Cintas Corporation

Good day, everyone, and welcome to the Cintas Corporation Announces Fiscal 2025 Second 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.

Thank you for joining us. With me are Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 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, Jared. We are pleased with our strong second quarter results, which reflect great execution by our employee partners and the comprehensive value proposition we provide to our customers in supporting their image, safety, cleanliness, and compliance needs. Second quarter total revenue grew 7.8% to $2.56 billion, an all-time high for revenue in a quarter. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 7.1%. In the second quarter, we continued to experience strong demand for our services, reflecting the complementary nature of our platform and our unmatched product and service offerings for businesses of all types and sizes. Virtually every business has a need Cintas is ready to meet, whether it's a front door that needs a mat, a bathroom to service, exit lighting, fire extinguishers and sprinkler systems, first aid and safety needs, or an apparel solution. Cintas is continually deepening our value propositions, particularly within our four focused verticals of healthcare, hospitality, education, and state and local government, which continue to perform well. Gross margin for the second quarter grew 11.8% over the prior year to 49.8%, just below our all-time high we set in the first quarter. Operating income of 23.1% as a percent of revenue was an all-time record, an increase of 18.4% over the prior year. Diluted EPS grew a robust 21.1% to $1.09. Our strong earnings growth reflects our operational excellence via sourcing and supply chain initiatives, route and energy optimization, and technology-enabled efficiency in our facilities. Cash flow this year continues to be very strong, with free cash flow for the first six months increasing 34.9% over the prior year. We continue to deploy capital across each of our capital allocation priorities, starting with investing back into our businesses. This strong cash flow generation allows us to focus on making strategic investments in our customers and our employee partners, which positions us to deliver long-term value for our shareholders. Our technology investments remain a significant area of reinvestment. We continue to leverage our SAP system to standardize our processes across our operations. Combined with our focus on operational excellence, we are improving the way our employees work and getting the right products to our customers faster. all of which improves the customer experience and positively impacts our margin profile. At the same time of investing in our customers and employee partners and making strategic acquisitions, returning capital to Cintas to shareholders remains a key priority. Cintas paid a quarterly cash dividend of $0.39 per share last week, and looking ahead, we will continue our opportunistic approach with share buybacks. 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, which reflect our strong momentum and confidence in our outlook. We are updating our annual revenue expectations from a range of $10.22 billion to $10.32 billion to a range of $10.255 billion to $10.32 billion, a total growth rate of 6.9% to 7.5%. We expect our organic growth rate to be in the range of 7.0% to 7.7%. We're also updating our annual diluted EPS expectations from a range of $4.17 to $4.25 to a range of $4.28 to $4.34, a growth rate of 12.9% to 14.5%. Cintas's differentiated culture, superior products and services, and industry best talent position us to deliver meaningful value creation in fiscal 2025 and beyond. We remain focused on delivering outstanding customer experiences and making appropriate investments in the business to sustain our growth. I thank all of Cintas' employee partners whose outstanding work and dedication to our customers remains the key to our success. With that, I'll turn it over to Mike to discuss the details of our second quarter results.