Cintas Corporation (NASDAQ:CTAS) Q3 2016 Earnings Conference Call - Preliminary Transcript
Mar 22, 2016 • 05:00 pm ET
Thank you. [Operator Instructions] And we'll take our first question with Joe Box from KeyBanc Capital Markets.
Hey, good afternoon, guys.
I just wanted to dig into the 6.1% organic growth rate in uniform. I know you guys usually wait until 4Q to give us a little bit more detail on the breakout of that segment. But can you maybe just talk to were there any noticeable differences in the growth rate between the 52% that's uniform and the 48% that is other or any directional trends between the two?
Well, we've talked a little bit, Joe, about the issues that we've had in the oil and gas sector. Outside of that though, we haven't seen much of a change in the operating environment. And I would say that our sales continue to be broad-based in terms of the different verticals that we're selling to and the different products and services that we're actually selling. And so we haven't seen much of a change with the exception of the oil and gas that continues to be problematic and has deteriorated even further in this third quarter.
Got you. So it's fair to say that there's not any sort of moderation above and beyond within the uniform only component relative to where you were at over the last quarter or two?
No, and I think the organic growth is fairly consistent with the last quarter, second quarter which was at 6.2%. And so, no, we haven't seen a lot of change in the economic environment, and based on our guidance, we still feel pretty good about going forward.
Got it. Thanks for that. And then Mike, I appreciate the commentary on the breadth of your products earlier. How should we think about the pace of new product intros going into hygiene, first aid, non-uniform markets? Are you seeing an accelerating pace there based on the new workday campaign?
Well, I think from a campaign standpoint, first of all, Cintas and all of our partners are very energized by the campaign. We are really excited about it and it really speaks well of the value that we offer. I would say that reactions though, to the campaign are primarily anecdotal. We hear a lot of good news from our locations. But it's too early to tell whether that's having any impact on our current results. I think we'll know more about that as we go through the next several quarters. But getting back to the products and services, you know, Joe, we spend a lot of time in terms of innovation. And we invest a lot in R&D to find the right products that can solve problems for our customers. And again, I think that speaks to our new tagline, Ready for the Workday. And you know, Joe, when we think about the products and services, we've got retail inspired products, like Carhartt and our wrinkle free garments that people want to wear. We've got customer focused solutions like