CINTAS CORP 10-Q

ITEM 1. FINANCIAL STATEMENTS CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) Three Months Ended (In thousands except per share data) August 31, 2025 August 31, 2024 Revenue: Uniform rental and facility services $ 2,091,066 $ 1,933,839 Other 627,056 567,748 Total revenue 2,718,122 2,501,587 Costs and expenses: Cost of uniform rental and facility services 1,052,553 981,163 Cost of other 299,008 268,293 Selling and administrative expenses 748,702 691,100 Operating income 617,859 561,031 Interest income ( 2,209 ) ( 1,250 ) Interest expense 24,161 25,619 Income before income taxes 595,907 536,662 Income taxes 104,767 84,629 Net income $ 491,140 $ 452,033 Basic earnings per share $ 1.21 $ 1.12 Diluted earnings per share $ 1.20 $ 1.10 Dividends declared per share $ 0.45 $ 0.39 See accompanying notes. 3 Table of Contents CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended (In thousands) August 31, 2025 August 31, 2024 Net income $ 491,140 $ 452,033 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments ( 325 ) 3,656 Change in fair value of interest rate lock agreements, net of tax benefit of $( 908 ) and $( 3,408 ), respectively ( 2,652 ) ( 9,956 ) Amortization of interest rate lock agreements, net of tax benefit of $( 513 ) and $( 513 ), respectively ( 1,523 ) ( 1,523 ) Other comprehensive loss, net of tax benefit of $( 1,421 ) and $( 3,921 ), respectively ( 4,500 ) ( 7,823 ) Comprehensive income $ 486,640 $ 444,210 See accompanying notes. 4 Table of Contents CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) August 31, 2025 May 31, 2025 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 138,143 $ 263,973 Accounts receivable, net 1,421,047 1,417,381 Inventories, net 449,739 447,408 Uniforms and other rental items in service 1,172,321 1,137,361 Prepaid expenses and other current assets 194,676 170,046 Total current assets 3,375,926 3,436,169 Property and equipment, net 1,677,021 1,652,474 Investments 369,503 339,518 Goodwill 3,410,729 3,400,227 Service contracts, net 298,025 309,828 Operating lease right-of-use assets, net 244,067 224,383 Other assets, net 462,419 462,642 $ 9,837,690 $ 9,825,241 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 462,315 $ 485,109 Accrued compensation and related liabilities 135,185 229,538 Accrued liabilities 779,672 875,077 Income taxes, current 78,956 4,034 Operating lease liabilities, current 51,691 50,744 Total current liabilities 1,507,819 1,644,502 Long-term liabilities: Debt due after one year 2,425,757 2,424,999 Deferred income taxes 484,443 471,740 Operating lease liabilities 197,818 178,738 Accrued liabilities 466,153 420,781 Total long-term liabilities 3,574,171 3,496,258 Shareholders’ equity: Preferred stock, no par value: — — 100 shares authorized, none outstanding Common stock, no par value, and paid-in capital: 2,694,077 2,593,479 1,700,000 shares authorized FY 2026: 778,465 shares issued and 402,950 shares outstanding FY 2025: 776,936 shares issued and 402,948 shares outstanding Retained earnings 12,107,250 11,798,451 Treasury stock: ( 10,125,516 ) ( 9,791,838 ) FY 2026: 375,515 shares FY 2025: 373,988 shares Accumulated other comprehensive income 79,889 84,389 Total shareholders’ equity 4,755,700 4,684,481 $ 9,837,690 $ 9,825,241 See accompanying notes. 5 Table of Contents CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Common Stock and Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Total Shareholders' Equity (In thousands) Shares Amount Shares Amount Balance at June 1, 2025 776,936 $ 2,593,479 $ 11,798,451 $ 84,389 ( 373,988 ) $ ( 9,791,838 ) $ 4,684,481 Net income — — 491,140 — — — 491,140 Comprehensive loss, net of tax — — — ( 4,500 ) — — ( 4,500 ) Dividends — — ( 182,341 ) — — — ( 182,341 ) Stock-based compensation — 30,348 — — — — 30,348 Vesting of stock-based compensation awards 511 — — — — — — Stock options exercised 1,018 70,250 — — ( 304 ) ( 67,581 ) 2,669 Repurchase of common stock — — — — ( 1,223 ) ( 266,097 ) ( 266,097 ) Balance at August 31, 2025 778,465 $ 2,694,077 $ 12,107,250 $ 79,889 ( 375,515 ) $ ( 10,125,516 ) $ 4,755,700 Common Stock and Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock Total Shareholders' Equity (In thousands) Shares Amount Shares Amount Balance at June 1, 2024 773,097 $ 2,305,301 $ 10,617,955 $ 91,201 ( 368,089 ) $ ( 8,698,085 ) $ 4,316,372 Net income — — 452,033 — — — 452,033 Comprehensive loss, net of tax — — — ( 7,823 ) — — ( 7,823 ) Dividends — — ( 157,955 ) — — — ( 157,955 ) Stock-based compensation — 33,367 — — — — 33,367 Vesting of stock-based compensation awards 792 — — — — — — Stock options exercised 1,342 77,055 — — ( 407 ) ( 76,824 ) 231 Repurchase of common stock — — — — ( 3,476 ) ( 614,802 ) ( 614,802 ) Balance at August 31, 2024 775,231 $ 2,415,723 $ 10,912,033 $ 83,378 ( 371,972 ) $ ( 9,389,711 ) $ 4,021,423 See accompanying notes. 6 Table of Contents CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended (In thousands) August 31, 2025 August 31, 2024 Cash flows from operating activities: Net income $ 491,140 $ 452,033 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 77,589 73,838 Amortization of intangible assets and capitalized contract costs 48,348 46,554 Stock-based compensation 30,348 33,367 Deferred income taxes 13,496 1,887 Change in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net ( 3,635 ) ( 49,129 ) Inventories, net ( 2,398 ) 11,318 Uniforms and other rental items in service ( 34,760 ) ( 20,144 ) Prepaid expenses and other current assets and capitalized contract costs ( 62,382 ) ( 80,282 ) Accounts payable ( 22,501 ) 56,698 Accrued compensation and related liabilities ( 94,275 ) ( 86,965 ) Accrued liabilities and other ( 101,114 ) ( 44,268 ) Income taxes, current 74,625 65,450 Net cash provided by operating activities 414,481 460,357 Cash flows from investing activities: Capital expenditures ( 101,957 ) ( 92,921 ) Purchases of investments ( 6,538 ) ( 7,124 ) Acquisitions of businesses, net of cash acquired ( 7,602 ) ( 9,436 ) Other, net ( 130 ) 1 Net cash used in investing activities ( 116,227 ) ( 109,480 ) Cash flows from financing activities: Issuance of commercial paper, net — 166,000 Proceeds from exercise of stock-based compensation awards 2,669 231 Dividends paid ( 157,766 ) ( 138,237 ) Repurchase of common stock ( 266,097 ) ( 614,802 ) Other, net ( 2,807 ) ( 4,461 ) Net cash used in financing activities ( 424,001 ) ( 591,269 ) Effect of exchange rate changes on cash and cash equivalents ( 83 ) ( 250 ) Net decrease in cash and cash equivalents ( 125,830 ) ( 240,642 ) Cash and cash equivalents at beginning of period 263,973 342,015 Cash and cash equivalents at end of period $ 138,143 $ 101,373 See accompanying notes. 7 Table of Contents CINTAS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Presentation The consolidated condensed financial statements of Cintas Corporation (Cintas, the Company, we, us or our) included herein have been prepared by Cintas, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. While we believe that the disclosures are adequately presented, we suggest that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 (Annual Report) filed with the SEC on July 28, 2025. See Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements" of that Annual Report for a summary of our significant accounting policies. There have been no material changes in the accounting policies followed by Cintas during the current fiscal year. Interim results are subject to variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, adjustments (which include only normal recurring adjustments) necessary for a fair statement of the consolidated results of the interim periods shown have been made. Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Inventories, net are comprised of the following at: (In thousands) August 31, 2025 May 31, 2025 Raw materials $ 20,007 $ 21,763 Work in process 39,317 42,615 Finished goods 390,415 383,030 Inventories, net $ 449,739 $ 447,408 Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 60.2 million and $ 59.9 million at August 31, 2025 and May 31, 2025, respectively. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the Company's reported results of operations. New Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (ASU 2023-09), which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). The Company is currently evaluating the impact of ASU 2023-09 on the consolidated condensed financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03), which requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the statement of income. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 (fiscal 2028), and for interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029), with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated condensed financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06) which 8 Table of Contents amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 (fiscal 2029), and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated condensed financial statements. There are no other accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements. Note 2 - Revenue Recognition The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31: (In thousands) 2025 2024 Uniform Rental and Facility Services $ 2,091,066 76.9 % $ 1,933,839 77.3 % First Aid and Safety Services 334,657 12.3 % 292,567 11.7 % Fire Protection Services 221,900 8.2 % 197,497 7.9 % Uniform Direct Sales 70,499 2.6 % 77,684 3.1 % Total revenue $ 2,718,122 100.0 % $ 2,501,587 100.0 % The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 10 entitled Segment Information. Revenue Recognition Policy Approximately 95 % of the Company's revenue is derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services customers, performed by a Cintas employee-partner, at the customer's location of business. Revenue from our route servicing customer contracts represents a single-performance obligation. The Company recognizes revenue over time as services are performed, based on the nature of services provided and contractual rates (output method) or at a point in time when the performance obligation under the terms of the contract with a customer is satisfied, at the customer's location of business. The Company's performance period generally corresponds with the monthly invoice period. The Company's remaining revenue, primarily within the Uniform Direct Sales operating segment, and representing approximately 5 % of the Company's total revenue, is recognized when the obligations under the terms of a contract with a customer are satisfied. This generally occurs when the goods are transferred to the customer. We are exposed to credit losses primarily through our trade receivables. We determine the allowance for credit losses using both an estimate, based on historical rates of collections, and reserves for specific accounts identified as uncollectible. The portion of the allowance for credit losses that is an estimate based on Cintas' historical rates of collections is recorded for overdue amounts, beginning with a nominal percentage when the account is current and increasing substantially as the account ages. The amount provided as the account ages will differ slightly between the Uniform Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each business. We update our allowance for credit losses quarterly, considering recent write-offs and collections information and underlying economic expectations. Costs to Obtain a Contract The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. Capitalized commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense. The current portion is included in prepaid expenses and other current assets, and the noncurrent portion is included in other assets, net on the Company's consolidated condensed balance sheets. As of August 31, 2025, the current and noncurrent assets related to capitalized commissions totaled $ 96.5 million and $ 283.1 million, respectively. As of May 31, 2025, the current and noncurrent assets related to capitalized commissions totaled $ 96.5 million and $ 275.3 million, respectively. The Company recorded amortization expense related to capitalized commissions of $ 26.2 million and $ 25.9 million during the three months ended August 31, 2025 and 2024, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income. 9 Table of Contents Note 3 - Leases Cintas has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated condensed balance sheets with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the consolidated condensed balance sheets. Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of uniform rental and facility services and other on the Company's consolidated condensed statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 24.1 million and $ 21.8 million for the three months ended August 31, 2025 and 2024, respectively. The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31: (In thousands) 2025 2024 Cash paid for amounts included in the measurement of operating lease liabilities $ 15,792 $ 13,328 Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities $ 33,685 $ 13,973 Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows: August 31, 2025 May 31, 2025 Weighted-average remaining lease term 5.83 years 5.66 years Weighted-average discount rate 4.21 % 4.08 % The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2025: (In thousands) 2026 (remaining nine months) $ 45,520 2027 54,996 2028 48,961 2029 40,294 2030 30,301 Thereafter 62,935 Total payments 283,007 Less interest ( 33,498 ) Total present value of lease payments $ 249,509 10 Table of Contents Note 4 - Fair Value Measurements All financial instruments that are measured at fair value on a recurring basis have been classified within the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated condensed balance sheet dates. These financial instruments measured at fair value on a recurring basis are summarized below: As of August 31, 2025 As of May 31, 2025 (In thousands) Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 138,143 $ — $ — $ 138,143 $ 263,973 $ — $ — $ 263,973 Other assets, net: Interest rate lock agreements — 98,990 — 98,990 — 102,550 — 102,550 Total assets at fair value $ 138,143 $ 98,990 $ — $ 237,133 $ 263,973 $ 102,550 $ — $ 366,523 Cintas’ cash and cash equivalents are generally classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments. The fair values of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. The fair value was determined by comparing the locked rates against the benchmarked treasury rate. No other amounts included in other assets, net, are recorded at fair value on a recurring basis. The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates. In addition to assets and liabilities that are recorded at fair value on a recurring basis, Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S. GAAP. The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition. Note 5 - Earnings Per Share Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards. The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares for the three months ended August 31: Basic Earnings per Share (In thousands except per share data) 2025 2024 Net income $ 491,140 $ 452,033 Less: net income allocated to participating securities 1,651 1,654 Net income available to common shareholders $ 489,489 $ 450,379 Basic weighted average common shares outstanding 403,292 403,382 Basic earnings per share $ 1.21 $ 1.12 11 Table of Contents Diluted Earnings per Share (In thousands except per share data) 2025 2024 Net income $ 491,140 $ 452,033 Less: net income allocated to participating securities 1,651 1,654 Net income available to common shareholders $ 489,489 $ 450,379 Basic weighted average common shares outstanding 403,292 403,382 Effect of dilutive securities – employee stock options 6,002 7,114 Diluted weighted average common shares outstanding 409,294 410,496 Diluted earnings per share $ 1.20 $ 1.10 For the three months ended August 31, 2025 and 2024, options granted to purchase 1.4 million and 0.3 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive). On July 26, 2022 and July 23, 2024, Cintas announced that the Board of Directors (the Board) authorized share buyback programs, each for $ 1.0 billion. Neither of the outstanding share buyback programs have an expiration date. The following table summarizes the share buyback activity by program and period for the three months ended August 31: 2025 2024 Buyback Activity (In thousands except per share data) Shares Avg. Price per Share Purchase Price Shares Avg. Price per Share Purchase Price July 26, 2022 703 $ 213.40 $ 150,014 2,732 $ 173.40 $ 473,617 July 23, 2024 — — — — — — 703 $ 213.40 $ 150,014 2,732 $ 173.40 $ 473,617 Shares acquired for taxes due (1) 520 $ 223.04 $ 116,083 744 $ 189.67 $ 141,185 Total repurchase of Cintas common stock $ 266,097 $ 614,802 (1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards. In addition to the share buyback activity presented above, Cintas acquired shares of Cintas common stock, via non-cash transactions, in connection with net-share settlements of option exercises. The following table summarizes Cintas' non-cash share buyback activity for the three months ended August 31: 2025 2024 (In thousands except per share data) Shares Avg. Price per Share Non-Cash Value Shares Avg. Price per Share Non-Cash Value Non-cash transaction activity 304 $ 222.31 $ 67,581 407 $ 188.68 $ 76,824 In the period subsequent to August 31, 2025, through October 8, 2025, we purchased 1.1 million shares of Cintas common stock at an average price of $ 199.48 per share, for a total purchase price of $ 221.7 million. This completed the July 26, 2022 share buyback program and included purchases under the July 23, 2024 share buyback program. From the inception of the July 26, 2022 share buyback program through September 2025, Cintas purchased 5.4 million shares of Cintas common stock in the aggregate, at an average price of $ 185.01 per share, for a total purchase price of $ 1.0 billion. From the inception of the July 23, 2024 share buyback program through October 8, 2025, Cintas has purchased 0.5 million shares of Cintas common stock in the aggregate, at an average price of $ 199.58 per share, for a total purchase price of $ 108.2 million. 12 Table of Contents Note 6 - Goodwill, Service Contracts and Other Assets, Net Changes in the carrying amount of goodwill and service contracts by reportable operating segment and All Other for the three months ended August 31, 2025, are as follows: Goodwill (In thousands) Uniform Rental and Facility Services First Aid and Safety Services All Other Total Balance as of June 1, 2025 $ 2,913,991 $ 298,145 $ 188,091 $ 3,400,227 Goodwill acquired 1,667 2,459 6,446 10,572 Foreign currency translation ( 64 ) ( 6 ) — ( 70 ) Balance as of August 31, 2025 $ 2,915,594 $ 300,598 $ 194,537 $ 3,410,729 Service Contracts (In thousands) Uniform Rental and Facility Services First Aid and Safety Services All Other Total Balance as of June 1, 2025 $ 273,847 $ 14,138 $ 21,843 $ 309,828 Service contracts acquired 282 1,313 949 2,544 Service contracts amortization ( 12,156 ) ( 1,118 ) ( 1,021 ) ( 14,295 ) Foreign currency translation ( 50 ) ( 2 ) — ( 52 ) Balance as of August 31, 2025 $ 261,923 $ 14,331 $ 21,771 $ 298,025 Information regarding Cintas’ service contracts, net and other assets, net is as follows: As of August 31, 2025 As of May 31, 2025 (In thousands) Carrying Amount Accumulated Amortization Net Carrying Amount Accumulated Amortization Net Service contracts $ 1,080,820 $ 782,795 $ 298,025 $ 1,078,305 $ 768,477 $ 309,828 Capitalized contract costs (1) $ 930,639 $ 647,531 $ 283,108 $ 896,632 $ 621,351 $ 275,281 Noncompete and consulting agreements and other 255,731 76,420 179,311 262,610 75,249 187,361 Other assets $ 1,186,370 $ 723,951 $ 462,419 $ 1,159,242 $ 696,600 $ 462,642 (1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of both August 31, 2025 and May 31, 2025, is $ 96.5 million. Amortization expense for service contracts and other assets was $ 42.2 million and $ 40.7 million for the three months ended August 31, 2025 and 2024, respectively. These expenses are recorded in selling and administrative expenses on the consolidated condensed statements of income. As of August 31, 2025, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, is as follows: Fiscal Year (In thousands) 2026 (remaining nine months) $ 117,671 2027 136,681 2028 108,662 2029 91,760 2030 75,521 Thereafter 158,754 Total future amortization expense $ 689,049 13 Table of Contents Note 7 - Debt, Derivatives and Hedging Activities Cintas' outstanding debt is summarized as follows: (In thousands) Interest Rate Fiscal Year Issued Fiscal Year Maturity August 31, 2025 May 31, 2025 Debt due after one year Senior notes 3.70 % 2017 2027 $ 1,000,000 $ 1,000,000 Senior notes 4.20 % 2025 2028 400,000 400,000 Senior notes 4.00 % 2022 2032 800,000 800,000 Senior notes 6.15 % 2007 2037 236,550 236,550 Debt issuance costs ( 10,793 ) ( 11,551 ) Total debt due after one year $ 2,425,757 $ 2,424,999 Cintas' senior notes are recorded at cost, net of debt issuance costs. The fair value of the long-term debt is estimated using Level 2 inputs based on observable market prices. The carrying value and fair value of Cintas' debt as of August 31, 2025 were $ 2,436.6 million and $ 2,432.4 million, respectively, and as of May 31, 2025 were $ 2,436.6 million and $ 2,404.7 million, respectively. During the three months ended August 31, 2024, Cintas issued $ 166.0 million, net of commercial paper. The credit agreement that supports our commercial paper program has capacity under the revolving credit facility of $ 2.0 billion. The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under the revolving credit facility of up to $ 500.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility is March 23, 2027. As of August 31, 2025 and May 31, 2025, there was no commercial paper outstanding and no borrowings on our revolving credit facility. The fair value of the commercial paper, if any, which approximates carrying value, is estimated using level 2 inputs based on general market prices and interest rates. Cintas uses interest rate locks to manage its overall interest expense as interest rate locks effectively change the interest rate of specific debt issuances. The interest rate locks are entered into to protect against unfavorable movements in the benchmark treasury rate related to forecasted debt issuances. Cintas used interest rate locks, which represent cash flow hedges, to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2017 and fiscal 2022. The amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 1.5 million for both the three months ended August 31, 2025 and 2024. During fiscal 2022 and fiscal 2020, Cintas entered into interest rate lock agreements for forecasted debt issuances. The aggregate notional value of outstanding cash flow hedges was $ 500.0 million at both August 31, 2025 and May 31, 2025. The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows: Fiscal Year of Issuance (In thousands) August 31, 2025 May 31, 2025 Other assets, net Other assets, net 2022 $ 59,708 $ 61,230 2020 $ 39,282 $ 41,320 The changes in fair value of the interest rate locks are recorded in other comprehensive income (loss), net of tax. These interest rate locks had no impact on net income or cash flows for the three months ended August 31, 2025 or 2024. Cintas has certain covenants related to debt agreements. These covenants limit Cintas' ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets. These covenants also require Cintas to maintain certain debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) and interest coverage ratios. Cross-default provisions exist between certain debt instruments. If a default of a significant covenant were to occur, the default could result in an acceleration of the maturity of the indebtedness, impair liquidity and limit the ability to raise future capital. Cintas was in compliance with all of the debt covenants for all periods presented. 14 Table of Contents Note 8 - Income Taxes In the normal course of business, Cintas provides for uncertain tax positions and the related interest and adjusts its unrecognized tax benefits and accrued interest accordingly. As of August 31, 2025 and May 31, 2025, recorded unrecognized tax benefits were $ 50.7 million and $ 47.8 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheets. The majority of Cintas' operations are in North America. Cintas is required to file U.S. federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated results of operations in any given period. All U.S. federal income tax returns are closed to audit through fiscal 2021. Cintas is currently in various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2020. Based on the status and resolution of the various audits and other potential regulatory developments, it is expected that the balance of unrecognized tax benefits will not materially change for the fiscal year ending May 31, 2026. Cintas’ effective tax rate was 17.6 % and 15.8 % for the three months ended August 31, 2025 and 2024, respectively. The effective tax rate for all periods was impacted by certain discrete items (primarily the tax accounting impact for stock-based compensation). Note 9 - Accumulated Other Comprehensive Income (Loss) The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss), net of tax: (In thousands) Foreign Currency Unrealized Income on Interest Rate Locks Other Total Balance at June 1, 2025 $ ( 25,733 ) $ 108,553 $ 1,569 $ 84,389 Other comprehensive loss before reclassifications ( 325 ) ( 2,652 ) — ( 2,977 ) Amounts reclassified from accumulated other comprehensive income (loss) — ( 1,523 ) — ( 1,523 ) Net current period other comprehensive loss ( 325 ) ( 4,175 ) — ( 4,500 ) Balance at August 31, 2025 $ ( 26,058 ) $ 104,378 $ 1,569 $ 79,889 (In thousands) Foreign Currency Unrealized Income on Interest Rate Locks Other Total Balance at June 1, 2024 $ ( 18,292 ) $ 108,893 $ 600 $ 91,201 Other comprehensive income (loss) before reclassifications 3,656 ( 9,956 ) — ( 6,300 ) Amounts reclassified from accumulated other comprehensive income (loss) — ( 1,523 ) — ( 1,523 ) Net current period other comprehensive income (loss) 3,656 ( 11,479 ) — ( 7,823 ) Balance at August 31, 2024 $ ( 14,636 ) $ 97,414 $ 600 $ 83,378 15 Table of Contents The following table summarizes the reclassifications out of accumulated other comprehensive income (loss) for the three months ended August 31: Details about Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line in the Consolidated Condensed Statements of Income (In thousands) 2025 2024 Amortization of interest rate locks $ 2,036 $ 2,036 Interest expense Tax expense ( 513 ) ( 513 ) Income taxes Amortization of interest rate locks, net of tax $ 1,523 $ 1,523 Note 10 - Segment Information Cintas’ reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies, and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ operating segments, which consists of the Fire Protection Services operating segment and the Uniform Direct Sales operating segment, is included in All Other. Our chief operating decision maker (CODM) is the chief executive officer. The CODM is responsible for setting the Company's strategic direction, managing overall operations, and is the main point of communications between the Board and key operational personnel within the organization. The CODM evaluates each operating segment's performance primarily based on revenue and operating income, using this information to guide strategic decisions and allocate resources across the Company. The accounting policies of the operating segments are the same as those described in Note 1 entitled Basis of Presentation. Information related to the operations of Cintas’ reportable operating segments and All Other is set forth below: (In thousands) Uniform Rental and Facility Services First Aid and Safety Services All Other Corporate (1) Total As of and for the three months ended August 31, 2025 Revenue $ 2,091,066 $ 334,657 $ 292,399 $ — $ 2,718,122 Cost of sales 1,052,553 144,489 154,519 — 1,351,561 Gross margin 1,038,513 190,168 137,880 — 1,366,561 Selling and administrative expenses 538,576 109,841 100,285 — 748,702 Operating income $ 499,937 $ 80,327 $ 37,595 $ — $ 617,859 Depreciation and amortization $ 100,047 $ 19,749 $ 6,141 $ — $ 125,937 Capital expenditures $ 70,475 $ 16,474 $ 15,008 $ — $ 101,957 Total assets $ 8,100,857 $ 825,053 $ 773,637 $ 138,143 $ 9,837,690 As of and for the three months ended August 31, 2024 Revenue $ 1,933,839 $ 292,567 $ 275,181 $ — $ 2,501,587 Cost of sales 981,163 123,764 144,529 — 1,249,456 Gross margin 952,676 168,803 130,652 — 1,252,131 Selling and administrative expenses 506,238 97,515 87,347 — 691,100 Operating income $ 446,438 $ 71,288 $ 43,305 $ — $ 561,031 Depreciation and amortization $ 92,690 $ 22,305 $ 5,397 $ — $ 120,392 Capital expenditures $ 67,687 $ 10,555 $ 14,679 $ — $ 92,921 Total assets $ 7,588,895 $ 756,833 $ 621,606 $ 101,373 $ 9,068,707 (1) Corporate assets include cash and cash equivalents and marketable securities, if applicable, in all periods. 16 Table of Contents