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. Bill Gale, Senior Vice President of Finance and Chief Financial Officer. Please go ahead, sir.

Thank you for joining us this evening. With me is Mike Hansen, Cintas’s Vice President and Treasurer. After our commentary we will be happy to answer questions. Let me remind you that 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. I refer you to the discussion on these points contained in our most recent filings with the SEC. We are pleased to report first quarter revenue of $1.102 billion. Organic revenue growth which adjusts for the impact of acquisitions and the Shred-it Transaction was 7.2% for the first quarter. This was a nice acceleration from the 6.2% organic growth in our fourth quarter ended May 31st, led by a rental organic growth of 8.1% and our first aid safety and fire protection services organic growth rate up 10.1%. Our sales force performance in both businesses was strong and the pricing environment in the first quarter improved from our previous quarter. We were a little disappointed with the negative 2.2% organic growth change in our uniform direct sale revenue as we have a third consecutive quarter of year-over-year revenue decline. While much of the declines in the last three quarters relates to large national account roll-outs occurring last year and not repeating this year, we have seen some softness in our Fortune 1000 national accounts as well. As we noted in today’s press release, our first quarter income statement was affected by a few items that are not representative of our ongoing operational performance. First, as we indicated in our July earnings call, we had a $13.6 million gain net of tax on the sale of stock in an equity method investment…

Thanks, Bill and good evening. I’ll start with a few comments on Document Management. We indicated in today’s press release that we have changed our accounting classification of the document storage and imaging business to discontinued operations. We’re evaluating strategic opportunities for this business, and we’ll provide more details as appropriate. The classification of this business as discontinued operations means under U.S. generally accepted accounted principles that we must condense all income statement impact from the business into one line on the income statement for all periods presented. As a result, we will no longer show any documents storage and imaging revenue, gross margin or operating income in either this year’s or last year’s income statement. Instead, the entire results in both years are condensed into one line item on the income statement, entitled income from discounted operations net of tax. Let’s switch to Document Shredding. Because we continue to have an ownership in the Document Shredding business through our partnership with Shred-it, U.S. GAAP says we really haven’t exited the business. As a result we will continue to include document shredding results in last fiscal year’s income statement; however, beginning with this first quarter of fiscal ‘15, we will no longer report any document shredding revenue, gross margin, or operating income. Instead, we will simply show our share of the partnership income in our corporate operating segment. During the first quarter of fiscal ’15, there was no impact from the partnership. From a modeling perspective, the end result of these changes in document management accounting means that we will have no document management operating segment results going forward. The easiest way to model the comparison of fiscal ‘15 results to last year will be to exclude the entire document management operating segment results from last year. So, as a…

Thank you, Mike. We’re updating our fiscal 2015 revenue guidance to be in the range of $4.4 billion to $4.475 billion. This revenue guidance has changed from our initial guidance provided in July to reflect the elimination of document storage and imaging revenue due to its classification as discontinued operations. This updated guidance also reflects our first quarter revenue performance and our thoughts on the U.S. economic environment for the remainder of our fiscal 2015 year. As Scott Farmer indicated in our press release earlier today, we believe the U.S. economy remains inconsistent and we believe recent global events increase the unpredictability of the environment. We are also updating our fiscal 2015 earnings per diluted share guidance to be in the range of $3.20 to $3.29. This guidance reflects a number of items. First we have eliminated the benefits from the documents storage and imaging business. Second, we have incorporated the additional $0.04 Shred-it Transaction gain. Third, this updated guidance continues to assume no benefit from the Shred-it partnership but does reflect the first quarter $0.11 gain on the sale of stock in an equity method investment which was also in the initial guidance provided in July. Lastly the updated guidance reflects the first quarter performance and also our thoughts on the U.S. economic environment. This concludes our prepared remarks and we will now be glad to answer your questions.

Thank you. (Operator Instructions). And we’ll take our first question from John Healy with Northcoast Research.

Bill, I had this question come in to me. I just was hoping to get a little bit more color on the guidance. If I think about the moving parts, the $0.11 item was already in the guidance and you kind of called out the $0.04 gain. So if I back that out, the guidance looks like it’s moving up by about $0.10. How should we think about that $0.10 from a contribution standpoint in terms of how does your view on the economy change and the other item I thought that would be contributing to it would be, how do we think about the movements of document storage now that it’s in discontinued ops, if that’s a net positive or how that impacted the guidance?

Well, the document storage and imaging business did have a minor contribution to our initial guidance, it was about $0.03. So, basically you are backing that out. I think you accounted for the $0.04 special gain in the first quarter due to the Shred-it Transaction, but you are correct that we are increasing guidance on the rental first aid business and our direct sale business basically. Primarily, as the result of the first quarter results, which were better than we originally expected, and while we expect the rest of the year to be good, we don’t expect it to be as robust as we saw in the first quarter. Again, it could be a bit conservative on our part, but there has been ongoing inconsistency in the jobs reports. We still are seeing a reluctance in the part of many of our customers to expand our operations, to add employees. As Mike indicated, there was very little, there was no help from add-stops in the quarter, basically it continues to be from new business and then again as he said, a better pricing environment. So, I guess in summary what we are saying is yes increased guidance from continuing operations but probably not at the same rate that you saw in the first quarter.

And I wanted to ask, when I was taking the notes from your initial comments, it sounded like you guys were at the margin I would say talking positively about the pricing environment. I feel like it’s been a long time since I’ve heard anything like that on the Uniform Rental Costs. So I was hoping if you could talk to kind of what you are seeing on that side of things? Maybe what’s driving it? Is it a cost push in the business or is it more disciplined from industry competitors or just some more color that you are seeing there?

Well I went back and looked at some of our releases last year and our calls. And I think we did indicate that pricing environment was beginning to improve even in fiscal ‘14. And I think what happened in this first quarter is we saw continued improvement. I think part of it is driven by probably a better education on our part for our service providers and sales people to go to our customers and explain that we’ve had the cost increases over the last several years and have not really been able to pass those on to the extent that we feel justified that we should be able to. So I don’t want to create a belief that we just have really skyrocketed prices, we haven’t, but we certainly have been able to get more of a price increase than we have since the end of the recession.

And then just final question from me on the discounted ops. Any thought in terms of when we might see that kind of realistically come to a close? Is it a quarter out or two quarters out, how should we think about that?

John, I really can’t answer that question right now. There’s a lot of things going on. So it would be premature for me to speculate on a specific timeframe.

And our next question comes from Manav Patnaik with Barclays.

Hi this is actually Greg calling on for Manav. I was hoping you could talk maybe about the specific industry verticals. I know you said that the recovery has been inconsistent. But I was wondering if maybe you could talk to specific verticals that you’ve seen some strength in recently?

Well, as it relates to our performance Greg, it’s been relatively broad revenue growth for us. Our new business still comes from customers of all different types. We’ve been able to sell additional products and services into existing customers of all types. And so, I would say that it’s been a fairly broad revenue growth stream for us. As we look at the job performance, even in this first quarter as well as the entire calendar year, we’ve generally seen a bit of narrow employment improvement, and about a third coming -- about a third of the employment growth coming from some verticals that don’t help our businesses, particularly uniform rental much and that being professional services, fast-food service, temps, education. But having said that, we’ve been able to continue to sell to many different verticals both in new business and in penetrating with additional products and services.

Okay, fair enough. And then maybe on the M&A pipeline. How active has that been and do you expect to ramp-up post some of these document management transactions?

Well, we’ve have been -- we’ve remained active Greg, in the M&A area throughout the last couple of years. And as I have indicated in the past, it’s not for lack of effort on our part, it’s for the appropriate valuation that we feel an acquisition would make sense for our shareholders. So, at this point, we are still very much wanting to do some big acquisitions, and we are continuing to work diligently for those. But there is nothing at this point that has come to fruition, primarily because of valuation expectations.

Next question comes from Scott Schneeberger with Oppenheimer.

This is Daniel again for Scott. Can you address some of the margin enhancing initiatives you are doing this year that can provide potential upside to your current outlook?

Well, I think the first quarter was reflective of a lot of things we’ve already been able to implement. It’s greater utilization of our plans and our routes. It’s more selling of products and services that do not require the processing through our laundry facilities, things like chemical dispending and hygiene services et cetera. I think it also is just an attitude on the part of the company to continue to drive excess cloths out of the business and work toward improving the margins back to the levels that we had achieved prior to the recession. We had stable energy cost, so we didn’t have to deal with that this quarter. Better utilization of our stockrooms for our Uniform business. So, I think it’s just a number of different things. As far as looking out for the rest of the year, I think you as look at our guidance what we’re saying is we would probably anticipate maintaining margins at relatively the same levels that we achieved in the first quarter. As far as any significant upside potential, I doubt if that is really available. I’d say it’s more maintaining what we’ve achieved.

Next question comes from George Tong with Piper Jaffray. Please go head.

Good afternoon. Can you discuss how add/stop performance in the quarter compared versus your expectations and what your views are for add/stop performance next quarter?

Well, we talked to last quarter that net add/stops were slightly better than the previous year. In this first quarter, they were slightly lower than last year. And so we really haven’t seen much of a trend. We’ve continued to kind of bump along with net add/stops. We haven’t seen any change in that performance or any discernable trends in September either. And so, we are expecting that we’ll just kind of continue to bump along relatively and consistently in net add/stops, and don’t anticipate that our customers will start hiring at any rapid pace anytime soon.

Got it. And your updated guidance does that incorporate improvements and add/stop performance?

Not really. It pretty much just reflects kind of a status quo where we don’t really see any improvement over prior years in add/stops but we’ll continued new business, which is basically new customers and increased penetration of different products and services. And then hopefully a reasonable pricing environment continuing as we saw in the first quarter.

That’s very helpful. And as you look at margin performance, how would you segment out contribution from pricing versus greater route and planned utilization versus the say cost savings initiatives?

I really don’t have a way of doing that very easily George and probably wouldn’t be able to disclose that even if I had it because of competitive things. But I would say all of them are contributing factors. And it’s, basically you’ve got all different sorts of initiatives going on from different levels of capital investments, from efficiencies. Obviously the pricing helps. So, it’s just very difficult for me to be able to split that kind of stuff out.

Got it. And last question, this is a longer-term strategic question. But with respect to margins, how do you think about the path to peak margins in terms of just how long it takes to get there and whether your success in pushing through pricing, whether that means you can break above prior peak margins?

I am not sure I would commit to breaking above prior peak margins. I’d love to be able to get back to those margins in the future. And I think we’re making very good progress towards that regard. But keep in mind, the cost of doing business today is more than what it cost back in 2005 and ’06, we hit those margins. So, we are attempting to get back there, but to exceed it would be pretty difficult thing to do, I think.

We have Andy Whitman, Robert W. Baird.

Hey, guys good afternoon. Bill, I don’t want to make two side of a point on it, but you made a comment that the margins that you put up here in the first quarter might kind of continue through the balance of the year. Are you referring to the year-over-year growth in margins on the operating line, which really the 140 basis points on the clean basis or you’re saying the absolute level or is that referenced to the gross margins? Maybe just a little, again not trying the two side of a point, but I want to understand what you meant by that.

Well, sorry for the confusion Andy. What I was saying the absolute level of the margins should be relative, I would hope, would be relatively to close what we achieved in the first quarter.

Okay, great. And then just on the revenue line you kind of gave us some help about the document storage business, in fact $0.03, you talked about. On the top line, what was your forecast for what that business can do? We were modeling somewhere around $80 million, maybe $90 million, is that about right?

Absolutely right.

So then really you do have a slight raise than on the revenue line, if you kind of adjust for that as well. Just a little bit, but a little bit of on the revenue line.

You are correct.

Okay. And then just as it relates to the government contract you highlighted, you said that half of percentage point Mike. Should we see that basically as kind of a one-time benefit? So, you can make the argument that the segment growth of 8.1, because really the 7.6, still very good but not quite 8.1?

That’s right Andy, but it’s not a government contract. It is a customer. It was a commercial customer who, because of a government regulation, was forced to close down some of their operations and therefore they bought out of their contract. So it was not to having to do with the government so we’ll get sure clarify that.

No, that’s helpful. And then just as it relates to the asset for sale for the storage business, it’s on the balance sheet like you noted for 151. I guess when you move things to discontinued operations and assets for sale, you have to at least to evaluation test there. I guess I think is it true that you would, if it would have been less than the 150, you would have market-to-market that what you thought it was. So, can we assume that the 151 would be a minimum for what you get for it?

Well, you are absolutely right. We have an obligation to impair it if it were not going to get that value. So, this is all subjective. But our expectation is that those were fair values that are on the balance sheet.

To call it asset for sale or to put in discontinued, do you need a letter of intent or something more formal or is it really just a subjective decision or just using this as maybe a way for investors to gauge where you might be along in that process?

It’s a very complex set of analysis that one must go through, and we decided to be conservative. And basically classify it that way since we believe that within the next months we won’t necessarily be operating those as we are today, they’ll be part of a joint venture or they’ll be sold to another party.

And then can you just afford maybe one last question, I wanted to ask about the ancillary services and the rental segment. And I’ve asked this one plenty of times before. But maybe Mike can you talk about the relative growth rates of the ancillary services versus what you consider core uniform rental? And maybe just as it relates to the longer-term trend, you’ve always talked about how the number of services that you can offer customer increases your retention. But how has that number of services and products that you’ve been offering tracked? Can you give us some sense about how that’s improved over the last couple of years, if it’s improved?

Okay, regarding your first question about the growth of the different products and services. We have seen very good growth in our uniform rental business, and we have seen growth in our ancillary products and services. So, the mat rental, the hygiene products and service, which is made-up of air fresheners and soaps and towel dispensers and the chemical dispensing. All are growing quite nicely. We won’t get into the specific level of growth on any of them, but they are all growing quite nicely. And we continue to improve the amounts of products and services at our existing customers. We still believe we have a long way and a long great opportunity continue adding those. But certainly they have gotten better, in terms of the penetration amounts, have gotten better in the last few years. That doesn’t give you any specific numbers. But we don’t really get into the specifics of any of those. But I can tell you that directionally we’re doing very well.

We’ll move to Andrew Steinerman with JPMorgan.

I just wanted to focus on the revenues guidance of 4.9% to 6.7%. I assume very little of that has acquisition, past acquisition, baked in to just like the first quarter had only 20 basis point differential. And so my question is assuming that point is right and we get over 7% growth in the first quarter, is there anything other than a conservative view on the economy that suggest more like a mid-single digit like a 5% growth for the balance of the year to kind of get into the 4.9% to 6.7% range with the same percent start?

Your assumption first, and yes there is no real acquisition growth going forward other than what you just saw.

And Andrew, I would say that is a pretty good summation of our view for the rest of the year, and that’s what reflected in the guidance. Yes, again, we are being somewhat conservative, driven by enlarge by what we continue to see this inconsistency, and then all the different activity going around the world that seems to impact people’s thinking on business. So, obviously, if we can achieve similar results in the rest of the year that we saw in the first quarter, we’ll be at the upper end if not exceed that guidance. So obviously, if it goes the other way, we’ll be down the lower-end.

And could you just mention how much storage -- document storage revenues were in the previous guide, I mean what was taken out of the guide and put into discontinued ops for 2015?

Maybe for $85 million, last year’s storage revenue was $82 million. And so it’s roughly that same amount.

We’ll move to Greg Halter with Great Lakes Review.

Based on the cash flow statement, there appears to be about 61.4 million in the repurchase of common stock. I just was curious as to the timing of that and the number of shares.

Well, 700 and some thousand shares were the result of the share purchase program that we reported to you in July. That was kind of the combination of the 4.2 million shares we bought beginning in our fourth quarter. Then the remainder of that was due to the fact when we have restricted stock that that’s with our partners. There is a tax obligation as a considered ordinary income. And so what we do is we basically sell enough of a share that they invest and to pay for the payroll taxes.

Okay, so there really wasn’t anything new in this fiscal quarter?

No.

Okay and probably 10 years ago I was in one year plans for Investor Day or something like that, and there was great discussion and potential around RFID. And just wonder if anything has occurred in that regard in terms of making that a viable solution in some of the plans?

It really has not. We continue to experiment with it, but it has not really proven to be beneficial yet. And we are certainly trying it but it’s nothing we’ve been able to rollout.

(Operator Instructions) And we next move to Dan Dolev with Jefferies.

Just really a macro question, Bill, I am just thinking about your comments today and compare them to your comments the last, maybe quarter or two. Am I misreading it or you incrementally more bearish on the U.S. economy or is it just over-interpreting you analysis or is it everything the same really?

I think it’s the same. I don’t think my view, our view I shouldn’t say it’s my view, our views have really changed from the way we felt the last couple of quarters. We were obviously pleased with the first quarter results, better than what we initially expected. But has that given us confidence that that will continue, not yet. And we’d love to be able to continue to surprise everybody on the upside, but I just not confident enough to give you that comfort.

No, that’s help. I thought I sense something, but I guess I was over interpreting. I appreciate it.

Thank you all very much for joining us and being interested in the results. And at this point, we would expect to issue our second quarter results some time before the Christmas holiday in mid to late December. So, until then, thank you again.