Cintas Corporation (NASDAQ:CTAS) Q4 2023 Earnings Call Transcript

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Todd Schneider: Thank you, Ashish. I’ll start, and if Mike wants to chime in. The First Aid and Safety business is going quite well. We really like that business. We’ve — we see significant opportunities in the future there. And we’re getting leverage there, really growth — the strong growth is really helping us get some real leverage but the mix of business is very attractive. We spoke about during the peaks of the pandemic now, there was more PPE sales and safety sales. And the mix is now back to what we really like, it’s a cabinet sale that are repeat in nature and higher margin. So we really like the mix, but the growth in total is great. And I would tell you that the value proposition is really resonating our customers are trying to make sure that they’re reinvesting in their people.

Health and wellness is a concept that is resonating very strongly in the marketplace, and we’re leveraging that and benefiting from that. And on top of that, we’re also — we have inefficiencies in that business as well. So we’re extracting out those inefficiencies. They’re going to help us continue to expand our margins. But we like the position we’re in, we like the tailwinds we have with the health and wellness, and we think the future is quite bright in that area.

Ashish Sabadra: That’s very helpful color. I just wanted to drill down further on the vertical sales strategy. Obviously, you mentioned you’re seeing some pretty good success on that front. I was wondering if you could drill down further on the key verticals. And then also on your health care initiative, how those are trending, but also any other verticals that you would call out? Thanks.

Todd Schneider: Certainly. Our key verticals where we’re focusing our time is health care, education and government. We’ve organized around those verticals. We have products and services that are attractive to them. Certain service functions dedicated to them. And as a result, we’re really benefiting from it. And we very much think that they’re smart verticals to invest in. And as a result, they’re growing really attractively. And customer retention is good, new business is good. And we think that there’s a real long opportunity here for us to continue to invest in these into the future. Certainly, the demographics of health care are quite attractive. But education and government are doing well in addition, and we’re going to continue to invest in those areas. So it’s paying dividends for us.

Ashish Sabadra: That’s very helpful color. Thank you very much.

Operator: Your next question comes from Manav Patnaik with Barclays.

Manav Patnaik: Good. I think historically, you’ve talked about how almost two-thirds of that — two-thirds of new sales come from those known programmers. I just wanted to update that and kind of tied to that. What is the competitive environment look like? Have there been any changes? Because your two public comps, obviously, there’s a lot of changes going on at each of the organizations?

Todd Schneider: Yes, Manav, you were — I couldn’t hear the first part, but I think I understand your question. I’ll try to answer it. And if I don’t, then please let me know. The know programmers are — it’s going quite well. And it has historically been a significant portion of what we sell, and it continues to be a significant portion of what we sell. And we have products and services that are attractive to them. We have a sales effort that is, I’d say, skilled at identifying and delivering the message to those folks. And I think it’s important to understand that with know programmers, it’s not always — I would say rarely is it just all incremental new spend to them. Many, many cases, we are able to — they’re spending those dollars somewhere in many cases, with other vendors, maybe not a direct competitor, but they’re spending money on compliance and image and safety and cleanliness, those types of things.

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