Cintas Corporation F1Q10 (Qtr End 08/31/09) Earnings Call Transcript

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2009-09-23 18:59:07.0

Tags: Morningstar Inc., Industry, Call Transcript, Earnings, Manufacturing, Strategy, Management, Seeking Alpha, Cintas Corp.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Vishnu Lekraj – Morningstar.

Vishnu Lekraj - Morningstar

Looking here at your margins, they seemed to have improved over the quarter, and over the past half year. Looking at your uniform rental division, how are you going to approach that currently? Do you plan on keeping consolidating stops or do you plan on keeping them as they are so when the economy turns around you will be in a position to increase stops?

William C. Gale

We will intend to keep our routes operating very efficiently but we have a lot of flexibility. So in a particular location, if we get a major new customer, we can very quickly adjust our route structure to handle any increased new business. So at this point in time, I would say that due to the way that we have basically structured our current route system, the fact that we have so many routes in every particular geographic area, we are able to fairly quickly respond to changes in business environment and keep the routes fairly efficient.

Vishnu Lekraj - Morningstar

One more question related to your customer base. Given the deep struggles of certain industries during this recession and the reduction in employment levels for these industries, how has the mix in your customer base changed, if at all, in the last year or so?

Michael L. Thompson

It has certainly become less concentrate manufacturing, but again, you haven't seen a significant change in the percentages, just because the timing's been too quick and relative job losses has impacted all of our customers to some degree.

Certainly more of the industrial, heavy-soil-type customers have been hurt a little more, although in certain areas like energy and utilities they've still done okay. So, it's kind of a mixed bag but certainly manufacturing is a lower percentage than it was.

Vishnu Lekraj - Morningstar

So if you expect manufacturing to come back a little slower than the rest of the industries, how do you plan on growing your revenue in pace with GDP, I guess, with an increase over the next couple of years.

William C. Gale

Well, we're going to do it two ways. First off, we are very aggressive on trying to take additional market share from our competition and we believe that our dedication during this downturn to continuing to take care of our customers will benefit us as we go forward and allowing us to take some of that market share.

 

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