Cintas Corp Q4 2025 Earnings Call Transcript

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

Question: George Tong - Goldman Sachs - Analyst : Hi, thanks. Good morning. Starting at a high level, can you talk a little bit about what the overall selling environment looks like, including how sale cycles are performing and how client sentiment is trending?

Question: George Tong - Goldman Sachs - Analyst : Very helpful. And then, my follow up, you're continuing to see and deliver operating margin expansion on a year-over-year basis, but incremental margins stepped down this quarter from what was 40%, 50% before to around 25%. Can you talk a bit about what factors may be causing this narrowing rate of margin expansion? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 2:00PM, CTAS.OQ - Q4 2025 Cintas Corp Earnings Call

Question: George Tong - Goldman Sachs - Analyst : Got it, very helpful, thank you.

Question: Jasper Bibb - Truist Securities - Analyst : Hey, good morning, guys. I know you don't give quarterly guidance. Just hoping you could give a little bit more color on the cadence of your '26 outlook as I imagine you're going to have a lot more difficult comps on the incremental margin front in the first half or second half.

Question: Jasper Bibb - Truist Securities - Analyst : Got it. And then hoping maybe you could give some color on what you're seeing in the ad stops and how you're thinking about that trend in your fiscal '26 guidance?

Question: Jasper Bibb - Truist Securities - Analyst : Thanks for taking the question.

Question: Manav Patnaik - Barclays Capital - Analyst : Hi, good morning. This is Ronan Kennedy on for Manav. Thank you for taking my questions. You touched on this in response to Jasper's question, but if I may just look to go a little more granular. The '26 guide of the implied operating income margins at 25%, I think are at the lower end of the midterm guide at 25% to 35% and then 23% and 27% at the low and high ends, respectively. There's obviously an element of operating leverage at play and revenues. But any further insights you can shed as to the puts and takes to the drivers of those incrementals, whether it's the positive impacts of supply chain tech initiatives or the negative impacts, say of the SAP implementation for fire protection. Any further insights on kind of puts and takes to those incrementals, please?

Question: Manav Patnaik - Barclays Capital - Analyst : Thank you. And then for my follow up please. Similar question, but in relation to revenues. The range -- the guided revenue range is I think under 40 basis points which you understandably indicated is right where you want to be. I also think that range is consistent with the guided range for F25. Can you give us any further insight as to what that contemplates from organic by department or the expected contributions from say price, new biz, et cetera, versus historicals, any further insight there, please. Be greatly appreciate it.

Question: Manav Patnaik - Barclays Capital - Analyst : Thank you very much. I appreciate it.

Question: Andrew Steinerman - JPMorgan Chase & Co - Analyst : Hi. The quarter ended six weeks ago. And I just wanted to get a sense of how the current quarter started. Just what's already behind us in June in the first couple weeks of July in terms of revenue growth momentum. Has it been consistent with the way you're finished the quarter? And then I'll just ask my second question also. I just saw some discussion, I was just wondering if there's any recent changes to your go to market strategy, particularly around on national accounts?

Question: Andrew Steinerman - JPMorgan Chase & Co - Analyst : Sounds right. Thanks.

Question: Josh Chan - UBS - Analyst : Hi, good morning, Todd, Jim. Scott here. As you look into your different cost buckets going into 2026, material, labor, your fleet. Anything to highlight in terms of the trajectory of cost changes. And maybe on the material side, could you touch on potential tariffs impact and how that could have -- how that could impact the cost thing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 2:00PM, CTAS.OQ - Q4 2025 Cintas Corp Earnings Call

Question: Josh Chan - UBS - Analyst : That's great. Yeah, I appreciate the context there. That's really helpful. And then, I guess for my follow-up, I think, Scott, you highlighted the M&A spend this past year. I just wonder if you could comment on the prospects of M&A going forward and how the pipeline of the bolt-ons look at the moment. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 2:00PM, CTAS.OQ - Q4 2025 Cintas Corp Earnings Call

Question: Josh Chan - UBS - Analyst : Great. Thank you for your time and congrats on a good quarter.

Question: Josh Chan - UBS - Analyst : Thank you.

Question: Jason Haas - Wells Fargo Securities LLC - Analyst : Hey, good morning, and thanks for taking my questions. I'm curious if you expect the industry to pass on higher price increases in fiscal 2026 given the tariff-driven inflation. And if that's something that you've baked into your guidance systems, you could take more price as well, and what if that could represent upside? Thank you.

Question: Jason Haas - Wells Fargo Securities LLC - Analyst : Okay. Thank you, that's helpful. And then as a follow up, I was curious in this environment if you're seeing more competitive wins, particularly from some of your larger competitors that are out there since it seems like your growth rates are quite elevated versus what we've seen from others. Thank you.

Question: Jason Haas - Wells Fargo Securities LLC - Analyst : Yeah. Thank you. That, that's very helpful.

Question: Ashish Sabadra - Rbc Capital Markets - Analyst : Thanks for taking my question. I just wanted to focus on the four strategic verticals: healthcare, government, education, and hospitality. I was wondering if you could just provide any update on those fronts and any big initiative as we go into 2026? Thanks.

Question: Ashish Sabadra - Rbc Capital Markets - Analyst : That's great color and maybe just on the follow up we've seen some material acceleration in the first-aid business. I was just -- it seems like based on the prepared remark that it was broad based across products. But I was just curious if there is incremental traction that you're getting for certain products or just improving penetration. Any color there will be helpful. Thanks.

Question: Ashish Sabadra - Rbc Capital Markets - Analyst : That's great color. Thank you.

Question: Shlomo Rosenbaum - Stifel Nicolaus & Company Inc - Analyst : Hi, thank you for taking my questions. I want to piggyback a little on a Ashish's question. In that first-aid business, how much of that revenue would you say is more kind of recurring and how much of that business is usually training in

Question: Shlomo Rosenbaum - Stifel Nicolaus & Company Inc - Analyst : Okay, thank you. And just for the follow up, could you comment a little on the spike up in uniform sales? Is that -- and usually I know you expect it to grow in the low-single digits. And was there something that will carry forward into the next quarter or two or was it really just kind of one quarter fulfillment or something?

Question: Manav Patnaik - Barclays Capital - Analyst : Thank you.

Question: Stephanie Moore - Jefferies - Analyst : Great. Good morning. Thank you. I was hoping you could talk a little bit about some of your end-market exposure, if you're seeing any kind of weakness or strength in particular end markets. Maybe the manufacturing sector, for example, has been kind of weak across the board here in the US. But any areas of weakness or areas of strength that you could call out? Thank you.

Question: Stephanie Moore - Jefferies - Analyst : Got it. And then really just any kind of -- I guess this one follow up here, if you think about your M&A opportunity, obviously, you've given some color today and kind of your continued focus on M&A. But are there any areas or that you would look at expanding an M&A outside of the core-uniform area?

Question: Stephanie Moore - Jefferies - Analyst : Thank you. I appreciate it.

Question: Scott Schneeberger - Oppenheimer - Analyst : Thanks very much. Todd, I believe you mentioned progress relating to SmartTruck and improved sourcing. Could you please elaborate on that? And then my follow up I'll ask up front for Scott. Just curious. It sounds like we should be expecting 4% of revenue CapEx again in fiscal 26%. I'm just curious digging in from the one big, beautiful act Bill Act, anything to expect their, impacting cash flow in '26 or any other aspects of the business? Thanks guys.

Question: Scott Schneeberger - Oppenheimer - Analyst : Great. Thanks, guys.

Question: Toni Kaplan - Morgan Stanley - Analyst : Hi, good morning. This is Yehuda Silverman on the line for Toni Kaplan. So just had a quick question about new sales. So typically, what's the main driver for a customer to switch providers? Is there a certain product or area that's more or most attractive to customers? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 17, 2025 / 2:00PM, CTAS.OQ - Q4 2025 Cintas Corp Earnings Call

Question: Manav Patnaik - Barclays Capital - Analyst : Hey, good morning.

Question: Manav Patnaik - Barclays Capital - Analyst : Thank you. I appreciate it.