On Monday, Cintas Corporation (NASDAQ:CTAS) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Rising Paper Prices
James Samford – Citigroup: Just a couple questions on the guidance. It looks like you’re still guiding to margin expansion for next year if I back into it roughly 40 to 50 basis points. I am just trying to understand, how much of that is a function of increasing paper prices that you’ve built in there and what gives you confidence that paper prices can be up $10 per quarter going forward?
J. Michael Hansen – VP and Treasurer: James if you take a look at the guidance for our paper prices, we are actually including guidance that would be almost a 13% reduction in year-over-year paper prices. So, our guidance assumes about an average of $175 per ton. In fiscal ’12 it was about $200. So, we will see a negative impact for the full year. That will certainly be frontend loaded. The first two quarters, as Bill mentioned, will be negatively affected by paper and in the back half of the year, we should see a small benefit and we’re basing this assumption on talking with our partners in the industry and other people who are familiar with the paper.
William C. Gale – SVP and CFO: With that said, James, our margins are anticipated to expand overall in the Company, primarily as a result of improved margins in the Rental, First Aid and Safety, and Uniform Direct Sales divisions, they are just being offset by the Document Management segment.
James Samford – Citigroup: On that the Rental piece, are you assuming some return to normalcy or at least some hiring occurring or is that still taking into account an increasing mix of new versus the additional new areas from existing accounts?
J. Michael Hansen – VP and Treasurer: We’re actually continuing to expect most of that growth primarily coming from new business. We do not expect to see much growth in our existing customers’ headcount.
Cautious Client Base in Uniform Direct Sales
Sara Gubins – Bank of America-Merrill Lynch: Could you talk about what you are seeing in Uniform Direct Sales, the year-over-year growth rate slowed in the first quarter and I’m wondering what’s the tone of your client base is there?
J. Michael Hansen – VP and Treasurer: Sara, as the growth rate was lower as you point out, with that segment, we’ve always said we’ll grow over time in the mid single-digit. So if I can remind you, last year the growth rate was over 8%, this year it is a little around 3%, therefore it is not unusual for that to fluctuate. We have not seen a lot of I guess communication from customers indicating any big concern in the environment, but on the other hand as a result of lack of orders in the quarter, I would say they are being cautious just pending the outcome of what’s going to happen in the economy.
Sara Gubins – Bank of America-Merrill Lynch: Okay and then within the guidance for next year, how are you thinking about SG&A, you’ve gotten great leverage recently?
J. Michael Hansen – VP and Treasurer: We are seeing SG&A being approximately at the same level that we saw this year.
Sara Gubins – Bank of America-Merrill Lynch: On a dollar basis?
J. Michael Hansen – VP and Treasurer: On a percent of sales basis, it did increase in dollars, but percent of sales should be roughly the same level.
Sara Gubins – Bank of America-Merrill Lynch: Got it and then if you could just provide us with the ending share count at the end of the year that would be great.
J. Michael Hansen – VP and Treasurer: Yes, it is on the face of the balance sheet and if you just give me a second I can…
William C. Gale – SVP and CFO: 126.519 million that’s the outstanding shares at May 31.