信達思 (CTAS) 2020 Q3 法說會逐字稿

Good day, everyone, and welcome to the Cintas Quarterly Earnings Results Conference Call.

Today's call is being recorded.

At this time, I would like to turn the call over to Mr. Mike Hansen, Executive Vice President and Chief Financial Officer.

Sir, please begin.

Thank you, and good evening, and thanks for joining us tonight.

With me is Paul Adler, Cintas' Vice President and Treasurer.

We will discuss our third quarter results for fiscal 2020.

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 SEC.

Before discussing the financials, I want to say that our thoughts go out to all of those impacted by the COVID-19 coronavirus.

This is a challenging time for all of us, and we can't thank enough our partners -- our employees, whom we call partners, for doing all that they can to keep our customers' places of business clean, safe and Ready for the Workday.

We currently find ourselves at the peak of uncertainty as it relates to the pandemic's impact on the economy.

The response of our country in each state evolves daily.

A week ago, we hadn't seen much impact to our business, and we were expecting today to increase revenue and EPS guidance based on our year-to-date results and fourth quarter outlook.

However, much has changed in a matter of days and more changes are likely to come.

Due to this uncertainty, including the severity and duration of the pandemic, we are not providing guidance for the fourth quarter of fiscal 2020 at this time.

We certainly remain focused, though, on the safety and well-being of our employee partners and the care of our customers.

So let's move to providing our third quarter results, and then we will open it up for questions.

Our fiscal 2020 third quarter revenue was $1.81 billion, an increase of 7.6% over last year's third quarter.

Earnings per diluted share, or EPS, from continuing operations were $2.16, an increase of 17.4% over last year's third quarter, adjusted for G&K integration expenses.

Free cash flow for this year's third quarter was $300 million, an increase of 17.2%.

The organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations and differences in the number of workdays was 5.7% for the third quarter of fiscal '20.

The organic growth rate for the Uniform Rental and Facility Services operating segment was 4.8%, and the organic growth rate for the First Aid and Safety Services operating segment was 12.5%.

Gross margin for the third quarter of fiscal '20 of $824.4 million increased 9.2%.

Gross margin as a percentage of revenue was 45.5% for the third quarter of fiscal '20 compared to 44.9% in the third quarter of fiscal '19.

Operating income for the third quarter of fiscal '20 of $314.7 million increased 13.1%.

Operating margin was 17.4% in the third quarter of fiscal '20 compared to 16.5% in fiscal '19.

Net income from continuing operations for the third quarter of fiscal '20 was $234.5 million, and our reported earnings per diluted share were $2.16.

Excluding the G&K acquisition integration expenses in fiscal '19, EPS increased 17.4%.

In addition to the solid financial performance, we continue to generate strong cash flow and commit to effectively deploying cash to increase shareholder value.

Third quarter free cash flow was $300 million, an increase of 17.2% compared to last year.

In the third quarter of fiscal '20, we paid an annual dividend totaling $268 million.

The dividend of $2.55 per share was an increase of 24.4% over last year's annual dividend.

In addition to the annual dividend, we purchased $393.1 million of Cintas stock in fiscal '20 to date, including $200 million in March.

The amount remaining under our buyback authorization is $1.1 billion.

We ended our third quarter with fiscal year-to-date revenue growth of 7.2% and an organic growth rate of 7.1%.

Operating income, excluding last year's G&K integration expenses, increased 14.7%.

EPS adjusted for last year's special items increased 22.2%.

And finally, free cash flow for the third quarter year-to-date increased 61%.

Our employee partners have really done a great job this year.

With that, I will turn the call over to Paul for additional details for our third quarter results.

Thanks, Mike.

We have 2 reportable operating segments, Uniform Rental and Facility Services and First Aid and Safety Services.

The remainder of our business is included in All Other.

All Other consists of Fire Protection Services and our Uniform Direct Sales business.

First Aid and Safety Services and All Other are combined and presented as other services on the income statement.

Uniform Rental and Facility Services operating segment includes the rental and servicing of uniforms, mats and towels and the provision of restroom supplies and other facility products and services.

The segment also includes the sale of items from our catalogs to our customers on route.

Uniform Rental and Facility Services revenue was $1.45 billion, an increase of 6.6%.

Excluding the impact of acquisitions, foreign currency exchange rate changes and the difference in number of workdays, the organic growth rate was 4.8%.

Our Uniform Rental and Facility Services segment gross margin was 45.8% for the third quarter compared to 44.9% in last year's third quarter, an improvement of 90 basis points.

Gross margins have strengthened for many reasons, including strong revenue growth and realization of cost synergies from the acquisition of G&K.

Our First Aid and Safety Services operating segment includes revenue from the sale and servicing of first aid products, safety products and training.

This segment's revenue for the third quarter was $170.5 million.

The organic growth rate for this segment was 12.5%.

The First Aid segment gross margin was 48.0% in the third quarter compared to 48.2% in last year's third quarter.

The difference in gross margin was due to revenue mix in the quarter, which consists of service, product sales and training.

The strong organic revenue growth benefited from more safety and personal protective equipment product sales, which generally have lower margins than the other revenue categories.

Our Fire Protection Services and Uniform Direct Sales businesses are reported in the All Other category.

Our Fire business continues to grow each year at a strong pace.

The Uniform Direct Sales business growth rates are generally low single digits and are subject to volatility, such as when we install a multimillion dollar account.

Uniform Direct Sales, however, is a key business for us, and its customers are often significant opportunities to cross-sell and provide products and services from our other business units.

All Other revenue was $192.1 million, an increase of 9.9%.

The organic growth rate was 7.1%.

The Fire business organic growth rate was 4.1%.

Fire revenue was weighed down by the loss of a struggling national account in the retail sector that recently disclosed the closing of over 100 stores by mild winter weather that resulted in less sprinkler repair service revenue from freezing and bursting water pipes and by a decline in sales rep productivity through the Christmas and New Year's holidays.

Uniform Direct Sales business organic growth rate was 11.1% and benefited from additional sales from the rollout last quarter of Carhartt-branded garments to a Fortune 100 customer.

All Other gross margin was 41.3% for the third quarter of this fiscal year compared to 42.3% last year.

Selling and administrative expenses as a percentage of revenue were 28.2% in the third quarter of fiscal '20 and 28.3% in the third quarter of fiscal '19.

G&A labor expense as a percent of revenue improved year-over-year.

Our effective tax rate on continuing operations for the third quarter of fiscal '20 was 18.9% compared to 20.1% last year.

The tax rate can move from period to period based on discrete events, including the amount of stock compensation expense.

Our cash and equivalents balance as of February 29 was $234.4 million.

Of that amount, $144.7 million was in the United States and unrestricted.

Capital expenditures in the third quarter were $63.2 million.

Our CapEx by operating segment was as follows: $50.2 million in Uniform Rental and Facility Services, $10.1 million in First Aid and Safety and $2.9 million in All Other.

Year-to-date, free cash flow was $745.2 million, an increase of 61% compared to the prior year period.

Free cash flow increased because of strong earnings growth and improvements in working capital, particularly accounts receivable, inventories, uniforms and other rental items in service and accounts payable.

As of February 29, our balance sheet remains strong.

Our leverage was 1.7x debt to EBITDA.

We have an untapped credit facility of $1 billion.

No debt maturities in the next 12 months and no material debt maturities in the next 2 years.

That concludes our prepared remarks.

We are happy to answer your questions.

(Operator Instructions) And first, we have Manav Patnaik with Barclays Capital.

Just maybe in light of all the stuff going on, perhaps you could help us with a little bit more detail in terms of where your exposures lie, whether that's restaurants, lodging and so forth, just so we at least know magnitude of what percentage of revenues are really at risk versus those that could go like 50-50 or whatever it is.

I was hoping you could help us with a little bit more color there.

Sure, Manav.

We're -- as I mentioned a bit earlier, we're really at the peak of uncertainty.

We're -- as of a week ago, we didn't really see much impact to our revenue.

And so we're going about trying to get a better understanding of that as we go through this week and into the future.

But let me remind you, we have a very diverse customer base, about 30% of our revenues from industrials, 70% from service-providing businesses.

That includes health care, retail, distribution centers, foodservice, hospitality, and all of these are being affected in different ways.

If you think about health care, for example, they really need us now.

They need our scrubs, they need our microfiber wipes.

They need our cleaning chemicals.

They need our fire protection.

If you think about restaurants, while some are closed, some are opened only carryout.

And we're learning, as we visit them this week, what are their needs.

They may still need some chef works, some hygiene products, first aid and safety, but we're going to -- it's going to take a little bit of time to understand what those needs are.

Office environments, they're looking to stay clean more than ever.

And so we're seeing some nice movement there in terms of our First Aid and Safety, our personal protective equipment like gloves.

And then you think about hotels, casinos, arenas, they aren't doing very much business right now.

And so we are in the midst of better understanding the collective impact to the business, Manav.

And gosh, we're so early in that process that it's really hard to break it down because in addition to the details that I just provided and keeping in mind, if you think about 3-digit NAICS codes, we don't have revenue of greater than 10% in any of those 3-digit NAICS codes.

But also keep in mind, as I talked about revenue per vertical, it's quite different from geography to geography today.

So if you think about some of those different businesses that are on the coasts, they may be impacted more severely than those same kind of businesses in the same verticals in the middle of the country.

And so this is -- it's going to take a little bit of time for us to really get clarity on the collective impact to the business, and we're just not there yet.

Next, we have a question from Andrew Wittmann with R.W. Baird.

A question that we've gotten a lot this week is how customer closures work and how they affect you and what the contract says when such things happen.

I know there's probably different ways to treat different categories of customers, small customers, large customers, maybe even by end market.

But for those customers that are shutting down, that we know are shutting down, how does that get treated by Cintas?

And what is the impact to your financials?

Yes, that's a -- it's a great question, Andy.

And we're -- as I said, we're still working on gaining clarity there.

But as -- it's going to be all over the board, right?

This is not a normal environment.

In a normal environment, we may have a business shut down for a week, and we still may be charging the rental of garments and other products.

That's a -- holiday manufacturing shutdowns are a good example of that.

Semester breaks at school is a good example of that.

What we're talking about right now is quite different.

And so we have to understand from our customers how long do they think they will be closed, and many of them right now don't know, but how long do we think they're going to be closed and what are the needs of the business today versus maybe where they were a couple weeks ago.

And so it's going to be all over the board, Andy, from small businesses to large businesses and different kinds of verticals in different geographies and, as I said, we're working through that to gain clarity.

Our next question will come from Andrew Steinerman with JPMorgan Securities.

Mike, let me give it a try.

So my sense, I've been in this for over a decade looking at Cintas and the group, and my sense is that the Uniform Rental business really is kind of cyclical on a delay.

Like when you look at your fiscal 2008, it was actually up.

It wasn't until 2009 and 2010 fiscals did you have kind of moderate declines about 5% organic per year for those 2 years.

So my question really is, do you think that the impact that you've experienced now will be more immediate?

Or do you think it's going to be a delay like I described last recession?

Yes, Andrew, this is not a normal recession or even like the Great Recession.

And so I think there's going to be a more immediate impact, simply because we have so many businesses that have been ordered to close, right?

We've got -- 40 states have closed their schools.

I think another -- over 20 states have closed their restaurants.

That's -- I mean that's unprecedented.

And it's not like our customers are going out of business over time or even had the chance to reduce their workforce.

They're kind of closing, many of them, on orders of municipalities.

And so there's going to be a little -- there's going to be certainly a more immediate impact.

What is that impact?

Look, one of the reasons that we did not provide guidance is it's really hard to tell.

We've never been through a pandemic.

And in this pandemic, we're seeing things that we really haven't seen in the 90 years of Cintas -- of running the business.

And so we're -- we need a little bit of time for clarity.

As I said, we haven't seen much of an impact as of a week ago, but there's going to be an impact coming.

And that's why we did not provide guidance because it's just too hard to tell right now.

Our next question will come from Seth Weber with RBC Capital Markets.

I guess maybe just following up on that line of questioning.

I think in 2010, your decremental margins were sort of mid-30%.

I guess, Mike, as I just kind of read between what you're saying here, it seems like the impact could be sort of more of a shock here near term.

So from a decremental margin framework, should we think about levels above kind of where you were in the last sort of time that organic growth was down?

Is that kind of what you're messaging?

Can you just talk about actions?

Sure, sure.

So if you think about the fixed versus variable and how can we -- how will we manage the business, right, through this disruption.

And right now, there is a fair amount of uncertainty, as I've mentioned a number of times.

And we need a little bit more clarity.

And the clarity in -- as it relates to this is really around what's the depth of this, what's the breadth of this, how long will this last, what's the severity and duration.

If we start to believe that the -- that, for example, the severity is pretty high, but we don't expect the duration to last very long, then we may not be as aggressive because we don't want to harm the long-term opportunities and the performance of the business as we move into next fiscal year.

As we go into this, if we feel like the duration is going to be longer, then we may take different steps to pull down some of those variable expenses.

And so we're going to need a little bit of time to understand what our best expectations are for severity and duration, and we'll manage accordingly to that.

I can tell you, as we sit here today, we are generally, and we have been for a long time, in a mode of growing the business and adding routes and adding laundry capacity.

And as we sit here today, I would -- we have not -- or at least we've slowed CapEx, for example, to only those things that are essential.

And so in other words, we're not looking to add routes right now.

That will reduce CapEx.

We're not looking to expand capacities in our wash alleys, add extra -- open new processing facilities that's going to reduce CapEx.

Along those lines, that means we likely won't be hiring people to staff those new routes, to staff the added capacity.

And so those are -- there are certainly things that we can do today to say we expect to get into a period where the growth isn't going to be what it was in the first 3 quarters.

And so we can pull back on that a little bit.

And that certainly is going to help the cash flow.

But as it relates to then being more aggressive, we are -- we're here for the long term.

And if we feel like this is a short-duration disruption, we'll likely treat that a little bit differently than a longer-term duration.

Our next question will come from George Tong with Goldman Sachs.

Oil prices have contracted sharply in recent weeks.

What are your expectations for your industrial and manufacturing verticals?

And what factors could potentially cause Cintas to perform differently during this energy downturn compared to the prior 2014 to 2016 downturn?

Well, I think, George, if we were looking at this only in the lens of the oil and gas vertical, then I'd say a couple things.

One, it's a smaller piece of our business than it was at the beginning of that last downturn.

And so it will -- that will not have as big of an impact on us as it did last time, and the lower gas prices will certainly help us today.

And so if we're just looking at the lens of that particular -- or maybe a few verticals, I think we fare really well during that.

And we did several years ago as well, but this is broader.

This is certainly broader than just that one lens.

And so it's going to be really hard to tell exactly how do we think we performed in that one vertical compared to what's going on in the rest of the United States.

Our next question comes from Gary Bisbee with Bank of America Merrill Lynch.

In the earlier question about cost actions, you referenced variable versus fixed, but actually didn't, unless I missed it, give us the mix of the 2. Can you take a shot at that?

And maybe just at a high level, if you do decide that this could be longer duration, what are the kind of actions you would take?

Is it just head count?

Or are there other actions you would take to reduce costs in the business?

Well, so Gary, if you think about our business, there are many variable costs in the business.

The question is are they variable to the point where we can turn them off immediately and do we want to turn them off immediately.

That's the biggest question that we're dealing with.

And it's really -- I think it'd be irresponsible of me to give you a percentage of just total variable costs because we have to manage the business and we're managing it for the long term.

And so I'm not -- I don't want to throw out some variable number where you think we will cut to the bone our business.

So let me give you some examples, though.

When you think about the material cost of the business, we've got a lot of cost of disposable products like paper, soaps.

We have direct sale like our catalog business.

Those are highly variable.

And if we're not selling them, we don't have those costs.

We also have the gas, water and energy, the gas for our trucks, the water and energy for running the facilities.

There certainly is a variable component of that, but there's also a bit of a fixed, and it just depends on how much of that capacity we may decide or not to pull back on.

Then if you think about the laundry capacity, there are a lot of different pieces that go into that, including labor.

And then when you think about our route capacity, we've got the cost of our drivers.

And so there are a lot of variable costs.

Our goal is to make sure that our business remains strong for the long term.

And so if we start to see a longer duration, then there are certainly some things that we will do like pull back even a little harder on capital expenditures and other growth pieces of what we do.

We may do some things through attrition.

And we'll have to make sure we understand the capacity utilization and knowing that we want to manage to that.

If you go back to '09 and '10, we did close facilities, but that was a little bit different in that it was a longer period of a recession.

This is potentially deep, but we just don't know the duration.

And we do not want to impact the business for the long-term until we really have to.

Our next question comes from Hamzah Mazari with Jefferies.

Mike, if you could just provide just a little more detail on your contract structure?

And what I mean by that is, if a customer goes bankrupt, clearly, you see that right away if it's a closure.

But how quickly do your contracts adjust to permanent head count changes?

Just any sense as to how defensive your portfolio is.

But specifically, what's the lead lag to head count changes that may be permanent?

I realize absences don't impact your business.

Yes.

We -- I mean our contracts are generally 5-year contracts, and they provide for a steady stream of revenue.

And generally, there is some minimum level of revenue that we require.

But Hamzah, we're in a little bit of a different time today.

And so there's going to be a customer-by-customer conversation about what makes sense, and that's going to take a little bit of time to get through.

This is -- again, this is not a normal kind of ramping down -- a trending down of the business.

This is kind of an abrupt closure of a lot of different customers.

But let's remember something else about our business.

As I mentioned a little bit earlier, there are a number of -- there are many businesses that really need our products and services.

And I don't want that to be lost.

There have been a couple municipalities and areas within the country, particularly on the coasts, and we have been identified as an essential provider.

And so even though other businesses may be shutting down, we are operating because our customers need us.

And we're going to -- over the course of the next few weeks, we're going to understand the collective impact.

But let's keep in mind that while some of our customers are going to be impacted negatively, there are others that really need us.

We're seeing an increase in what they need, and we're going to do everything we can to take care of them.

So it's a mix, and we're going to -- it's going to take a little bit of time to understand that and give some clarity.

Our next question comes from Tim Mulrooney with William Blair.

I understand the slowdown is very different, Mike.

But if you go back to the last recession, I can't remember if you broke this out or not, but how did customer retention look through that period?

I'm trying to figure out how much of that mid-single-digit organic decline in '09 and '10 was due to a deterioration in retention rates versus new customer sales or pricing, for example?

Yes.

The retention was not negatively impacted that much.

It was more about customers reducing their head count.

We certainly did have more customers than normal periods go out of business.

And so that contributed to a little bit of a higher loss business number.

But generally speaking, our retention was really good then.

And I think our retention -- outside of possible businesses that actually have to go out of business, I think our retention is going to be very good here.

It's going to just -- there's going to be some period of disruption that we have to work ourselves through.

I think it's -- I think we have to be careful about comparing this to a prior recession.

This is a pandemic.

That's quite different, and the disruption is going to be a little bit more abrupt and immediate.

The question is how long will it last.

And boy, if we can get through this as a country in the next 60, 90 days, we look forward to getting back to normal operations.

But we got to see what that looks like first.

Next we have a question from Shlomo Rosenbaum with Stifel, Nicolaus Investments.

Can you talk about how many of your contracts would you say -- or percentage-wise like in First Aid and Safety, are those primarily consumption-based contracts?

Or are they contracts that are on kind of a recurring revenue, you charge us about per month?

Can you go into that a little bit more?

And First Aid and Safety has been a very good growth portion of the business, I was just wondering how those contracts work.

Yes, generally, those are based on -- there are some recurring revenue streams.

I would tell you the bulk of that is consumption-based.

And it's a business that's performing very, very well right now, as you can imagine, with the need for sanitizing, personal protective equipment.

That's a business that is performing very well.

It has for the whole year.

And we're getting a lot of customer requests for more ways to help.

When you think about the needs of many businesses today, the cleanliness and the safety aspects have really risen, and we've got a lot of products and services that can help in those areas.

And those have been asked for quite a bit over the course of the last couple weeks, and I expect that those kind of things will perform well.

Our next question comes from Kevin McVeigh with Crédit Suisse.

Can you give us a sense of not only the client mix but what was the revenue trends the last week or so just to get a sense of how much the business came off?

And then just, as you think -- is there any way to think about it geographically?

Because it sounds like California, New York, Washington, maybe that's been a little bit weaker than the interior.

But just any thoughts on kind of trends the last week or so, and then is there any way to kind of just frame it out with a little more context geographically?

Yes.

Unfortunately, Kevin, through last week, we didn't see much disruption to the revenue.

We -- in our direct sale -- Uniform Direct Sales business, we did start to see the incoming orders start to come down.

And so that was probably the early signs.

But through last week, not a lot of impact.

There has been certainly some impact on the coasts.

And so for example, all of our customers in New Rochelle, they're hard to get to, as you can imagine, with the National Guard patrolling the streets there.

That's been difficult.

There are others that have been difficult on the West Coast as well.

But collectively, it wasn't that big of an impact.

I expect that we will start to see some impact as we go through the rest of this week and certainly then in next week.

And that's when we're going to start to be able to get a little clarity on what's the initial response of our customers and what might their needs be as we move, too.

And like I said, there are going to be some customers where their needs have really increased.

There are going to be others who have -- who have closed and we're going to be talking about a different -- there's a different conversation there.

We need to get through all those conversations though.

Our next question comes from Scott Schneeberger with Oppenheimer & Co.

I guess you've alluded to CapEx a few times.

Just looking at it year-to-date, you're trending -- I think your guide at the midpoint this year was the same as what you did last year, but you're trending about $17 million below per my numbers.

So just curious if we could delve into CapEx a little bit more.

And I think you had said you'd already taken some actions with regard to what you've been seeing over the last weeks or months.

So just kind of delve in a little bit more on what you would be thinking about on a go-forward basis as well.

Sure.

When I mentioned that we've made some decisions to reduce CapEx, that's a very, very recent type of conversation.

We -- look, we are -- when we think about CapEx, we love to grow the business, and we are -- we have been expanding the routes as necessary and expanding capacity.

But we've also -- keep in mind, we've gotten some capacity through the G&K deal, and we've gotten some efficiency through projects within the facilities.

And our routes -- the revenue per route has been growing.

And so we've become a little bit more efficient.

And so we're -- we've been pretty efficient and, I'd say, prudent in CapEx throughout the year.

But having said that, going forward, we've been at a, let's call it, a $60 million to $65 million quarterly clip.

And certainly, that's going to come down probably by half.

Now I don't have a very -- I don't have a -- that's not a scientific measurement, but it's going to come down quite a bit as we think about the fourth quarter.

Beyond the fourth quarter, it's going to get back to our expectation for the severity and duration of this.

Our last question in the queue comes from Toni Kaplan with Morgan Stanley.

I'm going to take the road less traveled and ask a question about the quarter.

Could you talk about the organic growth deceleration within the uniform rental space?

It sounds like it wasn't related to coronavirus since you hadn't really seen an impact from that yet.

So I guess just what were the main drivers of the deceleration within rental?

Yes.

We've talked a little bit over the last 2 quarters about the choppiness that we had seen in industrials, and we certainly saw that pick up a little bit in our third quarter.

Now whether that has to do with China in the early parts of the quarter, not sure, or the uncertainty around this, that's really hard to put our finger on.

But we certainly did see some choppiness in that side of the business, and that contributed to a little bit of a deceleration there.

Pricing was a bit more aggressive in the quarter.

We talked a little bit about that in our second quarter, and that remained here in the third quarter.

And the holidays, I mentioned this in the second quarter call back in December, the holidays are tough.

When you've got 2 holidays on a Wednesday, generally speaking, our salespeople have a really hard time of setting appointments.

And so you -- if you think about a 2-week period of time, where you've got many customers, because it's on a Wednesday, taking the whole week off or in and out, it's really hard to set appointments.

And so we saw -- we did see some impact to our sales rep productivity, Paul mentioned in Fire and also in Rental, and that was a bit of a contributor as well.

So collectively, those things were what we saw in the third quarter.

Let's set aside the pandemic.

The business has been operating at a very healthy pace, and we really like the execution of it.

And while the disruption is coming, we think we're poised pretty well to manage through that and get back on to our business once we get through this.

That concludes the question-and-answer session for today's call.

And I would like to turn the call back over to Mr. Hansen for closing remarks.

Thank you.

And before ending the call, we'd like to leave you with a couple final comments.

First, I want to say again that our thoughts remain with those impacted by the COVID-19 coronavirus as our country works to get through this difficult situation as quickly as possible.

But secondly, our business has performed well, very well over the course of the last 10 years with strong revenue, income and EPS growth.

In fact, we've grown our sales and profits in 48 out of the last 50 years.

And although we're entering a period of disruption, we and all Cintas partners remain excited about the future opportunities of our business and look forward to getting back to business as usual.

In the meantime, we are well positioned to enter this period of disruption with a strong cash flow, a very solid balance sheet and an untapped $1 billion credit facility.

So we feel good about our ability to manage through this and come out the other side with a very strong business.

So thank you again for joining us tonight.

We'll issue our fourth quarter financial results in July, and we look forward to speaking with you again at that time.

Thank you, ladies and gentlemen.

This concludes today's teleconference, and you may now disconnect.

Please enjoy the rest of your day.