Q4 2025 Cintas Corp Earnings Call

July 17, 2025

Operator: Good day, everyone, and welcome to the Cintas Corporation announces fiscal 2025 fourth quarter and full year 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.

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

Jared Mattingly: Thank you, Ross. Thank you for joining us. With me are Todd Schneider, President and Chief Executive Officer, Jim Rozakis, Executive Vice President and Chief Operating Officer, and Scott Garula, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 fourth quarter and full year 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.

Jared Maddingley: At this time, I will like to turn the call over to Mr. Jared, maddingley, vice president Treasurer and investor relations. Please go ahead sir.

Jared Maddingley: President and Chief Financial Officer. We will discuss our fiscal 2025 fourth quarter and full full year results.

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

Jared Maddingley: The private security 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.

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

Todd Schneider: Thank you, Jared, and thank you all for joining us. I'd like to take a moment and welcome Jim and Scott to our call today. Jim is a seasoned leader that brings 26 years of experience with Cintas, and over the last two years has served as Cintas' Chief Operating Officer. Scott was recently appointed as our Chief Financial Officer and brings with him over 29 years of leading each of our route-based businesses. On today's call, I'll start by sharing an overview of the quarter, the year, and our outlook for fiscal 2026. Jim will share some more detail on our segment performance and the drivers in the business, and Scott will wrap up with more detail on our financials. We are pleased to have delivered a strong fourth quarter to close out another impressive fiscal year for Cintas.

Jared Maddingley: These 4 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.

Todd: Thank you Jared, and thank you all for joining us. Like to take a moment and welcome Jim and Scott to our call today.

Speaker Change: Jim is a seasoned leader that brings 26 years of experience with sentos and over the last 2 years, has served as Centos as Chief Operating Officer.

Speaker Change: Scott was recently appointed as our Chief Financial Officer and brings it with him, over 29 years of experience, including leading each of our route-based businesses.

Speaker Change: On today's call, I'll start by sharing an overview of the quarter, the year, and our outlook for physical 2026.

Speaker Change: Jim will share some more detail on our segment performance and the drivers in the business.

In Scott will wrap up with more detail on our financials.

Todd Schneider: We delivered robust top line growth and maintained healthy margins and cash flow, demonstrating the value, excuse me, demonstrating the strength of our value proposition. In the fourth quarter, total revenue grew 8% to $2.67 billion. Our organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and workday differences, was 9%. We continue to execute at a high level across each of our businesses including organic growth of 7.2% in the uniform rental and facility services segment and 18.5% in our first aid and safety segment. All other, which includes our fire protection services and uniform direct sale, grew organically by 11.1%. Turning to profitability, gross margin for the fourth quarter grew 9.1% over the prior year from 49.2% to 49.7%. Operating income as a percentage of revenue increased 9.1% over the prior year and diluted EPS increased 9% to $1.09.

Speaker Change: We are pleased to have delivered, a strong fourth quarter to close out, another impressive, fiscal year for Cintas.

Speaker Change: We deliver robust Topline growth and maintain healthy margins in cash, flow, demonstrating the value. The excuse me, demonstrating the strength of our value proposition.

Speaker Change: In the fourth quarter, total revenue grew 8% to 2.67 billion.

Our organic growth rate which adjusts for the impacts of Acquisitions. Foreign currency exchange, rate fluctuations, and workday differences was 9%,

Speaker Change: We continue to execute at a high level across each of our businesses, including organic growth of 7.2% and the Uniform, Rental and facility services segment, and 18.5% in our first aid and safety segment.

All other which includes our fire protection services and uniform truck sale in uniform. Direct sale grew organically by 11.1%.

Speaker Change: Turning to profitability, gross margin for the fourth quarter, grew 9.1% of the prior Year from 49.2% to 49.7%.

Todd Schneider: We remain confident the strategic investments we made in the business position us to capitalize on future growth opportunities. Those investments include technology that makes it easier for our employee partners to do their jobs, such as our SAP system and SmartTruck platform, investments in our infrastructure to increase capacity and position our employee partners for success, as well as investments in management trainees and selling resources. For the full year, fiscal 2025 revenue was a record $10.34 billion, an increase of 7.7%. Organic growth was 8% for the year. Our top line growth continues to underscore the strength of Cintas' value proposition. Operating margins for the full year were 22.8%, an increase of 14.1%, and an all-time high compared to our prior year operating margin of 21.6%. Diluted earnings per share of $4.40 grew 16.1% over the prior year.

Operating income is a percentage of Revenue increased 9.1% over the prior year and diluted EPS increased 9% to a dollar 9.

Speaker Change: We remain confident. This the Strategic Investments we've made in the business position us to capitalize on future growth opportunities.

Those Investments include technology, that makes it easier for our employee Partners to do their jobs such as our sap system and smart truck platform investments, in our infrastructure. To increase, capacity and position our employee partners for success, as well as investments in management, trainees in selling resources,

For the full year, physical 2025 Revenue was a record 10.34 billion dollars, an increase of 7.7%.

Organic growth was 8% for the year.

Speaker Change: Our Topline growth continues to underscore the strength of syntax as value proposition.

Speaker Change: Operating margins for the full year or 22.8%, an increase of 14.1% and an all-time high compared to our prior year, operating margin of 21.6%.

Todd Schneider: Balanced capital allocation remains a key pillar of our strategy. In the fourth quarter and throughout fiscal 2025, we continue to deploy capital across all of our strategic priorities, including reinvesting in our products, people, and technologies to ensure we are best positioned to deliver value for our customers. Looking ahead to fiscal 2026, our financial expectations reflect both the strength of the underlying business and our commitment to disciplined execution. Scott will later touch on the assumptions included in our guidance. We expect our revenue to be in the range of $11 billion to $11.15 billion, a total growth rate of 6.4% to 7.8%. We expect diluted EPS to be in the range of $4.71 to $4.85, a growth rate of 7% to 10.2%.

Speaker Change: Diluted earnings per share of $4.40 per 16.1% over the prior year.

Balance Capital allocation remains a key pillar of our strategy.

Speaker Change: In the fourth quarter. And throughout physical 2025, we continue to deploy Capital across all of our strategic priorities, including reinvesting, in our products, people and Technologies. To ensure we are best positioned to deliver value for our customers.

Speaker Change: Looking ahead to physical 26, our, our financial expectations, reflect both the strength of the underlying business and our commitment to discipline execution,

Speaker Change: Scott will later touch on the assumptions included in our guidance.

Speaker Change: We expect our Revenue to be in the range of 11 billion to 11.15 billion. The total growth rate of 6.4% to 7.8%.

Todd Schneider: Our fourth quarter and full year 2025 results and 2026 outlook underscore the strength of our business model and our ability to execute in a dynamic environment. Fiscal 2025 now marks 54 years out of the last 56 years that we've grown sales and adjusted EPS. I want to thank all of our employee partners for their hard work and dedication. With our culture of continuous improvement, superior products and services, and disciplined execution, we are well positioned for sustained growth and value creation. Lastly, we were named to the prestigious Fortune 500 for the ninth consecutive year. It is an honor to be recognized among the most successful and respected companies. We're proud of these results and the value we continue to deliver for Cintas shareholders. With that, I'll turn it over to Jim for additional insights.

We expect diluted EPS to be in the range of $4.71 to $4.85, a growth rate of 7% to 10.2%.

Speaker Change: And our ability to execute in a dynamic environment.

Speaker Change: Physical 2025, now marks 54 years as the last 56 years, that we've grown sales and adjusted eps.

I want to thank all of our employee partners for their hard work and dedication with our culture of continuous Improvement, Superior products, and services and discipline execution. We are well, positioned for sustained, growth and value creation.

Speaker Change: Lastly, we were named to the prestigious Fortune 500 for the 19th consecutive year.

Jim Rozakis: Thanks Todd and good morning. We continue to grow at attractive rates by helping new customers meet their needs of image, safety, cleanliness, and compliance. We are seeing success in adding new products and new services to existing customers. Our retention rates are right at our all-time highs and pricing continues to be at our historical levels. Turning to the fourth quarter organic growth by business, we grew 7.2% for uniform rental and facility services, 18.5% for first aid and safety services, 12.1% for fire protection services, and uniform direct sale was up 9%. As we have done in the past, I will share a revenue mix of the uniform rental and facility services operating segment for the fourth quarter. Keep in mind there can be small fluctuations in mix between quarters.

Speaker Change: Is an honor to be recognized among the most successful and respected. Companies, we're proud of these results in the value. We continue to deliver present to us as shareholders with that. I'll turn it over to Jim for additional insights.

Jim: Thanks Todd. Good morning, we continue to grow up with attractive rates by helping new customers, meet their needs of image, safety, kindliness and compliance.

Jim: We are seeing success in adding new products and new services to existing customers.

Jim: Our retention rates are right at our all-time highs and pricing continues to be at our historical levels.

Jim: Turn on the fourth quarter, organic growth by business. We grew 7.2% for Uniform Rental and facility services.

Jim: 18.5% for first aid and safety services.

Jim: 12.1 for fire protection services and uniform direct sale was up 9%.

Jim: As we've done in the past, I will share a revenue mix of the Uniform, Rental and facility services operating segments for the fourth quarter.

Jim Rozakis: Uniform Rental was 48%, dust was 19%, hygiene was 16%, shop towels were 3%, linen, which includes microfiber wipes, towels, and aprons, was 10%, and catalog revenue was 4%. These percentages are consistent with last year and demonstrate we continue to experience strong demand across all our products and services. Gross margin percentage by business was 49% for Uniform Rental and Facility Services, 56.8% for First Aid and Safety Services, 49.3% for Fire Protection Services, and 41.6% for Uniform Direct Sale. Gross margin for the uniform rental facility services segment increased 40 basis points from last year. Our progress year over year reflects the positive impacts made by our excellent supply chain team as well as cost savings initiatives such as our garment sharing technology enhancements like our order sortation systems in our plants, and our proprietary Smart Truck solution that makes our routes more efficient.

Jim: keep in mind that can be small fluctuations in mix between quarters,

Jim: Uniform Rental was 48%.

Jim: Dust was 19%.

Jim: Hygiene was 16%.

Jim: Shop towels were 3%.

Jim: Linen, which includes microfiber wipes towels and aprons was 10% and catalog. Revenue was 4%.

Jim: These percentages are consistent with last year and demonstrate we continue experience, strong demand across all our products and services.

Jim: Across margin percentage by business, was 49% for Uniform, Rental, and facility services.

Jim: 56.8% for first aid and safety services.

Jim: 49.3 for 5 protection services and 41% 41.6 for uniform direct sale.

Gross margin for the uniform rental facility services that have been increased 40 basis points from last year.

Jim Rozakis: Gross margin for the First Aid and Safety Services segment increased 140 basis points from last year, but strong revenue growth, continuing to create leverage, a healthy revenue mix that includes growth in high-margin recurring revenue products like AED Rentals, Eyewash Stations, and WaterBreak as well as cost savings initiatives such as Smart Truck and improved sourcing. Before I turn over to Scott, I'd like to share an example that demonstrates how we're delivering for our customers. A customer in the southeastern part of the country has been a valued customer for over 10 years. For most of that time we provided them exclusively with Facility Services, products, and services. Their maintenance department uniforms were direct purchase, what we would call a no-programmer. Our customer approached us to see if we could help them address three key pain points. 1.

Jim: Our progress year-over-year reflects the positive impacts made by our excellent supply chain team, as well as cost savings initiatives. Such as our garment sharing technology enhancements like our order sortation systems and our plans and our proprietary smart truck solution, that makes our routes more efficient

Jim: Gross Martin for the first date in Safety Services. Segment increased 140 basis points from last year, but strong Revenue growth continuing to create leverage a healthy Revenue. Mix that includes growth in high margin, recurring Revenue products like AED rentals, eyewash stations and water break.

As well as cost savings initiatives, such as smart truck and improved sourcing.

Speaker Change: Before I turn off a Scott. I'd like to share an example that demonstrates, how we're delivering for our customers.

Jim: A customer in the Southeastern part of the country has been a valued customer for over 10 years.

Jim: For most of that time, we provided them exclusively with Facility Services, products and services.

Their maintenance department uniforms were direct purchase what we would call a no programmer.

Jim Rozakis: The initial investment. Ongoing costs associated with replacing uniforms due to turnover and damage made it difficult to forecast spend and manage cash flow. 2. Their employees expressed a strong preference for the convenience and professionalism of a laundered uniform program over washing their uniforms at home. 3. Their managers found that overseeing uniform logistics in house took valuable time away from focusing on their core business operations. In response, we successfully introduced our uniform rental program on top of our facility services offering. But the story doesn't end there. We also earned the trust to add the culinary department onboarding those employees who had previously been with a traditional uniform competitor. The switch was driven by a premium ChefWorks exclusive attire and the opportunity for vendor consolidation. This example underscores several points. First, we don't always have to leave with uniforms.

Jim: Our customer approached us to see if we could help them address 3 key pain points.

Jim: 1, the initial investment ongoing costs associated with replacing uniforms, due to turnover and damage. Made it difficult to forecast, spend and manage cash flow.

Jim: 2, their employees expressed a strong preference for the convenience, and professionalism of a laundered uniform program, over Washington uniforms at home.

Jim: 3, their managers found that overseeing uniform Logistics in house to valuable time away from focusing on their Core Business operations.

Jim: In response, we successfully introduced our uniform method program on top of our Facility Services offering.

Jim: But the store doesn't end there.

Jim: We also aren't supposed to get culinary Department, onboarding, those employees who had previously been with a traditional uniform competitor.

The switch was driven by a premium Chef Works exclusive attire and the opportunity for vendor consolidation.

Jim: This example, underscores several points.

Jim Rozakis: In this case, we had a long, successful relationship with a customer built on our facility services offering. Second, we can grow in a variety of different ways. We can convert no-programmers to a rental program. We could add new customers that are currently with another uniform rental provider by offering premium products and services. And we can grow by adding new products and services to our existing customers. This example also illustrates how Cintas is more than a service provider. We are true problem solvers committed to helping our customers succeed, and by staying attuned to their feedback, we continue to strengthen our relationships and expand our footprint across industries. And now I'll turn over to Scott for additional details on our capital allocation strategy and 2026 outlook.

Jim: First, we don't always have to believe what uniforms in this case, we had a long successful relationship with the customer built on our Facility Services offering.

Jim: Second, we can grow in a variety of different ways. We can convert know, programmers to a rental program.

Jim: We can add new customers are currently with another Uniform Rental Provider by offering premium products and services and we can grow by adding new products and services to our existing customers.

Jared Mattingly: Thank you, Jim, and good morning, everyone. As Todd mentioned, we closed our fiscal year with strong financial performance. Our balance sheet remains healthy, and during fiscal 2025 we generated $1.6 billion of free cash flow. In the fourth quarter, we were able to put our capital to work through capital expenditures of $114.6 million, acquisitions of $34.1 million, dividends of $157.8 million, and share repurchases of $256.7 million. Our effective tax rate for the fourth quarter was 22.1% compared to 21.4% last year. For fiscal 2025, the effective tax rate was 20% compared to 20.4% the prior year. During fiscal year 2025, we deployed significant capital across each of our capital allocation priorities. This capital allocation strategy has been effective for many years and has served us well. We invested $408.9 million in capital expenditures, which helped support investments in our technology and infrastructure.

Jim: This example, also illustrates how Santos is more than a service provider. We are a true problem solvers committed to helping our customers succeed. And by staying at 2 to their feedback, we continue to strengthen our relationships and expand our footprint across Industries and now turn over to Scott for additional details on Capital allocation strategy in 2026 Outlook.

Jim: We closed our fiscal year with strong financial performance.

Scott: Our balance sheet remains healthy and during fiscal. 20125, we generated 1.6 billion dollars of free cash flow.

Scott: In the fourth quarter, we were able to put our Capital to work through Capital expenditures of 114.6 million.

Scott: Acquisitions of 34.1 million, dividends of 157.8 million and share repurchases of 256.7 million.

Scott: Our effective tax rate for the fourth quarter was 22.1% compared to 21.4% last year.

Scott: For fiscal 2025, the effective tax rate was 20% compared to 20.4% the prior year.

Scott: During fiscal year 2025, we deployed significant Capital across each of our Capital allocation priorities.

Scott: This Capital allocation strategy has been effective for many years and has served us. Well,

Jared Mattingly: Capital expenditures were 4% of revenue, which is right where we like to be. We invested $232.9 million in acquisitions in fiscal 2025, representing our largest year of M&A activity in almost 20 years, excluding our 2017 acquisition of G&K. These acquisitions spanned across each of our three route-based segments, adding new customers, extending capacity, and delivering compelling synergies. By optimizing our existing route structure, we've been able to spend more time with customers while reducing time spent on the road. Acquisitions remain an important lever for growth, enabling us to broaden our offerings and deliver greater value to our stakeholders. Additionally, we returned over $1.5 billion to shareholders through dividends and share buybacks. Almost $612 million in dividend payments marks the 41st consecutive year that we've increased our dividend, which is every year since going public.

Scott: We invested 408.9 million in capital expenditures, which helped support investments in our technology and infrastructure.

Scott: Capital expenditures were 4 point or 4% of Revenue which is right where we like to be.

Scott: We invested 20232.9 million in Acquisitions in fiscal 2025 representing our largest year of m&a, activity and almost 20 years. Excluding our 2017 acquisition of gnk

Scott: These Acquisitions spanned across each of our 3 route, based segments adding new customers, extending capacity and delivering compelling synergies.

Scott: By optimizing our existing route structure, we've been able to spend more time with customers while reducing time spent on the road.

Scott: Acquisitions remain an important lever for growth, enabling us to broaden our offerings and deliver greater value to our stakeholders.

Additionally, we returned over a billion and a half dollars to shareholders through dividends and share BuyBacks.

Jared Mattingly: We also repurchased approximately $935 million of shares during fiscal year 2025. Todd provided our fiscal 2026 outlook at the start of the call, and I'd like to provide some context on a few assumptions underpinning our guidance. Please note that both fiscal 2025 and fiscal 2026 have the same number of work days for the year and by quarter. Our guidance does not assume any future acquisitions. Our guidance assumes a constant foreign currency exchange rate. The fiscal 2026 net interest is expected to be approximately $98 million. The fiscal 2026 effective tax rate is expected to be 20%, which is the same as fiscal 2025, and our guidance includes no future share buybacks, or significant economic disruptions, or downturn. With that, I'll turn it back over to Todd for closing remarks.

Scott: Almost 612 million dollars in dividend payments marks, the 41st consecutive year that we've increased our dividend, which is every year since going public.

Scott: We also repurchased approximately 935 million of shares during fiscal year 2025.

Scott: Todd provided our fiscal 2026 Outlook at the start of the call. And I'd like to provide some context on a few assumptions. Underpinning, our guidance.

Scott: Please note that both fiscal, 2025 and fiscal 2026. Have the same number of work days for the year and by quarter,

Scott: Our guidance does not assume any future acquisitions.

Scott: Our guidance assumes a constant foreign currency exchange rates.

Scott: The fiscal 2026 interest. Net is expected to be approximately 98 million.

Scott: The fiscal 2026 effective tax rate is expected to be 20%, Which is the same as fiscal 2025 and our guidance includes no future share, BuyBacks or significant, economic disruptions or downturn.

Todd Schneider: Thank you, Scott. As we look ahead to fiscal 2026, our results reflect the strength of our strategy and the value we provide in helping our customers meet their image, safety, cleanliness, and compliance needs. We remain focused on delivering exceptional customer experiences while continuing to make the necessary investments in our business to sustain long-term growth value creation. Our confidence in our ability to navigate the current environment and capitalize on future opportunities remains strong. Jared, back to you.

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

Thank you, Scott, as we look ahead to physical 2026, our results, reflect the strength of our strategy, and the value. We provide in helping our customers, meet their image safety, cleanliness and compliance needs. We remain focused on delivering exceptional customer experiences while continuing to make the necessary investments in our business to sustain long-term growth value creation.

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

Scott: Our confidence in our ability to navigate the current environment and capitalize, on a future opportunities. Remain, strong Jared back to you.

Operator: If you would like to ask a question, please press Star one on your telephone keypad. Now please be prepared to ask your question when prompted. You will also be allowed to ask one follow up question. Once again, if you would like to ask a question, please press Star one on your phone now. Our first question comes from George Tong from Goldman Sachs. Please go ahead.

Thanks, Todd, Jim and Scott that concludes our prepared remarks. Now, we are happy to answer questions from the analysts. Please ask just 1 question and a single follow-up if needed. Thank you.

Scott: If you would like to ask a question, please press star 1 on your telephone keypad now.

Please be prepared to ask your question when prompted.

Scott: You also be allowed to pass 1. Follow up question.

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

[Analyst]: George: Hi, thanks. Good morning. Starting at a high level, can you talk a little bit about what the overall selling environment looks like, including how sales cycles are performing and how client sentiment is trending?

Jasper Bibb: George: Hi, thanks. Good morning. Starting at a high level, can you talk a little bit about what the overall selling environment looks like, including how sales cycles are performing and how client sentiment is trending?

Speaker Change: and our first question comes from George Tong from Goldman Sachs, please go ahead George

Todd Schneider: Good morning, George. Thanks for the question. I'll start. And Jim, if you want to add any color, no real change to the customer behavior, sales cycles, new business remains strong, retention rates are still at very attractive levels. Ad stops really no significant change there. There are certain. Excuse me, clearly there's more uncertainty in the marketplace with tariff, trade, tax, or excuse me, tariff trade taxes, which has a little bit more clarity and interest rates. But nevertheless our value proposition continues to resonate, and it resonates in virtually every economic cycle, hence our 54, the last 56 years. And we expect that to continue, and we like the position we're in. Anything else, Jim, on customer behavior that you'd like to contribute?

Jim Rozakis: Yeah, I think maybe Todd, the only color I would add on that is that the customer behavior offers an opportunity for us to add value to our customers. I recently, at an operational visit and in a routine conversation, one of our employee partners was at a customer site, and as you can imagine during traditional rapport building, the customer expressed concern regarding the overall uncertainty in a macro environment. Our employee partner turned out an opportunity to discuss further Cintas products and services. And we found out that we were able to go ahead and save this customer significant money on something as simple as disposable gloves. So there certainly is a degree, as you described, of a little bit of uncertainty. That uncertainty creates opportunity, and the customers are looking for answers, and oftentimes we're able to provide those answers for them.

Uh, Good morning, George. Uh, thanks for the question. Um, I'll start and Jim if you want to, uh, at any color. Um, uh, no no real change to uh, the customer Behavior, Uh, sales Cycles, you know, new business remains strong retention rates are still at very attractive levels. Um, you know, add stops really no significant change there. Um, uh, it is, there are certain or excuse me, uh, uh. Clearly there's more uncertainty in the marketplace, um, uh, with, you know, tariff trade, uh, um, you know, tax or excuse me, tariff, trade taxes, uh, which is a little bit more clarity, um, and interest rates. Uh, but nevertheless, our our value proposition continues to resonate and, uh, it resonates in, um, in virtually every economic cycle, hence, our 54 the last 56 years. And um uh and and we expect that to continue and um, and we uh, we like the position we're in anything else. Jim on, um, customer behavior that you'd like to contribute.

Jim: Yeah, I think that maybe it's not the only color I would add on that. Is that the the customer Behavior offers an opportunity for us to add value to our customers? I was, I was recently able to have a an operational visit, uh, and and in a routine, uh, conversation 1 of our employee Partners is out of the customer site. And as you can imagine during, uh, traditional Rapport, building the customer expressed concern regarding the overall uncertainty in a macro environment, uh, our employee partner turned out an opportunity to discuss further, uh,

[Analyst]: Very helpful. And then my follow-up, you're continuing to see and deliver operating margin expansion on a year-over-year basis. But incremental margins stepped down this quarter from what was 40% to 50% before to around 25%. Can you talk a bit about what factors may be causing this narrowing rate of margin expansion?

Jasper Bibb: Very helpful. And then my follow-up, you're continuing to see and deliver operating margin expansion on a year-over-year basis. But incremental margins stepped down this quarter from what was 40% to 50% before to around 25%. Can you talk a bit about what factors may be causing this narrowing rate of margin expansion?

Jim: Same toss products and services and we found out that we were able to go ahead and save this. Customer significant money on something as simple as disposable gloves. Uh, so there certainly is a degree as you described of a little bit of uncertainty that uncertainty creates opportunity. And the customers are are looking for answers and oftentimes are by those answers for them.

Todd Schneider: Yeah, George. Yeah, we had another really good profit quarter. We did run 22.4% operating profit for the quarter. That brings us to 35% incrementals for the year, excluding our land sale. I will say last year Q4 was by far our best profit quarter. So the comparables were certainly tougher. And as you know, running a business isn't linear, but we like where we are. We're right in that sweet spot of 25% to 35% incrementals, and we're investing for the future. And we're doing that because we see the opportunities ahead, and we like what the opportunities look like for us. So we're investing appropriately. Got it.

Speaker Change: Very helpful and then um my follow-up you're you're continuing to see and deliver operating margin expansion on the year-over-year basis. But incremental, margins step down the quarter from what was 40 50% before to around. 25%, can you talk a bit about what factors may be causing causing this narrowing rate of margin extension? Yeah. George, uh, yeah, we had, uh, another really good profit quarter. Um, we did run 22.4% operating profit for the quarter, um, that brings us to 35% incremental for the year. Excluding, uh, our land sale. Uh, uh, I will say last year Q4 was, by far our best profit quarter. So the comparables were were, certainly tougher. Uh, and as, you know, running a business isn't linear but um, uh, we like where we are, uh, we're right in that um, sweet spot of 25 to 35% an incremental, uh, and uh, we're investing for the future. Uh, and we're doing that because

Speaker Change: Uh, we see the opportunities ahead and uh, and we like uh, uh uh, what the uh, the opportunities look like for us. So, we're investing appropriately.

[Analyst]: Very helpful. Thank you.

Jasper Bibb: Very helpful. Thank you.

Todd Schneider: Thank you.

Speaker Change: Approval. Thank you.

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

Speaker Change: Thank you.

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

Jim Rozakis: Hey, good morning, guys. I know you don't give quarterly guidance.

Jasper Bibb: Hey, good morning, guys. I know you don't give quarterly guidance.

Jasper: And our next question comes from Jasper, bib from truist Securities, please. Go ahead, Jasper.

Operator: But just something you can give a.

Jim Rozakis: Little bit more color on the cadence of your 2026 outlook, as I imagine you're going to have a lot more difficult comps on the incremental margin front in the first half versus the second half?

Jasper Bibb: Little bit more color on the cadence of your 2026 outlook, as I imagine you're going to have a lot more difficult comps on the incremental margin front in the first half versus the second half?

Speaker Change: Hey, good morning guys I I know you're gonna think for the way guys. I just hoping you could give a little bit more color on the Cadence of your 26 Outlook. As I imagine, you're going to have a lot more different goals on the incremental margin trust in the first half or something like that.

Todd Schneider: Jasper, thanks for the question. Yeah, on the revenue side, we just finished a very successful year where we grew 7.7%, which is right where we want to be. The 2026 revenue guide calls for 6.4% to 7.8% growth, which again is right where we like to be and sets us up for another really good year. We're performing well, and we like the momentum that we have in the business. On the EPS side, we had a great year in FY25, and we think we're set up for another really good year in FY26. The guide calls for EPS growth of 7% to 10.2%, which infers margin expansion throughout the guide, and at the midpoint of revenue EPS guide, it also represents operating margin above 23% in incrementals in the high 20s. So this is all consistent with how we guided last year and this year.

Uh, Jasper, thanks for the question. Um, uh yeah, on the revenue uh side. We we just finished a very successful uh, year where we grew 7.7%, which is right where we want to be. Uh, the 26th Revenue guide calls for, uh, 6.4 to 7.8% uh, which again a growth which again is right where we like to be in sets us up for another uh really good year. Uh we're performing uh well and uh and we like the momentum that we have in the business. Um on the EPS side, uh we uh we had a great year in fy2 and we think we're set up for another really good year and FY. 26. Um,

Todd Schneider: Certainly, the macro environment is. There is a little bit more uncertainty, but we think we're well positioned to navigate the environment and have another very successful year in 2026.

Jim Rozakis: Got it. And then, hoping maybe you could give some color on what you're seeing in ad stops and how you're thinking about that trend in your fiscal 2026 guidance?

The guide calls for EPS growth of 7% to 10.2%, uh, which infers margin expansion throughout the guide. Um, and at the midpoint of Revenue and EPS guide, it also represents operating margin above 23%, uh, in incremental, in the high 20s. So this is all consistent with how we guided last year. Uh, and this year, certainly the, the macro environment is uh, uh, there is a little bit more uncertainty, uh, but we think we're well positioned to uh, to navigate the uh the environment and um and have a another very successful year in 26.

Todd Schneider: Yeah, Jasper, good question. You know, we have an incredibly broad customer base. So we have, you know, some customers that are absolutely thriving in this environment. Some are dealing with input cost challenges, but the net net is, you know, our customer base is still performing well and we think that we're in a good position there. Keep in mind, 70% of our customer base are in the services providing sector, 30% in the goods producing. So from an ad stop standpoint, we think we're in a good spot. We don't give out that specific number, but we like the momentum that we see in our business.

Speaker Change: Hoping maybe you could give some color on what you're seeing in the ad stops. Um and how you're thinking about that Trend in your fiscal 26 guidance?

For good question. You know, we we have a, an incredibly broad, uh, customer base. Um, so we have, uh, you know, um, um, you know, some customers that are absolutely thriving in this environment. Some are dealing with input costs, uh, challenges, um, uh, but the net. Net is, um, uh, you know, our, um,

Speaker Change: Customer base is uh, uh, still performing well and we we we think that we're in a good position there. Keep in mind, 70% of our customer base are, are in the services. Providing sector 30% in the goods producing. Um, but we, uh, uh, so from an add stop standpoint. We think we're in a good spot. Uh, we don't give out that specific number but, um, uh, we like the momentum that we see in our business.

Jim Rozakis: Thanks for taking the question.

Speaker Change: Thanks for taking that question.

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

Speaker Change: And our next question comes from manav Patnick from Barclays Capital. Please go ahead, mine off.

[Analyst]: Hi, good morning. This is Ronan Kennedy. I'm from Manav. Thank you for taking my questions. You touched on this in response to Jasper's question. But if I may just look to go a little more granular. The 2026 guide is the implied operating income margins of 25%, I think, are at the lower end of the midterm guide at 25% to 35%, and then 23% and 27% at the low and high end, respectively. There's obviously an element of operating leverage at play and revenues. But any further insights you can shed as to the puts and takes to the drivers of those incrementals, whether it's the positive impacts of supply chain tech initiatives or the negative impact, say, of the SAP implementation for fire protection. Any further insights on kind of puts and takes to those incrementals, please?

Ronan Kennedy: Hi, good morning. This is Ronan Kennedy. I'm from Manav. Thank you for taking my questions. You touched on this in response to Jasper's question. But if I may just look to go a little more granular. The 2026 guide is the implied operating income margins of 25%, I think, are at the lower end of the midterm guide at 25% to 35%, and then 23% and 27% at the low and high end, respectively. There's obviously an element of operating leverage at play and revenues. But any further insights you can shed as to the puts and takes to the drivers of those incrementals, whether it's the positive impacts of supply chain tech initiatives or the negative impact, say, of the SAP implementation for fire protection. Any further insights on kind of puts and takes to those incrementals, please?

Speaker Change: Hi, good morning. This is ronin. Kennedy off from manah. Thank you for taking my uh questions you touched on this um, in response to Jasper's question. But if I may just look to go a little more granular, the the 26 guy, the implied operating income margins of 25%, I think are at the lower end of the midterm guide at 25 to 35 and then 23 and 27 at the low and high end is respectively. Uh, there's obviously an element of operating leverage at play and revenues, but any further insights You Can Shed as to the puts and takes of the

Todd Schneider: Yeah, thank you, Ronan. Yeah, we like our guide. We think the incrementals are right where we want to be. You know, certainly there is. We will be continuing to invest in SAP in our fire business. That does that. That's not an inexpensive effort there. But that's all contemplated in our guide, as is any input cost challenges that are thrown our way as a result of the environment, the macro environment that we're dealing with, et cetera. So we feel good about the spot we're in from an incremental margin standpoint, again, 25% to 35%, and we're investing appropriately. Running a business isn't linear. So, but we're focused on the long term and positioning our partners and our customers to be incredibly successful, and we like the spot that we're in.

To the drivers of those incremental, whether it's the positive impacts of supply chain Tech initiatives or the negative impact say of the sap implementation for fire protection. Uh, any further insights? I'm kind of puts and takes to those incremental, please.

Speaker Change: Yeah, thank you, Ronan. Um, yeah, we like our guide. We think, uh, we're um, the incremental are right where we want to be. Um uh, you know, certainly there is um, uh uh, we will be uh, continuing to invest in sap in our fire business. Uh uh does Zach that's not um, an inexpensive effort there. Um, but that that's all contemplated in our guide as is, um, uh, you know, any, uh, input cost, um, uh, um, challenges that uh, that are are, are thrown our way as a result of the, uh, the environment that the macro environment that we're uh, dealing with Etc. So we feel good about the, um, uh, the spot. We're in from an incremental margin standpoint again, 25 to 35% and, um, uh, and we're investing appropriately, you know, running a running a business isn't linear, so we, um, um, uh, wait, but we're, we're focused on the long term, and positioning our, our partners and our

Speaker Change: And our customers to be incredibly successful. And uh, and we like the spot that we're in.

[Analyst]: Thank you. And then for my follow-up please, similar question, but in relation to revenues, the range, the guided revenue range is, I think, under 40 basis points, which you understandably indicated is right where you want to be. I also think that range is consistent with the guided range for F25. Can you give us any further insight as to what that contemplates from organic by department or the expected contributions from, say, price, new biz, et cetera versus historicals? Any further insight there? Please be greatly appreciated.

Jasper Bibb: Thank you. And then for my follow-up please, similar question, but in relation to revenues, the range, the guided revenue range is, I think, under 40 basis points, which you understandably indicated is right where you want to be. I also think that range is consistent with the guided range for F25. Can you give us any further insight as to what that contemplates from organic by department or the expected contributions from, say, price, new biz, et cetera versus historicals? Any further insight there? Please be greatly appreciated.

Todd Schneider: Yeah, certainly Ronan. Yeah. Again, we like our guide on the revenue as well. We think we're positioned there. The net for us, we want to grow our business in the mid- to high-single-digits revenue. We certainly expect that our rental business will be similar and our fire and first aid businesses will be in the double-digit area. Then, in our Uniform Direct Sale business, as we've detailed out, we are not trying to grow that as aggressively. Low single digits would be a good way to think about it, but it is a very strategic business because those rather large customers we sell our route-based businesses into as well. So that's kind of how we think about it.

Speaker Change: Thank you. And then for for my follow-up, please similar question. But in relation to revenues the range and the guided Revenue range is, I think 140 basis points, which you understandably indicated is right where you want to be. I also think that range is consistent with the guided range for f25. Can you give us any further insight as to what that contemplates from organic by department? Or you know the expected contributions from say price New Biz Etc versus historicals any further insight there. Please be greatly appreciated.

[Analyst]: Thank you very much. Appreciate it.

Jasper Bibb: Thank you very much. Appreciate it.

Yes, certainly, uh, Ronin. Um, uh, yeah. We again, we like our guide on on the revenue as well. Uh, we think we're, we're positioned there, you know, uh, uh, the uh, net for us. We want to grow our business in the mid to high single digits Revenue. Um, we certainly expect that, um, our rental, uh, business will be similar, uh, and our, um, our fire and first aid, businesses be in the double digit, um, uh, uh area and then, in our uniform direct sale business. Uh, as we've detailed out where we are, I'm not trying to grow that as aggressively, um, you know, low single digits, would be a good way to think about it. Um, but it is a very strategic business because, um, those, uh, rather large customers, we sell, um, our route based businesses into, as well. Uh, so that's, uh, that's kind of how we think about it.

Speaker Change: Thank you very much, appreciate it.

Todd Schneider: Thank you.

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

Speaker Change: Thank you.

Tim Maloney: And our next question comes from, Tim Maloney from William Blair, please go ahead. Tim

Jim Rozakis: Jim Rozakis, good morning.

Todd Schneider: Good morning, Tim.

Tim Mulrooney: Good morning, Tim.

Todd. Jim Scott. Good morning.

Jim Rozakis: Thanks for taking my question, just the first one on the quarter. Your fourth quarter result here, you know, organic growth was 9%. That was well above consensus.

Tim Maloney: Good morning.

Todd Schneider: I think it was also above what?

Speaker Change: Uh, thanks for taking my question. So just the first 1 on on the quarter. Um, your fourth quarter result here, you know, organic growth was 9%, that was well above consensus.

Jim Rozakis: Was implied by your own guidance range that you provided last quarter. So I'm just curious what business lines or sectors picked up during the quarter relative beyond expectations.

I was also above.

Todd Schneider: Yes, thank you, Tim. Yes, we're really proud of our fourth quarter performance. It did exceed our expectations, I think underscores the momentum we have in our business. But we did have for some, I'll call it more discrete type one-time benefits. In the area of our first aid business, we were propelled by a great performance in our training area, which those tend to be a little bit more discrete. One-time in nature, our uniform direct sale business grew 9%, which was a really strong close to what was a bumpy year. So a little bit more one-time in nature there. But we're really proud of the performance in the close of the year, and we think we're well positioned for FY26.

Speaker Change: Expectations.

Yeah, thank you, Tim. Uh, yeah, we're, we're really proud of our of our fourth quarter performance. It did exceed, our expectations. Um, um, you know, I think, uh, underscores the momentum we have in our business, but, uh, but we did have, uh, for, uh, some, uh, um, I'll call it more discreet type 1 time benefits in the, uh, in the area of our first aid business. Uh, we were propelled by, uh, I mean, a great performance in our training area, which those tend to be a little bit more discreet, 1 time in nature. Um, our uniform direct sale business, uh, you know, grew 9%, which was a really strong close to a, what was a bumpy year? Uh, so, um, uh, you know, a little bit more, uh, 1 time in nature there. Um, but we're, we're really proud of, uh, of the the performance, uh, and the close of the year. And we think we're well positioned for, um, FY 26.

Jim Rozakis: Okay, no follow-up needed. Thanks guys.

Todd Schneider: Thank you.

Okay. No, follow up needed. Thanks guys.

Thank you.

Operator: And our next question comes from Andrew Steinerman from J.P. Morgan. Please go ahead. Andrew, hi. You know, the quarter ended, you know, six weeks ago, and I just wanted to get a sense of how the current quarter started. Just, you know, what's already kind of behind us in June, in the first couple weeks of July, in terms of revenue growth, momentum; has it sort of been consistent with the way you finished the quarter? And then I'll just ask my second question. Also, I just saw some discussion. I was just wondering if there's any recent changes to your go-to-market strategy, particularly around national accounts.

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

Andrew Steinerman: hi. You know, the quarter ended, you know, six weeks ago, and I just wanted to get a sense of how the current quarter started. Just, you know, what's already kind of behind us in June, in the first couple weeks of July, in terms of revenue growth, momentum; has it sort of been consistent with the way you finished the quarter? And then I'll just ask my second question. Also, I just saw some discussion. I was just wondering if there's any recent changes to your go-to-market strategy, particularly around national accounts.

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

Speaker Change: Um, hi. Um, the, you know, the quarter ended, um, you know, 6 weeks ago. And I just wanted to get a sense of how the current quarter, uh, started just, you know, what's already kind of behind us. In, in June, in the first couple weeks of July, in terms of Revenue growth, our momentum has it, you know, sort of been consistent uh, with the way. Um,

Speaker Change: You, you know, you have finished finished the quarter and then I'll just ask my second question also. Uh um, I just saw you know, some discussion. I was just wondering if there's any recent changes to your go to market strategy, particularly around national accounts.

Todd Schneider: Good morning, Andrew. Thanks for the question. First off, yeah, you're right. I mean, we're, because of this being our Q4 call, we are further into our quarter than normal, and the start of the year, it's starting exactly the way we expected, and it's reflected in our guide. So kind of, well, I would say consistent with what we expected for the start of the year. As for our go-to-market strategy, that really hasn't changed. You know, websites change, and we talk about trying to position ourselves appropriately to all of our customers, but we've been in the national account business for 30-plus years. I'd say virtually my entire career. The only thing I would call out is our vertical strategy; obviously, it has been different over the last five to 10 years, and that has performed well.

Speaker Change: Uh, good morning, Andrew. Thanks for the question. Uh, first off. Uh, yeah. You're right. I mean, we're, uh, because of this being, um, uh, our, uh, our Q4 call, we are, um, further into our, our quarter than normal. Um, and the start of the year is, uh, it's starting, um, uh, exactly the way we expected and, um, uh, and it's reflected in our guide. So, um, uh, kind of cons. Well, I would say consistent with, uh, What, uh, what we expected for the start of the year.

Our, our go-to Market strategy know that really hasn't changed, you know, uh, websites changed.

Todd Schneider: So no other change, no real change in our market strategy. We're constantly reinvesting in our products and services to make them of more value to our customers and to position our employee partners to make it easier to take care of our customers. So there's always refreshes going on. A product here, product there. That's just part of our culture to try to make sure we're positioned to be successful as possible.

Speaker Change: We talked about, uh, you know, trying to, uh, uh, position ourselves, uh, appropriately to all of our customers. Uh, but we've been in the national account business for 30 plus years. Uh, I'd say virtually my entire career. Um, and uh, uh, the only, you know, uh, uh, uh, thing I would call out is our vertical strategy is obviously. Uh, has been different over the last, uh, uh, you know, 5 to 10 years. Uh, and that has performed, uh, well, um, so um, no other change, no, no real change in in our uh, in our, our Market strategy. Uh, we're

Operator: Sounds right. Thanks.

Speaker Change: Constantly reinvesting in our products and services to make them, um, of more value to our, our customers, and the position, our our employee Partners to, uh, to make it easier to, uh, take care of our customers. So, um, there's always refreshes going on, uh, a product here product there. Uh, that's, uh, that's just part of our culture, uh, to try to make sure we're positioned to be, uh, uh, successful as possible.

Todd Schneider: Thank you.

Speaker Change: Sounds. Alright. Thanks.

Speaker Change: Thank you.

Operator: And our next question comes from Josh Chan from UBS. Please go ahead. Josh. Hi, good morning, Todd, Jim, Scott, Jared. As you look into your different cost buckets kind of going into 2026, you know, material, labor, your fleet, anything to highlight in terms of your trajectory of cost changes, and maybe on the material side, could you touch on potential tariff impact and how that could have. How that could impact kind of the cost.

Operator: And our next question comes from Josh Chan from UBS. Please go ahead. Josh.

Josh Chan: Hi, good morning, Todd, Jim, Scott, Jared. As you look into your different cost buckets kind of going into 2026, you know, material, labor, your fleet, anything to highlight in terms of your trajectory of cost changes, and maybe on the material side, could you touch on potential tariff impact and how that could have. How that could impact kind of the cost.

Speaker Change: And our next question comes from Josh Chan from UBS. Please go ahead. Josh.

[Analyst]: Thank you.

Jasper Bibb: Thank you.

Todd Schneider: Yeah. Good morning, Josh. Yeah, why don't I just speak a little bit about that subject? You know, we believe we're in a good position to navigate through what is clearly a very dynamic environment with challenges like tariffs and what have you. We think it gives us an opportunity to flex our strengths, which is our people and our culture. And all this is reflected in our guide. We contemplated some additional expense into the guide, but we have some, we think some real advantages. First off, the nature of how we expense our goods in our largest businesses is because we amortize it. It gives us time. It also, you probably notice on our balance sheet, our inventory is up. So we've anticipated and managed this appropriately. And I'd like to also say that we've navigated this very successfully in the past.

Hi, good morning, Todd, Jim Scott Jarrett. Um, as you look into your different cost buckets, kind of going into 2026, you know, material, Labor, uh, your Fleet, anything to to highlight in terms of, you know, trajectory of of cost changes and maybe on the material side, could you touch on potential tariff impacts and and how that could have uh how that could impact kind of um the cost thing.

Speaker Change: Yeah, good morning Josh. Um, uh, yeah, I want to just speak a little bit about um uh that subject. Uh, you know, uh uh we we believe we're, we're in a good position to navigate, uh, through what is a clearly, a very Dynamic environment, um, with challenges like, uh, tariffs and what have you? We think it gives us an opportunity to, uh, to flex our strength, uh, which is our people and our culture.

Todd Schneider: The past five years. Whether it's been inflation or supply chain challenges, our global supply chain has shined and has been a competitive advantage for us in the marketplace. As a reminder, we source products all over the world, so we have great geographic diversity, and we also have 90% or so of our products. We have two or more sources. You put that together with our buying power, all that gives us options and leverage. So we think that that positions us well. And you put on top of that our corporate culture, traits of positive discontent, competitive urgency. It fuels us to look at process improvements and finding ways to extract inefficiencies out of our business so that we can be more efficient. We don't take the approach that well, if a tariff is going to raise a cost, then we just gotta.

Speaker Change: It it gives us a time. Um, uh, it also we, uh, you probably notice our balance sheet. Our inventory is up. Um, so um, we've anticipated and uh, and uh uh, and and manage this appropriately. Um, and I'd like to also say that we've, uh, We've navigated this very successfully in the past, you know, the past 5 years, whether it's been inflation or supply chain challenges, um, our our Global Supply Chain has, uh, has shined, and, um, and has has been a competitive Advantage for us in the marketplace. Um, as a reminder, we Source, uh, products, uh, all over the world. So we have great Geographic diversity. Um, and we also have, um, uh, 90% or so of our products we have 2 or more sources. Um, you put that together with our buying power, all that gives us, uh, options and leverage. Um, so, uh, we, we think that that, uh, positions us well,

Speaker Change: When you, uh, you put on top of that, uh, our corporate culture traits of positive discontent and competitive urgency. Um, it it fuels us to uh to look at process improvements uh and finding ways to extract inefficiencies out of our business so that we can be more inefficient, more efficient,

Todd Schneider: We gotta eat that and pass it along to our customer. That's not how we run our business, and it's not how we've run it in the past, and it's not how we're running it in the future. And we think it gives us an opportunity to shine.

Jim Rozakis: Josh, if I might add to that, I think Todd did a great job describing the supply chain. He also talked about some of the work we're doing to remove inefficiencies. We have several initiatives ongoing. Some were mentioned in our prepared remarks that are all in play and again contemplated in next year's expectations. But garment sharing would be one that I think would be worth highlighting here. We continue to leverage the SAP platform to be able to share goods that we have in inventory across our entire network. And that's been quite effective. And we think we've got some room to go on that one. Automating within our plants and deploying auto sortation technology in our plants. We have about 50% of our plants have some degree of auto sortation, and we're in the middle of trying to deploy more of that in the past.

Speaker Change: Uh, we don't take the approach that. Well, you know, uh, if a tariff is going to raise a cost, then we just got to, we got to eat that and pass it along to our customer. Uh, it's not how we run our business and um uh it's not how we run it in the past and it's not how we're going to run it in the future. Uh, we're uh, and we think it gives us an opportunity to uh, to shine.

Jim Rozakis: It's been challenging due to our plants being all different shapes and sizes. We believe that we develop technology to overcome that and limit the disruption. So those are in motion, and we expect those to continue to deploy this year. Todd mentioned operational excellence. Operational excellence is us really maximizing the assets, specifically in our rental business around the plant. That allows us to continue to defer capital expenditure, and it also allows us to run those plants more efficiently, allowing us to wash fewer loads, you know, consume less energy, less chemistry, and water within our facilities. And then maybe last that I would be mentioning would be our Smart Truck initiative that's been ongoing now for several years. That allows us to incrementally route our fleets more efficiently, get them more time in front of the customer.

Speaker Change: Hey Josh. If I might add to that uh you know, I think Todd did a, a great job, describing a supply chain. He also talked about some of the work we're doing to remove inefficiencies. We we have several initiatives ongoing somewhere mentioned in our prepared remarks uh that are all in play and again contemplated in in next year's expectations. But Garmin sharing would be 1 that I think would be worth highlighting here. We continue to Leverage, The sap platform to be able to share uh, Goods that we have an inventory across our entire network. Uh, and that's been quite effective and we think we got some, some room to go on that 1, uh, automating, uh, within our plants and deploying Auto sortation technology. In our plants, we have about 50% of our plants, uh, have some degree of Auto sortation, and we're in the middle of trying to deploy more of that, uh, in the past, it's been challenging due to our plants, being all different shapes and sizes. We believe that we've developed technology to overcome that and limit the disruption. Uh so those are uh in motion and uh we expect those to continue to deploy this year. Uh, Todd mentioned operational.

Jim Rozakis: But certainly route growth is significantly less than what our revenue growth is. And we're going to continue that. And it's not next discovery.

Speaker Change: Excellence. Operational excellence is, that's really maximizing the assets specifically in our rental business, uh, around the plant. Uh that allows us to continue to defer capital expenditure. Um and uh it'll also allows us to run those plants more efficiently uh allowing us to wash fewer loads, uh, you know, consume less, uh, energy, uh, less chemistry and water within our facilities. And then maybe last, uh, that I would be mentioning would be our smart truck, uh, initiative. That's been ongoing. Now for several years, uh, that allows us to incrementally Route our uh, our fleets more efficiently, get them more time in front of the customer. But certainly route growth is significantly less than what our Revenue growth is. And and we're going to continue that and it's not next fiscal.

Operator: That's great, Carlo. Yeah, I appreciate the context there. That's really helpful. And then I guess for my follow up, I think Scott, you highlighted the M&A spend this past year. Just wonder if you could comment on the prospects of M&A going forward and how the pipeline of the bolt-ons look at the moment. Thanks.

Speaker Change: That's a great color. I appreciate the uh, the context there, that's really helpful. Um, and then I guess for my follow-up, I think Scott, you highlighted the the m&a spend this past year, just wondering if you could comment on the prospects of of m&a, kind of going forward and and how the the pipeline of the the boltons. Look at the moment. Thank you.

Todd Schneider: Why don't I start a little bit on pipeline, and then Scott can talk about capital allocation. You know, M&A is tough to predict, but it's very important to us. You know, these relationships that we have we've had for decades, and trying to figure out when a business is going to be interested in selling is, I mean, it's not random, but it is certainly tough to predict. We had a great year, and we leveraged those relationships that we've had for decades. But we're in the business of buying really good businesses. And when you buy really good businesses, you get a lot of things, but you get customers and you get employee partners and are the most important areas. In certain cases, we get capacity, and if we don't get capacity, we get really good synergies.

Speaker Change: uh, well, why don't I start a little bit on Pipeline and then Scott can talk about Capital, allocation, um,

Speaker Change: You know, m&a is cut from predict. Um, uh, but, uh, but it's very important to us. Um, you know, these, um, uh, relationships that we have, um, you know, we've had for decades, uh, and, uh, and trying to figure out when a, um, a business is going to be, uh, interested in selling is, um, I mean, it's, it's, it's not random but, uh, but it is certainly a tough to predict. We had a great year. Um, and uh, we leverage those relationships that we've had for decades, uh, and but we're in the business of buying really good businesses uh, and when you buy really good businesses, you get a lot of things but you get

Todd Schneider: So we'll continue to work our pipeline, but nevertheless, we can't time it, but we're highly active so that when somebody is interested, we're well positioned for that. Scott, if you want to talk a little bit about capital allocation.

Jared Mattingly: Thanks, Todd. As I mentioned in our prepared remarks, our approach to a balanced capital allocation strategy has served us well for many years. You know, I've been part of that in my prior roles and really don't see a change in that in the future. Continue not only to invest in M&A activity, you know, we'll continue to reinvest back in the business via capital expenditures and, you know, continue to invest in both dividends and be opportunistic with share buyback.

Or less we we, uh, uh can't time it but uh, but we're highly active so that when somebody is interested, uh, we're we're well positioned for that Scott. If you want to talk a little bit about Capital, allocation,

Yeah. Thanks, uh, Todd, as I mentioned our prepared remarks, um, you know, our approach to a balanced, the capital allocation strategy has served us well, uh, for many years.

Speaker Change: Uh, you know, I've been part of that, uh, in my, uh, prior roles and really don't see a change in that, in the future. Um, and uh, continue not only to, uh, invest in m&a activity. You know, we'll continue to reinvest back in the business, uh, via Capital expenditures and um, you know, uh, continue to invest in both dividends and uh, the opportunistic uh, with share BuyBacks.

Operator: Great. Thank you for your time and congrats on a good quarter.

Jared Mattingly: Thank you.

Todd Schneider: Thank you.

Speaker Change: Great. Uh thank you for your time and congrats on the good quarter.

Speaker Change: Thank you. Thank you.

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

Todd Schneider: Jason. Hey, good morning, and thanks for taking my questions. I'm curious if you expect the industry to pass on higher price increases in fiscal 2026, given the tariff-driven inflation and if that's something that you've baked into your guidance, assuming you could take more price as well, or if that could represent upside. Thank you. Thanks for the question, Jason. Our pricing strategy is we're back at historical levels on pricing. We certainly don't control how our competitors price things, but we expect to be at historical levels of pricing. What we know of the environment today, we think we're well positioned. It's contemplated in our guide. As I mentioned earlier, we don't just run our business in a manner where, well, if a tariff comes through and there is some cost increase, first off, we don't just accept that.

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

Jason: Hey, good morning and thanks for taking my questions. I'm curious if you expect the industry to pass on higher price increases in fiscal 2026 given the Tower of driven inflation. And if that's something that you've baked into your guidance system, you know, you could take more prices as well. And if that could represent upside, thank you.

Todd Schneider: And then secondly, we find ways to run our business more efficiently because, you know, we operate in a competitive environment, competitive marketplace, and as a result, we want to make sure that we're being great fiduciaries for not only our shareholders and our partners, but our customers. So our guide contemplates historical pricing and that's how we would plan to manage the business. Okay, thank you, that's helpful. And then as a follow up, I was curious in this environment if you're seeing more competitive wins, particularly from some.

Speaker Change: Uh, thanks for the question, Jason. Um, uh uh, our pricing strategy is, uh, is you know, we're, we're back at historical levels on pricing. We certainly don't control, uh, um, uh, how our competitors, uh, price things. Um, but we expect to be a historical levels of pricing, um, you know, um, uh, what we know of the environment today, we we we think we're well positioned, uh, it's contemplating our guide. Uh, and as I mentioned earlier, um, we don't just run our business in a manner where well, if a, if a tariff comes through and there is some cost increase, first off, we don't just accept that. Um, and then secondly, we um, uh, uh, we we find ways to run our business more efficiently because, um, you know, uh, uh, we operate in a competitive, um, uh, environment compared to Marketplace. Um, and, and as a result, we, we want to make sure that, uh, we're, uh, we're being great fiduciaries.

Speaker Change: For not only our shareholders and our partners, but our customers. So, um, uh, so, uh, our our guide contemplates historical pricing and, uh, uh, and that's, uh, you know, uh, how we would plan to manage the business,

Operator: Of your larger competitors that are out.

Todd Schneider: Since it seems like your growth rates are quite elevated versus what we've seen from others.

Jim Rozakis: Thank you.

Speaker Change: Okay, thank you. That's helpful. And then as a follow-up, I was curious in this environment, if you're seeing more competitive wins, uh, particularly from some of your, your larger competitors that are out there since it seems like your, your growth rates are are quite elevated. Um, versus what we've seen from others. Thank you.

Todd Schneider: Yeah. So again, thanks for the question. No real change in the marketplace, I'd say, from a competitive landscape. It's been competitive my entire career and I'm sure will be into the future as well. That being said, we don't look at it as a finite pie. We have a little over a million business customers. There's 16 to 17 million businesses in the US and Canada. So we look at it as an opportunity to go and sell more to those customers who are not buying from us today. And then we have this incredible opportunity to sell more products and services to our current customers. So you know how someone else in our direct competitor might be growing, that's not of interest to us. We're more focused on how can we provide more value to our customers, how can we position our employee partners to be more successful.

Yeah. Uh, so again, thanks for the question. Um, you know, I'm no real change in the marketplace, I'd say, uh, in from a competitive landscape, um,

Todd Schneider: We want to be easier to do business with, want to be easier for our partners to sell, and easier for our partner, our customers, for them to do business with us. Got it.

Speaker Change: Uh, it's, it's been competitive my entire career and uh, and I'm sure we'll be, you know, in the in to the Future as well. Um, uh, that being said, uh, we don't look at it as a, um, uh, as a finite pie, you know, there's, uh, we have a l over a million business customers. There's uh, 16 to 17 million businesses in the US and Canada. Um, so we look at it as a, uh, an opportunity to go and sell more to those, uh, uh, customers who are not buying from us today. Um, and then we have this incredible opportunity to sell more products and services to our, our current customers. So, uh, you know how, uh, someone else in, in, in our, uh, uh, direct competitor might be growing is, um, uh, that's not of interest to us. We're more focused on, you know, how can we provide more value to our customers? How can we position our employee Partners to, uh, to be more successful? We want to be easier to do business with want to be easier for our partners to sell. And, and

Jim Rozakis: Thank you, that's very helpful.

Speaker Change: and, uh, and easier for our, uh, our partners, our customers, uh, uh, for them to do business with us,

Speaker Change: got it. Thank you. That's very helpful.

Operator: Our next question comes from Ashish Sabadra from RBC. Please go ahead. Ashish, thanks for taking my question.

Speaker Change: and our next question comes from Ashish sabadra from um R RBC please go ahead Ashish

Todd Schneider: I just wanted to focus on the four strategic verticals. Healthcare, Government, Education, and Hospitality. I was wondering if you could just provide any update on those fronts and any big initiative as we go into 2026. Thanks. Good morning, Ashish. Thanks for the question. I'll start and then, Jim, feel free to chime in. We like all our verticals. We think we've chosen them really well. As a reminder, we don't just sell into those verticals. We organize around them and from a business standpoint, to make sure that we can service them appropriately and provide better value. But we think we've chosen them quite well and we expect them all to perform above our average growth rates. Jim, anything specific on verticals you'd like to call out?

Speaker Change: I'm taking my question. I just wanted to focus on the 4 strategy. Verticals Healthcare, government education, and Hospitality. I was wondering if you could just provide any update on those fronts and any big initiative as we go into 2026. Thanks.

Jim Rozakis: I guess I would just add that by organizing around the verticals, it allows us to gain intimate knowledge and really understand the industries well. Therefore, we're able to collaborate and innovate solutions that we bring to the marketplace that not only allow us to have solid growth within those verticals, but oftentimes those solutions could expand outside of those verticals. One we've discussed in the past has been our Healthcare journey. You know, our journey with really what initiated scrub dispensing; that's that dispensing service now is out beyond just Healthcare, and we see lots of applications for that. We've gone on a recent journey in Healthcare to really innovate and change how we go to market for privacy curtains.

Speaker Change: And from a business standpoint, to make sure that we can service them appropriately and provide better value, uh, but we think we've chosen them quite well, uh, and um, uh, and we expect them all to perform um, above our our, uh, our average growth rates, uh, Jim, anything specific on verticals. You like to call out, I guess I would just add that, you know, by organizing around the verticals allows us to gain intimate knowledge, and really understand, uh, the industry as well. Uh, therefore, we're able to collaborate innovate, uh, solutions that we bring to the marketplace that not only allow us to, uh, have you know, solid growth within those verticals. Uh, but often times their solutions could expand outside of those verticals. And, and 1, we've discussed in the past has been our Healthcare journey. And, you know, our our journey with really, what initiated the scrub dispensing. Uh, that scrub that dispensing service now is out Beyond uh just Healthcare and we see lots of applications for that. Uh we've gone on a recent journey and health.

Jim Rozakis: We believe that those are indicative in the types of solutions that you're able to bring to marketplace when you get that involved and invested in particular verticals. We want to continue to do that moving forward.

Todd Schneider: Ashish, we hear from our customers, as Jim mentioned, when you organize around them and you spend that much time with them, you hear where they need help and where they're struggling, for whether it's cleanliness, compliance, image, or safety. Jim just walked through the privacy curtains and it's a great example where customers really struggle with that, with the compliance which affects cleanliness. We didn't just roll out privacy curtains; we invested in technology around that and also in improving how they function. As a result of that, we have patents around that and we've got a lot of customers that have been really excited and happy about what we're doing there. That's great. Teller. Maybe just on the follow-up, we've seen some material acceleration in the first aid business.

Speaker Change: Care to really innovate and uh and change how we go to market for privacy curtains and we believe that those are indicative and the types of solutions that you're able to bring to Marketplace when you get that involved and invested in particular verticals. Uh and we want to continue to do that moving forward.

Speaker Change: She we hear from our customers, uh, as Jim mentioned, when you organize around them. And you and, uh, and you spend that much time with them, uh, you hear where you where they need help and, um, uh, and where they're struggling for whether it's as cleanliness or compliance or image, or safety. Um, and, uh, Jim just walked through the Privacy curtains and, uh, it's, it's a great example where customers really struggle with that with the compliance, which affects cleanliness. And, um, I and we didn't just roll out privacy curtains, we invested in, uh, technology around that and also in, uh, in improving uh, uh, how there are, uh, how they're uh, they how they function. Um, and as a result of that, we have patents around that and uh, and we've got a lot of customers that uh, are have been really excited and happy about the, what we're doing there.

Todd Schneider: I was just, it seems like based on the prepared remarks that it was broad-based across products, but I was just curious if there is incremental traction that you're getting for certain products or just improving penetration. Any color there will be helpful.

[Analyst]: Thanks.

Jasper Bibb: Thanks.

Todd Schneider: Yeah, great, great question. We love the first aid business and it's performing at a very exciting clip, and the value that they provide to the customers is reflecting. Jim talked a little bit about that. We've got some good momentum around certain products and services. AEDs have been in great demand. That's been good. Our WaterBreak, our Eyewash Stations, those recurring revenue type products are really good for us. But our cabinet business is attractive, so we've invested appropriately there, and, and we're seeing the benefits of that. That being said, we did benefit from a spike in training during the quarter, which we don't expect to continue at those levels. But nevertheless, we think we're well positioned to be successful in the marketplace in the first aid business. That's great. Thank you. Thank you.

Oh, that's great color and maybe just on the follow-up. We've seen some material acceleration in the first aid business. I was just, it seems like based on the Preparatory Mark that it was brought based across products. But I was just curious. If there is incremental traction that you're getting for certain products or just improving penetration any color, there will be helpful. Thanks.

You have great. Great question. Uh, we love the first aid business and uh, it's performing at a, at a very, uh, uh, exciting clip, um, uh, in the value that they provide to the customers is, uh, it's reflecting. Um, uh, Jim talked, a little bit about that. We, you know, we've got some, uh, good momentum around, uh, uh, certain products and services aeds, um, have been, uh, in great demand, that that's been good. Our water break our eyewash stations, those recurring Revenue, uh, type products are are, uh, are really good for us. Um, uh, but our cabinet business is attractive. So, uh, it's uh, um, we've invested appropriately there, and, uh, and we're seeing the benefits of that. That being said, we did benefit from, uh, uh, you know, a spike in training, uh, during the quarter, which we don't expect to continue at those levels. But nevertheless, uh, we think we're well positioned to be successful in the marketplace, uh, in the first aid business.

Speaker Change: That's great. So thank you.

Operator: And our next question comes from Shlomo Rosenbaum from Stifel. Shlomo, please go ahead. Hi. Thank you for taking my questions. I want to piggyback a little on Ashish's question. In that first aid business, how much of that revenue would you say is more kind of recurring, and how much of that business is usually training and other areas that might be more one time?

Speaker Change: Thank you.

Speaker Change: And our next question. Come from schlomo Rosen bomb from stifel Nicholas. Please go ahead Shlomo.

[Analyst]: Ish.

Jasper Bibb: Ish.

Todd Schneider: Yeah, good morning, Shlomo. Yeah, we don't give out the exact percentages as far as revenue that's recurring versus more on consumption. But nevertheless, we're constantly reinvesting in that business to try to come up with products and services that are of real value to the customers. And we're seeing the benefits there. So that's part of our culture, is that reinvestment, and we'll continue down that path. And we think, again, we're well positioned to be successful in that market, and the demand is showing, and we expect that that business will grow in the low double digits moving forward. And we like the spot for there.

Hi. Thank you for taking my questions. I want to uh piggy back a little on ashish's uh uh question um in that first stage business. How much of that Revenue would you say is more kind of a recurring and how much of that business is is usually training uh, and other areas that might be more 1-time.

Yeah, good morning slowmo. Um,

Operator: Okay, thank you. And just for the follow up, could you comment a little on the spike up in uniform sales? And usually I know you expect it to grow in the low single digits, and was there something that will carry forward into the next quarter or two, or was it really just kind of one quarter kind of fulfillment or something?

uh, and we would like to spot for their

Todd Schneider: Good question, Shlomo. Yeah. In the uniform direct sale business, we do expect that to grow in the low single digits. It was a bumpy year for them, and they had a really strong close. But I would not expect that that would continue into the fiscal year. We plan for that business to grow in the low single digits. And because of the nature of it, with rollouts, it can be a little bit of lumpiness to that. And Q4 was really strong close to the year.

Okay, thank you. And just for the follow-up. Could you comment a little on? Uh, the spike up in uniform sales? Is that, uh, and you know, usually I know you expect it to grow in the low single digits, and was there something that will carry forward into the next quarter or 2? Or was it really just kind of a, a 1 quarter, uh, kind of fulfillment or something?

Operator: Thank you.

Speaker Change: Yeah, good question is from omo. Yeah. In uniform direct sale business. We we do expect that to grow in the low single digits. Um, uh, it was a bumpy year for them and they, they had a really strong close, but I would not expect that. That would, uh, continue uh, uh, into, uh, the fiscal year. Uh, we we plan for that business to grow in the low single digits and, uh, uh, and and, and because of the nature of it with rollouts, uh, it can be a little bit of, um, uh, lumpiness to that. And uh, and Q4 was uh, really strong close to the year.

Todd Schneider: Thank you.

Speaker Change: Thank you.

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

Speaker Change: Thank you.

And our next question comes from Stephanie Moore from Jeffrey's. Please go ahead Stephanie.

[Analyst]: Great. Good morning. Thank you. I was hoping you could talk a little bit about some of your end market exposure if you're seeing any kind of weakness or strength in particular end markets. Maybe the manufacturing sector, for example, has been kind of weak across the board here in the US, but any areas of weakness or areas of strength that you could call out. Thank you.

Jasper Bibb: Great. Good morning. Thank you. I was hoping you could talk a little bit about some of your end market exposure if you're seeing any kind of weakness or strength in particular end markets. Maybe the manufacturing sector, for example, has been kind of weak across the board here in the US, but any areas of weakness or areas of strength that you could call out. Thank you.

Stephanie Moore: Great. Good morning. Thank you. You

Stephanie Moore: I was hoping you could talk a little bit about some of your end Market exposure if you're seeing any kind of weakness or strength in particular end markets, you know maybe the manufacturing sector for example has been kind of a weak across the across the board here in the US but any areas of weakness or areas of strength that you could call out. Thank you.

Todd Schneider: Good morning, Stephanie. In general, again, we have an incredibly broad customer base, whether it's by business type, NAIC code, and also geographically. And so no real weakness that we're seeing whatsoever in the marketplace. Certainly the goods producing customers have been under more pressure the last few years. The services providing customers are trying to fulfill demand. So you know, the net net of it is no real weakness that we're seeing there. You know, we would be encouraged to see more production coming back into the US from the goods producing sector and we would, we're hoping for more certainty as far as what the tax or excuse me, what the trade looks like which will allow business people to invest appropriately. And we are hopeful that that will come here in the near future.

Yeah. Uh, good morning Stephanie. Um, you know, in general again we we have an incredibly broad customer base, um, uh, whether it's, uh, by, uh, a business type, net code, and also geographically. Um, and um, so no, uh, you know, uh, real weakness that we're seeing whatsoever in the marketplace. Um, certainly the goods producing. Um, um, you know, customers have been under more pressure, the last few years, the service is providing customers, um, uh, are trying to fulfill demand. Um, so, uh, you know, the, the net net of it is um, no real weakness that we're seeing there. Um, you know, we would be encouraged to see, uh, more um, more production coming back, uh, into the US, uh, from the goods producing sector. Uh, and, um, uh, we would, uh, uh, uh, uh, we're hoping for more certainty as far as, uh, what the tax or excuse me, what the trade looks like, which will allow this is people

Stephanie Moore: To invest appropriately, uh, and we are hopeful that that will come here in the near future.

[Analyst]: Got it. And then really just any kind of, I guess, just one follow-up here. You know, as you think about your M&A opportunity, obviously you've given some color today on kind of your continued focus on M&A. But are there any areas that you would look at expanding an M&A outside of kind of the core uniform area?

Jasper Bibb: Got it. And then really just any kind of, I guess, just one follow-up here. You know, as you think about your M&A opportunity, obviously you've given some color today on kind of your continued focus on M&A. But are there any areas that you would look at expanding an M&A outside of kind of the core uniform area?

Stephanie Moore: Got it. And then really.

Speaker Change: Opportunity. Obviously you've given some color today and and kind of your continued focus on m&a. But are there any areas or um that you would look at expanding in m&a outside of kind of the core uniform area?

Todd Schneider: Yeah, thanks for the question, Stephanie. First off, we're acquisitive in each of our route based businesses, and that's a key component of our strategy. We love when we make an acquisition, I talked about synergies, and I talked about capacity. But it does give us an opportunity to go to those customers with a broader breadth of products and services that we can help them with. So that's an important function. But yeah, we're acquisitive in each of our route based businesses, and we're always, you know, various people bring us opportunities outside of those, and we don't need to, we don't need to go outside of those. The opportunity in our business is significant. As I mentioned, a little over a million business customers with 16, 17 million businesses in US and Canada.

Yeah. Uh, thanks for the question. Uh, Stephanie there. Uh, first off, we uh, we're inquisitive in each of our routes based businesses. Um, and, uh, that's a, uh, it's a, a key component of our strategy. But we love when we, um, uh, when we make an acquisition, I talked about synergies and I talked about capacity, um, but it does give us an opportunity to, to go to this customers with a, uh, a broader breadth of of products and services, uh, that will, uh, that we can help them with. So, uh, uh, that's an important function. Um, but yeah, we're inquisitive in each of our route based businesses. Um, and uh, uh, and we're always, you know, various people bring us, um, opportunities outside of those. Uh, and, um, uh, and uh, we don't need to, we don't need to go outside of those. The opportunity, in our, in our business, uh, is significant. Um, the um, uh, as I mentioned, you know, a little over a million business customers, whether it's 1617 million businesses,

Todd Schneider: So the opportunity looking forward is very encouraging, and we're staying disciplined while being aware of opportunities that are out there. But all three route-based businesses are; we're trying to make deals.

And US and Canada. Uh, so the opportunity, uh, looking forward is, uh, very encouraging and, uh, and we're staying, uh, disciplined, uh, while being aware of opportunities that are out there. Uh, but the, the all 3 route based businesses are. Um, we're, we're, we're trying to make make deals.

[Analyst]: Thank you. Appreciate it.

Jasper Bibb: Thank you. Appreciate it.

Todd Schneider: Yes, ma'am. Thank you.

Speaker Change: Thank you, appreciate it.

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

Speaker Change: Man, thank you.

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

[Analyst]: Todd.

Jasper Bibb: Todd.

Operator: I believe you mentioned progress relating to Smart Truck and improved sourcing. Could you please elaborate on that? Then my follow up, I'll ask up front for Scott, it sounds like we should be expecting 4% of revenue CapEx again in fiscal 2026. I'm just curious, digging in from the one big beautiful act, the Build Back Better Act, anything to expect there impacting cash flow in 2026 or any other aspects of the business. Thanks, guys.

Todd Schneider: Well, thank you for the question, Scott. Yeah, as I mentioned and I think Jim expanded upon it, Smart Truck has been a great investment for us. It's technology that allows us to spend more time with the customer and less time driving. As we like to say around here, we don't generate any revenue when the wheels are turning. We only generate revenue when the wheels stop. So, and that technology has allowed us to improve upon that. Jim mentioned that we're adding routes at a certainly slower pace than we're adding revenue. That speaks to just what I mentioned. From a sourcing standpoint, we're constantly working on improving sourcing. We have seen benefits over the past few years with our centralized purchasing, with our First Aid distribution center.

In in 26 or any other aspects of the business. Thanks, guys.

Todd Schneider: But our sourcing organization, they're working overtime right now, and because of the environment with tariffs being uncertain there. But we're encouraged by what they do, how they do it, and again, we think this will give them an opportunity to shine. Scott, if you want to talk a.

Speaker Change: Uh, well, thank you for the question Scott. Um, yeah. As, as I mentioned, uh, uh, and I think Jim expanded upon it. Smart truck has been, uh, a great investment for us. Um, it's technology that allows us to, uh, uh, to spend more time with the customer and less time driving. And, uh, as we like to say around here, we don't, uh, generate any Revenue, when the wheels are turning, we only make, uh, uh, generate Revenue when the wheels stop. So, um, and that technology is, uh, allowed us to, uh, uh, to improve upon that Jim mentioned that we're, we're adding routes at a certainly a slower Pace than we're adding Revenue, um, and, uh, and that speaks to just what I, uh, I mentioned, um, from a sourcing standpoint, uh, we're constantly, uh, working on improving sourcing. Um, uh, we have seen benefits over the past few years with our, uh, centralized purchasing, uh, with our first aid Distribution Center. Um, but our sourcing organization, um, uh, is is they're working overtime.

Jared Mattingly: Little bit about CapEx and cash flow, thanks, Todd. Thanks for the question, Scott. Regarding CapEx, it came in at 4% of revenue in fiscal year 2025, and we expect to be in that, you know, 3.5% to 4% going forward. As we know, I mean, investments can fluctuate from quarter to quarter and year to year, but we like to be in that 3.5% to 4% range as a percent of sales. I believe your second question was related to the tax bill. We are not, you know, based on the strength of our balance sheet and financials, we're not expecting any material impact from the tax bill on our tax rate, cash flow, or the business in general.

Right now, uh, and um, uh, because of the, uh, the environment with, um, uh, uh, with with, uh, tariffs being sort of, uh, uncertain there. Um, and uh, but we're, we're encouraged by what they do, how they do it. And, um, and we again, we, we think this will give them an opportunity to shine Scott. If you want to talk a little bit about capex and cash flow. Yeah, thanks Todd. Uh, thanks uh, for the

Question Scott regarding a capex.

Uh, you know what? Came in at 4% of Revenue and fiscal year 25. Uh and uh we expect to be in that, you know, 3 and a half to 4% uh going forward. Uh as we know, I mean Investments, can fluctuate uh, from quarter to quarter and year to year. Uh, but we uh like to be in that 3 and a half to 4% uh uh range as a percent to sales.

Speaker Change: Uh, I believe your second question was related to uh uh the tax bill and uh, we are not, you know, based on our the strength of our balance sheet and the financials, we're not expecting any material impact uh from the tax bill on our, our tax rate cash flow or the business in general.

Operator: Great. Thanks, guys.

Todd Schneider: Thank you.

Speaker Change: Great. Thanks guys.

Operator: Our next question comes from Tony Kaplan from Morgan Stanley. Please go ahead. Tony. Hi, good morning. This is Yehuda Silverman on the line for Tony Kaplan. Just had a quick question about new sales. Typically, what's the main driver for a customer to switch providers? Is there a certain product or area that's more or most attractive to customers?

Speaker Change: Thank you.

Speaker Change: And our next question comes from Tony Kaplan from Morgan Stanley. Please go ahead, Tony.

Speaker Change: Hi, good morning. This is Yehuda Silverman on the line for Tony Kaplan. So just had a quick question about new sales. So, typically, what what's the main driver for a customer to switch providers? Is there a certain product or area that's more or most attractive to customers?

Todd Schneider: Yeah, thank you for the question. We don't care where the customers start doing business with us, whether it's uniforms or FS, as Jim spoke about earlier with his example and prepared remarks: first aid, fire, Uniform Direct Sale. We just want to start doing business with them. And as we do business, we think that that makes it easier because they historically have a very good experience. And then it leads to, well, what else can you help us with? And when you have eyes and ears and minds in your customer's place of business on a frequent basis, it breeds confidence, and it breeds the opportunity as they look out and say, what else can we help you with? Excuse me.

Speaker Change: Uh, yeah, thank you for the question. Here it is. It's, um, you know, it, there is, um, we don't care where the customers start doing business with us, um, whether it's uniforms, or, uh, FS is Jim spoke about earlier, uh, with his, his example and his prepared remarks first aid, fire uniform, direct sale. Um, we just want to start doing business with them and then, uh, um, and as we do business, we think that, uh, that makes it easier, uh, because they're, uh, they, uh, historically have a very good experience and then it leads to well, what else can you help us with? And when you have

Todd Schneider: Jim mentioned a little bit about it. [It] really varies based upon where we get started, but also the impetus for a customer to switch because of the white space out there where there's so many businesses that are self serve. That's where we really focus our time. And they're all spending money to some degree on items, meaning they're all people are wearing clothes, their people are getting, they're getting disposables from somewhere. It might be e-commerce or it might be a brick and mortar retail store. So it really doesn't. It varies based upon where the customer is, where their business is at that point. They may be dealing with an environment where they don't have as many people but the work still needs to be done or they're struggling to keep up with demand. And you can help me with this, take this off my plate.

Speaker Change: Eyes and, uh, and ears and Minds in your customers. Place of business on a frequent basis, um, it breathes confidence and it breeds the opportunity as they look out and say, oh, you know what else can we help you with? Um,

Speaker Change: Excuse me, Jim mentioned a little bit about um uh it really uh, varies based upon where we get started. Uh, but also uh uh, the impetus for a customer to switch, um, because the, the white space out there where there's so many businesses that are self served. Uh, that's where we really focus our time and um, uh, and they're all spending money to some degree on items. Meaning, they're all where they're they're people are wearing clothes. They're people are, are, are getting, um, uh, uh, they're they're getting, uh, disposables, uh, from uh, somewhere. It might be a e-commerce or it might

Todd Schneider: Be happy for you to do that, Jim. Anything else you'd like to add there?

Jim Rozakis: The only thing I would say is the new business wins converting from traditional competitor over to us. They happen for a variety of different reasons, and we believe we have a lot of differentiators from the product line to the service to the technology offerings for the customers. But just as, maybe, a level setting, is that about 2/3 of our new business comes from what we call no programmers or, really, that as Todd described, the do it yourself or the folks that are purchasing from some retail or e-commerce type of solution. And that's where we focus a lot of our time, and that's where we have the most success. That's been a strategy for years and will continue to be a strategy, and we know that that resonates well in the market.

Speaker Change: Differentiators from the product line, to the service to the technology offerings by the customers. Uh, but just as a, maybe a level setting is that about 2/3 of our, our new business. Uh, comes from what we call know programmers or or really that as Todd described the do-it-yourselfer of the folks that are purchasing from some uh retail or e-commerce type of solution. Uh and that's where we focus a lot of our time. And and that's what we have. The uh the most success. Uh, that's been a strategy for years and we'll continue to be a strategy and we know that that resonates well uh, in the market.

Operator: Great, thank you. Our next question comes from Kartik Mehta from North Coast Research. Please go ahead, Kartik.

Speaker Change: Great. Thank you.

[Analyst]: Hey, good morning, Todd. Maybe on the first aid business, and I know that you're able to get pricing on the uniform side just because of the service level you're providing. I'm wondering as you look at the first aid business and that double digit growth, what component is price, and you know, what's your ability to get price increases?

Jasper Bibb: Hey, good morning, Todd. Maybe on the first aid business, and I know that you're able to get pricing on the uniform side just because of the service level you're providing. I'm wondering as you look at the first aid business and that double digit growth, what component is price, and you know, what's your ability to get price increases?

Kartik: And our next question comes from kartik ma from North Coast research. Please go ahead kartik.

Todd Schneider: Good morning, Kartik, great question. You know, the First Aid business is, from a pricing strategy, the same as how we run our other businesses, and they're back to historical levels. So the vast majority of our growth in that business is volume growth. We're not growing our business because of, or any of our businesses, because of pricing being the major strategy. We're growing it because we're providing more value, more products, and services to customers. So that volume is growing. That's the same in each of our businesses, and that's an important component of our strategy. So, yeah, can we get some pricing? Yes, but it's at historical levels, and we're excited about the value that we're providing the customers in the First Aid. But all of our businesses.

Hey, good morning, Todd, maybe on the first aid, business. And I know that, uh, you're able to get pricing on the uniform side just because of the service level you're providing. And I'm wondering as you look at the first aid, business and that double-digit growth. Uh what what component or is price and you know, what's your ability to get price increases?

Speaker Change: Uh, good morning kartik, uh, great question. Um,

Speaker Change: You know, uh uh, the first aid business is uh, from a pricing. Uh, strategy is, is, uh, the same as what, how we run, our other businesses, um, and they're back to historical levels. Um, and so the, the vast majority of our growth in that business is volume growth. Um, you know, we're not growing our business because of, or any of our

[Analyst]: And just to follow up, different topic, just use of AI kind of where you are in Cintas. More from is it today more of a cost? Is it a benefit or is it neutral?

Jasper Bibb: And just to follow up, different topic, just use of AI kind of where you are in Cintas. More from is it today more of a cost? Is it a benefit or is it neutral?

Speaker Change: Our business is, because of of, uh, of of pricing being the major strategy. Uh, we're growing it because we're providing more value more products services to customers. Uh, so that volume is growing, uh, that's the same in the, the, uh, in each of our businesses, uh, and that's an important component of our strategy. Um, so uh, yeah, can we get some price? Yes, but it's at historical levels. Uh, and um, uh, and we're excited about the value that we're providing the customers in the first 8, but all of our businesses

Speaker Change: And just to follow up. But different topic just use of AI, kind of where you are on Cintas more from, you know, is it today more of a cost? Is it a benefit? Or is it neutral?

Todd Schneider: Great question, Kartik. I appreciate that. You know, we've been investing in technology for years and we will be doing so, I'm sure, in perpetuity. I'll start with our investment in our, what I call our rock solid foundation of SAP and then moving on to then we started investing in data analytics once we had that ability of accessing the data and then algorithms and now machine learning and artificial intelligence, which is certainly in the early innings for us, but we see opportunity there. So, yeah, we're making investments and we're doing so because we think we're excited about where we think we can take this technology and for it to be easier for our employee partners to do their job and make it easier for customers to do business with us.

Speaker Change: Uh, great question. I appreciate that. Um, you know, we've been investing in technology for for years, uh, and we will be doing. So, um, you know, I'm sure in perpetuity, um, and I'll start with our our investment and our, in our, uh, what I call, our rock, solid foundation of sap, uh, and then moving on to then we started investing in data analytics. Uh, once we had that, uh, that ability, uh, uh, of, uh, of accessing the data. Uh, and then the algorithms, uh, and now machine learning and, uh, and artificial intelligence, uh, which is certainly in the early innings for us, uh, but we see opportunity there, so, yeah, we're making Investments, um, uh, and we, and we're doing so because we, we think,

Todd Schneider: You know, an example of that is we talked about with Smart Truck technology that's not artificial intelligence, but it is certainly that has been important to us and the learnings that we've had there, we're making it better and better. Garment sharing applications, as Jim mentioned, similar. You know, we're getting efficiencies out of our most critical assets. And all this makes it for our employee partners to be more successful and productive and to take administrative time out of their day. We also see opportunities with technology and machine learning to direct them where to spend their time. So we think that's important. All this will show up, Kartik, in I'll say incremental improvements over many years, but important investments for us to make so that we can get those incremental investments and benefits for many years to come.

Speaker Change: Uh, you know, we're excited about where we think. We can take this technology and uh, for it to be easier for our employee Partners to do their job, uh, and make it easier for customers to do business with us. Um, you know, an example of that is when we talked about with smart truck technology, that's not artificial intelligence. Um, but it is certainly, um, is uh, uh, that that uh, uh, has been important to us and the, uh, the learnings that we've had their, uh, we're making it better and better, garment sharing applications as Jim mentioned. Uh, similar, you know, we're we're getting, uh, efficiencies, uh, out of our most critical assets, um, in all this makes it, um, uh, for our employee Partners to be more successful and productive. Uh, and, and to take administrative time out of their day. We also see opportunities, uh, uh, to with, um, uh, with technology and, um, and machine learning, uh, to, uh, to direct them where to spend their time. So,

[Analyst]: Thank you. I appreciate it.

Jasper Bibb: Thank you. I appreciate it.

So, um, we think that's important. Um, all this will show up Karthik in, um, I'll say, incremental improvements over many years. Um, uh, but, uh, but important Investments for us to make, uh, so that we can get those incremental Investments and benefits, uh, for many years to come,

Todd Schneider: Thank you.

Speaker Change: Thank you, I appreciate it.

Operator: Great. We have run out of time for our question and answer session, so I will turn the call back over to Jared for closing remarks.

Speaker Change: Thank you.

Jared Mattingly: Thank you, Ross. Thank you for joining us this morning. We will issue our Q1 of fiscal 2026 financial results in September. We look forward to speaking with you again at that time. Thank you.

Speaker Change: Great and we have run out of time for our question and answer session. So I will turn the call back over to Jared for closing remarks.

Jared Maddingley: Thank you, Ross, and thank you for joining us this morning. We will issue our first quarter of fiscal 2026 Financial results in September. We look forward to speaking with you again at that time. Thank you.

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

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

Todd Schneider: The host has ended this call.

[Analyst]: Goodbye.

Jasper Bibb: Goodbye.

All goodbye.

Q4 2025 Cintas Corp Earnings Call

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