Cintas Corporation Q1 FY2026 earnings call

• The company is pleased with its start to fiscal 2026, with total revenue growth, improved gross margin, and operating income growth. - Investments in technology to help employee partners and drive efficiency are ongoing. - Demonstrated ability to perform well in various macroeconomic environments. - Example of converting a no-programmer (highway department) to a customer using Cintas' Carhartt high-visibility safety apparel solution. - Selling and administrative expenses as a percent of revenue decreased 10 basis points from last year.

Total revenue for the first quarter was $2.72 billion, growing 8.7% with an organic growth rate of 7.8%. The three route-based businesses all had strong revenue growth. Uniform Rental and Facility Services had an organic growth of 7.3% and a gross margin of 49.7% (40 basis points increase from last year). First Aid and Safety Services had an organic growth of 14.1% and a gross margin of 56.8%. Fire Protection Services had an organic growth of 10.3% and a gross margin of 48.9%. Uniform Direct Sale declined 9.2% with a gross margin of 41.7%.

• Raised fiscal 2026 revenue guidance to $11.06 billion to $11.18 billion, representing a total growth rate of 7% to 8.1%. - Raised diluted EPS guidance to $4.74 to $4.86, with a growth rate of 7.7% to 10.5%.

• Macro-economic uncertainties could impact actual results. - Tariff-driven expense growth is a concern, but the company's global supply chain and process improvement efforts aim to mitigate impacts. - Competitive environment with other companies potentially affecting market share.

Q: The highway example and if macro weakening accelerates converting non-programmers?

A: Todd Schneider stated they've demonstrated ability to grow in various environments, helping customers free up cash flow and time, and will continue to convert no-programmers.

Q: Fire side gross margin decline due to SAP implementation?

A: Todd Schneider mentioned busy with SAP for fire business, investing for future, and those investments are smart for long-term success.

Q: Update on overall selling environment and client budget trends?

A: Todd Schneider said no specific changes to sales cycles, value proposition resonates despite uncertainty, retention rates are attractive, and customer base is steady or improved.

Q: What's driving the comment that customer base is steady or improving?

A: James Rozakis provided an example of a manufacturing customer expanding and adding multiple Cintas services, showing relationship expansion and trust.