Financial Data and Key Metrics Changes - Total revenue for Q1 2026 grew by 8.7% to $2.72 billion, with an organic growth rate of 7.8% [3][4] - Gross margin as a percentage of revenue increased by 20 basis points to 50.3% [3] - Operating income rose to $617.9 million, a 10.1% increase year-over-year [3][10] - Diluted EPS increased by 9.1% to $1.20 [3][10] - Cash flow from operating activities was $414.5 million [10] Business Segment Data and Key Metrics Changes - Organic growth by business: - Uniform rental facility services: 7.3% - First aid and safety services: 14.1% - Fire protection services: 10.3% - Uniform direct sale: declined by 9.2% [7][8] - Gross margin percentages by business: - Uniform rental facility services: 49.7% - First aid and safety services: 56.8% - Fire protection services: 48.9% - Uniform direct sale: 41.7% [8] Market Data and Key Metrics Changes - The company reported strong revenue growth across all three route-based businesses despite macroeconomic uncertainties [3][4] - Retention rates remained high, and customer behavior showed slight improvement during the quarter [23][24] Company Strategy and Development Direction - The company is raising its fiscal 2026 financial guidance, expecting revenue between $11.06 billion and $11.18 billion, and diluted EPS between $4.74 and $4.86 [4][11] - Continued investments in technology and operational efficiency are aimed at driving revenue growth and margin expansion [4][11] - The company focuses on converting "no programmers" into customers, emphasizing the value of outsourcing to improve cash flow and operational efficiency [18][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and the value provided to customers, despite a somewhat uncertain economic environment [13][24] - The company is optimistic about maintaining growth and expanding its market share, particularly among "do-it-yourselfers" [61][62] Other Important Information - The company announced a 15.4% increase in its quarterly cash dividend, marking the 42nd consecutive year of dividend increases [11] - Capital expenditures for the quarter were $102 million, with ongoing investments in all three route-based businesses [10][11] Q&A Session Summary Question: Impact of macroeconomic pressures on converting non-programmers - Management indicated that they can grow in various environments and help customers manage budget pressures, which can accelerate conversions from non-programmers [18] Question: Update on the selling environment and client budget trends - Management noted no significant changes in sales cycles and that customer retention rates improved slightly during the quarter [23][24] Question: Trends in net wear levels across rental business - Management acknowledged the deceleration in non-farm payrolls but emphasized their ability to grow despite employment levels [29][30] Question: Changes in competitive environment - Management stated that the market remains competitive, but they continue to focus on the large untapped market of "do-it-yourselfers" [61] Question: Update on tariff-driven expense growth - Management confirmed that while tariffs have impacted costs, their global supply chain provides a competitive advantage [49][51] Question: First aid segment gross margins - Management explained that gross margins were flat sequentially and attributed any year-over-year changes to timing issues rather than operational inefficiencies [55][57] Question: M&A pipeline and appetite for expansion - Management expressed ongoing interest in M&A, particularly in the fire and safety business, while also focusing on organic growth opportunities [67][78] Question: Impact of visa requirements on customer hiring - Management reported no material impact from changes in immigration policy on customer hiring [92] Question: Update on MyCintas portal - Management highlighted the MyCintas portal as a competitive advantage, noting continued investment and positive customer feedback [88][90]