Cintas Corporation

Good day, everyone, and welcome to the Cintas second quarter fiscal year 2023 earnings release conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Paul Adler, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Thanks, Ross, and thank you for joining us. With me is Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2023 second quarter results. After our commentary, we will open the call to questions from analysts. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Thank you, Paul. Second quarter total revenue grew 13.1% to $2.17 billion. Each of our businesses increased revenue at a double-digit rate. The benefits of our strong revenue growth flowed through to our bottom line. Operating income margin increased 70 basis points to 20.5%, and diluted EPS grew 13% to $3.12. I thank our employees, whom we call partners, for their continued focus on our customers, our shareholders, and each other. The uniform rental and facility services operating segment revenue for the second quarter of fiscal 23 was $1.71 billion compared to $1.54 billion last year. The organic revenue growth rate was 11.3%. Revenue growth was driven mostly from increased volume. Our sales force continues to add new customers and penetrate and cross-sell our existing customer base. Businesses prioritize all we provide, including image, safety, cleanliness, and compliance. Challenged with labor scarcity and rising costs, businesses continue to turn to Cintas to help them get ready for the workday. Additionally, price increases contributed at a higher level than historically. We believe such a mix of revenue drivers, volume, and price is healthy and supportive of continued long-term growth. Our first aid and safety services operating segment revenue for the second quarter was $236.0 million compared to $202.2 million last year. The organic revenue growth rate was 15.1%. This rate reflects the continued momentum of our first aid cabinet business, which continues to grow more than 20%. Whether it is COVID-19 or influenza, the health and safety of employees remains top of mind. We provide businesses with access to quick and effective products and services that promote health and well-being in the workplace. Personal protective equipment, or PPE, while still elevated compared to pre-COVID levels, declined slightly on a sequential basis. The revenue mix shift benefits our financial results because the cabinet service is a more consistent revenue stream and has higher profit margins than PPE. Our fire protection services and uniform direct sale businesses are reported in the all other segment. All other revenue was $228.9 million compared to $184.9 million last year. The fire business organic revenue growth rate was 18.0%, And the uniform direct sale business organic growth rate was 33.9%. And before turning the call over to Mike to provide details of our second quarter results, I'll provide our updated financial expectations for our fiscal year. We are increasing our financial guidance. We are raising our annual revenue expectations from a range of 8.58 to 8.67 billion dollars to a range of 8.67 to 8.75 billion dollars. a total growth rate of 10.4 to 11.4%. Also, we are raising our annual diluted EPS expectations from a range of $12.30 to $12.65 to a range of $12.50 to $12.80, a growth rate of 10.8 to 13.5%. Mike? Thanks, Todd, and good morning. Our fiscal 2023 second quarter revenue was $2.17 billion,