Q1 2026 Cintas Corp Earnings Call

September 24, 2025

Manav Patnaik: Sa.

Operator: Good day, everyone, and welcome to the Cintas Corporation Announces FY 2026 First Quarter Results Conference Call. Today's call is being recorded at this time. I would like to turn the call over to Mr. Jared Mattingly, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Speaker #1: Good day, everyone, and welcome to the CINTAS Corporation announcements fiscal 2026 first quarter results conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Jared Mattingly, Vice President, Treasurer and Investor Relations.

Operator: Good day, everyone, and welcome to the Cintas Corporation Announces Fiscal 2026 First Quarter Results Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Jared Mattingly, Vice President, Treasurer & Investor Relations. Please go ahead, sir.

Speaker #1: Please go ahead, sir.

Speaker #2: Thank you, Russ. Thank you for joining us. With me are Todd Schneider, President and Chief Executive Officer; Jim Rosakis, Executive Vice President and Chief Operating Officer; and Scott Garula, Executive Vice President and Chief Financial Officer.

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 2026 Q1 results. After our commentary, we will open the call to questions from analysts. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Jared Mattingley: Thank you, Ross. Thank you for joining us. With me 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 2026 Q1 results. After our commentary, we will open the call to questions from analysts. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Jared Mattingley: Thank you, Ross. Thank you for joining us. With me 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 2026 first quarter results. After our commentary, we will open the call to questions from analysts. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events in financial performance. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Speaker #2: We will discuss our fiscal 2026 first quarter results. After our commentary, we will open the call to questions from analysts. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements.

Speaker #2: 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.

Speaker #2: I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Speaker #3: Thank you, Jared. We are pleased with our start to fiscal year 2026, reflecting the strength of our business model and the dedication of our employee partners.

Todd Schneider: Thank you, Jared. We are pleased with our start to fiscal year 2026 reflecting the strength of our business model and the dedication of our employee partners. Our first quarter performance is a testament to the strength of our value proposition. First quarter total revenue grew 8.7% to $2.72 billion. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 7.8%. This is right where we like to be. Each of our three route-based businesses had strong revenue growth in the quarter. Gross margin as a percent of revenue was 50.3%, a 20 basis point increase over the prior year. Operating income grew to $617.9 million, an increase of 10.1% over the prior year. Diluted EPS of $1.20 grew 9.1% over the prior year. Our culture continues to be our greatest competitive advantage.

Todd Schneider: Thank you, Jared. We are pleased with our start to Fiscal Year 2026, reflecting the strength of our business model and the dedication of our employee partners. Our first quarter performance is a testament to the strength of our value proposition. First quarter total revenue grew 8.7% to $2.72 billion. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 7.8%. This is right where we like to be. Each of our three route-based businesses had strong revenue growth in the quarter. Gross margin, as a percent of revenue, was 50.3%, a 20 basis point increase over the prior year. Operating income grew to $617.9 million, an increase of 10.1% over the prior year. Diluted EPS of $1.20 grew 9.1% over the prior year. Our culture continues to be our greatest competitive advantage.

Speaker #3: Our first quarter performance is a testament to the strength of our value proposition. First quarter total revenue grew 8.7% to $2.72 billion. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 7.8%.

Speaker #3: This is right where we'd like to be. Each of our three route-based businesses had strong revenue growth in the quarter. Gross margin, as a percent of revenue, was 50.3%.

Speaker #3: A 20 basis point increase over the prior year. Operating income grew to $677.9 million, an increase of 10.1% over the prior year. Diluted EPS of $1.20 grew 9.1% over the prior year.

Speaker #3: Our culture continues to be our greatest competitive advantage. We have shown an inability throughout the years to perform well in a variety of macroeconomic environments.

Todd Schneider: We've shown an ability throughout the years to perform well in a variety of macroeconomic environments. Our ongoing investments continue to help drive revenue growth and expand margins. These investments include technology to make it easier for our employee partners to do their jobs, whether that is growing the business or making us more efficient. Reflecting our strong first quarter performance, we are raising our fiscal 2026 financial guidance. We expect our revenue to be in the range of $11.06 billion to 11.18 billion, a total growth rate of 7% to 8.1%. We expect Diluted EPS to be in the range of $4.74 to 4.86, a growth rate of 7.7% to 10.5%. With that, I'll turn it over to Jim to discuss the details of our first quarter results.

We've shown an ability throughout the years to perform well in a variety of macroeconomic environments. Our ongoing investments continue to help drive revenue growth and expand margins. These investments include technology to make it easier for our employee partners to do their jobs, whether that is growing the business or making us more efficient. Reflecting our strong first quarter performance, we are raising our fiscal 2026 financial guidance. We expect our revenue to be in the range of $11.06 billion to 11.18 billion, a total growth rate of 7% to 8.1%. We expect Diluted EPS to be in the range of $4.74 to 4.86, a growth rate of 7.7% to 10.5%. With that, I'll turn it over to Jim to discuss the details of our first quarter results.

Todd Schneider: We've shown an ability throughout the years to perform well in a variety of macroeconomic environments. Our ongoing investments continue to help drive revenue growth and expand margins. These investments include technology to make it easier for our employee partners to do their jobs, whether that is growing the business or making us more efficient. Reflecting our strong first quarter performance, we are raising our Fiscal 2026 Financial Guidance. We expect our revenue to be in the range of $11.06 billion to $11.18 billion, a total growth rate of 7% to 8.1%. We expect diluted EPS to be in the range of $4.74 to $4.86, a growth rate of 7.7% to 10.5%. With that, I'll turn it over to Jim to discuss the details of our first quarter results.

Speaker #3: Our ongoing investments continue to help drive revenue growth and expand margins. These investments include technology to make it easier for our employee partners to do their jobs, whether that is growing the business or making us more efficient.

Speaker #3: Reflecting our strong first-quarter performance, we are raising our fiscal 2026 financial guidance. We expect our revenue to be in the range of $11.06 billion to $11.18 billion.

Speaker #3: The total growth rate of 7% to 8.1%. We expect diluted EPS to be in the range of $4.74 to $4.86. A growth rate of 7.7% to 10.5%.

Speaker #3: With that, I'll turn it over to Jim to discuss the details of our first-quarter results.

Speaker #4: Thanks, Todd. I want to begin by discussing our strong revenue performance. Our employee partners continue to perform at a high level, and demonstrate that our value proposition resonates with all types of customers.

Jim Rozakis: Thanks Todd. I want to begin by discussing our strong revenue performance. Our employee partners continue to perform at a high level and demonstrate that our value proposition resonates with all types of customers. We are seeing great success in converting no programmers, selling additional products and services to our existing customers, as well as retaining our valued customers. Let me provide an example. Recently there was a Department of Transportation located in the Northwest that was a do-it-yourselfer or what we refer to as a no programmer. The employees purchased and wore their own clothing while the Highway Department provided the required high visibility safety vest to be worn over their personal garments. They reached out and expressed challenges with their safety vest program including the time and effort administering the program, budgeting difficulties, and inconsistent compliance among workers.

Jim Rozakis: Thanks, Todd. I want to begin by discussing our strong revenue performance. Our employee partners continue to perform at a high level and demonstrate that our value proposition resonates with all types of customers. We are seeing great success in converting new programmers, selling additional processing services to our existing customers, as well as retaining our valued customers. Let me provide an example. Recently, there was a Department of Transportation located in the Northwest that was a do-it-yourselfer, or what we refer to as a new programmer. The employees purchased and wore their own clothing, while the Highway Department provided the required high-visibility safety vest to be worn over their personal garments. They reached out and expressed challenges with their safety vest program, including the time and effort to maintain the program, budgeting difficulties, and inconsistent compliance among workers.

Speaker #4: We are seeing great success in converting non-programmers, selling additional processing services to our existing customers, as well as retaining our valued customers. Let me provide an example.

Speaker #4: Recently, there was a department transportation located in the Northwest that was a do-it-yourselfer, or what we refer to as a no programmer. The employees purchased and wore their own clothing, while the highway department provided the required high-visibility safety vest to be worn over their personal garments.

Speaker #4: They reached out and expressed challenges with their safety vest program, including the time and effort commissioning the program, budgeting difficulties, and inconsistent compliance among workers.

Speaker #4: CINTAS was able to offer a solution with our recently expanded line of Carhartt high-visibility safety apparel. These high-visibility garments were well received by the employees and have allowed the highway department to receive the benefits of the CINTAS rental program by providing an exclusive Carhartt branded rental garment for daily use.

Jim Rozakis: Cintas was able to offer a solution with our recently expanded line of Carhartt high-visibility safety apparel. These high-visibility garments were well received by the employees and have allowed the highway department to receive the benefits of a Cintas rental program by providing an exclusive Carhartt branded rental garment for daily use, Cintas reliable service, a reduction in administrative time and effort, more predictive budgeting, the convenience of a laundry service, and improved safety compliance among their workers. This example illustrates how our value proposition continues to resonate with customers in many different verticals throughout various economic cycles and to customers of all types, including no programmers. Now turning to our business segments. Organic growth by business was 7.3% for Uniform Rental, Facility Services, 14.1% for First Aid and Safety Services, 10.3% for Fire Protection Services, and Uniform Direct Sale declined 9.2%.

Cintas was able to offer a solution with our recently expanded line of Carhartt high-visibility safety apparel. These high-visibility garments were well received by the employees and have allowed the highway department to receive the benefits of a Cintas rental program by providing an exclusive Carhartt branded rental garment for daily use, Cintas reliable service, a reduction in administrative time and effort, more predictive budgeting, the convenience of a laundry service, and improved safety compliance among their workers. This example illustrates how our value proposition continues to resonate with customers in many different verticals throughout various economic cycles and to customers of all types, including no programmers. Now turning to our business segments. Organic growth by business was 7.3% for Uniform Rental, Facility Services, 14.1% for First Aid and Safety Services, 10.3% for Fire Protection Services, and Uniform Direct Sale declined 9.2%.

Jim Rozakis: Cintas was able to offer a solution with our recently expanded line of Carhartt high-visibility safety apparel. These high-visibility garments were well received by the employees and have allowed the Highway Department to receive the benefits of the Cintas Rental Program by providing an exclusive Carhartt-branded rental garment for daily use, Cintas's reliable service, a reduction in administrative time and effort, more predictive budgeting, the convenience of a laundry service, and improved safety compliance among their workers. This example illustrates how our value proposition continues to resonate with customers in many different verticals throughout various economic cycles and to customers of all types, including new programmers. Now turning to our business segments. Organic growth by business was 7.3% for Uniform Rental and Facility Services, 14.1% for First Aid and Safety Services, 10.3% for Fire Protection Services, and Uniform Direct Sale declined 9.2%.

Speaker #4: CINTAS's reliable service, a reduction in administrative time and effort, more predictive budgeting, the convenience of a laundry service, and improved safety compliance among their workers.

Speaker #4: This example illustrates how our value proposition continues to resonate with customers in many different verticals, through our various economic cycles and to customers of all types, including non-programmers.

Speaker #4: Now, turning to our business segments. Organic growth by business was 7.3% for Uniform Rental Facility Services, 14.1% for First Aid and Safety Services, and 10.3% for Fire Protection Services.

Speaker #4: Uniform direct sale declined by 9.2%. Gross margin percentage by business was 49.7% for uniform rental facility services and 56.8% for first aid and safety services.

Jim Rozakis: Gross margin percentage by business was 49.7% for Uniform Rental, Facility Services, 56.8% for First Aid and Safety Services, 48.9% for Fire Protection Services, and 41.7% for Uniform Direct Sale. Gross margin for the Uniform Rental, Facility Services segment increased 40 basis points from last year. This improvement is a result of strategic sourcing by the supply chain team and process improvement initiatives from our engineering and Black Belt teams. In addition, strong revenue growth is helping to generate leverage. Gross margin for the First Aid and Safety Services segment was 56.8%. We are pleased our investments to grow this business are generating strong double-digit revenue growth while maintaining attractive gross margins. Selling and administrative expenses as a percent of revenue was 27.5%, which was a 10 basis point decrease from last year.

Gross margin percentage by business was 49.7% for Uniform Rental, Facility Services, 56.8% for First Aid and Safety Services, 48.9% for Fire Protection Services, and 41.7% for Uniform Direct Sale. Gross margin for the Uniform Rental, Facility Services segment increased 40 basis points from last year. This improvement is a result of strategic sourcing by the supply chain team and process improvement initiatives from our engineering and Black Belt teams. In addition, strong revenue growth is helping to generate leverage. Gross margin for the First Aid and Safety Services segment was 56.8%. We are pleased our investments to grow this business are generating strong double-digit revenue growth while maintaining attractive gross margins. Selling and administrative expenses as a percent of revenue was 27.5%, which was a 10 basis point decrease from last year.

Jim Rozakis: Gross margin percentage by business was 49.7% for Uniform Rental and Facility Services, 56.8% for First Aid and Safety Services, 48.9% for Fire Protection Services, and 41.7% for Uniform Direct Sale. Gross margin for the Uniform Rental and Facility Services segment increased 40 basis points from last year. This improvement is a result of strategic sourcing by the supply chain team and process improvement initiatives from our engineering and black belt teams. In addition, strong revenue growth is helping to generate leverage. Gross margin for the First Aid and Safety Services segment was 56.8%. We are pleased our investments to grow this business are generating strong double-digit revenue growth while maintaining attractive gross margin. Selling and administrative expenses as a percent of revenue was 27.5%, which was a 10 basis point decrease from last year.

Speaker #4: 48.9% for fire protection services and 41.7% for uniform direct sale. Gross margin for the uniform rental facility services segment increased 40 basis points from last year.

Speaker #4: This improvement is a result of strategic sourcing by the supply chain team and process improvement initiatives from our engineering and Black Belt teams. In addition, strong revenue growth is helping to generate leverage.

Speaker #4: Gross margin for the First Aid and Safety Services segment was 56.8%. We are pleased that our investments to grow this business are generating strong double-digit revenue growth while maintaining an attractive gross margin.

Speaker #4: Selling and administrative expenses as a percent of revenue were 27.5%, which was a 10 basis point decrease from last year. With that, I'll turn it over to Scott to discuss our operating income, capital allocation performance, and 2026 guidance assumptions.

Jim Rozakis: With that, I'll turn over to Scott to discuss our operating income capital allocation performance and 2026 guidance assumptions.

With that, I'll turn over to Scott to discuss our operating income capital allocation performance and 2026 guidance assumptions.

Jim Rozakis: With that, I'll turn it over to Scott to discuss our operating income, capital allocation performance, and 2026 guidance assumptions.

Speaker #5: Thanks, Jim, and good morning, everyone. First-quarter operating income was $677.9 million compared to $561 million last year. Operating income is a percentage of revenue at 22.7% for the first quarter of fiscal 2026, compared to 22.4% in last year's first quarter.

Jared Mattingly: Thanks Jim and good morning everyone. Q1 operating income was $617.9 million compared to $561 million last year. Operating income as a percentage of revenue was 22.7% in Q1 of fiscal 2026 compared to 22.4% in last year's Q1. This was an increase of 30 basis points. Our effective tax rate for the quarter was 17.6% compared to 15.8% last year. The tax rates in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for Q1 was $491.1 million compared to $452 million last year. This year's Q1 diluted EPS was $1.20 compared to $1.10 last year. An increase of 9.1%. Cash flow provided from operating activities was $414.5 million. Our strong cash generation allows us to have a balanced approach to capital allocation in order to create value for our shareholders.

Scott Garula: Thanks Jim and good morning everyone. Q1 operating income was $617.9 million compared to $561 million last year. Operating income as a percentage of revenue was 22.7% in Q1 of fiscal 2026 compared to 22.4% in last year's Q1. This was an increase of 30 basis points. Our effective tax rate for the quarter was 17.6% compared to 15.8% last year. The tax rates in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for Q1 was $491.1 million compared to $452 million last year. This year's Q1 diluted EPS was $1.20 compared to $1.10 last year. An increase of 9.1%. Cash flow provided from operating activities was $414.5 million. Our strong cash generation allows us to have a balanced approach to capital allocation in order to create value for our shareholders.

Jared Mattingley: Thanks, Jim, and good morning, everyone. First quarter operating income was $617.9 million compared to $561 million last year. Operating income as a percentage of revenue was 22.7% in the first quarter of Fiscal 2026 compared to 22.4% in last year's first quarter. This was an increase of 30 basis points. Our effective tax rate for the quarter was 17.6% compared to 15.8% last year. The tax rates in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for the first quarter was $491.1 million compared to $452 million last year. This year's first quarter diluted EPS was $1.20 compared to $1.10 last year, an increase of 9.1%. Cash flow provided from operating activities was $414.5 million. Our strong cash generation allows us to have a balanced approach to capital allocation in order to create value for our shareholders.

Speaker #5: This was an increase of 30 basis points. Our effective tax rate for the quarter was 17.6% compared to 15.8% last year. The tax rates in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation.

Speaker #5: Net income for the first quarter was $491.1 million, compared to $452 million last year. This year's first quarter diluted EPS was $1.20, compared to $1.10 last year, an increase of 9.1%.

Speaker #5: Cash flow provided from operating activities was $444.5 million, our strong cash generation allows us to have a balanced approach to capital allocation in order to create value for our shareholders.

Speaker #5: In the first quarter, we continued to invest in our businesses through capital expenditures of $102.0 million. Although not significant, we were able to make acquisitions in all three of our route-based businesses.

Jared Mattingly: In the first quarter, we continue to invest in our businesses through capital expenditures of $102.0 million. Although not significant, we were able to make acquisitions in all three of our route-based businesses. We also returned capital to shareholders via our quarterly dividends and announced an increase of 15.4% in our quarterly cash dividend. This marks the 42nd consecutive year that we increased our dividend, meaning we have maintained that practice every year since going public in 1983. Also during the first quarter and as of 23 September, we were active in the buyback program with repurchases of $347.4 million of Cintas shares. Earlier, Todd provided our updated guidance for the remainder of the year. That guidance assumes the following expectations. Please note, both Fiscal 2025 and Fiscal 2026 have the same number of workdays for the year and by quarter. Our guidance does not assume any future acquisitions.

In the first quarter, we continue to invest in our businesses through capital expenditures of $102.0 million. Although not significant, we were able to make acquisitions in all three of our route-based businesses. We also returned capital to shareholders via our quarterly dividends and announced an increase of 15.4% in our quarterly cash dividend. This marks the 42nd consecutive year that we increased our dividend, meaning we have maintained that practice every year since going public in 1983. Also during the first quarter and as of 23 September, we were active in the buyback program with repurchases of $347.4 million of Cintas shares. Earlier, Todd provided our updated guidance for the remainder of the year. That guidance assumes the following expectations. Please note, both Fiscal 2025 and Fiscal 2026 have the same number of workdays for the year and by quarter. Our guidance does not assume any future acquisitions.

Jared Mattingley: In the first quarter, we continued to invest in our businesses through capital expenditures of $102.0 million. Although not significant, we were able to make acquisitions in all three of our route-based businesses. We also returned capital to shareholders via our quarterly dividends and announced an increase of 15.4% in our quarterly cash dividend. This marks the 42nd consecutive year that we increased our dividend, meaning we have maintained that practice every year since going public in 1983. Also, during the first quarter and as of September 23, we were active in the buyback program with repurchases of $347.4 million of Cintas shares. Earlier, Todd provided our updated guidance for the remainder of the year. That guidance assumes the following expectations. Please note both Fiscal 2025 and Fiscal 2026 have the same number of workdays for the year and by quarter. Our guidance does not assume any future acquisitions.

Speaker #5: We also returned capital to shareholders via our quarterly dividends and announced an increase of 15.4% in our quarterly cash dividend. This marks the 42nd consecutive year that we have increased our dividend, meaning we have maintained that practice every year since going public in 1983.

Speaker #5: Also, during the first quarter, and as of September 23rd, we were active in the buyback program with repurchases of $347.4 million of Cintas shares.

Jared Mattingly: Our guidance assumes a constant foreign currency exchange rate, the fiscal 2026 net interest expense of approximately $97.0 million, a fiscal 2026 effective tax rate of 20.0%, which is the same compared to our fiscal 2025. And finally, our guide does not include any future share buybacks or significant economic disruptions or downturns. With that, I'll turn it back to Todd for some closing remarks.

Our guidance assumes a constant foreign currency exchange rate, the fiscal 2026 net interest expense of approximately $97.0 million, a fiscal 2026 effective tax rate of 20.0%, which is the same compared to our fiscal 2025. And finally, our guide does not include any future share buybacks or significant economic disruptions or downturns. With that, I'll turn it back to Todd for some closing remarks.

Jared Mattingley: Our guidance assumes a constant foreign currency exchange rate, the Fiscal 2026 net interest expense of approximately $97.0 million, a Fiscal 2026 effective tax rate of 20.0%, which is the same compared to our Fiscal 2025. Finally, our guide does not include any future share buybacks or significant economic disruptions or downturns. With that, I'll turn it back to Todd for some closing remarks.

Todd Schneider: Thank you, Scott. Looking ahead to the remainder of fiscal 2026. Our outlook reflects continued confidence in our strategy and in the value we provide by helping customers meet their image, safety, cleanliness, and compliance needs. We remain committed to delivering exceptional customer experiences and making the investments necessary to sustain growth for fiscal 2026 and well into the future. As always, I want to express my appreciation to our employee partners for their dedication to Cintas and our customers. Our culture remains our strongest competitive advantage. I'll now turn it back over to Jared.

Todd Schneider: Thank you, Scott. Looking ahead to the remainder of Fiscal 2026, our outlook reflects continued confidence in our strategy and in the value we provide by helping customers meet their image, safety, cleanliness, and compliance needs. We remain committed to delivering exceptional customer experiences and making the investments necessary to sustain growth for Fiscal 2026 and well into the future. As always, I want to express my appreciation to our employee partners for their dedication to Cintas and our customers. Our culture remains our strongest competitive advantage. I'll now turn it back over to Jared.

Jared Mattingly: Thanks, Todd. 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.

Jared Mattingley: Thanks, Todd. 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.

Operator: If you would like to ask a question, please press Star one on your telephone keypad now. Please be prepared to ask your question when prompted. You will also be allowed to ask one follow up question. Once again, if you would like to ask a question, please press Star one on your phone now. And our first question comes from Manav Patnaik from Barclays Capital. Please go ahead, Manav.

Operator: If you would like to ask a question, please press *1 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 *1 on your phone now. Our first question comes from Manav Patnik from Barclays Bank PLC. Please go ahead, Manav.

Manav Patnaik: Thank you. Good morning, guys. I just had a question. You know, the highway example I guess you gave in converting from no programmer to your customer was very helpful in the context of, you know, more budget pressures. If the macro weakens, I was hoping you could give us some historical anecdotal examples. Maybe if that's a positive for you guys in terms of accelerating the pace of, you know, converting no programmers to your clients.

[Analyst]: Thank you. Good morning, guys. I just had a question. The highway example I guess you gave in converting from non-programmer to your customer was very helpful. In the context of more budget pressures, if the macro weakens, I was hoping you could give us some historical anecdotal examples maybe of if that's a positive for you guys in terms of accelerating the pace of converting non-programmers to your clients.

Todd Schneider: Good morning, Manav. You know, I think we demonstrated we can grow in many ways and certainly in environments where people are under more pressure than we help customers in those circumstances to free up cash flow. We help them to, for budgetary purposes, give them back more time. And you think about an environment where, in Jim's example, where the customer was struggling to manage the program. This frees them up and frees them up to focus on other areas we like to talk about when you outsource to us. It allows our customers to then focus on their customers. Gives them back time, gives them back certain times, saves them money, certainly smooths out budgeting and cash flow.

Todd Schneider: Good morning, Manav. I think we demonstrate that we can grow in many ways, and certainly in environments where people are under more pressure, we help customers in those circumstances to free up cash flow. We help them for budgetary purposes, give them back more time. When you think about an environment where, in Jim's example, the customer was struggling to manage the program, this frees them up and frees them up to focus on other areas. We like to talk about when you outsource to us, it allows our customers to then focus on their customers, gives them back time, gives them back certain times to save them money, certainly smooths out budgeting and cash flow.

Todd Schneider: We demonstrated we have the ability to do that, and we are confident we're able to continue to convert new programmers or the do-it-yourselfers over, and we've been doing that for many years and will continue to do that as well.

Todd Schneider: So we demonstrated we have the ability to do that, and we're confident we're able to continue to convert no programmers or the do-it-yourselfers over, and we've been doing that for many years, and we'll continue to do that as well.

So we demonstrated we have the ability to do that, and we're confident we're able to continue to convert no programmers or the do-it-yourselfers over, and we've been doing that for many years, and we'll continue to do that as well.

Manav Patnaik: Got it. And just as a follow up on the Fire side, the decline in gross margins, I'm guessing is that because the SAP implementation is in full swing now or just any updates on that, please?

To free up cash flow. We help them to, uh, for budgetary purposes. Uh, give them back more time and you think about an environment where, uh, in Jim's example, where the, uh, uh, the customer was, uh, struggling to manage the program. Um, uh, this, frees them up, and, and frees them up to focus on other areas. We like to talk about, when you, when you Outsource to us, uh, it allows our customers to then focus on their customers, um, gives them back time. Gives them back certain times to, uh, saves them money. Certainly, uh, Smooths out budgeting, uh, uh, uh, and and cash flow. So, um, uh, We've demonstrated, uh, we have the ability to do that and, um, uh, and we're, we're able, we we're confident, we're able to continue to convert into a programmers or the do-it-yourselfers over, uh, and we've been doing that for many years and we'll continue to do that as well.

[Analyst]: Got it. Just as a follow-up, on the fire side, the decline in gross margins, I'm guessing, is that because the SAP system implementation is in full swing now or just any updates on that, please?

Todd Schneider: Yeah, certainly we're busy working on SAP for our FIRE business, and there are additional costs that come along with that, but we're quite bullish on that business, and we're investing for the future in that business. And that includes all kinds of different investments with bench strength, operational capacity, technologies around that, not just SAP, but other items. So that as we expand that business, we're going to continue to make investments. And those investments are smart and important for us to be successful not just in the near term, but in the long term as well.

Todd Schneider: Yeah, certainly, we are busy working on SAP for our Fire Protection Services business, and there are additional costs that come along with that. We're quite bullish on that business, and we're investing for the future in that business. That includes all kinds of different investments, you know, with bench strength, operational capacity, technologies around that, not just SAP, but other items. As we expand that business, we're going to continue to make investments, and those investments are smart and important for us to be successful, not just in the near term, but in the long term as well.

Got it. And just as a follow-up on the fireside chat, the decline in gross margins—I'm guessing—is that because the SAP implementation is in full swing now? Or just any updates on that, please?

Yeah. Certainly uh, um, uh, we are, we're busy working on uh uh sap for our fire business. Uh, and there are additional costs that come along with that. Uh, but we're, we're quite bullish on that business and we're investing for the future in that business.

Uh, and that includes all kinds of different Investments. Um, you know, uh, with bench strengths, um, uh, operational capacity, uh, Technologies around that not just, uh, uh, sap. Uh, but uh, other uh items uh, uh, so that, uh, as we expand that business, uh, we're going to continue to make investments and, uh, those Investments are smart and important, uh, for us to, uh, to be successful. Not just in the near term, but in the, uh, in the long term as well.

Manav Patnaik: Got it. Thank you.

[Analyst]: Got it. Thank you.

Todd Schneider: Thank you.

Got it. Thank you.

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

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

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

Thank you.

George Tong: George, hi. Thanks. Good morning. Can you provide an update on the overall selling environment, including client budget trends, and sales cycles?

[Analyst]: Hi, thanks. Good morning. Can you provide an update on the overall selling environment, including client budget trends and sales cycles?

And our next question comes from George Tong from Goldman Sachs. Please go ahead, George.

Todd Schneider: Yeah, good morning, George. You know, as far as customer behavior, we really, there's nothing specific to call out. I wouldn't say there's any changes to sales cycles, nothing like that. It is, you know, we're certainly operating in a, I'll call it a somewhat uncertain environment, but right now. But despite that uncertainty, the value proposition that we provide continues to resonate and can, as I referred to earlier, can even improve during uncertain periods. The outsourcing can improve and steady the cash flow that I talked about, but we continue to sell good new business. We like that very much. Retention rates are still at a very attractive levels, and the customer base that you asked about was steady. If anything, I would say improved slightly during the quarter.

Todd Schneider: Good morning, George. As far as customer behavior, there's nothing specific to call out. I wouldn't say there's any changes to sales cycles, nothing like that. We're certainly operating in a somewhat uncertain environment right now. Despite that uncertainty, the value proposition that we provide continues to resonate and, as I referred to earlier, can even improve during uncertain periods. Outsourcing can improve and steady the cash flow that I talked about. We continue to sell good new business. We like that very much. Retention rates are still at very attractive levels. The customer base that you asked about was steady. If anything, I would say improved slightly during the quarter.

Hi. Thanks. Good morning. Can you provide an update on the overall selling environment, including client budgets, trends, and sales cycles?

Yeah, good morning George. Um,

You know, uh, as far as, uh, uh, customer Behavior. We really, uh, there's nothing specific to call out. I wouldn't say, there's any changes to, um, uh, sales Cycles. Um, nothing like that. Uh, it is, you know, we're certainly operating in a, um, I'll call it a somewhat uncertain environment, but, uh, right now. But despite that uncertainty, um, the value proposition that we provide continues to resonate and, uh, uh, uh, and can, as I referred to earlier can even improve during uncertain periods. Uh, the Outsourcing, uh, can improve and uh, instead of the cash flow that

I talked about, um, uh, but we continue to sell good new business. Um, we like that very much. Retention rates are still at very attractive levels, um, and the customer base that you asked about, uh, was steady. If anything, I would say it improved slightly during the quarter.

George Tong: Got it. That's helpful. And then you increased your revenue guidance as well as your EPS guidance. Can you elaborate on parts of the business that outperformed your initial expectations to drive this increase in the outlook?

[Analyst]: Got it. That's helpful. You increased your revenue guidance as well as your EPS guidance. Can you elaborate on parts of the business that outperformed your initial expectations to drive this increase in the outlook?

Got it. That's helpful. And then you increased your revenue guidance, as well as your EPS guidance. Can you elaborate on parts of the business that outperformed your initial expectations to drive this increase in the outlook?

Todd Schneider: Great question, George. Yeah, thank you for that. The guide first off is right where we like to be. We're performing really well, and we like the momentum we have in the business. I'd just like to point out the implied growth in Q2 through Q4 is higher than the opening guide at all points within the range. We like the range that we're in, especially with this, as I mentioned, somewhat uncertain environment. But our three route-based businesses are all performing very well, and we like the momentum we have in each of those, and we're encouraged by that momentum. Again, our value proposition is continuing to resonate and has in all kinds of environments, and it's showing its strength in the current operating environment.

Todd Schneider: Great question, George. Yeah, thank you for that. The guide, first off, is right where we like to be. We're performing really well, and we like the momentum we have in the business. I'd just like to point out the implied growth in Q2 through Q4 is higher than the opening guide at all points within the range. We like the range that we're in, especially with this, as I mentioned, somewhat uncertain environment. Our three route-based businesses are all performing very well, and we like the momentum we have in each of those, and we're encouraged by that momentum. Again, our value proposition is continuing to resonate and has in all kinds of environments, and it's showing its strength in the current operating environment.

Uh, great question, George. Yes, uh, thank you for that. Uh, the guy first off is is uh, right where we like to be uh we're performing really well and we, we like the momentum we have in in the business. Um, uh, I would just like to point out the implied growth in Q's 2, through 4, is higher than the opening guide at all points within the range. Um, and we like the range that we're in, especially with this, uh, as I mentioned, somewhat uncertain environment. Uh, but our, our 3 route based, uh, businesses are all performing very well and that we like the momentum we have in each of those. Uh, and, uh, we're encouraged, uh, by that momentum. And, uh, and again our value proposition is continuing to resonate, um, and, and has in all kinds of environments. And um, uh, and it's, uh, it's uh, uh, showing its from excuse me, showing a strength, uh, in the current operating environment.

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

[Analyst]: Got it. Very helpful. Thank you.

Todd Schneider: Thank you.

Got it. Very helpful. Thank you.

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

Operator: Our next question comes from Timothy Michael Mulrooney from William Blair & Company L.L.C. Please go ahead, Tim.

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

Thank you.

Todd Schneider: Hi, good morning, this is Luke McFadden on for Tim Mulrooney.

Luke McFadden: Hi, good morning, this is Luke McFadden on for Tim Mulrooney. Thanks for taking our questions. We've seen growth in nonfarm payrolls decelerate somewhat meaningfully over the last few months. I'm curious if this showed up at all in net wearer levels across your rental business during the quarter?

[Analyst]: Hi, good morning. This is Luke McFadden on for Timothy Michael Mulrooney. Thanks for taking our questions. We've seen growth in non-farm payrolls decelerate somewhat meaningfully over the last few months. I'm curious if this showed up at all in net wear levels across your rental business during the quarter.

And our next question comes from Tim Moroni from William. Blair, please. Go ahead. Tim

Jared Mattingly: Thanks for taking our questions.

Todd Schneider: We've seen growth in nonfarm payrolls decelerate somewhat meaningfully over the last few months.

Jared Mattingly: I'm curious if this showed up at all in net wearer levels across your rental business during the quarter?

Hi, good morning. This is Luke McFaden, on for some more Rooney. Uh, thanks for taking our questions. So, we've seen growth in non-farm payrolls decelerate somewhat meaningfully over the last few months. I'm curious if this showed up at all in the wear levels across your rental business during the quarter.

Todd Schneider: Yeah, Luke, thanks for the question. You know, certainly, when you know we've seen that we're reading the same information that you're reading about the employment levels, but our team continues to execute at a very high level. I mentioned the uncertainty environment can create opportunities for us, and we've demonstrated that we can grow in excess of jobs growth in GDP. So we would way rather swim downstream and have jobs be incredibly abundant. But we've demonstrated that we can win in many ways. Certainly converting over no programmers is a very important component of our growth. Selling additional products and services into our existing customers. I mentioned we have our retention levels are really good, and we do take business from the competition, although that's not our major focus. MA has been important to us over the past few quarters, and we can talk about that more.

Todd Schneider: Yeah, Luke, thanks for the question. Certainly, when we've seen that, we're reading the same information that you're reading about the employment levels. Our team continues to execute at a very high level. I mentioned the uncertainty environment can create opportunities for us, and we've demonstrated that we can grow in excess of jobs growth in GDP. We would way rather swim downstream and have jobs be incredibly abundant, but we've demonstrated that we can win in many ways. Certainly, converting over new programmers is a very important component of our growth, selling additional products and services into our existing customers. I mentioned we have our retention levels are really good, and we do take business from the competition, although that's not our major focus. M&A has been important to us over the past few quarters, and we can talk about that more, but we like the pipeline there.

You know, certainly when uh, um, you know, we've seen that we're reading the same information that you're reading about the, uh, the employment levels. Um, uh, but our, our team team continues to execute at a very high level. Um, I mentioned the uncertainty environment can can create opportunities, um, uh, for us, uh, and we've, we've demonstrated that we can grow in excessive, uh, of jobs growth in GDP. So we would way rather swim Downstream, um, uh, and have jobs, you know, be an incredibly abundant. Um, but uh, we we've demonstrated that we can win in many ways. Um, certainly converting over know, programmers is a very important component of our growth, um, selling additional products and services into our existing customers. Uh, I mentioned we have our retention levels are really good uh and uh and we do take business from the competition, all all that, although that's not our major Focus. Um m&a's been uh uh, has been important to us

Todd Schneider: But we like the pipeline there and pricing is included as well. But we have the ability to grow and we, we'd love employment to pick up dramatically but we're not counting on that and we're going to continue to run our business and grow it successfully. Sure would love for it to be easier but we're doing it in an impressive manner. Really helpful and if I can just.

But we like the pipeline there and pricing is included as well. But we have the ability to grow and we, we'd love employment to pick up dramatically but we're not counting on that and we're going to continue to run our business and grow it successfully. Sure would love for it to be easier but we're doing it in an impressive manner.

Todd Schneider: Pricing is included as well. We have the ability to grow, and we'd love employment to pick up dramatically, but we're not counting on that. We're going to continue to run our business and grow it successfully. Sure, we'd love for it to be easier, but we're doing it in an impressive manner.

Over the past few quarters. And, uh, and uh, we can we can talk about that more, but we like the, the pipeline there, uh, and pricing is included as well. But, um, uh, but we're, we have the ability to grow and, um, and we, uh, we'd love employment to, uh, uh, to pick up dramatically. Uh, but we're not counting on that and, um, we're going to, uh, um, uh, continue to run our business and grow a successfully, uh, sure we'd love for it to, uh, uh, to be easier but it's

Luke McFadden: Really helpful and if I can just build off of that. Heard the comment earlier about strength just. In terms of demand actually growing through the quarter. Could you perhaps just elaborate on that a little bit and maybe talk about? Just demand trends through the first few weeks of the second quarter here?

Well, we're doing it in an impressive manner.

[Analyst]: Really helpful. If I can just build off of that, I heard the comment earlier about strengths just in terms of demand actually growing through the quarter. Could you perhaps just elaborate on that a little bit and maybe talk about just demand trends through the first few weeks of the second quarter here?

Jared Mattingly: Build off of that.

Todd Schneider: Heard the comment earlier about strength just.

Jared Mattingly: In terms of demand actually growing through the quarter.

Todd Schneider: Could you perhaps just elaborate on that a little bit and maybe talk about?

Jared Mattingly: Just demand trends through the first few weeks of the second quarter here?

Todd Schneider: Yeah, nothing really, I would say different in the start of the quarter compared to the results that we're posting. But you know, you see that our rental business is performing well, and you referred to earlier the employment levels. Again, as I mentioned, we'd like to swim downstream with employment, but we're continuing to grow our business at attractive levels without that. But nothing. No real changes in the demand from Q1 to Q2 so far. But we like the momentum we have in each of our route based businesses. Rental, as you saw, is performing well, but they're all performing well, so we're encouraged by that.

Really helpful and if I can just build off of that heard, the comment earlier about um, strengths, just in terms of demand actually growing through the quarter. Uh could you, perhaps just elaborate on that a little bit and maybe talk about uh just demand Trends through the first few weeks of the second quarter here?

Todd Schneider: Yeah, nothing really, I would say, different in the start of the quarter compared to the results that we're posting. You see that our rental business is performing well. You referred to earlier the employment levels. Again, as I mentioned, we'd like to swim downstream with employment, but we're continuing to grow our business at attractive levels without that. No real changes in the demand from Q1 to Q2 so far. We like the momentum we have in each of our route-based businesses. Rental, as you saw, is performing well, but they're all performing well. We're encouraged by that.

Yeah, uh, nothing, uh, really. I would...

Make a difference in the start of the quarter, compared to the results that we're posting. Um, but, you know, you see that our rental business is performing well, and um, uh,

You referred to earlier the employment levels. Um, uh, you know, again, as I mentioned, we'd like, to, to swim Downstream with employment, but, um, uh, we're continuing to grow our business at attractive levels, uh, without that, but nothing, uh, no real changes in the, uh, uh, in the demand from q1 to 2 so far. Um, but, but we like the momentum we have in each of our route based businesses rental. As you saw is performing well, but they're all performing well. So, uh, we're encouraged by that.

George Tong: Great.

Luke McFadden: Great. Thank you very much.

[Analyst]: Great. Thank you very much.

Jared Mattingly: Thank you very much.

Todd Schneider: Thank you.

Right, thank you very much.

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

Operator: Our next question comes from Andrew Steinerman from Barclays Bank PLC. Please go ahead, Andrew.

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

Thank you.

George Tong: Hi, this is Alex Hess on for Andrew. I want to just start with the comment about, you know, to refocus on the customer base being steady or if anything improving slightly when you guys make that call out, like what are you actually looking to, to make that? Is that anecdotal? Is that based on, you know, any piece of data you look at, like? You know, we all see the jobs number, we all see the macro data. You know, just trying to understand exactly what you're trying to point investors to when you make that call out. And then I'll ask my follow-up.

Alex Hess: Hi, this is Alex Hess on for Andrew. I want to just start with the comment about, you know, to refocus on the customer base being steady or if anything improving slightly when you guys make that call out, like what are you actually looking to, to make that? Is that anecdotal? Is that based on, you know, any piece of data you look at, like? You know, we all see the jobs number, we all see the macro data. You know, just trying to understand exactly what you're trying to point investors to when you make that call out. And then I'll ask my follow-up.

[Analyst]: Hi, this is Alex Hess on for Andrew. I want to just start with the comment about, you know, to refocus on this, the customer base being steady or if anything improving slightly. When you guys make that call out, what are you actually looking to make that? Is that anecdotal? Is that based on any piece of data you look at? You know, we all see the jobs number. We all see the macro data. Just trying to understand exactly what you're trying to point investors to when you make that call out. I'll ask my follow-up.

And our next question comes from Andrew Steinman from JP Morgan. Please go ahead, Andrew.

Hi. This is Alex Hess on for Andrew. Uh, I want to just start with the comment about, you know, to to refocus on this the customer base being steadier, if anything improving slightly, when, when you guys make that call out, like what are you actually looking to to make that is, is that anecdotal? Is that based on, you know, any piece of data, you look at like,

Todd Schneider: Yeah. Thank you, Alex. Yeah, shareholders matter to us for sure, but we have many ways to grow our business, and I think it'd probably be appropriate. Jim, you have an example to maybe share on how we go about doing that? Yeah, sure.

Todd Schneider: Thank you, Alex. You know, awareness matters to us for sure, but we have many ways to grow our business. I think it'd probably be appropriate, Jim, you have an example to maybe share on how we go about doing that?

You know, we all see the jobs numbers. We all see the macro data. Just trying to understand exactly what you're trying to point investors to when you make that call out, and then I'll ask my follow-up.

Yeah, thank you, Alex. Yeah, sir. Um

Jim Rozakis: Yeah, sure. I think that, you know, we could talk a little bit about our strategy to expand our relationship with our current customers. We brought that up a little bit on the last call. Effectively, we said it doesn't matter to us which business line we start with with a customer. Our objective is to get a business line into a customer, to create an exceptional customer experience, to build a relationship, to become a trusted resource for that customer. How does that play out over time? We have an example here of a customer out in the Southwest that was a manufacturing customer, been a long-term customer of ours utilizing our Uniform Rental and Facility Services program. They are going through an exciting time and they're expanding their business, opening another line and opening another building.

Jim Rozakis: I think that, you know, we could talk a little bit about our strategy to expand our relationship with our current customers. We brought that up a little bit on the last call, and effectively we said we don't really matter. It doesn't matter to us which business line we start with a customer. Our objective is to get a business line into a customer, to create an exceptional customer experience, to build a relationship, to become a trusted resource for that customer. So how does that play out over time? Well, we have again an example here of a customer out in the Southwest that was a manufacturing customer, been a long-term customer of ours utilizing our uniform rental program. They are going through an exciting time, and they're expanding their business, opening on the line and opening another building.

You know, uh, uh, where is matter to us? For sure, but we have many ways to grow our business. Um, uh, and um, uh, I think it'd probably be appropriate Jim. You have an example to, to maybe share on how we go about doing that. Yeah, sure. Um, I think that, you know, we could talk a little bit about our our strategy to expand our relationship with our current customers. Uh, we brought that up a little bit on the last call. Uh, and effectively, we, we, we don't really matter. It doesn't matter to us, which business line we start with with a customer or our objective is to get a business line, uh, into a customer, uh, to create an exceptional customer experience to build the relationship to become a trusted resource for that. So how does that play out? Uh, over time? Well, we have a again. An example here of a customer out in the southwest, uh, that was a manufacturing customer. It's been a long time. Customer of ours, utilizing our, our uniform,

Mental program.

Jim Rozakis: During those conversations, our folks are actively involved in conversations with them on a day-to-day basis and, again, [as a] trusted resource. They asked about setting up the garments, the rental program, Uniform Rental program in the new building. During those conversations, the customer expressed how busy they were. It's an exciting time, but obviously a lot on their plate, and they needed some help and asked what other items we can help out with. We were able to go ahead and add Facility Services to the new building. We were able to add our First Aid and Safety Services to the new building and Fire Protection Services to the new building.

Jim Rozakis: During those conversations, our folks are actively involved in conversations with them on a day-to-day and, again, trusted resource. They asked about setting up the garments, the rental program, Uniform Rental and Facility Services program in the new building. During those conversations, the customer expressed how busy they were. It's an exciting time, but obviously a lot on their plate. They needed some help and asked what other items we can help out with. We were able to go ahead and add a Facility Services line to the new building. We're able to add our First Aid and Safety Services to the new building and Fire Protection Services to the new building.

During those conversations, our folks are actively involved in conversations with them on a day-to-day basis and, again, [as a] trusted resource. They asked about setting up the garments, the rental program, Uniform Rental program in the new building. During those conversations, the customer expressed how busy they were. It's an exciting time, but obviously a lot on their plate, and they needed some help and asked what other items we can help out with. We were able to go ahead and add Facility Services to the new building. We were able to add our First Aid and Safety Services to the new building and Fire Protection Services to the new building.

Jim Rozakis: So this is an example of us being in the door, having a great relationship, the customer looking at us as a trusted resource, and in a time of a lot of work and being a little bit slightly overwhelmed with the new assignment, they looked at us to say how can you help? And we were able to go in and provide all those resources, add value to the relationship. And in many cases, this is things they were going to have to spend money on anyhow. So just a burden that's been to us because we've established ourselves as that trusted resource.

So this is an example of us being in the door, having a great relationship, the customer looking at us as a trusted resource, and in a time of a lot of work and being a little bit slightly overwhelmed with the new assignment, they looked at us to say how can you help? And we were able to go in and provide all those resources, add value to the relationship. And in many cases, this is things they were going to have to spend money on anyhow. So just a burden that's been to us because we've established ourselves as that trusted resource.

Jim Rozakis: This is an example of us being in the door, having a great relationship, the customer looking at us as a trusted resource in a time of a lot of work and being a little bit slightly overwhelmed with the new assignment. They looked at us to say, "How can you help?" We were able to go in and provide all those resources, add value to the relationship. In many cases, this is things they were going to have to spend money on anyhow. Just diverting that spend to us because we've established ourselves as that trusted resource.

George Tong: Understood. Appreciate that. And then just thinking about, you know, positioning for. I know everybody's got peak job fears right now, but maybe the other side of that, you know, if we are at something like trough unemployment or trough nonfarm payroll growth and that reaccelerates, maybe helping us think to where you guys can go from here. And then, if you don't mind, I'll throw in one quick more. Any comments on sort of the inventory and rent uniforms and service injection that we saw this quarter?

Alex Hess: Understood. Appreciate that. And then just thinking about, you know, positioning for. I know everybody's got peak job fears right now, but maybe the other side of that, you know, if we are at something like trough unemployment or trough nonfarm payroll growth and that reaccelerates, maybe helping us think to where you guys can go from here. And then, if you don't mind, I'll throw in one quick more. Any comments on sort of the inventory and rent uniforms and service injection that we saw this quarter?

Uh, in, in a time of, uh, of a lot of work and, and being a little bit slightly overwhelmed with the new assignment. Uh, they looked at us to say, how can you help? And we were able to go in and provide all the resources, uh, add value to the relationship. Uh, and in many cases, this is things that we're going to have to spend money on anyhow. So just a burden that's been to us because we've established ourselves as that trusted resource.

[Analyst]: Understood. Appreciate that. Just thinking about positioning for, you know, I know everybody's got peak job fears right now, but maybe the other side of that, if we are at something like trough unemployment or trough of non-farm payroll growth and that re-accelerates, maybe helping us think to where you guys can go from here. If you don't mind, I'll throw in one quick more. Any comments on sort of the inventory and uniform and rent uniforms and service injection that we saw this quarter?

Todd Schneider: Yeah. So Alex, regarding employment, we're not in the prediction and business of what will happen with that. I would delight us if our customers all were hiring a lot more people, but we're not forecasting for that, and then we're planning to grow our business, I'll say, with the current environment, and our guide reflects, I think, attractive growth without the employment picture being real favorable. So yeah, we'd love that. That would be super. Regarding the inventory items, Scott, if you want to take that.

Todd Schneider: Yeah, so Alex, regarding employment, we're not in the prediction business of what will happen with there. That would delight us if our customers all were hiring a lot more people, but we're not forecasting for that. We're planning to grow our business in the, I'll say, with the current environment, and our guide reflects, I think, attractive growth without, you know, the employment picture being, you know, real favorable. Yeah, we'd love that. That would be super. Regarding the inventory item, Scott, if you want to take that.

Understood. I appreciate that. And then, just thinking about positioning for, you know, everybody's got peak job fears right now. But maybe the other side of that, you know, if we are at something like trough unemployment or trough non-farm payroll growth and that re-acceleration, you know, maybe helping us think forward to where you guys can go from here. And then, you know, if you don't mind, I'll throw in 1 1/4.

Yeah, so Alex uh, regarding uh employment, um, uh, we're not uh, in the prediction and business, uh, of of what will happen with their, uh, I would, uh, that would Delight us if, uh, if our customers all were hiring a lot more people, um, but we're, we're not forecasting for that. And then, uh, we're we're planning to grow our business, uh, in the, uh, in what I'll say with the, the, uh, the current environment. And our guide reflects, I think attractive growth, um, without uh, you know, the employment picture being, um, uh, you know, real favorable. So,

Jared Mattingley: Oh yeah, thanks, Todd. I would just answer that question that you've seen a nice steady uptick in growth in our rental business really over the last four quarters. We continue to see strong growth out of both our First Aid and Safety Services business as well as our Fire Protection Services business. When that happens, we've stated in the past that we're going to have a use of capital, and that would include the injection of garments for the Uniform Rental business. I would say that's just reflective of the growth that you're seeing in all three of our route-based businesses.

Jared Mattingly: Yes, thanks Todd. I would just answer that question that you've seen a nice steady uptick in growth in our rental business really over the last four quarters. We continue to see strong growth out of both our first aid and safety business, as well as our fire business. And when that happens, we've stated in the past that we're going to have a use of capital, and that would include the injection of garments for the uniform rental business. So I would say that's just reflective of the growth that you're seeing in all three of our route based businesses.

Scott Garula: Yes, thanks Todd. I would just answer that question that you've seen a nice steady uptick in growth in our rental business really over the last four quarters. We continue to see strong growth out of both our first aid and safety business, as well as our fire business. And when that happens, we've stated in the past that we're going to have a use of capital, and that would include the injection of garments for the uniform rental business. So I would say that's just reflective of the growth that you're seeing in all three of our route based businesses.

So, um, yeah, we'd love that. Uh, that would be, uh, super, um, regarding the, uh, inventory items. Scott, if you want to take that.

Uh, yeah, thanks Todd. Uh, you know, I would just, uh, answer that question that. Uh, you've seen a nice steady, uh, uptick uh, in growth in our rental business, really over the last 4 quarters. Uh, we continue to see uh, strong growth out of both our first aid and safety business as well as our fire business. And when that happens, you know, we've stated um, in the past that we're going to have a use of capital and that would include the injection of uh, you know, garments uh, for our uh, for the Uniform Rental business. So I would say that's just reflective of the growth that you're seeing in all 3 of our route based businesses,

George Tong: Thank you.

Alex Hess: Thank you.

Todd Schneider: Thank you.

Operator: Our next question comes from Joshua Chan from UBS. Please go ahead, Joshua. Hi, good morning.

Operator: Our next question comes from Joshua K. Chan from UBS Investment Bank. Please go ahead, Joshua.

Operator: Our next question comes from Joshua Chan from UBS. Please go ahead, Joshua. Hi, good morning.

[Analyst]: Hi, good morning. Thanks for taking my questions. Great job growing through a choppy environment. I guess I'm wondering, as you look at the different verticals within your business, are you seeing customers behave differently in some of the more stressed verticals, recognizing that you can kind of grow through any of the environment? Just wondering if there's any subtle behavior change kind of by vertical.

And our next question comes from Joshua Chan from UBS. Please go ahead, Joshua.

Todd Schneider: Thanks for taking my questions. Great job growing through a choppy environment. I guess I'm wondering as you look at the different verticals within your business.

Joshua Chan: Thanks for taking my questions. Great job growing through a choppy environment. I guess I'm wondering as you look at the different verticals within your business. Are you seeing customers behave differently in some of the more stressed verticals? Recognizing that you can kind of grow through any of the environment. But just wondering if there's any subtle behavior change, kind of, by vertical.

Manav Patnaik: Are you seeing customers behave differently in?

Todd Schneider: Some of the more stressed verticals?

Manav Patnaik: Recognizing that you can kind of grow.

Todd Schneider: Through any of the environment. But just wondering if there's any subtle?

Hi, good morning. Thanks for taking my questions. Um, great job growing through a choppy environment. I guess I'm wondering if you look at the different verticals within your business, are you seeing customers behave differently in some of the more stressed verticals, recognizing that you can kind of grow through?

Manav Patnaik: Behavior change, kind of, by vertical.

Any of the environment, but just wondering if there's any subtle behavior change, kind of by vertical.

Todd Schneider: Josh, good question. We're not seeing really any change in behavior in each of the verticals. Again, we think we've chosen those verticals really well. They're all accretive to our growth. And just as a reminder, we don't just sell into them; we organize around them and spend an inordinate amount of time with those customers trying to help them run their business. So but I wouldn't speak to any real change in behavior there. As a reminder, healthcare is a great vertical for hospitality business as well. The education vertical, and then the state and local governments, all are performing well and pretty consistently as well.

Todd Schneider: Josh, good question. We're not seeing really any change in behavior in each of the verticals. We think we've chosen those verticals really well. They're all accretive to our growth. Just as a reminder, we don't just sell into them. We organize around them and spend an inordinate amount of time with those customers trying to help them run their business. I wouldn't speak to any real change in behavior there. As a reminder, healthcare is a great vertical for our hospitality business as well, the education vertical, and then the state and local governments. All are performing well and pretty consistently as well.

Manav Patnaik: Great, thank you for the call there, Todd.

Joshua Chan: Great, thank you for the call there, Todd. I noticed that on the EPS guidance it's a little wider at this juncture of the year than it was. Last year at this time. Is there any color regarding that or kind of the thought process behind that?

[Analyst]: Great. Thank you for the call there, Todd. I noticed that on the EPS guidance, it's a little wider at this juncture of the year than it was last year at this time. Is there any color regarding that or kind of the thought process behind that?

Uh, Josh, good question. Um, uh, we're not seeing really any change in behavior in each of the verticals. Um, again, we we think we we've chosen those verticals really well. Uh, they're, they're all creative to our growth. Uh, and, um, and it just has reminder. We don't just sell into them. We organize around them and spend, uh, uh, in an inordinate amount of time with those customers trying to help them run their business. So, uh, but I, I, I wouldn't speak to any a real change in Behavior there. Um, as a reminder, um, you know, it's healthcare's, uh, a great vertical Force Hospitality business as well, uh, uh, the uh, education vertical, uh, and then the state and local governments, all um, are performing well and uh, pretty consistently as well.

Todd Schneider: I noticed that on the EPS guidance it's a little wider at this juncture of the year than it was.

Operator: Last year at this time.

Todd Schneider: Is there any color regarding that or kind of the thought process behind that? No, I wouldn't say Joshua wouldn't read anything into that. We like where our guide is. We like where our business is performing. As we think about that, it is we're in a position where the guide would explain to you that we're in a spot where we think our incrementals are attractive. We're able to grow the business nicely. It's right where we like to be, meaning we're performing really well. Like the momentum, we've increased. The guide at all points in the EPS within the range, Q2 through Q4 implied guide, also increases at all points within the range. Then also the incrementals are right where we'd like them to be at that stated 25% to 35% range. It also implies margin expansion within there as well.

Todd Schneider: No, I wouldn't say Joshua wouldn't read anything into that. We like where our guide is. We like where our business is performing. As we think about that, it is we're in a position where the guide would explain to you that we're in a spot where we think our incrementals are attractive. We're able to grow the business nicely. It's right where we like to be, meaning we're performing really well. Like the momentum, we've increased. The guide at all points in the EPS within the range, Q2 through Q4 implied guide, also increases at all points within the range. Then also the incrementals are right where we'd like them to be at that stated 25% to 35% range. It also implies margin expansion within there as well.

Great, thank you for the color there Todd. Um, and I noticed it on the EPS guidance, uh, it's it's a little wider at this juncture of the year than it was last year at this time. Is there any color regarding that or kind of the the thought process behind that?

Todd Schneider: No, I wouldn't say, Joshua, wouldn't read anything into that. We like where our guide is. We like where our business is performing. As we think about that, it is a, we're in a position where the guide would explain to you that we're in a spot where we think our incrementals are attractive. We're able to grow the business nicely. It's right where we like to be, meaning we're performing really well and like the momentum. We've increased the guide at all points in the EPS within the range. Q2 through Q4 implied guide also increases at all points within the range. The incrementals are right where we like them to be at that stated 25% to 35% range. It also implies margin expansion within there as well. This range, Josh, allows us to make the investments that we need for the long term.

Um, no, I wouldn't say, uh, Joshua wouldn't read anything into that. Um, uh, we like where our guide is, um, we like where our, um, uh, um, you know, business is performing, uh, and as we think about that, um, you know, it is a, um, we're in a position where, um, uh, the guide.

I would explain to you that, uh, we're in a spot where we think our, um, our incrementals are attractive. We're able to grow the business nicely, um, it's right where we like to be, um, meaning we're performing, uh, really well and like the momentum. Uh, the, um, um, we've increased the guide at all points in the EPS, um, within the range Q2 through Q4. Uh, the implied guide also increases at all points within the range.

Todd Schneider: This range, Josh, allows us to make the investments that we need for the long term. But being able to make those investments while improving margins at the exact same time, it's real strength of our business.

This range, Josh, allows us to make the investments that we need for the long term. But being able to make those investments while improving margins at the exact same time, it's real strength of our business.

Todd Schneider: Being able to make those investments while improving margins at the exact same time, it's a real strength of our business.

5% to 35% range. Um, and it also implies margin expansion within there as well. This range, Josh, allows us, uh, to make the investments that we need for the long term. Um, and, uh, uh, but being able to make those investments while improving margins at the exact same time. It's a real strength of our business.

Manav Patnaik: Well, it's great to hear and congratulate.

Joshua Chan: Well, it's great to hear and congratulations [audio distortion]

[Analyst]: That's great to hear. Congrats on the raise, guys, and exciting.

Todd Schneider: Ladies and gentlemen. Thank you.

Todd Schneider: Thank you.

And that's great to hear. And I congratulate them to raise guys and guiding

Thank you.

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

Manav Patnaik: Hey, good morning guys. I joined a little bit late, so apologies if you already covered this, but was just hoping you could update us on what you're seeing on the tariff driven expense growth front at this point. And maybe that's how that's compared to your initial expectations for the year.

Jasper Bibb: Hey, good morning guys. I joined a little bit late, so apologies if you already covered this, but was just hoping you could update us on what you're seeing on the tariff driven expense growth front at this point. And maybe that's how that's compared to your initial expectations for the year.

[Analyst]: Hey, good morning, guys. I joined a little bit late, so apologies if you already covered this, but was just hoping you could update us on what you're seeing on the tariff-driven expense growth front at this point, and maybe how that's compared to your initial expectations for the year.

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

Hey, good morning, guys. I joined a little bit late, so I apologize if you already covered this, but I was just hoping you could update us on what you're seeing on the tariff-driven expense growth front at this point.

Todd Schneider: Jasper, thanks for joining the call and that subject has not come up yet, so glad you asked. You know, as you know, the situation around tariffs has been really dynamic and we certainly aren't immune from any impact of higher costs as a result of tariffs. However, I'll say our global supply chain is a true competitive advantage for us and our team really exemplifies our corporate culture, our traits of positive discontent, and competitive urgency. They fuel our process improvements and drive us frankly to be more efficient. So we don't simply accept product costs are increasing and then pass along to our customers. That's not our culture and that's not how we run our business. But we also have some other built-in advantages there. We've got, as you can imagine, significant purchasing power. We also have great geographic diversity.

Todd Schneider: Jasper, thanks for joining the call, and that subject has not come up yet, so glad you asked. As you know, the situation around tariffs has been really dynamic, and we certainly aren't immune from any impact of higher costs as a result of tariffs. However, I'll say our global supply chain is a true competitive advantage for us, and our team really exemplifies our corporate culture. Our traits of positive discontent and competitive urgency fuel our process improvements and drive us, frankly, to be more efficient. We don't simply accept product costs are increasing and then pass along to our customers. That's not our culture, and that's not how we run our business. We also have some other built-in advantages there. We've got, as you can imagine, significant purchasing power. We also have great geographic diversity. We also, 90%+ of our products have two or more providers.

Oh, that's compared to your initial expectations for the year.

Uh, Jasper. Thanks for joining the call. And, uh, that subject has not come up yet. So, I'm glad you asked, um, you know, as as as you know, the situation around tariffs has been, it's been really Dynamic. Uh, and we, we certainly aren't immune from many impact of higher costs as a result of terrorists. Um, however, I'll say our Global Supply Chain is a true competitive Advantage for us, uh, and our, uh, our team really exemplifies our, our corporate culture. Um, our traits of positive discontent and competitive urgency. They fuel our process improvements, uh, and drive us, or frankly, to be more efficient.

Todd Schneider: We also 90% plus of our products have two or more providers. All of this gives us optionality. You know, when tariffs go across the board, they go up. You know, the geographic diversity can give you some advantage, but not as much. But what doesn't change is our drive for process improvement and our drive for more efficiencies so that we can extract those out of our organization. And I'd just like to remind you that our guide contemplates the current environment for tariffs as well.

We also 90% plus of our products have two or more providers. All of this gives us optionality. You know, when tariffs go across the board, they go up. You know, the geographic diversity can give you some advantage, but not as much. But what doesn't change is our drive for process improvement and our drive for more efficiencies so that we can extract those out of our organization. And I'd just like to remind you that our guide contemplates the current environment for tariffs as well.

Todd Schneider: All of this gives us optionality. When tariffs go across the board, they go up. The geographic diversity can give you some advantage, but not as much. What doesn't change is our drive for process improvement and our drive for more efficiencies so that we can extract those out of our organization. I'd just like to remind you that our guide contemplates the current environment for tariffs as well.

So we don't simply accept product costs, uh, are going or increasing and then pass along to our customers. That's not our culture, and that's not how we run our business. Um, uh, we also have some other built-in advantages there. Um, we've got, as you can imagine, significant purchasing power. Um, we also have great geographic diversity. Um, uh, we also have 90% plus of our products that have two or more providers. Uh, all of this gives us optionality. Um, you know, when tariffs go across the board, they go up. Um, uh, you know, the geographic diversity can give you some advantage, but not as much. Uh, but our what doesn't change is our drive for process improvement, um, and our drive for more efficiencies, so that we can extract those out of our organization. Um, and I'd just like to remind you that our guide contemplates uh, the current

environment for tariffs as well.

George Tong: Got it.

Jasper Bibb: Got it. Curious about sales cycles for no programmers. Has there been any change there so far this year in what you're seeing in customer behavior?

[Analyst]: Got it. Curious about sales cycles for non-programmers. Has there been any change there so far this year in what you're seeing in customer behavior?

Manav Patnaik: Curious about sales cycles for no programmers. Has there been any change there so far this year in what you're seeing in customer behavior?

Got it. And then, uh, curious about sales cycles for knowledgeable programmers. Has there been any change there so far this year, and what are you seeing in customer behavior?

Todd Schneider: No real change on the sales cycle for no programmers or, frankly, in general. I'd say the sales cycle has remained pretty consistent, and we're continuing to invest for the futures that we're prepared to be successful, ongoing.

Todd Schneider: No, no real change on the sales cycle for programmers or, frankly, in general. I'd say the sales cycle has remained pretty consistent, and we're continuing to invest for the future so that we're prepared to be successful ongoing.

Uh, no, no real change, uh, on the sales cycle, uh, for, uh, programmers or, frankly, uh, in general. Um, I’d say the sales cycle has remained, uh, pretty consistent. Um, and we’re continuing to, uh, uh, invest for the future. So, we’re prepared to be successful ongoing.

Manav Patnaik: Great.

Jasper Bibb: Great. Thank you for taking the questions.

[Analyst]: Great. Thank you for taking the questions.

Todd Schneider: Thank you for taking the questions. Thank you.

Todd Schneider: Thank you.

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

Great. Thank you for taking the questions. Thank you.

Operator: Our next question comes from Andrew Whitman from RW Baird. Please go ahead, Andrew.

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

George Tong: Andrew, hi. Yeah, great. Thanks for taking my questions this morning. And maybe Scott, one for you on the first aid segment. Gross margins, they were down a decent amount year over year. And I was wondering if you could help us understand what either happened this quarter that caused them to be down or maybe in the prior year if there was a comp issue, just so we'd have a better understanding about the gross margins there in first aid. Thanks.

And our next question comes from Andrew Whitman from RW Beard. Please go ahead, Andrew.

[Analyst]: Hi, yeah, great. Thanks for taking my questions this morning. Maybe, Scott, one for you. On the First Aid and Safety Services segment gross margins, they were down a decent amount year over year. I was wondering if you could help us understand what either happened this quarter that caused them to be down or maybe in the prior year if there was a comp issue, just so we'd have a better understanding about the gross margins there in First Aid and Safety Services. Thanks.

Andrew Wittmann: Hi, yeah, great. Thanks for taking my questions this morning. And maybe Scott, one for you on the first aid segment. Gross margins, they were down a decent amount year over year. And I was wondering if you could help us understand what either happened this quarter that caused them to be down or maybe in the prior year if there was a comp issue, just so we'd have a better understanding about the gross margins there in first aid. Thanks.

Jared Mattingly: Yeah, Andrew, thanks for the question. You know, I'll just go back to some comments that Todd mentioned. Nothing really to call out here. We continue to invest in all of our route based businesses, specifically in both our first aid and fire business. I think you're seeing the benefits of those investments show up in the double digit growth rates that we're enjoying in both our first aid and fire business. Jim, I don't know if you want to comment further on that first aid business.

Jared Mattingley: Yeah, Andrew, thanks for the question. You know, I'll just go back to some comments that Todd mentioned. Nothing really to call out here. We continue to invest in all of our route based businesses, specifically in both our first aid and fire business. I think you're seeing the benefits of those investments show up in the double digit growth rates that we're enjoying in both our first aid and fire business. Jim, I don't know if you want to comment further on that first aid business.

Jared Mattingley: Yeah, Andrew, thanks for the question. I'll just go back to some comments that Todd mentioned. Nothing really to call out here. We continue to invest in all of our route-based businesses, specifically in both our First Aid and Safety Services and Fire Protection Services business. I think you're seeing the benefits of those investments show up in the double-digit growth rates that we're enjoying in both our First Aid and Safety Services and Fire Protection Services business. Jim, I don't know if you want to comment further on that First Aid and Safety Services business.

Hi, yeah. Great. Thanks for taking my questions this morning and maybe Scott 1 for for you. Uh, on the first aid segment gross margins, um, they were down, a decent amount year-over-year and I was wondering if you could help us understand what are the, what e either happened this quarter, uh that caused them to be down, or maybe in the prior year if there was a comp issue. Just so we'd had a better understanding about the gross margins there in first aid. Thanks.

Yeah, Andrew. Uh, thanks for the uh, question. You know, I'll do go back to some comments, that Todd mentioned. Um, you know, nothing really to call out here. Um, you know, we continue to invest in all of our route, based businesses, uh, specifically in both our first aid and fire business. I think you're seeing the benefits of those Investments show up, uh, in the double digit growth rates, uh, that were enjoying in both our first aid and fire business.

Jim Rozakis: I would, Andy, appreciate the question. So our gross margin, First Aid and Safety, is actually flat just sequentially. We did have a little bit of a challenging comp from Q1 of last fiscal year to this fiscal year. But we really love where that business is positioned, and we continue to make investments specifically in areas like route capacity, leadership, bench strength, technology, selling resources, and managing trainees. So I would just call that more of a timing issue. Running the business isn't linear, and we want to make the investments for the future. We really like the outlook of that business.

Jim Rozakis: Yeah, I would, Andy, appreciate the question. You know, our gross margin First Aid and Safety Services is actually flat sequentially. We did have a little bit of a challenging comp from Q1 of last fiscal year to this fiscal year. We really love the way that business is positioned, and we continue to make investments specifically in areas like route capacity, leadership bench strength, technology, selling resources, and managing trainees. I would just call that more of a timing issue. Running the business isn't linear, and we want to make the investments for the future. We really like the outlook of that business.

[Analyst]: Got it. Just to build on that then, Jim, do you think that Fiscal 2026 is a higher investment year in some of these things like route leadership, management trainees, technology than it was in 2025? Obviously, 2025 margins was a big story for the year. They were so impressive. You're way above the incrementals. I know that you're going to tell me this is kind of more like what you've talked about for the long term. I'm just wondering, as you compare this year to last year in terms of the P&L investments that you're making, is this a higher year than last year? Is that part of the reason why we're seeing the margins be good but not quite as good as last year in terms of the improvement year over year?

George Tong: Got it. So just to build on that then, Jim, do you think that Fiscal 2026 is a higher investment year in some of these things like route leadership, management trainees, technology, than it was in Fiscal 2025? Obviously Fiscal 2025 margins was a big story for the year. They were so impressive, way above the incrementals. And I know that you're going to tell me this is kind of more like what you've talked about for the long term, but I'm just wondering, as you compare this year to last year in terms of the P&L investments that you're making, is this a higher year than last year? Is that part of the reason why we're seeing the margins be good but not quite as good as last year in terms of the improvement year over year?

Andrew Wittmann: Got it. So just to build on that then, Jim, do you think that Fiscal 2026 is a higher investment year in some of these things like route leadership, management trainees, technology, than it was in Fiscal 2025? Obviously Fiscal 2025 margins was a big story for the year. They were so impressive, way above the incrementals. And I know that you're going to tell me this is kind of more like what you've talked about for the long term, but I'm just wondering, as you compare this year to last year in terms of the P&L investments that you're making, is this a higher year than last year? Is that part of the reason why we're seeing the margins be good but not quite as good as last year in terms of the improvement year over year?

Um, uh, you know, Jim, I don't know if you want to comment further on that first day business, I would Andy appreciate the question and, um, you know, so our gross margin first, day of safety is actually flat sequentially. Uh, we did have a little bit of a, a challenging comp from q1 of last fiscal year to to this fiscal year. Uh, what we really love what our business is positioned. And we continue to make investments specifically, uh, in areas like route capacity, uh, leadership bench strength, uh, technology selling resources uh, and management trainees. So uh, I would just call that more of a a timing issue around the business isn't linear and we want to make the Investments for the future. We'd really like you out looking at our business.

Jim Rozakis: Andy, I would more call that a little bit of timing, meaning, hey, there's investments that are made periodically. I think you saw us begin to invest a little heavier in the fourth quarter of last fiscal year, continuing to put on those selling resources and adding the route capacity. So more of a timing issue. But yeah, we are continuing to invest in that business and we really like.

Jim Rozakis: Yeah, Andy, I would more call that a little bit of timing, meaning, hey, there's investments that are made periodically. I think you saw us begin to invest a little heavier in the fourth quarter of last fiscal year, continuing to put on those selling resources and adding the route capacity. You know, more of a timing issue. Yeah, we are continuing to invest in that business, and we really like the outlook on it.

Fiscal 26 is a higher investment year in some of these things like route leadership management, trainees technology than it was in 2012. Obviously, 25 margin was, was a big story for the year. They were so impressive. You you know, way above the incremental and I know that you're going to tell me this is kind of more like what you've talked about for the long term but I'm just wondering like as you compare this year to last year, in terms of the p&l Investments that you making is this is this a higher year than last year is that is that part of the reason why we're seeing the margins be good but not quite as good as last year in terms of the Improvement year over year.

Andrew Wittmann: Okay. Thanks, guys.

George Tong: The outlook on, okay. Thanks, guys.

[Analyst]: Okay, thanks, guys.

Yeah. Andy, I would call that a little bit of timing. Meaning, hey, there are investments that are made periodically. I think you saw us begin to invest a little heavier in the fourth quarter of last fiscal year, continuing to put on those selling resources and adding the rock capacity. So, um, you know, more of a timing issue. Uh, but yeah, we are continuing to invest in that business, and we realize the outlook on it.

Okay, thanks guys.

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

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

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

And our next question comes from Jason Hos from Wells Fargo. Please go ahead, Jason.

Manav Patnaik: Hi, this is Jinyi on for Jason Haas. Curious, are you seeing any change in the competitive environment? I know historically most of your wins come from no programmers, but we're seeing a lot of your peers struggle in this environment with one of your peers laying off a big portion of their sales force recently. So, curious if you see a growing opportunity to win share from your competitors. Thanks.

[Analyst] (Wells Fargo): Hi, this is Jinyi on for Jason Haas. Curious, are you seeing any change in the competitive environment? I know historically most of your wins come from no programmers, but we're seeing a lot of your peers struggle in this environment with one of your peers laying off a big portion of their sales force recently. So, curious if you see a growing opportunity to win share from your competitors. Thanks.

[Analyst]: Hi, this is Jin Yi on for Jason Haas. Curious, are you seeing any change in the competitive environment? I know historically, most of your wins come from no programmers, but we're seeing a lot of your peers struggle in this environment with one of your peers laying off a big portion of their sales force recently. Curious if you see a growing opportunity to win share from your competitors. Thanks.

Todd Schneider: Yes, thank you Jinyi for the question. The overall market remains very competitive. Our retention rates are still very strong. The new business wins come, as you know, mostly from no programmers, more so than the competition. We love that huge TAM of that unserved market that do-it-yourselfers or no programmers. We will certainly take business from traditional competitors. That's not really where our focus is. It's not where we focus our time and our efforts. We recognize that one of our particular competitors is working on their foundation, but again, it's not where our focus is. We see this huge TAM of opportunity with people that are do-it-yourselfers, you know, the 16, 17 million businesses out there in the US and Canada. We're servicing a little over 1 million. There is a massive opportunity.

Todd Schneider: Yes, thank you, Jin Yi, for the question. The overall market remains very competitive. Our retention rates are still very strong. The new business wins come, as you know, mostly from no programmers, more so than the competition. We love that huge TAM of that unserved market, that do-it-yourselfers or no programmers. We will certainly take business from traditional competitors, but that's not really where our focus is. Not where we focus our time and our efforts. We recognize that one of our particular competitors is working on their foundation. Again, it's not where our focus is. We see this huge TAM of opportunity with people that are do-it-yourselfers, the 16 million, 17 million businesses out there in the U.S. and Canada. We're servicing a little over 1 million. There is a massive opportunity. That's really where we spend our time to focus, to help expand that market.

Hi, this is Jimmy on for Jason Ho. I'm curious, are you seeing any change in the competitive environment? I know, historically, most of your wins come from no programmers, but we're seeing a lot of your peers struggle in this environment, with one of your peers laying off a big portion of their sales force recently. So, I'm curious if you see a growing opportunity to win share from your competitors. Thanks.

Yes. Thank you Junior uh, for the question. Um, oh the overall Market, it remains very competitive. Um, our retention rate. Uh, rates are still uh, very strong. Um, uh the new business wins come as you as, you know, from Mostly from new programmers, more, so than the competition.

Todd Schneider: That's really where we spend our time and focus to help expand that market. It's worked for us quite well. That's our plan for the future as well.

That's really where we spend our time and focus to help expand that market. It's worked for us quite well. That's our plan for the future as well.

Todd Schneider: It's worked for us quite well, and that's our plan for the future as well.

Manav Patnaik: Great. For my follow up, can you talk about what's driving the softness in the operating margins for the all other segments?

[Analyst] (Wells Fargo): Great. For my follow up, can you talk about what's driving the softness in the operating margins for the all other segments?

Uh, and we love that huge Tam of uh, of of that unserved market that do-it-yourselfers are new programmers. We will certainly take business from, uh, traditional competitors. Uh, but that's not really where our focus is. Um, it's not where we where we, we focus our time and our efforts. Uh, we recognize that 1 of our particular, uh, uh, competitors is working on their Foundation. Um, uh, but again, it's not where our focus is. Um, uh, we see this huge uh, Tam of opportunity uh, with uh, people that are do-it-yourselfers, um, uh, the uh, you know, the uh, 1617 million businesses out there in the US and Canada. Uh, we're servicing a little over 1 million. Uh, there is a massive opportunity. So that's really where we spend our time and the focus, uh, uh, to to help expand that market and, uh, its Workforce quite well. And, uh, that's our plan for the future as well.

[Analyst]: Great. For my follow-up, can you talk about what's driving the softness in the operating margins for the all-other segment?

Great. Um, and for my follow-up, can you talk about what's driving the softness in the operating margins for the All Other segments?

Todd Schneider: Well, the all other segment, as you know, is the Fire and the Design Collective business. Our gross margin in the all other was up 10 basis points sequentially, down 30 basis points year over year. But we're investing appropriately in all those businesses, and we like the returns that we're getting in our three route-based businesses specifically. And we're investing for the future because we see the opportunity that's out there. And so we're going to continue to, Jim mentioned, invest in bench strength, capacity. We're going to invest in leadership, management, trainees, sales resources, all those. And we're doing that because we see the opportunity ahead. Certainly we do have some additional costs with SAP in the Fire business as we are still going through that process. But those are again our investments for the future, and we think the future is quite bright, so we're going to invest appropriately.

Todd Schneider: The all-other segment, as you know, is the Fire Protection Services and the Design Collective business. Our gross margin in the all-other was up 10 bps sequentially, down 30 bps year over year. We're investing appropriately in all of those businesses, and we like the returns that we're getting in our three route-based businesses specifically. We're investing for the future because we see the opportunity that's out there. We're going to continue to, as Jim mentioned, invest in bench strength capacity. We're going to invest in leadership, management trainees, sales resources, all those. We're doing that because we see the opportunity ahead. Certainly, we do have some additional costs with the SAP system in the Fire Protection Services business as we are still going through that process, but those are, again, our investments for the future. We think the future is quite bright, so we're going to invest appropriately.

Certainly we do have some additional costs with SAP in the Fire business as we are still going through that process. But those are again our investments for the future, and we think the future is quite bright, so we're going to invest appropriately.

Uh, well, the all other segments, as you know, is the, uh, fire. And the, uh, design Collective business. Um, uh, our, uh, gross margin, uh, in the, uh, in the all other. Um, uh, is, um, uh, you know, was up 10 bits sequentially, uh, down 30, um, uh, year-over-year. Um, but we're, uh, we're investing appropriately. Uh, in all those businesses. Uh, and, uh, uh, and we like, uh, the returns that we're getting in our 3 route based businesses, specifically, uh, and we're investing for the future, because we see, um, the opportunity that's out there. And, uh, so we're going to continue to, uh, Jim mentioned, uh, invest in, um, uh, in bench strength capacity. Uh, we're going to invest in, um, uh, uh, leadership, um, management, trainees sales resources. All those and we're doing that because we, uh, we see the opportunity ahead. Uh, certainly we do have uh, some additional costs uh, with sap.

He and the fire business as we are uh uh uh still going through that process. Um, and uh, but those are again our investments for the future and um, and we think the future is quite bright, so we're going to invest appropriately.

Manav Patnaik: Thank you.

[Analyst] (Wells Fargo): Thank you.

[Analyst]: Thank you.

Thank you.

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

Operator: Our next question comes from Ashish Sabadra from RBC Capital Markets. Please go ahead, Ashish.

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

Manav Patnaik: Ashish, thanks for taking my question. Maybe just a quick one on the uniform direct sales. I know that can be pretty choppy quarter to quarter, but I was just wondering if you could talk more about some of the softness that we saw in the quarter but also any comments on the trend going forward. Thanks.

Ashish Sabadra: Thanks for taking my question. Maybe just a quick one on the uniform direct sales. I know that can be pretty choppy quarter to quarter, but I was just wondering if you could talk more about some of the softness that we saw in the quarter but also any comments on the trend going forward. Thanks.

And our next question comes from Ashish Sabadra from RBC. Please go ahead, Ashish.

[Analyst]: Thanks for taking my question. Maybe just a quick one on the Uniform Direct Sale. I know that can be pretty choppy quarter to quarter, but I was just wondering if you could talk more about some of the softness that we saw in the quarter, but also any comments on the trend going forward. Thanks.

Todd Schneider: Yeah, thank you Ashish. The Uniform Direct Sale business is a strategic business for us. Not so much in the size of it because it's only 2.6% of our revenue, but in the nature of those customers. Meaning we sell all of our route-based businesses into those customers. An example would be if you think about a hotel, the front of the house with the front desk, the bellhop, the concierge if you're doing business with them, the front of the house that can lead to the back of the house opportunities which tend to be in rental which would be housekeeping, maintenance, culinary. So this is strategic business for us and it allows us again not just sell rental but to sell first aid into those customers and to sell fire as well. So very important.

Todd Schneider: Yeah, thank you, Ashish. You know, the Uniform Direct Sale business is a strategic business for us, not so much in the size of it because it's only 2.6% of our revenue, but in the nature of those customers. Meaning we sell all of our route-based businesses into those customers. You know, an example would be if you think about a hotel, the front of the house with the front desk, the bell top, the concierge. If you're doing business with them in the front of the house, that can lead to the back of the house opportunities, which tend to be in rental, which would be housekeeping, maintenance, culinary. This is a strategic business for us, and it allows us, again, not just to sell rental, but to sell First Aid and Safety Services into those customers and to sell Fire Protection Services as well. Very important.

Thanks for taking my question. Maybe just a quick one on the uniform direct sales. I know that can be pretty choppy quarter to quarter, but I was just wondering if you could talk more about some of the softness that we saw in the quarter, but also any comments on the trend going forward.

Yeah, thank you. Sheesh. Um, uh, you know, the, the uniform direct sale, business is a strategic business for us. Um, not so much in the size of it, because it's only 2.6% of our Revenue. But in the nature of those customers, um,

Todd Schneider: Certainly the Uniform Direct Sale business can be a bit lumpy with rollouts of large programs, but we like the business and it's a strategic business for us.

Certainly the Uniform Direct Sale business can be a bit lumpy with rollouts of large programs, but we like the business and it's a strategic business for us.

Todd Schneider: Certainly, the Uniform Direct Sale business can be a bit lumpy with rollouts of large programs. We like the business, and it's a strategic business for us.

Example would be if you think about a hotel, um, the front of the house, uh, with the front desk, the bellhop, the concierge. Um, uh, if you're doing business with them, the front of the house can lead to the back of the house opportunities, which tend to be in rental, which would be housekeeping, maintenance, uh, culinary. So, um, uh, this is strategic business for us and it allows us, again, not just our rental, but to sell first aid into those customers, uh, and to, uh, uh, to sell fire as well. So, very important. Um, uh, certainly, the uniform direct sale business can, uh, can be a bit lumpy with rollouts of large programs, um, but, uh, but we like the business and it's just, uh, strategic business for us.

Manav Patnaik: That's very helpful information. Maybe just switching gears on M&A, wondering if you could talk about the M&A pipeline not just for more tuck-in deals but also larger deals, and would you consider diversifying into newer areas. Any color on that front? Thanks.

Ashish Sabadra: That's very helpful information. Maybe just switching gears on M&A, wondering if you could talk about the M&A pipeline not just for more tuck-in deals but also larger deals, and would you consider diversifying into newer areas. Any color on that front? Thanks.

[Analyst]: That's very helpful information. Maybe just switching gears and M&A, wondering if you could talk about the M&A pipeline, not just for more tuck-in deals, but also larger deals. Would you consider diversifying into newer areas? Any color on that front? Thanks.

Todd Schneider: Yes, thanks for the question, Ashish. First off, MA is important to us. We have, I think, demonstrated that we can leverage our balance sheet to buy really good companies. When we do that, we either get a really good capacity or we get really good synergies, sometimes a combination. So, MA is important to us. We didn't have as much MA in Q1 as what we have over the last 12 months. The funnel looks good. We like where we are, and it will be an important component for us. That being said, it's tough to predict those items because when a seller wants to sell, it's up to them. We just want to make sure we're there, have great relationships, and do exactly what we say we'll do so that we can make sure that the pipeline looks attractive.

Todd Schneider: Yes, thanks for the question, Ashish. First off, M&A is important to us. We have, I think, demonstrated that we can leverage our balance sheet to buy really good companies. When we do that, we either get a really good capacity or we get really good synergies, sometimes a combination. M&A is important to us. We didn't have as much M&A in Q1 as what we have over the last 12 months, but the funnel looks good. We like where we are, and it'll be an important component for us. That being said, it's tough to predict those items. When a seller wants to sell, it's up to them, and we just want to make sure we're there and have great relationships and do exactly what we say we'll do so that we can make sure that the pipeline looks attractive.

That that's very helpful information. Uh, maybe just Switching gears from MMA. Uh if wondering if you could talk about them, any pipeline, not just for more tuck and deals but also a larger deal. And would you consider uh diversifying into newer areas and color on that front? Thanks.

Uh, yes. Uh, thanks for the. The question is she, um, first off m&a is important to us. Um, uh, we have, uh, uh, I think, uh, demonstrated that, uh, um, uh, we can, uh, leverage our balance sheet to, uh, to buy really good companies. Um, and when we do that, we, uh, either get a really good capacity or we get really good synergies. Sometimes a combination. Um, so

So, uh, m&a is important to us. We didn't have, uh, as much m&a in q1 as as so. Uh, What uh, uh, we, we have over the last 12 months, but the funnel looks good. Uh, we, we, like, where we are and, um, uh, it'll be an important component for us. That being said, it's tough to predict, uh, those items and, um, uh, you know, because, uh, you know, when, when a seller wants to sell, um,

Todd Schneider: As far as getting outside of our current businesses, we're always looking at those opportunities. But the great news is we don't have to. The opportunity that we have in our current business is immense. So we're primarily focused there, but we're certainly always evaluating opportunities.

As far as getting outside of our current businesses, we're always looking at those opportunities. But the great news is we don't have to. The opportunity that we have in our current business is immense. So we're primarily focused there, but we're certainly always evaluating opportunities.

Todd Schneider: As far as getting outside of our current businesses, we're always looking at those opportunities. The great news is we don't have to. The opportunity that we have in our current businesses is immense. We're primarily focused there, but we're certainly always evaluating opportunities.

Uh, it's, uh, it's up to them and uh, and we just want to make sure we're there and have great relationships and, uh, and do exactly what we say. We'll do so that we can make sure that the pipeline looks, uh, attractive as far as, uh, uh, getting outside of, uh, of our current businesses, uh, we're always looking, uh, at those opportunities. Um, but the, uh, the great news is we don't have to, uh, the opportunity that we have in our current businesses, uh, is immense. Uh, so we're, uh, we're, uh, primarily focused there. Uh, but we're certainly, um, uh, always um, uh, uh, evaluating uh opportunities.

Manav Patnaik: Thanks. Great fellow. Thank you.

Ashish Sabadra: Thanks. Great fellow. Thank you.

[Analyst]: Thanks. Great color. Thank you.

Thanks. Hey, thank you.

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

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

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

Faiza Alwi: Yes. Hi. Good morning. Thank you. I wanted to ask about the first aid business again, and I'm curious as you're making these investments, sort of how your outlook for top line growth here has maybe changed or evolved because you've talked about you're seeing the opportunity. I know historically we've talked about this business as a maybe low double digit grower. So, curious how you think about, you know, top line growth moving forward over the next three to five years.

[Analyst]: Yes, hi. Good morning. Thank you. I wanted to ask about the First Aid and Safety Services business again. I'm curious, as you're making these investments, how your outlook for top-line growth here has maybe changed or evolved. You've talked about seeing the opportunity. I know historically we've talked about this business as maybe a low double-digit grower. I'm curious how you think about top-line growth moving forward over the next three to five years.

And our next question comes from Fisa AI from Deutsche Bank. Please go ahead, Fisa.

George Tong: Yeah.

Todd Schneider: Yeah. Good morning, Faiza. Thanks for the question. We are making investments in that business, and we think we're doing so smartly. We do see it as a double-digit, low double-digit growth business, and it's performed really well over the last year, and we would expect that, you know, that low double-digit number to be a, a good number for us. We are encouraged by how the business is performing, and we are going to continue to invest there because the future is quite attractive for us. So, you know, we think about investments in the manner of, well, we want to make sure we're positioned for the long-term, and so we're making those investments so that we can provide great customer service and position our employee partners to be highly successful.

Todd Schneider: Yeah, good morning, Faiza. Thanks for the question. We are making investments in that business, and we think we're doing so smartly. We do see it as a low double-digit growth business, and it's performed really well over the last year. We would expect that low double-digit number to be a good number for us. We are encouraged by how the business is performing, and we are going to continue to invest there because the future is quite attractive for us. We think about investments in the manner of wanting to make sure we're positioned for the long term. We are making those investments so that we can provide great customer service and position our employee partners to be highly successful. Doing so while increasing operating margins is, again, we think a real strength of our business.

Todd Schneider: Good morning, Faiza. Thanks for the question. We are making investments in that business, and we think we're doing so smartly. We do see it as a double-digit, low double-digit growth business, and it's performed really well over the last year, and we would expect that, you know, that low double-digit number to be a, a good number for us. We are encouraged by how the business is performing, and we are going to continue to invest there because the future is quite attractive for us. So, you know, we think about investments in the manner of, well, we want to make sure we're positioned for the long-term, and so we're making those investments so that we can provide great customer service and position our employee partners to be highly successful.

Yes. Hi, good morning, thank you. Um, I wanted to ask about the first aid business again and I'm curious as as you're making these Investments sort of how your outlook for. You know, Topline growth here has maybe changed or evolved because you've talked about, you know, you're seeing the opportunity. I know historically we've talked about this business as as a, you know, maybe low double-digit grower. Um, so so curious how you think about, uh, you know, uh, Topline growth, uh, moving forward over the next 3 to 5 years.

Todd Schneider: Doing so while increasing operating margins is, again, we think, a real strength of our business. But we're investing in all of them. All of our route-based businesses in the first aid is performing very attractively, again. But I would think about it as a low double-digit growth business for us moving forward.

Doing so while increasing operating margins is, again, we think, a real strength of our business. But we're investing in all of them. All of our route-based businesses in the first aid is performing very attractively, again. But I would think about it as a low double-digit growth business for us moving forward.

Yeah, good morning, fisa. Thanks for the question. We are. Um, we are making investments in that business. Uh, and we think, uh, uh, we're doing so smartly, um, uh, we do see it as a double digit, a low double digit growth, uh, business, uh, and, uh, it's performed really well over the last year. Uh, and we would expect that, uh, you know, that low double digit, uh, number to be a, uh, a good number for us. Um, we are encouraged by, uh, how the business is performing. Uh, and we are going to continue to invest there because the the future is, um, is quite attractive for us. So, um, you know, we, we think about Investments, uh, in the manner of, uh, well, um, uh, we want to make sure we're positioned for the, for the long term. And, uh, so we're making those Investments so that we can, um, uh, provide great customer service and position our our employee Partners to be highly successful, um, and, uh, what doing so,

Todd Schneider: We're investing in all of them, all of our route-based businesses, and the first aid is performing very attractively. Again, I would think about it as a low double-digit growth business for us moving forward.

While increasing operating margins is, again, we think a real strength of our business. Um, uh, but we're uh we're investing in all of them of our route based businesses in the first aid is uh, uh, performing uh, very attractively uh again but I would think about it as a low double digit growth business for us. Uh moving forward.

Faiza Alwi: Understood. Then just, you know, you talked about timing as it relates to the investments. So, and it sounded like, you know, even in Q4 of last year because you talked about sequential, sequential margins being similar. Give us a bit more color on the timing. Like is this, are you, when do you expect to be sort of through with those? And you know, do you, how should we think about the incremental margins in that business, you know, going forward?

[Analyst]: Understood. You talked about timing as it relates to the investments. It sounded like, even in the fourth quarter of last year, because you talked about sequential margins being similar. Give us a bit more color on the timing. Is this, are you, when do you expect to be sort of through with those? How should we think about the incremental margins in that business going forward?

understood, and then,

Todd Schneider: Yeah. So Faiza, it is from a timing standpoint. You know, we certainly have different initiatives in each of our businesses. First aid is no different. We'll have certain rollouts of products which might affect the mix. But we're planning to grow that business attractively. And I'll just remind you that 56.8% gross margin is really attractive. We're quite happy with it. We've had a significant increase over the last few years in that area, and we're going to continue to get leverage there. But it's a high level, and we think it's really good. And the mix of the business has been attractive for us. But we're providing more and more value to those customers, and then we're selling other items into those customers outside the first aid business. So it all works quite nicely.

Todd Schneider: Yeah, so Faiza, it is, from a timing standpoint, we certainly have different initiatives in each of our businesses. First Aid and Safety Services is no different. We'll have certain rollouts of products which might affect the mix. We're planning to grow that business attractively. I'll just remind you that that 56.8% gross margin is really attractive. We're quite happy with it. We've had a significant increase over the last few years in that area. We're going to continue to get leverage there, but it's a high level, and we think it's really good. The mix of the business has been attractive for us. We're providing more and more value to those customers, and we're selling other items into those customers outside of the First Aid and Safety Services business. It all works quite nicely.

Is this are you? When do you expect to be sort of through with those and, you know, do you, how should we think about the incremental margins in that business? You know, going going forward?

Todd Schneider: So I wouldn't be thinking of it as, oh, geez, you know, the first aid margin is going to pop after certain timing. These are, we'll get leverage and we'll grow that business attractively and provide more value to customers. But we like where it is and in the future as well.

Yeah, uh so, um, fisa it is, uh, from a timing standpoint. You know, we certainly have a different initiatives in each of our businesses. First aid is no different. Um, we'll have certain rollouts of products, uh, which might affect the mix. Uh, but we we're, we're we're planning to, uh, to grow that business attractively. Um, and um, and I'll just remind you that. That 56.8% gross margin is, um, really attractive. Uh, we're we're quite happy with it. Uh, we've had a significant increase over the last few years in that area, um, and, uh, we're going to continue to get leverage there, but, um, it's it's at, it's a high level and we think it's really good, uh, and uh, you know, the mix of the business has been attractive for us, uh, but we're, we're providing more and more value to those customers, uh, and um, uh, and then we're selling other items into those customers outside the first 8 business. So, it all, uh, work.

So I wouldn't be thinking of it as, oh, geez, you know, the first aid margin is going to pop after certain timing. These are, we'll get leverage and we'll grow that business attractively and provide more value to customers. But we like where it is and in the future as well.

Todd Schneider: I wouldn't be thinking of it as, oh geez, the first aid margin is going to pop after a certain timing. We'll get leverage, and we'll grow that business attractively and provide more value to customers. We like where it is and in the future as well.

Faiza Alwi: Great, thank you very much.

Works quite nicely. And um, uh, so I I wouldn't, um, I wouldn't be thinking of it as uh, um, uh LG's, you know, the uh, this the first a margin is going to pop after a certain timing. Uh, these are, um, we'll get leverage and um and we'll grow that business attractively uh, and provide more value to customers. Uh, but we like where it is and uh, in the future as well.

[Analyst]: Great. Thank you very much.

Great, thank you very much.

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

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

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

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

Stephanie Lynn Benjamin Moore: Hi, good morning. Thank you. I wanted to maybe follow up a question that was asked earlier in regards to M&A and kind of compare that to some commentary you made about growing your maybe other segments, fire and safety, for example. Maybe talk about your appetite as you think about other areas within your total company as you look to expand. What is your appetite to further expand your fire and safety business? And how do you leverage both doing so organically as well as potentially opportunistic M&A. Thank you.

Stephanie Moore: Hi, good morning. Thank you. I wanted to maybe follow up a question that was asked earlier in regards to M&A and kind of compare that to some commentary you made about growing your maybe other segments, fire and safety, for example. Maybe talk about your appetite as you think about other areas within your total company as you look to expand. What is your appetite to further expand your fire and safety business? And how do you leverage both doing so organically as well as potentially opportunistic M&A. Thank you.

[Analyst]: Hi, good morning. Thank you. I wanted to maybe follow up a question that was asked earlier in regards to M&A and kind of compare that to some commentary you made about growing your maybe other segments, Fire Protection Services and First Aid and Safety Services, for example. Maybe to talk about your appetite as you think about other areas within your total company as you look to expand. What is your appetite to further expand your Fire Protection Services and First Aid and Safety Services business? How do you leverage both doing so organically as well as potentially opportunistic M&A? Thank you.

Hi, good morning. Thank you.

Todd Schneider: Yeah, Stephanie, thank you for the question. You know, our fire business, we think the future is quite bright there, and we are very active in M&A in that business and growing it organically. And those again can just like any M&A can be a little lumpy, but we're quite active there, and we make, I would say, acquisitions almost every quarter in that business. Some of them are smaller, many of them are smaller, some might give us an additional footprint, and many of them are also tuck-ins, and we love both. When we get the additional footprint, that gives us an opportunity to invest in sales organizations and other resources and to serve that many more customers. And then when we do tuck-ins in that business, we get synergies from back-office and other areas.

Todd Schneider: Yeah, Stephanie, thank you for the question. Our Fire Protection Services business, we think the future is quite bright there, and we are very active in M&A in that business and growing it organically. Those, again, just like any M&A, can be a little lumpy, but we're quite active there. We make, I would say, acquisitions almost every quarter in that business. Some of them are smaller, many of them are smaller. Some might give us an additional footprint, and many of them are also tuck-ins. We love both. When we get the additional footprint, that gives us an opportunity to invest in sales organizations and other resources and to self-serve that many more customers. When we do tuck-ins in that business, we get synergies from back office and other areas.

I wanted to maybe follow up a question that was asked earlier in regards to m&a. Um and kind of compare that to some commentary you made about growing your maybe other segments fire and safety. For example maybe to talk about your appetite. As you think about other areas within your your total company as you look to expand what is your appetite to further? Expand your fire and safety business. Um, and how do you leverage both doing so organically as well as potentially opportunistic m&a. Thank you.

Yeah, uh Stephanie, thank you for the question. Um uh, you know, our our fire business um uh we think the future is quite bright there and we are very active, uh, in m&a, uh, in that business and growing it organically um, uh, and and those again can just like any m&a can be a little lumpy, but, um,

Todd Schneider: How we go about running a business tends to be that we're able to extract out some inefficiencies and run it in a more productive manner. That's all part of our strategy. We really like that business, and we are acquisitive, and we'll continue to be.

Todd Schneider: Then how we go about running a business tends to be that we're able to extract out some inefficiencies and run it in a more productive manner. That's all part of our strategy. We really like that business, and we are acquisitive and will continue to be.

Then how we go about running a business tends to be that we're able to extract out some inefficiencies and run it in a more productive manner. That's all part of our strategy. We really like that business, and we are acquisitive and will continue to be.

Uh, but we're we're quite active there. And we're we make, uh, uh, I would say, uh, um, Acquisitions, uh, almost every quarter in that business. Some of them are smaller. Many of them are smaller. Um, some might give us an additional, uh, uh, footprint. Uh, and I'll, and many of them are also tuck ends. And when we, uh, we love both, um, when we, when we get the, the additional footprint, um, uh, that gives us opportunity to invest in sales organizations and other resources, uh, and to self-serve, uh, that many more customers. Uh, and then when we do tuck in that business, we get uh, we get synergies uh, from back office and other areas. Um, and uh, and then how we go about running, a business tends to be, um, that we're able to extract out some efficient, inefficiencies and, uh, run it in a more productive manner. So, that's all part of our strategy. Uh, we really like that business. Uh, and we're we are inquisitive, uh, and will continue.

To be.

Stephanie Lynn Benjamin Moore: Thank you. And then just one follow-up question. I think it's pretty well understood that based on your investments over 10 plus years, you have a very strong tech stack and have really invested back into your technology capabilities. So as you think about what you have in place now and the ability to leverage, you know, AI and machine learning and the likes of everything that we're talking about now, what are the conversations like internally as you think about the opportunity, you know, is it pretty incremental just given you're already at such a, such an advanced state from a technology standpoint to really leverage AI to either, you know, improve productivity or drive incremental business? Thank you.

Stephanie Moore: Thank you. And then just one follow-up question. I think it's pretty well understood that based on your investments over 10 plus years, you have a very strong tech stack and have really invested back into your technology capabilities. So as you think about what you have in place now and the ability to leverage, you know, AI and machine learning and the likes of everything that we're talking about now, what are the conversations like internally as you think about the opportunity, you know, is it pretty incremental just given you're already at such a, such an advanced state from a technology standpoint to really leverage AI to either, you know, improve productivity or drive incremental business? Thank you.

[Analyst]: Thank you. Just one follow-up question. I think it's pretty well understood that based on your investments over 10-plus years, you have a very strong tech stack and have really invested back into your technology capabilities. As you think about what you have in place now and the ability to leverage AI and machine learning and the likes of everything that we're talking about now, what are the conversations like internally as you think about the opportunity? Is it pretty incremental, just given you're already at such an advanced state from a technology standpoint to really leverage AI to either improve productivity or drive incremental business? Thank you.

Thank you. And then just one follow-up question. Um, you know, I think it's pretty well understood that, based on your investments over, you know, 10 plus years, you have a very strong tech stack and have really invested back into your technology capabilities. So, as you think about what you have in place now and the ability to leverage, you know, AI and machine learning and the likes of everything that we're talking about now, you know, what are the conversations like internally as you think about the opportunity?

Todd Schneider: Yeah, good question, Stephanie. As you pointed out, investing in technology has been a key part of our strategy for many, many years, and it's certainly not slowing. Our investment in SAP has created a really valuable foundation for which we can build upon. So we're really focusing our investments to help us in those areas. And I'll just call it technology umbrella. AI is a component, analytics is a component. Algorithms, large language models, all that is part of it. But we're focused really in two areas. Making it easier for our customers to do business with us via managing their account, getting answers to questions faster, making it easier for them to purchase additional products and services, paying their bill would all be components of it. And then the second area is making our employee partners more successful.

Todd Schneider: Yeah, good question, Stephanie. As you point out, investing in technology has been a key part of our strategy for many, many years. It's certainly not slowing. Our investment in SAP has created a really valuable foundation for which we can build upon. We're really focusing our investments to help us in those areas. I'll just call it technology umbrella. AI is a component, analytics is a component, algorithms, large language models, all that is part of it. We're focused on really in two areas: making it easier for our customers to do business with us via managing their account, getting answers to questions faster, making it easier for them to purchase additional products and services, paying their bill would all be components of it.

You know, is it pretty incremental just given you're already at such an advanced state from a technology standpoint, to really leverage AI to either, you know, improve productivity or drive incremental business.

Todd Schneider: The second area is making our employee partners more successful, putting information in their hands to make them more valuable to the customer, spending their time in a more productive manner by eliminating administrative time and pointing them in the right direction to where to spend their time with the right products, the right prospects, the right areas of the business. It's all important to us, very important. It's part of our investment for the future. We think it's going to be, we will continue to invest and it will be attractive for us. You've seen some of it with SmartTruck, myCINTAS, the best product, the best prospect. That's all ongoing and not slowing down. We see a real opportunity to leverage that tech stack and to also leverage our engineering and black belt resources, our Six Sigma team. All goes into play with that. It's not just a technology.

Todd Schneider: Putting information in their hands to make them more valuable to the customer, spending their time in a more productive manner by eliminating administrative time and pointing them in the right direction to where to spend their time with the right products, the right prospects, the right areas of the business. So it's all important to us, very important. It's part of our investment for the future and we think it's going to be, will continue to invest and will be attractive for us. But you've seen some of it with SmartTruck. MyCintas, the best product, best prospect, and that's all ongoing and not slowing down. We see a real opportunity to leverage that tech stack and to also leverage our engineering and Black Belt resources. Our Six Sigma team all goes into play with that.

Putting information in their hands to make them more valuable to the customer, spending their time in a more productive manner by eliminating administrative time and pointing them in the right direction to where to spend their time with the right products, the right prospects, the right areas of the business. So it's all important to us, very important. It's part of our investment for the future and we think it's going to be, will continue to invest and will be attractive for us. But you've seen some of it with SmartTruck. MyCintas, the best product, best prospect, and that's all ongoing and not slowing down. We see a real opportunity to leverage that tech stack and to also leverage our engineering and Black Belt resources. Our Six Sigma team all goes into play with that.

Analytics as a component algorithms, um, large language models, uh, all that is, uh, is part of it, um, but we're focused on and really, in 2 areas making it easier for our customers to do business with us, um, uh, via, you know, managing their account, uh, getting answers to questions faster, uh, making it easier for them to purchase additional products and services paying their bill. Um, it would all be components of it and then the second area is making our employee Partners more successful, um, putting information in their hands to make them more valuable to the customer, uh, spending spending their time, uh, in a more productive manner by eliminating administrative time. And pointing them in the right direction to where to, where to spend their time, um, with the the right products, the right prospects, the right, uh uh, areas of the business,

Todd Schneider: So it's not just a technology, it's positioning the technology to make it easier for our customers to do business with us and make our people that much more successful.

So it's not just a technology, it's positioning the technology to make it easier for our customers to do business with us and make our people that much more successful.

So, uh, it's all important to us very important. It's part of our investment for the future, uh, and we think it's going to be, um, uh, uh, uh, well continue to invest and will be attractive for us, uh, but, uh, you've seen some of it with smart truck. My Centos the best product best pro, uh, Prospect. Uh, and there's, um, that's all ongoing and, uh, not slowing down, uh, and we see a real opportunity for, uh, to leverage that Tech stack. And to, uh, also leverage our engineering and black belt resources, our, uh, our 6 Sigma team, um, all goes into a play with

Todd Schneider: It's positioning the technology to make it easier for our customers to do business with us and make our people that much more successful.

With that, uh, so it's not just a technology; it's, uh, a position of the technology to, uh, make it easier for our customers to do business with us and make our people, uh, that much more successful.

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

Scott Schneeberger: Thanks. Good morning, everyone. Two questions. I guess I'll ask them both up front, although they're quite different. The first one's kind of playing off on some of these M&A questions. In the past, many years ago, you all had considered going international to a much greater degree and kind of doing so via existing customers who may, you know, large multinationals who may have needed service outside of the US. Just curious, is that it has been quiet on the M&A front. Is that a consideration? And if so, what would be your approach? And then the second question is just on MyCintas portal. Would just love to hear any update on how that's progressing.

And our next question comes from Scott Schneberger from Oppenheim. Please go ahead, Scott.

[Analyst]: Thanks. Good morning, everyone. Two questions. I guess I'll ask them both up front, although they're quite different. The first one's kind of playing off on some of these M&A questions. In the past, many years ago, you all had considered going international to a much greater degree and kind of doing so via existing customers who may, you know, large multinationals who may have needed service outside of the U.S. Just curious, is that it has been quiet on the M&A front? Is that a consideration? If so, what would be your approach? The second question is just on myCINTAS portal.

[Analyst]: We'd just love to hear any update on how that's progressing, maybe mix of, you know, what % of sales is running through that now, what % of payments, any other metrics you may be offered to provide, because you've been at that for a little while, and I imagine it's providing good productivity leverage. Thanks.

Scott Schneeberger: Maybe a mix of, you know, what percent of sales is running through that now, what percent of payments, any other metrics you may be willing to provide because you've been at that for a little while. And I imagine it's providing good productivity leverage. Thanks.

Maybe a mix of, you know, what percent of sales is running through that now, what percent of payments, any other metrics you may be willing to provide because you've been at that for a little while. And I imagine it's providing good productivity leverage. Thanks.

Todd Schneider: Yes, thank you, Scott. First off, on the M&A front, I wouldn't say it's been quiet on the M&A front. We had our very best year last year, with the exception of, in the last 20 years, with the exception of the year we bought G&K. So we've been very active, and the pipe continues to be attractive. Now, on the international front, we certainly, we have relationships, and we evaluate that on an ongoing basis. But the best news is we don't have to. We don't see a need to do that in order to grow our business. If the right opportunity showed up, we would, but we don't need to. We are, you know, as I mentioned, we're servicing a little over a million businesses in the US and Canada or 16, 17 million businesses. The white space of opportunity out there is immense.

Todd Schneider: Yes, thank you, Scott. First off, on the M&A front, I wouldn't say it's been quiet on the M&A front. We had our very best year last year, with the exception of, in the last 20 years, with the exception of the year we bought G&K. We have been very active, and the pipe continues to be attractive. On the international front, we certainly have relationships, and we evaluate that on an ongoing basis. The best news is we don't have to. We don't see a need to do that in order to grow our business. If the right opportunity showed up, we would. We don't need to. We are, as I mentioned, servicing a little over a million businesses in the U.S. and Canada, out of 16, 17 million businesses. The white space of opportunity out there is immense.

Thanks, good morning, everyone. Um, 2 questions, I guess. I'll ask them both up front, although they're quite different. Um, the first 1's kind of playing off on some of these, uh, m&a questions. Uh, in the past many years ago, you all had considered going um, International to a much greater degree and kind of doing so via existing customers who may, you know, large multinationals, who may have needed service outside of, uh, of of, of, of the US. I just curious, um, is that it has been quiet on the m&a front. Is that a consideration? And, uh, and and if so, what would be your your approach and then the second question is just, um, on my syntax portal, um, we just would love to hear any update on on how that's progressing. Maybe mix of. Uh, you know, what percent of sales is running through that? Now, what percent of payments, any other metrics you may be offered to provide uh because you've been at that for a little while and I imagine it's uh it's providing good uh good productivity leverage. Thanks.

Todd Schneider: We love the spot we're in and the geography we're in. That being said, we have those relationships, and we continue to cultivate those. If the right opportunity presented itself, we would certainly evaluate. We have the ability, we have the bench, we have the culture, we have the balance sheet, and the know-how, and the ability to go do something like that if we want to. Regarding the myCINTAS portal, that's really a platform that we use not just for our customers for paying, but also for them to manage their account. We expand it for other areas for our partners to be able to become that much more successful and productive for handling customer requests.

Todd Schneider: So we love the spot we're in in the geography we're in. But that being said, we have those relationships, and we continue to cultivate those. And if the right opportunity presented itself, we would certainly evaluate, and we have the ability, we have the bench, we have the culture, we have the balance sheet, the know-how, and the ability to go do something like that if we want to. Regarding the MyCintas portal, that's really a platform that we use not just for our customers for paying, but also for them to manage their account, and then we expand it for other areas for our partners to be able to become that much more successful and productive for handling customer requests.

So we love the spot we're in in the geography we're in. But that being said, we have those relationships, and we continue to cultivate those. And if the right opportunity presented itself, we would certainly evaluate, and we have the ability, we have the bench, we have the culture, we have the balance sheet, the know-how, and the ability to go do something like that if we want to. Regarding the MyCintas portal, that's really a platform that we use not just for our customers for paying, but also for them to manage their account, and then we expand it for other areas for our partners to be able to become that much more successful and productive for handling customer requests.

Yes. Uh, thank you, Scott. Um, first off on the M&A front, um, I wouldn't say it's been quiet on the M&A front. We had our very best year last year with the exception of, uh, in the last, uh, 20 years with the exception of the year we bought GNK. Um, so we've been very active, uh, and the, uh, and the pipe continues to be attractive. Um, uh, on the international front, uh, we certainly, uh, we have relationships, uh, and we, uh, evaluate that on an ongoing basis. Um, but the best news is we don't have to, um, uh, we don't see a need to, uh, uh, to do that in order to grow our business. Uh, if the right opportunity showed up, we would, um, but we don't need to. We are, you know, as I mentioned, we're servicing a little over a million businesses and, uh, and the U.S. and Canada are 16, 17 million businesses. The white space of opportunity out there is immense.

Uh, so, uh, we, we, we love the spot. We're in, in the geography, we're in. Uh, but that being said, we, we have those relationships and we continue to cultivate those. And if the right opportunity presented itself, uh, we would certainly evaluate. And, uh, and uh, we have the ability, we have the bench, we have the, uh, uh, uh, the culture. We have the balance sheet. Um, we uh, and, and the know-how and the, uh, um, uh, ability to go good,

Do something like that. If we want to, uh, regarding the MySentos portal.

Todd Schneider: I won't go into great detail about any metrics on that area for competitive reasons, but I'll just say it's an area where we continue to invest, and we see it as a competitive advantage, and our customers really like it. When your customers like it and your employee partners like it, we think we've got something there, and we're going to continue to invest because we see the opportunity to continue to provide additional value there.

Todd Schneider: So I won't go into great detail about any metrics on that area for competitive reasons, but I'll just say it's an area where we continue to invest and we see it as a competitive advantage and our customers really like it. So when your customers like it and your employee partners like it, we think we got something there and we're going to continue to invest because we see the opportunity to continue to provide additional value there.

So I won't go into great detail about any metrics on that area for competitive reasons, but I'll just say it's an area where we continue to invest and we see it as a competitive advantage and our customers really like it. So when your customers like it and your employee partners like it, we think we got something there and we're going to continue to invest because we see the opportunity to continue to provide additional value there.

Reasons. But I'll just say it's a area where we continue to invest, uh, and we see it as a competitive Advantage uh and our customers really like it. Uh, so when your customers like it and your employee Partners like it, um, we think we got something there. And we're going to continue invest, uh, because we see the opportunity to continue to provide additional value there.

Scott Schneeberger: Sounds good, thanks.

[Analyst]: Sounds good. Thanks.

Sounds good, thanks.

Operator: Our next question comes from Tony Kaplan from Morgan Stanley. Please go ahead.

Operator: Our next question comes from Tony Kaplan from Morgan Stanley. Please go ahead, Tony.

Operator: Our next question comes from Tony Kaplan from Morgan Stanley. Please go ahead, Tony

Stephanie Lynn Benjamin Moore: Tony, thank you so much. In light of all the news on visa requirements, are you expecting any impact from changes to impact your customers' hiring? I know it could be a little bit further out, but just wanted to understand how you're thinking about that.

Toni Kaplan: Thank you so much. In light of all the news on visa requirements, are you expecting any impact from changes to impact your customers' hiring? I know it could be a little bit further out, but just wanted to understand how you're thinking about that.

[Analyst]: Thank you so much. In light of all the news on visa requirements, are you expecting any impact from changes to impact your customers' hiring? I know it could be a little bit further out, but just wanted to understand how you're thinking about that.

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

Todd Schneider: Yeah, Tony, it's a good question. We're certainly paying attention to immigration policy, but I can't tell you that we're seeing any material impact at all. Is there some impact? There might be, but we're not really hearing it much from our customers. We're not seeing it in the results. Certainly the H-1B subject is more of a technology. It seems as more of a technology subject. So no real impact from the visas or the immigration that we can really refer to.

Todd Schneider: Yeah, Tony, it's a good question. We're certainly paying attention to immigration policy, but I can't tell you that we're seeing any material impact at all. Is there some impact? There might be, but we're not really hearing it much from our customers, and we're not seeing it in the results. The H1B subject is more of a technology, it seems is more of a technology subject. No real impact from the visas or the immigration that we can really refer to.

Thank you so much. In light of all the news on visa requirements, are you expecting any impact from changes to affect your customers' hiring? I know it could be a little bit further out, but I just wanted to understand how you're thinking about that.

Yeah, Tony, it's a good question. Um, uh uh, you know, we're paying attention to uh immigration policy um you know, uh but I can't

You know, tell you that we're seeing any material impact, uh, at all. Um, uh, uh, uh, is there, uh, some impact there might be, uh, but we're not really hearing it much from our customers. Um, we're not seeing it in the results. Um, uh. Uh, and certainly the, uh, the H-1B subject, uh, is a, uh, more of a technology that seems, as more of an technology subject. So um, uh no real real impact from uh, uh, from the Visas or the immigration.

Stephanie Lynn Benjamin Moore: Okay, great. And then just to follow up on all other you mentioned continuing to invest. We saw SG&A step up there in the quarter. Should we expect a similar level of investment throughout the year? That would be really helpful to understand how SG&A in particular should continue to progress as we proceed through this fiscal year. Thanks.

Toni Kaplan: Okay, great. And then just to follow up on all other you mentioned continuing to invest. We saw SG&A step up there in the quarter. Should we expect a similar level of investment throughout the year? That would be really helpful to understand how SG&A in particular should continue to progress as we proceed through this fiscal year. Thanks.

[Analyst]: Okay, great. Just to follow up on all other, you mentioned continuing to invest. We saw SG&A step up there in the quarter. Should we expect a similar level of investment throughout the year? That would be really helpful to understand how SG&A in particular should continue to progress as we proceed through this fiscal year. Thanks.

Uh, that we can, uh, really refer to.

Okay, great. And then just

Todd Schneider: Yeah, we think our SG&A investment is appropriate right now where it is. So I don't think you'll see a ramp up or ramp down from there from that perspective. So we like the spot that we're in, we like the levels of bench that we're at, and we think in totality that, you know, we got a 10 basis points improvement on SG&A for the company going from 27.6 to 27.5 year over prior. So I wouldn't overreact to the all other more of just a timing subject there, but we think we're in a good spot from an SG&A investment and plan to get leverage on that over time.

Todd Schneider: Yeah, we think our SG&A investment is appropriate right now where it is. I don't think you'll see a ramp up or ramp down from there, from that perspective. We like the spot that we're in. We like the levels of bench that we're at. We think in totality that we got a 10 basis point improvement on SG&A for the company, going from 27.6% to 27.5% year over prior. I wouldn't overreact to the all other, more of just a timing subject there. We think we're in a good spot from an SG&A investment and plan to get leverage on that over time.

Just a follow-up on all other. You mentioned continuing to invest; we saw SG&A step up there in the quarter. Should we expect a similar level of investment throughout the year? That would be really helpful to understand how SG&A in particular should continue to progress as we proceed through this fiscal year. Thanks.

Stephanie Lynn Benjamin Moore: Thank you.

Toni Kaplan: Thank you.

[Analyst]: Thank you.

Yeah. Uh, uh, we think our sgna investment is, uh, appropriate right now, where it is. Um, uh, so, um, I don't think you'll see a, uh, you know, a ramp up or ramp down from there, um, uh, from that perspective. So, um, we're we're, uh, we like the spot that we're in. We like, the the levels of bench, uh, that we're at. And, um, uh, and we think, uh, in in totality that, um, you know, we we got, uh, uh, uh, 10 basis point, uh, um, uh, Improvement on sgna for the company, uh, going from 276 to 275, uh, year-over-year. Um, so I wouldn't, um, overreact to the all other more of just a, a timing subject there. But, um, uh, but what we think we're in a good spot from a um uh, an sgna investment, uh, and plan to get leverage on that uh over time.

Thank you.

Operator: Our next question comes from Kartik Mehta from Northcoast Research. Please go ahead. Kartik.

Operator: Our next question comes from Kartik Mehta from Northcoast Research Partners. Please go ahead, Kartik.

Operator: Our next question comes from Kartik Mehta from Northcoast Research. Please go ahead. Kartik.

And our next question comes from Kartik Ma from North Coast Research. Please go ahead, Kartik.

Todd Schneider: Good morning, Todd. I know you've answered the question I'm going to ask in parts, but I thought maybe if I could get you to give a comprehensive answer or just maybe a summary of all the answers you gave, be a good perspective and you know, the economy, it seems like, has changed in the last six months. And I'd be curious from your perspective at least the key metrics you look at for each of the businesses, what you think has improved, what hasn't changed, and maybe what might have gotten a little worse. Yeah, Kartik, our business is performing really well and we like the momentum. You've seen that the rental business is continuing to improve. We're really encouraged by that. But each of our three route based businesses are performing at a high level. Uniform Direct Sale business.

Kartik Mehta: Good morning, Todd. I know you've answered the question I'm going to ask in parts, but I thought maybe if I could get you to give a comprehensive answer or just maybe a summary of all the answers you gave, be a good perspective and you know, the economy, it seems like, has changed in the last six months. And I'd be curious from your perspective at least the key metrics you look at for each of the businesses, what you think has improved, what hasn't changed, and maybe what might have gotten a little worse.

[Analyst]: Hey, good morning, Todd. I know you've answered the question I'm going to ask in parts, but I thought maybe if I could get you to give a comprehensive answer or just maybe a summary of all the answers you gave, it would be a good perspective. You know, the economy it seems like has changed in the last six months. I'd be curious from your perspective, at least the key metrics you look at for each of the businesses, what you think has improved, what hasn't changed, and maybe what might have gotten a little worse.

Todd Schneider: Yeah, Kartik, our business is performing really well and we like the momentum. You've seen that the rental business is continuing to improve. We're really encouraged by that. But each of our three route based businesses are performing at a high level. Uniform Direct Sale business.

Hey, good morning, Todd. Uh I know you've answered the question. I'm going to ask in Parts but I thought, maybe if I could I get you to give a comprehensive answer, just maybe a summary of all the answers you gave be a good perspective. And, you know, the economy it seems like has changed in the last 6 months and I'd be curious from your perspective, at least the key metrics you look at for each of the businesses, what you think has improved, what hasn't changed and maybe what, what might have gotten a little worse?

Todd Schneider: Yeah, Kartik, you know, our business is performing really well, and we like the momentum. You've seen that the rental business is continuing to improve. We're really encouraged by that. Each of our three route-based businesses are performing at a high level. Uniform Direct Sale business, the performance there in Q1 was a 30 basis point headwind for the company on growth. If you solve for that, then the business would have grown at 9%. That would be really good. We like where we are. As I mentioned earlier, Kartik, we are investing for the future because we think the future is bright because of all the opportunity ahead for us and the position that we're trying to put our partners in, our employee partners in, and the value we're trying to provide for our customers.

Yeah, Kartik, um, you know our business is performing.

Todd Schneider: The performance there in Q1 was a 30 basis points headwind for the company on growth. So if you solve for that, then the business would have grown at 9%. So that would be really good. So we like where we are. And as I mentioned earlier, Kartik, that we are investing for the future because we think the future is bright because of all the opportunity ahead for us in the position that we're trying to put our partners in, our employee partners in, and the value we're trying to provide for our customers. Just a follow-up, you know, you talked about M and A, and obviously you are very active in the M and A world.

The performance there in Q1 was a 30 basis points headwind for the company on growth. So if you solve for that, then the business would have grown at 9%. So that would be really good. So we like where we are. And as I mentioned earlier, Kartik, that we are investing for the future because we think the future is bright because of all the opportunity ahead for us in the position that we're trying to put our partners in, our employee partners in, and the value we're trying to provide for our customers.

And we like the momentum. Uh, you've seen that the rental business is, um, uh, you know, continuing to improve. Uh, we're really encouraged by that. Uh, but each of our three route-based businesses, uh, are performing at a high level. The uniform direct sale business, um, uh, uh, the performance there in Q1 was a, um, uh, a 30 basis point, uh, headwind for the company on growth. So, um, uh, you know, if you solve for that, then the business would have grown at 9%. Uh, uh, so, well, that would be, um, uh, really good. So, uh, we like, uh,

Kartik Mehta: Just a follow-up, you know, you talked about M and A, and obviously you are very active in the M and A world. I'm wondering if you're seeing any change in prices for M&A in either of the businesses, and if maybe sellers are getting a little bit, maybe lowering prices because of what's going on.

Where we are. And, um, uh, and as I mentioned earlier, garlic that we are investing for the future, uh, because we think the future's bright, uh, because of all the opportunity ahead for us, uh, in the position that we're, we're trying to put our partners in our employee Partners in, uh, and the value we're trying to provide for our customers.

[Analyst]: Just a follow-up. You talked about M&A, and obviously you are very active in the M&A world. I'm wondering if you're changing any change in prices for M&A in either of the businesses, and if maybe sellers are getting a little bit maybe lowering prices because of what's going on.

Todd Schneider: I'm wondering if you're seeing any change in prices for M&A in either of the businesses, and if maybe sellers are getting a little bit, maybe lowering prices because of what's going on. Good question, Kartik. You know, no, I wouldn't say there's any real change in prices. It's trying to predict when someone's ready to sell their business is really challenging. There's all kinds of items that come into play: succession planning, health, maybe what they look at for how their business is going to perform in the future. There's all kinds of things. So trying to predict that one's challenging. What we can control is making sure that we're in a position to leverage our relationships. And we've invested over the years to make sure that we are in a position to do that. And we'll continue to do that.

Todd Schneider: Good question, Kartik. You know, no, I wouldn't say there's any real change in prices. It's trying to predict when someone's ready to sell their business is really challenging. There's all kinds of items that come into play: succession planning, health, maybe what they look at for how their business is going to perform in the future. There's all kinds of things. So trying to predict that one's challenging. What we can control is making sure that we're in a position to leverage our relationships. And we've invested over the years to make sure that we are in a position to do that. And we'll continue to do that.

Uh, for M&A, uh, in either of the businesses. Uh, and if maybe sellers are getting a little bit, uh, maybe lowering prices because of what's going on.

Todd Schneider: Good question, Kartik. No, I wouldn't say there's any real change in prices. It's trying to predict when someone's ready to sell their business, which is really challenging. There are all kinds of items that come into play: succession planning, health, maybe what they look at for how their business is going to perform in the future. There are all kinds of things, so trying to predict that is challenging. What we can control is making sure that we're in a position to leverage our relationships. We've invested over the years to make sure that we are in a position to do that, and we'll continue to do that. Jim and I are very involved with those because we've known many of those people for decades, and we think that our reputation is such that we're well positioned for when those opportunities come to the table.

Uh, yeah. Good question, Kartik. Uh, you know, no, I wouldn't say there's any real change in prices. Um, it's trying to predict when someone's ready to sell their business is really challenging. Um,

Todd Schneider: Jim and I are very involved with those because of. Well, we've known many of those people for decades and we think that our reputation is such that we're well positioned for when those opportunities come to the table. Perfect. Thank you very much. Thank you.

Jim and I are very involved with those because of. Well, we've known many of those people for decades and we think that our reputation is such that we're well positioned for when those opportunities come to the table.

Kartik Mehta: Perfect. Thank you very much.

[Analyst]: Perfect. Thank you very much.

Uh, there are all kinds of, uh, items that come into play: succession planning, health, um, you know, um, uh, maybe what they look at, uh, for, uh, how their business is going to perform in the future. There's all kinds of things. Uh, so trying to predict that one's challenging. What we can control is, um, making sure that we're in a position, uh, to, uh, uh, to um, uh, leverage our relationships. Uh, and, uh, we've invested, uh, over the years to make sure that we are in a position to do that, uh, and we'll continue to do that. Uh, Jim and I are, are, are involved with those, uh, because of what we've known many of those people for decades. So, uh, uh, and we think that our reputation is such that, um, uh, that we're well positioned, uh, for, uh, when those opportunities come to the table.

Todd Schneider: Thank you.

Perfect, thank you very much.

Todd Schneider: Thank you.

Operator: Our next question comes from Leo Carrington from Citigroup. Please go ahead, Leo.

Thank you.

And our next question comes from Leo Carrington from Citigroup. Please go ahead, Leo.

George Tong: Thank you very much. Good morning. Just one follow up from me. If you could elaborate, please, on the points you made on tariffs. I think you probably were focusing more on the uniforms rental costs, but have you seen any effects on your cost base in terms of CapEx, any changes to your CapEx expectations? Thank you.

Leo Carrington: Thank you very much. Good morning. Just one follow up from me. If you could elaborate, please, on the points you made on tariffs. I think you probably were focusing more on the uniforms rental costs, but have you seen any effects on your cost base in terms of CapEx, any changes to your CapEx expectations? Thank you.

[Analyst]: Thank you very much. Good morning. Just one follow-up from me. If you could elaborate, please, on the points you made on tariffs. I think you probably were focusing more on the uniforms and rental costs, but have you seen any effects on your cost base in terms of CapEx? Any changes to your CapEx expectations? Thank you.

Thank you very much. Good morning.

Just 1 moment from me. If you could.

Elaborate, please, on the points you made on tariffs. I think you...

Probably we were focusing more on the uniforms, uh, rental costs. But have you seen any effects on your cost base in terms of CapEx?

Todd Schneider: Yes, thank you, Leo, for the question. You know, the tariffs are, as I mentioned, we're not immune from them, but our supply chain organization supports our entire business, not just our rental business, and they're doing a great job. So when I talk about a great job, all those items of the geographic diversity having optionality with all the different providers, that applies to each of our businesses. And as a result, we're finding ways to become more efficient so that culture is shining through. And when you go through really challenging times like what tariffs throw at you, it gives our organization opportunity to shine. And our supply chain is doing just that. And they're continuing to fight through what is a challenging environment from a CapEx standpoint, our 4% targeted CapEx. I think you'll see that be consistent.

Todd Schneider: Yes, thank you, Leo, for the question. The tariffs are, as I mentioned, we're not immune from them. Our supply chain organization supports our entire business, not just our rental business, and they're doing a great job. When I talk about a great job, all those items of the geographic diversity, having optionality with all the different providers, that applies to each of our businesses. As a result, we're finding ways to become more efficient. That culture is shining through. When you go through really challenging times, like what tariffs throw at you, it gives our organization the opportunity to shine. Our supply chain is doing just that, and they're continuing to fight through what is a challenging environment. From a CapEx standpoint, our 4% targeted CapEx, I think you'll see that be consistent. We would expect that that would be where we plan to be moving forward.

Um, have there been any changes to your CAPEX expectations? Thank you.

Yes. Thank you Leo for the question. Um, you know, the tariffs are, um, as I mentioned, we're not immune from them. Um, uh, but our supply chain organization, uh, supports our entire business. Not just our rental business, uh, and uh, and they're doing a great job. So, um, uh, you know, and when I talk about a great job, all those items of, you know, the the geographic diversity the, uh, uh, the having, um, optionality with all the different providers that applies to each of our businesses, um, and, um, uh, and as a result, um, uh, uh, you know, we're, uh, we're finding ways to become more efficient. Uh, so, uh, that, that culture is shining through, uh, and when you go through really challenging times, uh, like what tariffs throw at you, um, uh, it gives, uh, our our organization,

Todd Schneider: We would expect that that would be where we plan to be moving forward.

We would expect that that would be where we plan to be moving forward.

Opportunity to shine. Uh, and our supply chain is doing just that, uh, and um, they're, they're continuing to fight through. Uh, what is uh, a challenging environment from a capex standpoint? Um, uh, we we've our our, our 4% uh targeted, uh capex. I think uh, you'll see that be consistent. Um, uh, we would expect that that uh, would be uh, where we plan to be moving forward.

George Tong: Thank you.

Leo Carrington: Thank you.

[Analyst]: Thank you.

Todd Schneider: Thank you.

Thank you.

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

Thank you.

Jared Mattingly: Thank you, Ross.

Jared Mattingley: Thank you, Ross. Thank you for joining us. This morning we will issue our second quarter of Fiscal 2026 financial results in December. We look forward to speaking with you again at that time. Thank you.

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

And at this time, there are no further questions. I would like to now turn the call back over to Jared for closing remarks.

Todd Schneider: Thank you for joining us.

Jared Mattingly: This morning we will issue our second quarter of Fiscal 2026 financial results in December. 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.

Thank you, Ross. Thank you for joining us this morning. We will issue our second quarter of fiscal 2026 financial results in December. We look forward to speaking with you again at that time. Thank you.

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

Stephanie Lynn Benjamin Moore: The host has ended this call. Goodbye.

Operator: The host has ended this call. Goodbye.

It has ended. This call, goodbye.

Q1 2026 Cintas Corp Earnings Call

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