Mike Hansen - Vice President Finance and Chief Financial Officer Paul Adler - Vice President and Treasurer

Adrian Paz - Piper Jaffray Greg Bisbee - RBC Capital Markets Sara Gubins - Bank of America Merrill Lynch. Nate Brochmann - William Blair Scott Schneeberger - Oppenheimer Andrew Wittmann - Robert W. Baird Manav Patnaik - Barclays Shlomo Rosenbaum - Stifel Nicolaus

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

Thank you and good evening. Thanks for joining us tonight. With me is Paul Adler, Cintas Vice President and treasurer. We will discuss our fourth quarter and full year results for fiscal 2015. In addition, we will provide guidance for fiscal 2016 and after our commentary we will be happy to answer any questions. 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. As we reported today, in today's press release, our results for continuing operations adjusted to exclude all impacts of the document management businesses and the first quarter benefit from the gain on the sale of stock in an equity method investment are more representative of our ongoing performance. Therefore our discussion of the Company's performance will exclude these items. We are pleased to report fourth quarter revenue of $1.142 billion. Organic revenue growth which adjusts for the impact of acquisitions, foreign currency and the Shred-it transaction was 6% for the quarter. Full fiscal year revenue was $4.476 billion representing organic growth of 7.1% over the prior fiscal year. While revenue in our Uniform Direct Sales segment was unchanged compared to fiscal 2014, our two largest segments, Rental Uniforms and First Aid, First Aid, Safety and Fire Protection grew organically for the year by 7.7% and 9.2% respectively. The performance of our sales force in both businesses were strong. We saw profitable business and penetrated existing customers with our broad line of products and services. Fourth quarter operating income was $177 million which was 15.6% of revenue compared to an adjusted operating margin of 15.4% in the prior year. Full fiscal year operating income was $696 million or 15.6% of revenue. This represents a 120 basis point improvement over last year's adjusted operating margin. We are pleased with our ability to leverage our infrastructure and with the results of our increased focus on managing our cost structure following the Shred-it transaction. Additionally, we benefited from lower energy-related costs compared to last year. Paul will discuss the energy-related costs in more detail. Earnings per diluted share as adjusted for the fourth quarter were $0.86 representing an increase of 11.7% over last year. For the full fiscal year EPS was $3.35, an increase of 21.8% over last year. As our CEO, Scott Farmer stated in today's press release, we also demonstrated our continuing commitment to providing shareholder value through our stock buyback program. We purchased 4.4 million shares of our common stock during the fourth quarter and into the first quarter of fiscal '16 for $370 million. Fiscal 2015 was a very successful year for Cintas. We thank our employees, whom we call partners for their hard work in ensuring this outcome. Yesterday, the Company announced that it has entered into a definitive agreement to sell its investment in Shred-it for approximately $550 million to $600 million before taxes. The transaction is expected to close in the fourth quarter of calendar year 2015 subject to obtaining regulatory approvals and satisfaction of other customary closing conditions. These proceeds will be in addition to the $180 million received at the closing of the partnership transaction on April 30, 2014 and the $113 million received in May 2015 in the form of a dividend from Shred-it. Looking forward to fiscal 2016, we expect revenue to be in the range of $4.700 billion to $4.780 billion. We also expect double-digit EPS growth in the range of $3.74 to $3.83. This guidance includes the impact of having two more workdays in fiscal '16 compared to fiscal '15. Our guidance does not include any EPS impact from the recently announced agreement to sell our investment in Shred-it nor does it include any deterioration in the U.S. economy or any additional share buybacks. The EPS guidance is detailed in a table within today's press release. I'll now turn the call over to Paul for more details on Company performance.

Thanks Mike. First, please note that there were 65 work days in this year's fourth quarter which is the same as last year's fourth quarter. Full fiscal year of 2015 had the same number of days as fiscal 2014 of 260 days. Fiscal year 2016 will have 262 work days, two more than fiscal 2015. For fiscal 2016 the number of work days by quarter are 66 in the first quarter, 65 in the second and third quarters and 66 in the fourth quarter. As Mike stated, total revenue increased organically by 6.0% in the fourth quarter and by 7.1% for the full fiscal year. Total Company gross margin was 42.6% for the fourth quarter of this year compared to 42.2% in last year's fourth quarter as adjusted. Total Company energy-related expenses for this year's fourth quarter were 2.2%. Last year's fourth quarter energy-related expenses were 3.0% excluding document management. For the full year total Company gross margin was 42.9% an increase of 120 basis points over the prior year adjusted margin of 41.7%. For the full year total Company energy-related expenses of 2.5% or 40 basis points lower than fiscal 2014 as adjusted to exclude document management. I will discuss gross margin and energy-related expenses by segments in just a moment. Before doing so, let me remind you that we have three reportable operating segments, rental uniforms and ancillary products, uniform direct sales and first aid, safety and fire protection services. Uniform Direct Sales and First Aid, Safety and Fire Protection Services are combined and presented as other services on the income statement. The Rental Uniforms and ancillary products operating segment consists of the rental and servicing of uniforms, mats, towels, and other related items. The segment also includes restaurant supplies and other facility products and services. Rental Uniforms and Ancillary Products revenue was $873 million an increase of 5.8% compared to last year's fourth quarter. Organic growth which excludes the impact of acquisitions and foreign currency exchange rate changes was 6.5%. Organic growth was higher than total growth because of continued weakening of the Canadian dollar. For the full year rental segment total road and organic growth were 7.2% and 7.7% respectively. Rental segment revenue mix for the fourth quarter of fiscal 2015 was unchanged from the prior year quarter. The revenue mix was as follows: uniform rental accounted for approximately 52% of revenue. Loss control comprised mainly of entrance mats accounted for 19%, hygiene and other services including restaurant supply, cleaning services and chemical services were 16% of revenue. Shop [ph] towels were 5% and linen and others which is mainly nonperson specific garments such as aprons and butcher coats was 8%. Our Rental segment gross margin was 44.0% for the fourth quarter, an increase from 43.6% in last year's fourth quarter. Energy-related costs were 90 basis points lower than our last year's fourth quarter. For the year Rental segment gross margin was 44.6% an increase of 130 basis points compared to the prior year, about 50 basis points of which was due to lower energy-related costs. Our Uniform Direct Sales operating statement included the direct sale of uniforms and other related products to national and regional customers. Uniforms and other related products are also sold to local customers including product sold to rental customers through our direct sale catalog. Uniform Direct Sales revenue for the fourth quarter was $118 million an increase of 0.3% compared to last year's fourth quarter. When adjusting for foreign currency exchange rate changes organic growth was 1.1% for the quarter and flat for the full fiscal year. Uniform Direct Sales gross margin was 29.8% for the fourth quarter compared to 30.0% in the prior year quarter. For both the full fiscal years of 2015 and 2014 gross margin was 28.5%. The decrease in energy-related costs benefitted gross margins 30 basis points and 10 basis points in the fourth quarter and full-year periods respectfully. Our First Aid, Safety and Fire Protection Service operating segment includes revenue from the sale and servicing of first aid products, safety products and training and fire protection products. First Aid, Safety and Fire Protection revenue for the fourth quarter was $150 million which was 9.8% higher than last year's fourth quarter. Organic growth was 7.3%. For the full-year segment total growth and organic growth was 10.5% and 9.2% respectively. This segment's gross margin was 44.4% in the fourth quarter compared to 44.6% in the prior year. Energy-related costs were 60 basis points lower than in last year's fourth quarter. For the year First Aid, Safety and Fire Protection segment gross margin was 44.1% an increase of 30 basis points compared to the prior year. Energy-related costs were 40 basis points lower than fiscal 2014. Regarding selling, and general and administrative expenses, total Company SG&A was 27.0% as a percentage of fourth quarter revenue compared to a total Company SG&A and last year's fourth quarter of 27.8%. When excluding the impact that document shredding had on last year's fourth quarter SG&A and revenue, last year's adjusted total Company SG&A were 26.8% as a percentage of the adjusted revenue. We had an increase in legal and professional expenses in the fourth quarter. Full year SG&A as a percentage of revenue was 27.4% for fiscal 2015, the same percentage as in fiscal 2014 when adjusted for document shredding. Our effective tax rate for the fourth quarter was 37.6% compared to 40.4% in the prior year period. The full year 2015 effective tax rate was 37.2% compared to 38.3% in fiscal 2014. The higher fiscal 2014 effective tax rate was the result of a number of discrete items related to the Shred-it transaction. We expect the fiscal 2016 effective tax rate to be 37.3%. Our cash and marketable securities were $433 million at May 31, an increase of $30 million from the $403 million at February 28. Cash provided by operating activities was $202 million in the fiscal fourth quarter driven by net income and increases in working capital resulting from the timing of vendor and other payments compared to the previous quarter. In the fourth quarter of fiscal 2015 we received a dividend from Shred-it of $113 million. And finally, the company paid $237 million in the fourth quarter to repurchased common stock. Capital Expenditures for the fourth quarter were $54 million. Our CapEx by operating segments was as follows: [Indiscernible] $4 million in rental, 3 million in uniform direct sales, and $7 million in first aid, safety and fire protection. We expect for fiscal 2016 in the range of $250 million to $300 million. That concludes our prepared remarks. We are happy to answer your questions.

[Operator Instructions] We will take our first question from George Tong from Piper Jaffray.

Hi this is Adrian Paz on for George Tong. And I want to I guess driving to the rental uniform segment and there has been a bit of deceleration there from prior quarters. Maybe you can touch on trends that you are seeing there that contributed to the deceleration there? And also I want to know if you are maybe seeing softness from the manufacturing sector due to the stronger dollar?

Sure, so our rental organic growth, it did come down a bit from the third quarter to the fourth quarter and there were several things that accounted for that. First of all we did see a little bit of softening in our net add-stops performance, a little pullback from our customers. I would say in the middle of the quarter we started to see a little bit of a worsening trend and that actually continued into our first quarter. We also a little bit of a pull back from our national account customers, especially in our emergency services business. We saw a little bit of a negative impact from the oil and gas that we’ve talked about in the past, and then lastly I would say, we did see a little bit of an impact from pricing from the standpoint of the year-over-year impact. So let me talk a bit about pricing. Last year, in the fourth quarter we talked about how we saw an improvement in the pricing environment and that carried throughout our fiscal 2015. And we really didn’t see much of a change in our fourth quarter, but one thing to keep in mind is, we did lap the beginning of that what we saw was a bit of an improved environment. So the year-over-year growth was affected by a little bit. So I would say those four things contributed to a little bit of a deceleration in that rental organic growth. From a manufacturing segment standpoint I can’t say that we saw anything unusual or any significant trend or noticeable trend.

Hey great. Thank you. That’s very helpful. And I guess can you touch on, I guess your capital allocation plans with divestiture or the sale of the Shred-it transaction, it seems like you guys have a really strong balance sheet at this point. Maybe you could touch on what you are – if you are looking at any particular segment for M&A plans in general?

Well, so certainly when we think about our cash usage we want to make sure that we’re growing organically and we’ll spend what we need to on CapEx. Secondly, we really do like acquisition opportunities if they are at the right value and they create synergies and long-term benefits for the Company. We certainly would be actively involved in looking at acquiring business in our current businesses if the value was there, if we felt like synergies were available. And so we certainly have an active corporate development team and certainly are open to making acquisitions again that are at the right value and that can provide long-term value for us. Certainly after that, we’ve shown that we will increase the dividend. We’ve done so every year since we went public in 1983 and so dividends are an important part of our capital allocation. And then lastly as you’ve seen in the last quarter or so, the buyback program in very important to us and as we mentioned we acquired $370 million of our stock in the last quarter and into the first quarter. So when we think about capital allocation, those are thoughts. Now certainly, with the Shred-it transaction, that will close in the fourth quarter, our board will be busy thinking about how to deploy that cash, what’s the appropriate way to use that and we’ll certainly be actively thinking in terms of how to use that.

And looking at perhaps your M&A pipeline, are you really looking for larger transactions or are you happy with maybe just bolt-on opportunities?

We would look at both bold-ons. We certainly love bold-ons because they create some great synergies for us. But we certainly would be open to larger transactions again as long as they created a value that we felt like we needed, the synergy opportunities and long-term value for Cintas.

Great, thank you.

We’ll go next to Greg Bisbee from RBC Capital Markets.

Hi, guys, good afternoon.

Hi, Greg.

A couple questions, if I could. The first aid, fire safety organic growth slowed a little more and my sense coming out of last quarter’s call was that there has been a little weather impact that may be would bounce back, is there anything more specific you’d fall out and any thought process in how that might trend given this recent period of deterioration organic growth? Thank you.

Yes. We are still pleased with the performance of the business. On the fire side of that business, there does tend to be a little bit more project work and we did see a little bit of pull back in that project work in the fourth quarter. So there are repairs that we do, there are new product sales like fire extinguisher sales to customers and we saw a little bit of pull back in the fourth quarter nothing that we believe to be creating a trend. We still feel very positive particularly about the service side of the business. It's been performing very well. So I think that’s what we’ve seen in the business in the last quarter, but in our minds nothing to be concerned about.

Okay. And then on the gross margins, it looks like both rentals and first aid if you back out the benefit from energy would have seen a gross margin decline somewhat year-over-year that's obliviously change from what’s been a real strong trend for quite some time. Is there anything in particular going on there? I guess comps probably won’t really be, but are you spending more, is there anything else and I guess how do we think about that flowing into your guidance for next year?

Yes I think, first let me say, we feel like we had a great year in those businesses where the gross margin in rental went up about a 130 basis points, in first aid it went up about 30 basis points. We continue to invest in both businesses and I think in the fourth quarter, we saw a little bit may be of pulling repair and maintenance into the fourth quarter that may have happened in the first quarter. I think we started hiring a little bit early for the businesses, on the Ralphs [ph] particularly. So we added Ralphs maybe a little bit more aggressively in both businesses than we have and probably just setting the table for fiscal 2016. So, as we think about the guidance I would say we still believe that there is gross margin opportunity. We think incremental margins are going to be healthy. As it relates to our rental business we've talked a little bit during fiscal 2015 about pushing some capacity growth into fiscal 2016 that goes into our guidance thinking a little bit. And the other thing is, when we – from the standpoint of energy so gas fuel prices for us, we’ve included an expectation, that fuel prices for the year would be about the same in fiscal 2016 as in fiscal 2015. Both years would be about 2.5%. On the flip side though, as I mentioned from a rental organic growth standpoint we did see a little bit of negative impact from our oil and gas customers in the fourth quarter and we’ve also included in our guidance into fiscal 2016 that that kind of performance would continue as long as we see the fuel in that 2.5% range. And so the point is on a net basis, while we got a benefit certainly in fiscal 2015 from net, oil and gas in the fuel costs, we think it might turn around a little bit in fiscal 2016.

That sounds prudent and then just one other one. I assume you have a pretty good sense of what your cost based for the shredding businesses, so should we think of taxes eating up a big piece of those proceeds or is it fairly minor and I guess I’d say the same for the dividends?

Yes. So we’ve got a fairly complex transaction. So we’re going to be working on taxes up to the point of time that we close that transaction. But as of May 31, our book value was $219 million and that came down because of the dividend. So we have to record that dividend as a reduction in our book value of our investment. So you can kind of think of the cash that we received, let’s call it the midpoint of 575 compared to a book value of as of May 31, 2019 that’s a $350-ish million gain and so we’ll pay taxes on that gain and probably an easy way to think about that at the moment is using our 37.3% against that. One thing from a cash standpoint to keep in mind is that the gain we recognized a year ago was a deferred tax gain, so we didn’t pay taxes on that piece of the gain, so we’ll have to do that as well when we receive the cash at closing. Does that make sense? So I would say it is going to be a fairly good sized tax bill, but we'll have a lot of cash left over. And we’ll certainly provide more details as we get through those calculations and we firm up the amount of the proceeds.

Perfect, that’s very helpful. Thank you.

We’ll go next to Sara Gubins from Bank of America Merrill Lynch.

Hi, thank you good afternoon.

Hi Sara.

A couple of questions about guidance, could you help us think about how much of a benefit from the Shred-it JV is in your fiscal guidance?

Yes, as Paul mentioned there is no benefit in the fiscal 2016 guidance as it relates to Shred-it.

So, yeah.

So let me make a couple of points on that. We are going to continue to own 42% of Shred-it until that transaction closes. So roughly for the first half of the year we will record our share of the Shred-it income just like we did in fiscal 2015. We, because of the transaction and you probably had seen that there was an IPO process as well. We didn’t – we just didn’t have clarity on what that performance might look like and so we’ve not included any impact from the Shred-it net income performance that we will share in and then once we haven’t received the cash yet. We need to close that deal first and until we do that we’re not ready to provide any other guidance on how that cash may impact us. One thing about the first particularly the first quarter as it relates to our share of the Shred-it income they have the IPO process going as well as this transaction that we announced yesterday and there will likely be a fair amount of transaction related expenses that we will share in. Now, when we record that, when we record our share of those expenses in the first quarter and in the second quarter, keep in mind those are non-cash – That’s a non-cash entry for us. And the impact is it increases our book value even more. So it’s just an offset we get that gain back when the transaction closes.

Got it okay, so just to make sure that I understand it, in the first quarter we’ll see some expenses, which are not incorporated into the guidance, but at the same time in the first part of the half of the year we’ll see a benefit from the JV which is also not incorporated into your guidance?

No I would say that in the first quarter we’re going to see more than likely a negative impact, because of the transaction expenses and I’m not ready to comment at all on what we will see in the second quarter, but regardless none of that impact is contemplated in the guidance that we’ve given.

Okay, and could you tell us what the share count is that you are using for the guidance?

Sara it is $115 million for fiscal 2016.

Okay, and could you now just think about what might drive you to the higher end of the revenue range for the guidance at 6.8%?

I think the continued execution by our businesses I think our partners have done a fantastic job in fiscal 2015, and we need to continue to execute well. So our sales performance needs to continue as it has done. We need to continue to be able to penetrate existing customers and we believe that we’ve got a lot of penetration opportunities left. So we need to continue to penetrate our customers and we need to execute. So I think the range of guidance that we’re giving is certainly what we believe to be an achievable range and I think if we execute well like we have this year we can get to towards the top end of that range.

Okay, and just last question, you mentioned that you were seeing a bit more pricing pressure after having had it improve for the last year. Is it coming in particular regions or from particular types of competitors? I’m wondering what’s driving the change there?

So I’m sorry, maybe I wasn’t clear. We haven’t seen a change in the pricing environment of any significance. Pricing is still competitive. It always has been in our business. It always will be. So pricing is still competitive. But we haven’t seen much of a change in our fourth quarter compared to our third quarter, second quarter, et cetera. What my point was, in the fourth quarter of last year we saw a bit of a change at that point where we saw an improved environment for pricing. And we quite honestly, we talked a little bit about training our people to speak to our customers about the great value that we are providing to our customers. And so a year ago we saw a bit of a change from the third quarter to the fourth quarter in terms of that pricing environment and now we've lapped that change. And so what that does is it has a little bit of an impact on our year-over-year growth as it relates to the third quarter growth compared to the fourth quarter growth.

Got it, thanks very much that's helpful.

Sure.

We will go next to Nate Brochmann from William Blair.

Good evening gentlemen.

Hi Nate.

Just wanted to talk a little bit obviously with the document management business you guys did a great job kind of growing that with a few acquisitions, but then kind of growing organically and then getting the fairly positive shareholder wealth creation event out of that. And I was just wondering when you think about the business now as it stands in terms of the portfolio of services what do you expect to have and be able to grow in terms of replacing that business and what could be the next big opportunity or what else is in the hopper in terms of things to think about?

Well, the great news is our growth this year has replaced it. Our revenue in fiscal 2015 is almost the same as in fiscal 2014. So the good news is we have replaced it now. Now clearly, how do we continue to grow into the future, from a rental business we need to continue to create solutions for our customers that are of high value. We need to get more known programmers into uniform rental programs, things like new types of Carhartt programs, fire resistant clothing offerings. So we need to continue to create innovation. We need to create innovation with our facilities, services products and services and we need to continue to penetrate. We've got quite a, we believe to be quite a penetration opportunity in our customer base. And the nice thing about having about a million customers is we've got a lot of warms leaves out there that we can continue to work to penetrate. From a first aid, safety and fire business standpoint, it is a bit of the same. We need to go out and capture new customers and we need to continue to look for adjacencies under the umbrellas of safety and protection and we've done a very nice job in creating product adjacencies that we can then sell into existing customers. So it is the answer to your question about how do we continue to grow and what is the business? We feel like we've got a lot of opportunity in our existing businesses. Now having said that, we certainly would look for other ideas that might be wholly new businesses, but it has got to be a business that can create some good long-term value for us.

And you know Mike I think that's actually there is actually one point and like the rental segment is that it is not just the traditional uniform wearer based. As you develop these new fabrics that you are able to attack a whole different suite of end markets, correct?

Yes that is correct and more retail inspired offerings certainly helps as well.

Correct, okay. And that is actually a good read and then I apologize for asking another question on guidance, but I am presuming as you mentioned that there is probably a little bit of pessimism in terms of just looking at the revenue line both on the oil and gas customers as well as just kind of looking at some of the add-stops I know that we have gone from negative to neutral a little positive here and there and now back to negative and we’re not really getting that run rate. So I assume that most in the guidance is probably a little bit of pessimism around the oil and gas and the add-stops with the optimism coming from the new customers and the penetration et cetera in terms of the same playbook, correct?

Yes that is correct and Nate, I should probably point out one additional item. We’ve seen a fair amount of movement in the Canadian exchange rate during the year. Keep in mind our guidance is total revenue growth for the current year. So for fiscal 2015, our average currency exchange rate was about a $1.15 Canadian and we have seen that now go to closer to 1.20, 1.25. And so our guidance assumes a 1.25 for fiscal 2016 and so that does have about a 50 to 60 basis point negative impact on total revenue growth. So having said that, let me put that aside and make sure that I’m also talking about, look we feel really good about the business. We’ve had some really nice momentum and so we believe that we do have some real nice opportunities. But you’re right, we've got a little bit of headwind in the Canadian currency, got a little bit of headwind in the oil and gas impact and a little bit of headwind in the net add-stops area.

Okay. So obviously if any of that kind of changes and we get a different flow, we could get a little upside there. And then just in terms of the bottom line, you've talked about the incremental margins and the gross margin opportunity and maybe even pulling some growth investment maybe into this quarter relative to next year. But is there any additional catch-up and any additional investment at this point that we need on either the hiring front on the sales side or an extra layer of new routes that we are playing catch-up on in terms of thinking about or is it kind of just normal growth investment with that level of revenue in mind?

Yes, I would say it is normal investment that we have made with the exception that we have talked a little bit about the processing, rental processing capacity. But aside from that, we have been continuously investing in routes in the rental business and the first aid, safety and fire business; we will continue to do that, but generally it is a bit of business as usual. I don’t see any need for an accelerated rate of investment unless something changes like we do see a dramatic change in net add-stops or a dramatic change in the economy.

Okay. Great, I appreciate the time.

We will go next to Scott Schneeberger with Oppenheimer.

Thanks, good afternoon. I was just curious on all the discussion on bit of the decline in net add-stops inventory in the quarter and moving into the first quarter, I understand it is incorporated in the guidance [ph] I think, but might be just could you take us a little bit further into what you think is driving that or what you are seeing beyond what you had said already or is it really not much of that?

Well, I don’t know that there is much to add other than to say we have seen a little bit of a bumpy economic ride. There have been some ups and downs in employment. Some months have been narrower than others. We have seen some macro events that have probably given businesses pause. We have seen a stronger U.S. dollar. We have got the prospect of interest rates. So I think we have seen a little bit of a bumpy ride and I would say aside from that bumpy ride, I don’t have a lot of additional color to add other than the oil and gas impact certainly.

Great, thanks. And then, just I have two others both they are kind of quirky. You guys mentioned legal and professional was elevated in the fourth quarter. I'm curious, was that just associated with what was going on with Shred-it or is there something else particularly on the legal side that we should be concerned or aware about?

Yes, that was generally a good part of that related to the transaction.

Okay. Thanks and then lastly, just an update on the ERP and its influence on CapEx where we are in that cycle, just want to make sure we are aware of where you are on that on that?

Yes, we talked about that being about a $100 million project. We have spent about half of that in fiscal 2015. The project is right where we wanted it to be. We are still very optimistic that that will continue on that calendar that we've talk about and so I would expect that we could see another $40 million to $50 million of CapEx during fiscal 2016. We've talked about fiscal 2017 would be the year when we start the rollout and start to see some impact potentially mid-year to the end of the year.

Excellent, thanks very much and nice work.

Thanks.

We’ll go next to Andy Wittmann with Robert W. Baird.

Hi guys, thanks for taking my question. I wanted to Mike ask a little bit about the strategic decision on the exit of Shred-it. I mean, first time you contributed in the joint venture, you got the synergies and created the value. You really worked substantially selling the business, but now you are likely to sell it you could have been the buyer and bought it back in. So what were you seeing in the business as it related to the rest of your business that made it the right decision for you to exit that today?

Well, if we go back a year ago, some of the things that we’ve talked about relating to that business, we really do believe that it was a good business for us. We took a business, changed the business model from onsite to offsite shredding. We added our people, our culture, our processes and we felt like we really made a - created a great business. But there were some things that we didn’t like as much and that is generally what we found was the decision maker was different than the decision maker for most of our businesses. The commodity impact was a bit of a bumpy ride through the years and we weren’t crazy about that. We felt like we were a little concerned that there weren’t many product adjacencies for us in that business. So the growth was coming from volume primarily and so, for those reasons, we and then finally we weren’t seeing enough or improvement quickly enough and that was one of the main reasons why we also wanted to do the transaction with Shred-it a year ago. When we think about how that’s gone over the last year as I’ve mentioned several times in the last few quarters, we've been very, very pleased with how the business has progressed, how the integration has progressed. But when we think about our investment, there’s a lot of uncertainty in the macro environment. There is a lot of uncertainty about how commodities will continue to affect that business. There is uncertainty in a way of the stock market as it related to the IPO alternative with Greece and China creating some wild rides. There’s uncertainty as it relates to being a minority owner and having a bit of a limited influence. And then finally there was uncertainty as it relates to the impact that it would have on our P&L. And so generally speaking, the thoughts that we had a year ago for making the transaction and the uncertainty about the position that we were in led us to believe that taking the certainty of this deal was a great opportunity for us.

Was there a $50 million that you’re highlighting Mike as you look up to number?

The total purchase price is $2.3 billion for the entire company, but we have to pull out debt and some transaction expenses and so there can be a little bit of movement in those. And as in most deals there’s a little bit of a hold back and so that’s the reason for the range.

Is it a fair playbook to look at the first time you contributed this to the joint venture where you wound up doing a decent sized special dividend and then kind of followed up some buyback, is that you think decent [indiscernible] are going in assumptions as to how the capital redeployment may go?

I hate to speculate on that Andy. We haven’t closed the deal yet, so it’s we don’t have the cash. Our Board so we just announced it yesterday, so our Board will certainly have that on their agenda and give a thoughtful process to how we put that cash to work. So I can’t speculate on that yet. But as you know we’ve shown a very much of willingness to put that cash to work.

And then my final question from me one more is, just your comments on the sales productivity, it sounds like it must have been really strong in the fourth quarter. Can you give us a sense about how the sales productivity this fourth quarter compared to the sales productivity last fourth quarter?

We do see some very good productivity from our sales reps, it was probably relative to the prior year our best quarter of the year. I’d rather not get into too much detail, but it was a good quarter for us. Our people and our partners have been very productive. Our training processes have gone very, very well. We have very good products and services to arm them with and they’ve done a very nice job.

Okay well, that seems like it would have an implication then for the revenue growth rate since that wasn't all captured as new business in the fourth quarter, that should give you at least some visibility into the revenue growth that you have next year. Is that fair?

It is fair. It does give us a bit of a nice start to the year.

Okay, thank you very much.

Sure.

We’ll go next to Manav Patnaik from Barclays.

Hi good evening guys and firstly congratulations on the way you guys did your portfolio realignment I guess. The one question I had I mean is just around the M&A your appetite, you said you’d love to do tuck-ins and maybe even the larger one occasionally. But if I look at the history, I mean, in uniform, you guys haven't done a deal in the last two years, really. In first aid, also it's been like two or three a year, I guess going back the last three years if I look at the disclosures. So maybe if you can just help us understand the pipeline that you see, like are there opportunities? I know you'd love to do it, but does it seem like there's a lot out there?

There are opportunities, now I would say that in our rental business and probably our first aid business there are as many opportunities as there was 15 years ago and probably not, but there are opportunities, they are very good opportunities and we’ll continue to explore them. But they have to be at the right value for us. We generally need a willing seller and so far we just haven’t seen the alignment, but we’re certainly active and we’ll not hesitate to make an acquisition particularly in our existing businesses that we believe has good value.

Okay and is the, I guess the preference for the larger deal, like what is the, I mean is there an active consideration to look at the larger ones versus the smaller ones or not really?

I would just say that we certainly would be involved if there was a willing seller or a process and we think a large acquisition could at the right value be accretive for us. And so we would certainly take a look.

Okay and then just last one from me, I know you talked briefly about some of the trends and for the net add-stops, but generally speaking, is there any way for you to characterize based on what you guys have seen historically, where we are in terms of on innings or however you want to characterize it in terms of the upsets and just employment -- I mean improvement on the employment front?

I am not sure that I can give you a specific in terms of innings or where I think we are. We've had a fairly nice stretch of economic performance albeit bumpy, but we've had a fairly nice stretch of economic performance over the last several years. How long will that continue, I am not sure. What I do know is that we will do our best through any economic cycle to continue to penetrate existing customers and then find ways to create value to know programmers. But I am not sure I can give you a specific inning or timeframe Manav.

Okay, all right fair enough thank you guys.

We'll go next to Shlomo Rosenbaum with Stifel.

Hi thank you for squeezing me in here. Most of my questions have been answered. I just want to touch on two items that were brought up a little bit earlier. Just on the add-stops metric what has the trajectory been? No I'm not talking about the last quarter, but just the last few years and has there really been more of an upswing if you would kind of chart that and where do we stand versus let's say where we were seven or eight years ago before we had kind of the great depression or the great recession, where do we stand versus that because there was always just kind of a lever are we back to levels that we had seen prior to things going bad or where do you see it right now?

I would say that the performance has certainly been more choppy in the last several years. Going back prerecession, I don’t have that at my fingertips but I will tell you over the last few years, because of the choppiness that we've seen in the adds and stops, we've talked a lot about seeming to have a positive trend only the churn next quarter and to a bit of a negative trend because of the choppiness that we have seen. The overall impact to the business I would say has been a bit muted and there still is opportunity to see a better impact. I was just looking at -- if you think about the jobs that are in the historically strong uniform rental sectors. Some are still at lower levels than prerecession. And I think that is just a reflection of the bumpiness and inconsistency that we've seen in the last several years.

Okay. And then one other thing that was brought up before and I just want to touch on, do you have any recent new introduction of products or services that have been added like what you did with Carhartt and what you've done with [indiscernible] kind of agreement and what you've done with kind of the floor washing, is there anything recent that's been added that seems like it is another potential opened end market for you guys?

Well we're always working on innovation Shlomo, but I will tell you that our chemical business, our Carhartt business, they are still relatively small and we've got a lot of growth opportunities still in those. And we have the other one that I could mention is a our signature series hygiene products and even though we've introduced those a few years ago, it takes a little bit of time to get those penetrated throughout the country and so we're still working on those. We're focused on continuing to drive penetration. I don't have any new things to talk about. We certainly know that innovation is important and we're working on it. But I don’t have anything new to talk to you about. We're just focused on continuing to penetrate with some of these newer products and services where we've got a lot of room.

Okay great, thank you so much.

Sure.

And at this time, we have no further questions in the queue.

Well, thank you very much for joining us tonight. We will be issuing our first quarter earnings in late September and we look forward to speaking with you again at that time.

This does conclude today's conference. We thank you for your participation.