Cintas Corp Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Patnaik - Barclays Services Corp - Analyst : I just had a question. The highway example, I guess, you gave in converting from no-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. I think that's a positive for you guys in terms of accelerating the pace of converting no-programmers to your clients?

Question: Manav Patnaik - Barclays Services Corp - Analyst : 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?

Question: Manav Patnaik - Barclays Services Corp - Analyst : Got it. Thank you.

Question: George K. Tong - Goldman Sachs Group Inc - Analyst : Can you provide an update on the overall selling environment, including client budget trends and sales cycles?

Question: George K. Tong - Goldman Sachs Group Inc - Analyst : Got it. That's helpful. And then you increased 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?

Question: Luke McFadden - William Blair Capital Partners - Analyst : This is Luke McFadden on for Tim Mulrooney. So we've seen growth in on-farm 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.

Question: Luke McFadden - William Blair Capital Partners - Analyst : Really helpful. And if I can just build off of that, I 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? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2025 / 2:00PM, CTAS.OQ - Q1 2026 Cintas Corp Earnings Call

Question: Alexander Hess - JPMorgan Chase & Co - Analyst : This is Alex Hess on for Andrew. I wanted to start with the comment about -- 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 make that? Is that anecdotal? Is that based on any piece of data you look at? Like 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? And then I'll ask my follow-up.

Question: Alexander Hess - JPMorgan Chase & Co - Analyst : Understood. Appreciate that. And then just thinking about positioning for -- 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 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 one quick more. Any comments on sort of the inventory and uniforms and service injection that we saw this quarter?

Question: Joshua Chan - UBS AG - Analyst : Great job growing through an HP 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?

Question: Joshua Chan - UBS AG - Analyst : Great. And 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? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2025 / 2:00PM, CTAS.OQ - Q1 2026 Cintas Corp Earnings Call

Question: Jasper Bibb - Truist Securities - Analyst : I joined a little bit late, so apologies 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, and maybe how that's compared to your initial expectations for the year?

Question: Jasper Bibb - Truist Securities - Analyst : Got it. And then curious about sales cycles for no-programmers. Has there been any change there so far this year and what you're seeing in customer behavior?

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : 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 had a better understanding about the gross margins there in first aid.

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : Got it. So just to build on that then, Jim, do you think that fiscal '26 is a higher investment year in some of these things like route leadership, management trainees, technology than it was in 2025. Obviously, '25 margins was a big story for the year. They were so impressive, you way above the incrementals. And I know that 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're making, is this a higher year than last year? Is that part of the reason why

Question: Ashish Sabadra - Rbc Capital Markets - Analyst : 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.

Question: Ashish Sabadra - Rbc Capital Markets - Analyst : 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? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 24, 2025 / 2:00PM, CTAS.OQ - Q1 2026 Cintas Corp Earnings Call

Question: Faiza Alwy - Deutsche Bank AG - Analyst : Yes. 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 top line growth moving forward over the next 3 to 5 years?

Question: Faiza Alwy - Deutsche Bank AG - Analyst : Understood. And then just you talked about timing as it relates to the investments. So -- and 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? Like is this -- are you -- when do you expect to be sort of true with those? And do you -- how should we think about the incremental margins in that business going forward?

Question: Stephanie Moore - Jefferies LLC - 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 and Safety, for example. Maybe just 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?

Question: Stephanie Moore - Jefferies LLC - Analyst : 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 capability. So 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 a such an advanced state from a technology standpoint to really leverage AI to either improve productivity or drive incremental business?

Question: Scott Schneeberger - Oppenheimer & Co Inc - Analyst : I had two questions. I guess I'll ask them both upfront, though they're quite different. The first one is kind of playing off on some of these M&A questions. in the past and many years ago, you all had considered going international to a much greater degree and kind of doing so via existing customers who may 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. We just love to hear any update on how that's progressing, maybe mix of what percent of sales is running through that now? What percent 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.

Question: Toni Kaplan - Morgan Stanley - Analyst : 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.

Question: Toni Kaplan - Morgan Stanley - Analyst : Okay. Great. And then 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.

Question: Leo Carrington - Citibank Cameroon SA - Analyst : Just one follow-up for me. If you could elaborate, please, on the points you made on tariffs. I think you probably were focusing more on the uniform rental costs, but have you seen any effects on your cost base in terms of CapEx? Any changes to your CapEx expectations?