: Can you just kind of update us on how you're thinking about incremental margin.

Speaker Change: So how they go about that the great work that's been done on material cost.

Heather: And how youre thinking about the margin story for 2025, and what are the bigger tailwind what are you most excited about.

Speaker Change: <unk>.

Joshua Chan: Hi, good morning, Todd, Mike, and Jared. Congrats on a strong quarter. I was wondering if you guys could comment on your retention rates. I know that you said it's generally stable. Have you seen any slight uptick in industry churn or downtick in retention? I guess. Or how are you seeing your customers behave in this environment?

Speaker Change: So again, starting with sourcing but also.

Speaker Change: We leverage our SAP system to help us.

Todd Schneider: I was wondering if you guys could?

Operator: Comment on your retention rates. I know that you said it's generally stable. Have you seen any slight uptick in industry churn or downtick in retention? I guess. Or how are you seeing your customers behave in this environment?

Speaker Change: Two to improve our garment sharing.

Speaker Change: And anything going on in the cost environment well. Thank you.

Speaker Change: And we've been working on this for years.

Speaker Change: And it's it's bearing fruit.

Speaker Change: Well I'll start Heather and good morning.

Speaker Change: Not only in our cost structure, but also in turnaround time for our customers. So it helps us to get product to our customers faster when it is in our stock rooms versus having to order.

Speaker Change: Sure.

Speaker Change: As we think about margin expansion and.

Speaker Change: Our guide.

Speaker Change: It reflects margin expansion.

Speaker Change: The first item when we think about as it comes to that is leverage leverage on revenue growth.

Todd Schneider: Good morning, Josh, and thanks for your comments. We really haven't seen a change in our customer behavior. As I mentioned, our retention rates are still at very attractive levels. And when you have as broad of a customer base as we do, there are certainly some aspects that are doing that are thriving and some that are struggling. It varies based upon industry and varies based upon geography. But when you speak as a whole, I would say our customer base is we haven't seen much change in it so far.

Speaker Change: New out of our distribution centers better for our customers better for our financials.

And.

Speaker Change: We've demonstrated that we have the ability to do that and that will continue to do that.

Speaker Change: And and that's paying off for us.

Yes.

Speaker Change: And that's easy to say hard to do better job of the team has done an incredible job.

Speaker Change: That's really helpful. Thank you very much.

Speaker Change: Thank you.

Speaker Change: And so many areas starting with our global supply chain, which is a competitive advantage in the marketplace.

Speaker Change: And our next question comes from Andy Wittmann from RW Baird. Please go ahead Andy.

Andy Wittmann: Yeah, great. Thanks, and good morning, Thank you for taking my questions.

Speaker Change: How they go about their jobs.

Andy Wittmann: Hey, guys I, just thought I would start with the competitive environment. Both of your largest competitors have noted increased.

Speaker Change: The fact that they have.

Speaker Change: Dual source or many sources for 90% or more of the products that we source.

Operator: That's great to hear. And then for my follow up, could you just kind of talk about your reasoning behind choosing the 6.4% to 8.0% organic growth for next year? I guess in the context of just doing 7.5% in Q4, what are the scenarios that would lead you to the bottom and the top ends of the growth range? Thank you so much.

Joshua Chan: That's great to hear. And then for my follow up, could you just kind of talk about your reasoning behind choosing the 6.4% to 8.0% organic growth for next year? I guess in the context of just doing 7.5% in Q4, what are the scenarios that would lead you to the bottom and the top ends of the growth range? Thank you so much.

Andy Wittmann: Increased competition out there and I know that your product and service offering is a little bit broader but I thought just given those competitor comments I would take your temperature and have you comment if you could please on what youre seeing out there in the in the competitive environment.

Speaker Change: So how they go about that the great work that's been done on material cost.

Speaker Change: Yes.

Speaker Change: So again, starting with sourcing but also.

Speaker Change: We leverage our SAP system to help us.

Good morning, Andy.

Speaker Change: Two to improve our garment sharing.

Andy Wittmann: Here's what I'll tell you is that.

Todd Schneider: Well, Josh, you know, we really like where our guide is. We like where our business is and that's kind of where we target our business to grow at those types of levels. Certainly, you know, we read, you know, the overall macro data that you all read about what's going on in the economy. And so we watch that, but we don't expect much change at this point. And as a result, I'd say we expect to be right in that guide. We'd love for the economy to go even faster, but nevertheless, we find ways to be successful. Our value proposition is resonating. You know, we have, we service a little over a million customers. There are 16 million businesses in our market. And we have all kinds of ways to grow.

Speaker Change: And we've been working on this for years.

Speaker Change: We operate in a highly competitive market.

Speaker Change: And it's bearing fruit.

Andy Wittmann: These have always will sure I've been with the company for 35 years its been competitive every day since I've been here.

Not only in our cost structure, but also in turnaround time for our customers. So it helps us to get product to our customers faster when it is in our stock rooms versus having to order.

Andy Wittmann: Now that being said our revenue retention rates as I mentioned are attractive.

Andy Wittmann: And part of it is because.

Speaker Change: New out of our distribution centers better for our customers better for our financials.

Andy Wittmann: Our new business wins tend to come from the no program market.

Andy Wittmann: And less from the competition so.

Speaker Change: And and that's paying off for us.

Andy Wittmann: As I mentioned earlier, there is 16 million businesses out there we service about $1 million. So the white space out there is incredible.

Speaker Change: That's really helpful. Thank you very much.

Speaker Change: Thank you.

Speaker Change: And our next question comes from Andy Wittmann from RW Baird. Please go ahead Andy.

Andy Wittmann: And we're focused on converting those folks from I'll call. It a do it yourself type.

Andy Wittmann: Yeah, great. Thanks, and good morning, Thank you for taking my questions.

Andy Wittmann: Two.

Andy Wittmann: Hey, guys I, just thought I would start with the competitive environment. Both of your largest competitors have noted.

Andy Wittmann: Two customer of ours and that that value.

Andy Wittmann: Proposition is resonating because we help them focus on taking care of their customers or their patients or their guests or whatever.

Speaker Change: Do you want to describe it.

Speaker Change: And we take that for them and we're able to do it better faster smarter and in many cases cheaper than what they were doing it so.

Todd Schneider: I think we've shown that we have the ability to exceed GDP growth and exceed employment growth. We would certainly love for our customers to be thriving and adding people all over the place. Nevertheless, we're going to find a way to be successful and we're confident in our guide.

I think we've shown that we have the ability to exceed GDP growth and exceed employment growth. We would certainly love for our customers to be thriving and adding people all over the place. Nevertheless, we're going to find a way to be successful and we're confident in our guide.

Andy Wittmann: Good morning, Andy.

Speaker Change: Yes, it is a competitive heck, yes, it's always been competitive.

Andy Wittmann: Sure.

Andy Wittmann: Here's what I'll tell you is that.

Speaker Change: We operate in a highly competitive market.

Speaker Change: And we're focused on growing the market and that's been a good model for us.

Andy Wittmann: These have always will sure I've been with the company for 35 years its been competitive everyday since I've been here.

Speaker Change: I appreciate that and.

Speaker Change: And then I guess, maybe Mike I guess I wanted to kind of ask because some of the margin questions a little bit different way.

Andy Wittmann: Now that being said our revenue retention rates as I mentioned are attractive.

Speaker Change: First is on just kind of do the math between the EPS and the revenue I was getting somewhere around 20 or 30 basis points of implied operating margin expansion for the year. So maybe you could just give clarify that but but that's a pretty decent deceleration from the amount of margin expansion certainly saw in the quarter or even over the course of the.

And part of it is because.

Andy Wittmann: Our new business wins tend to come from the no program market.

Operator: Our next question comes from Heather Balsky from Bank of America. Please go ahead.

Andy Wittmann: Less from the competition so.

Mike Hanson: Heather, hi. Thank you so much for taking my question. Can you just kind of update us on how you're thinking about incremental margins and how you're thinking about the margin story for 2025? What are the bigger tailwinds, what are you most excited about? And anything going on in the cost environment as well. Thank you.

Heather Balsky: Heather, hi. Thank you so much for taking my question. Can you just kind of update us on how you're thinking about incremental margins and how you're thinking about the margin story for 2025? What are the bigger tailwinds, what are you most excited about? And anything going on in the cost environment as well. Thank you.

Andy Wittmann: As I mentioned earlier, there is 16 million businesses out there we service about $1 million.

The white space out there is incredible.

Speaker Change: For the past fiscal year. So I was just wondering if you could comment on if theres anything any categories inside the P&L that we should be aware of that are inflating.

Andy Wittmann: And we're focused on converting those folks from I'll call. It a do it yourself type.

Andy Wittmann: Two.

Andy Wittmann: Two customer of ours and that value proposition.

Speaker Change: Materially or if theres other.

Speaker Change: Areas, maybe energy costs I don't know that we should be aware of that could be weighing on continued margin expansion like we've seen here in recent quarters.

Opposition is resonating because we help them focus on taking care of their customers or their patients or their guests or whatever however, you want to describe it.

Todd Schneider: Well, I'll start. Heather, good morning. As we think about margin expansion and our guide reflects margin expansion, the first item we think about as it comes to that is leverage, leverage on revenue growth. We demonstrated that we have the ability to do that and that we'll continue to do that. That's easy to say, hard to do, but the team has done an incredible job in so many areas, starting with our global supply chain, which is a competitive advantage in the marketplace, how they go about their jobs, the fact that they have dual source or many sources for 90% or more of the products that we source. So how they go about that, the great work that's been done on material.

Andy Wittmann: And we take that for them and we're able to do it better faster smarter and in many cases cheaper than what they were doing it so.

Andy Wittmann: Hi, Andy.

Speaker Change: The short answer to or are there any new headwinds.

Speaker Change: The short answer is.

Yes, it is a competitive heck, yes, it's always been competitive.

Speaker Change: No with the exception of maybe the two fewer workdays.

And we're focused on growing the market and that's been a good model for us.

Speaker Change: Whereas you as you've heard us talk about.

Andy Wittmann: I appreciate that and then I guess, maybe Mike I guess I wanted to kind of ask because some of the margin questions a little bit different way.

Speaker Change: For example in the first quarter.

Speaker Change: We've talked a little bit about the top line impact being a 160 basis points of growth.

Speaker Change: First is on just kind of do the math between the EPS and the revenue I was getting somewhere around 20 or 30 basis points of implied operating margin expansion for the year. So maybe you could just give clarify that but but thats a pretty decent deceleration from the amount of margin expansion certainly saw in the quarter or even over the course of.

Speaker Change: Headwind, but also you've also heard us talk about margins when we lose a workday, we've generally talked about a 50 basis point impact we lose two workdays next year.

Speaker Change: We've done such a good job of leveraging our infrastructure that the loss of a workday in a quarter is probably more like 30% to 40 basis points now.

Mike Hanson: Cost.

Speaker Change: Over the past fiscal year. So I was just wondering if you could comment on if theres anything or any categories inside the P&L that we should be aware of that are inflating.

Todd Schneider: Again, starting with sourcing, but also we leverage our SAP system to help us to improve our garment sharing. And we've been working on this for years. And it's bearing fruit not only in our cost structure, but also in turnaround time for our customers. So it helps us to get product to our customers faster when it's in our stock rooms versus having to order new out of our distribution centers, better for our customers, better for our financials. And that's paying off for us.

Again, starting with sourcing, but also we leverage our SAP system to help us to improve our garment sharing. And we've been working on this for years. And it's bearing fruit not only in our cost structure, but also in turnaround time for our customers. So it helps us to get product to our customers faster when it's in our stock rooms versus having to order new out of our distribution centers, better for our customers, better for our financials. And that's paying off for us.

Speaker Change: But we lose two workdays and so there'll be a little bit of.

Speaker Change: Headwind from that that is just sort of.

Speaker Change: A product of the calendar and not necessarily the business, having said that the business is still operating really well and if you think about we think about the guidance range is generally in the you can call it the 25% to 35% incremental margin range.

Speaker Change: More materially or if theres other.

Speaker Change: Areas may be energy costs, I don't know that we should be aware of that could be weighing on continued margin expansion like we've seen here in recent quarters.

Andy Wittmann: Hi, Andy.

Andy Wittmann: The short answer to or are there any new headwinds.

Speaker Change: And so it is a pretty good margin range of 30 basis points of you.

Speaker Change: The short answer is.

Speaker Change: No with the exception of maybe the two fewer workdays.

Speaker Change: Referred to Andy we would we would kind of say look at the very bottom there still is margin expansion at the very bottom of our range at the top of the range. There is there is more than 30 basis points, probably more like 70 basis points.

Speaker Change: Whereas you as you've heard us talk about.

Mike Hanson: That's really helpful. Thank you very much.

Heather Balsky: That's really helpful. Thank you very much.

Speaker Change: For example in the first quarter.

Todd Schneider: Thank you.

Speaker Change: We've talked a little bit about the top line impact being a 160 basis points of growth.

Operator: Our next question comes from Andy Whitman from R.W. Baird. Please go ahead, Andy.

Speaker Change: So the year. We think is that this is a typical guide range for us.

Todd Schneider: Yeah, great.

Andy Wittmann: Yeah, great. Thanks. Good morning. Thank you for taking my questions, guys? I just thought I would start with the competitive environment. Both of your largest competitors have noted increased competition out there. I know that your product and service offering is a little bit broader, but I thought just given those competitor comments, I would take your temperature and have you comment, if you could please, on what you're seeing out there in the competitive environment.

Jared Mattingley: Thanks. Good morning. Thank you for taking my questions, guys? I just thought I would start with the competitive environment. Both of your largest competitors have noted increased competition out there. I know that your product and service offering is a little bit broader, but I thought just given those competitor comments, I would take your temperature and have you comment, if you could please, on what you're seeing out there in the competitive environment.

Speaker Change: <unk>.

Speaker Change: Headwind, but also you've also heard us talk about margins when we lose a workday.

Speaker Change: As you saw on our fourth quarter.

Speaker Change: The initiatives and the operational excellence that we have worked so hard on have continued in the fourth quarter and given this guide we expect those to continue into fiscal 'twenty five.

Speaker Change: Generally talked about a 50 basis point impact we lose two workdays next year, we've done such a good job of leveraging our infrastructure that the loss of a workday in a quarter is probably more like 30% to 40 basis points now but.

Speaker Change: But we lose two workdays and so there'll be a little bit of.

Speaker Change: And our next question comes from George Tong from Goldman Sachs. Please go ahead George.

Speaker Change: Headwind from that that is just sort of.

Todd Schneider: Good morning, Andy. Here's what I'll tell you is that we operate in a highly competitive market. Always have, always will. Sure. I've been with the company for 35 years, been competitive every day since I've been here. Now, that being said, our revenue retention rates, as I mentioned, are attractive. And part of it is because our new business wins tend to come from the no program market and less from the competition. So as I mentioned earlier, there's 16 million businesses out there. We service about 1 million. So the white space out there is incredible. And we're focused on converting those folks from, I'll call it a do it yourself type to a customer of ours. And that value proposition is resonating because we help them focus on taking care of their customers, or their patients, or their guests, or whatever, however you want to describe it.

George Tong: Hi, Thanks, good morning.

Speaker Change: A product of the calendar and not necessarily the business, having said that the business is still operating really well and if you think about the <unk>.

George Tong: Can you talk a bit about the progress youre, making with penetrating your high growth verticals, including healthcare hospitality education, and government, where you're seeing particularly good traction.

Speaker Change: We think about the guidance range is generally in the you can call it the 25% to 35% incremental margin range.

Speaker Change: Good morning, George.

Speaker Change: Yes.

Speaker Change: Really like the verticals that we've chosen.

And so it is a pretty good margin range of 30 basis points to you.

Speaker Change: As a reminder.

Speaker Change: Referred to Andy we would we would kind of say look at the very bottom there is still as margin expansion at the very bottom of our range at the top of the range. There is there is more than 30 basis points, probably more like 70 basis points.

Speaker Change: It's not just a sales strategy.

Speaker Change: It is also.

Speaker Change: How we organize around those customers those industries as verticals.

Speaker Change: To make sure that we are.

Speaker Change: Meeting exceeding their needs.

Speaker Change: So the year. We think is that this is a typical guide range for us.

Speaker Change: Because they're a little different and and as we do that.

Speaker Change: <unk> the services that we provide the support that we provide is all comes along with that and so yes. They are all operating at attractive levels and.

Speaker Change: As you saw in our fourth quarter.

Speaker Change: I wouldn't call any one out specifically, where I'd say Oh, my gosh that was it.

Todd Schneider: And we take that for them and we able to do it better, faster, smarter, in many cases cheaper than what they were doing it. So yeah, is it competitive? Heck yeah. It's always been competitive and we're focused on growing the market and that's been a good model for us. Appreciate that.

And we take that for them and we able to do it better, faster, smarter, in many cases cheaper than what they were doing it. So yeah, is it competitive? Heck yeah. It's always been competitive and we're focused on growing the market and that's been a good model for us. Appreciate that.

Speaker Change: <unk>.

Speaker Change: They're all they're all doing quite well.

Speaker Change: And our next question comes from George Tong from Goldman Sachs. Please go ahead George.

Speaker Change: I thought it might be helpful.

Speaker Change: To talk a little bit about.

Keen Fai Tong: Hi, Thanks, good morning.

Speaker Change: Our recent healthcare win that we had.

Keen Fai Tong: Can you talk a bit about the progress youre, making with penetrating your high growth verticals, including healthcare.

Speaker Change: We recently sold a large hospital network with scrub dispensing technology.

Speaker Change: <unk> education, and government, where you're seeing particularly good traction.

Speaker Change: For the scrubbers and the various departments throughout.

Jared Mattingley: Then I guess maybe, Mike, I guess I wanted to kind of ask some of the margin questions a little bit different way. First, as I was just kind of doing the math between the EPS and the revenue, I was getting somewhere around 20 or 30 basis points of implied operating margin expansion for the year. Maybe you could just clarify that. But that's a pretty decent deceleration from the amount of margin expansion certainly saw in the quarter or even over the course of the past fiscal year.

Andy Wittmann: Then I guess maybe, Mike, I guess I wanted to kind of ask some of the margin questions a little bit different way. First, as I was just kind of doing the math between the EPS and the revenue, I was getting somewhere around 20 or 30 basis points of implied operating margin expansion for the year. Maybe you could just clarify that. But that's a pretty decent deceleration from the amount of margin expansion certainly saw in the quarter or even over the course of the past fiscal year.

Speaker Change: And acute care hospital.

Speaker Change: But we're also having really good success with the surgery centers and those types that are attached to the large acute care hospital networks and you are probably seeing some of that.

Speaker Change: Good morning, George.

Speaker Change: Yes, we really.

Keen Fai Tong: Like the verticals that we've chosen.

Keen Fai Tong: And as a reminder.

Speaker Change: Not just our sales strategy.

Speaker Change: Acute care hospital networks.

Speaker Change: Having investments in other areas so.

It is also.

Speaker Change: How we organize around those customers those industries as verticals.

Speaker Change: In fact, I'd say three large health care systems came to us for help.

Speaker Change: To make sure that we are.

Speaker Change: With their non acute facilities, so when I say non acute facilities.

Speaker Change: Meeting exceeding their needs.

Jared Mattingley: So I was just wondering if you could comment on if there's anything, any categories inside the P and L that we should be aware of that are inflating more materially, or if there's other areas, maybe energy costs I don't know, that we should be aware of, that could be weighing on continued margin expansion like we've seen here in recent quarters. Thanks, Andy. The short answer to are there any new headwinds? The short answer is no, with the exception of maybe the two fewer work days, where, as you've heard us talk about, for example, in the first quarter, we've talked a little bit about the top line impact being 160 basis points of growth headwind, but also, you know, you've also heard us talk about margins. When we lose a workday, we've generally talked about a 50 basis point impact. We lose two workdays next year.

So I was just wondering if you could comment on if there's anything, any categories inside the P and L that we should be aware of that are inflating more materially, or if there's other areas, maybe energy costs I don't know, that we should be aware of, that could be weighing on continued margin expansion like we've seen here in recent quarters.

Speaker Change: I'm talking about really surgery centers clinics physician offices those types.

Speaker Change: Because they're a little different and and as we do that.

Speaker Change: <unk> the services that we provide the support that we provide is all comes along with that and so yes. They are all operating at attractive levels and.

Speaker Change: And they came to us and said you're doing a great job for our acute care can you help us with the non acute.

And what does that do for them and allows them to have a consistent supply.

Speaker Change: I wouldn't call any one out specifically, where I'd say Oh, my gosh that was it.

Speaker Change: But also allows them to consolidate vendors.

Mike Hansen: Thanks, Andy. The short answer to are there any new headwinds? The short answer is no, with the exception of maybe the two fewer work days, where, as you've heard us talk about, for example, in the first quarter, we've talked a little bit about the top line impact being 160 basis points of growth headwind, but also, you know, you've also heard us talk about margins. When we lose a workday, we've generally talked about a 50 basis point impact. We lose two workdays next year.

Speaker Change: So we're seeing good success in certainly in healthcare.

Speaker Change: Seating.

Speaker Change: They're all they're all doing quite well.

Speaker Change: But the other verticals are all performing well and we like the.

Speaker Change: I thought it might be helpful.

Speaker Change: To talk a little bit about.

Speaker Change: The decisions the investments that we've made in those areas and we think theyre going to continue to pay dividends for us.

Speaker Change: Our recent healthcare win that we had.

Speaker Change: We recently sold a large hospital network with scrub dispensing technology.

Speaker Change: Got it very helpful. Thank you.

Speaker Change: Thank you.

Speaker Change: And our next question comes from Tim Mulrooney from William Blair. Please go ahead Tim.

Speaker Change: For the scrubbers and the various departments throughout.

Speaker Change: And acute care hospital.

Tim Mulrooney: Yes, good morning, Mike Todd just one for me.

Tim Mulrooney: I'll hop on late so apologies. If this has been addressed a few of your competitors.

Speaker Change: Have recently cited more.

Speaker Change: Two care hospital networks, having investments in other areas. So.

Speaker Change: More pricing pushback, and an increasing number of customers putting their contracts out to bed.

Jared Mattingley: We've done such a good job of leveraging our infrastructure that the loss of a workday in a quarter is probably more like 30 to 40 basis points now, but we lose two work days and so there'll be a little bit of headwind from that. That is just sort of a product of the calendar and not necessarily the business. Having said that, the business is still operating really well. And if you think about the, we think about the guidance range is generally in the, you know, you can call it the 25% to 35% incremental margin range. And so it is a pretty good margin range. The 30 basis points that you referred to, Andy, we would kind of say, look at the very bottom. There still is margin expansion at the very bottom of our range.

We've done such a good job of leveraging our infrastructure that the loss of a workday in a quarter is probably more like 30 to 40 basis points now, but we lose two work days and so there'll be a little bit of headwind from that. That is just sort of a product of the calendar and not necessarily the business. Having said that, the business is still operating really well. And if you think about the, we think about the guidance range is generally in the, you know, you can call it the 25% to 35% incremental margin range. And so it is a pretty good margin range. The 30 basis points that you referred to, Andy, we would kind of say, look at the very bottom. There still is margin expansion at the very bottom of our range.

Speaker Change: In fact, I'd say three large health care systems came to us for help.

Speaker Change: I'm wondering on this pricing idea.

Speaker Change: With their non acute facilities, so when I say non acute facilities.

Speaker Change: We're seeing a similar dynamic where customers are becoming more price sensitive in this environment or do you think that this is less of an issue.

Speaker Change: I am talking about really surgery centers clinics physician offices those types.

Speaker Change: And they came to us and said you're doing a great job for our acute care can you help us with the non acute.

Speaker Change: The industry overall and could perhaps be more specific to these individual companies or markets.

Speaker Change: And what does that do for them and allows them to have a consistent supply.

Tim So: Good morning, Tim So.

Tim: I'd say nothing to call out specifically, there, it's still really a normal operating involved operating environment as.

Speaker Change: But also allows them to consolidate vendors.

Speaker Change: So we're seeing good success in certainly in health care, but the other verticals are all performing well and we like the.

Tim: As I mentioned earlier, we operate in a highly competitive market.

Tim: No.

Tim: We've got to we've got to make sure that where our value proposition is resonating with our customers and we're providing outstanding customer service.

Speaker Change: The decisions the investments that we've made in those areas and we think theyre going to continue to pay dividends for us.

Speaker Change: Got it very helpful. Thank you.

Tim: We said that our plan is to lower pricing back towards.

Thank you.

Jared Mattingley: At the top of the range there's more than 30 basis points, probably more like 70 basis points. So the year we think is this is a typical guide range for us. As you saw in our fourth quarter, the initiatives and the operational excellence that we have worked so hard on have continued in the fourth quarter. And given this guide, we expect those to continue into fiscal 2025.

At the top of the range there's more than 30 basis points, probably more like 70 basis points. So the year we think is this is a typical guide range for us. As you saw in our fourth quarter, the initiatives and the operational excellence that we have worked so hard on have continued in the fourth quarter. And given this guide, we expect those to continue into fiscal 2025.

Speaker Change: And our next question comes from Tim Mulrooney from William Blair. Please go ahead Tim.

Tim: Historical levels and Thats what were seeing.

Tim: And I would just point out that as we've moderated pricing even in fiscal 'twenty four we were able to expand operating margins by 120 basis points.

Tim Mulrooney: Yes, good morning, Mike Todd just so just one from me.

Tim Mulrooney: I'll hop on late so apologies if this has been addressed but a few of your competitors.

Tim: And so we're finding ways to provide great value for our customers, while moderating pricing and.

Tim Mulrooney: Recently cited more more pricing pushback.

Tim Mulrooney: An increasing number of customers putting their contracts out for bid.

Tim: But still extracting inefficiencies out of our business so that we can improve.

Speaker Change: Wondering on this pricing idea if youre seeing a similar dynamic where customers are becoming more price sensitive in this environment or do you think that's this is less of an issue for the industry overall and could perhaps be more specific to these individual companies or markets.

Tim: Operating margins.

Speaker Change: Okay, so not really seeing pushback.

Operator: Our next question comes from George Tong from Goldman Sachs. Please go ahead. George.

Speaker Change: On pricing and Todd would you say, it's certainly not lost on us that you had.

Mike Hanson: Hi, thanks.

George Tong: Hi, thanks. Good morning. Can you talk a bit about the progress you're making with penetrating your high growth focus verticals including healthcare, hospitality, education, and government? Where are you seeing particularly good traction?

Todd: Strong incrementals this quarter.

Jared Mattingley: Good morning.

Operator: Can you talk a bit about the?

Todd: Yes.

Jared Mattingley: Progress you're making with penetrating your high growth focus verticals including healthcare, hospitality, education, and government? Where are you seeing particularly good traction?

Todd: As pricing moderated, which would you say now pricing has fully.

Tim So: Good morning, Tim So.

Tim: I would say nothing to call out specifically, there, it's still really a normal operating <unk> operating environment.

Speaker Change: Normalized that there is no more headwinds as we head into 2025 for moderating pricing or is that are you still in that process.

Todd Schneider: Good morning, George. Yeah, we really like the verticals that we've chosen. As a reminder, it's not just a sales strategy; it is also how we organize around those customers, those industries, those verticals to make sure that we're meeting, exceeding their needs because they're a little different. As we do that, the products, the services that we provide, the support that we provide comes along with that. So, yeah, they're all operating at attractive levels. I wouldn't call anyone out specifically where I'd say, oh my gosh, that one's exceeding. They're all doing quite well. I thought it might be helpful to talk a little bit about a recent healthcare win that we had. We recently sold a large hospital network with scrub dispensing technology for the scrubs in the various departments throughout an acute care hospital.

As I mentioned earlier, we operate in a highly competitive market.

Speaker Change: Oh.

Speaker Change: Jim we as I mentioned, it's a highly competitive market, we have continued to moderate pricing.

Tim Mulrooney: No.

Speaker Change: We've got to we've got to make sure that where our value proposition is resonating with our customers and we're providing outstanding customer service.

Speaker Change: <unk>.

Speaker Change: And pricing is a local subject.

We said that our plan is to lower pricing back towards.

Speaker Change: It really depends upon the customers what their operating environments like with their customer base is doing those type. So we continue to monitor that and and manage it appropriately based upon our local businesses and.

Speaker Change: Historical levels and Thats what were seeing.

Speaker Change: And I would just point out that as we've moderated pricing even in fiscal 'twenty four we were able to expand operating margins by 120 basis points.

Speaker Change: And making sure that we're meeting our customers' needs and thinking about the long term value of a customer.

Speaker Change: And so we're finding ways to provide great value for our customers, while moderating pricing and.

Speaker Change: Because we don't we don't look at it and say we're we're we're focused on the near term or in the short term. We are focused on the long term for our customers and we'll continue to manage pricing in that manner.

Speaker Change: But still extracting inefficiencies out of our business so that we can improve.

Speaker Change: Operating margins.

Speaker Change: Okay, so not really seeing pushback.

Speaker Change: On pricing and Todd would you say, it's certainly not lost on us that you had.

Speaker Change: And then I might just add.

Speaker Change: Two to your question.

Todd: Strong incrementals this quarter.

Speaker Change: Probably not a lot of fiscal 'twenty five to fiscal 'twenty four year over year pricing change.

Todd: As pricing moderated would you would you say now pricing has fully.

Speaker Change: Normalized that there is no more headwinds as we head into 2025 for moderating pricing or is that are you still in that process.

Speaker Change: And our next question comes from Andrew Steinman from Jpmorgan. Please go ahead Andrew.

Todd Schneider: But we're also having really good success with surgery centers and those types that are attached to the large acute care hospital networks. You're probably seeing some of that acute care hospital networks having investments in other areas. In fact, I'd say three large healthcare systems came to us for help with their non-acute facilities. When I say non-acute care facilities, I'm talking about really surgery centers, clinics, physician offices, those types. They came to us and said, you're doing a great job for our acute care. Can you help us with the non-acute? What does that do for them? It allows them to have a consistent supply, but also allows them to consolidate vendors.

But we're also having really good success with surgery centers and those types that are attached to the large acute care hospital networks. You're probably seeing some of that acute care hospital networks having investments in other areas. In fact, I'd say three large healthcare systems came to us for help with their non-acute facilities. When I say non-acute care facilities, I'm talking about really surgery centers, clinics, physician offices, those types. They came to us and said, you're doing a great job for our acute care. Can you help us with the non-acute? What does that do for them? It allows them to have a consistent supply, but also allows them to consolidate vendors.

Speaker Change: Oh.

Andrew Steinman: If you can believe it I am just going to ask you to clarify something you just said so you talked about moderating pricing.

Speaker Change: As I mentioned, it's a highly competitive market, we have continued to moderate pricing.

Speaker Change: In other words moderate pricing Ics price decreases I assume what you mean is you're moderating to a more normal.

Speaker Change: <unk>.

Speaker Change: Pricing is a local subject.

Speaker Change: It really depends upon the customers what their operating environments like with their customer base is doing those types. So we continue to monitor that and.

Speaker Change: Modest price increase and then when talking about fiscal 'twenty. Five are you talking about modest price increases or really flat pricing year over year for existing customers.

Speaker Change: And manage it appropriately based upon our local businesses and.

Speaker Change: And making sure that we are.

Speaker Change: Good morning, Andrew and Jeff.

Speaker Change: Meeting, our customers' needs and thinking about the long term value of a customer.

Mark: To clarify Mark.

Speaker Change: Moderating pricing is the way you characterize it which is.

Speaker Change: Because we don't we don't look at it and say where.

Speaker Change: We are.

Speaker Change: <unk>.

Speaker Change: And through modest price increases based upon our agreement and relationship with that customer.

Speaker Change: We're focused on the near term or in the short term we're focused on the long term for our customers and we'll continue to to manage pricing in that manner.

Todd Schneider: We're seeing good success certainly in healthcare, but the other verticals are all performing well and we like the decisions, the investments that we've made in those areas, and we think they're going to continue to pay dividends for us.

We're seeing good success certainly in healthcare, but the other verticals are all performing well and we like the decisions, the investments that we've made in those areas, and we think they're going to continue to pay dividends for us.

And that varies based upon customers geographies industries et cetera, but yes. The way you described it as appropriate its a modest price increase.

Speaker Change: And then I might just add Tim to your question.

Tim: Probably not a lot of fiscal 'twenty five to fiscal 'twenty four year over year pricing change.

Operator: Got it. Very helpful. Thank you.

George Tong: Got it. Very helpful. Thank you.

Speaker Change: With customers and in general.

Todd Schneider: Thank you.

Operator: Our next question comes from Tim Mulroney from William Blair. Please go ahead, Tim. Yeah, good morning, Mike.

Speaker Change: That is true for the fiscal 'twenty five too right.

Operator: Our next question comes from Tim Mulroney from William Blair. Please go ahead, Tim.

Speaker Change: That would be correct. Okay. Thank you very much good clarification. Thank you.

Tim Mulrooney: Yeah, good morning, Mike. Todd, just one from me. Hopped on late, so apologies if this has been addressed. But a few, your competitors have recently cited more pricing pushback and an increasing number of customers putting their contracts out to bid. I'm wondering on this pricing idea if you're seeing a similar dynamic where customers are becoming more price sensitive in this environment or do you think this is less of an issue for the industry? Overall and could perhaps be more specific. To these individual companies or markets?

Speaker Change: And our next question comes from Andrew Steinman from J P. Morgan. Please go ahead Andrew.

Todd Schneider: Todd, just one from me.

Andrew Charles Steinerman: If you can believe it I'm just going to ask you to clarify something you. Just said so you talked about moderating pricing, but when I see other words moderate pricing Ikea price decreases I assume what you mean is you're moderating to a more normal.

Speaker Change: And our next question comes from Jasper Bibb from <unk> Securities. Please go ahead Jeffrey.

Operator: Hopped on late, so apologies if this has been addressed. But a few, your competitors have recently cited more pricing pushback and an increasing number of customers putting their contracts out to bid. I'm wondering on this pricing idea if you're seeing a similar dynamic where customers are becoming more price sensitive in this environment or do you think this is less of an issue for the industry?

Jasper Bibb: Hey, Good morning, guys I was hoping you could give a bit more color on what youre seeing as far as net head count of customers or their hiring posture and any expectations. There are begging for fiscal 'twenty five organic growth guidance.

Type of modest price increase.

Speaker Change: When talking about fiscal 'twenty five are you talking about modest price increases or really flat pricing year over year for existing customers.

Speaker Change: Good morning, Jasper, yes, it will.

Speaker Change: Really varies.

Speaker Change: As I mentioned, we have such a broad customer base and geographies.

Jared Mattingley: Overall and could perhaps be more specific.

Andrew Charles Steinerman: Good morning, Andrew.

Speaker Change: But really not much change in customer behavior when it comes to.

Operator: To these individual companies or markets?

Speaker Change: Just to clarify moderating pricing is the way you characterize it which is.

Speaker Change: Hiring.

Todd Schneider: Good morning, Tim. So I'd say nothing to call out specifically there. It's still really a normal operating environment. As I mentioned earlier, we operate in a highly competitive market, so we've got to make sure that our value proposition is resonating with our customers and we're providing outstanding customer service. We've said that our plan is to lower pricing back towards historical levels, and that's what we're seeing. And I would just point out that as we've moderated pricing, even in fiscal 2024, we were able to expand operating margins 120 basis points. And so we're finding ways to provide great value for our customers while moderating pricing, but still extracting inefficiencies out of our business so that we can improve operating margins. Okay, so not really seeing pushback on pricing. And Todd, would you say it certainly.

Speaker Change: We are.

Speaker Change: We're seeing a pretty.

Speaker Change: Passing through modest price increases based upon our agreement and relationship with that customer and that varies based upon customers geographies industries et cetera, but yes. The way you described it as appropriate its modest price increase.

Speaker Change: The environment is I'll call it stable and it hasnt hasnt really changed much.

Speaker Change: In the in the past Q.

Speaker Change: Few quarters.

Speaker Change: Got it.

Speaker Change: Last one for me, maybe asking an earlier question a little bit differently.

Speaker Change: This whole dynamic of peer is talking about increased churn.

Speaker Change: With customers.

Speaker Change: In general.

Speaker Change: Including at some of our larger national accounts, if youre not seeing.

Speaker Change: That's true for the fiscal 'twenty $5 right.

Speaker Change: Pricing our retention had are you potentially taking away some of this competitive our business at a higher rate given these market dynamics.

Speaker Change: That would be correct. Okay. Thank you very much good clarification. Thank you.

Speaker Change: Thank you.

Speaker Change: And our next question comes from Jasper Bibb from <unk> Securities. Please go ahead Jasper.

Speaker Change: Well, here's the way I would describe it as where we.

Speaker Change: We operate in a really competitive environment and.

Jasper Bibb: Hey, Good morning, guys I was hoping you could give a bit more color on what youre seeing as far as net head count of customers or their hiring posture any expectations. There are begging for fiscal 'twenty five organic growth guidance.

Speaker Change: So we're.

Speaker Change: We're out there.

Speaker Change: To the best to take care of our customers fighting for business every day.

Speaker Change: And.

Speaker Change: And I wouldn't characterize it as really much of a change in the environment, It's always really competitive.

Tim Mulrooney: Okay, so not really seeing pushback on pricing and Todd, would you say it certainly. Is not lost on us that you had strong incrementals this quarter as pricing moderated. Would you say now pricing has fully. Normalized, that there is no more headwind. As we head into 2025 for moderating pricing, or are you still in that process?

Good morning, Jasper yes.

Speaker Change: <unk>.

Speaker Change: And we're continuing to try to position our organization with the best products. The best services. The best technology, So that they can be successful in the marketplace.

Speaker Change: It really varies.

Speaker Change: As I mentioned, we have such a broad customer base and geographies.

Operator: Is not lost on us that you had strong incrementals this quarter as pricing moderated. Would you say now pricing has fully.

Speaker Change: But really not much change in customer behavior when it comes to.

Speaker Change: Makes sense. Thank you.

Speaker Change: Hiring.

Speaker Change: Thank you.

Jared Mattingley: Normalized, that there is no more headwind.

Speaker Change: We're seeing a pretty <unk>.

Speaker Change: And our next question comes from Manav Patnaik from Barclays. Please go ahead manav.

Speaker Change: Environment is I'll call it stable and it hasnt, there hasnt really changed much.

Operator: As we head into 2025 for moderating pricing, or are you still in that process?

Manav Patnaik: Thank you good morning, I just had one question you talked about how you've been the most.

Speaker Change: In the past.

Todd Schneider: Tim? As I mentioned, it's a highly competitive market. We have continued to moderate pricing and pricing is a local subject. It really depends upon the customers, what their operating environment's like, what their customer base is doing, those types. So we continue to monitor that and manage it appropriately based upon our local businesses and making sure that we're meeting our customers needs and thinking about the long term value of a customer because we don't look at it and say we're focused on the near term or the short term. We're focused on the long term for our customers and we'll continue to manage pricing in that manner.

Speaker Change: A few quarters.

Speaker Change: And then.

Speaker Change: Got it.

Manav Patnaik: Many years now so I'm just curious if you could just talk a little bit more about why now and perhaps what the pipeline in each of your segments looks like for future M&A.

Speaker Change: Last one for me, maybe asking an earlier question a little bit differently.

Speaker Change: But this whole dynamic of Peter is talking about increased churn, including at some of our larger national accounts, if youre not seeing.

Manav Patnaik: Good morning Manav.

Speaker Change: Pricing our retention had are you potentially taking away some of this competitive their business at a higher rate given these market dynamics.

Manav Patnaik: Yeah as you know M&A.

Speaker Change: It's tough to predict.

Speaker Change: We think about it long term and.

Speaker Change: Well, here's what I would describe it as we are.

Speaker Change: Make sure that we have relationships so that.

Speaker Change: We operate in a really competitive environment and.

Speaker Change: When someone does decided that they want to transact that we're well positioned.

Speaker Change: So where.

Speaker Change: We're out there.

Speaker Change: Trying to do the best to take care of our customers fighting for business every day.

Speaker Change: So it's really tough to predict.

Speaker Change: Deal flow.

Speaker Change: <unk>.

Speaker Change: But again, we think about long term and we want to be we.

Speaker Change: And I wouldn't characterize it as really much of a change in the environment, It's always really competitive.

Speaker Change: We find.

Speaker Change: M&A are really attractive.

Speaker Change: And we're continuing to try to position our organization with the best products. The best services. The best technology, So that they can be successful in the marketplace.

Speaker Change: And in large part because of as I mentioned earlier.

Jared Mattingley: I might just add, Tim, to your question, probably not a lot of fiscal 2025 to fiscal 2024 year-over-year pricing change.

I might just add, Tim, to your question, probably not a lot of fiscal 2025 to fiscal 2024 year-over-year pricing change.

Speaker Change: It gives us a new set of customers that we can offer.

Speaker Change: Wider breadth of products and services that we offer but theres really can be highly attractive synergies.

Speaker Change: Makes sense. Thank you.

Speaker Change: Thank you.

And our next question comes from Manav Patnaik from Barclays. Please go ahead manav.

Speaker Change: In many cases, we get.

Operator: Our next question comes from Andrew Steinerman from JPMorgan. Please go ahead. Andrew. Hey, if you could believe it, I'm.

Speaker Change: Some.

Operator: Our next question comes from Andrew Steinerman from JPMorgan. Please go ahead.

Manav Shiv Patnaik: Thank you good morning, I just had one question you talked about how you've been the most.

Speaker Change: Infrastructure that is important to us.

Andrew Steinerman: Andrew. Hey, if you could believe it, I'm just going to ask you to clarify. Something you just said. So you talked about moderating pricing. When I hear the words moderating pricing. I hear price decreases. I assume what you mean is you're moderating to a more normal type of modest price increase. And then when talking about fiscal 2025, are you talking about modest price increases or really flat pricing year over year for existing customers?

Speaker Change: And we always get great people and we learn from those so yes, we're highly interested in M&A of all shapes and sizes.

Jared Mattingley: Just going to ask you to clarify.

Manav Shiv Patnaik: M&A.

Operator: Something you just said. So you talked about moderating pricing.

Many years now so I was just curious if you could just talk a little bit more about.

Todd Schneider: When I hear the words moderating pricing.

Speaker Change: And and we're active in those markets tough the tough the pasted. It takes takes two to dance and we just want to make sure we're at the dance and ready.

Speaker Change: Why now and perhaps what the pipeline in each of your segments looks like for future M&A.

Operator: I hear price decreases. I assume what you mean is you're moderating to a more normal type of modest price increase. And then when talking about fiscal 2025, are you talking about modest price increases or really flat pricing year over year for existing customers?

Manav: Good morning Manav.

Yes, as you know M&A.

Speaker Change: Okay fair enough. Thank you guys.

Speaker Change: It's tough to predict.

Speaker Change: Thank you.

Speaker Change: We think about it long term and.

Speaker Change: And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead Scott.

Speaker Change: Make sure that we have relationships so that.

Scott Schneeberger: Thanks, Good morning, guys.

Speaker Change: When someone does decided that they want to transact that we're well positioned.

Todd Schneider: Well, good morning Andrew. Just to clarify, moderating pricing is the way you characterize it, which is we are passing through modest price increases based upon our agreement and relationship with that customer, and that varies based upon customers, geographies, industries, et cetera. But yeah, the way you described it is appropriate. It's a modest price increase with customers in general.

Scott Schneeberger: Two the first one is just <unk>.

<unk> been speaking over the course of the year about investing in <unk>.

Speaker Change: So it's really tough to predict.

Speaker Change: Youre selling capabilities technology management training, just an update there and also <unk> been alluding to optimize cintas portal.

Speaker Change: Deal flow.

Speaker Change: But again, we think about long term and where we were.

Speaker Change: B.

Speaker Change: We find.

Speaker Change: M&A are really attractive.

Scott Schneeberger: Any quantification you can put on that about about penetration or anything else about how thats progressing. Thanks.

Speaker Change: And in large part because of as I mentioned earlier.

Speaker Change: It gives us a new set of customers that we can offer.

Speaker Change: Yes, good morning, Scott, it's tough to put a number on that.

Speaker Change: Wider breadth of products and services that we offer but theres really can be highly attractive synergies.

Speaker Change: It's kind of like.

Speaker Change: How do you put a value on the culture of Cintas.

Operator: That's true for the fiscal 2025 too, right?

Andrew Steinerman: That's true for the fiscal 2025 too, right?

Speaker Change: We are constantly reinvesting in those technologies.

Speaker Change: In many cases, we get.

Todd Schneider: That would be correct.

Speaker Change: Some.

Operator: Okay, thank you very much. Good clarification.

Andrew Steinerman: Okay, thank you very much. Good clarification.

Speaker Change: Infrastructure that is important to us.

Jared Mattingley: Thank you.

Speaker Change: Those trainings to position our people to be more successful.

Operator: Thank you. Our next question comes from Jasper Bibb from Truist Securities. Please go ahead, Jasper.

Speaker Change: And we always get great people in and we learn from those so yes, we're highly interested in M&A of all shapes and sizes.

Speaker Change: And we talk about making it easier for them to do their jobs and make it easier for our customers to do business with us. So those are all investments that are long term thinking long term investments that positions our people to be successful in the marketplace.

Jared Mattingley: Hey, good morning guys.

Jasper Bibb: Hey, good morning guys. Was hoping you could give a bit. More color on what you're seeing as far as net headcount of customers or their hiring posture and any expectations? They're embedded in your fiscal 2025 organic growth guidance.

Speaker Change: And and we're active in those markets tough the tough the pace. It. It takes it takes two to dance and we just want to make sure we're at the dance and ready.

Todd Schneider: Was hoping you could give a bit.

Jared Mattingley: More color on what you're seeing as far as net headcount of customers or their hiring posture and any expectations?

Operator: They're embedded in your fiscal 2025 organic growth guidance.

Speaker Change: Some of those investments pay off faster, but it's a continual investment.

Speaker Change: Okay fair enough. Thank you guys.

Thank you.

Todd Schneider: Good morning, Jasper. Yeah, it really varies. As I mentioned, we have such a broad customer base in geographies, but really not much change in customer behavior when it comes to.

Todd Schneider: Good morning, Jasper. Yeah, it really varies. As I mentioned, we have such a broad customer base in geographies, but really not much change in customer behavior when it comes to hiring. We're seeing the environment is. I'll call it stable, and hasn't really changed much in the past few quarters.

Speaker Change: And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead Scott.

And when we think about those investments. It is we have an amazing team of partners that are out every day.

Scott Andrew Schneeberger: Thanks, Good morning, guys.

Scott Andrew Schneeberger: Two the first one is just <unk>.

Speaker Change: Great care of the customers we won.

Speaker Change: <unk> been speaking over the course of the year about investing in <unk>.

Speaker Change: To make it easier for them and we want to make it give them data that.

Jared Mattingley: Hiring.

Speaker Change: Youre selling capabilities technology management training, just an update there and also <unk> been alluding or optimize cintas portal.

Todd Schneider: We're seeing the environment is. I'll call it stable, and hasn't really changed much in the past few quarters.

Speaker Change: <unk> allows them to provide more value to the customers.

Speaker Change: Make it.

Speaker Change: Less laborious for them to do their jobs.

Scott Andrew Schneeberger: Any quantification you can put on that about about penetration or anything else about how thats progressing. Thanks.

Speaker Change: And allow customers the ability to self serve and have many conduits to to.

Operator: Got it.

Jasper Bibb: Got it. Last one for me. Earlier question a little bit differently with this whole dynamic of peers talking about increased churn, including at some of their larger national accounts. If you're not seeing a pricing or retention hit, are you potentially taking away some of this competitor business at a higher rate given these market dynamics?

Jared Mattingley: Last one for me.

Scott Andrew Schneeberger: Good morning, Scott, it's tough to put a number on that.

Operator: Earlier question a little bit differently with.

Speaker Change: Do business with Centaur and also communicate with center. So all of those investments are.

Jared Mattingley: This whole dynamic of peers talking about increased churn, including at some of their larger national accounts. If you're not seeing a pricing or retention hit, are you potentially taking away some of this competitor business at a higher rate given these market dynamics?

Speaker Change: It's kind of like.

Speaker Change: But how do you put a value on the culture of Cintas.

Our ongoing and will be frankly, probably ongoing in perpetuity, because thats the nature of business now.

Speaker Change: We are constantly reinvesting in those technologies.

Speaker Change: And those trainings to position our people to be more successful when.

Speaker Change: Technology plays a key role and we're blessed to have.

Todd Schneider: Well, here's the way I would describe it: we operate in a really competitive environment. So we're out there trying to do the best to take care of our customers, fighting for business every day. I wouldn't characterize it as really much of a change in the environment. It's always really competitive, and we're continuing to try to position our organization with the best products, the best services, the best technology so that they can be successful in the marketplace.

Speaker Change: We talk about making it easier for them to do their jobs and make it easier for our customers to do business with us. So those are all investments that are long term thinking long term investments that positions our people to be successful in the marketplace.

Speaker Change: Our balance sheet, where we can invest appropriately.

Speaker Change: And position our team to be really successful.

Speaker Change: Thanks, and the follow up is I figure at fiscal year end.

Speaker Change: All time high in the fourth quarter on the operating margin.

Speaker Change: Some of those investments pay off faster, but it's a continual investment.

Speaker Change: So kind of a conceptual longer term question you guys have done great since implementing the implementing the ERP and reaping benefits from it what what can you get to for peak margins I mean, you've talked about incremental margin, 25%, 35% range can you get to 'twenty five promptly can you get to 31.

Speaker Change: And when we think about those investments. It is we have an amazing team of partners that are out.

Speaker Change: Everyday.

Speaker Change: Great care of the customers, we want to make it easier for them and we want to make it give them data that.

Operator: Makes sense. Thank you. Thank you. And our next question comes from Manav Patnaik from Barclays. Please go ahead, Manav.

Jasper Bibb: Makes sense. Thank you.

Operator: Thank you. And our next question comes from Manav Patnaik from Barclays. Please go ahead, Manav.

<unk> allows them to provide more value to the customers.

Speaker Change: Longer term <unk>.

Speaker Change: Consideration on what aspirational targets would be reasonable thanks.

Speaker Change: Make it.

Todd Schneider: Thank you. Good morning. I just had one question. You know, earlier you talked about how.

Manav Patnaik: Thank you. Good morning. I just had one question. You know, earlier you talked about how. You've been the most active in M&A for many years now. I was just curious if you could just talk a little bit more?You know, why now and perhaps what the pipeline in each of your segments looks like for future ma?

Speaker Change: Less laborious for them to do their jobs.

Operator: You've been the most active in M&A for many years now.

Speaker Change: Scott.

Speaker Change: And allow customers the ability to self serve and have many conduits to two <unk>.

Speaker Change: I would say this we don't like to put a ceiling on our on our aspirations but.

Todd Schneider: I was just curious if you could just talk a little bit more?

Operator: You know, why now and perhaps what the pipeline in each of your segments looks like for future ma?

Speaker Change #100: We certainly think that we can continue to improve margins in <unk>.

Speaker Change: <unk> business was sent to US and also communicate with center. So all those investments are.

Speaker Change #100: And so maybe a couple a couple of points first of all.

Speaker Change: Our ongoing and will be frankly, probably ongoing in perpetuity because thats the nature of business now that technology plays a key role and we're blessed to have a balance sheet, where we can invest appropriately.

Todd Schneider: Good morning, Manav. Yeah, as you know, Manav, it's tough to predict. We think about it long-term and make sure that we have relationships so that when someone does decide that they want to transact that, we're well positioned. So it's really tough to predict deal flow. But again, we think about long-term and we want to be. We find M&A really attractive and large part because of, as I mentioned earlier, it gives us a new set of customers that we can offer a wider breadth of products and services that we offer. There really can be highly attractive synergies. In many cases we get some infrastructure that is important to us, and we always get great people and we learn from those. So yeah, we're highly interested in M&A of all shapes and sizes, and we're active in those markets.

Speaker Change #100: 25% to 35% operating incremental operating margins.

Speaker Change #100: We've got locations that are operating at the 30 plus level today.

Speaker Change #100: And.

Speaker Change #100: And so we and that's in all of our businesses.

Speaker Change: And and position our team to be really successful.

Speaker Change #100: And so there is a pathway there and we are continuing to work on it sometimes it's it's.

Speaker Change: And the follow up is just figure at fiscal year end.

Speaker Change #100: It's better scale and density sometimes it's a little bit of product mix, sometimes it's the newness of the location.

Speaker Change: All time high in the fourth quarter on the operating margin.

So kind of a conceptual longer term question you guys have done great since implementing the implementing the ERP and reaping benefits from it.

Speaker Change #100: But we have those examples and we're continuing to get all of our locations closer and closer to those highest operating locations.

Speaker Change: What can you get to for peak margins I mean, you've talked about incremental margin, 25% to 35% range can you get to 'twenty five promptly can you get to 30 longer term.

Speaker Change #100: And that that operating incremental operating margin range of 25 to 35.

Speaker Change #100: In our minds tells US certainly we can work he continue to work to get there.

Just some consideration on what aspirational targets would be reasonable.

Speaker Change #101: As you go back to that you've talked a little bit about technology.

Speaker Change: Scott.

Speaker Change: I would say this we don't like to put a ceiling on our on our aspirations but.

Speaker Change #101: I would say that we're still in the early innings of technology, we can become much much better at operating on the SAP system.

Scott Andrew Schneeberger: We certainly think that we can continue to improve margins.

Todd Schneider: Tough to pace, takes two to dance. And we just want to make sure we're at the dance and ready.

Tough to pace, takes two to dance. And we just want to make sure we're at the dance and ready.

Speaker Change: And so.

Speaker Change: So maybe a couple a couple of points first of all.

Speaker Change #102: And it's only been about four years since we have been since our rental business has been fully on in fire is not on yet.

25% to 35% operating incremental operating margins.

Operator: Okay, fair enough.

Manav Patnaik: Okay, fair enough. Thank you guys. Thank you.

Todd Schneider: Thank you guys. Thank you.

Speaker Change #102: And so we have been getting better and better at using that.

Speaker Change: We've got locations that are operating at the 30 plus level today.

Operator: And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead, Scott. Thanks.

Speaker Change #102: Our system, but as you know and as we've talked about over the course of the last year or so there are still a lot of things that can come with our Google and Verizon and SAP partnerships that we are just touching the surface on and we think that.

Speaker Change: And so we and that's in all of our businesses.

Todd Schneider: Good morning, guys.

Scott Schneeberger: Good morning, guys. The first one is just, you know, you've been speaking over the course of the year about investing in your selling capabilities, technology, management training. Just an update there. And also you've been alluding a lot to the MyCintas portal. Any quantification you can put on that about penetration or anything else about how that's progressing. Thanks.

Operator: The first one is just, you know, you've been speaking over the course of the year about investing in your selling capabilities, technology, management training. Just an update there. And also you've been alluding a lot to the MyCintas portal. Any quantification you can put on that about penetration or anything else about how that's progressing. Thanks.

Speaker Change: So there is a pathway there and we are continuing to work on it sometimes it's it's better scale and density sometimes it's a little bit of product mix, sometimes it's the newness of the location.

Speaker Change #102: That can be a big driver of continued margin expansion into the future.

Speaker Change: But we have those examples and we're continuing to get all of our locations closer and closer to those highest operating locations.

Speaker Change #103: I'm not ready to put a date on when we can hit 25.

Speaker Change #103: <unk> 30, but we certainly have that in our sites and we'll continue to work hard to get there.

Todd Schneider: Good morning, Scott. It's tough to put a number on that. It's kind of like how do you put a value on the culture of Cintas? We're constantly reinvesting in those technologies and those trainings to position our people to be more successful. We talk about making it easier for them to do their jobs and make it easier for our customers to do business with us. So those are all investments that are long term thinking, long term investments that positions our people to be successful in the marketplace. Some of those investments pay off faster, but it's a continual investment and when we think about those investments it is. We have an amazing team of partners that are out every day taking great care of their customers. We want to make it easier for them.

Speaker Change: And that that operating incremental operating margin range of 25% to 35.

Speaker Change #104: Thanks, Great job.

Speaker Change #104: And our next question comes from Shlomo Rosenbaum from Stifel. Nicolaus. Please go ahead Shlomo.

Speaker Change: In our minds tells us.

Certainly we can work continue to work to get there.

Speaker Change #104: Hi, This is Adam on for Shlomo.

Speaker Change: As you go back to the <unk>.

Adam: Maybe provide a little bit of outlook for uniform direct sales of fire protection businesses for 25, and how much of a margin impact should there be on the <unk> business from the SAP implementation you alluded to last quarter.

Speaker Change: Talk a little bit about technology.

Speaker Change: I'd say that we're still in the early innings of technology, we've become much much better at operating on the SAP system.

Speaker Change #106: From a fire protection business perspective.

Speaker Change: And it's only been about four years since we've been since our rental business has been fully on in fire is not on yet.

Speaker Change #107: We're still in the implementation phase of that and.

Speaker Change: And so we have been getting better and better at using that.

Speaker Change #108: And theres going to be a little bit of pressure on there I'm not going to give specific guidance in terms of their margin, but there'll be there'll be some pressure as we go through keeping in mind. When we go through an implementation. There is the work of the implementation the work of training all of our people to use it the <unk>.

Speaker Change: Our system, but as you know and as we've talked about over the course of the last year or so there are still a lot of things that can come with our Google and Verizon and SAP partnerships that we are just touching the surface on.

Todd Schneider: We want to make it give them data that allows them to provide more value to the customers, make it less laborious for them to do their jobs, and allow customers the ability to self serve and have many conduits to do business with Cintas and also communicate with Cintas. So all those investments are ongoing and will be frankly probably ongoing in perpetuity because that's the nature of business now that technology plays a key role and we're blessed to have a balance sheet where we can invest appropriately and position our team to be really successful.

We want to make it give them data that allows them to provide more value to the customers, make it less laborious for them to do their jobs, and allow customers the ability to self serve and have many conduits to do business with Cintas and also communicate with Cintas. So all those investments are ongoing and will be frankly probably ongoing in perpetuity because that's the nature of business now that technology plays a key role and we're blessed to have a balance sheet where we can invest appropriately and position our team to be really successful.

Speaker Change: And we think that.

Speaker Change #108: <unk> sees that come along with that and we will then get better and better and fiscal 'twenty five is going to be a little bit of a year of that training and implementation period.

That can be a big driver of continued margin expansion into the future.

Speaker Change: Not ready to put a date on when we can hit 25.

Speaker Change: Or 30, but we certainly have that in our sites and we will continue to work hard to get there.

Speaker Change #108: So I would say.

Speaker Change #108: <unk>.

Speaker Change #108: That's going to be a little bit of pressure on the margins. There certainly that's incorporated within our overall guide of margin improvement from a uniform direct sale perspective, our margins have been really good we've.

Speaker Change: Thanks, Great job.

Speaker Change: And our next question comes from Shlomo Rosenbaum from Stifel. Nicolaus. Please go ahead Shlomo.

Adam: Hi, This is Adam on for Shlomo could you maybe provide a little bit of outlook for uniform direct sales of fire protection businesses for 25, and how much of a margin impact should there be on the <unk> business from the SAP implementation, we alluded to last quarter.

Speaker Change #108: We've been working on selling the right types of programs and our.

Speaker Change #108: Foreign direct sale partners are doing a great job in that area.

Jared Mattingley: Thanks.

Operator: The follow-up is, I would figure fiscal year-end and all-time high in the fourth quarter on the operating margin. So kind of a conceptual longer-term question. You guys have done great since implementing the ERP and reaping benefits from it. What can you get to for peak margins? I mean, you've talked about incremental margins, 25% to 35% range. Can you get to 25% promptly? Can you get to 30% longer term, just some consideration on what aspirational targets would be reasonable. Thanks.

Scott Schneeberger: The follow-up is, I would figure fiscal year-end and all-time high in the fourth quarter on the operating margin. So kind of a conceptual longer-term question. You guys have done great since implementing the ERP and reaping benefits from it. What can you get to for peak margins? I mean, you've talked about incremental margins, 25% to 35% range. Can you get to 25% promptly? Can you get to 30% longer term, just some consideration on what aspirational targets would be reasonable. Thanks.

Speaker Change #108: But.

Speaker Change #101: From a fire protection business perspective.

Speaker Change #108: So all of that a little bit hard to tell based on that SAP implementation and fire, but keeping in mind. That's included with our overall guide.

Speaker Change #102: We're still in the implementation phase of that and.

Speaker Change #103: There's going to be a little bit of pressure on there I'm not going to give specific guidance in terms of their margin, but there'll be there'll be some pressure as we go through keeping in mind. When we go through an implementation. There is the work of the implementation the work of training all of our people to use it the.

Speaker Change #108: Okay.

Speaker Change #108: And our next question comes from Ashish <unk> from RBC capital markets. Please go ahead Ashish.

Speaker Change #108: Yeah.

ashish: Thanks for taking my question.

ashish: Just a question on the guidance philosophy because.

Speaker Change #110: If you think about the organic growth in the quarter still continues to be pretty robust compared to the industry growth profile at seven and a half but it has moderated.

Speaker Change #103: <unk> seen that come along with that and we will then get better and better.

Speaker Change #103: Fiscal 'twenty five is going to be a little bit of a year of that training and implementation period.

Jared Mattingley: Scott, I would say this, we don't like to put a ceiling on our aspirations, but we certainly think that we can continue to improve margins. So maybe a couple points. First of all, 25% to 35% incremental operating margins, we've got locations that are operating at the 30 plus level today, and that's in all of our businesses. So there is a pathway there, and we are continuing to work on it. Sometimes it's better scale and density, sometimes it's a little bit of product mix, sometimes it's the newness of the location. But we have those examples, and we're continuing to get all of our locations closer and closer to those highest operating locations, and that incremental operating margin range of 25% to 35% in our minds tells us certainly we can continue to work to get there.

Speaker Change #111: Over the last eight quarters, the higher end of the guidance implies 8% organic growth implies an inflection in growth and is starting to <unk>.

Speaker Change #103: And so I would say.

Speaker Change #103: That's going to be a little bit of pressure on the margins. There certainly that's incorporated within our overall guide of margin improvement from a uniform direct sale perspective, our margins have been really good we've.

Speaker Change #111: <unk> entities so guidance.

Speaker Change #111: A year.

Speaker Change #112: So as we think about where do we really see the inflection and intensive guidance philosophy. When you see is it equally conservative as we've seen in the patios.

Speaker Change #103: We've been working on selling the right types of programs in our.

Speaker Change #113: Well I'll say maybe this.

Speaker Change #112: Ashish.

Speaker Change #103: Uniform direct sale partners are doing a great job in that area.

ashish: We had a we had an 8% organic growth rate year. This year and that was a really good year in a year, where again last year, we were at about 12, 2% and 10% the previous year and these were years, where there was just heavy inflation and as you know our pricing was.

Speaker Change #103: But.

Speaker Change #103: Having said all of that a little bit hard to tell based on that SAP implementation and fire, but keeping in mind. That's included with our overall guide.

Speaker Change #103: Okay.

Speaker Change #103: And our next question comes from Ashish <unk> from RBC capital markets. Please go ahead Ashish.

ashish: A little bit higher than norm, and we got the 8% this year and sort of that bringing the price increases back to something closer to historical levels.

ashish: Thanks for taking my question, maybe just a question on the guidance philosophy, because when you think about the organic growth in the quarter still continues to be pretty robust compared to the industry growth profile at seven and a half but it has moderated.

ashish: As we think about.

ashish: Our guide maybe I'll throw out a couple of numbers to you.

Jared Mattingley: As you go back to the, you know, you've talked a little bit about technology. I would say that we're still in the early innings of technology. We've become much, much better at operating on the SAP system. And it's only been about four years since our rental business has been fully on and fire is not on yet. And so we have been getting better and better at using that system. But as you know, as we talked about over the course of the last year or so, there are still a lot of things that can come with our Google, Verizon, and SAP partnerships that we are just touching the surface on. And we think that can be a big driver of continued margin expansion into the future.

As you go back to the, you know, you've talked a little bit about technology. I would say that we're still in the early innings of technology. We've become much, much better at operating on the SAP system. And it's only been about four years since our rental business has been fully on and fire is not on yet. And so we have been getting better and better at using that system. But as you know, as we talked about over the course of the last year or so, there are still a lot of things that can come with our Google, Verizon, and SAP partnerships that we are just touching the surface on. And we think that can be a big driver of continued margin expansion into the future.

Speaker Change #105: Over the last eight quarters, the higher end of the guidance implies 8% organic growth implies an inflection in growth and historically <unk> beaten entities still guidance throughout the year.

ashish: And as Todd has been mentioning we've had.

Todd: We've not seen a lot of changing customer behavior, and we've had some really good performance in.

Todd: In our full fiscal 'twenty four year, but I'll point out a couple in our third quarter. If you adjust for the workdays are total growth was eight 2%.

Speaker Change #106: So as we think about where do we really see the inflection in terms of guidance philosophy. When you see is it equally conservative as we've seen in the patios.

Todd: In the fourth quarter, our total growth was eight 2%.

Speaker Change #105: Yeah.

Todd: Our in our guide when you think about just simply the Workday. Our guide range is $6 seven to eight 3%. So our guide range is effectively telling you.

Speaker Change #107: Well I'll say maybe this.

Speaker Change #107: Ashish.

Speaker Change #108: We had a we had an 8% organic growth rate year. This year and that was a really good year in a year, where again last year, we were at about 12, 2% and 10% the previous year and these were years, where there was just heavy inflation and as you know our pricing was.

Speaker Change #114: We're seeing this business operate in much of the same manner as we saw in the second half of the year. If you look at the organic numbers in those in the third quarter fourth quarter and next year same story and so the philosophy is a little bit of look.

Jared Mattingley: Not ready to put a date on when we can hit 25 or 30, but we certainly have that in our sights and we'll continue to work hard to get there. Thanks.

Not ready to put a date on when we can hit 25 or 30, but we certainly have that in our sights and we'll continue to work hard to get there.

Speaker Change #108: A little bit higher than norm, and we got the 8% this year and sort of that bringing the price increases back to something closer to historical levels.

Speaker Change #114: We have to build a bit of a range because.

Scott Schneeberger: Thanks. Great job.

Speaker Change #114: We have to consider.

Operator: Great job. Our next question comes from Shlomo Rosenbaum from Stifel Nicolaus, please go ahead.

Operator: Our next question comes from Shlomo Rosenbaum from Stifel Nicolaus, please go ahead. Shlomo.

Speaker Change #114: Alternatives, but effectively.

Speaker Change #108: As we think about.

Speaker Change #115: The guide range for fiscal 'twenty five on the topline is right in line with what you have seen particularly in the second half of fiscal 'twenty four and that is really nice.

Speaker Change #108: Our our guide maybe I'll throw out a couple of numbers to you.

Todd Schneider: Shlomo.

Operator: Hi, this is Adam for Shlomo. Could you maybe provide a little bit of outlook for uniform direct sales and fire protection businesses for 2025 and how much of a margin impact should there be in the fire business from the SAP implementation you alluded to last quarter?

Adam Parrington: Hi, this is Adam for Shlomo. Could you maybe provide a little bit of outlook for uniform direct sales and fire protection businesses for 2025 and how much of a margin impact should there be in the fire business from the SAP implementation you alluded to last quarter?

Speaker Change #108: And as Todd has been mentioning we've had.

Speaker Change #115: Growth in all of our businesses.

Todd: We have not seen a lot of changing customer behavior, and we've had some really good performance in in.

Speaker Change #115: Certainly in uniform rental first.

Speaker Change #109: Our full fiscal 'twenty four year, but I'll point out a couple in our third quarter. If you adjust for the workdays are total growth was eight 2%.

Speaker Change #115: First aid safety and fire protection so.

Jared Mattingley: From a fire protection business perspective, we're still in the implementation phase of that, and there's going to be a little bit of pressure on there. I'm not going to give a specific guidance in terms of their margin, but there'll be some pressure as we go through. Keeping in mind, when we go through an implementation, there is the work of the implementation, the work of training all of our people to use it, the inefficiencies that come along with that, and we will then get better and better. Fiscal 2025 is going to be a little bit of a year of that training and implementation period. So I would say that's going to be a little bit of pressure on the margins there. Certainly that's incorporated within our overall guide of margin improvement. From a uniform direct sale perspective, our margins have been really good.

Speaker Change #115: Hopefully that helps a little bit Ashish.

ashish: Yes, no that's very helpful color. Thank you.

Speaker Change #109: In the fourth quarter, our total growth was eight 2%.

ashish: And our next question comes from Faiza <unk> from Deutsche Bank. Please go ahead faiza.

Speaker Change #110: <unk> in our guide when you think about just simply the Workday. Our guide range is $6 seven to eight 3%. So so our guide range is effectively telling you.

Faiza: Yes, hi, Thank you so much until you mentioned earlier in the call about the white space opportunity and.

Faiza: Just.

Speaker Change #111: We're seeing the business operate in much of the same manner as we saw in the second half of the year. If you look at the organic numbers in those in the third quarter fourth quarter and next year same story.

Speaker Change #117: The traction youre getting with non programmers.

Faiza: Relative to historical levels the contribution from non programmers to growth has been higher. So I'm curious if you can talk about what youre doing differently or you may be using technology.

And so the philosophy is a little bit of look we have to build a bit of a range because we have to consider.

Speaker Change #118: Changed a little bit is there something about the underlying environment.

Speaker Change #119: Just curious on what's what's driving sort of incremental.

Speaker Change #111: Certain alternatives, but effectively.

Speaker Change #111: The guide range for fiscal 'twenty five on the topline is right in line with what you've seen particularly in the second half of fiscal 'twenty four and that is really nice.

Speaker Change #120: Tradition from non programmers.

I'll start.

Speaker Change #120: And Mike if you'd like to contribute.

Jared Mattingley: We've been working on selling the right types of programs and our Uniform Direct Sale partners are doing a great job in that area. But having said all of that, a little bit hard to tell based on that SAP implementation in Q4. But keeping in mind that's included with our overall guidance.

We've been working on selling the right types of programs and our Uniform Direct Sale partners are doing a great job in that area. But having said all of that, a little bit hard to tell based on that SAP implementation in Q4. But keeping in mind that's included with our overall guidance.

Mike Todd: Good morning <unk>.

Mike Todd: Yeah.

Mike Todd: For several decades now we have had a focus on trying to grow the pie of the business.

Speaker Change #111: Growth in all of our businesses.

Speaker Change #111: Certainly in uniform rental.

Speaker Change #111: First aid safety and fire protection so.

Mike Todd: That white space.

Mike Todd: Is significant so we.

Speaker Change #111: Hopefully that helps a little bit Ashish.

ashish: Yeah, No that's very helpful color. Thank you.

Mike Todd: Teach our organization about how to attract no programmers.

And our next question comes from Faiza <unk> from Deutsche Bank. Please go ahead faiza.

Operator: Thank you. Our next question comes from Ashish Sabhadra from RBC Capital Markets. Please go ahead.

Mike Todd: It's a little different process and it takes it's more of a conceptual.

Speaker Change #122: Sale versus something.

Faiza: Yes, hi, Thank you so much until you mentioned earlier in the call about the white space opportunity and.

Speaker Change #122: I'll call it more about what <unk> got to coach them and teach them about.

Todd Schneider: Ashish, thanks for taking my question. Maybe just a question on the guidance.

Ashish Sabadra: Ashish, thanks for taking my question. Maybe just a question on the guidance. Philosophy, because when we think about the organic growth in the quarter still continues to be pretty robust compared to the industry growth profile at 7.5, but it has moderated over the last eight quarters. The higher end of the guidance implies. The 8% organic growth implies an inflection in growth. Historically, we've always set your guide where you have beaten and raised to guidance throughout the year. So, as we think about where do we really see the inflection and in terms of guidance philosophy, would you say, is it equally conservative as we have seen in the prior years? Thanks.

ashish: Just.

Operator: Philosophy, because when we think about the organic growth in the quarter still continues to be pretty robust compared to the industry growth profile at 7.5, but it has moderated over the last eight quarters. The higher end of the guidance implies.

Speaker Change #122: On how to do something different instead of.

Speaker Change #118: The traction youre getting with non programmers.

Speaker Change #122: Simply doing it yourself.

Faiza: Relative to historical levels the contribution from non programmers to growth has been high. So I'm curious if you can talk about what youre doing differently or you may be using technology has the pit changed a little bit is there something about the underlying environment.

Speaker Change #122: Again, thats a conceptual.

Speaker Change #122: Sale and we teach our folks on how to do that and we happen to be blessed with being in a spot where there is a massive white space out there.

Todd Schneider: The 8% organic growth implies an inflection in growth.

Operator: Historically, we've always set your guide where you have beaten and raised to guidance throughout the year. So, as we think about where do we really see the inflection and in terms of guidance philosophy, would you say, is it equally conservative as we have seen in the prior years? Thanks.

And I'll say, it's a harder concept to get across to people, but we've been doing it for so long that it's it's just part of how our organization operates tender and we think that.

Speaker Change #120: Just curious on what's what's driving sort of incremental.

Speaker Change #115: Tradition from non programmers.

Oh.

Speaker Change #113: I'll start.

Speaker Change #122: That's exciting for us no real <unk>.

Speaker Change #113: And Mike if you'd like to contribute faiza.

Speaker Change #114: Good morning.

Jared Mattingley: Well, I'll say maybe this, Ashish. You know, we had an 8% organic growth rate this year and that was a really good year in a year where again last year we were at about 12.2% and 10% the previous year. And these were years where there was just heavy inflation and as you know, our pricing was a little bit higher than norm and we got the 8% this year in sort of that bringing the price increases back to something closer to historical levels. You know, as we think about.

Speaker Change #122: Obvious change I would point to it's just part of our culture. It's part of how we teach and train our partners on how to approach that.

Speaker Change #113: Yes.

Todd M. Schneider: For several decades now we have had a focus on trying to grow the pie of the business and that white space.

Speaker Change #122: And it resonates with people.

Speaker Change #113: Is significant so we.

Speaker Change #123: Because they get the concept of outsourcing to get the concept of yes, maybe I am struggling to keep up with all of this and you can do it and you can do it better faster smarter cheaper than I can.

Speaker Change #117: Teach our organization about how to attract no programmers.

Speaker Change #113: And it's it's a little different process and it takes it's more of a conceptual sale.

Speaker Change #123: And that's been a key fundamental of how we've grown our business over the years and how we'll continue to grow our business into the future.

Speaker Change #116: Versus something.

Speaker Change #116: I'll call it more about whether you have got to coach them and teach them about.

Speaker Change #123: Maybe I'll offer maybe I'll offer this a bit.

Speaker Change #116: How to do something different.

Speaker Change #123: About the healthcare vertical.

Stead of.

Simply doing it yourself and again Thats a conceptual.

Speaker Change #123: That we've been in for maybe a decade or so.

Operator: Our.

Our Guide, maybe I'll throw out a couple numbers to you. As Todd has been mentioning, we've not seen a lot of change in customer behavior, and we've had some really good performance in our full fiscal 2024 year. But I'll point out a couple in our Q3. If you adjust for the workdays, our total growth was 8.2%. In the Q4, our total growth was 8.2% in our guide. When you think about just simply the workday, our guide range is 6.7% to 8.3%. Our guide range is effectively telling you we're seeing the business operate in much of the same manner as we saw in the H2 of the year. If you look at the organic numbers in the Q3, Q4, and next year, same story.

Jared Mattingley: Guide, maybe I'll throw out a couple numbers to you. As Todd has been mentioning, we've not seen a lot of change in customer behavior, and we've had some really good performance in our full fiscal 2024 year. But I'll point out a couple in our Q3. If you adjust for the workdays, our total growth was 8.2%. In the Q4, our total growth was 8.2% in our guide. When you think about just simply the workday, our guide range is 6.7% to 8.3%. Our guide range is effectively telling you we're seeing the business operate in much of the same manner as we saw in the H2 of the year. If you look at the organic numbers in the Q3, Q4, and next year, same story.

Speaker Change #123: Now when we got into that we needed to create a sales team because it's just a different kind of sale different kind of relationships and so we had to create a different kind of sales team.

Speaker Change #116: And we teach our folks on how to do that and we happen to be blessed with being in a spot where there is a massive white space out there.

Speaker Change #116: I'll say, it's a harder concept to get across to people, but we've been doing it for so long that it's it's just part of how our organization operate center and we think that.

Speaker Change #123: When we when we when we did that we started with sort of maintenance uniforms uniform rental and maintenance.

Speaker Change #123: Because we didn't have a broad product offering as we continued in that business. We started to learn through dialogue with the customers how else. We can help them and we started things like micro fiber and we started rental programs in micro fiber and that started to take off.

Speaker Change #116: That's exciting for us no real <unk>.

Speaker Change #116: Obvious change I would point to it's just part of our culture. It's part of how we teach and train our partners on how to approach that.

Speaker Change #116: And it resonates with people.

Speaker Change #121: Because they get the concept of outsourcing to get the concept of yes, maybe I am struggling to keep up with all of this and you can do it and you can do it better faster smarter cheaper than I can.

Speaker Change #123: And has become a nice product for us as we continued to have dialogue with them.

Speaker Change #123: Sort of evolved into then scrub rental programs. These came out of again dialogue with how can we help our customers and.

Speaker Change #121: That's been a key fundamental of how we've grown our business over the years and how we'll continue to grow our business into the future.

Jared Mattingley: And so the philosophy is a little bit of look, we have to build a bit of a range because we have to consider certain alternatives. But effectively the guide range for fiscal 2025 on the top line is right in line with what you've seen, particularly in the second half of fiscal 2024. And that is really nice growth in all of our businesses, certainly in uniform rental, first aid and safety, and fire protection. So hopefully that helps a little bit.

And so the philosophy is a little bit of look, we have to build a bit of a range because we have to consider certain alternatives. But effectively the guide range for fiscal 2025 on the top line is right in line with what you've seen, particularly in the second half of fiscal 2024. And that is really nice growth in all of our businesses, certainly in uniform rental, first aid and safety, and fire protection. So hopefully that helps a little bit.

Speaker Change #123: And so this this healthcare has grown from almost nothing to call it 8% of our revenue now.

Speaker Change #122: Maybe I'll offer maybe I'll offer this.

Speaker Change #122: Thinking about the healthcare vertical.

Speaker Change #123: And it's largely because of the adaptation of our people to this this new type of vertical along with our dialogue with our customers and creating a real nice partnership.

Speaker Change #122: We've been in for maybe a decade or so.

Speaker Change #122: Now when we got into that we needed to create a sales team because it's just a different kind of sale different kind of relationships and so we had to create a different kind of sales team.

Speaker Change #123: That then creates some innovation that gets innovation flowing for us in new products and services and then if we couple that with technology of of having more information at our fingertips of being able to.

Speaker Change #122: When we when we when we did that we started with sort of maintenance uniforms uniform rental and maintenance.

Operator: Yeah, that's very helpful, Khalil.

Ashish Sabadra: Yeah, that's very helpful color. Thank you.

Todd Schneider: Thank you.

Speaker Change #123: Find better prospecting as we can.

Speaker Change #122: Because we didn't have.

Operator: Our next question comes from Faiza Alwi from Deutsche Bank. Please go ahead, Faiza.

Speaker Change #122: Our broad product offering as we continued in that business, we started to learn through dialogue with the customers how else. We can help them and we started things like micro fiber and we started a rental programs in micro fiber and that started to take off.

Speaker Change #123: Better.

Speaker Change #123: Able to tell what customers have which products and where might the warmest leads and so on b. We have over time, we have been able to grow the business and through that grow our productivity and so all of these things that we do that the Todd.

Mike Hanson: Yes, hi. Thank you so much. So you mentioned earlier in the call about the white space opportunity, and you know, just the traction you're getting with no programmers. I think relative to historical levels, the contribution from no programmers to growth has been higher. So I'm curious if you can talk about, you know, what you're doing differently. Are you maybe using technology? Has the mix changed a little bit? Is there something about the underlying environment? So just curious on what's driving sort of incremental contribution from no programmers.

Faiza Alwy: Yes, hi. Thank you so much. So you mentioned earlier in the call about the white space opportunity, and you know, just the traction you're getting with no programmers. I think relative to historical levels, the contribution from no programmers to growth has been higher. So I'm curious if you can talk about, you know, what you're doing differently. Are you maybe using technology? Has the mix changed a little bit? Is there something about the underlying environment? So just curious on what's driving sort of incremental contribution from no programmers.

Speaker Change #122: <unk> has become a nice product for us as we continued to have dialogue with them.

Speaker Change #124: Talks about they don't happen overnight. They are the evolution in continued dialog and collaboration with our customers to become more and more ingrained in what we do with them.

Sort of evolved into then scrub rental programs. These came out of again dialogue with how can we help our customers.

Speaker Change #125: And so the you.

Speaker Change #125: You asked about the white space. This is just a continued evolution.

Speaker Change #122: And so this healthcare has grown from almost nothing to call it 8% of our revenue now.

Speaker Change #125: That collaboration innovation technology wins productivity improvement.

Speaker Change #122: And it's largely because of the adaptation of our people to this this new type of vertical along with our dialogue with our customers and creating a real nice partnership.

Todd Schneider: I'll start and Mike, if you'd like to contribute. Faiza, good morning. For several decades now, we have had a focus on trying to grow the pieces, the business, and that white space is significant. So we teach our organization about how to attract no programmers. It's a little different process, and it's more of a conceptual sale versus something I'll call it more about. Well, you've got to coach them and teach them about how to do something different instead of simply doing it yourself. Again, that's a conceptual sale. We teach our folks on how to do that. We happen to be blessed with being in a spot where there is a massive white space out there.

Speaker Change #126: That's very helpful. Thank you so much and then just a quick follow up on on Capex, you mentioned at the outset as a priority I know we saw an increase in the <unk>.

Speaker Change #122: That then creates some innovation that gets innovation slowing for us in new products and services and then if we couple that with technology of of having more information at our fingertips of being able to.

Speaker Change #127: In Capex in 2024, and apologies if I missed it I don't know if you gave a specific number but just talk a bit more about some of the capex investments and how we should think about that going forward.

Find better prospecting as we can.

Speaker Change #128: We we were about four 3% in fiscal 'twenty four as a percent of revenue you might remember we had a little bit of a catch up in truck purchasing through the year, we had some of the SAP.

Speaker Change #122: Better.

Speaker Change #122: Are you able to tell what customers have which products and where might the warmest leads and so on <unk>. We have over time, we have been able to grow the business and through that grow or the productivity and so all of these things that we do that the Todd.

Speaker Change #127: <unk>.

Speaker Change #129: Investments for fire protection.

Speaker Change #130: We largely believe that capex in the future as the three 5% to 4% of revenue range I think that's where we'll likely end up in fiscal 'twenty five.

Speaker Change #122: Talks about they don't happen overnight. They are the evolution and continued dialog and collaboration with our customers to become more and more ingrained in what we do with them.

Speaker Change #131: Great. Thank you so much.

Speaker Change #122: And so the you.

Todd Schneider: I'll say it's a harder concept to get across to people, but we've been doing it for so long that it's just part of how our organization operates, and we think that that's exciting for us. No real obvious change I would point to. It's just part of our culture. It's part of how we teach and train our partners on how to approach that. It resonates with people because they get the concept of outsourcing. They get the concept of, yeah, maybe I am struggling. Keep up with all this and you can do it. You can do it better, faster, smarter, cheaper than I can. That's been a key fundamental of how we've grown our business over the years and how we'll continue to grow our business into the future.

Speaker Change #131: And our next question comes from Stephanie <unk> from Jefferies. Please go ahead Stephanie.

Speaker Change #122: You ask about the white space. This is just a continued evolution.

I'll say it's a harder concept to get across to people, but we've been doing it for so long that it's just part of how our organization operates, and we think that that's exciting for us. No real obvious change I would point to. It's just part of our culture. It's part of how we teach and train our partners on how to approach that. It resonates with people because they get the concept of outsourcing. They get the concept of, yeah, maybe I am struggling. Keep up with all this and you can do it. You can do it better, faster, smarter, cheaper than I can. That's been a key fundamental of how we've grown our business over the years and how we'll continue to grow our business into the future.

Stephanie: Hi, Good morning. Thank you I wanted to follow up on just the last question there.

Speaker Change #123: That collaboration innovation technology wins productivity improvement.

Stephanie: One quick question.

Speaker Change #124: That's very helpful. Thank you so much and then just a quick follow up on on Capex, you mentioned at the outset as a priority I know we saw an increase in the <unk>.

Stephanie: Are you finding potentially from increased activity from new customers.

Speaker Change #133: And then maybe a value proposition differently.

Speaker Change #134: Maybe taking that away with higher inflationary environment, maybe not looking to kind of do it in house and kind of have that initial capital outlay and your value proposition. That's coming in is that has that been contributing to contributing geismar two.

Speaker Change #125: In Capex in 2024, and apologies if I missed it I don't know if you gave a specific number but just talk a bit more about some of the capex investments and how we should think about that going forward.

Speaker Change #126: We we were about four 3% in fiscal 'twenty four as a percent of revenue you might remember we had a little bit of catch up in purchasing through the year, we had some of the SAP.

Brad: This is Brad.

Brad: Good morning, Stephanie, Yes, there's many inputs to it.

Speaker Change #136: Certainly if you are.

With a rental uniform program, if you want to buy garments theres, a large capital outlay versus us doing that for the customer.

Jared Mattingley: Faiza. Maybe I'll offer, maybe I'll offer this a bit. Think about the healthcare vertical that we've been in for maybe a decade or so now. When we got into that, we needed to create a sales team because it's just a different kind of sale, different kind of relationships. And so we had to create a different kind of sales team. When we did that, we started with sort of maintenance, uniforms, uniform rental, and maintenance because we didn't have a broad product offering. As we continued in that business, we started to learn through dialogue with the customers how else we can help them. And we started things like microfiber, and we started rental programs in microfiber, and that started to take off and has become a nice product for us as we continued to have dialogue with them. That sort of evolved into then scrub rental programs.

Speaker Change #126: Investments for fire protection.

Speaker Change #127: We largely believe that capex in the future as the three 5% to 4% of revenue range I think that's where we'll likely end up in fiscal 'twenty five.

Speaker Change #136: In other areas, where you might have to go buy dispensers.

Speaker Change #136: Four.

Speaker Change #136: For chemicals or soaps.

Speaker Change #136: How's what have you and restrooms, and we do that for the customer we make that investment on their behalf.

Speaker Change #128: Great. Thank you so much.

Speaker Change #128: And our next question comes from Stephanie <unk> from Jefferies. Please go ahead Stephanie.

Speaker Change #136: <unk>.

Speaker Change #136: And then again, we free them up to take care of their business focus there on there.

Stephanie: Hi, Good morning. Thank you I wanted to follow up actually on just the last question there.

Speaker Change #136: There are people their customers their guests their patients.

One quick question.

Speaker Change #136: So I'm sure that contributes to it.

Stephanie: Are you finding potentially from increased activity from new customers that are viewing maybe a value proposition differently for taking it.

Speaker Change #136: Certainly when it's.

Speaker Change #136: I think we've benefited from.

Speaker Change #136: The <unk>.

Speaker Change #136: Environment, where people are busy in there.

Speaker Change #130: Maybe taking that in any way with higher inflationary environment, maybe not looking to kind of do it in house and kind of have that initial capital outlay and your value proposition. That's coming in is that has that been contributing to contributing geismar two.

Speaker Change #136: Whether they are trying to hire people will take care of customers.

Speaker Change #136: And they say okay.

Speaker Change #137: Wow I didn't realize you could do that for for me you can do it at those.

Brad: This is Brad.

Speaker Change #136: <unk> of rates in.

Brad: Good morning, Stephanie, Yes, there's many inputs to it.

Speaker Change #136: And that frees me up and.

Jared Mattingley: These came out of, again, dialogue with how we can help our customers. And so this healthcare has grown from almost nothing to, call it, 8% of our revenue now. And it's largely because of the adaptation of our people to this new type of vertical, along with our dialogue with our customers, and creating a real nice partnership that then creates some innovation that gets innovation flowing for us and new products and services. And then if we couple that with technology, of having more information at our fingertips, of being able to find better prospecting as we can better able to tell what customers have which products and where might the warmest leads and so on be. We have over time we have been able to grow the business and through that grow the productivity.

These came out of, again, dialogue with how we can help our customers. And so this healthcare has grown from almost nothing to, call it, 8% of our revenue now. And it's largely because of the adaptation of our people to this new type of vertical, along with our dialogue with our customers, and creating a real nice partnership that then creates some innovation that gets innovation flowing for us and new products and services. And then if we couple that with technology, of having more information at our fingertips, of being able to find better prospecting as we can better able to tell what customers have which products and where might the warmest leads and so on be. We have over time we have been able to grow the business and through that grow the productivity.

Speaker Change #136: And over the years, we've when we've spoken to many many customers who were surprised.

Speaker Change #132: Certainly if you are.

Brad: A rental uniform program, if you want to buy garments. There is a large capital outlay versus us doing that for the customer.

Note that our average sized customer how small it is.

Speaker Change #136: And they didn't realize that they were big enough to have a service like ours.

Brad: In other areas, where you might have to go buy dispensers.

Speaker Change #136: Sure.

Speaker Change #136: Our average sized customer is really small.

Brad: For.

Speaker Change #136: And Thats part of our responsibility is to get the message out that we can help customers and our sales team out there actively pursuing those but I've seen that over and over again throughout the years.

Brad: For chemicals or soaps.

Brad: Towels, what have you and restrooms.

Brad: And we do that for the customer we make that investment on their behalf.

Brad: And then again, we free them up to take care of their business focus there on there.

Speaker Change #138: Great got it.

Excellent color.

Brad: There are people their customers their guest their patients.

Last question for me you talk you talked about M&A being a bit more aggressive in this past year.

Speaker Change #133: So I'm sure that contributes to it.

Speaker Change #139: I'm curious what your appetite would be to maybe more aggressively expand in the fire and safety and security space.

Speaker Change #133: Certainly when it's.

Speaker Change #134: I think we benefited from.

Speaker Change #134: The.

Speaker Change #140: It's been a good vertical for you I think it is an area of the market with that pretty considerable white space. So just curious your appetite within that vertical specifically thank you.

Speaker Change #134: Environment, where people are busy in there.

Speaker Change #134: Whether they are trying to hire people will take care of customers.

Speaker Change #134: And they say.

Jared Mattingley: And so all of these things that we do that Todd talks about, they don't happen overnight. They are the evolution and continued dialogue and collaboration with our customers to become more and more ingrained in what we do with them. And so you ask about the white space. This is just a continued evolution of that collaboration, innovation, technology wins, productivity improvement.

And so all of these things that we do that Todd talks about, they don't happen overnight. They are the evolution and continued dialogue and collaboration with our customers to become more and more ingrained in what we do with them. And so you ask about the white space. This is just a continued evolution of that collaboration, innovation, technology wins, productivity improvement.

Speaker Change #135: Wow I didn't realize you could do that for for me you can do it at those.

Speaker Change #139: Yes, Stephanie the way I would describe it as.

Speaker Change #141: Again, we were able to invest more in M&A. This year then.

Speaker Change #136: Competitive rates.

Speaker Change #136: And that frees me up and and.

Speaker Change #141: Going back all the way to 2000 fiscal 2017.

Speaker Change #137: And over the years, we've when we've spoken to many many customers who were surprised.

Speaker Change #141: That being said that is a.

Speaker Change #141: A byproduct of just timing deal flow when people make decisions I wouldn't call. It a.

Speaker Change #137: That our average sized customer how small it is.

Speaker Change #138: And they didn't realize that they were big enough to have a service like ours.

Speaker Change #141: A change in strategy on our part it was more about timing and flow.

Speaker Change #137: Sure.

Speaker Change #137: Our our average sized customers really small.

Mike Hanson: That's very helpful, thank you so much. Then just a quick follow up on CapEx. You mentioned it at the outset as a priority. I know we saw an increase in CapEx in 2024, and apologies if I missed it. I don't know if you gave a specific number, but just talk a bit more about some of the CapEx investments and how we should think about that going forward.

Faiza Alwy: That's very helpful, thank you so much. Then just a quick follow up on CapEx. You mentioned it at the outset as a priority. I know we saw an increase in CapEx in 2024, and apologies if I missed it. I don't know if you gave a specific number, but just talk a bit more about some of the CapEx investments and how we should think about that going forward.

And Thats part of our responsibilities to get the message out that we can help customers and our sales team out there actively pursuing those but I've seen that over and over again throughout the years.

Speaker Change #141: And thats tough to predict as far as the first aid and safety business and the fire business.

Speaker Change #141: We're acquisitive in every single route based business that we have.

And so we're we'd like to.

Speaker Change #139: Great got it no that's excellent color.

Speaker Change #141: Evaluate.

Speaker Change #140: Last question for me you talk you talked about M&A being a bit more aggressive in this past year.

Every single deal and make a good decision in the fire business specifically.

Speaker Change #141: I'm curious what your appetite would be to maybe more aggressively expand in the fire and safety and fire and security space.

Jared Mattingley: We were about 4.3% in fiscal 2024 as a percent of revenue. You might remember we had a little bit of catch up in truck purchasing through the year. We had some of the SAP investment for fire protection. We largely believe that CapEx in the future is the 3.5% to 4% of revenue range. I think that's where we'll likely end up in fiscal 2025.

Speaker Change #141: We want to make sure that we're.

Speaker Change #141: Competitive in fact in an aggressive after good attractive deals.

Speaker Change #142: It's been a good vertical for you I think it is an area of the market with that pretty considerable white space. So just curious your appetite within that vertical specifically thank you.

Speaker Change #141: Mix of business matters to us.

Speaker Change #141: Meaning.

Speaker Change #141: We like business that meets the mix of <unk>.

Speaker Change #142: Yes, Stephanie the way I would describe it as.

Speaker Change #142: Test and inspect that we have in repair along with that as well.

Speaker Change #143: Again, we were able to invest more in M&A. This year then.

Speaker Change #142: And there are some deals that have come across our desk that we have chosen not to participate in because there's a significant amount of installation in those businesses.

Speaker Change #143: Back all the way to 2000 fiscal 2017.

Mike Hanson: Great, thank you so much.

Faiza Alwy: Great, thank you so much.

Speaker Change #144: That being said that is a.

Operator: Our next question comes from Stephanie Moore from Jefferies. Please go ahead.

A byproduct of just timing.

Speaker Change #142: And the installation business tends to be kind of tied to new construction.

Mike Hanson: Stephanie, hi, good morning. Thank you. I wanted to follow up actually on just the last question there. Just one quick question. Are you finding potentially some increased activity from new customers that are viewing maybe a value proposition differently? So maybe taking that another way with higher inflationary environment, maybe not looking to kind of do it in house and kind of have that initial capital outlay and your value proposition is coming in. Has that been a contributing driver to the growth?

Stephanie Moore: Stephanie, hi, good morning. Thank you. I wanted to follow up actually on just the last question there. Just one quick question. Are you finding potentially some increased activity from new customers that are viewing maybe a value proposition differently? So maybe taking that another way with higher inflationary environment, maybe not looking to kind of do it in house and kind of have that initial capital outlay and your value proposition is coming in. Has that been a contributing driver to the growth?

Speaker Change #144: Deal flow when people make decisions I wouldn't call it a.

Speaker Change #142: And.

Speaker Change #142: That is.

Speaker Change #142: A really a very business and not one that to as attractive to us it's tougher to staff tougher, it's kind of like bid and chase business. So we've chosen to avoid those.

Our change in strategy on our part it was more about timing and flow.

Speaker Change #144: And thats tough to predict as far as the first aid and safety business and the fire business.

Speaker Change #142: But we are we really like both the all of the route based businesses again were highly acquisitive and and we'd like to continue on that path.

Speaker Change #144: We are acquisitive in every single route based business that we have.

Speaker Change #144: And so we're we like to.

Speaker Change #144: Evaluate.

Speaker Change #144: Every single deal and make a good decision in the fire business specifically.

Speaker Change #143: Great. Thank you so much.

Speaker Change #143: Thank you.

Speaker Change #143: And at this time there are no further questions I'd like to turn the call back over to Jared for closing remarks.

Speaker Change #144: We want to make sure that we're.

Todd Schneider: Good morning, Stephanie. Yeah, there's many inputs to it. Certainly if you are with a rental uniform program, if you want to buy garments, there's a large capital outlay versus us doing that for the customer in other areas where you might have to go buy dispensers for chemicals or soaps, towels, what have you in restrooms. And we do that for the customer. We make that investment on their behalf, and then again we free them up to take care of their business, focus on their people, their customers, their guests, their patients. So I'm sure that contributes to it. Certainly when it's. I think we've benefited from the environment where people are busy and they're, whether they're trying to hire people, take care of customers, and they say, again, wow, I didn't realize you could do that.

Speaker Change #144: Competitive and aggressive after good attractive deals.

Jared: Thank you for joining us. This morning, we will issue our first quarter of fiscal 'twenty five financial results in September we look forward to speaking with you again at that time.

Speaker Change #145: Mix of business matters to us mean.

Speaker Change #144: Meaning.

Speaker Change #144: We like business that meets the mix of test and inspect that we have in repair along with that as well.

Speaker Change #144: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change #144: Yeah.

Speaker Change #144: And there are some deals that have come across our desk that we have chosen not to participate in because there's a significant amount of installation in those businesses.

Speaker Change #144: And the installation business tends to be kind of tied to new construction.

Speaker Change #144: And.

That is.

Speaker Change #144: A really a very business and not one that's as attractive to us it's tougher to staff tougher, it's kind of like bid and chase business. So we've chosen to avoid dose.

Speaker Change #144: But we are we really like both the all of the route based businesses again were highly acquisitive and we'd like to continue on that path.

Speaker Change #146: Great. Thank you so much.

Todd Schneider: For me, you can do it at those competitive rates and that frees me up. And over the years we've spoken to many, many customers who were surprised that our average sized customer, how small it is, and they didn't realize that they were big enough to have a service like ours where our average size customer is really small. And that's part of our responsibilities to get the message out that we can help customers and our sales team out there actively pursuing those. But I've seen that over and over again throughout the years.

For me, you can do it at those competitive rates and that frees me up. And over the years we've spoken to many, many customers who were surprised that our average sized customer, how small it is, and they didn't realize that they were big enough to have a service like ours where our average size customer is really small. And that's part of our responsibilities to get the message out that we can help customers and our sales team out there actively pursuing those. But I've seen that over and over again throughout the years.

Thank you.

Speaker Change #146: And at this time there are no further questions I'd like to turn the call back over to Jared for closing remarks.

Jared: Thank you for joining us. This morning, we will issue our first quarter of fiscal 'twenty five financial results in September we look forward to speaking with you again at that time.

Speaker Change #147: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change #148: The host has ended this call goodbye.

Speaker Change #148: Ended this call goodbye.

Mike Hanson: Great. Got it. No, that's excellent color. Just last question for me. You talked about MA being a bit more aggressive in this past year. I'm curious what your appetite would be to maybe more aggressively expand in the fire and safety or fire and security space. It's been a good vertical for you? I think it is an area or a market with a pretty considerable white space. So just curious, your appetite within that vertical, specifically. Thank you.

Stephanie Moore: Great. Got it. No, that's excellent color. Just last question for me. You talked about MA being a bit more aggressive in this past year. I'm curious what your appetite would be to maybe more aggressively expand in the fire and safety or fire and security space. It's been a good vertical for you? I think it is an area or a market with a pretty considerable white space. So just curious, your appetite within that vertical, specifically. Thank you.

Operator: Yeah.

Todd Schneider: Yeah. Stephanie, the way I would describe it is, you know, again, we were able to invest more in MA this year than going back all the way to fiscal 2017. That being said, that is a byproduct of just timing deal flow when people make decisions. I wouldn't call it a change in strategy on our part. It was more about timing and flow, and that's tough to predict. As far as the first aid and safety business and the fire business, we're acquisitive in every single route-based business that we have, and so we like to evaluate every single deal and make a good decision. In the fire business specifically, we want to make sure that we're competitive and aggressive after good, attractive deals.

Todd Schneider: Stephanie, the way I would describe it is, you know, again, we were able to invest more in MA this year than going back all the way to fiscal 2017. That being said, that is a byproduct of just timing deal flow when people make decisions. I wouldn't call it a change in strategy on our part. It was more about timing and flow, and that's tough to predict. As far as the first aid and safety business and the fire business, we're acquisitive in every single route-based business that we have, and so we like to evaluate every single deal and make a good decision. In the fire business specifically, we want to make sure that we're competitive and aggressive after good, attractive deals.

Todd Schneider: The mix of business matters to us, meaning we like a business that meets the mix of test and inspect that we have and repair along with that as well. There are some deals that have come across our desk that we have chosen not to participate in because there's a significant amount of installation in those businesses. The installation business tends to be kind of tied to new construction. That is really a varied business and not one that's as attractive to us. It's tougher to staff, tougher, kind of like bid and chase business. We've chosen to avoid those. We really like both all the route based businesses. We're highly acquisitive and would like to continue on that path.

The mix of business matters to us, meaning we like a business that meets the mix of test and inspect that we have and repair along with that as well. There are some deals that have come across our desk that we have chosen not to participate in because there's a significant amount of installation in those businesses. The installation business tends to be kind of tied to new construction. That is really a varied business and not one that's as attractive to us. It's tougher to staff, tougher, kind of like bid and chase business. We've chosen to avoid those. We really like both all the route based businesses. We're highly acquisitive and would like to continue on that path.

Mike Hanson: Great. Thank you so much.

Stephanie Moore: Great. Thank you so much.

Todd Schneider: Thank you.

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

Jared Mattingley: Thank you for joining us this morning. We will issue our first quarter of fiscal 2025 financial results in September. We look forward to speaking with you again at that time.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Q4 2024 Cintas Corp Earnings Call

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