Q1 2025 Cintas Corp Earnings Call

September 25, 2024

Operator: Good day everyone, and welcome to the Cintas Corporation announces fiscal 2025 first quarter results conference call. Today's call is being recorded at this time. I would like to turn the call over to Mr. Jared Mattingly, Vice President, Treasurer, and Investor Relations.

Operator: Good day everyone, and welcome to the Cintas Corporation announces fiscal 2025 first quarter results conference call. Today's call is being recorded at this time. I would like to turn the call over to Mr. Jared Mattingley, Vice President, Treasurer, and Investor Relations.

Good day, everyone. And welcome to the Santa's Corporation, announces fiscal 2025 First Quarter Results Conference Call. Today's call is being recorded.

Operator: Announces Fiscal 2025 First Quarter Results Conference Call. Today's call is being recorded.

Jared Mattingley: At this time, I would like to turn the call over to Mr. Jared Mattingley, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Jared Manningley: At this time, I would like to turn the call over to Mr. Jared Manningley by President Treasure and Investor Relations. Please go ahead, sir.

Jared Mattingly: Please go ahead, sir. Thank you, Ross. Thank you for joining us. With me today are Todd Schneider, President and Chief Executive Officer, and Mike Hanson, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 Q1 results. After our commentary, we will open the call to questions from analysts. The 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.

Jared Mattingley: Please go ahead, sir. Thank you, Ross. Thank you for joining us. With me today are Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 Q1 results. After our commentary, we will open the call to questions from analysts. The 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.

Jared Mattingley: Thank you, Ross. Thank you for joining us. With me today are Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 first quarter results.

Jared Manningley: Thank you, Ross. Thank you for joining us. With me today, our Todd Schneider, President and Chief Executive Officer, and my cancels in Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 first quarter results.

Jared Mattingley: After our commentary, we will open the call to questions from analysts.

Jared Manningley: After our commentary, we will open the call to questions from Analysts.

Operator: The Private Security's 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 the future events in financial performance. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we made discussed.

Jared Manningley: The private securities litigation reform act of 1995 provides a safe harbor from civil litigation for forward-looking statements.

Jared Manningley: This conference call contains forward-looking statements that reflect the company's current views as the future events in financial performance.

Speaker Change: 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 filing with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Operator: I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission.

Todd Schneider: I will now turn the call over to Todd. Thank you, Jared. We are pleased with our start to fiscal year 2025. Our First Quarter Results reflect the strength and breadth of Cintas' value proposition for businesses of all types, and stellar execution by our employee partners. First quarter total revenue grew 6.8% to $2.5 billion, an all-time high for revenue in a quarter. First quarter revenue growth was negatively impacted by one last workday in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. On the same day work basis, first quarter revenue growth was 8.4%.

Todd Schneider: Thank you, Jared. We are pleased with our start to fiscal year 2025. Our first quarter results reflect the strength and breadth of Cintas' value proposition for businesses of all types and stellar execution by our employee partners. First quarter total revenue grew 6.8% to $2.5 billion, an all-time high for revenue in a quarter. First quarter revenue growth was negatively impacted by one less workday in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. On a same day work basis, first quarter revenue growth was 8.4%. The organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and the fact that there was one less workday in the quarter, was 8.0%. Each of Cintas' business divisions contributed to our success in the quarter.

Todd: Thank you, Jared. We are pleased with our start to fiscal year 2025.

Todd: Our first quarter results reflect the strength and breadth of synthesis value proposition for businesses of all types. Install our execution by our employee partners.

Todd: 1st quarter total revenue grew 6.8% to 2.5 billion dollars, and all time high for revenue in a quarter.

Todd: First quarter revenue growth was negatively impacted by one last work day in the first quarter at fiscal 2025 compared to the first quarter of fiscal 2024.

Todd: On the same day, work basis.

Todd: 1st quarter revenue growth was 8.4%.

Todd Schneider: Your organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and the fact that there was one last workday in the quarter, was 8.0%. Each of Cintas' business divisions contributed to our success in the quarter. As Michael Detail, our rental division was right where we liked them to be, and the first thing to safety and fire protection businesses each generated double-digit year-over-year growth, demonstrating the complementary nature of our platform. And our long runway for future growth. The value of the products and services Cintas delivers continues to resonate with customers of all sizes and across industries.

Speaker Change: Your organic growth rate, which adjusts for the impacts of acquisitions for an currency exchange rate fluctuations, and in the fact that there was one last work day in the quarter, was 8.0%.

Speaker Change: Each of St. Thomas's business divisions contributed to our success in the quarter.

Todd Schneider: As Mike will detail, our rental division was right where we like them to be, and our first aid and safety and fire protection businesses each generated double digit year over year growth, demonstrating the complementary nature of our platform and our long runway for future growth. The value of the products and services Cintas delivers continues to resonate with customers of all sizes and across industries. We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America. In Q1, we continued to experience strong demand for our services not only from existing customers but across our new business pipeline. Businesses across our four focus verticals of healthcare, hospitality, education, and state and local government continue to perform well. Our top line results flow through to our bottom line.

As Mike will detail, our rental division was right where we like them to be, and our first aid and safety and fire protection businesses each generated double digit year over year growth, demonstrating the complementary nature of our platform and our long runway for future growth. The value of the products and services Cintas delivers continues to resonate with customers of all sizes and across industries. We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America. In Q1, we continued to experience strong demand for our services not only from existing customers but across our new business pipeline. Businesses across our four focus verticals of healthcare, hospitality, education, and state and local government continue to perform well. Our top line results flow through to our bottom line.

Speaker Change: As Michael Detail, our rental division was right where we liked them to be, and our first state and safety in fire protection businesses, each generated double digit year-of-a-year growth, demonstrating the complementary nature of our platform and our long runway for each of our growth.

Speaker Change: The value of the products and services sent us delivers continues to resonate with customers of all sizes and across industries.

Todd Schneider: We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America. In the first quarter, we continue to experience strong demand for our services not only from existing customers, but across our new business pipeline. Businesses across our four focused verticals of healthcare, hospitality, education, and state and local government continue to perform well. Our top line results flow through to our bottom line. Gross margin for the first quarter increased 9.7% over the prior year to our record 50.1%. Operating income of 22.4% as a percent of revenue was also an all-time record, an increase of 12.1% over the prior year.

Speaker Change: We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America.

Speaker Change: In the first quarter, we continue to experience strong demand for our services, not only from existing customers, but across our new business pipeline.

Speaker Change: Businesses across our four focused verticals of healthcare, hospitality, education, and state and local government continue to perform well.

Speaker Change: Our top line results flow through to our bottom line.

Todd Schneider: Gross margin for the first quarter increased 9.7% over the prior year to a record 50.1%. Operating income of 22.4% as a percent of revenue was also an all-time record, an increase of 12.1% over the prior year. Diluted EPS, which reflects the recent 4-for-1 stock split, grew a robust 18.3% to $1.10. Our earnings growth continues to reflect our relentless focus on operational excellence in every aspect of our business, including strategic sourcing and supply chain initiatives that drive down our material cost, route and energy optimization with SmartTruck, and leveraging our SAP system to maximize the efficiency of our facilities. Cash flow was very strong in the first quarter with free cash flow increasing 62.4% over the prior year. Our cash generation enabled us to deploy capital across each of our capital allocation priorities.

Gross margin for the first quarter increased 9.7% over the prior year to a record 50.1%. Operating income of 22.4% as a percent of revenue was also an all-time record, an increase of 12.1% over the prior year. Diluted EPS, which reflects the recent 4-for-1 stock split, grew a robust 18.3% to $1.10. Our earnings growth continues to reflect our relentless focus on operational excellence in every aspect of our business, including strategic sourcing and supply chain initiatives that drive down our material cost, route and energy optimization with SmartTruck, and leveraging our SAP system to maximize the efficiency of our facilities. Cash flow was very strong in the first quarter with free cash flow increasing 62.4% over the prior year. Our cash generation enabled us to deploy capital across each of our capital allocation priorities.

Speaker Change: Gross margin for the first quarter increased 9.7% over the prior year to a record 50.1%.

Speaker Change: Operating income of 22.4% as a percent of revenue was also an all-time record, an increase of 12.1% over the prior year.

Todd Schneider: DeLuted EPS, which reflects the recent four-for-one stock split, grew a robust 18.3% to $1.10. Our earnings growth continues to reflect our relentless focus on operational excellence in every aspect of our business, including strategic sourcing, the supply chain initiatives that drive down a material cost, route and energy optimization with smart truck, and leveraging our SAP system to maximize the efficiency of our facilities. Cash flow was very strong in the first quarter, with free cash flow increasing 62.4% over the prior year. Our cash generation enabled us to deploy capital across each of our capital allocation priorities. We continue to focus our strategic investments in our customers and our employee partners.

Speaker Change: The wounded EPS, which reflects the recent 4-1 stock split, grew a robust 18.3% to $10.

Speaker Change: Our earnings growth continues to reflect our relentless focus on operational excellence in every aspect of our business, including strategic sourcing, the supply chain initiatives that drive down our material cost.

Speaker Change: Route and energy optimization was smart truck and leveraging our SAP system to maximize the efficiency of our facilities.

Speaker Change: Cash flow was very strong in the first quarter with free cash flow increasing 62.4% over the prior year.

Speaker Change: Our cash generation, and you're going to have to deploy capital across each of our capital allocation priorities.

Todd Schneider: We continue to focus our strategic investments in our customers and our employee partners. This strategy is reflected in our capital allocation priorities that continue to position us to deliver long-term value for our shareholders. In the first quarter, we continued to invest in our businesses through capital expenditure of $92.9 million and made acquisitions in each of our three route-based segments. Our technology investments are a significant area of reinvestment. We are making great strides to implement better technology-driven solutions to standardize our processes across our operations. These investments have enabled us to provide more flexibility to our customers including increased garment sharing and achieving more nimble and efficient product sourcing. Coupled with our ongoing partnerships with Verizon, Google, and SAP, we're able to make our employee partners jobs easier and get the right products to our customers faster.

We continue to focus our strategic investments in our customers and our employee partners. This strategy is reflected in our capital allocation priorities that continue to position us to deliver long-term value for our shareholders. In the first quarter, we continued to invest in our businesses through capital expenditure of $92.9 million and made acquisitions in each of our three route-based segments. Our technology investments are a significant area of reinvestment. We are making great strides to implement better technology-driven solutions to standardize our processes across our operations. These investments have enabled us to provide more flexibility to our customers including increased garment sharing and achieving more nimble and efficient product sourcing. Coupled with our ongoing partnerships with Verizon, Google, and SAP, we're able to make our employee partners jobs easier and get the right products to our customers faster.

Speaker Change: We continue to focus our strategic investments in our customers and our employee partners.

Todd Schneider: This strategy is reflected in our capital allocation priorities that continue to position us to deliver long-term value for our shareholders. In the first quarter, we continue to invest in our businesses through capital expenditure of $92.9 million. It made acquisitions in each of our three route-based segments. Our technology investments are a significant area of reinvestment. We are making great strides to implement better technology-driven solutions to standardize our processes across our operations. These investments have enabled us to provide more flexibility to our customers, including increased garment sharing and achieving more nimble and efficient product sourcing. Coupled with our ongoing partnerships with Verizon, Google, and SAP, we're able to make our employee partners' jobs easier and get the right products for our customers faster.

Speaker Change: This strategy is reflected in our capital allocation priorities that continue a position us to deliver long-term value for our shorehorses.

Speaker Change: In the first quarter, we continued to invest in our businesses through capital expenditure of $92.9 million. It made acquisitions in each of our three route-based segments.

Speaker Change: Our technology investments are a significant area of reinvestment.

Speaker Change: We're making great strides to implement better technology-driven solutions to standardized our processes across our operations.

Speaker Change: These investments have enabled us to provide more flexibility to our customers, including increasing garment sharing and achieving more nimble and efficient products sourcing.

Speaker Change: Coupled with our ongoing partnerships with Verizon, Google and SAP, we're able to make our employee partners jobs easier and get the right products for our customers faster.

Todd Schneider: We are seeing these efforts continue to improve customer experience and positively impact our margin profile. In addition to making the investments in our business to fuel future growth, returning capital to Cintas shareholders through our dividend and share repurchase remains a key priority. Cintas increased its quarterly dividend by 15.6% per share, which resulted in an aggregate quarterly cash dividend payment of $157.9 million on 3 September. This marked the 41st consecutive year that we increased our dividend, meaning we have maintained this practice every year since going public. We also purchased $473.6 million worth of common stock during the quarter before turning the call over to Mike to provide details of our Q1 results.

We are seeing these efforts continue to improve customer experience and positively impact our margin profile. In addition to making the investments in our business to fuel future growth, returning capital to Cintas shareholders through our dividend and share repurchase remains a key priority. Cintas increased its quarterly dividend by 15.6% per share, which resulted in an aggregate quarterly cash dividend payment of $157.9 million on 3 September. This marked the 41st consecutive year that we increased our dividend, meaning we have maintained this practice every year since going public. We also purchased $473.6 million worth of common stock during the quarter before turning the call over to Mike to provide details of our Q1 results.

Todd Schneider: We are seeing these efforts continue to improve customer experience and possibly impact our margin profile. In addition to making the investments in our business to fuel future growth, returning capital to Syntas shareholders through our dividend and share repurchase remains a key priority. Syntas increases quarterly dividend by 15.6% per share, which resulted in an aggregate quarterly cash dividend payment of $157.9 million on September 3rd. This marked the 41st consecutive year that we increase our dividend, meaning we have maintained this practice every year since going public. We also purchased $4.73 million worth of common stock during the quarter.

Speaker Change: We are seeing these efforts continue to improve customer experience and possibly impact our margin profile.

Speaker Change: In addition to making the investments in our business to feel future growth, we're turning capital to synthesize shareholders through our dividend and share repurchase remains a key priority.

Speaker Change: St. Foss increases quarterly dividend by 15.6% per share, which resulted in an aggregate quarterly cash dividend payment of $157.9 million on September 3rd.

Speaker Change: This marked the 41st consecutive year that we increase our dividend, meaning we amainting this practice every year since going public.

Speaker Change: We also purchased 473.6 million dollars worth of common stock during the quarter.

Todd Schneider: Before turning the call over to Mike to provide details of our first quarter results, I'll provide our updated financial expectations for our fiscal year, which reflect the momentum we carried through the first quarter and the exceptional dedication of our employee partners in helping our customers meet image, safety, cleanliness, and compliance needs. We are increasing our financial guidance range for fiscal 2025. We are raising our annual revenue expectations from a range of $10.16 billion to $10.31 billion to a range of $10.22 billion to $10.32 billion, a total growth rate of 6.5% to 7.5%. We expect our organic growth rate to be in the range of 7.0% to 8.1%.

Speaker Change: The fourth time the call over to Mike to provide details over our first quarter results, I'll provide our updated financial expectations for our fiscal year, which reflect them a minimum we carry through the first quarter.

Todd Schneider: I'll provide our updated financial expectations for our fiscal year which reflect the momentum we carried through the first quarter and the exceptional dedication of our employee partners in helping our customers meet image, safety, cleanliness, and compliance needs. We are increasing our financial guidance range for fiscal 2025. We are raising our annual revenue expectations from a range of $10.16 billion to 10.31 billion to a range of $10.22 billion to 10.32 billion, a total growth rate of 6.5% to 7.5%. We expect our organic growth rate to be in the range of 7.0% to 8.1%. We are also raising our annual diluted EPS expectations from a range of $4.06 to 4.19 to a range of $4.17 to 4.25, a growth rate of 10.0% to 12.1%. The future of Cintas remains bright and I look forward to the year ahead.

I'll provide our updated financial expectations for our fiscal year which reflect the momentum we carried through the first quarter and the exceptional dedication of our employee partners in helping our customers meet image, safety, cleanliness, and compliance needs. We are increasing our financial guidance range for fiscal 2025. We are raising our annual revenue expectations from a range of $10.16 billion to 10.31 billion to a range of $10.22 billion to 10.32 billion, a total growth rate of 6.5% to 7.5%. We expect our organic growth rate to be in the range of 7.0% to 8.1%. We are also raising our annual diluted EPS expectations from a range of $4.06 to 4.19 to a range of $4.17 to 4.25, a growth rate of 10.0% to 12.1%. The future of Cintas remains bright and I look forward to the year ahead.

Speaker Change: and make exceptional dedication of our employee partners and helping our customers meet image, safety, crimeliness, and compliance needs.

Speaker Change: We are increasing our fundamental guidance range for fiscal 2025.

Speaker Change: We are raising our annual revenue expectations from a range of $10.16 billion to $10.31.

Speaker Change: 10.31 billion dollars to a range of 10.22 billion dollars to 10.32 billion dollars. A total growth rate of 6.5 percent to 7.5 percent.

Speaker Change: We expect our organic growth rate to be in the range of 7.0% to 8.1%.

Todd Schneider: We're also raising our annual deluded EPS expectations from a range of $4.06, the $4.19, to a range of $4.17 to $4.25, the growth rate of 10.0% to 12.1%.

Speaker Change: We're also raising our annual diluted EPS expectations from a range of $4.6 to $4.19 to a range of $4.17 to $4.25. The growth rate of 10.0% to 12.1%.

Todd Schneider: The future Cintas remains bright, and I look forward to the year ahead.

Speaker Change: The future of St. Dauce remains bright, and I look forward to the year ahead.

Todd Schneider: With that, I'll turn the call over to Mike to discuss the details of our first quarter results.

With that, I'll turn the call over to Mike to discuss the details of our first quarter results.

Mike Hansen: With that, I'll turn the call over to Mike to discuss the details of our first quarter results. Thanks, Todd, and good morning. Our fiscal 2025 first quarter revenue was $2.5 billion compared to $2.34 billion last year. The organic revenue growth rate adjusted for acquisitions, foreign currency exchange rate fluctuations, and a difference in the number of work days was 8%. Total growth was negatively impacted by 160 basis points due to one fewer work day in the first quarter compared to the prior year period. As a reminder, we have two fewer work days in fiscal 2025 compared to fiscal 2024.

Speaker Change: With that, I'll turn the call over to Mike to discuss the details of our first quarter results.

Jared Mattingly: Thanks Todd and good morning. Our fiscal 2025 first quarter revenue was $2.5 billion compared to $2.34 billion. The organic revenue growth rate adjusted for acquisitions, foreign currency exchange rate fluctuations, and a difference in the number of workdays was 8%. Total growth was negatively impacted by 160 basis points due to one fewer workday in the first quarter compared to the prior year period. As a reminder, we have two fewer workdays in fiscal 2025 compared to fiscal 2024. One impacted our first quarter and the second will impact our fourth quarter. Each of our fiscal 2025 quarters has 65 days. Organic growth by business was 7% for Uniform Rental and Facility Services, 14% for First Aid and Safety Services, 13.8% for Fire Protection Services, and Uniform Direct Sale was down 1.8%.

Mike Hansen: Thanks Todd and good morning. Our fiscal 2025 first quarter revenue was $2.5 billion compared to $2.34 billion. The organic revenue growth rate adjusted for acquisitions, foreign currency exchange rate fluctuations, and a difference in the number of workdays was 8%. Total growth was negatively impacted by 160 basis points due to one fewer workday in the first quarter compared to the prior year period. As a reminder, we have two fewer workdays in fiscal 2025 compared to fiscal 2024. One impacted our first quarter and the second will impact our fourth quarter. Each of our fiscal 2025 quarters has 65 days. Organic growth by business was 7% for Uniform Rental and Facility Services, 14% for First Aid and Safety Services, 13.8% for Fire Protection Services, and Uniform Direct Sale was down 1.8%.

Mike: Thank you. Our fiscal 2025 first quarter revenue was $2.5 billion compared to $2.34 billion last year.

Mike: The Organic Revenue Growth Rate adjusted for acquisitions, foreign currency exchange rate fluctuations, and a difference in the number of 4 days was 8%.

Mike: Total growth was negatively impacted by 160 basis points due to one fewer workday in the first quarter compared to the prior year period.

Mike: As a reminder, we have two fewer work days in fiscal 2025 compared to 2024. One impacted our first quarter, and the second will impact our fourth quarter.

Mike Hansen: One impacted our first quarter, and the second will impact our fourth quarter. Each of our fiscal 2025 quarters has 65 days. Organic growth by business was 7% for uniform rental and facility services, 14% for first aid and safety services, 13.8% for fire protection services, and uniform direct sale was down 1.8%. Growth margin for the first quarter of fiscal 2025 was $1.25 billion compared to $1.14 billion last year, an increase of 9.7%. As Todd mentioned, growth margin as a percent of revenue reached a milestone 50.1% for the first quarter of fiscal 25 compared to 48.7% last year, an increase of 140 basis points.

Mike: Each of our fiscal 2025 quarters has 65 days.

Mike: Organic growth by business was 7% for uniform rental and facility services, 14% for first aid and safety services, 13.8% for fire protection services, and uniform direct sale was down 1.8%.

Jared Mattingly: Gross margin for the first quarter of fiscal 2025 was $1.25 billion compared to $1.14 billion last year, an increase of 9.7%. As Todd mentioned, gross margin as a percent of revenue reached a milestone 50.1% for the first quarter of fiscal 2025 compared to 48.7% last year, an increase of 140 basis points. Robust volume growth continues to generate strong operating leverage. Our gross margins also increased as a result of our world class supply chain investments we have made in technology and continued operational efficiencies. Gross margin percentage by business was 49.3% for Uniform Rental and Facility Services, 57.7% for First Aid and Safety Services, 50.2% for Fire Protection Services, and 40.6% for Uniform Direct Sale. Gross margin for the Uniform Rental and Facility Services segment increased 120 basis points from last year. We continue to generate leverage as a result of our strong revenue growth.

Gross margin for the first quarter of fiscal 2025 was $1.25 billion compared to $1.14 billion last year, an increase of 9.7%. As Todd mentioned, gross margin as a percent of revenue reached a milestone 50.1% for the first quarter of fiscal 2025 compared to 48.7% last year, an increase of 140 basis points. Robust volume growth continues to generate strong operating leverage. Our gross margins also increased as a result of our world class supply chain investments we have made in technology and continued operational efficiencies. Gross margin percentage by business was 49.3% for Uniform Rental and Facility Services, 57.7% for First Aid and Safety Services, 50.2% for Fire Protection Services, and 40.6% for Uniform Direct Sale. Gross margin for the Uniform Rental and Facility Services segment increased 120 basis points from last year. We continue to generate leverage as a result of our strong revenue growth.

Mike: Gross margin for the first quarter of fiscal 25 was $1.25 billion compared to $1.14 billion last year an increase of 9.7%.

Mike: As Todd mentioned, gross margin as a percent of revenue reached a milestone 50.1% for the first quarter of fiscal 25 compared to 48.7% last year in increase of 140 basis points.

Mike Hansen: Robust volume growth continues to generate strong operating leverage. Our growth margins also increased as a result of our world-class supply chain, investments we have made in technology, and continued operational efficiencies. Growth margin percentage by business was 49.3% for Uniform Rental and Facility Services, 57.7% for First Aid and Safety Services, 50.2% for Fire Protection Services, and 40.6% for Uniform Direct Sale. Growth margin for the uniform rental and facility services segment increased 120 basis points from last year. We continue to generate leverage as a result of our strong revenue growth. Great performance from our supply chain is lowering our product costs.

Todd: For a bus volume growth continues to generate strong operating leverage. Our gross margins also increased as a result of our world-class supply chain. Investments we have made in technology and continued operational efficiencies.

Rose Martin: Rose Martin, percentage by business, was 49.3% for uniform rent on facility services. 57.7% for first date and safety services.

Rose Martin: 50.2% for fire protection services and 40.6% for uniform direct sale.

Rose Martin: Gross margin for the uniform rental and facility services segment increased 120 basis points from last year

Rose Martin: We continue to generate leverage as a result of our strong revenue growth. Great performance from our supply chain is lower in our product costs.

Jared Mattingly: Great performance from our supply chain is lowering our product costs. We continue to realize benefits from our technology investments and we are extracting inefficiencies from the business through our Six Sigma and engineering teams. Gross margin for the first aid and safety services segment increased 180 basis points from last year. As with our rental business, strong revenue growth continues to create leverage. Our sales mix continues to be favorable with more profitable first aid products and increases in our recurring revenue products like AEDs, Eyewash Stations, and WaterBreak. Our technology investment in SmartTruck continues to provide route optimization and improved efficiencies and we continue to see sourcing benefits from our first aid dedicated distribution center that we opened several years ago that has allowed us to lower product costs. All of these contribute to improved margins.

Great performance from our supply chain is lowering our product costs. We continue to realize benefits from our technology investments and we are extracting inefficiencies from the business through our Six Sigma and engineering teams. Gross margin for the first aid and safety services segment increased 180 basis points from last year. As with our rental business, strong revenue growth continues to create leverage. Our sales mix continues to be favorable with more profitable first aid products and increases in our recurring revenue products like AEDs, Eyewash Stations, and WaterBreak. Our technology investment in SmartTruck continues to provide route optimization and improved efficiencies and we continue to see sourcing benefits from our first aid dedicated distribution center that we opened several years ago that has allowed us to lower product costs. All of these contribute to improved margins.

Mike Hansen: We continue to realize benefits from our technology investments, and we are extracting inefficiencies from the business through our six sigma and engineering teams. Growth margin for the first aid and safety services segment increased 180 basis points from last year. As with our rental business, strong revenue growth continues to create leverage. Our sales mix continues to be favorable with more profitable first aid products, and increases in our recurring revenue products like ADDs, iWash stations, and water bridge. Our technology investment in smart truck continues to provide a route optimization and improved efficiencies, and we continue to see sourcing benefits from our first aid dedicated distribution center that we opened several years ago that has allowed us to lower product costs. All of these contribute to improved margins.

Rose Martin: We continue to realize benefits from our technology investments, and we are extracting inefficiencies from the business through our six Sigma engineering teams.

Rose Martin: Gross Margin for the first date in safety services segment increased 180 basis points from last year. As with our rental business, strong revenue growth continues to create leverage.

Rose Martin: Our sales mix continues to be favorable with more profitable first-aid products and increases in our recurring revenue products, like AEDs, I watch stations and water break.

Rose Martin: Our technology investment in smart truck continues to provide a route optimization and improve deficiencies. And we continue to see sourcing benefits from our first aid dedicated distribution center that we opened several years ago that has allowed us to lower product costs.

Rose Martin: All of these contribute to improved margins.

Jared Mattingly: and administrative expenses as a percentage of revenue was 27.6%, which was a 20 basis points increase from last year. We continue to make strategic investments in technology and in our partners. Q1 operating income was $561 million compared to $500.6 million last year. Operating income as a percentage of revenue was 22.4% in Q1 of fiscal 2025 compared to 21.4% in last year's Q1, an increase of 100 basis points. Our effective tax rate for Q1 was 15.8% compared to 19.2% last year. The tax rate in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for Q1 was $452 million compared to $385.1 million last year. This year's Q1 diluted EPS of $1.10 compared to $0.93 last year, an increase of 18.3%.

and administrative expenses as a percentage of revenue was 27.6%, which was a 20 basis points increase from last year. We continue to make strategic investments in technology and in our partners. Q1 operating income was $561 million compared to $500.6 million last year. Operating income as a percentage of revenue was 22.4% in Q1 of fiscal 2025 compared to 21.4% in last year's Q1, an increase of 100 basis points. Our effective tax rate for Q1 was 15.8% compared to 19.2% last year. The tax rate in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for Q1 was $452 million compared to $385.1 million last year. This year's Q1 diluted EPS of $1.10 compared to $0.93 last year, an increase of 18.3%.

Mike Hansen: Selling administrative expenses as a percentage of revenue was 27.6%, which was a 20 basis point increase from last year. We continue to make strategic investments in technology and in our partners. First quarter operating income was $561 million, compared to $500.6 million last year. Operating income as a percentage of revenue was 22.4% in the first quarter of fiscal 25, compared to 21.4% in last year's first quarter, an increase of 100 basis points. Our effective tax rate for the first quarter was 15.8%, compared to 19.2% last year. The tax rate in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock base compensation.

Rose Martin: Selling administrative expenses as a percentage of revenue was 27.6 percent, which was a 20 basis point increase from last year.

Rose Martin: We continue to make strategic investments in technology and in our partners.

Rose Martin: First quarter operating income was $561 million, compared to $5.6 million last year.

Rose Martin: Operating income as a percent of revenue was 22.4% in the first quarter of fiscal 25 compared to 21.4% in last year's first quarter, an increase of 100 basis points.

Rose Martin: yeah

Rose Martin: Our effective tax rate for the first quarter was 15.8% compared to 19.2% last year. The tax rate in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation.

Mike Hansen: Net income for the first quarter was $452 million, compared to $385.1 million last year. This year's first quarter diluted EPS of $1.10, compared to 93 cents last year, an increase of 18.3%. As Todd mentioned earlier, we generated strong cash flow. Our first quarter free cash flow increased 62.4%. This has allowed us to invest back in the business, which has resulted in first quarter capital expenditures of $92.9 million. Our investments include technology to grow the top line and expand margins, automation to improve efficiencies in our plants, and additional processing capacity where needed. We expect capital expenditures to finish between 3.5% and 4% of revenue for the year.

Rose Martin: net income for the first quarter was $452 million, compared to $385.1 million last year.

Rose Martin: This year's first quarter-deluded EPS of $1.10, compared to 93 cents last year, an increase of 18.3%.

Jared Mattingly: As Todd mentioned earlier, we generated strong cash flow. Our first quarter free cash flow increased 62.4%. This has allowed us to invest back in the business, which has resulted in first quarter capital expenditures of $92.9 million. Our investments include technology to grow the top line and expand margins, automation to improve efficiencies in our plants, and additional processing capacity where needed. We expect capital expenditures to finish between 3.5% and 4% of revenue for the year. Todd provided our annual financial guidance. Related to the guidance, please note the fiscal 2025 net interest expense is expected to be approximately $101 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.

As Todd mentioned earlier, we generated strong cash flow. Our first quarter free cash flow increased 62.4%. This has allowed us to invest back in the business, which has resulted in first quarter capital expenditures of $92.9 million. Our investments include technology to grow the top line and expand margins, automation to improve efficiencies in our plants, and additional processing capacity where needed. We expect capital expenditures to finish between 3.5% and 4% of revenue for the year. Todd provided our annual financial guidance. Related to the guidance, please note the fiscal 2025 net interest expense is expected to be approximately $101 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.

Rose Martin: As Todd mentioned earlier, we generated strong cash flow. Our first quarter free cash flow increased 62.4%. This has allowed us to invest back in the business, which has resulted in first quarter capital expenditures of $92.9 million.

Todd: Our investments include technology to grow the top line and expand margins, automation to improve efficiencies in our plants, and additional processing capacity we're needed.

Speaker Change: We expect capital expenditures to finish between 3.5% and 4% of revenue for the year.

Mike Hansen: Todd provided our annual financial guidance. Related to the guidance, please note the following. This 25 net interest expense is expected to be approximately $101 million, compared to 95 million dollars in fiscal 24. Predominantly as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks. Our fiscal 25 effective tax rate is expected to be 20.4%, the same compared to our fiscal 24. And guidance does not include any future share buybacks or significant economic disruptions or downturns.

Speaker Change: To have provided our annual financial guidance related to the guidance, please note the follow.

Speaker Change: This 25 net interest expense is expected to be approximately $101 million, compared to $95 million in fiscal 24. Predominantly as a result of a higher variable rate debt used to complete, a portion of the previously mentioned share of IVEX.

Jared Mattingly: Our fiscal 2025 effective tax rate is expected to be 20.4%, the same compared to our fiscal 2024, and guidance does not include any future share buybacks, or significant economic disruptions, or downturns. With that, I'll turn it back to Todd for some closing remarks.

Our fiscal 2025 effective tax rate is expected to be 20.4%, the same compared to our fiscal 2024, and guidance does not include any future share buybacks, or significant economic disruptions, or downturns. With that, I'll turn it back to Todd for some closing remarks.

Speaker Change: Our fiscal 25 effective tax rate is expected to be 20.4% to the same compared to our fiscal 24. And guidance does not include any future share by-back or significant economic disruptions or downturns.

Todd Schneider: With that, I'll turn it back to Todd for some closing remarks. Thank you, Mike. Before we conclude, I'd like to take a moment to thank our employee partners for their continued efforts on behalf of Cintas and our customers in the first quarter. As I've said before, our culture is our greatest competitive advantage. Our partners fuel our success, and we believe deeply in the importance of each employee partner having ownership in the company to share collectively in that success. As Sintas shares reach record highs in the spring, our Board of Directors approved a 4-for-1 split of our common stock, which went into effect before the market opened on September 12th.

Speaker Change: With that, I'll turn it back to Todd for some closing remarks.

Todd Schneider: Thank you, Mike. Before we conclude, I'd like to take a moment to thank our employee partners for their continued efforts on behalf of Cintas and our customers in the first quarter. As I've said before, our culture is our greatest competitive advantage. Our partners fuel our success, and we believe deeply in the importance of each employee partner having ownership in the company to share collectively in that success. As Cintas shares reach record highs in the spring, our Board of Directors approved a 4-for-1 split of our common stock, which went into effect before the market opened on 12 September 2024. We are proud to enhance the accessibility of Cintas shares for all of our investors, especially for our employee partners, so that they can continue to share in the future growth of Cintas as we look ahead to the rest of fiscal 2025.

Todd: Thank you, Mike. Before we conclude, I'd like to take a moment to thank our employee partners for their continued efforts on behalf of St. Os and our customers in the first quarter.

Todd: As I've said before, our culture is our greatest competitive advantage.

Todd: Our partners fuel our success and we believe deeply in the importance of each employee partner having ownership in the company to share collectively in that success.

Speaker Change: As Cynthia shares reach record highs in the spring, our Board of Directors approved a 4-4-1 split of our common stock, which went into effect before the market opened on September 12.

Todd Schneider: We're proud to enhance the accessibility of Cintas to shares for all of our investors, especially for our employee partners, so they can continue to share in the future growth of Cintas. As we look ahead to the rest of physical 25, our outlook reflects our continued confidence in our strategy and value proposition of helping our customers achieve their image, safety, cleanliness, and compliance needs.

Speaker Change: We're proud to enhance the accessibility of St. Tossie shares for all of our investors, especially for our employee partners, to take in the continued share in the future growth of St. Toss.

Todd Schneider: Our outlook reflects our continued confidence in our strategy and value proposition of helping our customers achieve their image, safety, cleanliness, and compliance needs. We remain focused on delivering outstanding customer experiences and making the necessary investments in the business to sustain our growth for the remainder of fiscal 2025 and beyond. I'll now turn the call back over to Jared.

Our outlook reflects our continued confidence in our strategy and value proposition of helping our customers achieve their image, safety, cleanliness, and compliance needs. We remain focused on delivering outstanding customer experiences and making the necessary investments in the business to sustain our growth for the remainder of fiscal 2025 and beyond. I'll now turn the call back over to Jared.

Speaker Change: As we look ahead to the rest of fiscal 25, our outlook reflects our continued confidence and our strategy and value proposition of helping our customers achieve their image, safety, crimeliness, and compliance needs.

Todd Schneider: We remain focused on delivering outstanding customer experiences and making the necessary investments in the business to sustain our growth for the remainder of physical 25 and beyond.

Speaker Change: We remain focused on delivering outstanding customer experiences to make them the necessary investments in the business to sustain our growth for the remainder of fiscal 25 and beyond.

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

Operator: That concludes our prepared remarks. We are now happy to answer questions from the analysts. Please ask us one question, and a single follow-up is needed.

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

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

Speaker Change: I'm now trying to call back over to Jared.

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

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad now. Can you 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.

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. Our first question comes from George Tong from Goldman Sachs. Please go ahead.

Speaker Change: If you would like to ask a question, please press star 1 on your telvo keypad now. To be prepared to ask your question when prompted, you also be allowed to ask one follow-up question.

Speaker Change: Once again, if you would like to ask a question, please press star 1 on your phone now.

George Tong: And our first question comes from George Tong from Goldman Sachs. Please go ahead, George. Hi, thanks. Good morning.

Speaker Change: And I first question come from George Tong from Goldman Sachs. Please go ahead George

Todd Schneider: George.

Jared Mattingly: Hi, thanks. Good morning.

George Tong: Hi, thanks. Good morning. Can you talk a little bit about the overall selling environment and whether you're seeing any changes in customer purchasing behaviors in response to the overall macro environment and evolving macro uncertainty?

Todd Schneider: Can you talk a little bit about the overall selling environment and whether you're seeing any changes in customer purchasing behaviors in response to the overall macro environment and evolving macro uncertainty? Good morning, George. Thanks for the question. We have not seen much change in our customer behavior. It's just 60 days ago that we reported our full physical year 24 earnings, but we haven't seen much change. We still see nice demand from our customers. We're helping them with their image, their safety, their cleanliness, and their compliance needs. And that frees them up to focus on what's most important for them: taking care of their guests, their people, their patients, whatever their constituents are.

Todd Schneider: Can you talk a little bit about?

George Tong: Hi, thanks for the morning. Can you talk a little bit about the overall selling environment and whether you're seeing any changes in customer purchasing behaviors in response to the overall macro environment and evolving macro uncertainty?

Jared Mattingly: The overall selling environment and whether you're seeing any changes in customer purchasing behaviors in response to the overall macro environment and evolving macro uncertainty?

Todd Schneider: Good morning, George. Thanks for the question. You know, we have not seen much change in the customer behavior. You know, it's just 60 days ago that we reported our full fiscal year 2024 earnings, but we haven't seen much change. We still see nice demand from our customers, and we're helping them with their image, their safety, their cleanliness, and their compliance needs. That frees them up to focus on what's most important for them, taking care of their guests, their people, their patients, and whatever their constituents are. Not much change, I would say, in sales cycle or in the demand of the customer.

Speaker Change: Good morning George. Thanks for the question.

Speaker Change: You know, we have not seen much change in our in the customer behavior, you know, it's just 60 days ago that we reported our full physical year 24 earnings. But we haven't seen much change. We still see nice demand from our customers.

George Tong: So not much change, I would say, in sales cycle or in the demand of the customer. Got it. That's the tumble.

Speaker Change: whatever their constituents are. So, not much change, I would say, in a cell cycle or in the demand of the customer.

Operator: Got it.

George Tong: Got it. That's helpful. You continue to highlight healthcare, hospitality, education, and government as key focus verticals for the company. Can you talk a little bit more about traction you're seeing in those verticals and how growth and performance there compared versus the broader company?

Jared Mattingly: That's helpful. You continue to highlight healthcare, hospitality, education, and government as key focus verticals for the company. Can you talk a little bit more about traction you're seeing in those verticals and how growth and performance there compared versus the broader company?

Todd Schneider: And you continue to highlight healthcare, hospitality, education, and government as key focus verticals for the company. Can you talk a little bit more about traction you're seeing in those verticals and how growth and performance there compare as versus the broader company? Yeah, certainly. So those, we believe we've chosen those verticals very well. We've invested in them. We run them not like just a sales vertical, but we look at them as how do we take care of those customers holistically?

Speaker Change: Got it. That's the tough full. And you continue to highlight health care, hospitality, education and government as key focus verticals for the company. Can you talk a little bit more about traction you're seeing in those verticals and how broken performance there, compared versus the broader company?

Todd Schneider: Yeah, certainly we believe we've chosen those verticals very well. We've invested in them, we run them. Not like just a sales vertical, but we look at them as, how do we take care of those customers holistically? And I thought I would just give an example of that. But all this starts with our culture. We have a spirit of positive discontent, is what we call it at Cintas, which is meaning we're constantly focused on improving and innovating. And we also believe that the answers are not at our desk, meaning we believe the answer is out with our customers and our employee partners. So we travel and we talk to our customers about where we can help them. And I have two examples where we're helping customers in the healthcare area that came exactly from those conversations.

Speaker Change: Yeah, certainly. So those, we believe we've chosen those verticals very well. We've invested in them. We run them not like just the sales vertical, but we look at them as how do we take care of those customers holistically?

Todd Schneider: And I thought I would just give an example of that, but all this starts with our culture. You know, we have a spirit of positive discontent. It's what we call it. It's in to us, which is meaning we're meaning we're constantly focused on improving and innovating. And we also believe that the answers are not at our desk, meaning we believe the answer is out with our customers and our employee partners. So we travel, and we get, we talk to our customers about where we can help them.

Speaker Change: And I thought I would just give an example of that, but all this starts with our culture. We have a spirit of positive discontent, is what we call it, it's syntax, which is meanings we're meaning, we're constantly focused on improving and innovating.

Speaker Change: And we also believe that the answers are not at our desk, meaning we believe the answers out with our customers and our employee partners. So we travel and we get, we talk to our customers about.

Todd Schneider: And I have two examples where we're helping customers in the healthcare area that came exactly from those conversations. The first was, and we have spoken a little bit about this with garment dispensing. You know, we're continuing to have a very good success with this technology. And our healthcare customers, what they pulled us was they had a problem managing their inventory. In this case, scrubs, as they didn't have accountability with the scrubs. So when you don't have accountability, there's hoarding of garments that occurs, which leads to lack of availability, meaning the first person to get there takes garments, and then those who show up later don't get the garments.

Speaker Change: Where we can help them. And I'm two examples where we're helping customers in the healthcare area that came exactly from those conversations.

Todd Schneider: The first was, and we've spoken a little bit about this with garment dispensing. You know, we're continuing to have very good success with this technology. Our healthcare customers, what they told us was they had a problem managing their inventory, in this case of scrubs, as they didn't have accountability with the scrubs. So when you don't have accountability, there's hoarding of garments that occurs, which leads to lack of availability, meaning the first person who gets there takes garments, and then those who show up later don't get the garments. As a result, the healthcare customers, for the most part, invested in what I'll call substandard product because they wanted. Well, when they didn't have control over the inventory, they went as cheap as possible. This technology addresses those issues.

The first was, and we've spoken a little bit about this with garment dispensing. You know, we're continuing to have very good success with this technology. Our healthcare customers, what they told us was they had a problem managing their inventory, in this case of scrubs, as they didn't have accountability with the scrubs. So when you don't have accountability, there's hoarding of garments that occurs, which leads to lack of availability, meaning the first person who gets there takes garments, and then those who show up later don't get the garments. As a result, the healthcare customers, for the most part, invested in what I'll call substandard product because they wanted. Well, when they didn't have control over the inventory, they went as cheap as possible. This technology addresses those issues.

Speaker Change: The first was and we spoke of a little bit about this with garment dispensing.

Speaker Change: We're continuing to have a very good success with this technology and our health third customers with a total of them was they had a problem managing their inventory.

Speaker Change: In this case, subscribe, as they didn't have accountability with the scrubs.

Speaker Change: So, when you don't have accountability, there's hoarding of garments that occurs which leads to lack of availability, meaning the first person to get there takes garments and then those who show up later don't get the garments.

Todd Schneider: And as a result, the healthcare customers, for the most part, invested in what I'll call substandard product because they wanted, well, when they didn't have control over the inventory, they went as cheap as possible. So, in this technology, it addresses those issues. And today we're being used in many clinical areas: you know, labor and delivery, emergency room, operating rooms, radiology, cath labs, ICU, or some examples of where we're doing that. We found the exact same opportunity, meaning when we spoke to our customers, that we ask them, what else can we help you with? And they said, "We are having a heck of a problem with privacy curtains."

Speaker Change: And as a result, the healthcare customers, for the most part, invested in what all call substandard product because they wanted, well, when they didn't have control over the inventory, they went as cheap as possible. So in this technology, addresses those issues.

Todd Schneider: Today it's being used in many clinical areas, labor and delivery, emergency room, operating rooms, radiology, cath labs, ICU, are some examples of where we're doing that. We found the exact same opportunity, meaning when we spoke to our customers, we asked them, what else can we help you with? And they said, we are having a heck of a problem with privacy curtains. And what they told us is it was one of their top compliance issues. And those privacy curtains, when you think about those, they're in patient rooms, recovery areas, emergency rooms, and acute care. But they're also in non-acute throughout, in surgery centers, and medical centers. And they have to be cleaned. They have to be cleaned on a frequent basis. And so it's a real compliance challenge for our customers. So we listened to them and we didn't just take over the problem.

Today it's being used in many clinical areas, labor and delivery, emergency room, operating rooms, radiology, cath labs, ICU, are some examples of where we're doing that. We found the exact same opportunity, meaning when we spoke to our customers, we asked them, what else can we help you with? And they said, we are having a heck of a problem with privacy curtains. And what they told us is it was one of their top compliance issues. And those privacy curtains, when you think about those, they're in patient rooms, recovery areas, emergency rooms, and acute care. But they're also in non-acute throughout, in surgery centers, and medical centers. And they have to be cleaned. They have to be cleaned on a frequent basis. And so it's a real compliance challenge for our customers. So we listened to them and we didn't just take over the problem.

Speaker Change: And today we're being used in many clinical areas, you know, labor and delivery emergency room, operating rooms.

Speaker Change: radiology, cath labs, ICU, or some examples.

Speaker Change: We're doing that. We found the exact same opportunity, meaning when we spoke to our customers, we asked them, what else can we help you with? And they said, we are having a heck of a problem with privacy curtains.

Todd Schneider: and when they told us it was one of our top compliance issues and those privacy curtains when you think about those that are in patient rooms, recovery areas, emergency rooms, and acute care, but they're also in non-accused throughout in surgery centers and medical centers, and they have to be cleaned, they have to be cleaned on a frequent basis, and so it's a real compliance challenge for our customers. So we listened to them, and we didn't just take over the problem; we studied it and came up with some great products and technology. Those products have some patents on them as well, and the technology allows us to track compliance.

Speaker Change: um

Speaker Change: And when they told us it was one of their top compliance issues and those privacy curtains when you think about those there in patient rooms, recovery areas, emergency rooms, and acute care, but they're also in not acute throughout in surgery centers and medical centers.

Speaker Change: And they have to be clean, they have to be clean on a frequent basis. And so it's a real compliance challenge for our customers.

Speaker Change: So we listened to them. And we didn't just take over the problem. We studied it. And came up with some great products and technology. Those products have some patents on them as well. And the technology allows us to track compliance.

Todd Schneider: We studied it and came up with some great products and technology. Those products have some patents on them as well. And the technology allows us to track compliance. So it makes for, in total, it makes for a safer environment, a more compliant environment. And it frees up the environmental services at those organizations who are cleaning patient rooms and other areas where clinicians provide care. So a safer, cleaner, more compliant, and more efficient environment. So I thought that might help just to give a little bit of color around what we're doing in that particular vertical. But it really starts with our culture and we listen to our customers, where can we help? And then we dive in and we provide those solutions.

We studied it and came up with some great products and technology. Those products have some patents on them as well. And the technology allows us to track compliance. So it makes for, in total, it makes for a safer environment, a more compliant environment. And it frees up the environmental services at those organizations who are cleaning patient rooms and other areas where clinicians provide care. So a safer, cleaner, more compliant, and more efficient environment. So I thought that might help just to give a little bit of color around what we're doing in that particular vertical. But it really starts with our culture and we listen to our customers, where can we help? And then we dive in and we provide those solutions.

Todd Schneider: So it makes for, in total, it makes for a safer environment, a more compliant environment, and it frees up the environmental services that those organizations who are cleaning patient rooms and other areas where clinicians provide care. So a safer, cleaner, more compliant, and more efficient environment.

Speaker Change: So it makes for a safer environment, a more compliant environment.

Speaker Change: And it frees up the Environmental Services at those organizations.

Speaker Change: who are cleaning patient rooms and other areas where clinicians provide care. So a safer, cleaner, more compliant and more efficient environment. So I thought that might help just to give a little bit of color around what we're doing in that.

George Tong: So I thought that might help just to give a little bit of color around what we're doing in that particular vertical, but it really starts with our culture, and we listen to our customers. Where can we help? And then we dive in, and we provide the solution. Very helpful. Thank you.

Speaker Change: particular vertical, but it really starts with our culture and we listen to our customers, we're going to help and then we dive in and we provide us solutions.

Jared Mattingly: Very helpful. Thank you.

George Tong: Very helpful. Thank you.

Todd Schneider: Thank you.

Speaker Change: Very helpful. Thank you.

Luke McFadden: And our next question comes from Tim Mulroney from William Blair. Please go ahead, Tim.

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

Speaker Change: Thank you.

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

Luke McFadden: Hi, this is Luke McFadden on for Tim Mulroney. Thanks for taking our questions today. I might have missed it in your prepared remarks, but could you provide the breakdown in new sales between market share winds and conversion of no programmers for the quarter? Yes, good morning. We did not cite it specifically, but no change to that trend. On average, we're historically about two out of three of our new customers coming from what we call the no program market. The no program market with meaning that they're not with a traditional competitor. Now, that doesn't mean that they're not using products and services, meaning we might go in and they need help with; they might own a mat.

Jared Mattingly: Hi, this is Luke McFadden for Tim Mulrooney. Thanks for taking our questions today.

Luke McFadden: Hi, this is Luke McFadden for Tim Mulrooney. Thanks for taking our questions today. I might have missed it in your prepared remarks, but could you provide the breakdown in new sales between market share wins and conversion of No Program market for the quarter?

Speaker Change: Hi, this is Lippon Fanon for tomorrow, thanks for taking our questions today. I might have missed it in your prepared remarks, but could you provide the breakdown in new sales between market share wins and conversion of no programmers for the quarter?

Todd Schneider: I might have missed it in your.

Jared Mattingly: Prepared remarks, but could you provide the breakdown in new sales between market share wins and conversion of No Program market for the quarter?

Todd Schneider: Yes. Good morning. We did not cite it specifically, but no change to that trend. On average, we're historically about two out of three of our new customers come from what we call the No Program market. The No Program market meaning that they're not with a traditional competitor. Now that doesn't mean that they're not using products and services, meaning we might go in and they need help with. They might own a mat, they might have soaps, they might buy uniforms, but they're not with a traditional competitor. So they may be spending money on these products, those products, but we redirect them to ourselves to help them do it better, faster, smarter, cheaper, in many cases.

Speaker Change: Yes, good morning. We did not set it specifically, but no change to that trend.

Speaker Change: You're on average, we're historically about two out of three of our new customers comes from what we call the new program market.

Speaker Change: The No Program Market was meeting that they are not with a traditional competitor.

Speaker Change: BAM!

Speaker Change: Now, that doesn't mean that they're not using products and services, meaning we might go in and they need help with their own amount. They might have soaps, they might buy uniforms.

Todd Schneider: They might have soaps. They might buy uniforms, but they're not with a traditional competitor. So they may be spending money on these products and those products, but that we redirect them to ourselves to help them do a better, faster, smarter, cheaper, in many cases.

Speaker Change: But they're not with a traditional competitor. So they may be spending money on these products and certain products, but that we redirect them to ourselves to help them do a better, faster, smarter cheaper in many cases.

Todd Schneider: Understood, really helpful. And then kind of just sticking on that topic with my follow up, you know, it sounds like that no program or penetration continues to be an area of strength in the business. Let's hope, and you could offer maybe some insights into the typical profile of these recent no program or conversions, or the majority of these recent wins of a particular business size or concentrated in any specific market, or is it relatively broad based? Well, that's the that's the beauty of our business. We service below to over a million customers, and there's 16 million businesses in North America, US and Canada.

Jared Mattingly: Understood. Really helpful. Then kind of just sticking on that topic with my follow up, you know, it sounds like that no program penetration continues to be an area of strength in the business. Was hoping you could offer maybe some insights into the typical profile of these recent no program conversions. Are the majority of these recent wins of a particular business size or concentrated in any specific end market, or is it relatively broad-based?

Luke McFadden: Understood. Really helpful. Then kind of just sticking on that topic with my follow up, you know, it sounds like that no program penetration continues to be an area of strength in the business. Was hoping you could offer maybe some insights into the typical profile of these recent no program conversions. Are the majority of these recent wins of a particular business size or concentrated in any specific end market, or is it relatively broad-based?

Speaker Change: Understood really helpful and then kind of just sticking on on that topic with my follow up.

Speaker Change: You know, it sounds like that no program or penetration continues to be an area of strength in the business.

Speaker Change: Was hoping you could offer maybe some insights into the typical profile of these recent no-programmer conversions or the majority of these recent wins of a particular business size or concentrated in any specific and market or is a relatively broad day.

Todd Schneider: Well, that's the beauty of our business. We service a little over a million customers, and there are 16 million businesses in North America, US, and Canada. So the wins come from all industries, all shapes and sizes of businesses. That's why we're so bullish on the future, because we see that opportunity, that white space out there as a significant opportunity to help customers. We're still in obviously the very much early innings there.

Speaker Change: Well, that's the beauty of our business. We serve as a little over a million customers, and there's 16 million businesses in North America, U.S. and Canada, and so the winds come from all industries, all shapesizes of businesses.

Todd Schneider: And so the wins come from all industries, all shape sizes of businesses. And that's why we're so bullish on the future because we see that opportunity, that white space out there, as a significant opportunity to help customers, and we're still in, obviously, the very much early ending.

Speaker Change: And that's why we're so bullish on the future, because we see that opportunity that white space out there, as a significant opportunity to help customers and we're still, and obviously they're very much early in the morning.

Jared Mattingly: Understood. Thanks so much.

Luke McFadden: Understood. Thanks so much.

Todd Schneider: Thank you.

Speaker Change: Thank you.

Operator: Our next question comes from Andrew Steinerman from J.P. Morgan. Please go ahead, Andrew.

Andrew Steinerman: Andrew Steinerman, J.P. Morgan. Please go ahead, Andrew. Hi, this is Andrew.

Speaker Change: And our next question comes from Andrew Steinerman from JP Morgan. Please go ahead and answer.

Jared Mattingly: Hi, this is Andrew.

Andrew Steinerman: Hi, this is Andrew. Mike, could you talk about merchandise amortization in the quarter, year over year, how much is merchandise amortization a headwind or tailwind? And what have you assumed for the fiscal year in terms of trends in merchandise amortization?

Todd Schneider: Mike, could you talk about merchandise amortization in the quarter, year over year, how much is merchandise amortization a headwind or tailwind?

Speaker Change: Hi, this is Andrew Kuda. I could just talk about Merchandise Abidization and the quarter year of a year, how much is Merchandise Abidization ahead wind or tail wind and what have you assumed for the fiscal year in terms of trends in Merchandise Abidization?

Andrew Steinerman: Could you understand what have you assumed for the fiscal year in terms of trends in merchandise amazement? Good morning, Andrew. The material cost has been an area of strength for us in, and I'll say the rental business, but also the others, but I'll stick to the rental business for a second. Material cost has been trending nicely, and we work hard at that material cost. Within there, you can think about our global supply chain and finding better ways to source, better cost of product, and so they've done a really great job there despite the really good business growth volume growth that we've had.

Jared Mattingly: And what have you assumed for the fiscal year in terms of trends in merchandise amortization? Good morning, Andrew. Material cost has been an area of strength for us in, I'll say, the rental business, but also the others. But I'll stick to the rental business for a second. Material cost has been trending nicely, and you know, we work hard at that material cost. So within there, you can think about our global supply chain and finding better ways to source better cost of product. And so they've done a really great job there, despite the really good business growth, volume growth that we've had. And the other thing that we really work hard at, as you know, Andrew, is in our stock rooms and the sharing of garments.

Mike Hansen: Good morning, Andrew. Material cost has been an area of strength for us in, I'll say, the rental business, but also the others. But I'll stick to the rental business for a second. Material cost has been trending nicely, and you know, we work hard at that material cost. So within there, you can think about our global supply chain and finding better ways to source better cost of product. And so they've done a really great job there, despite the really good business growth, volume growth that we've had. And the other thing that we really work hard at, as you know, Andrew, is in our stock rooms and the sharing of garments.

Speaker Change: Good morning Andrew. The material cost has been an area of strength for us.

Speaker Change: In, and I'll say the rental business, but also the others. But I'll stick to the rental business for a second. Material cost has been, has been trending nicely.

Speaker Change: You know, we work hard at that material cost, so within there you can think about our global supply chain.

Speaker Change: and finding better ways to source better tests.

Speaker Change: cost a product. And so they've done a really great job there, despite the really good business growth volume growth that we've had. And the other thing that we really work hard at is, you know, Andrew is...

Mike Hansen: Any other thing that we really work hard at, as you know, Andrew, is in our stock rooms and the sharing of garments. And so the more we share in terms of our garments, the more pull percentage we get out of the stock rooms, and that means we are injecting fewer garments into service. And so the combination of those things have created some nice tailwind, and you see that showing up in our gross margin. We would expect that will continue through the fiscal year. Thanks, Mike.

Jared Mattingly: And so we, the more we share in terms of our garments, the more pull percentage we get out of the stock rooms. And that means we are injecting fewer garments into service. And so the combination of those things have created some nice tailwind, and you see that showing up in our gross margin. We would expect that will continue through the fiscal year.

And so we, the more we share in terms of our garments, the more pull percentage we get out of the stock rooms. And that means we are injecting fewer garments into service. And so the combination of those things have created some nice tailwind, and you see that showing up in our gross margin. We would expect that will continue through the fiscal year.

Andrew: is in our stock rooms and the sharing of garments and so we, the more we share in terms of our garments, the more

Andrew: We get out of the stock rooms and that means we are injecting fewer garments into service. And so the combination of those things have created some nice tailwind and you see that showing up in our gross margin. We would expect that will continue through the fiscal year.

Todd Schneider: Thanks, Mike.

Andrew Steinerman: Thanks, Mike.

Speaker Change: Thanks, bye.

Jasper Bibb: And our next question comes from Jasper Bibb for security. Please go ahead, Jasper. Hey, one of you guys wanted to ask about some more trucks and the Google partnership. I think you announced that a little over a year ago now. Did the cloud migration a few quarters ago, just kind of hoping you could update us on how that's progressed and where you might be seeing some associated margin or efficiency benefits at this stage. Jasper, thank you for the question. Smart truck is, as a reminder, is proprietary technology that we work to develop. It is, it's been very helpful for our business, but more specifically it's helpful for our customers because you know, we're able to, instead of spending time driving, we're able to spend more time with our customers.

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

Speaker Change: And an extra question comes from Jasper Bibs through his securities. See you so head Jasper.

Jared Mattingly: Hey, good morning, guys. Wanted to ask about SmartTruck and the Google partnership. I think you announced that a little over a year ago now, did the cloud migration a few quarters ago. Just kind of hoping you could update us on how that's progressed and where you might be seeing some associated marginal.

Jasper Bibb: Hey, good morning, guys. Wanted to ask about SmartTruck and the Google partnership. I think you announced that a little over a year ago now, did the cloud migration a few quarters ago. Just kind of hoping you could update us on how that's progressed and where you might be seeing some associated marginal efficiency benefits of the SmartTruck.

Speaker Change: Hey, good morning, guys. One of the ask about some more drugs in the Google partnership. I think you announced that a little over a year ago now, did the cloud migration a few quarters ago, just kind of hoping you could update us on how that's progressed and where you might be seeing some associated marginal efficiency benefits of this stage.

Todd Schneider: Efficiency benefits of the SmartTruck. Yeah, Jasper, thank you for the question. SmartTruck is, as a reminder, proprietary technology that we work to develop. It's been very helpful for our business, but more specifically, it's helpful for our customers because, you know, we're able to, instead of spending time driving, we're able to spend more time with our customers. So, when we're there with our customers, it gives us the opportunity with eyes and ears and minds in those businesses to solve problems for them, whether it's something else in their business. Like I mentioned in healthcare, with garment dispensing and scrubs and privacy curtains, so more time with the customer is really valuable for us, separate from the fact that we like to say around here we don't make any money when the wheels are moving, we only make money.

Todd Schneider: Yeah, Jasper, thank you for the question. SmartTruck is, as a reminder, proprietary technology that we work to develop. It's been very helpful for our business, but more specifically, it's helpful for our customers because, you know, we're able to, instead of spending time driving, we're able to spend more time with our customers. So, when we're there with our customers, it gives us the opportunity with eyes and ears and minds in those businesses to solve problems for them, whether it's something else in their business. Like I mentioned in healthcare, with garment dispensing and scrubs and privacy curtains, so more time with the customer is really valuable for us, separate from the fact that we like to say around here we don't make any money when the wheels are moving, we only make money.

Speaker Change: Jeff, thank you for the question. SmartTruck is as a reminder as a proprietary technology that we work to develop. It is

Speaker Change: It's been very helpful for our business, but more specifically, it's helpful for our customers.

Speaker Change: We're able to, instead of spending time driving, we're able to spend more time with our customers. So in one word, they're with our customers, it gives us the opportunity with eyes and ears and minds in those business.

Todd Schneider: So, and when we're there with our customers, it gives us opportunity with eyes and ears and minds in those businesses to solve problems for them, whether it's something else in their business. Like I mentioned, in healthcare, with garment dispensing and scrubs and privacy curtains. So, more time when the customer is really valuable for us, separate from the fact that we like to share around here. We don't make any money when the wheels are moving; we only make money, we only generate revenue when the wheels stop on our trucks. So, that's been valuable. Our relationship with Google has been very advantageous.

Speaker Change: to solve problems for them.

Speaker Change: Whether it's something else in their business, like I mentioned with...

Speaker Change: in healthcare with garment dispensing and scrubs and privacy curtains.

Speaker Change: So, more time than the customer is really valuable for us.

Speaker Change: Separate when the fact that we like to share around here, we don't make any money when the wheels are moving. We only make money, we only generate revenue when the wheels stop on our trucks. So that's been valuable. Our relationship with Google has been very advantageous.

Todd Schneider: We only generate revenue when the wheels stop on our trucks. So that's been valuable. Our relationship with Google has been very advantageous. And as important as our relationship with Google is Google's relationship with SAP. So having that all combined gives us insight into our business, helps us to leverage our infrastructure and leverage our employee partners to put them in the right spot, the right place, the right time. So we believe that that is going to be beneficial into the future and we really value those relationships.

We only generate revenue when the wheels stop on our trucks. So that's been valuable. Our relationship with Google has been very advantageous. And as important as our relationship with Google is Google's relationship with SAP. So having that all combined gives us insight into our business, helps us to leverage our infrastructure and leverage our employee partners to put them in the right spot, the right place, the right time. So we believe that that is going to be beneficial into the future and we really value those relationships.

Todd Schneider: And as important as our relationship with Google is, Google's relationship with SAP. So, having that all combined gives us insight into our business, helps us to leverage our infrastructure and leverage our employee partners to put them in the right spot, the right place, the right time.

Speaker Change: And as important as our relationship with Google is Google's relationship with SAP. So...

Speaker Change: of having that all combined.

Speaker Change: Give us insight into our business, help us to...

Speaker Change: Our infrastructure and our employee partners to put them in the right spot, the right place, the right time. So we believe that that is going to be beneficial into the future and we really value those relationships.

Jim Reit: So, we believe that that is going to be beneficial to the future, and we really value those relationships. Jim Reit. Thanks. And then maybe following up on that last point, it sounded like pretty good growth in fire in the quarter.

Jared Mattingly: Thanks. And then maybe following up on that last point, sounded like pretty good growth and Fire in the quarter. Any color on where the underlying operating margin for that business was in Q1? And would also be great to hear how some of the initiatives you're doing there, like the SAP implementation and some of the G&A investments you called out in the past, where those stand today.

Jasper Bibb: Thanks. And then maybe following up on that last point, sounded like pretty good growth and Fire in the quarter. Any color on where the underlying operating margin for that business was in Q1? And would also be great to hear how some of the initiatives you're doing there, like the SAP implementation and some of the G&A investments you called out in the past, where those stand today.

Speaker Change: i

Speaker Change: Thanks. And then maybe following up on that last point, it sounded like pretty good growth in fire in the quarter. So, any color onward on the wrong operating margin for that business was in the first quarter, and would also be great to hear how some of the initiatives you're doing there like, that's a key implementation in some of the DNA investments you've called out in the past, where we're going to stand for them.

Mike Hansen: Any color onward underwiring operating margin for that business was in the first quarter and would also be great to hear how some of the initiatives you're doing there, like the SAP implementation and some of the GNA investments you've called out in the past, are where we're going to stand for that. Yes, good question. So we love the fire business. It's growing really nicely. The organic opportunity is amazing. The M&A opportunity is really attractive for us. And yeah, we're investing in that business. We're investing in our SAP system. And we're excited about that, excited about having over-routely systems on one system.

Todd Schneider: Yes, good question. So we love the fire business. It's growing really nicely. The organic opportunity is amazing. The M&A opportunity is really attractive for us. And yeah, we're investing in that business. We're investing in our SAP system, and we're excited about that, excited about having all of our route-based systems on one system. We think that'll really give us some insights into our customers that we don't have today. But the opportunity out there for fire is incredible. Just because it's every business, the only business we're in, that every business legally has to have it, the services around it, whether it's sprinklers, alarms, in certain cases, fire extinguishers, emergency lights. So we think the runway is really attractive in that business. We like the margin profile, we know how to run the business, we know the mix of business that's attractive.

Speaker Change: Yes, good question. So we love the virus. It is growing really nicely. The organic opportunity is amazing. The M&A opportunity is really attractive for us.

Speaker Change: And, yeah, we're investing in that business. We're investing in our SAP system, and we're excited about that. I'm excited about having, overall, our SAP systems on one system. We think that'll really give us...

Mike Hansen: We think that'll really give us some insights into our customers that we don't have today. But the opportunity out there for fire is it's incredible just because you know it's every business. The only business we're in that every business legally have to have it. The services around it, whether it's sprinklers, alarms, in certain cases, fire extinguishers, emergency lights. So we think the runway is really attractive in that business. We like the margin profile. We know how to run the business. We know the mix of business. That's attractive. As a result, not every M&A opportunity that comes down the pike is really attractive for us.

Speaker Change: Some insights into our customers that we don't have today. But the opportunity out there for fire is incredible. Just because it's every business. The only business we're in, that every business we really have to have it.

Speaker Change: The service is around whether it's...

Speaker Change: sprinklers, alarms, in certain cases, fire extinguishers, emergency lights.

Speaker Change: So we think the runway is really attractive in that business.

Speaker Change: We like the margin profile. We know how to run the business. We know the mix of business that's attractive. And as a result, not every M&A opportunity that comes down the pike is really attractive for us, but we know how to do it, and we will be aggressive as appropriate.

Todd Schneider: As a result, not every MA opportunity that comes down the pike is really attractive for us. We know how to do it and we will be aggressive as appropriate.

As a result, not every MA opportunity that comes down the pike is really attractive for us. We know how to do it and we will be aggressive as appropriate.

Mike Hansen: But we know how to do it, and we will be aggressive as appropriate. Maybe I'll offer two things with that as well. You heard me saying the prepared remarks. This was the second quarter in a row that grossed margin in the fire business was 50%. That is a reflection of a lot of the things that Todd talked about in terms of really going well and running the business well. We are in the midst of that SAP implementation that we've talked about. And I think back in July, I mentioned that there would be a little bit of pressure on fire margins in fiscal 25 because of that implementation.

Jared Mattingly: Maybe I'll offer two things with that as well. You heard me say in the prepared remarks, this was the second quarter in a row that gross margin in the fire business was 50%. And so that is a reflection of a lot of the things that Todd talked about in terms of really going well and running the business. Well, we are in the midst of that SAP implementation that we've talked about, and I think back in July I mentioned that there would be a little bit of pressure on Fire margins in fiscal 2025 because of that implementation. And so you see a little bit of that coming through Fire SG&A. And if you look at the all other operating margin, we're down a bit from Q4 to Q1.

Mike Hansen: Maybe I'll offer two things with that as well. You heard me say in the prepared remarks, this was the second quarter in a row that gross margin in the fire business was 50%. And so that is a reflection of a lot of the things that Todd talked about in terms of really going well and running the business. Well, we are in the midst of that SAP implementation that we've talked about, and I think back in July I mentioned that there would be a little bit of pressure on Fire margins in fiscal 2025 because of that implementation. And so you see a little bit of that coming through Fire SG&A. And if you look at the all other operating margin, we're down a bit from Q4 to Q1.

Speaker Change: Maybe I'll offer two things with that as well. You heard me say in the prepared remarks. This was the second quarter in a row that gross margin in the fire business was 50%.

Speaker Change: And so that is a reflection of a lot of these things that I talked about in terms of.

Speaker Change: really going well and run in the business well. We are in the midst of that SAP implementation that we've talked about. And I think back in July I mentioned that there would be a little bit of pressure on fire margins.

Speaker Change: in fiscal 25 because of that implementation. And so you see a little bit of that coming through Fire SQA. And if you look at the all other operating margin, we're down a bit from Q4 to Q1. And it's a bit of that reflection of the SAP implementation. As you've seen in our first state and safety and rental businesses, we're down to Q4 to Q4.

Mike Hansen: And so you see a little bit of that coming through FireSGNA, and if you look at the all other operating margin, we're down a bit from Q4 to Q1, and it's a bit of that reflection of the SAP implementation. As you've seen in our first aid in safety and rental businesses, that SAP implementation, it certainly takes some time, but there are some really nice benefits subsequent to getting that system in and running it and learning how to run it. But, as we've talked about, fiscal 25 may show a little bit of pressure in SGNA and fire business; certainly, that is all incorporated into the guide, the overall guide that we've given.

Jared Mattingly: It's a bit of that reflection of the SAP implementation, as you've seen in our first aid and safety and rental businesses, that SAP implementation. It certainly takes some time, but there are some really nice benefits subsequent to getting that system in and running it and learning how to run it. But as we talked about, fiscal '25 or May show a little bit of pressure in SGA in the fire business. Certainly that is all incorporated into the guide, the overall guide that we've given.

It's a bit of that reflection of the SAP implementation, as you've seen in our first aid and safety and rental businesses, that SAP implementation. It certainly takes some time, but there are some really nice benefits subsequent to getting that system in and running it and learning how to run it. But as we talked about, fiscal '25 or May show a little bit of pressure in SGA in the fire business. Certainly that is all incorporated into the guide, the overall guide that we've given.

Speaker Change: that SAP implementation, it certainly takes some time, but there are some really nice benefits.

Speaker Change: Subsequently, to getting that system in and running it and learning how to run it. But as we talked about, this will 25 may show a little bit of pressure in SGNA in the fire of business. Certainly, that is all incorporated into the guide, the overall guide that we've given.

Operator: Great. Thanks for the detail there. Our next question comes from Manav Patnaik from Barclays.

Jasper Bibb: Great. Thanks for the detail there.

Operator: Our next question comes from Manav Patnaik from Barclays. Please go ahead, Manav.

Speaker Change: Right, let's show the detail there.

Manav Patnik: And our next question comes from Manav Patnik from Barclays. Please go ahead, Manav. Hi, good morning.

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

Jared Mattingly: Please go ahead.

Operator: Manav.

Jared Mattingly: Hi, good morning, this is Ronan Kennedy. I'm from Manav. Thank you for taking my question. The strong growth in OI margin expansion, you said it was sourcing supply chain tech operating efficiencies, an element of favorable mix, I think 20 basis points from energy. Can I please confirm whether there's any one-time factors in there or is it the more sustainable drivers and do you see upside to the margin expansion opportunity?

Ronan Kennedy: Hi, good morning, this is Ronan Kennedy. I'm from Manav. Thank you for taking my question. The strong growth in OI margin expansion, you said it was sourcing supply chain tech operating efficiencies, an element of favorable mix, I think 20 basis points from energy. Can I please confirm whether there's any one-time factors in there or is it the more sustainable drivers and do you see upside to the margin expansion opportunity?

Ronin Kennedy: This is Ronin Kennedy from Manav. Thank you for taking my question. The strong growth in all I march and you said it was sourcing supply chain tech, operating efficiencies, and element of favorable mix, I think 25th from energy. Can I please confirm whether there's any one-time factors in there, or is it the more sustainable drivers? And do you see upside to the margin expansion opportunities? Ronin, thanks for the question. No one-timers to call out, you know, as far as where we can go with this. We're focused on extracting out inefficiencies in our business, and there's more to come, so we don't like to put a ceiling on our aspirations there. But we see opportunity in our business to extract out inefficiencies.

Speaker Change: Hi, good morning. This is Ronin Kennedy, I'm from Monop. Thank you for taking my question.

Speaker Change: The strong growth in all I'm Mark Bench and he said it was sourcing supply chain tech operating efficiencies and element of favorable mixing 20 bits

Speaker Change: Can I please confirm whether there is any one-time factors in there or is it the more sustainable drivers? And do you see upside to the margin expansion opportunity?

Todd Schneider: Ronan, thanks for the question. No one-timers to call out. You know, as far as where we can go with this, you know, we're focused on extracting out inefficiencies in our business, and there's more to come. So we don't like to put a ceiling on our aspirations there. But you know, we see opportunity in our business to extract that inefficiencies, and so we will continue to do that. I think from an operating margin standpoint, we've talked about 25% to 35% incrementals, and I think our guide reflects in that range. Got it, thank you.

Speaker Change: Uh, Ronan, thanks for the question. No one timers to call out.

Ronan: As far as where we can go with this, we're focused on extracting out-in efficiencies in our business, and there's more to come, so we don't like to put a-

Ronan: A ceiling on our aspirations there, but we see opportunity in our business to extract that in efficiencies. And so we will continue to do that.

Ronin Kennedy: And so we will continue to do that. I think from an operating march at standpoint, we've talked about 25 to 35 percent incrementals, and I think our guide reflects in that range.

Ronan: I think from an operating margins standpoint, we've talked about 25 to 35 percent incremental and I think our guide reflects in that range.

Ronan Kennedy: Got it, thank you. Then may I please, could I ask for your current assessment of competitive dynamics within the industry and whether recent activity within the industry changes the way we think about capital allocation?

Ronin Kennedy: Thank you, and then may I please, could I ask for your current competitive dynamics within the industry, and whether recent activity within the industry changes the way we look about capital allocation? Ronin, you're speaking of M&A, is that correct, or do you like to clarify? Yes, please. And broader, dynamic and potential implications of potential M&A and your thought process of capital allocation. Great, great. Well, M&A is an important component of our business, has been and will be. You know, we are, it's worked very well for our business, for our customers, our shareholders throughout, and we certainly stay aware of what's going on in the marketplace, and we like our competitive position.

Jared Mattingly: Then may I please, could I ask for your current assessment of competitive dynamics within the industry and whether recent activity within the industry changes the way we think about capital allocation?

Speaker Change: Thank you and then may I please could I have your can I ask for your current competitive dynamics within the industry and whether recent activity within the industry changes the way about capital allocation.

Todd Schneider: Ronan, you're speaking of Manav, is that correct? Or if you'd like to clarify.

Todd Schneider: Ronan, you're speaking of M&A, is that correct? Or if you'd like to clarify.

Speaker Change: You're running your speaking of M&A, is that correct or if you'd like to clarify?

Jared Mattingly: Yes, please. Broader dynamics and, you know, potential implications of potential M&A and your thought process, capital allocation?

Ronan Kennedy: Yes, please. Broader dynamics and, you know, potential implications of potential M&A and your thought process, capital allocation?

Speaker Change: Yes, please.

Speaker Change: And broader, yes, Greek dynamic and potential implications with Tensula Mene and the adoptorosis of the capital allocation.

Todd Schneider: Great, great. Well, M&A is an important component of our business. It has been and will be. You know, we are. It's worked very well for our business, for our customers, our shareholders throughout, and we certainly stay aware of what's going on in the marketplace and we like our competitive position. We think we're in a good spot. We will continue to invest to make sure that we're appropriately positioned to compete in the market place moving forward. So that's where our focus is and that's what we'll continue to do.

Speaker Change: Great. Well, M&A is an important component of our business, has been, and will be, you know, we are, it's worked very well for our business, for our customers, our shareholders throughout.

Speaker Change: And we certainly stay aware of what's going on in the marketplace.

Ronin Kennedy: We think we're in a good spot. We will continue to invest to make sure that we're appropriately positioned to compete in the marketplace moving forward. So that's where our focus is, and that's what we'll continue to do.

Speaker Change: and um

Speaker Change: And we like our competitive position. We think we're in a good spot. We will continue to invest to make sure that we're appropriately positioned to compete in the marketplace moving forward. So that's where we're focusing, and that's what we'll continue to do.

Ronin Kennedy: Thank you; appreciate it.

Jared Mattingly: Thank you. Appreciate it.

Ronan Kennedy: Thank you. Appreciate it.

Speaker Change: Thank you, appreciate it.

Josh Chan: And our next question comes from Josh Chan from UBS. Please go ahead, Josh. Hi, good morning.

Operator: Our next question comes from Josh Chan from UBS.

Operator: Our next question comes from Josh Chan from UBS. Please go ahead, Josh.

Jared Mattingly: Please go ahead.

Speaker Change: And our next question comes from Josh, Chan from UBS, please go, Josh.

Operator: Josh.

Todd Schneider: Hi, good morning.

Josh Chan: Hi, good morning. Todd, Mike, and Jared, thanks for taking my questions. On the rental business, could you confirm that you haven't seen much change in wearer levels? And kind of relatedly, if you were to see wearer levels start to moderate the economy, could you talk about the cintas playbook in that scenario and what can you do to sustain the attractive growth that you're used to seeing? Thank you.

Jared Mattingly: Todd, Mike, and Jared, thanks for taking my questions. On the rental business, could you confirm that you haven't seen much change in wearer levels? And kind of relatedly, if you were to see wearer levels start to moderate the economy, could you talk about the.

Michael Jarrett: I'm Michael Jarrod. Thanks for taking my questions.

Josh Chan: Hi, you're morning, it's on Micah Jarrod. Thanks to the camera questions. On the rental business, could you confirm that you haven't seen much change in wearer levels? And kind of related to the, if you were to see wearer levels start to moderate that the economy, could you talk about the Stintras playbook and that's narrow?

Josh Chan: On the rental business, could you confirm that you haven't seen much change in wearer levels, and kind of relatedly, if you were to see wearer levels start to moderate the economy, could you talk about the St. Pat's playbook and that scenario and what you can do to sustain the attractors' growth that you're used to seeing? Thank you. Josh, thanks for the question. I'll start, Mike. Feel free to chime in. We certainly love when jobs are being added. We haven't seen real change in our wearer levels. But that being said, our business, we demonstrated that we can grow our business in multiples of GDP and multiples of employment growth.

Todd Schneider: Cintas playbook in that scenario and what?

Jared Mattingly: What can you do to sustain the attractive growth that you're used to seeing? Thank you.

Speaker Change: What you can do to sustain the attracted growth that you used to do. Thank you.

Todd Schneider: Josh, thanks for the question. I'll start. Mike, feel free to chime in. You know, we certainly love when jobs are being added. We haven't seen real change in our wear levels, but that being said, our business. We've demonstrated that we can grow our business in multiples of GDP and multiples of employment growth. So we are certainly not reliant on that. That being said, I love when jobs are being added. I think it's good for our economy, and it's good for our customers, and it's good for our business. So. But we're not reliant on that. We've also demonstrated that we can grow our business in virtually every type of economic cycle that we've seen. So we're focused on doing just exactly that, investing for the future to position our employee partners to take incredibly good care of our customers.

Speaker Change: Josh, thanks for the question. I'll start. I think feel free to chime in. You know, we certainly love when jobs are being added. We haven't seen...

Speaker Change: We'll change in our wear levels. But that being said, our business, we demonstrated that we can grow our business in multiples of GDP and multiples of employment growth.

Josh Chan: So we are certainly not reliant on that. With that being said, I love when jobs are being added. I think it's good for our economy, and it's good for our customers, and it's good for our business. But we're not reliant on that. We've also demonstrated that we can grow our business in virtually every type of economic cycle that we've seen.

Speaker Change: So we are certainly not relying on that, with that being said, a love when jobs are being added. I think it's good for...

Speaker Change: for our economy and it's good for our customers and it's good for our business.

Speaker Change: But we're not reliant on that. We've also demonstrated that we can grow our business in

Speaker Change: And virtually every type of economic cycle that we've seen. So we're focused on doing just exactly that.

Todd Schneider: So we're focused on doing just exactly that, investing for the future, to position our employee partners who take incredibly good care of our customers, and we'll continue to invest in that so that we can be positioned to be really successful. Thank you for the color.

Speaker Change: Investing for the future to position our employee partners to take incredibly good care of our customers and we'll continue to invest in that so that we can be positioned to be really successful for the future.

Todd Schneider: We'll continue to invest in that so that we can be positioned to be really successful for the future.

We'll continue to invest in that so that we can be positioned to be really successful for the future.

Operator: Great.

Josh Chan: Great. Thank you for that color, and on your guidance, was the growth in Q1 better than your internal expectation and I guess I'm asking in the context of you raising the four year guidance expected at the low end. Just wanted color on your thoughts around that. Thanks so much for your time.

Todd Schneider: Thank you for that color, and on your guidance, was the growth in Q1 better than your internal expectation?

Todd Schneider: And, on your guidance, was the growth in Q1 better than your internal expectation? I guess I'm asking in the context of you raising the four-year guidance exactly at the low end. Just want to color on your thoughts around that. Thanks so much for your time. Sure. Well, I'll say this: the growth, we saw some nice growth in the first quarter, and it generally lines up with where we like to be. It was at the high end of our guide, but as we now have a quarter in the books, it's a little, we can feel a little bit more confident to bring up the low end of the guide.

Speaker Change: Thank you for the color and on your guidance was the quarter was the growth and you want better than your internal expectation. I guess I'm asking in the context of

Jared Mattingly: And I guess I'm asking in the.

Todd Schneider: Context of you raising the four year.

Jared Mattingly: Guidance expected at the low end. Just wanted color on your thoughts around that. Thanks so much for your time.

Speaker Change: You're raising the four-year guidance, especially at the low end, just want to color on your thoughts around that. Thanks so much for your time.

Todd Schneider: Sure.

Mike Hansen: Sure. Well, I'll say this, the growth we saw, some nice growth in the first quarter, and generally it lines up with where we like to be. It was at the high end of our guide, but as we now have a quarter in the books, it's a little, we can feel a little bit more confident to bring up the low end of the guide. If you think about that guide range, you know it's a same workday growth range of 7.3% to 8.4% for the year. When you think about the implied guide range for the rest of the year, Q2 through Q4, we're not too far different from that 6.9% to 8.3% on a same workday basis. So look, this 8% growth that we saw in the first quarter, organic growth is right where we want to be.

Jared Mattingly: Well, I'll say this, the growth we saw, some nice growth in the first quarter, and generally it lines up with where we like to be. It was at the high end of our guide, but as we now have a quarter in the books, it's a little, we can feel a little bit more confident to bring up the low end of the guide. If you think about that guide range, you know it's a same workday growth range of 7.3% to 8.4% for the year. When you think about the implied guide range for the rest of the year, Q2 through Q4, we're not too far different from that 6.9% to 8.3% on a same workday basis. So look, this 8% growth that we saw in the first quarter, organic growth is right where we want to be.

Speaker Change: Well, I'll say this. The growth, we saw some nice growth in the first quarter. And generally, it lines up with where we like to be. It was at the high end of our guide. But as we now have a quarter in the books.

Speaker Change: It's a little, we can feel a little bit more confident to bring up the low end of the guide. If you think about that guide range,

Todd Schneider: If you think about that guide range, it's a same-work date growth range of 7.3% to 8.4% for the year. And when you think about the implied guide range for the rest of the year, Q2 through 4, we're not too far different from that. 6.9% to 8.3% on a same-work day basis. So look, this 8% growth that we saw in the first quarter, organic growth is right where we want to be. And the guide, I think for the rest of the year, is a reflection that look, we have some confidence in the way we're operating. We haven't seen a lot of change in the operating environment, and the growth still looks good.

Speaker Change: You know, it's a same work date growth range of

Speaker Change: 7.3% to 8.4% for the year

Houston: And when you think about the implied guide range for the rest of the year, Houston.

Houston: 2-3-4

Houston: We're not too far different from that 6.98.3% on the same workday basis, so

Houston: Look, this 8% growth that we saw in the first quarter.

Houston: Organic growth is right where we want to be and the guide I think for the rest of the year is a reflection that Look, we have some confidence in the way we're operating. We haven't seen a lot of change in the operating environment and the growth still looks good.

Jared Mattingly: The guide, I think, for the rest of the year is a reflection that look, we have some confidence in the way we're operating. We haven't seen a lot of change in the operating environment, and the growth still looks good.

The guide, I think, for the rest of the year is a reflection that look, we have some confidence in the way we're operating. We haven't seen a lot of change in the operating environment, and the growth still looks good.

Todd Schneider: Great, and congratulations on that strong quarter. Thank you.

Operator: Great.

Josh Chan: Great. Congrats on that strong quarter.

Todd Schneider: Congrats on that strong quarter.

Jared Mattingly: Thank you.

Mike Hansen: Thank you.

Speaker Change: Great, and congrats on the strong quarter.

Andy Whitman: And our next question comes from Andy Whitman from R.W. Baird. Please go ahead, Andy. Yeah, great, thanks. And good morning. Thank you for taking my questions. You guys in the script, you talked about Six Sigma, you talked about your engineering teams, degree of automation. So I was just wondering if you talk about the rollout of things like RFID inside your plants. I know that you've been kind of testing this for a while. And I think maybe that you're ramping this a little bit more. I thought maybe a Todd, you could comment on that specifically and kind of where you are.

Operator: Our next question comes from Andy Whitman, from R.W. Baird, please. Go ahead, Andy.

Speaker Change: Thank you.

Operator: Our next question comes from Andy Wittman, from R.W. Baird, please. Go ahead, Andy.

Speaker Change: And our next question from Andy Whitman from RWBaird. Please go ahead, Andy.

Andy Whitman: Yeah, great, thanks. And good morning. Thank you for taking my questions. You guys, in the script you talked about Six Sigma, you talked about your engineering team's degree of automation. So I was just wondering if you could talk about the rollout of things like RFID inside your plants. I know that you've been kind of testing this for a while, and I think maybe that you're ramping this a little bit more. I thought maybe Todd, you could comment on that specifically and kind of where you are and if this is the direction we're heading and really how long.

Andy Wittmann: Yeah, great, thanks. And good morning. Thank you for taking my questions. You guys, in the script you talked about Six Sigma, you talked about your engineering team's degree of automation. So I was just wondering if you could talk about the rollout of things like RFID inside your plants. I know that you've been kind of testing this for a while, and I think maybe that you're ramping this a little bit more. I thought maybe Todd, you could comment on that specifically and kind of where you are and if this is the direction we're heading and really how long does it take you to get to that promised land where this is the way that your business runs on a day to day basis. I guess maybe there would be a similar question related to the auto sortation. I think in the past you guys have talked that you auto sort like half of your business roughly. I was just wondering if there's any new developments on that, like cheaper technologies that make it so that you can deploy it more wide. Sometimes like space considerations in your plant have been a limiting factor. Any technologies that have been developed that allow you to broaden the rollout of your auto sortation. So just hoping you could talk about those two things in particular.

Andy Whitman: Yeah, great. Thanks. Good morning. Thank you for taking my questions. You guys in the script you talked about six, six million you talked about your engineering teams degree of automation. So I was just wondering if you could talk about

Speaker Change: The rollout of things like RFID inside your plants, I know that you've been.

Speaker Change: Kind of touching this for a while and I think maybe that you're ramping this a little bit more I thought maybe

Speaker Change: I thought you could comment on that specifically and kind of where you are and if this is a direction or you're heading and how long it's to get to that promised land where this is the way that your business runs on a day to day basis.

Andy Whitman: And if this is the direction we're heading, and really, how long does it take you to get to that promised land where this is the way that your business runs on a day-to-day basis. I guess maybe there'd be a similar question related to the auto-sortation. I think in the past, you guys have talked that you auto-sort half of your business roughly. I was just wondering if there's any new developments on that, like cheaper technologies that make it so that you can deploy it more widely. I know that sometimes, like space considerations in your plant, has been a limiting factor.

Todd Schneider: Does it take you to get to?

Andy Whitman: That promised land where this is the way that your business runs on a day to day basis. I guess maybe there would be a similar question related to the auto sortation. I think in the past you guys have talked that you auto sort like half of your business roughly. I was just wondering if there's any new developments on that, like cheaper technologies that make it so that you can deploy it more wide. Sometimes like space considerations in your plant have been a limiting factor. Any technologies that have been developed that allow you to broaden the rollout of your auto sortation. So just hoping you could talk about those two things in particular.

Speaker Change: I guess maybe there'd be a similar question.

Speaker Change: Related to the auto-sortation, I think in the past you guys have talked that you like auto-sort like half of your business roughly I was just wondering if there's any new developments on that like cheaper technologies That make it so that you can deploy it more widely or another sometimes like space considerations in your plant Have been limiting factor any technologies that have been developed that allow you to broaden the the rollout of your auto-sortation

Andy Whitman: Any technologies that have been developed that allow you to broaden the rollout of your auto-sortation. So just so many can talk about those two things in particular.

Speaker Change: So, just so many could talk about those two things in particular.

Andy Whitman: Certainly. Thank you, Andy. Let's go back to our culture. We have this; we call it a spirit of positive discontent. And part of that is we are constantly innovating. It's just, it's in our DNA. It always has been since I've joined the company, and I'm sure it always will be. So we're always trying to find ways to make it easier for our partners to, our employee partners to provide services, products and services to our customers, and easier for our customers to do business with us. So RFID, you mentioned, we've been using RFID for many years in our business, in certain areas of that.

Todd Schneider: Certainly. Thank you, Andy. I think, let's go back to our culture. We have this; we call it a spirit of positive discontent. And part of that is we are constantly innovating. It's just, it's in our DNA, always has been since I've joined the company and I'm sure it always will be. So we are always trying to find ways to make it easier for our partners, our employee partners, to provide services, products, and services to our customers and easier for our customers to do business with us. So, RFID you mentioned, we've been using RFID for many years in our business in certain areas of that and we're continuing to test and innovate and hopefully there's a future where we can have that more broadly in our business. Whether it's controlling inventory, it's important to us, important to our customers.

Speaker Change: Certainly. Thank you, Andy.

Speaker Change: I think it's still back to our culture. We have this we call it a spirit of positive discontent. And part of that is we are constantly innovating.

Speaker Change: It's just, it's in our DNA, it always has been since I've joined the company and I'm sure always will be.

Speaker Change: So, we are always trying to find ways to make it easier for our partners to employ partners to provide services to our customers and easier for our customers to do business with us.

Speaker Change: So RFID, you mentioned, we've been using RFID for many years in our business.

Speaker Change: Um.

Todd Schneider: And we're continuing to test and innovate, and hopefully there's a future where we can have that more broadly in our business. But whether it's controlling inventory, is important to us, important to our customers. So we're always innovating in that area, and that will continue. Similar with auto-sortation in our facilities and our rental facilities. So we're innovating. And we see opportunities there. We have invested in some proprietary technologies there that allows us to more broadly leverage that those technologies to extract out inefficiencies in our business. So your rent footprint can be an issue with certain technologies with auto-sortation, and we look at that and say, well, there's got to be a better way.

Speaker Change: In certain areas of that, and we're continuing to test and innovate.

Speaker Change: And hopefully there's a future where we can have that more broadly in our business.

Speaker Change: But whether it's controlling inventory is important to us, important to our customers. So we're always innovating in that area, and that will continue. Similar with auto-sortation in our facilities and our rental facilities.

Todd Schneider: So we're always innovating in that area, and that will continue similar with auto sortation in our facilities, in our rental facilities. So we're innovating, and we see opportunities there. We have invested in some proprietary technology there that allows us to more broadly leverage those technologies to extract out inefficiencies in our business. So you're right, footprint can be an issue with certain technologies, with auto sortation. And we look at that and say, well, there's got to be a better way. And we've invested, and we're bullish on that moving forward. Those things all take time. We're constantly tweaking to make sure we nail it. But we'll continue in that path.

So we're always innovating in that area, and that will continue similar with auto sortation in our facilities, in our rental facilities. So we're innovating, and we see opportunities there. We have invested in some proprietary technology there that allows us to more broadly leverage those technologies to extract out inefficiencies in our business. So you're right, footprint can be an issue with certain technologies, with auto sortation. And we look at that and say, well, there's got to be a better way. And we've invested, and we're bullish on that moving forward. Those things all take time. We're constantly tweaking to make sure we nail it. But we'll continue in that path.

Speaker Change: So um

Speaker Change: We're innovative and we see opportunities there, we have invested in

Speaker Change: Some proprietary technology there that allows us to

Speaker Change: To more broadly, leverage that those technologies to extract out inefficient season our business. So, your right footprint can be an issue with certain technologies with auto-sortation. And we look at that and say, well, there's got to be a better way. And we've invested and we're bullish on that moving forward. Those things all take time were conceptually tweaking to...

Todd Schneider: And we've invested, and we're bullish on that moving forward. Those things all take time. We're constantly tweaking to make sure we nail it, but we'll continue in that path.

Speaker Change: To make sure we now it but we'll continue in that path.

Andy Whitman: I appreciate those perspectives.

Andy Whitman: Appreciate those perspectives. I thought maybe I'd ask you about some innovation, maybe that's relevant to the top-line financials of your business. You've talked so much about healthcare, government, education. It's been a well-trodden thing for a while now. But I know you guys are always trying to open up new end markets, and I thought maybe you could talk about some of the developing end markets that maybe you're getting more excited about. Are the things around residential home services an opportunity for you? Is that an opportunity for you, and can you just talk about if you can play there and the size of that market in comparison to some of these other growth markets that you've talked about in the past.

Andy Wittmann: Appreciate those perspectives. I thought maybe I'd ask you about some innovation, maybe that's relevant to the top-line financials of your business. You've talked so much about healthcare, government, education. It's been a well-trodden thing for a while now. But I know you guys are always trying to open up new end markets, and I thought maybe you could talk about some of the developing end markets that maybe you're getting more excited about. Are the things around residential home services an opportunity for you? Is that an opportunity for you, and can you just talk about if you can play there and the size of that market in comparison to some of these other growth markets that you've talked about in the past.

Andy Whitman: I thought maybe I'd ask you about some innovation, maybe that's relevant to the top line financials of your business. You've talked so much about health care, government, education. It's been a well-trodden thing for a while now, but I know you guys are always trying to open up new end markets, and I thought maybe you could talk about some of the developing end markets that maybe you're getting more excited about. The things around residential home services. Is that an opportunity for you, and can you just talk about if you can play there and the size of that market in comparison to some of these other growth markets that you've talked about in the past?

Speaker Change: I appreciate those perspectives. I thought maybe I'd ask you about some innovation, maybe that's relevant to the top lines and answers of your business. You've talked.

Speaker Change: So much about healthcare government education. It's been well-troddened saying for a while now, but then you guys are always trying to open up new and markets. And I thought maybe.

Speaker Change: You could talk about some of the developing and markets that maybe you're getting more excited about

Speaker Change: But things around residential home services, is that an opportunity for you and can you just talk about if you can play there and in the size of that market in comparison to some of these other growth markets that you've talked about in the past?

Todd Schneider: Thanks for the question, Andy. So that's spirit of positive discontent flows through every area of our business, and we're always looking for the next best vertical. Not prepared to speak about anything where we see an investment in a particular vertical, home residential services is not high on our list. It's not been an area of focus. It's a very different business. Certainly, they have need for our products and services, but that has not been an area of significant investment for us.

Todd Schneider: Thanks for the question, Andy. So that Spirit of positive discontent flows through every area of our business, and we're always looking for the next best vertical. I'm not prepared to speak about anything where we see an investment in a particular vertical. Home residential services is not high on our list. That's not been an area of focus. It's a very different business. Certainly they have needs for our products and services, but that has not been an area of significant investment for us. Thank you. Thank you.

Speaker Change: Thanks for the question, Andy. So...

Speaker Change: That spirit of positive content flows through every area of our business and we're always looking for the next best vertical Not prepared to speak about anything where we see an investment in a particular vertical Home residential services is not high on our list. There's not a been an area of focus.

Speaker Change: It's a very different business, certainly they have needs for our products and services, but that has not been an area of the significant investment for us.

Andy Wittmann: Thank you.

Todd Schneider: Thank you.

Speaker Change: Thank you.

Shlomo Rosenbaum: And our next question comes from Shlomo Rosenbaum from Speedfoot Nicholas. Please go ahead, Shlomo. Hi, thank you. I want to get back to a question I think that George was touching on. I know there's broad base growth, but were there particular types of clients or verticals that you might want to call out over here in terms of, you know, really stand out growth during the quarter. Shlomo, I would say that, you know, our business and totality is functioning at a very good level.

Operator: Our next question comes from Shlomo Rosenbaum from Stifel. Please go ahead.

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

Speaker Change: Thank you.

Speaker Change: And our next question comes from Sloanwell Rosenbaum, from Speedfoot, Nicholas. Please go ahead Sloanwell.

Todd Schneider: Shlomo. Hi. Thank you. I want to get back to a.

Shlomo Rosenbaum: Hi. Thank you. I want to get back to a question, I think that George was touching on. I know there's broad-based growth, but were there a particular types of clients or verticals that you might want to call out over here in terms of really standout growth during the quarter?

Jared Mattingly: Question, I think that George was touching on.

Sloanwell Rosenbaum: [inaudible] touching on. I know there's broad-based groups, but were there particular types of clients or verticals that you might want to?

Todd Schneider: I know there's broad-based growth, but.

Jared Mattingly: Were there a particular types of clients or verticals that you might want to call out over here in terms of?

Todd Schneider: Really standout growth during the quarter?

Stephanie Lynn Benjamin Moore: Shlomo?

Todd Schneider: Shlomo, I would say that our business in totality is functioning at a very good level. So no particular vertical to call out besides the investments we've made in health care, hospitality, education, and state and local governments. We've been investing there and we'll continue to, you know, if you look at how, you know, particularly the jobs reports there, they've been good in those areas. Not shocking that health care, with the demographics of North America, that there's continued investment there. So. But we still see really good runway in all those businesses and we expect them to grow better than we do on average. If they weren't, then why would we have a focus vertical? So. Yeah. So nothing specific to call out besides what I just mentioned there.

Todd Schneider: I would say that our business in totality is functioning at a very good level. So no particular vertical to call out besides the investments we've made in health care, hospitality, education, and state and local governments. We've been investing there and we'll continue to, you know, if you look at how, you know, particularly the jobs reports there, they've been good in those areas. Not shocking that health care, with the demographics of North America, that there's continued investment there. So. But we still see really good runway in all those businesses and we expect them to grow better than we do on average. If they weren't, then why would we have a focus vertical? So. Yeah. So nothing specific to call out besides what I just mentioned there. Okay, thanks.

Speaker Change: So I would say that our business in totality is functioning at a very good level. So no particular vertical to call out besides the investments we've made in healthcare hospitality.

Todd Schneider: So no, no particular vertical to call out. Besides, you know, the investments we've made in healthcare, hospitality, education, and state local governments, we've been investing there and will continue to. You know, if you look at how, you know, particularly the jobs reports there, they've been good in those areas; not shocking that healthcare, with the demographics of North America, that there's continued investment there. So, but we see still see really good runway and all those businesses, and we expect them to grow better than we do on average. If they weren't them, why would we have a focus vertical.

Speaker Change: Education and State Local Governance, we've been investing there and we'll continue to.

Speaker Change: If you look at how the job reports there, they've been good in those areas.

Speaker Change: Not shocking that health care with the demographics of North America, that there's continued investment there. So, but we see still see really good runway and all those businesses.

Speaker Change: And we expect them to grow better than we do on average if they weren't. And why would we have a focus vertical? So yeah, so nothing specific to call out the sites that what I just mentioned there.

Todd Schneider: So, so yeah, so nothing specific to call out besides that what I just mentioned that.

Shlomo Rosenbaum: Okay, thanks. This is just a housekeeping item for Mike. Just the press release says you repurchased about $474 million in stock. I go to the cash flow statement, it looks like $615 million. Can you just talk about what the difference is between what's on the cash flow statement and what's in the commentary?

Mike Hansen: Okay, thanks. And this is just a housekeeping item for Mike. Just the pressure we says you per repurchased about 474 million in stock and I go to the cash flow statement. It looks like 615. Can you just talk about what the difference is between what's on the cash flow statement and what's in the comment. Yes, the commentary reflects the board-approved buyback authorization. The cash flow reflects that plus the impact of stock option exercises and restricted shares. So, in other words, when we have employee partners that exercise stock options, there are some shares that are effectively withheld or purchased for taxes.

Jared Mattingly: This is just a housekeeping item for Mike.

Speaker Change: Okay, thanks, and this is just a housekeeping item for Mike. Just the pressure we says you've been repurchased about 474 million in stock, and I go to the cash flow statement. It looks like 6-15, can you just talk about what the difference is between what's on the cash flow statement and what's in the comments?

Todd Schneider: Just the press release says you repurchased.

Jared Mattingly: About $474 million in stock. I go to the cash flow statement, it looks like $615 million.

Todd Schneider: Can you just talk about what the difference is between what's on the cash?

Jared Mattingly: flow statement and what's in the commentary? Yes, the commentary reflects the board-approved buyback authorization. The cash flow reflects that plus the impact of stock option exercises and restricted shares. So in other words, when we have employee partners that exercise a stock option, there are some shares that are effectively withheld or purchased for taxes for the exercise, the netting of shares, et cetera, for restricted shares that vest, same thing, we are withholding shares for taxes. That's the difference. Got it.

Mike Hansen: Yes, the commentary reflects the board-approved buyback authorization. The cash flow reflects that plus the impact of stock option exercises and restricted shares. So in other words, when we have employee partners that exercise a stock option, there are some shares that are effectively withheld or purchased for taxes for the exercise, the netting of shares, et cetera, for restricted shares that vest, same thing, we are withholding shares for taxes. That's the difference.

Speaker Change: Yes, the commentary reflects the board approved by back authorization. The cash flow reflects that plus.

Speaker Change: the impact of stock option exercises and restricted shares. So in other words, when we have employee partners

Speaker Change: that exercise stock option, there are some shares that are effectively with hell or purchased for taxes for the exercise.

Mike Hansen: For the exercise, the netting of shares, etc., for restricted shares that invest same thing. We are withholding shares for taxes. That's the difference.

Speaker Change: The netting of shares, et cetera, for restricted shares, that invests the same thing we are, we are withholding shares for taxes. That's the difference.

Shlomo Rosenbaum: Got it. Thank you.

Mahesh Sabhadra: Jordan, thank you.

Todd Schneider: Thank you.

Speaker Change: Got it. Thank you.

Mahesh Sabhadra: And our next question comes from Ashish Sabhadra from RBC. Please go ahead, Ashish. Thanks for taking my question. I just wanted to follow up on the margin front of really solid margin expansion in the quarter. The 38th percent incremental margins were about your like a mid-term guidance of 25 to 25. And that's despite one fewer working day head then. So as we go to the year, obviously we've made out multiple different margin expansion drivers. But how should we think about the incremental margins for the rest of the year? Thanks.

Operator: Our next question comes from Ashish Sabhadra from RBC.

Operator: Our next question comes from Ashish Sabhadra from RBC. Please go ahead, Ashish.

Speaker Change: And our next question comes from Ashish Sabhadra from RBC. Please go ahead Ashish.

Jared Mattingly: Please go ahead.

Todd Schneider: Ashish, thanks for taking my question. I just wanted to follow up on the margin front. Really solid margin expansion in the quarter. The 38% incremental margins were above your, like, a midterm guidance of 25 to 35. That's despite one fewer working day headwind. As we go through the year, obviously you've laid out multiple different margin expansion drivers. How should we think about the incremental margins for the rest of the year? Thanks.

Ashish Sabadra: Thanks for taking my question. I just wanted to follow up on the margin front. Really solid margin expansion in the quarter. The 38% incremental margins were above your, like, a midterm guidance of 25 to 35. That's despite one fewer working day headwind. As we go through the year, obviously you've laid out multiple different margin expansion drivers. How should we think about the incremental margins for the rest of the year? Thanks.

Ashish Sabhadra: Thanks for taking my question. I just wanted to follow up on the margin print of really solid margin expansion in the quarter of the 38 percent incremental margins for about your Like a midterm guidance of 35 to 25 to 35 and that's despite one fewer working day ahead. As we go through the year obviously made out multiple different margin expansion drivers, but how should we think about the incremental margins for the rest of the year? Thanks.

Ashish Sabhadra: Hi, Ashish. You know, we gave the 25 to 35 percent range. And that's where that's where our target is. You know, the business isn't wholly linear. And so there are some periods where we invest a little bit more. So we'll be a little bit lower in that range. And there are some quarters where we'll be higher in the range. Generally speaking, as we think about this year, though, we've got 65 work days in each of our quarters remaining. And so there's a little bit of variability because of work days that's not going to be there.

Jared Mattingly: Hi, Ashish. You know, we gave the 25% to 35% range and that's where our target is. You know, the business isn't wholly linear. And so there are some periods where we invest a little bit more. So we'll be a little bit lower in that range. And there are some quarters where we'll be higher in the range. Generally speaking, as we think about this year though, we've got 65 work days in each of our quarters remaining. And so there's a little bit of the variability because of work days that's not going to be there. But I expect that we'll run within that range. Some quarters at the higher end, some at the lower end. That's the way we'll, that's where we'll go through this as we move into the future.

Mike Hansen: Hi, Ashish. You know, we gave the 25% to 35% range and that's where our target is. You know, the business isn't wholly linear. And so there are some periods where we invest a little bit more. So we'll be a little bit lower in that range. And there are some quarters where we'll be higher in the range. Generally speaking, as we think about this year though, we've got 65 work days in each of our quarters remaining. And so there's a little bit of the variability because of work days that's not going to be there. But I expect that we'll run within that range. Some quarters at the higher end, some at the lower end. That's the way we'll, that's where we'll go through this as we move into the future.

Speaker Change: I, I, I, she, you know, we gave the 25 to 35% range and that's where that's where our target is.

Speaker Change: You know, the business isn't wholly linear and so there are some some periods where we invest a little bit more there are so so we'll be a little bit lower in that range and there are some quarters where we'll be higher in the range.

Speaker Change: Generally speaking, as we think about this year, though, we've got 65 work days in each of our quarters remaining. And so there's a little bit of variability because of work days that's not going to be there.

Ashish Sabhadra: But I expect that we'll run within that range, some quarters at the higher end, some at the lower end. That's the way we'll go, you know, through the, as we move into the future. Todd talked about so many initiatives and Six Sigma projects and investments. And these just sort of can move us through that range, sometimes even in and out of that range. Generally speaking, though, our expectation is we will be in that range. And that will be the really good news; is that means margin improvement for the year.

Speaker Change: But I expect that we'll run within that range, some quarters at the higher end, some at the lower end. That's the way we'll go through the, as we move into the future. Thought talks about so many initiatives.

Jared Mattingly: Todd talks about so many initiatives, Six Sigma projects, and investments, and these just sort of can move us through that range sometimes even in and out of that range. Generally speaking though, our expectation is we will be in that range, and that will be the really good news is that means margin improvement for the year.

Todd talks about so many initiatives, Six Sigma projects, and investments, and these just sort of can move us through that range sometimes even in and out of that range. Generally speaking though, our expectation is we will be in that range, and that will be the really good news is that means margin improvement for the year.

Speaker Change: and 6 Sigma projects.

Speaker Change: Investments and these just sort of can move us.

Speaker Change: Through that range, sometimes even in and out of that range. Generally speaking though our expectation is we will be in that range and that will be the really good news is that means margin improvement for the year.

Ashish Sabhadra: That's very color.

Todd Schneider: That's great color, and maybe just a quick follow up on M and A. Just wanted to follow up on earlier question on M and A. If you can talk about your M and A pipeline and appetite for potentially a large M and A deal as well. Thanks. Well, Ashish, thanks for the question. First off, again, M&A has been an important part of our strategy, and we've shown it can work really well for our business, for our customers, shareholders, and all involved. We're open to deals of various shapes and sizes across the entire platform. If you're speaking of what has been public with Vestis being courted by an international company, that acquisition in particular would pose particular challenges because it's been historically underinvested asset. So it would make it hard for us to generate the level of value we expect from M&A in that particular one.

Ashish Sabadra: That's great color, and maybe just a quick follow up on M and A. Just wanted to follow up on earlier question on M and A. If you can talk about your M and A pipeline and appetite for potentially a large M and A deal as well. Thanks.

Ashish Sabhadra: And maybe just a quick follow-up on MNA. I just wanted to follow up on our earlier question on MNA. If you can talk about your MNA pipeline and appetite for potentially a large MNA deal as well. Thanks. Well, she thanks for the question. First up, again, MNA has been an important part of our strategy. And we've shown it can work really well for our business, for customers, shareholders, all involved. And we're open to deals of various shapes and sizes across the entire platform. If you're speaking of what has been public with Vestus being courted by an international company, that acquisition in particular would pose particular challenges because it's been historically under-invested asset.

Speaker Change: That's great color. And maybe just a quick follow-up on M&A and just wanted to follow-up on our dear question on M&A. If you can talk about your M&A pipeline and appetite for potentially a large M&A deal as well. Thanks.

Todd Schneider: Well, Ashish, thanks for the question. First off, again, M&A has been an important part of our strategy, and we've shown it can work really well for our business, for our customers, shareholders, and all involved. We're open to deals of various shapes and sizes across the entire platform. If you're speaking of what has been public with Vestis being courted by an international company, that acquisition in particular would pose particular challenges because it's been historically underinvested asset. So it would make it hard for us to generate the level of value we expect from M&A in that particular one.

Speaker Change: Well, a sheet, thanks for the question. First up, again, emanate has been an important part of our strategy. And we've shown it can work really well for our business.

Speaker Change: For customers, shareholders, all involved. And we're open to deals of various shapes and sizes across the entire platform.

Speaker Change: If you're speaking of what has been public with Vestis

Speaker Change: being recorded by a

Speaker Change: international company. That acquisition in particular would pose particular challenges, because it's been historically under-invested asset. So it would make it hard for us to generate the level value we expect from M&A in that particular one.

Ashish Sabhadra: So it would make it hard for us to generate the level value we expect from MNA in that particular one. In MNA in general, it's again, it's important to us. And we think it's really attractive. It's hard to predict when sellers are ready to transact. And it takes two to dance, and those categories. But we're very much in that area of the business. We're very interested in MNA in a more general basis.

Todd Schneider: In M&A in general, you know, again, it's important to us and we think it's really attractive. It's hard to predict when sellers are ready to transact and it takes two to dance in those categories. But we're very much in that area of the business. We're very interested in M&A on a more general basis. That's very helpful color and solid result. Thanks.

In M&A in general, you know, again, it's important to us and we think it's really attractive. It's hard to predict when sellers are ready to transact and it takes two to dance in those categories. But we're very much in that area of the business. We're very interested in M&A on a more general basis. That's very helpful color and solid result. Thanks.

Speaker Change: in M&A in general.

Speaker Change: It's again, it's important to us. And we think it's really attractive.

Speaker Change: It's hard to predict when cellars are ready to transact.

Speaker Change: And it takes two to dance in those categories. But we're very much in that area of the business. We're very interested in M&A in a more general basis.

Ashish Sabhadra: First, that's very helpful color and solidarity. Thanks.

Speaker Change: That's very helpful, color and solid results, thanks.

Faiza Alwy: And our next question, from Faiza Alwy, from Deutsche Bank, please go ahead, Faiza. Yes, hi, Arne. I wanted to talk about the first state business because we're seeing organic revenue growth accelerated in that business, and I'm sure you think you can talk about the drivers there, and really what expectation is for the long-term opportunity here. I don't know if you can talk about potential scams or how we should think about the sustainability of teams type of businesses. Faiza, thank you for your question. The first state business, first state business has been great. The buying motives resonate with our customer base.

Operator: Our next question comes from Faiza Alwi from Deutsche Bank. Please go ahead. Faiza.

Pfizer: And our next question comes from Pfizer, are we from Deutsche Bank? Please go ahead, Pfizer.

Stephanie Lynn Benjamin Moore: Yes, hi. Morning. I wanted to talk about the first aid business because we're seeing organic revenue growth acceleration in that business. I'm curious if you can talk about your drivers there and really what your expectation is for, you know, the long term opportunity here. I don't know if you can talk about a potential TAM or how we should think about the sustainability of this type of business.

Faiza Alwy: Yes, hi. Morning. I wanted to talk about the first aid business because we're seeing organic revenue growth acceleration in that business. I'm curious if you can talk about your drivers there and really what your expectation is for, you know, the long term opportunity here. I don't know if you can talk about a potential TAM or how we should think about the sustainability of this type of business.

Pfizer: I wanted to talk about the first day of business, because we're seeing an organic revenue growth accelerated in that business. And I'm sure you could talk about...

Speaker Change: My words are in really well expectation for the long-term opportunity here. I don't know if you can talk about the potential scam or how we should think about the sustainability of...

Speaker Change: And it's getting a team's type of technical in that business.

Todd Schneider: Faiza, thank you for your question. The first aid and safety business has been great. The buying motives resonate with our customer base. There are 16 million businesses in North America. Maybe not every single one of them is a great candidate, but a large portion are great candidates for our products and services that we provide. So to a certain degree, the pandemic changed some things with regards to that business, meaning people, how they look at the health and wellness of their people and of their facilities. We think that's been positive for our business. So providing, whether it's a first aid cabinet, AEDs, in the case of sudden cardiac arrest, our eyewash stations that are for health and wellness, and certainly our WaterBreak where it provides potable water for people that, in various dimensions, that makes it accessible for them.

Speaker Change: Five to thank you for your question.

Speaker Change: The first thing that business has been great, you know, is the...

Speaker Change #100: The buying motives resonate with our customer base.

Faiza Alwy: There's 16 million businesses in North America; maybe not every single one of them is a great candidate, but a large portion of our great candidates for our products and services that we provide. So, to a certain degree, the pandemic changed some things with regards to that business, meaning people how they look at their health and wellness of their people and of their facilities. And we think that's been positive for our business. So providing whether it's a first aid cabinet, AEDs, in the case of a sudden cardiac arrest, our eye wash stations that are for health and wellness, and certainly our water break provides, you know, a potable water for people that, and now, in various dimensions, that makes it accessible for them.

Speaker Change #101: There are 16 million businesses in North America. Maybe not every single one of them is a great candidate, but a large portion are great candidates for our products and services that we provide.

Speaker Change #101: So, you know, to a certain degree, the pandemic changed something with regards to that business, meaning people, how they look at their...

Speaker Change #101: The health and wellness of their people and of their facilities. And we think that's been positive for our business.

Speaker Change #101: So providing whether it's a first aid cabinet, AEDDs for in the case of a sudden cardiac arrest.

Speaker Change #101: Our our wash stations that are for health and wellness, and certainly our water break where it provides you know, a potable water for people that and know, you know, in various [inaudible]

Faiza Alwy: So all those have been really attractive. So the mix of business is really good, but meaning back during the pandemic, it was more probably PPE focused. So this mix of that business has changed, but the demand has been very attractive. So we've invested there. We've invested in technology. We've invested in sales people, service partners to take care of our customers. And I neglected to mention we have a really nice training and compliance business, which helps our customers stay in compliance with the various needs that have, whether it's forklift training, first aid, general first aid training, certainly CPR training, are all things that we think we can invest in more significantly and provide more value to the customers.

Todd Schneider: So all those have been really attractive. The mix of business is really good, but, meaning back during the pandemic, it was more probably PPE focused. That mix of that business has changed, but the demand has been very attractive. We've invested there, we've invested in technology, we've invested in salespeople, service partners to take great care of our customers. I neglected to mention we have a really nice training and compliance business which helps our customers stay in compliance with the various needs they have. Whether it's forklift training, first aid, general first aid training, certainly CPR training, are all things that we think we can invest in more significantly and provide more value to the customers.

So all those have been really attractive. The mix of business is really good, but, meaning back during the pandemic, it was more probably PPE focused. That mix of that business has changed, but the demand has been very attractive. We've invested there, we've invested in technology, we've invested in salespeople, service partners to take great care of our customers. I neglected to mention we have a really nice training and compliance business which helps our customers stay in compliance with the various needs they have. Whether it's forklift training, first aid, general first aid training, certainly CPR training, are all things that we think we can invest in more significantly and provide more value to the customers.

Speaker Change #101: that makes it accessible for them. So all those have been really attractive. So the mix of business is really good, but meaning.

Speaker Change #102: Back during the pandemic it was more probably PPE focused. So that makes sense that business has changed. But the demand has been very attractive. So we've invested there. We've invested in technology. We've invested in salespeople. Service partners do take great care of our customers. And I neglected to mention we have a really nice training and compliance business.

Speaker Change #102: Which helps our customers stay in compliance with the various needs that I have, whether it's forecliffe training.

Speaker Change #102: First aid, general first aid training, certainly CPR training, are all things that we think we can invest in more significantly and provide more value to the customers.

Faiza Alwy: And are you finding that there's, you know, revenue synergies with the uniform business? I know that you're running the businesses separately in terms of, you know, certainly there's different trucks and things like that, but I'm curious, like what percentage of sort of new customers that you have in this first aid safety business are existing, you know, uniform customers. Is it a whole new type of customer that you're attached? Thank you. Faiza, good question. I don't have that number specific for you, but I'll say this: we do run separate trucks to those customers. And we've found that having that focus organized around that business specific has been really beneficial for us.

Stephanie Lynn Benjamin Moore: Are you finding that there's revenue synergies with the uniform business? I know that you're running the businesses separately in terms of, you know, certainly there's different trucks and things like that. But I'm curious, like what percentage of sort of new customers that you have in this first aid and safety business are existing uniform customers or is it a whole new type of customer that you're attracting?

Faiza Alwy: Are you finding that there's revenue synergies with the uniform business? I know that you're running the businesses separately in terms of, you know, certainly there's different trucks and things like that. But I'm curious, like what percentage of sort of new customers that you have in this first aid and safety business are existing uniform customers or is it a whole new type of customer that you're attracting?

Speaker Change #103: Are you finding that there's your revenue series with the uniform that I know that you're running, but this is your step quickly.

Speaker Change #104: In terms of, you know, there's different trucks and things like that. But I'm curious, like, what percentage of sort of new customers that you have in this worst state safety business are existing, you know, uniform customers, is it a whole new type of customers that you're attracting?

Todd Schneider: Faiza, good question. I don't have that number specific for you, but I'll say this: we do run separate trucks to those customers, and we found that having that focus organized around that business specific has been really beneficial for us. But we share data, we share data within our customers and opportunities. And as I mentioned, we have this infrastructure of employee partners that are in those customers, and when they're visiting with those customers, they have eyes, they have ears, they have minds, and they can help provide solutions to those customers. So it's easy enough to say, hey, I noticed you might have a need for this, or they may ask us. So there's a mix, you know; there's some of it. We're the very first time we do business with a customer is through first aid. Sometimes it's through fire, sometimes it's through rental.

Speaker Change #105: I don't have that number specific for you, but I'll say this. We do run separate.

Speaker Change #105: trucks, two of those customers. And we found that

Speaker Change #105: Having that focus, we're going to use the round that business.

Speaker Change #105: Specific has been really beneficial for us.

Faiza Alwy: But we share data. We share data within our customers and opportunities. And as I mentioned, we have this infrastructure of employee partners that are in those customers. And when they're visiting with those customers, they have eyes, they have ears, they have minds, and they can help provide solutions to those customers. So it's easy enough to say, hey, I noticed you might have a need for this, or they may ask us. So, so there's a mix. You know, there's some of it where the very first time we do business with the customers through first aid, sometimes it's through first aid, sometimes it's through fire, sometimes it's through rental. Just the sheer scale of rental certainly makes it for a nice cross selling opportunity because we have, well, we've been in that business the longest.

Speaker Change #105: But we share data, we share data within our customers and opportunities and, as I mentioned, we have this infrastructure of employee partners that are in those customers.

Speaker Change #105: And when they're visiting with those customers, they have eyes, they have ears, they have minds, and they can help provide solutions.

Speaker Change #105: to this customers.

Speaker Change #105: So it's easy enough to say, hey, I noticed you might have a need for this, or they may ask us.

Speaker Change #105: So, there's a mix, you know, there's some of it, we're the very first time we do business with a customers through first aid, sometimes it's through fire, sometimes it's through rental.

Todd Schneider: Just the sheer scale of rental certainly makes it for a nice cross-selling opportunity because we have, well, we've been in that business the longest. It's our heritage business, and it's our largest business. So we really don't care where we get started with the customer. We just want to do business with them. And then we'll leverage that infrastructure, that data to try to cross-sell as best as possible to provide additional solutions for those customers.

Just the sheer scale of rental certainly makes it for a nice cross-selling opportunity because we have, well, we've been in that business the longest. It's our heritage business, and it's our largest business. So we really don't care where we get started with the customer. We just want to do business with them. And then we'll leverage that infrastructure, that data to try to cross-sell as best as possible to provide additional solutions for those customers.

Speaker Change #105: Just the sheer scale of rental certainly makes it for a nice cross-selling opportunity because we have, well, we've been in that business the longest, it's our heritage business and it's our largest business. So we really don't care where we can start with the customer, we just want to do businesses of them.

Faiza Alwy: It's our heritage business, and it's our largest business. But, so we really don't care where we can start with the customer. We just want to do business with them. And then we'll leverage that infrastructure, that data to try to cross-sell as best as possible to provide additional solutions for those customers.

Speaker Change #105: And then we'll leverage that infrastructure that data to try to cross-sell as best as possible to provide additional solutions for those customers.

Faiza Alwy: Great. Thank you so much.

Stephanie Lynn Benjamin Moore: Great. Thank you so much.

Faiza Alwy: Great. Thank you so much.

Stephanie Moore: Thank you. And our next question comes from Stephanie Moore from Jeffries. Please go ahead, Stephanie. Hi, good morning. Thank you. I want to touch on maybe the competitive environment within your vendor market. If you're seeing anything in terms of stepped-up competitive activity in the form of maybe aggressively going after existing customers. Maybe a little bit challenging from the pricing standpoint. Any color there on the competitive activity. Great. Thanks.

Todd Schneider: Thank you.

Speaker Change #106: Great, thank you so much.

Operator: Our next question comes from Stephanie Moore from Jefferies.

Operator: Our next question comes from Stephanie Moore from Jefferies. Please go ahead, Stephanie.

Speaker Change #107: Thank you.

Speaker Change #108: And our next question comes from Stephanie Moore from Jeffree's. Please go ahead, Stephanie.

Jared Mattingly: Please go ahead.

Operator: Stephanie.

Stephanie Lynn Benjamin Moore: Hi, good morning. Thank you. I wanted to touch on maybe the competitive environment within your vended market. If you're seeing anything in terms of stepped up competitive activity in the form of maybe aggressively going after existing customers, maybe a little bit challenging from a pricing standpoint, any color there on the competitive activity would be great. Thanks.

Stephanie Moore: Hi, good morning. Thank you. I wanted to touch on maybe the competitive environment within your vended market. If you're seeing anything in terms of stepped up competitive activity in the form of maybe aggressively going after existing customers, maybe a little bit challenging from a pricing standpoint, any color there on the competitive activity would be great. Thanks.

Stephanie Moore: Hi, good morning. Thank you.

Stephanie Moore: I wanted to touch on maybe the competitive environment within your vended market. If you're seeing anything in terms of step-up competitive activity in the form of maybe aggressively going after this in customers, maybe a little bit challenging, some of pricing standpoint, any color there on the competitive activity would be great.

Stephanie Moore: Good morning, Stephanie. You know, we operate in a really competitive environment, and it's been competitive since I started with the company in 1989. And I'm sure it'll be competitive for, you know, the future. So one of the differences that is how we approach the business. We look at the no program market as an incredible opportunity. You know, we service over a million customers or 16 million businesses. The white space out there is amazing. And we see that opportunity where they can buy today, and we can help them today. So growing that pie is significant. That being said, oh, yeah, it's really competitive.

Todd Schneider: Good morning, Stephanie. You know, we operate in a really competitive environment, and it's been competitive since I started with the company in 1989. I'm sure it'll be competitive for, you know, the future. So, but one of the differences, that is, how we approach the business. We look at the no program market as an incredible opportunity. You know, we service a little over a million customers. There are 16 million businesses. The white space out there is amazing. And we see that opportunity where they can buy today, and we can help them today. So growing that pie is significant. That being said, yeah, it's really competitive, always has been. I wouldn't say there's a real change in competitive behavior.

Stephanie Moore: Good morning, Stephanie.

Stephanie Moore: You know, we operate in a really competitive environment and it's been competitive since I started with the company in 1989 and I'm sure it'll be competitive for the future.

Stephanie Moore: So, one of the differences that is how we approach the business.

Stephanie Moore: We look at the new program market as an incredible opportunity.

Stephanie Moore: You know, we service over a million customers or 60 million businesses, the white space out there is amazing.

Stephanie Moore: And we see that opportunity where they can buy today and we can help them today. So, so growing that pie is significant. That being said, oh yeah, it's really competitive. Always has been. I wouldn't say there's a real change in competitive behavior.

Stephanie Moore: Always has been. I wouldn't say there's a real change in competitive behavior. We're focused on trying to invest in our business to make sure we provide the best solutions for our customers and position our people best to compete in the marketplace. And it's certainly very important to us. Great.

Todd Schneider: We're focused on trying to invest in our business to make sure we provide the best solutions for our customers and position our people best to compete in the marketplace. It's certainly very important to us.

We're focused on trying to invest in our business to make sure we provide the best solutions for our customers and position our people best to compete in the marketplace. It's certainly very important to us.

Stephanie Moore: We're focused on trying to invest in our business to make sure we provide the best solutions for our customers and position our people best to compete in the marketplace. And it's certainly very important to us.

Stephanie Lynn Benjamin Moore: Great. And then just as a follow up, you touched on this actually a couple questions ago, but clearly there's some kind of potential industry consolidation activity going on. As you think about that, if you were to see your industry continue to consolidate, how do you think that would impact your thoughts on competitive activity in a more consolidated environment and the likes of that? Thanks.

Stephanie Moore: Great. And then just as a follow up, you touched on this actually a couple questions ago, but clearly there's some kind of potential industry consolidation activity going on. As you think about that, if you were to see your industry continue to consolidate, how do you think that would impact your thoughts on competitive activity in a more consolidated environment and the likes of that? Thanks.

Stephanie Moore: And then just as a follow-up, we touched on this actually a couple of questions ago, but clearly there's some kind of potential industry consolidation activity going on. You know, if you think about that, if you were to see your industry continue to consolidate, how do you think that would impact your thoughts on, you know, competitive activity in a more consolidated environment and the likes of that. Thanks. Yeah, good question. So we certainly pay attention to that. We never underestimate our competition, and we deal with competitors that are, you know, very good at what they do.

Speaker Change #110: Great. And then just as a follow-up, we touched on this actually a couple of questions to go, but clearly there's some kind of potential industry consolidation activity going on.

Speaker Change #111: You know, as you think about that, if you, if you were to see your industry continue to consolidate, how do you think that would impact you, thoughts on, you know, productivity and more consolidated environment, and the likes of that thing?

Todd Schneider: Yeah, good question. So we certainly pay attention to that. We never underestimate our competition, and we deal with competitors that are very good at what they do. So industry consolidation, would that have a dynamic impact? We don't think so, but we always have our head on a swivel, and we're making sure that we are focused on investing in our business to best position our people, to take care of our customers, and to provide the best solutions for our customers. So that's where we're spending our time, investing and focusing. But we pay very close attention to.

Speaker Change #112: Good question. So, we certainly pay attention to that. We never underestimate our competition and we deal with competitors that are very good at what they do. So, you know, industry consolidation would that have a dynamic impact? We don't think so.

Todd Schneider: So, you know, industry consolidation, would that have a dynamic impact? We don't think so. But you know, we always have our head on a swivel, and we're making sure that we are focused on investing in our business to best position our people to take care of our customers and to provide the best solutions for our customers. So, that's where we're spending our time, investing and focusing. But we pay very close attention to the competitive landscape. Keeping in mind that we compete every day against what we might call non-traditional competitors. So those who are providing direct sale uniforms, Amazon, Walmart, we're competing against all different kinds of competition.

Speaker Change #112: But, you know, we always have our head on a swivel and we're making sure that we are focused on investing in our business.

Speaker Change #112: to best position our people to take care of our customers and to provide the best solutions for our customers. So that's what we're spending our time investing and focusing, but we pay very close attention to the competitive landscape.

Jared Mattingly: The competitive landscape, keeping in mind that we compete every day against what we might call non-traditional competitors. So those who are providing direct sale uniforms, Amazon, Walmart, we're competing against all different kinds of competition. So industry consolidation is not necessarily a bad thing for us. It will continue to be competitive.

Mike Hansen: Keeping in mind that we compete every day against what we might call non-traditional competitors. So those who are providing direct sale uniforms, Amazon, Walmart, we're competing against all different kinds of competition. So industry consolidation is not necessarily a bad thing for us. It will continue to be competitive.

Speaker Change #112: To keep in mind that we compete every day against

Speaker Change #112: What we might call non-traditional competitors. So those who are providing direct sale uniforms, Amazon, Walmart, we're competing against all different kinds of competitions.

Todd Schneider: So, industry consolidation is not necessarily a bad thing for us. It will continue to be competitive.

Speaker Change #112: An industry consolidation is not necessarily a bad thing for us, it will continue to be competitive.

Todd Schneider: You know, I completely agree, Mike. You know, as I mentioned, we walk into a business. They may not be with a competitor, but in many cases, they've got the products and services, or something very similar, as what we can provide. They're getting it from those non-traditional sources. We think we can do a better, faster, smarter, cheaper, and many cases for the prospect of the customer. And that's where we've been successful in growing our business. And I guess to take that one quick point, I mean, you basically said it's always been competitive. If you had a greater consolidation, do you think it would be even more, you know, with maybe another player that's new to North America?

Todd Schneider: Yeah, I completely agree, Mike. You know, as I mentioned, we walk into a business, they may not be with a competitor, but in many cases they've got the products and services or something very similar as what we can provide. They're getting it from those non traditional sources. We think we can do it better, faster, smarter, cheaper, in many cases for the prospect or the customer. And that's where we've been successful in growing our business.

Speaker Change #112: Yeah.

Speaker Change #113: Yeah, I completely agree with Mike, you know, as I mentioned, we walked into a business.

Stephanie Lynn Benjamin Moore: I guess just to take that one quick point, I mean, you basically said it's always been competitive. If you had a greater consolidation, do you think it would be even more with maybe another player that's new to North America? Do you think it would end up being actually a more or less competitive environment?

Stephanie Moore: I guess just to take that one quick point, I mean, you basically said it's always been competitive. If you had a greater consolidation, do you think it would be even more with maybe another player that's new to North America? Do you think it would end up being actually a more or less competitive environment?

Todd Schneider: Do you think they would end up being actually a more or less competitive environment? Yeah, it's hard to imagine it being even more competitive. It's really competitive today, but if you're a national competitor to work to enter, we don't see the competitive dynamic changing. And again, our focus would remain on delivering great value for customers on a daily basis. All right. I ask too many questions. Thanks, guys. Thank you.

Todd Schneider: Yeah, it's hard to imagine it being even more competitive. It's really competitive today. But if a national competitor were to enter, we don't see the competitive dynamic changing. Again, our focus would remain on delivering great value to our customers on a daily basis.

Speaker Change #114: National competitor were to enter we don't see the competitive dynamic changing and again, our focus would remain on delivering great value to our customers on a daily basis.

Stephanie Lynn Benjamin Moore: All right, I asked too many questions. Thanks, guys.

Stephanie Moore: All right, I asked too many questions. Thanks, guys.

Speaker Change #115: Alright, so I ask too many questions. Thanks, guys.

Todd Schneider: Thank you.

Thank you.

Scott Schneeberger: And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead, Scott. Thanks very much. I have two. I'll ask them both up front since we're getting late here. First, when uniform direct sales, the organic declines, they've persisted for, I think, five quarters now. And I know this is a lumpy business, and the years prior is very strong.

Operator: Our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead, Scott.

Speaker Change #115: And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead Scott.

Operator: Our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead, Scott.

Todd Schneider: Thanks very much. I have two. I'll ask them both up front since.

Scott Schneeberger: Thanks very much. I have two. I'll ask them both up front since we're getting late here. First one, uniform direct sales organic declines. They persisted for, I think, five quarters. Now, I know this is a lumpy business and years prior is very strong, but could you guys please elaborate on trend over the balance of the year, what we might see there to the extent you have visibility. Then the second question, is free cash flow really strong in Q1? CapEx appears on pace, so it looks like the strength was something working-capital driven. Could you discuss was this a timing issue or should we anticipate a particularly strong cash flow in fiscal 2025? Thanks.

Scott Schneeberger: Thanks, very much I have two I'll I'll ask them both upfront since we're getting late here.

Operator: We're getting late here.

Todd Schneider: First one, uniform direct sales organic declines. They persisted for, I think, five quarters. Now, I know this is a lumpy business and years prior is very strong, but could you guys please elaborate on.

First one uniform direct sales.

Organic.

Speaker Change #117: Declines persisted for I think five quarters now and I know this is a lumpy business and prior was very strong but could you guys. Please elaborate on now on trend over the balance of the year, what we might see there to the extent you have visibility and then the second question is.

Scott Schneeberger: But could you guys please elaborate on, on trend over the balance of the year, what we might see there to the extent you have visibility?

Jared Mattingly: Trend over the balance of the year, what we might see there, too.

Todd Schneider: the extent you have visibility. Then the second question, is free cash flow really strong in Q1? CapEx appears on pace, so it looks like the strength was something working-capital driven. Could you discuss was this a timing issue or should we anticipate a particularly.

Scott Schneeberger: And then the second question is: free cash flow really strong in the first quarter. CapEx appears on pace. So it looks like the strength was something working capital driven.

Speaker Change #118: Free cash flow really strong in the first quarter.

Speaker Change #119: Capex appears on pace. So it looks like the strength was something working capital driven could you discuss it was just a timing issue or should we anticipate a particularly strong cash here in fiscal 'twenty five.

Scott Schneeberger: Could you discuss if this was a timing issue or should we anticipate a particularly strong cash year in fiscal 25? Thanks.

Jared Mattingly: Strong cash flow in fiscal 2025?

Todd Schneider: Thanks, Scott. Thanks for the question. I'll talk a little bit about the direct sale business, and Mike, if you'd like to respond regarding the cash flow. Scott, you nailed it. It's a lumpy business. Rollouts of national accounts, those types of national customers, are highly impactful. And you also nailed it that they had incredible growth going back a couple years. So just really more timing, lumpiness, no real change in that business. We like where we're positioned and feel like we're in a good spot for the future.

Scott Schneeberger: Scott, thanks for the question. I'll talk a little bit about the direct sale business and might, if you'd like, respond regarding the cash flow. Scott, you nailed it. It's a lumpy business. Roll outs of national accounts, those types of national customers are highly impactful. And you also nailed it that they had incredible growth going back a couple of years. So just really more timing, lumpiness, no real change in that business.

Speaker Change #119: Scott Thanks for the question.

Todd Schneider: Scott. Thanks for the question. I'll talk a little bit about the direct sale business, and Mike, if you'd like to respond regarding the cash flow. Scott, you nailed it. It's a lumpy business. Rollouts of national accounts, those types of national customers, are highly impactful. And you also nailed it that they had incredible growth going back a couple years. So just really more timing, lumpiness, no real change in that business. We like where we're positioned and feel like we're in a good spot for the future.

Speaker Change #119: I'll talk a little bit about the direct sale business and Mike if you'd like to risk.

Mike: To respond regarding the cash flow.

Scott Schneeberger: Scott you nailed it.

Mike: Lumpy business.

Mike: Rollouts of National accounts those types of <unk>.

Speaker Change #121: National customers are.

Speaker Change #121: Really impactful.

Speaker Change #123: And you also noted that they had incredible growth going back a couple of years, So just really more timing lumpiness.

Speaker Change #123: No real change in that business.

Scott Schneeberger: We like where we're positioned and feel like we're in a good spot for the future.

Speaker Change #123: We like where we're positioned and.

And feel like we're in a good spot for the future.

Mike Hansen: Yeah, regarding cash flow, your rights got free cash flow was really strong. For us, some of that is timing. So, for example, you see some real working capital change in a crude compensation-related liability. That's a little bit more timing. From an accounts payable, we got a nice benefit from accounts payable. We've been working hard in accounts payable to extend some terms, and that's paying off with a nice benefit in the cash flow.

Jared Mattingly: Yeah. Regarding cash flow, you're right, Scott. Free cash flow was really strong for us. Some of that is timing. So, for example, you see some real working capital change in accrued compensation-related liabilities. That's a little bit more timing from accounts payable. We got a nice benefit from accounts payable. We've been working hard in accounts payable to extend some terms, and that's paying off with a nice benefit in the cash flow for the year. Generally speaking, though, we look at it to be in the typical range. So free cash flow conversion of net income in the 90% to 100% range, which is sort of typically where we have been. That's where we expect to be for the rest of the year or for the full year in total. Thanks, guys.

Mike Hansen: Yeah. Regarding cash flow, you're right, Scott. Free cash flow was really strong for us. Some of that is timing. So, for example, you see some real working capital change in accrued compensation-related liabilities. That's a little bit more timing from accounts payable. We got a nice benefit from accounts payable. We've been working hard in accounts payable to extend some terms, and that's paying off with a nice benefit in the cash flow for the year. Generally speaking, though, we look at it to be in the typical range. So free cash flow conversion of net income in the 90% to 100% range, which is sort of typically where we have been. That's where we expect to be for the rest of the year or for the full year in total.

Speaker Change #124: Regarding cash flow.

Speaker Change #125: Youre right Scot free cash flow was really strong.

Speaker Change #126: For us some of that is timing. So for example, you see some some real working capital change in accrued compensation related related liabilities, that's a little bit more timing.

Speaker Change #126: From a from an accounts payable we got a nice benefit from accounts payable we have been working hard in accounts payable to extend.

Speaker Change #126: Some terms.

Speaker Change #126: And that's paying off with with a nice benefit in the cash flow.

Mike Hansen: For the year, generally speaking, though, we look at it to be in the typical range. So, free cash flow, a conversion of net income in the 90 to 100% range, which is sort of typically where we have been. That's where we expect to be for the rest of the year or for the full year in total.

Speaker Change #126: For the year generally speaking, though.

Speaker Change #126: We look at it to be in the in the typical range. So.

Speaker Change #126: Free cash flow conversion.

Speaker Change #126: Net income in the 90% to 100% range, which is which is sort of typically where we have been.

Speaker Change #126: That's where we expect it to be for the rest of the year or for the full year in total.

Scott Schneeberger: Thanks, guys.

Jason Haas: Thanks, guys. Thank you.

Speaker Change #127: Thanks, guys.

Todd Schneider: Thank you.

Speaker Change #128: Thank you.

Jason Haas: And our next question comes from Jason Hoss from Wells Fargo. Please go ahead, Jason. Hey, good morning, and thanks for taking my questions. I'm curious if you could remind us what level of price increases you're put again this year. And then I'm curious what the reception has been like from your customers. Jason, our price adjustments are a component of our growth and certainly not where we're focused on how we grow our business, but it is a component. And our price adjustments are way lower than they were at the peak of inflation, and they're back much closer to historical today.

Operator: Our next question comes from Jason Haas from Wells Fargo. Please go ahead. Jason.

Speaker Change #129: And our next question comes from Jason Haas from Wells Fargo. Please go ahead Jason.

Todd Schneider: Hey, good morning and thanks for taking my questions.

Jason Haas: Hey, good morning and thanks for taking my questions. I'm curious if you could remind us what level of price increases you're putting in this year? And then I'm curious what the reception has been like from your customers?

Jason Haas: Hey, good morning, and thanks for taking my questions I'm curious if you could remind us what level of price increases you've put again this year and then Im curious what the reception has been like from your customers.

Jared Mattingly: I'm curious if you could remind us what level of price increases you're putting in this year? And then I'm curious what the reception has been like from your customers?

Todd Schneider: Jason, our price adjustments are a component of our growth. Certainly not where we're focused on how we grow our business, but it is a component. Our price adjustments are way lower than they were at the peak of inflation, and they're back much closer to historical today and how they're received. You know, those are always challenging conversations and try to position our people on a daily basis to provide the best service so that they can go better. But it's always challenging, and it's been challenging my entire career on price adjustments. We just, we try to focus our time on how to best position our people, how to train them, and how to give them the best products and services so that they can provide the most value.

Jason.

Speaker Change #131: Our price adjustments.

Speaker Change #132: A component of our growth.

Speaker Change #133: Certainly not where we're focused in on how we grow our business.

Speaker Change #134: It is a component.

Speaker Change #134: And our price adjustments are.

Speaker Change #134: Wei.

Speaker Change #134: Sure.

Speaker Change #134: Lower than they were at the peak of inflation and they're back much closer to historical today.

Todd Schneider: And how they're received, you know, those are always challenging conversations and try to position our people on a daily basis to provide the best service so that they can go better. But it's always challenging. And it's been challenging my entire career on price adjustments. So we try to focus our time on how to best position our people, how to train them. And how to give them the best products and services so that they can provide the most value.

Speaker Change #134: And and how they are received.

Speaker Change #134: Those are those are always challenging conversations.

Speaker Change #136: <unk> tried to position our people on.

Speaker Change #136: On a daily basis to provide the best service so that they can go better but it is always challenging.

Speaker Change #136: And it's it's been challenging in my entire career on.

Speaker Change #136: Price adjustments. So we just we try to focus our time on.

Speaker Change #136: How to best position, our people how to train them and how to give them the best products and services. So that they can provide the most value.

Speaker Change #136: Okay.

Jason Haas: God, that makes sense. Thank you.

Jared Mattingly: Got it.

Jason Haas: Got it. That makes sense. Thank you. It's a good segue to my next question. I was curious about the hiring market for your own business, and I'm curious if it's gotten any easier or harder to hire people.

Speaker Change #137: Got it that makes sense. Thank you.

Todd Schneider: That makes sense.

Operator: Thank you.

Todd Schneider: It's a good segue to my next question.

Jason Haas: And it's a good segue to my next question. I was curious about the hiring market for your own business, and I'm curious if it's gotten any easier or harder to hire people. Yeah, Jason. Good question. I call it similar, right? Similar meaning it's always been a challenge to find great people. And that's what we're focused on. The hiring market, it has eased. There's no doubt from pandemic craziness, but it is certainly easier, but never easy. So that's, you know, that's what we're seeing in our business. We're still investing for the future. And the reason we're investing is because we see the opportunities that lie ahead.

It's a good segue to my next question I was curious about the hiring market for your own business and I'm curious, if it's gotten any any easier or harder to hire people.

Jared Mattingly: I was curious about the hiring market for your own business, and I'm curious if it's gotten any easier or harder to hire people.

Todd Schneider: Yeah, Jason, good question. I call it similar.

Todd Schneider: Yeah, Jason, good question. I call it similar. Right? Similarly, meaning it's always been a challenge to find great people. That's what we're focused on. The hiring market, it has eased, there's no doubt, from pandemic craziness, but it is certainly easier, but never easy. That's what we're seeing in our business. We're still investing for the future. The reason we're investing is because we see the opportunities that lie ahead.

Jason Haas: Yes, Jason good question.

Jason Haas: Similar similar meaning.

Stephanie Lynn Benjamin Moore: Right?

Todd Schneider: Similarly, meaning it's always been a challenge to find great people. That's what we're focused on. The hiring market, it has eased, there's no doubt, from pandemic craziness, but it is certainly easier, but never easy. That's what we're seeing in our business. We're still investing for the future. The reason we're investing is because we see the opportunities that lie ahead. Got it. That makes sense. Thank you. Thank you.

Speaker Change #138: It's always been a challenge to find great people.

Speaker Change #139: And that's what we're focused on.

Speaker Change #139: The hiring market. It has eased theres no doubt from sort of endemic craziness.

Speaker Change #139: But but it is certainly easier.

Speaker Change #139: But but never easy.

So thats.

Speaker Change #139: That's what we're seeing in our business, we're still investing for the future and the reason we're investing because we see the opportunities that lie ahead.

Jason Haas: God, it makes sense. Thank you.

Jason Haas: Got it. That makes sense. Thank you.

Speaker Change #140: Got it that makes sense. Thank you.

Todd Schneider: Thank you.

Speaker Change #139: Thank you.

Operator: And at this time, there are no further questions.

Operator: At this time, there are no further questions. I'll turn the call back over to Jared for closing remarks.

Speaker Change #139: And at this time there are no further questions I'll turn the call back over to Jerry for closing remarks.

Operator: At this time, there are no further questions. I'll turn the call back over to Jared for closing remarks.

Jared Mattingley: I'll turn the call back over to Jared. for closing remarks. Thank you, everyone, for joining us this morning. We will issue our second quarter of fiscal 25 financial results in December. We look forward to speaking with you again at that time.

Jerry: Thank you everyone for joining us. This morning, we will issue our second quarter of fiscal 'twenty five financial results in December we look forward to speaking with you again at that time.

Jared Mattingly: Thank you everyone for joining us this morning. We will issue our Q2 of fiscal 2025 financial results in December. We look forward to speaking with you again at that time.

Jared Mattingley: Thank you everyone for joining us this morning. We will issue our Q2 of fiscal 2025 financial results in December. We look forward to speaking with you again at that time.

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

Speaker Change #142: This concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. The host has ended this call. Goodbye.

Todd Schneider: The host has ended this call. Goodbye.

Speaker Change #143: The host has ended this call goodbye.

Operator: You may I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I know I .

Speaker Change #143: [music].

Jared Mattingly: Sa. Sa.

Speaker Change #143: [music].

Operator: Good day, everyone, and welcome to the Cintas Corporation, announces, fiscal 2025, first quarter results conference call. Today's call is being recorded.

Operator: Good day everyone and welcome to the Cintas Corporation announces fiscal 2025 Q1 results conference call. Today's call is being recorded at this time. I would like to turn the call over to Mr. Jared Mattingly, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Jared Mattingly: Good day, everyone and welcome to the Cintas Corporation announces fiscal 2025 first quarter results Conference call. Today's call is being recorded at this time I would like to turn the call turn the call over to Mr. Jared Mattingly, Vice President Treasurer and Investor Relations. Please go ahead Sir.

Jared Mattingley: At this time, I would like to turn the call over to Mr. Jared Mattingley, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Jared Mattingly: Thank you, Ross. Thank you for joining us. With me today are Todd Schneider, President and Chief Executive Officer, and Mike Hanson, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 first quarter results. After our commentary, we will open the call to questions from analysts. The 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.

Jared Mattingly: Thank you Ross. Thank you for joining US with me today are Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer, who will discuss our fiscal 2025 first quarter results.

Jared Mattingly: After our commentary we will open the call to questions from analysts the 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.

Operator: The Private Security's 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 the 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.

Jared Mattingly: Forward looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we may discuss.

Jared Mattingly: We refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission.

Todd Schneider: I'll now turn the call over to Todd. Thank you, Jared. We are pleased with our start to fiscal year 2025. Our First Quarter Results reflect the strength and breadth of Cintas' value proposition for businesses of all types. In stellar execution by our employee partners, first quarter total revenue grew 6.8 percent to $2.5 billion, an all-time high for revenue in a quarter. First quarter revenue growth was negatively impacted by one last workday in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. On the same day work basis, first quarter revenue growth was 8.4 percent.

Jared Mattingly: Now I'll turn the call over to Todd.

Todd: Thank you Jarrod.

Todd: We are pleased with our start to fiscal year 2025.

Todd: Our first quarter results reflect the strength and breadth of synthesis value proposition for businesses of all types and stellar execution by our employee partners.

Todd: First quarter total revenue grew six 8% to $2 5 billion.

Todd: An all time high for revenue in a quarter.

Todd: First quarter revenue growth was negatively impacted by one less workday in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.

Todd: On a same day work basis.

Todd: First quarter revenue growth was eight 4%.

Todd Schneider: The organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and the fact that there was one last workday in the quarter, was 8.0 percent. Each of Cintas' business divisions contributed to our success in the quarter. As Michael Detail, our rental division was right where we liked them to be, and the first day in the safety and fire protection businesses each generated double-digit year-over-year growth, demonstrating the complementary nature of our platform. And our long runway for future growth. The value of the products and services Cintas delivers continues to resonate with customers of all sizes and across industries.

Todd: The organic growth rate, which adjusts for the impacts of acquisitions foreign currency exchange rate fluctuations and the fact that there was one less workday in the quarter was 8.0%.

Todd: Each of synthesis business divisions contributed to our success in the quarter as Mike will detail our rental division was right, where we like them to be in our first aid safety and fire protection businesses, each generated double digit year over year growth demonstrating the complementary nature of our platform and our long runway for future growth.

Todd Schneider: As Mike will detail, our rental division was right where we like them to be, and our first aid and safety and fire protection businesses each generated double-digit year-over-year growth, demonstrating the complementary nature of our platform and our long runway for future growth. The value of the products and services Cintas delivers continues to resonate with customers of all sizes and across industries. We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America. In the first quarter, we continued to experience strong demand for our services not only from existing customers but across our new business pipeline. Businesses across our four focused verticals of healthcare, hospitality, education, and state and local government continue to perform well. Our top line results flow through to our bottom line.

Mike: The value of the products and services Cintas delivers continues to resonate with customers of all sizes and across industries.

Todd Schneider: We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America. In the first quarter, we continue to experience strong demand for our services not only from existing customers, but across our new business pipeline. Businesses across our four focused verticals of healthcare, hospitality, education, and state and local government continue to perform well. Our top line results flow through to our bottom line. Gross margin for the first quarter increased 9.7 percent over the prior year to our record 50.1 percent. Operating income of 22.4 percent as a percent of revenue was also an all-time record, an increase of 12.1 percent over the prior year.

Mike: We remain focused on the tremendous opportunity we have to serve 16 million businesses across North America.

Mike: In the first quarter, we continued to experience strong demand for our services not only from existing customers but.

But across our new business pipeline.

Mike: Businesses across our four focused verticals of healthcare hospitality education, and state and local government continued to perform well.

Mike: Our topline results flowed through to our bottom line.

Mike: Gross margin for the first quarter increased nine 7% over the prior year to a record 51%.

Mike: Operating income of 22, 4% as a percent of revenue was also an all time record an increase of 12, 1% over the prior year.

Todd Schneider: DeLuted EPS, which reflects the recent 4-for-1 stock split, grew a robust 18.3% to $1.10. Our earnings growth continues to reflect our relentless focus on operational excellence in every aspect of our business, including strategic sourcing, supply chain initiatives that drive down a material cost, route and energy optimization with smart truck, and leveraging our SAP system to maximize the efficiency of our facilities. Cash flow was very strong in the first quarter, with free cash flow increasing 62.4% over the prior year. Our cash generation enabled us to deploy capital across each of our capital allocation priorities. We continue to focus our strategic investments in our customers and our employee partners.

Mike: Diluted EPS, which reflects the recent four for one stock split.

Mike: <unk> grew a robust 18, 3% to $1 10.

Our earnings growth continues to reflect our relentless focus on operational excellence in every aspect of our business, including strategic sourcing and supply chain initiatives that drive down our material costs.

Mike: And energy optimization with smart truck.

Mike: And leveraging our SAP system to maximize the efficiency of our facilities.

Mike: Cash flow was very strong in the first quarter with free cash flow, increasing 62, 4% over the prior year.

Mike: Our cash generation enabled us to deploy capital across each of our capital allocation priorities.

Todd Schneider: We continue to focus our strategic investments in our customers and our employee partners. This strategy is reflected in our capital allocation priorities that continue to position us to deliver long-term value for our shareholders. In the first quarter, we continued to invest in our businesses through capital expenditure of $92.9 million and made acquisitions in each of our three route-based segments. Our technology investments are a significant area of reinvestment. We are making great strides to implement better technology-driven solutions to standardize our processes across our operations. These investments have enabled us to provide more flexibility to our customers including increased garment sharing and achieving more nimble and efficient product sourcing. Coupled with our ongoing partnerships with Verizon, Google, and SAP, we're able to make our employee partners' jobs easier and get the right products to our customers faster.

Mike: We continue to focus on our strategic investments in our customers and our employee partners.

Todd Schneider: This strategy is reflected in our capital allocation priorities that continue to position us to deliver long-term value for our shareholder. In the first quarter, we continue to invest in our businesses through capital expenditure of $92.9 million, and main acquisitions in each of our three route-based segments. Our technology investments are a significant area of reinvestment. We are making great strides to implement better technology-driven solutions to standardize our processes across our operations. These investments have enabled us to provide more flexibility to our customers, including increased garment sharing and achieving more nimble and efficient product sourcing. Coupled with our ongoing partnerships with Verizon, Google, and SAP, we're able to make our employee partners' jobs easier and get the right products to our customers faster.

Mike: This strategy is reflected in our capital allocation priorities that continue to position us to deliver long term value for our shareholders.

Mike: In the first quarter, we continued to invest in our businesses through capital expenditure of $92 9 million and made.

Mike: <unk> in each of our three route based segments.

Mike: Our technology investments are a significant area of reinvestment.

Mike: We are making great strides to implement better technology, driven solutions to standardize our processes across our operations. These.

Mike: These investments have enabled us to provide more flexibility to our customers, including increased garment sharing and achieving more more nimble and efficient product sourcing.

Mike: Coupled with our ongoing partnerships with Verizon Google in SAP.

Mike: We're able to make our employee partners jobs easier and get the right products to our customers faster.

Todd Schneider: We are seeing these efforts continue to improve customer experience and possibly impact our margin profile. In addition to making the investments in our business to fuel future growth, returning capital to Synthos shareholders through our dividend and share repurchase remains a key priority. Synthos increases quarterly dividend by 15.6% per share, which resulted in an aggregate quarterly cash dividend payment of $157.9 million on September 3rd. This marked the 41st consecutive year that we increase our dividend, meaning we have maintained this practice every year since going public. We also purchased $4.73 million worth of common stock during the quarter.

Todd Schneider: We are seeing these efforts continue to improve customer experience and positively impact our margin profile. In addition to making the investments in our business to fuel future growth, returning capital to Cintas shareholders through our dividend and share repurchase remains a key priority. Cintas increased its quarterly dividend by 15.6% per share, which resulted in an aggregate quarterly cash dividend payment of $157 million on 3 September. This marked the 41st consecutive year that we increased our dividend, meaning we have maintained this practice every year since going public. We also purchased $473.6 million worth of common stock during the quarter before turning the call over to Mike to provide details of our Q1 results.

Mike: We are seeing these efforts continued to improve customer experience and positively impact our margin profile.

Mike: In addition to making the investments in our business to fuel future growth returning capital to Cintas shareholders through our dividend and share repurchase remains a key priority.

Speaker Change #145: <unk> increased its quarterly dividend by 15, 6% per share, which resulted in an aggregate quarterly cash dividend payment of $157 9 million on September 30.

Speaker Change #145: This marks the 40 <unk> consecutive year that we increased our dividend, meaning we have maintained this practice every year since going public.

Speaker Change #145: We also purchased $473 $6 million worth of common stock during the quarter.

Todd Schneider: The fourth time the Colorado might provide details of our first quarter results. I'll provide our updated financial expectations for our fiscal year, which reflect the momentum we carried through the first quarter and the exceptional dedication of our employee partners in helping our customers meet image, safety, cleanliness, and compliance needs. We are increasing our financial guidance range for fiscal 2025. We are raising our annual revenue expectations from a range of $10.16 billion to $10.31 billion to a range of $10.22 billion to $10.32 billion. A total growth rate of 6.5% to 7.5%. We expect our organic growth rate to be in the range of 7.0 percent to 8.1 percent.

Before turning the call over to Mike to provide details of our first quarter results I will provide our updated financial expectations for our fiscal year, which reflect the momentum we carried through the first quarter and the exceptional dedication of our employee partners and helping our customers meet image safety cleanliness and compliance needs.

Todd Schneider: I'll provide our updated financial expectations for our fiscal year, which reflect the momentum we carried through the first quarter and the exceptional dedication of our employee partners in helping our customers meet image, safety, cleanliness, and compliance needs. We are increasing our financial guidance range for fiscal 2025. We are raising our annual revenue expectations from a range of $10.16 to 10.31 billion to a range of $10.22 to 10.32 billion, a total growth rate of 6.5% to 7.5%. We expect our organic growth rate to be in the range of 7.0% to 8.1%. We are also raising our annual diluted EPS expectations from a range of $4.06 to 4.19 to a range of $4.17 to 4.25, a growth rate of 10.0% to 12.1%. The future of Cintas remains bright and I look forward to the year ahead.

Speaker Change #145: We are increasing our financial guidance range for fiscal 2025.

Mike: We are raising our annual revenue expectations from a range of $10 $1 6 billion to.

Mike: To 10 three.

Mike: $10, three 1 billion to a range of $10 to $2 billion to 10, three 2 billion.

Mike: A total growth rate of six 5% to seven 5%.

Mike: We expect our organic growth rate to be in the range of $7 zero percent to eight 1%.

Todd Schneider: We are also raising our annual diluted EPS expectations from a range of $4.06, the $4.19 to a range of $4.17 to $4.25, the growth rate of 10.0 percent to 12.1 percent.

Mike: We are also raising our annual diluted EPS expectations from a range of $4 <unk>.

Mike: The $4 19.

Mike: To a range of $4 17.

Mike: To $4 25.

Mike: Our growth rate of 10.0% to 12, 1%.

Todd Schneider: The future of Cintas remains bright, and I look forward to the year ahead.

Mike: The future Cintas remains bright and I look forward to the year ahead.

Todd Schneider: With that, I'll turn the call over to Mike to discuss the details of our first quarter results. Thanks, Todd, and good morning. Our fiscal 2025 first quarter revenue was $2.5 billion compared to $2.34 billion last year. The organic revenue growth rate adjusted for acquisitions, foreign currency exchange rate fluctuations, and a difference in the number of work days was 8 percent. Total growth was negatively impacted by 160 basis points due to one fewer workday in the first quarter compared to the prior year period. As a reminder, we have two fewer work days in fiscal 2025 compared to fiscal 2024.

Todd Schneider: With that, I'll turn the call over to Mike to discuss the details of our first quarter results.

Mike: With that I'll turn the call over to Mike to discuss the details of our first quarter results.

Jared Mattingly: Thanks Todd and good morning. Our fiscal 2025 first quarter revenue was $2.5 billion compared to $2.34 billion last year. The organic revenue growth rate adjusted for acquisitions, foreign currency exchange rate fluctuations, and a difference in the number of workdays was 8%. Total growth was negatively impacted by 160 basis points due to one fewer workday in the first quarter compared to the prior year period. As a reminder, we have two fewer work days in fiscal 2025 compared to fiscal 2024. One impacted our first quarter and the second will impact our fourth quarter. Each of our fiscal 2025 quarters has 65 days. Organic growth by business was 7% for uniform rental and facility services, 14% for first aid and safety services, 13.8% for fire protection services, and Uniform Direct Sale was down 1.8%.

Thanks, Todd and good morning, our fiscal 2025 first quarter revenue was $2 5 billion compared to $234 billion last year.

Mike: The organic revenue growth rate adjusted for acquisitions foreign currency exchange rate fluctuations and a difference in the number of work days was 8%.

Speaker Change #146: Total growth was negatively impacted by 160 basis points due to one fewer workday in the first quarter compared to the prior year period.

Speaker Change #146: As a reminder, we have two fewer work days in fiscal 2025 compared to 2000 fiscal 2024, one impacted our first quarter and the second will impact our fourth quarter.

Mike Hansen: One impacted our first quarter, and the second will impact our fourth quarter. Each of our fiscal 2025 quarters has 65 days. Organic growth by business was 7 percent for uniform rental and facility services, 14 percent for first aid and safety services, 13.8 percent for fire protection services, and uniform direct sale was down 1.8 percent. Growth margin for the first quarter of fiscal 25 was 1.25 billion dollars compared to 1.14 billion dollars last year, an increase of 9.7 percent. As Todd mentioned, growth margin as a percent of revenue reached a milestone 50.1 percent for the first quarter of fiscal 25 compared to 48.7 percent last year, an increase of 140 basis points.

Speaker Change #146: Each of our fiscal 2025 quarters at 65 days.

Speaker Change #146: Organic growth by business was 7% for uniform rental and facility services, 14% for first aid and safety services.

13, 8% for fire protection services and uniform direct sale was down one 8%.

Speaker Change #146: Gross margin for the first quarter of fiscal 'twenty, five was 125 billion compared to $1 $4 billion last year, an increase of nine 7%.

Speaker Change #146: As Todd mentioned gross margin as a percent of revenue reached a milestone of 51% for the first quarter of fiscal 'twenty five compared to 48, 7% last year, an increase of 140 basis points.

Mike Hansen: Growth volume growth continues to generate strong operating leverage. Our growth margins also increased as a result of our world-class supply chain, investments we have made in technology, and continued operational efficiencies. Growth margin percentage by business was 49.3 percent for uniform rental and facility services, 57.7 percent for first aid and safety services, 50.2 percent for fire protection services, and 40.6 percent for uniform direct sale. Growth margin for the uniform rental and facility services segment increased 120 basis points from last year. We continue to generate leverage as a result of our strong revenue growth. Great performance from our supply chain is lowering our product costs.

Todd: Robust volume growth continues to generate strong operating leverage our gross margins also increased as a result of our world class supply chain investments, we have made in technology and continued operational efficiencies.

Speaker Change #147: Gross margin percentage by business was 49, 3% for uniform rental and facility services 57, 7% for first aid and safety services.

Speaker Change #147: 52% for fire protection services, and 46% for uniform direct sale.

Speaker Change #147: Gross margin for the uniform rental and facility services segment increased 120 basis points from last year.

Speaker Change #147: We continue to generate leverage as a result of our strong revenue growth great great performance from our supply chain is lowering our product costs.

Jared Mattingly: Great performance from our supply chain is lowering our product costs. We continue to realize benefits from our technology investments, and we are extracting inefficiencies from the business through our Six Sigma and engineering teams. Gross margin for the first aid and safety services segment increased 180 basis points from last year. As with our rental business, strong revenue growth continues to create leverage. Our sales mix continues to be favorable with more profitable first aid products and increases in our recurring revenue products like AEDs, eyewash stations, and WaterBreak. Our technology investment in SmartTruck continues to provide route optimization and improved efficiencies, and we continue to see sourcing benefits from our first aid dedicated distribution center that we opened several years ago that has allowed us to lower product costs. All of these contribute to improved margins.

Mike Hansen: We continue to realize benefits from our technology investments, and we are extracting inefficiencies from the business through our six sigma and engineering teams. Growth margin for the first aid and safety services segment increased 180 basis points from last year. As with our rental business, strong revenue growth continues to create leverage. Our sales mix continues to be favorable with more profitable first aid products, and increases in our recurring revenue products like AEDs, IWash Stations, and Waterbreak. Our technology investment in smart truck continues to provide a route optimization and improved efficiencies, and we continue to see sourcing benefits from our first day dedicated distribution center that we opened several years ago that has allowed us to lower product costs. All of these contribute to improved margins.

Speaker Change #147: We continue to realize benefits from our technology investments and we are extracting inefficiencies from the business through our six Sigma and engineering teams.

Speaker Change #147: Gross margin for the first aid and safety services segment increased 180 basis points from last year.

Speaker Change #147: As with our rental business strong revenue growth continues to create leverage.

Speaker Change #147: Our sales mix continues to be favorable with more profitable first aid products and increases in our recurring revenue products like Aedes eyewash stations in Waterbury.

Our technology investment in Smart truck continues to provide a route optimization and improved efficiencies and we continue to see sourcing benefits from our first date dedicated distribution center that we opened several years ago that has allowed us to lower product costs. All of these contribute to improved margins.

Jared Mattingly: Selling, administrative expenses as a percentage of revenue was 27.6%, which was a 20 basis point increase from last year. We continue to make strategic investments in technology and in our partners. First quarter operating income was $561 million compared to $500.6 million last year. Operating income as a percentage of revenue was 22.4% in the first quarter of fiscal 2025 compared to 21.4% in last year's first quarter, an increase of 100 basis points. Our effective tax rate for the first quarter was 15.8% compared to 19.2% last year. The tax rate in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for the first quarter was $452 million compared to $385.1 million last year. This year's first quarter diluted EPS of $1.10 compared to $0.93 last year, an increase of 18.3%.

Speaker Change #147: Selling and administrative expenses as a percentage of revenue was 27, 6%, which was a 20 basis point increase from last year.

Speaker Change #147: We continue to make strategic investments in technology and in our partners.

First quarter operating income was $561 million compared to $506 million last year.

Operating income as a percentage of revenue was 22, 4% in the first quarter of fiscal 'twenty five compared to 21, 4% in last year's first quarter, an increase of 100 basis points.

Speaker Change #147: Our effective tax rate for the first quarter was 15, 8% compared to 19, 2% last year.

Speaker Change #147: The tax rate in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock based compensation.

Speaker Change #147: Net income for the first quarter was $452 million compared.

Speaker Change #147: Compared to $385 $1 million last year.

Speaker Change #147: This year's first quarter diluted EPS of $1 10.

Compared to <unk> 93 last year, an increase of 18, 3%.

Jared Mattingly: As Todd mentioned earlier, we generated strong cash flow. Our first quarter free cash flow increased 62.4%. This has allowed us to invest back in the business, which has resulted in first quarter capital expenditures of $92.9 million. Our investments include technology to grow the top line and expand margins, automation to improve efficiencies in our plants, and additional processing capacity where needed. We expect capital expenditures to finish between 3.5% and 4% of revenue for the year. Todd provided our annual financial guidance. Related to the guidance, please note the Fiscal 2025 net interest expense is expected to be approximately $101 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.

Speaker Change #147: As Todd mentioned earlier, we generated strong cash flow, our first quarter free cash flow increased 62, 4%. This has allowed us to invest back in the business, which has resulted in the first quarter capital expenditures of $92 $9 million. Our investments include technology to grow the topline.

Todd: And expand margins automation to improve efficiencies in our plants and additional processing capacity where needed.

We expect capital expenditures to finish between three 5% and 4% of revenue for the year.

Mike Hansen: Todd provided our annual financial guidance. Related to the guidance, please note the following. This 25 net interest expense is expected to be approximately $101 million, compared to $95 million in fiscal 24. Predominantly as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks. Our fiscal 25 effective tax rate is expected to be 20.4%, the same compared to our fiscal 24. And guidance does not include any future share buybacks or significant economic disruptions or downturns.

Todd provided our annual financial guidance related to the guidance. Please note the following.

Speaker Change #148: 25% net interest expense is expected to be approximately $101 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.

Jared Mattingly: Our fiscal 2025 effective tax rate is expected to be 20.4%, the same compared to our fiscal 2024, and guidance does not include any future share buybacks or significant economic disruptions or downturns. With that, I'll turn it back to Todd for some closing remarks.

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

Speaker Change #148: Guidance does not include any future share buybacks were significant economic disruptions or downturns.

Todd Schneider: With that, I'll turn it back to Todd for some closing remarks.

Speaker Change #148: With that I'll turn it turn it back to Todd for some closing remarks.

Todd Schneider: Thank you, Mike. Before we conclude, I'd like to take a moment to thank our employee partners for their continued efforts on behalf of Syntas and our customers in the first quarter. As I've said before, our culture is our greatest competitive advantage. Our partners fuel our success, and we believe deeply in the importance of each employee partner having ownership in the company to share collectively in that success.

Todd Schneider: Thank you, Mike. Before we conclude, I'd like to take a moment to thank our employee partners for their continued efforts on behalf of Cintas and our customers in the first quarter. As I've said before, our culture is our greatest competitive advantage. Our partners fuel our success, and we believe deeply in the importance of each employee partner having ownership in the company to share collectively in that success. As Cintas shares reach record highs in the spring, our Board of Directors approved a 4-for-1 split of our common stock, which went into effect before the market opened on 12 September. We are proud to enhance the accessibility of Cintas shares for all of our investors, especially for our employee partners, so that they can continue to share in the future growth of Cintas as we look ahead to the rest of fiscal 2025.

Todd: Thank you Mike before we conclude I would like to take a moment to thank our employee partners for their continued efforts on behalf of Cintas and our customers in the first quarter.

Todd: As I've said before our culture is our greatest competitive advantage.

Todd: Our partners fueled our success and we believe deeply in the importance of each employee partner, having ownership in the company to share collectively in that success.

Todd Schneider: As Syntas shares reach record highs in the spring, our board of directors approved a 4-for-1 split of our common stock, which went into effect before the market opened on September 12. We're proud to enhance the accessibility of Cintas to shares for all of our investors, especially for our employee partners, so that they can continue to share in the future growth of Cintas. As we look ahead to the rest of physical 25, our outlook reflects our continued confidence in our strategy and value proposition of helping our customers achieve their image, safety, cleanliness, and compliance needs. We remain focused on delivering outstanding customer experiences and making the necessary investments in the business to sustain our growth for the remainder of physical 25 and beyond.

Todd: Cintas shares reached record highs in the spring our board of directors approved a four for one split of our common stock which went into effect before the market opened on September 12.

We are proud to enhance the accessibility of synthesis shares for all of our investors, especially for our employee partners. So they can continue to share in the future growth of Cintas.

Todd: As we look ahead to the rest of fiscal 'twenty five our outlook reflects our continued confidence in our strategy and value proposition of helping our customers achieve their image safety cleanliness and compliance needs. We remain focused on delivering outstanding customer experiences and making the necessary investments in the business to sustain our <unk>.

Todd: For the remainder of fiscal 'twenty five and beyond.

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

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

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

Operator: That concludes our prepared remarks. We are now happy to answer questions from the analysts. Please ask us one question and a single follow-up if needed.

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

Operator: Thank you. 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 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.

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. Our first question comes from George Tong from Goldman Sachs. Please go ahead.

Speaker Change #150: If you would like to ask a question. Please press star one on your telephone keypad now.

Baird to ask your question when prompted.

Speaker Change #150: Also be allowed to ask one follow up question.

Speaker Change #150: Once again, if you would like to ask a question. Please press star one on your phone now.

George Tong: And our first question comes from George Tong from Goldman Sachs. Please go ahead, George. Hi, thanks. Good morning.

Speaker Change #150: And our first question comes from George Tong from Goldman Sachs. Please go ahead George.

Jared Mattingly: George. Hi, thanks. Good morning. Can you talk a little bit about the overall selling environment and whether you're seeing any changes in customer purchasing behaviors in response to the overall macro environment and evolving macro uncertainty?

George Tong: Hi, Thanks, good morning.

Todd Schneider: Can you talk a little bit about the overall selling environment and whether you're seeing any changes in customer purchasing behaviors in response to the overall macro environment and evolving macro uncertainty? Good morning, George. Thanks for the question. We have not seen much change in the customer behavior. It's just 60 days ago that we reported our full physical year 24 earnings. But we haven't seen much change. We still see nice demand from our customers. And we're helping them with their image, their safety, their cleanliness, and compliance needs. And that frees them up to focus on what's most important for them: taking care of their guests, their people, their patients, whatever their constituents are.

George Tong: Can you talk a little bit about the overall selling environment and whether youre seeing any changes in customer purchasing behaviors.

Speaker Change #151: In response to the overall macro environment and evolving macro uncertainty.

Todd Schneider: Good morning, George. Thanks for the question. You know, we have not seen much change in the customer behavior. You know, it's just 60 days ago that we reported our full fiscal year 2024 earnings, but we haven't seen much change. We still see nice demand from our customers, and we're helping them with their image, their safety, their cleanliness, and their compliance needs. And that frees them up to focus on what's most important for them, taking care of their guests, their people, their patients, whatever their constituents are. So not much change, I would say, in sales cycle or in the demand of the customer. Got it.

Speaker Change #152: Good morning, George Thanks for the question.

Speaker Change #153: We we have not seen much change in our in the customer behavior.

Speaker Change #153: Just 60 days ago that we reported are our full fiscal year 'twenty for earnings, but we haven't seen much change.

Speaker Change #153: We still see nice demand from our customers.

Speaker Change #153: And we're helping them with their.

Speaker Change #153: Their image their safety their cleanliness in the compliance needs.

Speaker Change #153: That frees them up to focus on what's most important for them taking care of their guests.

Speaker Change #154: Sure there are people their patients.

Whatever their constituents are so not much change I would say in the sales cycle. We're in.

George Tong: So not much change, I would say, in sales cycle or in the demand of the customer. Got it. That's the top full.

Speaker Change #154: And the demand of the customers.

Speaker Change #154: Okay.

Speaker Change #155: Got it that's helpful and you continue to highlight healthcare hospitality education and government as key focus verticals, where the company can you talk a little bit more about traction you're seeing in those verticals and how growth in performance there compare versus the broader company.

Todd Schneider: And you continue to highlight healthcare, hospitality, education, and government as key focus verticals for the company. Can you talk a little bit more about traction and seeing in those verticals and how growth and performance there compare versus the broader company? Yes, certainly. So those we believe we've chosen those verticals very well. We've invested in them. We run them not like just the sales vertical, but we look at them as how do we take care of those customers holistically.

Todd Schneider: Yeah, certainly. So those we believe we've chosen those verticals very well. We've invested in them. We run them. Not like just a sales vertical, but we look at them as, how do we take care of those customers holistically? And I thought I would just give an example of that. But all this starts with our culture. We have a spirit of positive discontent, is what we call it at Cintas, which is meaning we're constantly focused on improving and innovating. And we also believe that the answers are not at our desk, meaning we believe the answer is out with our customers and our employee partners. So we travel, and we get out and we talk to our customers about where we can help them. And I have two examples where we're helping customers in the healthcare area that came exactly from those conversations.

Yes, certainly so those.

Speaker Change #156: We believe we've chosen those verticals very well we've invested in them.

Speaker Change #157: We run them not like just the sales vertical, but we look at them as how do we take care of those customers are holistically.

Todd Schneider: And I thought I would just give an example of that, but all the starts of our culture. You know, we have a spirit of positive discontent, is what we call it. It's in us, which is meanings we're meaning we're constantly focused on improving and innovating. And we also believe that the answers are not at our desk, meaning we believe the answer is out with our customers and our employee partners. So we travel and we get we get we talked to our customers about where we can help them.

Speaker Change #158: And I thought I would just.

Speaker Change #158: Give an example of that but.

Speaker Change #158: All of this starts with our culture.

Speaker Change #158: We have.

Speaker Change #158: Our spirit of positive discontent is what we call it <unk>, which is meetings, where it meaning we're constantly focused on improving and innovating.

Speaker Change #158: And we also believe that the answers are not at our desk, meaning we believe the answer is out with our customers and our employee partners. So we travel and we get laid out and we talk to our customers about.

Speaker Change #158: Where we can help them and I have two examples where we're helping customers in the healthcare area.

Todd Schneider: And I have two examples where we're helping customers in the healthcare area that came exactly from those conversations. The first was, and we've spoken a little bit about this with garment dispensing. You know, we're continuing to have very good success with this technology. And our health care customers, what they pulled us was they had a problem managing their inventory. In this case of scrubs, as they didn't have accountability with the scrubs. So when you don't have accountability, there's hoarding of garments that occurs, which leads to lack of availability, meaning the first person to get there takes garments, and then those who show up later don't get the garments.

Speaker Change #158: That.

Speaker Change #158: That came exactly from those conversations the first was and we've spoken a little bit about this with garmin dispensing.

Todd Schneider: The first was, and we've spoken a little bit about this with garment dispensing. You know, we're continuing to have very good success with this technology. Our healthcare customers, what they told us was they had a problem managing their inventory, in this case of scrubs, as they didn't have accountability with the scrubs. So when you don't have accountability, there's hoarding of garments that occurs, which leads to a lack of availability, meaning the first person who gets there takes garments, and then those who show up later don't get the garments. As a result, the healthcare customers, for the most part, invested in what I'll call substandard product because they wanted. Well, when they didn't have control over the inventory, they went as cheap as possible. This technology addresses those issues. Today it's being used in many clinical areas.

Speaker Change #158: We're continuing to have very good success with this technology.

Speaker Change #158: In our health care customers, what they told US was they had a problem managing their inventory in this case subscribes.

Speaker Change #158: As they didn't have accountability with the scrubber.

Speaker Change #158: When you don't have accountability, there's hoarding of garments that occurs which leads to a lack of availability, meaning the first person who gets there. It takes garments and then those who show up later don't get the garments.

Todd Schneider: And as a result, are the health care customers, for the most part, invested in what I'll call substandard product because they wanted. Well, when they didn't have control over the inventory, they went as cheap as possible. So, in this technology addresses those issues. And today we're being used in many clinical areas: you know, labor and delivery, emergency room, operating rooms, radiology, cat labs. ICU are some examples of where we're doing that.

Speaker Change #158: And as a result, our.

Speaker Change #158: Healthcare customers for the most part invested in what I'll call sub standard product because they.

Speaker Change #158: They wanted while when they didn't have control over the inventory they want as cheap as possible. So in this technology addresses those issues.

Speaker Change #158: And today, where it's being used in many clinical areas labor.

Todd Schneider: You know, labor and delivery, emergency room, operating rooms, radiology, cath labs, and ICU are some examples of where we're doing that we found the exact same opportunity. Meaning when we spoke to our customers, we asked them, what else can we help you with? And they said, we are having a heck of a problem with privacy curtains. And what they told us is it was one of their top compliance issues. And those privacy curtains, when you think about those, they're in patient rooms, recovery areas, emergency rooms, and acute care, but they're also in non-acute throughout, in surgery centers and medical centers. And they have to be cleaned. They have to be cleaned on a frequent basis. And so it's a real compliance challenge for our customers. So we listened to them and we didn't just take over the problem.

Speaker Change #158: Labor and delivery emergency room operating rooms, radiology Cath labs ICU are some examples.

Speaker Change #158: We're doing that.

Todd Schneider: We found the exact same opportunity, meaning when we spoke to our customers, we asked them, what else can we help you with? And they said, "We are having a heck of a problem with privacy curtains." And when they told us it was one of their top compliance issues, and those privacy curtains, when you think about those, they're in patient rooms, recovery areas, emergency rooms, and acute care, but they're also in non-acute throughout in surgery centers and medical centers, and they have to be clean; they have to be clean on a frequent basis, and so it's a real compliance challenge for our customers.

Speaker Change #158: We found the exact same opportunity.

Speaker Change #158: Meaning.

Speaker Change #158: When we spoke to our customers we asked them what else can we help you with and they said we are having a heck of a problem with privacy curtains.

Speaker Change #158: And what they told US is it was one of our top compliance issues and those privacy curtains. When you think about those that are in patient rooms recovery areas emergency rooms, and acute care, but theyre also in non acute throughout and surgery centers and medical centers.

Speaker Change #158: And they have to be cleaned.

Speaker Change #158: And they have to be clean on a frequent basis.

Speaker Change #158: So it's a real compliance challenge for our customers, so we listen to them and and we didn't just take over the problem. We studied it and came up with some.

Todd Schneider: So we listened to them, and we didn't just take over the problem; we studied it and came up with some great products and technology. Those products have some patents on them as well, and the technology allows us to track compliance. So it makes for a safer environment, a more compliant environment, and it frees up the environmental services at those organizations who are cleaning patient rooms and other areas where clinicians provide care. So a safer, cleaner, more compliant, and more efficient environment. So I thought that might help just to give a little bit of color around what we're doing in that particular vertical, but it really starts with our culture, and we listen to our customers. Where can we help? And then we dive in, and we provide the solutions.

Speaker Change #158: Some great products and technology those products have some patterns on them as well and the technology allows us to track compliance.

Speaker Change #158: It makes for in total it makes for a safer environment a more compliant environment.

Speaker Change #158: And it frees up the environmental services at those organizations.

Who are cleaning patient rooms, and other areas, where clinicians provide care so.

Speaker Change #158: For cleaner more compliant and more efficient environment. So I thought that might help just to give a little bit of color around what.

Speaker Change #158: What we're doing in that particular vertical.

Speaker Change #158: But it really starts with our culture, and we listen to our customers where can we help and then we dive in and we provide those solutions.

George Tong: Very helpful. Thank you.

Jared Mattingly: Very helpful. Thank you. Thank you.

Speaker Change #159: Very helpful. Thank you.

Speaker Change #159: Thank you.

Luke McFadden: And our next question comes from Tim Mulroney from William Blair. Please go ahead, Tim.

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

Speaker Change #159: And our next question comes from Tim Mulrooney from William Blair. Please go ahead Tim.

Luke McFadden: Hi, this is Luke McFadden on for Tim Mulroney. Thanks for taking our questions today. I might have missed it in your prepared remarks, but could you provide the breakdown in new sales between market share winds and conversion of no programmers for the quarter? Yes, good morning. We did not cite it specifically, but no change to that trend. You know, on average, we're historically about two out of three of our new customers come from what we call the no program market. The no program market with meaning that they're not with a traditional competitor. Now, that doesn't mean that they're not using products and services, meaning we might go in and they need help with; they might own a mat.

Jared Mattingly: Hi, this is Luke McFadden for Tim Mulrooney. Thanks for taking our questions today. I might have missed it in your prepared remarks, but could you provide the breakdown in new sales between market share wins and conversion of no program for the quarter?

Luke <unk>: Hi, This is Luke <unk> on for Tim Mulrooney, Thanks for taking our questions today.

Luke <unk>: I might have missed it in your prepared remarks, but could you provide the breakdown in new sales between market share wins and conversion of no programmers for the quarter.

Todd Schneider: Yes. Good morning. We did not cite it specifically, but no change to that trend. On average, we're historically about 2/3 of our new customers come from what we call the No Program market. The No Program market, meaning that they're not with a traditional competitor. Now, that doesn't mean that they're not using products and services, meaning we might go in and they need help with they might own a mat, they might have soaps, they might buy uniforms, but they're not with a traditional competitor. So they may be spending money on those products, but we redirect them to ourselves to help them do it better, faster, smarter, cheaper, in many cases.

Speaker Change #161: Yes. Good morning, we did not cited specifically, but no change to that trend.

Speaker Change #162: On average were historically about two out of three of our new customers come from what we call the <unk> program market.

Speaker Change #162: No program market with meaning that they are not with a traditional competitor.

Speaker Change #163: Now that doesn't mean that they're not using products and services, meaning we might go in and they need help with they might O&M, Matt they might have soaps they might buy uniforms.

Todd Schneider: They might have soaps, they might buy uniforms, but they're not with a traditional competitor. So they may be spending money on these products and those products, but that we redirect them to ourselves to help them do a better, faster, smarter, cheaper, in many cases.

But they're not with a traditional competitor so.

Speaker Change #163: They may be spending money on these products to serve those products.

But we redirect them to ourselves to help them do it better faster smarter cheaper in many cases.

Todd Schneider: Understood, really helpful. And then kind of just sticking on that topic with my follow up, you know, it sounds like that no program or penetration continues to be an area of strength in the business. It was hoping you could offer maybe some insights into the typical profile of these recent no program or conversions or the majority of these recent wins of a particular business size or concentrated in any specific market or is it relatively broad based? Well, that's the that's a beauty of our business. We service below over a million customers, and there's 16 million businesses in North America, US and Canada.

Jared Mattingly: Understood.

Speaker Change #163: Understood really helpful. And then kind of just sticking on that topic with my follow up.

Operator: Really helpful.

Jared Mattingly: Then kind of just sticking on that topic with my follow up, you know, it sounds like that No Program penetration continues to be an area of strength in the business. Was hoping you could offer maybe some insights into the typical profile of these recent No Program conversions; are the majority of these recent wins of a particular business size, or concentrated in any specific end market, or is it relatively broad-based?

Speaker Change #164: Sounds like that no programmer penetration continues to be an area of strength in the business.

Speaker Change #165: Was hoping you could offer maybe some insights into the typical profile of these recent no programmer conversions or the majority of these recent wins of pick.

Speaker Change #166: <unk> business size or concentrated in any specific end market or is it relatively broad based.

Todd Schneider: Well, that's the beauty of our business. We service a little over a million customers, and there are 16 million businesses in North America, US, and Canada. And so the wins come from all industries, all shapes, sizes of businesses. And that's why we're so bullish on the future, because we see that opportunity, that white space out there as a significant opportunity to help customers. And we're still in obviously the very much early innings there.

Speaker Change #166: Well, that's the beauty of our business.

Speaker Change #167: We service a little over 1 million customers and there are 16 million businesses in North America U S and Canada.

Speaker Change #168: And so the wins come from all industries, all shapes sizes of businesses.

Speaker Change #168: And that's why we're so.

Speaker Change #168: Bullish on the future because we see that opportunity that white space out there as a significant opportunity to help customers.

Speaker Change #168: And we're still in obviously the very much early innings there.

Jared Mattingly: Understood. Thanks so much.

Speaker Change #169: Understood. Thanks, so much.

Todd Schneider: Thank you.

Operator: Our next question comes from Andrew Steinerman from J.P. Morgan. Please go ahead, Andrew.

Speaker Change #170: And our next.

Andrew Steinerman: Andrew Steinerman, J.P. Morgan. Please go ahead, Andrew. Hi, this is Andrew.

Speaker Change #171: Question comes from Andrew Steinman from Jpmorgan. Please go ahead Andrew.

Todd Schneider: Hi, this is Andrew. Mike, could you talk about merchandise amortization.

Andrew: Hi, This is Andrew.

Andrew Steinerman: Could you talk about merchandise habitation in the quarter, year of a year, how much is merchandise habitation ahead, wind, or tailwind, and what have you assumed for the fiscal year in terms of trends in merchandise habitation? Good morning, Andrew. Material cost has been an area of strength for us in, and I'll say the rental business, but also the others, but I'll stick to the rental business for a second. Material cost has been trending nicely, and we work hard at that material cost. So within there, you can think about our globe supply chain and finding better ways to source better cost of product.

Andrew: Could you talk about merchandise amortization in the quarter year over year, how much of merchandise amortization of headwind or tailwind and what have you assumed for the fiscal year in terms of trends in merchandise amortization.

Jared Mattingly: In the quarter, year over year?

Todd Schneider: How much is merchandise amortization a headwind?

Jared Mattingly: Or tailwind, and what have you assumed for the fiscal year in terms of?

Todd Schneider: Trends in merchandise amortization?

Jared Mattingly: Good morning, Andrew. Material cost has been an area of strength for us in, I'll say, the rental business, but also the others. But I'll stick to the rental business for a second. Material cost has been trending nicely, and you know, we work hard at that material cost. So within there, you can think about our global supply chain and finding better ways to source better cost of product. And so they've done a really great job there despite the really good business growth, volume growth that we've had. And the other thing that we really work hard at, as you know, Andrew, is in our stock rooms and the sharing of garments. And so the more we share in terms of our garments, the more pull percentage we get out of the stock rooms. And that means we are injecting fewer garments into service.

Speaker Change #172: Good morning, Andrew.

Speaker Change #173: Material cost has been an area of strength for us.

Speaker Change #174: And I'll say the rental business, but also the others.

Speaker Change #174: But I'll stick to the rental business for a second.

Speaker Change #176: Material cost has been has been trending nicely and.

Speaker Change #176: We work hard at that material costs. So we.

Speaker Change #176: Within there you can think about our global supply chain and finding better ways to source.

Speaker Change #176: <unk>.

Speaker Change #176: Better.

Speaker Change #176: Cost of product.

Mike Hansen: And so they've done a really great job there, despite the really good business growth, volume growth that we've had. And the other thing that we really work hard at is, you know, Andrew is in our stock rooms and the sharing of garments. And so the more we share in terms of our garments, the more pull percentage we get out of the stock rooms, and that means we are injecting fewer garments into service. And so the combination of those things have created some nice tailwind, and you see that showing up in our gross margin. We would expect that will continue through the fiscal year.

Speaker Change #177: And so they've done a really great job there.

Speaker Change #177: Despite the really good business growth volume growth that we've had and the other thing that we really work hard at as you know Andrew as is in our stock rooms, and the sharing of garments and so the more we share in terms of our garments the more.

Andrew: Pull percentage, we get out of the stock rooms, and that means we are injecting fewer garments into service and so the combination of those things have created some nice tailwind and you see that showing up in our gross margin. We would expect that will continue through the fiscal year.

Jared Mattingly: And so the combination of those things have created some nice tailwind and you see that showing up in our gross margin. We would expect that will continue through the fiscal year.

Todd Schneider: Thanks, Mike.

Mike: Thanks, Mike.

Mike: Okay.

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

Speaker Change #178: And our next question comes from Jasper Bibb from <unk> Securities. Please go ahead Jasper.

Jared Mattingly: Hey, good morning guys. Wanted to ask about SmartTruck and the Google partnership. I think you announced that a little over a year ago now. Did the cloud migration a few quarters ago. Just kind of hoping you could update us on how that's progressed and where you might be seeing some associated marginal.

Jasper Bibb: Hey, Good morning, guys wanted to ask about similar Trump and the Google partnership I think you announced that.

Jasper Bibb: I think you announced that a little over a year ago now, did the cloud migration a few quarters ago, just kind of hoping you could update us on how that's progressed and where you might be seeing some associated more general efficiency benefits at this stage. And so I think we're going to have a little bit more time for our business, but more specifically, it's helpful for our customers because, you know, we're able to, instead of spending time driving, we're able to spend more time with our customers. So when we're there with our customers, it gives us the opportunity, with eyes and ears and minds in those businesses, to solve problems for them, whether it's something else in their business.

Speaker Change #179: A little over a year ago now.

Jasper Bibb: Cloud migration few quarters ago, and just kind of hoping you can update us on how that's progressed and where you might be seeing some associated margin our efficiency benefits at this stage.

Todd Schneider: Efficiency benefits at this stage. Yeah, Jasper, thank you for the question. SmartTruck is, as a reminder, is proprietary technology that we work to develop. It's been very helpful for our business, but more specifically it's helpful for our customers because we're able to, instead of spending time driving, we're able to spend more time with our customers. And when we're there with our customers, it gives us the opportunity with eyes and ears and minds in those business to solve problems for them, whether it's something else in their business, like I mentioned with in healthcare, with garment dispensing, scrubs, and privacy curtains. So more time with the customer is really valuable for us, separate from the fact that we like to say around here we don't make any money when the wheels are moving, we only make money.

Jasper Bibb: Yes, Jeff. Thank you for the question Smart truck is.

Speaker Change #181: As a reminder, there's proprietary technology that we worked.

Work to develop it.

Speaker Change #182: It is.

Speaker Change #182: Sure.

Speaker Change #182: It's been very helpful for our business.

Speaker Change #182: But more specifically it's helpful for our customers because.

Speaker Change #182: We're able to instead of spending time, driving we're able to spend more time with our customers So and when we're there with our customers. It gives us opportunity with eyes and ears in mines in those business.

To solve problems for them.

Speaker Change #182: Whether it's something else in their business like I mentioned with them and healthcare with Garmin dispensing in scrubs and privacy curtains.

Todd Schneider: And so we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more We're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers, and we're going to have a little bit more time for our customers.

Speaker Change #182: So more time with the customer is really valuable for us.

Speaker Change #183: But when the fact that we'd like to say around here. We don't we don't make any money when that wheels are moving we only make money when we generate revenue when the real stop on our trucks. So that's been valuable our relationship with Google as is.

Ben: As Ben.

Ben: Very advantageous.

Ben: And as important as our relation with Google is google's relationship with SAP.

<unk>.

Ben: Having that all combined gives us insight into our business helps us too.

Ben: Leverage our infrastructure and leverage our.

Ben: Our employee partners to put them in the right spot the right place the right time.

Ben: So.

We believe that that is going to be beneficial to the future and and we really value those relationships.

Jared Mattingly: Thanks. Then maybe following up on that last point, it sounded like pretty good growth in Fire in the quarter. Any color on where the underlying operating margin for that business was in Q1? And it would also be great to hear how some of the initiatives you're doing there, like the SAP implementation and some of the G&A investments you called out in the past, and where those stand today.

Jim Reit: Jim Reit. Thanks. And then maybe following up on that last point, it sounded like pretty good growth in fire in the quarter.

Speaker Change #185: Thanks, and then maybe following up on that last point.

Speaker Change #186: Like pretty good growth in the fire in the quarter.

Mike Hansen: That's any color onward on the running operating margin for that business was in the first quarter and would also be great to hear how some of the initiatives you're doing there, that's a key implementation in some of the GNA investments you've called out in the past, are where we're going to stand for that. Yeah, that's a good question. So we'd love to fire business. It is; it's growing really nicely. The organic opportunity is amazing. The M&A opportunity is really attractive for us. And yeah, we're investing in that business. We're investing in our SAP system. And we're excited about that.

Speaker Change #187: Any color on where the underlying operating margin for that business was in the first quarter and would also be great to hear how some of the initiatives you're doing there like.

Speaker Change #187: SAP implementation and some of the G&A investments you called out in the past.

Speaker Change #188: We're working.

Speaker Change #189: I'll just add to that.

Todd Schneider: Yes, good question. So we love the Fire business. It's growing really nicely. The organic opportunity is amazing. The M and A opportunity is really attractive for us. And yeah, we're investing in that business. We're investing in our SAP system, and we're excited about that. Excited about having all of our route based systems on one system. We think that'll really give us some insights into our customers that we don't have today. But the opportunity out there for Fire is incredible. Just because it's every business, the only business we're in, that every business legally has to have it, the services around it, whether it's sprinklers, alarms, in certain cases, fire extinguishers, emergency lights. So we think the runway is really attractive in that business. We like the margin profile, we know how to run the business, we know the mix of business that's attractive.

Speaker Change #190: Yes. Good question. So we love the fire versus it is it's growing really nicely.

Speaker Change #191: The organic opportunity is amazing the M&A opportunity is really attractive for us.

Speaker Change #191: And yes, we're investing in that business, we're investing in our SAP system.

And we're excited about that excited.

Mike Hansen: We're excited about having over-route-based systems on one system. We think that'll really give us some insights into our customers that we don't have today. But the opportunity out there for fire is, it's incredible just because you know, it's every business. The only business we're in, that every business legally have to have it. The services are random, whether it's sprinklers, alarms, in certain cases, fire extinguishers, emergency lights. So we think the runway is really attractive in that business. We like the margin profile. We know how to run the business. We know the mix of business that's attractive.

Speaker Change #192: Side about having.

Speaker Change #191: All of our route based systems on one system, we think that will really give us.

Speaker Change #191: Some insights into our customers that we don't have today.

Speaker Change #191: But the opportunity out there for fire is.

Speaker Change #193: It's incredible just because.

Every business, the only business, where and that every business legally have to have it.

Speaker Change #193: The services around it whether it's <unk>.

Speaker Change #193: Sprinklers alarms in certain cases fire extinguishers emergency lights. So we think the runway is really attractive in that business. We like the margin profile, we know how to run the business. We know the mix of business that's attractive.

Todd Schneider: As a result, not every MA opportunity that comes down the pike is really attractive for us. But we know how to do it, and we will be aggressive as appropriate.

Mike Hansen: And as a result, not every M&A opportunity that comes down to pike is really attractive for us. But we know how to do it. And we will be aggressive as appropriate.

Speaker Change #193: And as a result not every.

Speaker Change #193: M&A opportunity that comes down the Pike is really attractive for us, but we know how to do it and we will be aggressive as appropriate.

Mike Hansen: Maybe I'll offer two things with that as well. You heard me saying the prepared remarks. This was the second quarter in a row that gross margin in the fire business was 50 percent. And so that is a reflection of a lot of the things that Todd talked about in terms of really going well and running the business well. We are in the midst of that SAP implementation that we've talked about. And I think back in July, I mentioned that there would be a little bit of pressure on fire margins in fiscal 25 because of that implementation.

Jared Mattingly: Maybe I'll offer two things with that as well. You heard me say in the prepared remarks this was the second quarter in a row that gross margin in the Fire business was 50%. And so that is a reflection of a lot of the things that Todd talked about in terms of really going well and running the business. Well, we are in the midst of that SAP implementation that we've talked about, and I think back in July I mentioned that there would be a little bit of pressure on Fire margins in fiscal 2025 because of that implementation. And so you see a little bit of that coming through Fire SG&A. And if you look at the All Other operating margin, we're down a bit from Q4 to Q1.

Speaker Change #194: I'll offer two things with that as well.

Speaker Change #194: You heard me say in the prepared remarks. This was the second quarter in a row that gross margin in the fire business was 50%.

Speaker Change #194: And so that's.

Speaker Change #194: That is a <unk>.

Speaker Change #194: Reflection of a lot of these things that Todd talked about in terms of really going well and running the business well.

Speaker Change #194: <unk>.

Speaker Change #194: We are in the midst of that SAP <unk>.

Speaker Change #194: Implementation that we've talked about and I think back in July I mentioned that there would be a little bit of pressure on fire margins.

In fiscal 'twenty, five because of that implementation and so you see a little bit of that coming through fire SG&A and if you. If you look at the all other operating margin were down a bit from Q4 to Q1, and it's a bit of that reflection of the SAP <unk>.

Mike Hansen: And so you see a little bit of that coming through fire SGNA. And if you look at the all other operating margin, we're down a bit from Q4 to Q1. And it's a bit of that reflection of the SAP implementation. As you've seen in our first day in safety and rental businesses, that SAP implementation, it certainly takes some time, but there are some really nice benefits subsequent to getting that system in and running it and learning how to run it. But, as we talked about, fiscal 25 may show a little bit of pressure in SGNA and fire business.

Jared Mattingly: It's a bit of that reflection of the SAP implementation as you've seen in our first aid and safety and rental businesses, that SAP implementation. It certainly takes some time, but there are some really nice benefits subsequent to getting that system in and running it and learning how to run it. As we talked about, fiscal 2025 or May show a little bit of pressure in SG&A in the fire business. Certainly that is all incorporated into the guide, the overall guide that we've given.

Speaker Change #194: Implementation.

Speaker Change #194: As you have seen in our first aid and safety and rental businesses that our SAP implementation.

Speaker Change #195: It certainly takes some time, but there are some really nice benefits subsequent to getting that system in and running it and learning how to run it.

Speaker Change #195: But as we've talked about fiscal 'twenty five may show, a little bit of pressure in SG&A in the fire business certainly that is all incorporated into the guide the overall guide that we've given.

Mike Hansen: Certainly, that is all incorporated into the guide, the overall guide that we've given.

Todd Schneider: Great, thanks for the detail there.

Speaker Change #195: Greg Thanks for the detail there.

Manav Patnik: And our next question comes from Manav Patnik from Barclays.

Operator: Our next question comes from Manav Patnaik from Barclays.

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

Jared Mattingly: Please go ahead.

Ronin Kennedy: Please go ahead. Hi, good morning. This is Ronan Kennedy. I'm from Manav. Thank you for taking my question. The strong growth in all I March and you said it was sourcing supply chain tech, operating efficiencies and element of favorable mix, I think 20 dips from energy.

Operator: Manav.

Jared Mattingly: Hi, good morning, this is Ronan Kennedy. I'm from Manav. Thank you for taking my question. The strong growth in OI margin expansion, you said it was sourcing supply chain tech, operating efficiencies, an element of favorable mix, I think 20 basis points from energy. Can I please confirm whether there's any one-time factors in there or is it the more sustainable drivers and do you see upside to the margin expansion opportunity?

roni Kennedy: Hi, Good morning. This is roni Kennedy on for Matt. Thank you for taking my question.

The strong growth and high margin expansion you said it was sourcing supply chain tech operating efficiencies and element of favorable mix I think 20 bps from energy.

Energy can I. Please confirm whether there was any one time factors in there or is it the more sustainable drivers and do you see upside to the margin expansion opportunities.

Ronin Kennedy: Can I please confirm whether there's any one-time factors in there or is it the more sustainable drivers, and do you see upside to the margin expansion opportunity? Ronan, thanks for the question. No one-timers to call out, as far as where we can go with this. We're focused on extracting out inefficiencies in our business, and there's more to come, so we don't like to put a ceiling on our aspirations there. But we see opportunity in our business to extract out inefficiencies, and so we will continue to do that. I think from an operating margin standpoint, we've talked about 25 to 35% incrementals, and I think our guide reflects in that range.

Todd Schneider: Ronan, thanks for the question. No one-timers to call out, you know, as far as where we can go with this, you know, we're focused on extracting out inefficiencies in our business, and there's more to come. So we don't like to put a ceiling on our aspirations there. But you know, we see opportunity in our business to extract that inefficiencies, and so we will continue to do that. I think from an operating margin standpoint, we've talked about 25% to 35% incrementals, and I think our guide reflects in that range. Got it. Thank you.

Ronan: Ronan Thanks for the question no one timers to call out.

Speaker Change #198: As far as.

Speaker Change #199: Where we can go with this we're focused on extracting out inefficiencies in our business.

Speaker Change #199: And there is more to come so we don't like to put a.

Speaker Change #199: Our ceiling on our aspirations there but.

Speaker Change #200: We see.

Speaker Change #200: Opportunity in our business to extract out inefficiencies and so we will continue to do that.

Speaker Change #200: I think from an operating margin standpoint, we've talked about 25% to 35% Incrementals.

Speaker Change #200: And I think our guide reflects in that range.

Ronin Kennedy: Thank you, and then may I please, could I ask for your current competitive dynamics within the industry and whether recent activity within the industry changes the way about capital allocation? Ronan, you're speaking of M&A, is that correct, or do you like to clarify? Yes, please. And broader dynamic and potential implications with potential M&A and your thought process. Great, great. Well, M&A is an important component of our business, has been and will be. You know, we are, it's worked very well for our business, for our customers, our shareholders throughout, and we certainly stay aware of what's going on in the marketplace, and we like our competitive position.

Speaker Change #201: Got it thank you and EMEA pleased because I have.

Jared Mattingly: Could I ask for your current assessment of competitive dynamics within the industry and whether recent activity within the industry changes the way about capital allocation?

Could I ask three year current competitive dynamics within the industry and whether recent activity within the industry.

Speaker Change #202: Changes in capital.

Speaker Change #201: Capital allocation.

Speaker Change #203: Youre running Youre speaking of.

Todd Schneider: Ronan, you're speaking of Manav, is that correct? Or if you'd like to clarify.

Speaker Change #204: M&A is that correct or if you would like to clarify.

Jared Mattingly: Yes, please. And broader dynamics and, you know, potential implications of potential M&A and your thought process, capital allocation.

Speaker Change #204: Yes.

Speaker Change #205: And broader yes and no.

Speaker Change #205: And potential implications of potential M&A in your thought processes capital allocation.

Todd Schneider: Great, great. Well, M&A is an important component of our business, has been and will be. You know, it's worked very well for our business, for our customers, and our shareholders throughout. We certainly stay aware of what's going on in the marketplace, and we like our competitive position. We think we're in a good spot. We will continue to invest to make sure that we're appropriately positioned to compete in the marketplace moving forward. That's where our focus is, and that's what we'll continue to do.

Speaker Change #206: Great great.

Speaker Change #206: M&A is an important component of our business has.

Speaker Change #207: <unk> has been and will be.

Speaker Change #207: We are it's worked very well for our business for our customers our shareholders throughout.

Speaker Change #207: And.

Speaker Change #207: We certainly stay.

Speaker Change #207: Aware of what's going on in the marketplace and.

Speaker Change #207: And we like our competitive position, we think we're in a good spot we will continue to invest to make sure that we are.

Appropriate Lee positioned to compete in the marketplace moving forward. So that's.

That's where we're focused where our focus is and that's what we'll continue to do.

Josh Chan: Thank you, I appreciate it. And our next question comes from Josh. Sean from UBS, please go ahead, Josh. Hi, good morning.

Jared Mattingly: Thank you. Appreciate it.

Thank you I appreciate it.

Operator: Our next question comes from Josh Chan from UBS. Please go ahead. Josh.

Speaker Change #207: And our next question comes from Josh Chan from UBS. Please go ahead Josh.

Todd Schneider: Hi, good morning.

Josh Chan: Hi, Good morning, Michael Jared Thanks for taking my questions.

Jared Mattingly: Todd, Mike, and Jared.

Michael Jarrett: I'm Mike Jarrett. Thanks for taking my questions.

Todd Schneider: Thanks for taking my questions. On the rental business, could you confirm?

Josh Chan: On the rental business, could you confirm that you haven't seen much change in wearer levels, and kind of relatedly, if you were to see wearer levels start to moderate the economy, could you talk about the syntax playbook and that scenario and what you can do to sustain the attracted growth that you're used to seeing? Thank you. Josh, thanks for the question. I'll start, Mike. Feel free to chime in. You know, we certainly love when jobs are being added. We haven't seen real change in our wearer levels, but that being said, you know, our business, we demonstrated that we can grow our business in multiples of GDP and multiples of employment growth.

On the rental.

Could you confirm that you haven't seen much change in where our levels and kind of related.

Jared Mattingly: That you haven't seen much change in wearer levels? And kind of relatedly, if you were to see where levels start to moderate.

Speaker Change #208: If you were to see wafer level starts to moderate the <unk>.

Todd Schneider: The economy, could you talk about the Cintas playbook in that scenario and what?

Speaker Change #209: Economy could you talk about the same playbook in that scenario.

Jared Mattingly: What can you do to sustain the attractive growth that you're used to seeing? Thank you.

Speaker Change #210: What you can do to sustain the attractive growth that you used to be thank you.

Todd Schneider: Josh, thanks for the question. I'll start. Mike, feel free to chime in. You know, we certainly love when jobs are being added. We haven't seen real change in our wear levels. But that being said, you know, our business, we've demonstrated that we can grow our business in multiples of GDP and multiples of employment growth. So we are certainly not reliant on that. With that being said, I love when jobs are being added. I think it's good for our economy, and it's good for our customers, and it's good for our business. So but we're not reliant on that. We've also demonstrated that we can grow our business in virtually every type of economic cycle that we've seen. So we're focused on doing just exactly that, investing for the future to position our employee partners to take incredibly good care of our customers.

Speaker Change #210: Josh Thanks for the question I'll start Mike feel free to chime in.

Speaker Change #211: We certainly love when jobs are being added.

We haven't seen.

Speaker Change #211: Yes.

Mike: Real change in our wearer levels.

Mike: But that being said.

Mike: Our business, we've demonstrated that we can grow our business in multiples of GDP and multiples of employment growth. So we're certainly not relying on that.

Mike: With.

Mike: That being said alone when jobs are being Ed I think it's good for our economy and it's good for our customers and it's good for our business. So.

Mike: But we are not reliant on that we've also demonstrated that we can grow our business in.

Mike: And virtually every type of economic cycle that we've seen.

Todd Schneider: So we're focused on doing just exactly that, investing for the future to position our employee partners to take incredibly good care of our customers, and we'll continue to invest in that so that we can be positioned to be really successful. Thank you for the color.

Mike: So we're focused on doing just exactly that investing for the future to position or our employee partners, who take incredibly good care of our customers.

Todd Schneider: We'll continue to invest in that so that we can be positioned to be really successful for the future.

Mike: And.

Mike: And we'll continue to invest in that so that we can be positioned to can be really successful for the future.

Jared Mattingly: Great.

Todd Schneider: Thank you for that color, and on your guidance, was the growth in Q1 better than your internal expectation?

Speaker Change #212: Great. Thank you for that color.

Todd Schneider: On your guidance, was the growth in Q1 better than your internal expectation? I guess I'm asking in the context of you raising the four-year guidance exactly at the low end. Just wanted color on your thoughts around that. Thanks so much for your time. Sure. Well, I'll say this. We saw some nice growth in the first quarter, and generally it lines up with where we like to be. It was at the high end of our guide, but as we now have a quarter in the books, we can feel a little bit more confident to bring up the low end of the guide.

Speaker Change #213: On your guidance.

Speaker Change #214: Quarter, what the growth in Q1.

Speaker Change #215: Other than our internal expectation and I guess I'm asking in the context of.

Jared Mattingly: I guess I'm asking in the context.

Todd Schneider: Thank you for raising the four-year guidance.

Speaker Change #216: You're raising the full year guidance.

Jared Mattingly: Expect at the low end. Just wanted color on your thoughts around that. Thanks so much for your time.

Speaker Change #216: Low end just wanted to.

Speaker Change #218: Color on your thoughts around that thank you so much for your time.

Todd Schneider: Sure.

Speaker Change #216: Sure.

Jared Mattingly: Well, I'll say this, the growth, we saw some nice growth in Q1 and generally it lines up with where we like to be. It was at the high end of our guide. But as we now have a quarter in the books, it's a little. We can feel a little bit more confident to bring up the low end of the guide. If you think about that guide range, you know, it's a same workday growth range of 7.3% to 8.4% for the year. And when you think about the implied guide range for the rest of the year, Q2 through Q4, we're not too far different from that 6.9% to 8.3% on a same workday basis. So look, this 8% growth that we saw in Q1, organic growth is right where we want to be.

Speaker Change #219: Well I'll say this the growth.

We saw some nice growth in the first quarter and it and generally it lines up with where we like to be it was at the high end of our guide, but as we as we now have a quarter in the books. It's a little we can feel a little bit more confident to bring up the low end of the guide.

Todd Schneider: If you think about that guide range, it's a same-work-date growth range of 7.3% to 8.4% for the year. And when you think about the implied guide range for the rest of the year, Q2 through Q4, we're not too far different from that. 6.98.3% on a same-work-day basis. Look, this 8% growth that we saw in the first quarter, organic growth is right where we want to be. And the guide, I think, for the rest of the year is a reflection that, look, we have some confidence in the way we're operating. We haven't seen a lot of change in the operating environment, and the growth still looks good.

Speaker Change #219: If you think about that guide range.

Speaker Change #219: <unk>.

Speaker Change #219: It's a.

Speaker Change #219: Same work date growth range of 7.3.

<unk> to eight 4% for the year.

Speaker Change #219: And when you think about the implied guide range for the rest of the year Qs two through four were not too far different from that $6 90 to eight 3% on a same workday basis. So.

Speaker Change #219: Look this 8% growth.

Speaker Change #219: That we saw in the first quarter.

Speaker Change #219: Organic growth.

Speaker Change #219: Is right, where we want to be in the guide I think for the rest of the year is a reflection that.

Jared Mattingly: The guide, I think, for the rest of the year is a reflection that, look, we have some confidence in the way we're operating. We haven't seen a lot of change in the operating environment. The growth still looks good.

Speaker Change #219: Look we have some confidence in the way we're operating we haven't seen a lot of change in the operating environment and the growth still looks good.

Todd Schneider: Great, and congratulations on that strong quarter.

Operator: Great.

Todd Schneider: Congrats on a strong quarter. Thank you.

Speaker Change #220: Great and congrats on a strong quarter.

Andy Whitman: Thank you. And our next question from Andy Whitman from R.W. Baird. Please go ahead, Andy. Yeah, great, thanks, and good morning. Thank you for taking my questions. You guys in the script, you talked about 6th Sigma, you talked about your engineering teams, degree of automation. So I was just wondering if you talk about the rollout of things like RFID inside your plants. I know that you've been kind of testing this for a while, and I think maybe that you're ramping this a little bit more.

Speaker Change #221: Thank you.

Speaker Change #221: Okay.

Operator: Our next question comes from Andy Whitman from R.W. Baird, please. Go ahead, Andy.

Speaker Change #221: And our next question comes from Andy Wittmann from RW Baird. Please go ahead Andy.

Andy Whitman: Yeah, great.

Andy Wittmann: Yeah, great. Thanks, and good morning. Thank you for taking my questions you guys in the script you talked about six Sigma you talked about your engineering teams.

Todd Schneider: Thanks.

Andy Whitman: Good morning. Thank you for taking my questions. You guys, in the script you talked about Six Sigma, you talked about your engineering teams, degree of automation. I was just wondering if you could talk about the rollout of things like RFID inside your plants. I know that you've been kind of testing this for a while and I think maybe that you're ramping this a little bit more. I thought maybe, Todd, you could comment on that specifically and kind of where you are and if this is the direction we're heading and really how long.

Speaker Change #222: The degree of automation so.

Andy Wittmann: I was just wondering if you could talk about.

Speaker Change #222: Okay.

The rollout of things like RFID inside your plans I know that you've been testing this for a while.

Speaker Change #222: I think maybe that youre ramping this a little bit more thought maybe Todd.

Andy Whitman: I thought maybe Todd, you could comment on that specifically, and kind of where you are, and if this is the direction where you're heading, and really how long does it take you to get to that promised land where this is the way that your business runs on the data. I guess maybe there'd be a similar question related to the auto-sortation. I think in the past, you guys have talked that you auto-sort half of your business roughly. I was just wondering if there's any new developments on that, like cheaper technologies that make it so that you can deploy it more widely, or I know that sometimes space considerations in your plant have been a limiting factor. Any technologies that have been developed that allow you to broaden the rollout of your auto-sortation.

Speaker Change #222: Todd you could comment on that specifically and kind of where you are and if this is the direction, we're heading and how long does it take you to get to the promised land where this is the way that you.

Todd Schneider: Does it take you to get to?

Andy Whitman: That promised land where this is the way that your business runs on a day-to-day basis. I guess maybe there would be a similar question related to the auto sortation. I think in the past you guys have talked that you auto sort like half of your business, roughly. I was just wondering if there's any new developments on that, like cheaper technologies that make it so that you can deploy it more widely or. I know that sometimes space considerations in your plant have been a limiting factor. Any technologies that have been developed that allow you to broaden the rollout of your auto sortation. So just hoping you could talk about those two things in particular.

Your business runs on a day to day basis.

Speaker Change #224: I guess, maybe there'll be a similar question.

Related to the auto Sortation I think in the past you guys have talked that you like auto sort of like half of your business roughly.

Speaker Change #225: I was just wondering if there's any new developments on that like cheaper technologies that make it. So that you can deploy more widely or I know that sometimes like space considerations in your plant have been eliminating factor any technologies that have been developed.

Speaker Change #226: Allow you to broaden the rollout of your auto sortation.

Andy Whitman: So just so many can talk about those two things in particular.

Speaker Change #227: So just I was hoping you could talk about those two things in particular.

Andy Whitman: Certainly. Thank you, Andy. Let's go back to our culture. We have this; we called it a spirit of positive discontent. And part of that is we are constantly innovating. It's just, it's in our DNA; always has been since I've joined the company, and I'm sure it always will be. So we are always trying to find ways to make it easier for our partners to, our employee partners to provide services, products and services to our customers and easier for our customers to do business with us. So RFID, you mentioned, we've been using RFID for many years in our business in certain areas of that.

Todd Schneider: Certainly. Thank you, Andy. I think let's go back to our culture. We have this, we call it a Spirit of Positive Discontent. So. And part of that is we are constantly innovating. It's just, it's in our DNA, always has been since I've joined the company, and I'm sure it always will be. So we are always trying to find ways to make it easier for our partners, our employee partners, to provide services, products, and services to our customers and easier for our customers to do business with us. So RFID you mentioned, we've been using RFID for many years in our business in certain areas of that, and we're continuing to test and innovate, and hopefully there's a future where we can have that more broadly in our business. But whether it's controlling inventory, it's important to us, important to our customers.

Andy: Certainly thank you Andy.

Speaker Change #229: I think go back to our culture.

Speaker Change #230: Have we caught us.

Speaker Change #231: Spirit of positive discontent so.

Andy: And part of that is we're constantly innovating.

Andy: It's just it's in our DNA and always has been since I've joined the company and I am sure. It always will be so we're always trying.

Andy: Trying to find ways to make it easier for our our partners to our employee partners to provide our services products and services to our customers and easier for our customers to do business with us.

Andy: So RF.

Speaker Change #232: <unk> you mentioned, we've been using RFID for many years in our business.

Sure.

Speaker Change #232: In certain areas of that and.

Todd Schneider: And we're continuing to test and innovate. And hopefully there's a future where we can have that more broadly in our business. But whether it's controlling inventory, is important to us, important to our customers. So we're always innovating in that area, and that will continue. Similar with auto-sortation in our facilities and our rental facilities. So we're innovating. And we see opportunities there. We have invested in some proprietary technology there that allows us to more broadly leverage that those technologies to extract out inefficiencies in our business. So your right footprint can be an issue with certain technologies with auto-sortation.

Speaker Change #232: We're continuing to test and innovate.

Speaker Change #232: And and and.

Speaker Change #232: Hopefully there is a future where.

Speaker Change #232: We can have that more broadly in our business.

Speaker Change #232: Whether it's controlling inventory is important to us important to our customers. So we're always innovating in that area and.

Todd Schneider: So we're always innovating in that area, and that will continue similar with auto sortation in our facilities, in our rental facilities. So we're innovating, and we see opportunities there. We have invested in some proprietary technology there that allows us to more broadly leverage those technologies to extract out inefficiencies in our business. So you're right, footprint can be an issue with certain technologies, with auto sortation, and we look at that and say, well, there's got to be a better way, and we've invested and we're bullish on that moving forward. Those things all take time. We're constantly tweaking to make sure we nail it, but we'll continue in that path.

Speaker Change #232: That will continue.

Speaker Change #232: Similar with auto sortation, and our facilities and our rental facilities. So.

Speaker Change #232: We're innovating.

Speaker Change #232: <unk>.

Speaker Change #232: And we see opportunities there we have invested in <unk>.

Speaker Change #232: Some proprietary technology, there that allows us to.

Speaker Change #232: Two more broadly.

Speaker Change #232: Leverage that.

Speaker Change #232: Those.

Speaker Change #232: Technologies to extract out inefficiencies in our business. So direct footprint can be an issue with certain technologies with auto sortation.

Todd Schneider: And we look at that and say, well, there's got to be a better way. And we've invested, and we're bullish on that moving forward. Those things all take time. We're constantly tweaking to make sure we nail it. But we'll continue in that in that path.

Speaker Change #232: And.

Speaker Change #232: We looked at and say well Theres got to be a better way and and we've invested and we're bullish on that moving forward those things all take time, we're constantly tweaking to.

Speaker Change #232: To make sure we know it but we'll continue in that in that path.

Andy Whitman: I appreciate those perspectives. I thought maybe I'd ask you about some innovation, maybe that's relevant to the top line financials of your business. You've talked so much about health care, government, education.

Okay.

Andy Whitman: Appreciate those perspectives. Thought maybe I'd ask you about some innovation, maybe that's relevant to the top line financials of your business. You've talked so much about healthcare, government, education. It's been a well-trodden thing for a while now. But I know you guys are always trying to open up new end markets, and I thought maybe you could talk about some of the developing end markets that maybe you're getting more excited about things around residential home services. Is that an opportunity for you, and can you just talk about if you can play there and the size of that market in comparison to some of these other growth markets that you've talked.

Speaker Change #233: I appreciate those perspectives.

Speaker Change #234: I thought maybe I'd ask you about some innovation maybe that you're that's relevant to the topline financials of your business you've talked so much about health care government education, it's been well trodden thing for a while now but I.

Andy Whitman: It's been a well-trodden thing for a while now, but I know you guys are always trying to open up new end markets, and I thought maybe you could talk about some of the developing end markets that maybe you're getting more excited about. The things around residential home services, is that an opportunity for you and can you just talk about if you can play there and the size of that market in comparison to some of these other growth markets that you've talked about in the past. Thanks for the question, Andy.

Speaker Change #235: I know you guys are always trying to open up new end markets and I thought maybe you could talk about some of the developing end markets that maybe you are getting more excited about the things around residential home services.

Speaker Change #236: Is that an opportunity.

Speaker Change #237: For you and can you just talk about.

Speaker Change #238: If you can play there and the size of that market in comparison to some of these other growth markets that you've talked about in the past.

Operator: About in the past.

Todd Schneider: Thanks for the question, Andy. So that spirit of positive discontent flows through every area of our business, and we're always looking for the next best vertical. I'm not prepared to speak about anything where we see an investment in a particular vertical. Home residential services is not high on our list. That's not been an area of focus. It's a very different business. Certainly they have needs for our products and services, but that has not been an area of significant investment for us. Thank you. Thank you.

Speaker Change #238: Thanks for the question Andy.

Todd Schneider: So that's the spirit of positive discontent flows through every area of our business, and we're always looking for the next best vertical. Not prepared to speak about anything where we see an investment in a particular vertical, home residential services is not high on our list. It's not been an area of focus. It's a very different business. Certainly, they have needs for our products and services, but that has not been an area of significant investment for us. Thank you.

Speaker Change #238: No.

Speaker Change #239: That's a spirit of positive discontent.

Speaker Change #239: Flow through every area of our business and we're always looking for the next best vertical not.

Speaker Change #240: I'm not prepared to speak about.

Speaker Change #240: Anything where we see an investment in a particular vertical.

Speaker Change #241: Home residential services is not high on our list.

Speaker Change #241: It's not been an area of focus.

Speaker Change #241: It's a very different business certainly they have needs for our products and services, but that has not been an area of.

Speaker Change #241: A significant investment for us.

Speaker Change #242: Thank you.

Shlomo Rosenbaum: And our next question comes from Shlomo Rosenbaum from Speedfoot Nicholas. Please go ahead, Shlomo. Hi. Thank you. I want to get back to a question. I think that George was touching on.

Operator: Our next question comes from Shlomo Rosenbaum from Stifel Nicolaus.

Speaker Change #242: And our next question comes from Shlomo Rosenbaum from Stifel. Nicolaus. Please go ahead Shlomo.

Jared Mattingly: Please go ahead.

Todd Schneider: Shlomo. Hi.

Jared Mattingly: Thank you.

Shlomo Rosenbaum: Hi, Thank you I wanted to get back to a question I think that George was touching on I know, there's broad based growth, but we are there.

Todd Schneider: I want to get back to a.

Jared Mattingly: Question. I think that George was touching on.

Todd Schneider: I know there's broad base growth, but were there particular types of clients or verticals that you might want to call out over here in terms of, you know, really stand out growth during the quarter? Shlomo, I would say that our business and totality is functioning at a very good level. So no particular vertical to call out besides the investments we've made in health care, hospitality, education, and state local governments. We've been investing there, and we'll continue to. You know, if you look at how, you know, particularly the jobs report there, they've been good in those areas.

Todd Schneider: I know there's broad-based growth.

Jared Mattingly: Were there particular types of clients or verticals that you might want to call out over here in terms of?

Speaker Change #244: Our particular types of clients or verticals that you might want to.

Speaker Change #244: Paul out over here in terms of.

Todd Schneider: Really standout growth during the quarter, Shlomo. I would say that our business in totality is functioning at a very good level. So no particular vertical to call out besides the investments we've made in healthcare, hospitality, education, and state and local governments. We've been investing there, and we'll continue to. You know, if you look at how, you know, particularly the jobs reports there, they've been good in those areas. Not shocking that healthcare with the demographics of North America that there's continued investment there. So. But we still see really good runway in all those businesses, and we expect them to grow better than we do on average. If they weren't, then why would we have a focused vertical? So. Yeah. So nothing specific to call out besides what I just mentioned there. Okay, thanks.

Speaker Change #245: Really standout growth during the quarter.

Speaker Change #245: Shlomo I would say that.

Shlomo Rosenbaum: Our business in totality is functioning.

A very good level, so no no particular vertical to call out besides the investments we've made in health care hospitality.

Shlomo Rosenbaum: Education and state and local governments, we've been investing there and we'll continue to.

Shlomo Rosenbaum: <unk>.

Shlomo Rosenbaum: If you look at.

Shlomo Rosenbaum: Particularly as the jobs reports there they've been good in those areas.

Todd Schneider: Not shocking that health care, with the demographics of North America, that there's continued investment there. So, but we still see really good runway and all those businesses, and we expect them to grow better than we do on average. If they weren't, then why would we have a focus vertical?

Shlomo Rosenbaum: Not shocking that health care with the demographics of North America that that there is continued investment there so but we see still see really good runway in all of those businesses and we expect them to grow.

Speaker Change #246: Better than we do on average if they werent them why would we have.

Shlomo Rosenbaum: <unk> vertical so.

Todd Schneider: So, so, yeah, so nothing specific to call out besides what I just mentioned there. Okay, thanks.

Shlomo Rosenbaum: So yes, so nothing specific to call out besides that what I just mentioned there.

Shlomo Rosenbaum: Okay. Thanks, and this is just a housekeeping item for Mike.

Jared Mattingly: This is just a housekeeping item for Mike.

Mike Hansen: And this is just a housekeeping item for Mike. Just the pressure, we said you were repurchased about 474 million in stock, and I go to the cash flow statement. It looks like 615. Can you just talk about what the difference is between what's on the cash flow statement and what's in the comments? Yes, the commentary reflects the board-approved buyback authorization. The cash flow reflects that plus the impact of stock option exercises and restricted shares. So, in other words, when we, when we have employee partners that exercise stock options, there are some shares that are effectively withheld or purchased for taxes for the exercise, the netting of shares, etc.

Todd Schneider: Just the press release says you repurchased about $474 million in stock.

Speaker Change #247: Just the press release says you repurchased about $474 million in stock and I go to the cash flow statement it looks like $6 15.

Jared Mattingly: I go to the cash flow statement. It looks like 615. Can you just talk about what the.

Speaker Change #248: Can you just talk about what the differences between what's on the cash flow statement and what's in the commentary.

Todd Schneider: Difference is between what's on the cash.

Jared Mattingly: flow statement and what's in the commentary? Yes, the commentary reflects the board-approved buyback authorization. The cash flow reflects that plus the impact of stock option exercises and restricted shares. So, in other words, when we have employee partners that exercise a stock option, there are some shares that are effectively withheld or purchased for taxes for the exercise, the netting of shares, et cetera, for restricted shares that vest, same thing. We are withholding shares for taxes. That's the difference. Got it. Thank you.

Speaker Change #249: Yes, the commentary reflects the board approved.

Speaker Change #249: Buyback.

Speaker Change #250: Authorization, the cash flow reflects that plus the impact of stock option exercises and restricted shares. So in other words when we when we have employee partners that exercise of stock option.

Speaker Change #250: There are some shares that are effectively withheld or purchased for taxes for the exercise.

Speaker Change #250: The netting of shares et cetera for restricted shares that vest.

Mike Hansen: For restricted shares that invest same thing, we are withholding shares for taxes. That's the difference.

Speaker Change #250: One thing we are we are withholding shares for taxes.

Speaker Change #250: That's the difference.

Mahesh Sabhadra: David, thank you.

Speaker Change #251: Got it thank you.

Mahesh Sabhadra: And our next question, converge Mahesh Sabhadra from RBC, please go ahead, Ashish. Thanks for taking my question. I just wanted to follow up on the margin front of really solid margin expansion in the quarter. The 38th percent incremental margins were about your like a mid-term guidance of 25 to 25, and that's despite one fewer working day ahead then. So, as we go through the year, obviously we've made out multiple different margin expansion drivers, but how should we think about the incremental margins for the rest of the year? Thanks. Hi Ashish, you know we gave the 25 to 35 percent range and that's where that's where our target is.

Operator: Our next question comes from Ashish Sabhadra from RBC. Please go ahead.

Speaker Change #251: And our next question comes from Ashish <unk> from RBC. Please go ahead Ashish.

Todd Schneider: Ashish, thanks for taking my question. I just wanted to follow up on the margin front. Really solid margin expansion in the quarter, the 38% incremental margins were above your like a midterm guidance of 25% to 35%. And that's despite one fewer working day headwind. So as we go through the year, obviously you've laid out multiple different margin expansion drivers. But how should we think about the incremental margins for the rest of the year?

Ashish Sabhadra: Hi, Thanks for taking my question I, just wanted to follow up on the margin front really solid margin expansion in the quarter.

Speaker Change #252: 38% incremental margin above your.

Speaker Change #252: Like our midterm guidance of <unk> 45.

Speaker Change #254: 25 to 35, and that's despite one fewer working day headwind.

Speaker Change #255: As we go through the year, obviously, you've laid out might've been different margin expansion drivers and how should we think about the incremental margins for the rest of the year.

Jared Mattingly: Thanks. Hi, Ashish. You know we gave the 25% to 35% range, and that's where our target is. You know, the business isn't wholly linear, and so there are some periods where we invest a little bit more. So we'll be a little bit lower in that range, and there are some quarters where we'll be higher in the range. Generally speaking, as we think about this year though, we've got 65 work days in each of our quarters remaining. And so there's a little bit of the variability because of work days. That's not going to be there. But I expect that we'll run within that range. Some quarters at the higher end, some at the lower end. That's the way we'll, that's where we'll go through the year as we move into the future.

Speaker Change #254: Okay.

Ashish Sabhadra: Hi, Ashish.

Ashish Sabhadra: We gave the 25% to 35% range and that's where that's where our target is.

Ashish Sabhadra: You know, the business isn't wholly linear, and so there are some periods where we invest a little bit more. There are so we'll be a little bit lower in that range, and there are some quarters where we'll be higher in the range. Generally speaking, as we think about this year, though, we've got 65 work days in each of our quarters remaining. And so there's a little bit of variability because of work days that's not going to be there. But I expect that we'll run within that range, some quarters at the higher end, some at the lower end.

Speaker Change #256: The business isn't wholly linear and so there are some some periods, where we invest a little bit more.

Gen: So it will be a little bit lower in that range and there are some quarters, where it will be higher in the range Gen.

Gen: Generally speaking as we as we think about this year, though we've got 65 work days in each of our.

Quarters remaining.

Gen: And so there is so there is a little bit of the.

Gen: Variability because of work days and thats not going to be there, but but I expect it will run within that range some quarters at the higher end some at the lower end that's the way, we'll that's where it will go.

Ashish Sabhadra: That's the way we'll go, you know, through the as we move into the future. Talk about so many initiatives and Six Sigma projects and investments, and these just sort of can move us through that range, sometimes even in and out of that range. Generally speaking, though, our expectation is we will be in that range, and that will be the really good news: that means margin improvement for the year.

Gen: Through the as we move into the future at Todd talked about so many initiatives.

Jared Mattingly: Todd talks about so many initiatives, Six Sigma projects, and investments, and these just sort of can move us through that range, sometimes even in and out of that range. Generally speaking, though, our expectation is we will be in that range, and that will be the really good news is that means margin improvement for the year.

Gen: <unk>.

Todd: Six Sigma projects and <unk>.

Todd: Investments in these just sort of can move us.

Speaker Change #258: Through that range, sometimes even in and out of that range generally speaking, though our expectation is we will be in that range and that will be the really good news is that means margin improvement for the year.

Ashish Sabhadra: That's very color.

Todd Schneider: That's great color. Maybe just a quick follow up on M and A. Just wanted to follow up on an earlier question on M and A. If you can talk about your M and A pipeline and appetite for potentially a large M and A deal as well. Thanks. Well, Ashish, thanks for the question. First off, again, M&A has been an important part of our strategy, and we've shown it can work really well for our business, for our customers, shareholders, and all involved. We're open to deals of various shapes and sizes across the entire platform. If you're speaking of what has been public with Vestis being courted by an international company, that acquisition in particular would pose particular challenges because it's been historically underinvested asset.

That's great color and maybe just a quick follow up on M&A and just wanted to follow up on <unk> question on M&A. If you can talk about your M&A pipeline and appetite for potentially a large M&A deal as well.

Ashish Sabhadra: And maybe just a quick follow-up on M&A, and just wanted to follow up on earlier question on M&A. If you can talk about your M&A pipeline and appetite for potentially a large M&A deal as well. Thanks. Well, she thanks for the question. First up, again, M&A has been an important part of our strategy. And we've shown it can work really well for our business, for customers, shareholders, all involved. And we're open to deals of various shapes and sizes across the entire platform. If you're speaking of what has been public with VESIS being courted by an international company, that acquisition in particular would pose particular challenges because it's been historically under-invested asset.

Ashish Thanks for the question.

Ashish Sabhadra: First off.

Ashish Sabhadra: Again, M&A has been an important part of our strategy and we've shown it can work really well for our business for our customers shareholders all involved.

Ashish Sabhadra: And we are open to deals of <unk>.

Ashish Sabhadra: Various shapes and sizes across the entire platform.

Ashish Sabhadra: If youre speaking of.

Ashish Sabhadra: What has been public with Vestas.

Ashish Sabhadra: Sure.

Ashish Sabhadra: Being.

Ashish Sabhadra: Courted by.

Ashish Sabhadra: <unk>.

Ashish Sabhadra: International Company.

That acquisition in particular with pose particular challenges because it has been historically underinvested asset so it would make it hard for us to generate.

Todd Schneider: So it would make it hard for us to generate the level of value we expect from M&A in that particular one. In M&A in general, you know, again, it's important to us and we think it's really attractive. It's hard to predict when sellers are ready to transact and it takes two to dance in those categories. But we're very much in that area of the business. We're very interested in M&A on a more general basis. That's very helpful color and solid results. Thanks.

Ashish Sabhadra: So it would make it hard for us to generate the level value we expect from M&A in that particular one. In M&A in general, it's again, it's important to us. And we think it's really attractive. It's hard to predict when sellers are ready to transact. And it takes two to dance, and those categories. But we're very much in that area of the business. We're very interested in M&A in a more general pace.

Ashish Sabhadra: The level of value, we expect from M&A and that particular, one and M&A in general.

Ashish Sabhadra: It's.

Ashish Sabhadra: It's again, it's important to us and we think it's really attractive.

Ashish Sabhadra: It's hard to predict when.

Ashish Sabhadra: Sellers are ready to transact.

Ashish Sabhadra: And it takes two.

Ashish Sabhadra: Two to dance and those categories, so, but we're very much.

That area of the business, we're very interested.

Ashish Sabhadra: In M&A.

Ashish Sabhadra: General basis.

Ashish Sabhadra: First. That's very helpful color and solidarity. Thanks.

That's very helpful color. Thanks.

Faiza Alwy: And our next question, from Faiza Alwy, from Deutsche Bank. Please go ahead, Faiza. Yes, hi, Arne. I wanted to talk about the first aid business. Good for seeing organic revenue growth accelerated in that business. And I'm excited as for, you know, the long-term opportunity here.

Operator: Our next question comes from Faiza Alwi from Deutsche Bank. Please go ahead. Faiza.

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

Stephanie Lynn Benjamin Moore: Yes, hi. Morning. I wanted to talk about the first aid business because we're seeing organic revenue growth acceleration in that business, and I'm curious if you can talk about drivers there and really what your expectation is for the long-term opportunity here. I don't know if you can talk about a potential TAM or how we should think about the sustainability of this type of business.

Ashish Sabhadra: Yes.

Faiza <unk>: Good morning, I wanted to talk about the postpaid business.

Speaker Change #260: Organic revenue growth.

Speaker Change #260: And that business and Julian could you talk about.

Faiza <unk>: Okay.

Brian Willey: Brian Willey.

Brian Willey: For the long term opportunity here I don't know if you can talk about the potential.

Faiza Alwy: I don't know if you can talk about potential scams or, you know, how we should think about the sustainability of, you know, teens' type of business. Faiza, thank you for your question. The first aid business, First Aid business has been great. You know, the buying motives resonate with our customer base. You know, there's 16 million businesses in North America. Maybe not every single one of them is a great candidate, but a large portion. Our great candidates for our products and services that we provide. So, you know, to a certain degree, the pandemic changed some things with regards to that business, meaning people, how they look at their health and wellness of their people and of their facilities.

Or.

Speaker Change #263: How we should think about the sustainability.

Tycho: Hey, Tycho.

Speaker Change #263: Yes.

Speaker Change #263: Oh.

Todd Schneider: Faiza, thank you for your question. The first aid and safety business has been great. The buying motives resonate with our customer base. There are 16 million businesses in North America. Maybe not every single one of them is a great candidate, but a large portion are great candidates for our products and services that we provide. So to a certain degree, the pandemic changed some things with regards to that business, meaning people, how they look at the health and wellness of their people and of their facilities. We think that's been positive for our business. Providing, whether it's a first aid cabinet, AEDs in the case of sudden cardiac arrest, our eyewash stations that are for health and wellness, and certainly our WaterBreak where it provides potable water for people that, in various dimensions, that makes it accessible for them.

Faiza. Thank you for your question.

Speaker Change #265: The first aid business first aid safety business has been great.

Speaker Change #263: The.

Speaker Change #263: The buying motives resonate with the with our customer base.

Speaker Change #266: There are 60 million businesses in North America, maybe not every single one of them is a great candidate, but a large portion are great candidates for our products and services that we provide so.

Speaker Change #266: To a certain degree the pandemic changed some things with regards to that business, meaning people how they look at there.

Speaker Change #267: The health and wellness of their.

Speaker Change #267: There are people and of their facilities.

Faiza Alwy: And we think that's been positive for our business. So, providing whether it's a first aid cabinet, AEDs for, in the case of sudden cardiac arrest, our wash stations that are for health and wellness. And certainly our water break where it provides, you know, a potable water for people that, and you know, in various dimensions, that makes it accessible for them. So, all those have been really attractive. So, the mix of business is really good, but meaning back during the pandemic, it was more probably PPE focused. So, that mix of that business has changed, but the demand has been very attractive.

Speaker Change #267: And we think that that's been positive for our business.

Speaker Change #267: Providing whether its our first aid cabinet.

Speaker Change #267: For in the case of sudden cardiac arrest.

Speaker Change #267: Our <unk>.

Speaker Change #267: I wash stations, either for health and wellness.

And certainly our water break.

Speaker Change #267: It provides.

Sure.

Speaker Change #267: Potable water for people that and.

Speaker Change #267: And various.

Speaker Change #267: Dimensions that makes it accessible for them. So all of those have been really attractive. So the mix of business is really good but.

Todd Schneider: So all those have been really attractive. So the mix of business is really good, but meaning back during the pandemic, it was more probably PPE focused. So that mix of that business has changed, but the demand has been very attractive. So we've invested there, we've invested in technology, we've invested in salespeople, service partners to take great care of our customers. And I neglected to mention, we have a really nice training and compliance business which helps our customers stay in compliance with the various needs they have, whether it's forklift training, first aid, general first aid training, certainly CPR training, are all things that we think we can invest in more significantly and provide more value to the customers.

And meaning back during the pandemic. It was more probably PPE focused so that mix of that business has changed but the demand has been very attractive. So we've invested there we've invested in technology, we've invested in salespeople.

Faiza Alwy: So, we've invested there. We've invested in technology. We've invested in salespeople, service partners to take care of our customers.

Service partners to take great care of our customers.

Faiza Alwy: And I neglected to mention we have a really nice training and compliance business, which helps our customers stay in compliance with the various needs they have, whether it's forklift training, first aid, general first aid training, certainly CPR training, or all things that we think we can invest in more significantly and provide more value to the customers. And are you finding that there's, you know, revenue synergies, but they're going to form business. I know that you're running the businesses separately in terms of, you know, certainly there's different trucks and things like that, but I'm curious, like what percentage of sort of new customers that you have in this first aid safety business are existing, you know, uniform customers.

Speaker Change #267: And I neglected to mention we have a really nice training and compliance business, which helps our customers stay in compliance with the various.

Speaker Change #267: Needs they have whether its forklift training.

Speaker Change #267: First aid terminal first aid training certainly.

Speaker Change #267: CPR training.

Speaker Change #267: Are all things that we think we can invest in.

Speaker Change #267: More significantly and provide more value to the customers.

Stephanie Lynn Benjamin Moore: Are you finding that there's revenue synergies with the uniform business? I know that you're running the businesses separately in terms of, you know, certainly there's different trucks and things like that. But I'm curious, like, what percentage of sort of new customers that you have in this first aid safety business are existing uniform customers, or is it a whole new type of customer that you're attracting?

Speaker Change #268: And are you framing that there.

Speaker Change #269: Revenue synergies with the uniform business I know that you are running the business separately.

Speaker Change #270: In terms of sort of either.

Speaker Change #271: Different trucks and things like that.

Speaker Change #272: I'm curious like what percentage of new customers that you have.

Speaker Change #272: In this first stage.

The business our existing uniform customers is it a whole new type of customer.

Faiza Alwy: Is it a whole new type of customer that you're attached to? Thank you. Faiza, good question. I don't have that number specific for you, but I'll say this: we do run separate trucks to those customers. And we've found that having that focus organized around that business specific has been really beneficial for us. But we share data. We share data within our customers and opportunities. And as I mentioned, we have this infrastructure of employee partners that are in those customers. And when they're visiting with those customers, they have eyes, they have ears, they have minds, and they can help provide solutions to those customers.

Speaker Change #272: Thanks.

Todd Schneider: Faiza, good question. I don't have that number specific for you, but I'll say this, we do run separate trucks to those customers. We found that having that focus organized around that business specific has been really beneficial for us. We share data. We share data within our customers and opportunities. As I mentioned, we have this infrastructure of employee partners that are in those customers. When they're visiting with those customers, they have eyes, they have ears, they have minds, and they can help provide solutions to those customers. So it's easy enough to say, hey, I noticed you might have a need for this, or they may ask us. So there's a mix. You know, there's some of it. We're the very first time we do business with a customer is through first aid. Sometimes it's through fire. Sometimes it's through rental.

Speaker Change #273: <unk> is a good question I don't have that number specific for you, but but I will say this we do run separate.

Speaker Change #273: Trucks two of those customers.

Speaker Change #273: We've found that.

Speaker Change #273: Having that focus organized around that business specific has been really beneficial for us.

Speaker Change #273: But we but we share data we share data within our customers.

Speaker Change #273: And opportunities and as I mentioned, we have this infrastructure of of employee partners that are in those customers and when theyre visiting with those customers to <unk> their minds and they can help provide solutions to those customers. So it's easy enough to say, hey, I noticed you.

Faiza Alwy: So it's easy enough to say, hey, I noticed you might have a need for this, or they may ask us. So, so there's a mix. You know, there's some of it where the very first time we do business with the customers through first aid. Sometimes, it's through fire, sometimes it's through rental. Just the sheer scale of rental certainly makes it for a nice cross-selling opportunity because we have, well, we've been in that business the longest. It's our heritage business. And it's our largest business. But, so we really don't care where we can start with the customer.

Speaker Change #273: It might have a need for this or they may ask us so.

Speaker Change #274: So there's a mix there's some of it were.

Speaker Change #274: The very first time, we do business with our customers through first aid sometimes it's through fire, sometimes just through rental just the sheer.

Todd Schneider: Just the sheer scale of rental certainly makes it for a nice cross selling opportunity because we have, well, we've been in that business the longest. It's our heritage business and it's our largest business. So we really don't care where we get started with the customer. We just want to do business with them. And then we'll leverage that infrastructure, that data to try to cross sell as best as possible to provide additional solutions for those customers.

Speaker Change #274: Scale of rental certainly makes it for.

Speaker Change #274: A nice cross selling opportunity because we have what we have been in that business.

Speaker Change #274: Is this the longest it's our heritage business.

Speaker Change #274: And it's our largest business, but so we really don't care, where we can start with the customer. We just wanted to do business with them and then.

Faiza Alwy: We just want to do business of them. And then we'll leverage that infrastructure, that data, to try to cross-sell as best as possible to provide additional solutions for this customer.

We'll leverage that infrastructure that data to to try to cross sell as best as possible to provide additional solutions for those customers.

Faiza Alwy: Great. Thank you so much.

Stephanie Lynn Benjamin Moore: Great. Thank you so much.

Speaker Change #275: Great. Thank you so much.

Stephanie Moore: Thank you. And our next question comes from Stephanie Moore from Jeffries. Please go ahead, Stephanie. Hi. Good morning. Thank you.

Todd Schneider: Thank you.

Speaker Change #275: Thank you.

Operator: Our next question comes from Stephanie Moore from Jefferies.

Stephanie More: And our next question comes from Stephanie more from Jefferies. Please go ahead Stephanie.

Jared Mattingly: Please go ahead.

Operator: Stephanie.

Stephanie: Hi, good morning, Thank you.

Stephanie Moore: I want to touch on maybe the competitive environment within your vendor market. If you're seeing anything in terms of stepped-up competitive activity in the form of maybe aggressively going after existing customers. Maybe a little bit more. A little bit challenging, most pricing standpoint. Any color there on the competitive activity. Great. Thanks.

Stephanie: Hi, I wanted to touch on maybe the competitive environment within Europe that mid market, if youre seeing anything in terms of stepped up competitive activity in the format, maybe aggressively going after existing customers.

Speaker Change #279: Maybe a little bit challenging from a pricing standpoint, any color there on the competitive activity would be great. Thanks.

Todd Schneider: Thanks. Good morning, Stephanie. You know, we operate in a really competitive environment, and it's been competitive since I started with the company in 1989, and I'm sure it'll be competitive for, you know, the future. So. But one of the differences, that is how we approach the business. We look at the no program market as an incredible opportunity. We service a little over a million customers. There are 16 million businesses. The white space out there is amazing. And we see that opportunity where they can buy today and we can help them today. So growing that pie is significant. That being said, yeah, it's really competitive, always has been. I wouldn't say there's a real change in competitive behavior.

Stephanie: Yes.

Stephanie Moore: Good morning, Stephanie. You know, we operate in a really competitive environment, and it's been competitive since I started with the company in 1989. And I'm sure it'll be competitive for, you know, the future. So one of the differences that is how we approach the business. We look at the no program market as an incredible opportunity. You know, we service over a million customers or 16 million businesses. The white space out there is amazing. And we see that opportunity where they can buy today. And we can help them today. So growing that pie is significant. That being said, oh, yeah, it's really competitive.

Stephanie: Good morning, Stephanie.

Speaker Change #280: We operate in a really competitive environment and it's been competitive since I started with the company 1989.

Speaker Change #280: And I'm sure it'll be competitive for.

Speaker Change #280: The future.

Speaker Change #280: So.

But one of the differences that is how we approach the business.

Speaker Change #280: We we look at the new program market as an incredible opportunity.

Speaker Change #281: We service a little over 1 million customers or 60 million businesses. The white space out there is amazing.

Speaker Change #280: And.

Speaker Change #280: We see that opportunity where they can buy today.

Speaker Change #280: We can help them today. So so growing that pie is significant that being said, yes, it's really competitive always have been I wouldn't say, there's a real change in competitive behavior.

Speaker Change #280: Sure.

Speaker Change #280: We're focused on trying to invest in our business to make sure we.

Speaker Change #280: Alright provide the best solutions for our customers and position our people.

Speaker Change #280: First to compete in the marketplace.

Speaker Change #280: And it's certainly very important to us.

Stephanie Lynn Benjamin Moore: Great. And then just as a follow-up, you touched on this actually a couple questions ago. But clearly there's some kind of potential industry consolidation activity going on. As you think about that, if you were to see your industry continue to consolidate, how do you think that would impact your thoughts on competitive activity in a more consolidated environment and the likes of that? Thanks.

Great and then just as a follow up you touched on this actually a couple of questions ago, but clearly there is some kind of potential industry consolidation activity going on.

Todd Schneider: And then, just as a follow-up, you touched on this actually a couple of questions ago, but clearly there's some kind of potential industry consolidation activity going on. You know, if you think about that, if you were to see your industry continue to consolidate, how do you think that would impact your thoughts on, you know, competitive activity, and a more consolidated environment, and the likes of that. Thanks. Yeah, good question. So we certainly pay attention to that. We never underestimate our competition, and we deal with competitors that are, you know, very good at what they do.

Speaker Change #282: Do you think about that if you if you were to see our industry.

Speaker Change #282: Continue to consolidate how do you think that would impact your thoughts on.

Speaker Change #282: Competitive activity and a more consolidated environment.

Speaker Change #283: In the late for that.

Speaker Change #284: Yes, good question.

Speaker Change #285: So we certainly pay attention to that.

Speaker Change #286: We never underestimate our competition.

Speaker Change #286: And we deal with competitors that are.

Very good at what they do so.

Todd Schneider: So, you know, industry consolidation would that have a dynamic impact? We don't think so. But, you know, we always have our head on a swivel, and we're making sure that we are focused on investing in our business, the best position our people to take care of our customers and to provide the best solutions for our customers. So, that's what we're spending our time investing and focusing. But we pay very close attention to the competitive landscape. Keeping in mind that we compete every day against what we might call non-traditional competitors. So, those who are providing direct sale uniforms, Amazon, Walmart, we're competing against all different kinds of competition.

Speaker Change #287: Industry consolidation would that have a dynamic impact we don't think so.

Speaker Change #287: But.

We always have our head on a swivel and we're making sure that we are focused on investing in our business to best position our people to take care of our customers and to provide the best solutions for our customers. So.

Speaker Change #287: That's where we're spending our time investing and focusing.

Speaker Change #287: But we.

Speaker Change #287: We pay very close attention to the competitive landscape.

Jared Mattingly: The competitive landscape, keeping in mind that we compete every day against what we might call non-traditional competitors. So those who are providing direct sale uniforms, Amazon, Walmart, we're competing against all different kinds of competition. Industry consolidation is not necessarily a bad thing for us. It will continue to be competitive.

Speaker Change #287: Keeping in mind that we compete every day against what we might call non traditional competitors. So those those who are providing direct sale of uniforms.

Speaker Change #288: Amazon Walmart.

Speaker Change #288: We're competing against all different kinds of competition. So.

Todd Schneider: So, industry consolidation is not necessarily a bad thing for us. It will continue to be competitive.

Speaker Change #288: Industry consolidation is not necessarily a bad thing for us.

Speaker Change #288: It will continue to be competitive.

Todd Schneider: You know, I completely agree, Mike. You know, as I mentioned, we walk into a business. They may not be with a competitor. But in many cases, they've got the products and services, or something very similar as what we can provide. They're getting it from those non-traditional sources. We think we can do a better, faster, smarter, cheaper, in many cases for the prospect or the customer. And that's where we've been successful in growing our business. And I guess to take that one quick point, I mean, you've basically said it's always been competitive. If you had a greater consolidation, do you think it would be even more, you know, with maybe another player that's new to North America?

Todd Schneider: Yeah, I completely agree, Mike. As I mentioned, we walk into a business, they may not be with a competitor, but in many cases they've got the products and services or something very similar as what we can provide. They're getting it from those non-traditional sources. We think we can do it better, faster, smarter, cheaper, in many cases for the prospect or the customer. And that's where we've been successful in growing our business.

Speaker Change #288: Completely agree Mike as I mentioned, we walk into a business they may not be with a competitor, but in many cases, they've got the products and services or something very similar.

Mike: What we're what we can provide.

Mike: They're getting it from those non traditional sources.

Mike: We think we can do it better faster smarter cheaper in many cases.

Mike: For the prospect of the customer.

Mike: And that's where we that's where we've been successful in growing our business.

Speaker Change #289: And then I guess just to take that one quick point I mean, you basically said, it's always been competitive if you had a greater consolidation do you think it would be even more maybe another player that's new to the north in North America.

Todd Schneider: Do you think they would end up being actually a more less competitive environment? Yeah. It's hard to imagine it being even more competitive. It's really competitive today. But if you're a national competitor to work to enter, we don't see the competitive dynamic changing. And again, our focus would remain on delivering great value for customers on a daily basis.

Speaker Change #289: They would end up being exit more.

Speaker Change #290: More or less competitive environment.

Todd Schneider: Yeah, it's hard to imagine it being even more competitive. It's really competitive today. But if you, a national competitor, were to enter, we don't see the competitive dynamic changing. And again, our focus would remain on delivering great value to our customers on a daily basis.

Speaker Change #289: Yes.

Speaker Change #291: It's hard to imagine it being even more competitive it's really competitive today, but if you're a national competitor to work to enter we don't see the competitive dynamic changing.

Speaker Change #292: Again, our focus will remain on delivering great value to our customers on a daily basis.

Todd Schneider: All right. I have too many questions. Thanks, guys.

Stephanie Lynn Benjamin Moore: All right, I asked too many questions. Thanks, guys.

Speaker Change #293: Alright, so I ask too many questions. Thanks, guys.

Scott Schneeberger: Thank you. And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead, Scott. Thanks very much. I have two. I'll ask them both up front since we're getting late here.

Todd Schneider: Thank you.

Thank you.

Operator: Our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead, Scott.

Speaker Change #294: And our next question comes from Scott Schneeberger from Oppenheimer. Please go ahead Scott.

Todd Schneider: Thanks very much.

Scott Schneeberger: Thanks, very much I have two I'll I'll ask them both upfront since we're getting late here.

Jared Mattingly: I have two. I'll ask them both up front since.

Operator: We're getting late here.

Scott Schneeberger: First one, uniform direct sales; the organic declines. They've persisted for, I think, five quarters now. And I know this is a lumpy business, and the years prior is very strong. But could you guys please elaborate on the trend over the balance of the year, what we might see there to the extent you have visibility?

Todd Schneider: First one, uniform direct sales, organic declines. They persisted for, I think, five quarters. Now, I know this is a lumpy business and years prior is very strong, but could you guys please elaborate on.

First one uniform direct sales.

Scott Schneeberger: Organic.

Speaker Change #295: Declines persisted for I think five quarters now and I know this is a lumpy business.

Speaker Change #296: Mhm years prior is very strong, but could you guys. Please elaborate on now on trend over the balance of the year, what we might see there to the extent you have visibility and then the second question is.

Jared Mattingly: Trend over the balance of the year, what we might see there, too.

Todd Schneider: Extent you have visibility? And then the second question, Is free cash flow really strong in the first quarter? CapEx appears on pace. So it looks like the strength was.

Scott Schneeberger: And then the second question is: free cash flow really strong in the first quarter. CapEx appears on pace. So it looks like the strength was something working capital driven. Could you discuss if was this a timing issue or should we anticipate a particularly strong cashier fiscal 25? Thanks.

Speaker Change #297: Free cash flow really strong in the first quarter.

Speaker Change #298: Opex appears on pace. So it looks like the strength was something working capital driven could you discuss it was just a timing issue or should we anticipate a particularly strong cash flow in fiscal 'twenty five.

Operator: Something working capital driven.

Todd Schneider: Could you discuss, was this a timing issue or should we anticipate a particularly strong Q4 in fiscal 2025? Thanks, Scott. Thanks for the question. I'll talk a little bit about the direct sale business. And Mike, if you'd like to respond regarding the cash flow. Scott, you nailed it. It's a lumpy business. Rollouts of national accounts, those types of national customers, are highly impactful. And you also nailed it that they had incredible growth going back a couple years. So just really more timing, lumpiness, no real change in that business. We like where we're positioned and feel like we're in a good spot for the future.

Scott Schneeberger: Scott, thanks for the question. I'll talk a little bit about the direct sale business and might get if you'd like to respond regarding the cash flow. Scott, you nailed it. It's a lumpy business rollouts of national accounts. Those types of national customers are highly impactful. And you also nailed it that they had incredible growth going back a couple of years. So just really more timing, lumpiness, no real change in that business. We like where we're positioned and feel like we're in a good spot for the future.

Scott Thanks for the question.

Speaker Change #299: I'll talk a bit about the direct sale business.

Speaker Change #300: If you'd like to.

Speaker Change #301: Respond regarding the cash flow.

Speaker Change #301: Scott you noted its a lumpy business.

Speaker Change #302: Rollouts of National accounts those types of.

Scott Schneeberger: National customers are.

Speaker Change #302: Really impactful.

Speaker Change #303: And you also noted that they had incredible growth going back a couple of years, So just really more timing lumpiness.

Speaker Change #304: No real change in that business.

Speaker Change #304: We like where we're positioned and.

Speaker Change #304: And feel like we're in a good spot for the future.

Scott Schneeberger: Yeah, regarding cash flow, your rights got free cash flow was really strong. For us, some of that is timing. So, for example, you see some real working capital change in a crude compensation and related liability. That's a little bit more timing. From an accounts payable, we got a nice benefit from accounts payable. We've been working hard in accounts payable to extend some terms. And that's paying off with a nice benefit in the cash flow. For the year, generally speaking, though, we look at it to be in the typical range. So, free cash flow conversion of net income in the 90 to 100% range, which is sort of typically where we have been.

Speaker Change #305: Yes regarding cash flow.

Speaker Change #305: You are right Scott free cash flow was really strong.

Speaker Change #306: For us some of that is timing. So for example, you see some some real working capital change in accrued compensation related related liabilities, that's a little bit more timing.

Speaker Change #306: From a from an accounts payable we got a nice benefit from accounts payable we have been working hard in accounts payable to extend.

Speaker Change #306: Some terms.

And that's paying off with with a nice benefit in the cash flow.

Speaker Change #306: For the year generally speaking, though.

Speaker Change #306: We look at it to be in the in the typical range. So.

Speaker Change #306: Free cash flow conversion.

Net income in the 90% to 100% range, which is which is sort of typically where we have been.

Mike Hansen: That's where we expect to be for the rest of the year or for the full year in total.

Speaker Change #306: That's where we expect it to be for the rest of the year or for the full year in total.

Mike Hansen: Thanks, guys. Thank you.

Speaker Change #307: Thanks, guys.

Todd Schneider: Thank you.

Thank you.

Jason Haas: And our next question comes from Jason Haas from Wells Fargo. Please go ahead, Jason. Hey, good morning, and thanks for taking my questions. I'm curious if you could remind us what level of price increases you're put again this year. And then I'm curious what the reception has been like from your customers. Jason, our price adjustments are a component of our growth and certainly not where we're focused in on how we grow our business, but it is a component. And our price adjustments are way lower than they were at the peak of inflation. And they're back much closer to historical today.

Operator: Our next question comes from Jason Haas from Wells Fargo. Please go ahead.

Speaker Change #308: And our next question comes from Jason Haas from Wells Fargo. Please go ahead Jason.

Todd Schneider: Jason, hey, good morning and thanks for taking my questions.

Jared Mattingly: I'm curious if you could remind us what level of price increases you're putting in this year. And then I'm curious what the reception.

Operator: Has been like from your customers?

Todd Schneider: Jason, our price adjustments are a component of our growth. Certainly not where we're focused on how we grow our business, but it is a component. Our price adjustments are way lower than they were at the peak of inflation, and they're back much closer to historical today and how they're received. You know, those are always challenging conversations, and try to position our people on a daily basis to provide the best service so that they can go better. But it's always challenging, and it's been challenging my entire career on price adjustments. We just, we try to focus our time on how to best position our people, how to train them, and how to give them the best products and services so that they can provide the most value.

Jason Haas: Jason.

Speaker Change #309: Our price adjustments are a component of our growth.

Certainly not where we're focused in on how we grow our business.

Speaker Change #309: It is a component.

And our price adjustments are.

Speaker Change #309: Wei.

Wei: Lower than they were at the peak of inflation and they're back much closer to historical today.

Jason Haas: And how they're received, you know, those are always challenging conversations and try to position our people on a daily basis to provide the best service so that they can go better. But it's always challenging. And it's been challenging my entire career on price adjustments. So we just we try to focus our time on how to best position our people, how to train them. And how to give them the best products and services so that they can provide the most value. God, if that makes sense. Thank you.

Wei: And and how they are received.

Wei: Those are those are always challenging conversations.

Wei: <unk>.

Wei: We try to position our people.

Wei: On a daily basis to provide the best service so that they can go better but it is always challenging.

Wei: And it's it's been challenging in my entire career on.

Wei: Price adjustments. So we just we try to focus our time on.

Wei: How to best position, our people how to train them and how to give them the best products and services. So that they can provide the most value.

Wei: Okay.

Jared Mattingly: Got it. That makes sense.

Speaker Change #311: Got it that makes sense. Thank you.

Operator: Thank you.

Todd Schneider: It's a good segue to my next question.

Jason Haas: Good to see you on the next question.

Speaker Change #312: That's a good segue to my next question I was curious about the hiring market for your own business and I'm curious, if it's gotten any any easier or harder to hire people.

Jared Mattingly: I was curious about the hiring market for your own business, and I'm curious if it's gotten any easier or harder to hire people?

Jason Haas: It was curious about the hiring market for your own business, and I'm curious if it's gotten any easier or harder to hire people. Yeah, Jason. Good question. I call it similar, right? Similar meaning it's always been a challenge to find great people. And that's what we're focused on. The hiring market, it has eased. There's no doubt from pandemic craziness. But it is certainly easier, but never easy. So that's, you know, that's what we're seeing in our business. We're still investing for the future. And the reason we're investing is because we see the opportunities that lie ahead.

Todd Schneider: Yeah, Jason, good question. I call it similar. Right? Similar. Meaning it's always been a challenge to find great people, and that's what we're focused on. The hiring market, it has eased, there's no doubt, from pandemic craziness. But it is certainly easier, but never easy. So that's, you know, that's what we're seeing in our business. We're still investing for the future. And the reason we're investing is because we see the opportunities that lie ahead.

Jason Haas: Yes, Jason good question.

Jason Haas: Call it similar rate similar meaning.

Jason Haas: It's always been a challenge to find great people.

Jason Haas: And that's what we're focused on.

Jason Haas: The hiring market it has eased theres no doubt from pandemic craziness.

Jason Haas: But but it is it's certainly easier but.

Jason Haas: But never easy so thats.

Jason Haas: That's what we're seeing in our business, we're still investing for the future.

Jason Haas: And we're investing is because.

Jason Haas: We see the opportunities that lie ahead.

Operator: God, it makes sense.

Jared Mattingly: Got it. That makes sense.

Speaker Change #313: Got it that makes sense. Thank you.

Operator: Thank you.

Operator: Thank you. Thank you. At this time, there are no further questions. I'll turn the call back over to Jared for closing remarks.

Speaker Change #314: Thank you.

Operator: And at this time, there are no further questions.

Speaker Change #314: And at this time there are no further questions I will turn the call back over to Jerry for closing remarks.

Jared Mattingly: Thank you, everyone, for joining us this morning. We will issue our Q2 of fiscal 2025 financial results in December. We look forward to speaking with you again at that time.

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

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change #315: This concludes today's conference call. Thank you for your participation you may now disconnect.

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