What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-01-08 compared with 2023-10-05 · 146 added, 81 removed, 185 unchanged (55% of the section changed)

25 unchanged sentences

Cintas evaluates operating segment performance based on revenue and income before income taxes.

Revenue and income before income taxes for the three months ended August 31, 2023 and 2022, for the two reportable operating segments and All Other are presented in Note 10 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”

Revenue and income before income taxes for the three and six months ended November 30, 2023 and 2022, for the two reportable operating segments and All Other are presented in Note 10 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”

Consolidated Results

Three Months Ended August 31, 2023 Compared to Three Months Ended August 31, 2022

Total revenue increased 8.1% to $2,342.3 million for the three months ended August 31, 2023, compared to $2,166.5 million for the three months ended August 31, 2022.

The organic revenue growth rate, which adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations, was also 8.1%.

Three Months Ended November 30, 2023 Compared to Three Months Ended November 30, 2022

Total revenue increased 9.3% to $2,377.2 million for the three months ended November 30, 2023, compared to $2,174.9 million for the three months ended November 30, 2022.

The organic revenue growth rate, which adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations, was 9.0%.

Revenue growth was positively impacted by 0.4% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

Uniform Rental and Facility Services reportable operating segment revenue was $1,826.8 million for the three months ended August 31, 2023, compared to $1,697.8 million for the same period in the prior fiscal year, which was an increase of 7.6%.

The organic revenue growth rate for this reportable operating segment was also 7.6%.

Uniform Rental and Facility Services reportable operating segment revenue was $1,850.5 million for the three months ended November 30, 2023, compared to $1,710.0 million for the same period in the prior fiscal year, which was an increase of 8.2%.

The organic revenue growth rate for this reportable operating segment was 7.9%.

Revenue growth in the Uniform Rental and Facility Services reportable operating segment was positively impacted by 0.4% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

1 unchanged sentence

New business growth resulted from an increase in the number and productivity of sales representatives.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 10.0% for the three months ended August 31, 2023, compared to the same period in the prior fiscal year, from $468.7 million to $515.5 million.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 13.3% for the three months ended November 30, 2023, compared to the same period in the prior fiscal year, from $464.9 million to $526.6 million.

The organic revenue growth rate for other revenue was 12.9%.

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Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other ancillary items.

Cost of uniform rental and facility services increased $56.8 million, or 6.4%, for the three months ended August 31, 2023, compared to the three months ended August 31, 2022.

This change from the same period in the prior fiscal year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, as well as investments in material cost to support increased revenue growth achieved during the three months ended August 31, 2023.

Cost of uniform rental and facility services increased $67.5 million, or 7.4%, for the three months ended November 30, 2023, compared to the three months ended November 30, 2022.

This change from the same period in the prior fiscal year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, as well as investments in delivery infrastructure to support increased revenue growth achieved during the three months ended November 30, 2023.

Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, personal protective equipment, uniforms, and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other.

Cost of other increased $5.6 million, or 2.3%, for the three months ended August 31, 2023, compared to the three months ended August 31, 2022, primarily due to increased sales volume in each of the underlying operating segments.

Cost of other improved as a percentage of revenue, decreasing from 52.8% for three months ended August 31, 2022, to 49.1% for the three months ended August 31, 2023.

The improvement in cost of sales as a percent to revenue was primarily due to favorable changes in the sales mix, sourcing and productivity initiatives in the First Aid and Safety Services reportable operating segment as well as i mproved leverage of fixed costs for both the First Aid and Safety Services reportable operating segment and All Other.

Selling and administrative expenses increased $53.0 million, or 9.0%, in the three months ended August 31, 2023, compared to the same period of the prior fiscal year.

The increase was due to increases in labor and other employee-partner expenses.

Selling and administrative expenses as a percent of revenue were 27.4% for the three months ended August 31, 2023, compared to 27.1% for the same period in the prior fiscal year.

Selling and administrative expenses increased as a percent to revenue primarily due to labor and other employee-partner expenses.

Operating income was $500.6 million, or 21.4% of revenue, for the three months ended August 31, 2023, compared to $440.1 million, or 20.3% of revenue, for the three months ended August 31, 2022.

The change in operating income as a percent of revenue was due to operating leverage from revenue growth and productivity initiatives.

Net interest expense (interest expense less interest income) was $24.1 million for the three months ended August 31, 2023, compared to $27.6 million for the three months ended August 31, 2022.

The decrease was primarily due to a decrease in the average amount of outstanding debt during the three months ended August 31, 2023 compared to the three months ended August 31, 2022.

Cintas’ effective tax rate was 19.2% and 14.8% for the three months ended August 31, 2023 and 2022, respectively.

Cost of other increased $15.7 million, or 6.4%, for the three months ended November 30, 2023, compared to the three months ended November 30, 2022, primarily due to increased sales volume in each of the underlying operating segments.

Cost of other improved as a percent of revenue, decreasing from 52.8% for three months ended November 30, 2022, to 49.6% for the three months ended November 30, 2023.

The improvement in cost of sales as a percent of revenue was primarily due to favorable changes in the sales mix, sourcing and productivity initiatives in the First Aid and Safety Services reportable operating segment as well as i mproved leverage of fixed costs for both the First Aid and Safety Services reportable operating segment and All Other.

Selling and administrative expenses increased $64.4 million, or 11.1%, in the three months ended November 30, 2023, compared to the same period of the prior fiscal year.

Selling and administrative expenses as a percent of revenue were 27.0% for the three months ended November 30, 2023, compared to 26.6% for the same period in the prior fiscal year.

The change as a percent of revenue is primarily due to investing in additional selling resources, investing in our management trainee program and expanding our talent acquisition efforts for future growth.

Operating income was $499.7 million, or 21.0% of revenue, for the three months ended November 30, 2023, compared to $444.9 million, or 20.5% of revenue, for the three months ended November 30, 2022.

The improvement in operating income as a percent of revenue was due to operating leverage from revenue growth, efficiency gains in energy usage and productivity initiatives.

Net interest expense (interest expense less interest income) was $25.8 million for the three months ended November 30, 2023, compared to $28.6 million for the three months ended November 30, 2022.

The decrease was primarily due to a decrease in the average amount of outstanding debt during the three months ended November 30, 2023 compared to the three months ended November 30, 2022.

Cintas’ effective tax rate was 20.9% and 22.1% for the three months ended November 30, 2023 and 2022, respectively.

The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation.

Net income was $385.1 million for the three months ended August 31, 2023, an increase of 9.5%, compared to the three months ended August 31, 2022.

Diluted earnings per share were $3.70 for the three months ended August 31, 2023, which was an increase of 9.1% compared to the same period in the prior fiscal year.

Net income was $374.6 million for the three months ended November 30, 2023, an increase of 15.5%, compared to the three months ended November 30, 2022.

Diluted earnings per share were $3.61 for the three months ended November 30, 2023, which was an increase of 15.7% compared to the same period in the prior fiscal year.

Diluted earnings per share increased due to the increase in net income.

Uniform Rental and Facility Services Reportable Operating Segment

Three Months Ended August 31, 2023 Compared to Three Months Ended August 31, 2022

Uniform Rental and Facility Services reportable operating segment revenue was $1,826.8 million for the three months ended August 31, 2023 compared to $1,697.8 million for the same period of the prior fiscal year.

Three Months Ended November 30, 2023 Compared to Three Months Ended November 30, 2022

Uniform Rental and Facility Services reportable operating segment revenue was $1,850.5 million for the three months ended November 30, 2023 compared to $1,710.0 million for the same period of the prior fiscal year.

The organic revenue growth rate for the reportable operating segment was 7.9%.

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The reportable operating segment’s gross margin was $876.3 million.

Gross margin as a percentage of revenue was 48.1% for the three months ended August 31, 2023 compared to 47.5% for the three months ended August 31, 2022.

The improvement in gross margin was primarily the result of a reduction in energy expense as a percentage of revenue.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $30.5 million in the three months ended August 31, 2023 compared to the same period of the prior fiscal year.

Selling and administrative expenses as a percent of revenue for the three months ended August 31, 2023 were 25.9% compared to the 26.0% in the same period of the prior fiscal year.

The improvement as a percent of revenue was primarily due to operating leverage generated from the revenue growth in the three months ended August 31, 2023.

Income before income taxes increased $41.8 million, or 11.4%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended August 31, 2023, compared to the same period in the prior fiscal year.

Income before income taxes was 22.3% of the reportable operating segment’s revenue, which was an 80 basis point increase from the same period of the prior fiscal year of 21.5%.

This increase as a percent of revenue was primarily due to the previously discussed improvements in gross margin.

Gross margin as a percent of revenue was 47.4% for the three months ended November 30, 2023 compared to 47.0% for the three months ended November 30, 2022.

The improvement in gross margin was primarily the result of a reduction in energy expense as a percent of revenue.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $42.5 million in the three months ended November 30, 2023 compared to the same period of the prior fiscal year.

Selling and administrative expenses as a percent of revenue for the three months ended November 30, 2023 were 25.8% compared to the 25.4% in the same period of the prior fiscal year.

The change as a percent of revenue was primarily due to investing in additional selling resources, investing in our management trainee program and expanding our talent acquisition efforts for future growth.

Income before income taxes increased $30.5 million, or 8.3%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended November 30, 2023, compared to the same period in the prior fiscal year, but remained the same as a percent of revenue at 21.6%.

This was a result of the improvement in gross margin being offset by the investments in selling and administrative expenses noted above.

First Aid and Safety Services Reportable Operating Segment

Three Months Ended August 31, 2023 Compared to Three Months Ended August 31, 2022

First Aid and Safety Services reportable operating segment revenue increased from $234.2 million to $260.7 million, or 11.3%, for the three months ended August 31, 2023, over the same period in the prior fiscal year.

Three Months Ended November 30, 2023 Compared to Three Months Ended November 30, 2022

First Aid and Safety Services reportable operating segment revenue increased from $236.0 million to $266.4 million, or 12.9%, for the three months ended November 30, 2023, over the same period in the prior fiscal year.

The organic revenue growth rate for the reportable operating segment was 12.7%.

First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.4% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.2% due to acquisitions.

The increase in revenue was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers, price increases and strong customer retention.

Cost of first aid and safety services for the three months ended August 31, 2023, decreased $3.1 million, or 2.6%, compared to the three months ended August 31, 2022.

The gross margin as a percent of revenue was 55.9% for the quarter ended August 31, 2023, compared to the gross margin as a percent of revenue of 49.6% in the same period of the prior fiscal year.

The improvement in gross margin from the first quarter of the prior fiscal year was primarily driven by favorable changes in the sales mix and sourcing and productivity initiatives, as well as i mproved leverage of fixed costs and a reduction in energy expense as a percentage of revenue.

Selling and administrative expenses increased $10.9 million in the three months ended August 31, 2023, compared to the same period of the prior fiscal year.

Selling and administrative expenses as a percent of revenue for the three months ended August 31, 2023 were 33.1%, compared to 32.2% in the first quarter of the prior fiscal year.

The change as a percent of revenue from the same period in the prior fiscal year was primarily due to increases in labor and other employee-partner related expenses.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased $18.7 million to $59.6 million for the three months ended August 31, 2023, compared to the same period in the prior fiscal year.

Cost of first aid and safety services for the three months ended November 30, 2023, increased $4.3 million, or 3.7%, compared to the three months ended November 30, 2022.

The gross margin as a percent of revenue was 54.5% for the three months ended November 30, 2023, compared to the gross margin as a percent of revenue of 50.5% in the same period of the prior fiscal year.

The improvement in gross margin was primarily driven by favorable changes in the sales mix and sourcing and productivity initiatives, as well as i mproved leverage of fixed costs and a reduction in energy expense as a percent of revenue.

Selling and administrative expenses increased $13.1 million in the three months ended November 30, 2023, compared to the same period of the prior fiscal year.

Selling and administrative expenses as a percent of revenue for the three months ended November 30, 2023 were 32.6%, compared to 31.2% in the second quarter of the prior fiscal year.

The change as a percent of revenue was largely due to investing in additional selling resources for future growth.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased $13.0 million to $58.5 million for the three months ended November 30, 2023, compared to the same period in the prior fiscal year.

Income before income taxes was 22.0% of the reportable operating segment’s revenue compared to the same period of the prior fiscal year of 19.3%.

The increase in income before income taxes was due to the previously discussed improvements in gross margin, partially offset by the increase in selling and administrative expenses.

Consolidated Results

Six Months Ended November 30, 2023 Compared to Six Months Ended November 30, 2022

Total revenue increased 8.7% to $4,719.5 million for the six months ended November 30, 2023, compared to $4,341.3 million for the six months ended November 30, 2022.

Total organic revenue growth was 8.5%.

Organic growth adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations.

Revenue growth was

positively impacted by 0.3% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

Uniform Rental and Facility Services reportable operating segment revenue was $3,677.4 million for the six months ended November 30, 2023, compared to $3,407.8 million in the same period of the prior fiscal year, which was an increase of 7.9%.

Organic revenue growth for this reportable operating segment was 7.8%.

Uniform Rental and Facility Services reportable operating segment revenue was positively impacted by 0.3% due to acquisitions and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations.

Revenue growth was a result of new business, the penetration of additional products and services into existing customers and price increases, partially offset by lost business.

New business growth resulted from an increase in the number and productivity of sales representatives.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, was $1,042.1 million for the six months ended November 30, 2023, compared to $933.6 million for the same period of the prior fiscal year, which was an increase of 11.6%.

Other revenue organic growth was 11.3%.

Revenue growth was positively impacted by 0.4% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

Cost of uniform rental and facility services increased $124.3 million, or 6.9%, for the six months ended November 30, 2023, compared to the six months ended November 30, 2022.

The increase over the same period of the prior fiscal year was due to higher Uniform Rental and Facility Services reportable operating segment sales volume.

Cost of other increased $21.3 million, or 4.3%, for the six months ended November 30, 2023, compared to the six months ended November 30, 2022.

Cost of other improved as a percent of revenue, decreasing from 52.8% for six months ended November 30, 2022, to 49.4% for the six months ended November 30, 2023.

The improvement in cost of sales as a percent of revenue was primarily due to favorable changes in the sales mix in the First Aid and Safety Services reportable operating segment as well as i mproved leverage of fixed costs for both the First Aid and Safety Services reportable operating segment and All Other.

Selling and administrative expenses increased $117.4 million, or 10.1%, for the six months ended November 30, 2023, compared to the same period in the prior fiscal year.

Selling and administrative expenses as a percent of revenue were 27.2% for the six months ended November 30, 2023, compared to 26.8% for the same period of the prior fiscal year.

Operating income was $1,000.2 million, or 21.2% of revenue, for the six months ended November 30, 2023, compared to $885.1 million, or 20.4% of revenue, for the six months ended November 30, 2022.

The change in operating income as a percent of revenue was due to the previously mentioned improvements in gross margin.

Net interest expense (interest expense less interest income) was $49.9 million for the six months ended November 30, 2023, compared to $56.1 million for the six months ended November 30, 2022.

The change was primarily due to a decrease in the average amount of outstanding debt during the six months ended November 30, 2023.

Cintas’ effective tax rate was 20.1% and 18.4% for the six months ended November 30, 2023 and 2022, respectively.

The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting for stock-based compensation.

Net income for the six months ended November 30, 2023, increased $83.7 million, or 12.4%, compared to the six months ended November 30, 2022.

Diluted earnings per share was $7.32 for the six months ended November 30, 2023, which was an increase of 12.4% compared to the same period in the prior fiscal year.

Diluted earnings per share increased due to the increase in net income.

Uniform Rental and Facility Services Reportable Operating Segment

Six Months Ended November 30, 2023 Compared to Six Months Ended November 30, 2022

Uniform Rental and Facility Services reportable operating segment revenue increased 7.9% to $3,677.4 million for the six months ended November 30, 2023, compared to $3,407.8 million for the same period of the prior fiscal year.

Organic revenue growth for this reportable operating segment was 7.8%.

The cost of uniform rental and facility services increased $124.3 million, or 6.9%, for the six months ended November 30, 2023 over the same period in the prior fiscal year.

The reportable operating segment’s gross margin was $1,755.6 million, or 47.7% of revenue, for the six months ended November 30, 2023, compared to the gross margin of 47.3% for the six months ended November 30, 2022.

The improvement in gross margin was primarily the result of a reduction in energy expense as a percent of revenue.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $73.0 million, increasing as a percent of revenue for the six months ended November 30, 2023 to 25.8%, compared to 25.7% for the same period of the prior fiscal year.

As a percent of revenue, expenses were largely consistent as compared to the same period of the prior year.

Income before income taxes increased $72.3 million, or 9.8%, for the Uniform Rental and Facility Services reportable operating segment for the six months ended November 30, 2023, compared to the same period in the prior fiscal year.

Income before income taxes was 21.9% of the reportable operating segment’s revenue, compared to 21.5% for the six months ended November 30, 2022.

The change as a percent of revenue was primarily a result of the improvement in gross margin.

First Aid and Safety Services Reportable Operating Segment

Six Months Ended November 30, 2023 Compared to Six Months Ended November 30, 2022

First Aid and Safety Services reportable operating segment revenue increased from $470.1 million to $527.1 million, or 12.1%, for the six months ended November 30, 2023, over the same period in the prior fiscal year.

Organic revenue growth for this reportable operating segment was 11.9%.

First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.3% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

This increase in revenue was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers, price increases, and strong customer retention.

Cost of first aid and safety services increased $1.2 million, or 0.5%, for the six months ended November 30, 2023, from the six months ended November 30, 2022, due to higher sales volume.

The gross margin as a percent of revenue was 55.2% for the six months ended November 30, 2023, which was an increase of 520 basis points compared to the gross margin as a percent of revenue of 50.0% in the same period of the prior fiscal year.

The improvement in gross margin was primarily driven by favorable changes in the sales mix, sourcing and productivity initiatives, as well as i mproved leverage of fixed costs and a reduction in energy expense as a percent of revenue.

Selling and administrative expenses increased $24.0 million, and increased as a percent of revenue to 32.8%, for the six months ended November 30, 2023, compared to 31.7% for the six months ended November 30, 2022.

The increase in expenses as a percent of revenue was primarily due to increases in labor and other employee-partner related expenses, including investing in additional selling resources for future growth.

Income before income taxes for the First Aid and Safety Services reportable operating segment was $118.1 million for the six months ended November 30, 2023, compared to $86.3 million for the same period in the prior fiscal year.

Income before income taxes, at 22.4% of the reportable operating segment’s revenue, increased 400 basis points compared to the same period of the prior fiscal year due to the improvements in gross margin, partially offset by increases selling and administrative expenses.

Liquidity and Capital Resources

The following is a summary of our cash flows and cash and cash equivalents as of and for the three months ended August 31:

The following is a summary of our cash flows and cash and cash equivalents as of and for the six months ended November 30:

(In thousands) 2023 2022

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Cash and cash equivalents at the end of the period $ 85,556 $ 89,799

Cash and cash equivalents as of August 31, 2023 and 2022, include $30.2 million and $23.4 million, respectively, that is located outside of the U.S.

Cash and cash equivalents as of November 30, 2023 and 2022, include $40.7 million and $29.8 million, respectively, that is located outside of the U.S.

Cash flows provided by operating activities have historically supplied us with a significant source of liquidity.

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Acquisitions, repurchases of our common stock and dividends remain strategic objectives, but they will be dependent on the economic outlook and liquidity of the Company.

Net cash provided by operating activities was $336.9 million for the three months ended August 31, 2023, compared to $298.2 million for the three months ended August 31, 2022.

The change from the prior fiscal year was primarily due to an increase in net income.

Changes in working capital included favorable changes in accounts receivable, income taxes, current and uniforms and other rental items in service.

Net cash provided by operating activities was $729.6 million for the six months ended November 30, 2023, compared to $619.1 million for the six months ended November 30, 2022.

The change from the prior fiscal year was primarily due to an increase in net income and favorable changes in working capital, specifically accounts receivable, inventories, net and uniforms and other rental items in service.

These improvements were partially offset by unfavorable changes in working capital, specifically, accrued compensation and related liabilities and accounts payable.

Net cash used in investing activities includes capital expenditures, purchases of investments and cash paid for acquisitions of businesses.

Capital expenditures were $106.7 million and $70.0 million for the three months ended August 31, 2023 and 2022, respectively.

Capital expenditures in the three months ended August 31, 2023, included $70.1 million for the Uniform Rental and Facility Services reportable operating segment and $22.0 million for the First Aid and Safety Services reportable operating segment.

The increase in capital expenditures during the three months ended August 31, 2023, over the same period in the prior fiscal year, was due to investments in the operating segments to support continued revenue growth, an increase in equipment purchases, primarily trucks, due to vendors clearing backlogged orders and spending associated with the SAP implementation in the Fire Protection operating segment.

Cash paid for acquisitions of businesses was $55.7 million and $7.1 million for the three months ended August 31, 2023 and 2022, respectively.

The acquisitions during both the three months ended August 31, 2023 and 2022, occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection operating segment, which is included in All Other.

Net cash used in investing activities also includes $6.5 million and $5.9 million of purchases of investments during the three months ended August 31, 2023 and 2022, respectively.

Net cash used in financing activities was $202.4 million and $226.2 million for the three months ended August 31, 2023 and 2022, respectively.

The decrease in cash used in financing activities was due to the decrease in share buyback activity.

This decrease was partially offset by a decrease in proceeds from the net issuance of commercial paper and an increase in dividends paid in the three months ended August 31, 2023.

Capital expenditures were $200.5 million and $146.4 million for the six months ended November 30, 2023 and 2022, respectively.

Capital expenditures in the six months ended November 30, 2023, included $127.6 million for the Uniform Rental and Facility Services reportable operating segment and $46.8 million for the First Aid and Safety Services reportable operating segment.

The increase in capital expenditures during the six months ended November 30, 2023, over the same period in the prior fiscal year, was due to investments in the operating segments to support continued revenue growth, an increase in equipment purchases, primarily trucks, due to vendors clearing backlogged orders and spending associated with the SAP implementation in the Fire Protection Services operating segment.

Cash paid for acquisitions of businesses was $74.0 million and $15.5 million for the six months ended November 30, 2023 and 2022, respectively.

The acquisitions during both the six months ended November 30, 2023 and 2022, occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection operating segment, which is included in All Other.

Net cash used in investing activities also includes $7.5 million and $5.2 million of purchases of investments during the six months ended November 30, 2023 and 2022, respectively.

Net cash used in financing activities was $485.8 million and $446.4 million for the six months ended November 30, 2023 and 2022, respectively.

The increase in cash used in financing activities was due to the increase in share buyback activity and an increase in dividends paid.

This increase was partially offset by an increase in proceeds from the net issuance of commercial paper in the six months ended November 30, 2023.

On July 27, 2021, Cintas announced that the Board of Directors authorized a $1.5 billion share buyback program, which does not have an expiration date.

On July 26, 2022, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date.

The following table summarizes the buyback activity by program for the three months ended August 31:

The following table summarizes the buyback activity by program for the six months ended November 30:

Buyback Activity

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(1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards.

In the period subsequent to August 31, 2023, through October 5, 2023, we purchased 0.5 million shares of Cintas common stock at an average price of $482.59 for a total purchase price of $225.5 million.

From the inception of the July 27, 2021 program through October 5, 2023, Cintas has purchased 3.2 million shares of Cintas common stock in the aggregate, at an average price of $400.08 per share, for a total purchase price of $1.3 billion.

Cintas has made no purchases under the July 26, 2022 share buyback program.

Our Board of Directors declared the following dividends:

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Per Share Total

Three months ended August 31, 2023

Six months ended November 30, 2023

April 11, 2023 May 15, 2023 June 15, 2023 $ 1.15 $ 117.6

Three months ended August 31, 2022

July 25, 2023 August 15, 2023 September 15, 2023 1.35 138.2

$ 2.50 $ 255.8

Six months ended November 30, 2022

April 12, 2022 May 16, 2022 June 15, 2022 $ 0.95 $ 97.7

July 26, 2022 August 15, 2022 September 15, 2022 1.15 117.3

$ 2.10 $ 215.0

Accrued Dividends

As of August 31, 2023

July 25, 2023 (1)

August 15, 2023 September 15, 2023 $ 1.35 $ 138.3

As of August 31, 2022

July 26, 2022 (1)

August 15, 2022 September 15, 2022 $ 1.15 $ 117.5

(1) The dividends declared during the three months ended August 31, 2023 and 2022 were included in current accrued liabilities on the consolidated condensed balance sheet at August 31, 2023 and 2022.

As of November 30, 2023

October 24, 2023 (1)

November 15, 2023 December 15, 2023 $ 1.35 $ 137.5

As of November 30, 2022

October 25, 2022 (1)

November 15, 2022 December 15, 2022 $ 1.15 $ 117.4

(1) The dividends declared during the three months ended November 30, 2023 and 2022 were included in current accrued liabilities on the consolidated condensed balance sheet at November 30, 2023 and 2022.

Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board of Directors and dependent upon then-existing conditions, including the Company's consolidated operating results and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors may deem relevant.

During the three months ended August 31, 2023, Cintas repurchased, and subsequently retired, $10.0 million of its 6.15%, 30-year senior notes.

During the three months ended August 31, 2022, Cintas issued a net $196.0 million of commercial paper.

During the six months ended November 30, 2023, Cintas repurchased, and subsequently retired, $13.5 million of its 6.15%, 30-year senior notes.

During the six months ended November 30, 2023 and 2022, Cintas issued a net $210.0 million and $124.0 million of commercial paper, respectively.

The following table summarizes Cintas' outstanding debt:

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Issued Fiscal Year

Maturity August 31,

Maturity November 30,

Debt due within one year

Commercial paper 5.52 % (1)

2024 2024 $ 210,000 $ —

Total debt due within one year $ 210,000 $ —

Debt due after one year

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Total debt due after one year $ 2,474,287 $ 2,486,405

(1) Variable rate debt instrument.

The rate presented is the variable borrowing rate at November 30, 2023.

(2) Cintas assumed these senior notes with the acquisition of G&K Services, Inc.

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The interest rate shown above is the effective interest rate.

The principal amount of these notes is $50.0 million with a stated interest rate of 3.88%.

The principal amount of these senior notes is $50.0 million with a stated interest rate of 3.88%.

The credit agreement that supports our commercial paper program has a revolving credit facility with a capacity of $2.0 billion.

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The maturity date of the revolving credit facility is March 23, 2027.

As of both August 31, 2023 and May 31, 2023, there was no commercial paper outstanding and no borrowings on our revolving credit facility.

As of November 30, 2023, there was $210.0 million of commercial paper outstanding with a weighted average interest rate of 5.52% and maturity dates less than 90 days and no borrowings on our revolving credit facility.

As of May 31, 2023, there was no commercial paper outstanding and no borrowings on our revolving credit facility.

Cintas has certain covenants related to debt agreements.

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Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness.

As of August 31, 2023, our ratings were as follows:

As of November 30, 2023, our ratings were as follows:

Rating Agency Outlook Commercial

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In addition, in such a case, our cost of funds for new issues of commercial paper and long-term debt would be higher than our cost of funds would have been had the ratings of those new issues been at or above the level of the ratings noted above.

The rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities.

The rating agency ratings are not

recommendations to buy, sell or hold our commercial paper or debt securities.

Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating.

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2) is the indirectly, wholly owned principal operating subsidiary of Cintas.

2 is the issuer of the $2,490.0 million aggregate principal amount of senior notes outstanding as of August 31, 2023, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly owned, direct and indirect domestic subsidiaries.

2 is the issuer of the $2,486.6 million aggregate principal amount of senior notes outstanding as of November 30, 2023, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly owned, direct and indirect domestic subsidiaries.

Basis of Preparation of the Summarized Financial Information

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Summarized financial information of the Obligor Group is as follows:

Three Months Ended

Six Months Ended

Summarized Consolidated Condensed Statements of Income

(In thousands)

2023 August 31,

2023 November 30,

Net sales to unrelated parties $ 4,466,257 $ 4,105,128

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uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation;

our ability to meet our goals relating to environmental, social and governance (ESG) opportunities, improvements and efficiencies;

our ability to meet our goals relating to environmental, social and governance opportunities, improvements and efficiencies;

the cost, results and ongoing assessment of internal controls for financial reporting;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis