Cintas Corporation

Good day, everyone, and welcome to the Cintas Corporation announces fiscal 2025 fourth quarter and full year results conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Jared Mattingly, Vice President, Treasurer, and Investor Relations. Please go ahead, sir.

Thank you, Ross. Thank you for joining us. With me are Todd Schneider, President and Chief Executive Officer of Jim Rosakis, Executive Vice President and Chief Operating Officer, and Scott Garula, Executive Vice President and Chief Financial Officer. We will discuss our fiscal 2025 fourth quarter and full year results. After our commentary, we will open the call to questions from analysts. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements. that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the Securities and Exchange Commission. I'll now turn the call over to Todd.

Thank you, Jared, and thank you all for joining us. I'd like to take a moment and welcome Jim and Scott to our call today. Jim is a seasoned leader that brings 26 years of experience with Cintas, and over the last two years has served as Cintas' Chief Operating Officer. Scott was recently appointed as our Chief Financial Officer and brings with him over 29 years of experience, including leading each of our route-based businesses. On today's call, I'll start by sharing an overview of the quarter, the year, and our outlook for fiscal 2026. Jim will share some more detail on our segment performance and the drivers in the business. And Scott will wrap up with more detail on our financials. We are pleased to have delivered a strong fourth quarter to close out another impressive fiscal year for Cintas. We delivered robust top-line growth and maintained healthy margins in cash flow, demonstrating the value, excuse me, demonstrating the strength of our value proposition. In the fourth quarter, total revenue grew 8% to $2.67 billion. Our organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and workday differences, was 9%. We continue to execute at a high level across each of our businesses, including organic growth of 7.2% in the uniform rental and facility services segment, and 18.5% in our first aid and safety segment. All other, which includes our fire protection services and uniform direct sales, grew organically by 11.1%. Turning to profitability, gross margin for the fourth quarter grew 9.1% over the prior year from 49.2% to 49.7%. Operating income as a percentage of revenue increased 9.1% over the prior year, and diluted EPS increased 9% to $1.09. We remain confident the strategic investments we've made in the business position us to capitalize on future growth opportunities. Those investments include technology that makes it easier for our employee partners to do their jobs, such as our SAP system and Smart Truck platform, investments in our infrastructure to increase capacity and position our employee partners for success, as well as investments in management trainees in selling resources. For the full year, fiscal 2025 revenue was a record $10.34 billion. an increase of 7.7%. Organic growth was 8% for the year. Our top-line growth continues to underscore the strength of Cintas' value proposition. Operating margins for the full year were 22.8%, an increase of 14.1%, and an all-time high compared to our prior year operating margin of 21.6%. Diluted earnings per share of $4.40 grew 16.1% over the prior year. Balanced capital allocation remains a key pillar of our strategy. In the fourth quarter and throughout fiscal 2025, we continue to deploy capital across all of our strategic priorities, including reinvesting in our products, people, and technologies to ensure we are best positioned to deliver value for our customers. Looking ahead to fiscal 26, our financial expectations reflect both the strength of the underlying business and our commitment to disciplined execution. Scott will later touch on the assumptions included in our guidance. We expect our revenue to be in the range of $11 billion to $11.15 billion, the total growth rate of 6.4% to 7.8%. We expect diluted EPS to be in the range of $4.71 to $4.85, a growth rate of 7% to 10.2%. Our fourth quarter and full year 2025 results and 2026 outlook underscore the strength of our business model and our ability to execute in a dynamic environment. Fiscal 2025 now marks 54 years out of the last 56 years that we've grown sales and adjusted EPS. I want to thank all of our employee partners for their hard work and dedication. With our culture of continuous improvement, superior products and services, In disciplined execution, we are well positioned for sustained growth and value creation. Lastly, we were named to the prestigious Fortune 500 for the ninth consecutive year. It is an honor to be recognized among the most successful and respected companies. We're proud of these results and the value we continue to deliver for Centos' shareholders.