What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-03 compared with 2025-01-08 · 141 added, 136 removed, 201 unchanged (58% of the section changed)

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

Revenue and operating income for the six months ended November 30, 2024 and 2023, for the two reportable operating segments and All Other are presented in Note 11 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”

Revenue and operating income for the nine months ended February 28, 2025 and February 29, 2024, for the two reportable operating segments and All Other are presented in Note 11 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”

All references made to common stock shares, equity awards, common stock per share amounts or treasury share amounts throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations have been retroactively adjusted to reflect the effects of a four-for-one split of the Company's common stock on September 11, 2024 (the Stock Split).

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Consolidated Results

Three Months Ended November 30, 2024 Compared to Three Months Ended November 30, 2023

Total revenue increased 7.8% to $2,561.8 million for the three months ended November 30, 2024, compared to $2,377.2 million for the three months ended November 30, 2023.

Three Months Ended February 28, 2025 Compared to Three Months Ended February 29, 2024

Total revenue increased 8.4% to $2,609.2 million for the three months ended February 28, 2025, compared to $2,406.2 million for the three months ended February 29, 2024.

The organic revenue growth rate, which adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations, was 7.9%.

Revenue growth was positively impacted by 0.7% due to acquisitions.

Uniform Rental and Facility Services reportable operating segment revenue was $1,990.4 million for the three months ended November 30, 2024, compared to $1,850.5 million for the three months ended November 30, 2023, which was an increase of 7.6%.

Revenue growth was positively impacted by 0.9% due to acquisitions and negatively impacted by 0.4% due to foreign currency exchange rate fluctuations.

Uniform Rental and Facility Services reportable operating segment revenue was $2,021.1 million for the three months ended February 28, 2025, compared to $1,876.6 million for the three months ended February 29, 2024, which was an increase of 7.7%.

The organic revenue growth rate for this reportable operating segment was 7.0%.

Revenue growth in the Uniform Rental and Facility Services reportable operating segment was positively impacted by 0.7% due to acquisitions.

Revenue growth in the Uniform Rental and Facility Services reportable operating segment was positively impacted by 1.1% due to acquisitions and negatively impacted by 0.4% 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, increased 8.5% for the three months ended November 30, 2024, compared to the three months ended November 30, 2023, from $526.6 million to $571.4 million.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 11.0% for the three months ended February 28, 2025, compared to the three months ended February 29, 2024, from $529.5 million to $588.0 million.

The organic revenue growth rate for other revenue was 10.7%.

Revenue growth was positively impacted by 0.5% due to acquisitions.

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

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 $39.8 million, or 4.1%, for the three months ended November 30, 2024, compared to the three months ended November 30, 2023.

Cost of uniform rental and facility services improved as a percent of revenue, decreasing from 52.6% for the three months ended November 30, 2023, to 50.9% for the three months ended November 30, 2024.

This improvement as a percent of revenue was primarily due to efficiency gains in energy and in-service inventory usage and improved leverage of fixed costs.

Cost of uniform rental and facility services increased $49.5 million, or 5.2%, for the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Cost of uniform rental and facility services improved as a percent of revenue, decreasing from 51.2% for the three months ended February 29, 2024, to 50.0% for the three months ended February 28, 2025.

This improvement as a percent of revenue was primarily due to more efficient usage of in-service inventory and more efficient routing due to our SmartTruck initiative.

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 $9.6 million, or 3.7%, for the three months ended November 30, 2024, compared to the three months ended November 30, 2023 as a result of higher other revenue.

Cost of other improved as a percent of revenue, decreasing from 49.6% for three months ended November 30, 2023, to 47.4% for the three months ended November 30, 2024.

The improvement in cost of sales as a percent of revenue was primarily due to a favorable sales mix and 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 $43.4 million, or 6.8%, in the three months ended November 30, 2024, compared to the three months ended November 30, 2023.

Selling and administrative expenses as a percent of revenue were 26.8% for the three months ended November 30, 2024, compared to 27.0% for the three months ended November 30, 2023.

The improvement as a percent of revenue is primarily due to a decrease in employee-partner related expenses as a percent of revenue.

Operating income was $591.4 million, or 23.1% of revenue, for the three months ended November 30, 2024, compared to $499.7 million, or 21.0% of revenue, for the three months ended November 30, 2023.

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

Net interest expense (interest expense less interest income) was $25.7 million for the three months ended November 30, 2024, which was fairly consistent as compared to $25.8 million for the three months ended November 30, 2023.

Cintas’ effective tax rate was 20.7% and 20.9% for the three months ended November 30, 2024 and 2023, respectively.

Cost of other increased $22.0 million, or 8.5%, for the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Cost of other improved as a percent of revenue, decreasing from 48.7% for three months ended February 29, 2024, to 47.6% for the three months ended February 28, 2025.

Selling and administrative expenses increased $42.4 million, or 6.4%, in the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Selling and administrative expenses as a percent of revenue were 27.2% for the three months ended February 28, 2025, compared to 27.7% for the three months ended February 29, 2024.

We recorded a gain of $15.0 million on a sale of property and equipment in the three months ended February 28, 2025, and we recorded $15.0 million in costs associated with a tentative legal settlement in the three months ended February 29, 2024, both of which impacted all segments by the same percent of revenue.

Excluding those items, selling and administrative expenses as a percent of revenue increased for the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

The resulting increase as a percent of revenue was due in part to investments in technology and an increase in legal and professional expenses as a percent of revenue.

Operating income was $609.9 million, or 23.4% of revenue, for the three months ended February 28, 2025, compared to $520.8 million, or 21.6% of revenue, for the three months ended February 29, 2024.

The improvement in operating income as a percent of revenue was primarily due to operating leverage from revenue growth, sourcing and productivity initiatives, in-service inventory usage, and the changes in selling and administrative expenses noted above.

Net interest expense (interest expense less interest income) was $23.4 million for the three months ended February 28, 2025, compared to $24.6 million for the three months ended February 29, 2024.

The change was primarily due to a decrease in the average amount of outstanding debt during the three months ended February 29, 2025.

Cintas’ effective tax rate was 21.0% and 19.9% for the three months ended February 28, 2025 and February 29, 2024, 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 $448.5 million for the three months ended November 30, 2024, an increase of 19.7%, compared to the three months ended November 30, 2023.

Diluted earnings per share were $1.09 for the three months ended November 30, 2024, which was an increase of 21.1% compared to the three months ended November 30, 2023.

Net income was $463.5 million for the three months ended February 28, 2025, an increase of 16.6% compared to the three months ended February 29, 2024.

Diluted earnings per share were $1.13 for the three months ended February 28, 2025, which was an increase of 17.7% compared to the three months ended February 29, 2024.

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

Uniform Rental and Facility Services Reportable Operating Segment

Three Months Ended November 30, 2024 Compared to Three Months Ended November 30, 2023

Uniform Rental and Facility Services reportable operating segment revenue was $1,990.4 million for the three months ended November 30, 2024 compared to $1,850.5 million for the three months ended November 30, 2023.

Three Months Ended February 28, 2025 Compared to Three Months Ended February 29, 2024

The organic revenue growth rate for the reportable operating segment was 7.0%.

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The reportable operating segment’s gross margin was $1,011.5 million.

Gross margin as a percent of revenue was 49.1% for the three months ended November 30, 2024 compared to 47.4% for the three months ended November 30, 2023.

The improvement in gross margin was primarily the result of efficiency gains in energy and in-service inventory usage and improved leverage of fixed costs.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $27.3 million in the three months ended November 30, 2024 compared to the three months ended November 30, 2023.

Selling and administrative expenses as a percent of revenue for the three months ended November 30, 2024 were 25.3% compared to the 25.8% in the three months ended November 30, 2023.

The improvement as a percent of revenue was primarily due to a decrease in employee-partner related expenses as a percent of revenue.

Income before income taxes increased $72.7 million, or 18.2%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended November 30, 2024, compared to the three months ended November 30, 2023.

Income before income taxes was 23.7% of the reportable operating segment's revenue compared to the three months ended November 30, 2023 of 21.6% of revenue.

Gross margin as a percent of revenue was 50.0% for the three months ended February 28, 2025, compared to 48.8% for the three months ended February 29, 2024.

The improvement in gross margin was primarily the result of more efficient usage of in-service inventory and more efficient routing due to our SmartTruck initiative.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $26.0 million in the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Selling and administrative expenses as a percent of revenue for the three months ended February 28, 2025 were 25.8%, compared to 26.4% in the three months ended February 29, 2024.

Excluding the items noted previously, selling and administrative expenses as a percent of revenue increased for the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

The resulting increase as a percent of revenue was primarily due to investments in technology and an increase in legal and professional expenses as a percent of revenue.

Income before income taxes increased $69.1 million, or 16.4%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Income before income taxes was 24.2% of the reportable operating segment's revenue compared to the three months ended February 29, 2024 of 22.4% of revenue.

The improvement in income before income taxes was a result of the expansion in gross margin in addition to the improvement in selling and administrative expenses as a percent of revenue noted above.

First Aid and Safety Services Reportable Operating Segment

Three Months Ended November 30, 2024 Compared to Three Months Ended November 30, 2023

First Aid and Safety Services reportable operating segment revenue increased from $266.4 million to $299.4 million, or 12.4%, for the three months ended November 30, 2024, over the three months ended November 30, 2023.

Three Months Ended February 28, 2025 Compared to Three Months Ended February 29, 2024

First Aid and Safety Services reportable operating segment revenue increased from $262.6 million to $301.8 million, or 14.9%, for the three months ended February 28, 2025, over the three months ended February 29, 2024.

The organic revenue growth rate for the reportable operating segment was 15.0%.

First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.1% due to acquisitions.

First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.1% due to acquisitions and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations.

The increase in revenue was driven by many factors including increases in 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 November 30, 2024, increased $6.8 million, or 5.6%, compared to the three months ended November 30, 2023.

The gross margin as a percent of revenue was 57.3% for the three months ended November 30, 2024, compared to the gross margin as a percent of revenue of 54.5% in the three months ended November 30, 2023.

The improvement in gross margin as a percent of revenue was primarily driven by a favorable 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 $9.5 million in the three months ended November 30, 2024, compared to the three months ended November 30, 2023.

Selling and administrative expenses as a percent of revenue for the three months ended November 30, 2024 were 32.2%, compared to 32.6% for the three months ended November 30, 2023.

The improvement as a percent of revenue was primarily due to a decrease in employee-partner related expenses as a percent of revenue.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased $16.7 million to $75.2 million for the three months ended November 30, 2024, compared to the three months ended November 30, 2023.

Income before income taxes was 25.1% of the reportable operating segment’s revenue compared to the three months ended November 30, 2023 of 22.0%.

The increase in income before income taxes

was primarily due to the previously discussed improvements in gross margin, in addition to the improvement in selling and administrative expenses as a percent of revenue noted above.

Cost of first aid and safety services for the three months ended February 28, 2025, increased $14.8 million, or 12.8%, compared to the three months ended February 29, 2024.

The gross margin as a percent of revenue was 57.0% for the three months ended February 28, 2025, compared to the gross margin as a percent of revenue of 56.3% in the three months ended February 29, 2024.

The improvement in gross margin as a percent of revenue was primarily driven by a favorable sales mix and sourcing and productivity initiatives.

Selling and administrative expenses increased $10.6 million in the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Selling and administrative expenses as a percent of revenue for the three months ended February 28, 2025 were 33.3%, compared to 34.3% for the three months ended February 29, 2024.

The resulting increase as a percent of revenue was primarily due to investments in selling resources.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased $13.8 million to $71.5 million for the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

Income before income taxes was 23.7% of the reportable operating segment’s revenue compared to the three months ended February 29, 2024 of 22.0%.

The increase in income before income taxes was primarily due to the previously discussed improvements in gross margin, in addition to the change in selling and administrative expenses as a percent of revenue noted above.

Consolidated Results

Six Months Ended November 30, 2024 Compared to Six Months Ended November 30, 2023

Total revenue increased 7.3% to $5,063.4 million for the six months ended November 30, 2024, compared to $4,719.5 million for the six months ended November 30, 2023.

Total organic revenue growth was 7.6%.

Nine Months Ended February 28, 2025 Compared to Nine Months Ended February 29, 2024

Total revenue increased 7.7% to $7,672.5 million for the nine months ended February 28, 2025, compared to $7,125.7 million for the nine months ended February 29, 2024.

Total organic revenue growth was also 7.7%.

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

Revenue growth was positively impacted by 0.6% due to acquisitions, negatively impacted by 0.8% due to one less workday in the six months ended November 30, 2024 compared to the six months ended November 30, 2023, and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

Uniform Rental and Facility Services reportable operating segment revenue was $3,924.2 million for the six months ended November 30, 2024, compared to $3,677.4 million in the six months ended November 30, 2023, which was an increase of 6.7%.

Organic revenue growth for this reportable operating segment was 7.0%.

Uniform Rental and Facility Services reportable operating segment revenue was positively impacted by 0.7% due to acquisitions, negatively impacted by 0.8% due to one less workday in the six months ended November 30, 2024 compared to the six months ended November 30, 2023, and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations.

Revenue growth was positively impacted by 0.7% due to acquisitions, negatively impacted by 0.5% due to one less workday in the nine months ended February 28, 2025 compared to the nine months ended February 29, 2024, and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations.

Uniform Rental and Facility Services reportable operating segment revenue was $5,945.4 million for the nine months ended February 28, 2025, compared to $5,554.0 million in the nine months ended February 29, 2024, which was an increase of 7.0%.

Organic revenue growth for this reportable operating segment was also 7.0%.

Uniform Rental and Facility Services reportable operating segment revenue was positively impacted by 0.8% due to acquisitions, negatively impacted by 0.6% due to one less workday in the nine months ended February 28, 2025 compared to the nine months ended February 29, 2024, 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 $1,139.1 million for the six months ended November 30, 2024, compared to $1,042.1 million for the six months ended November 30, 2023, which was an increase of 9.3%.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, was $1,727.1 million for the nine months ended February 28, 2025, compared to $1,571.7 million for the nine months ended February 29, 2024, which was an increase of 9.9%.

Organic growth for other revenue was 10.1%.

Revenue growth was positively impacted by 0.4% due to acquisitions and negatively impacted by 0.8% due to one less workday in the six months ended November 30, 2024 compared to the six months ended November 30, 2023.

Revenue growth was positively impacted by 0.5% due to acquisitions and negatively impacted by 0.6% due to one less workday in the nine months ended February 28, 2025 compared to the nine months ended February 29, 2024, and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations.

Cost of uniform rental and facility services increased $73.4 million, or 3.8%, for the six months ended November 30, 2024, compared to the six months ended November 30, 2023, primarily due to increased sales volume in each of the underlying operating segments.

Cost of uniform rental and facility services improved as a percent of revenue, decreasing from 52.3% for the six months ended November 30, 2023, to 50.8% for the six months ended November 30, 2024.

This improvement as a percent of revenue was primarily due to efficiency gains in energy and in-service inventory usage and improved leverage of fixed costs.

Cost of uniform rental and facility services increased $122.9 million, or 4.3%, for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024.

Cost of uniform rental and facility services improved as a percent of revenue, decreasing from 51.9% for the nine months ended February 29, 2024, to 50.5% for the nine months ended February 28, 2025.

This improvement as a percent of revenue was primarily due to more efficient usage of in-service inventory and more efficient routing due to our SmartTruck initiative.

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 $24.7 million, or 4.8%, for the six months ended November 30, 2024, compared to the six months ended November 30, 2023.

Cost of other improved as a percent of revenue, decreasing from 49.4% for six months ended November 30, 2023, to 47.3% for the six months ended November 30, 2024.

The improvement in cost of sales as a percent of revenue was primarily due to a favorable sales mix and 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 $93.5 million, or 7.3%, for the six months ended November 30, 2024, compared to the six months ended November 30, 2023.

Selling and administrative expenses were the same as a percent of revenue for both the six months ended November 30, 2024 and 2023, at 27.2%.

Operating income was $1,152.4 million, or 22.8% of revenue, for the six months ended November 30, 2024, compared to $1,000.2 million, or 21.2% of revenue, for the six months ended November 30, 2023.

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

Net interest expense (interest expense less interest income) was $50.1 million for the six months ended November 30, 2024, which was fairly consistent as compared to $49.9 million for the six months ended November 30, 2023.

Cintas’ effective tax rate was 18.3% and 20.1% for the six months ended November 30, 2024 and 2023, respectively.

Cost of other increased $46.8 million, or 6.1%, for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024.

Cost of other improved as a percent of revenue, decreasing from 49.2% for nine months ended February 29, 2024, to 47.4% for the nine months ended February 28, 2025.

Selling and administrative expenses increased $136.0 million, or 7.0%, for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024, but improved as a percent of revenue from 27.4% for the nine months ended February 29, 2024, to 27.2% for the nine months ended February 28, 2025.

In the nine months ended February 28, 2025, we recorded a gain on a sale of property and equipment and in the nine months ended February 29, 2024, we recorded costs associated with a tentative legal settlement, both of which impacted all segments by the same percent of revenue.

Excluding those items, selling and administrative expenses as a percent of revenue increased for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024.

The resulting increase as a percent of revenue was primarily due to investments in technology.

Operating income was $1,762.3 million, or 23.0% of revenue, for the nine months ended February 28, 2025, compared to $1,521.0 million, or 21.3% of revenue, for the nine months ended February 29, 2024.

The improvement in operating income as a percent of revenue was primarily due to the previously mentioned improvements in gross margin, in addition to the change in selling and administrative expenses as a percent of revenue noted above.

Net interest expense (interest expense less interest income) was $73.5 million for the nine months ended February 28, 2025, compared to $74.5 million for the nine months ended February 29, 2024.

The reduction was primarily due to a decrease in the average amount of outstanding debt during the nine months ended February 29, 2025.

Cintas’ effective tax rate was 19.2% and 20.0% for the nine months ended February 28, 2025 and February 29, 2024, 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 for the six months ended November 30, 2024, increased $140.8 million, or 18.5%, compared to the six months ended November 30, 2023.

Diluted earnings per share was $2.19 for the six months ended November 30, 2024, which was an increase of 19.7% compared to the six months ended November 30, 2023.

Net income for the nine months ended February 28, 2025, increased $206.7 million, or 17.9%, compared to the nine months ended February 29, 2024.

Diluted earnings per share was $3.31 for the nine months ended February 28, 2025, which was an increase of 18.6% compared to the nine months ended February 29, 2024.

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

Uniform Rental and Facility Services Reportable Operating Segment

Six Months Ended November 30, 2024 Compared to Six Months Ended November 30, 2023

Uniform Rental and Facility Services reportable operating segment revenue increased 6.7% to $3,924.2 million for the six months ended November 30, 2024, compared to $3,677.4 million for the six months ended November 30, 2023.

Organic revenue growth for this reportable operating segment was 7.0%.

Nine Months Ended February 28, 2025 Compared to Nine Months Ended February 29, 2024

Uniform Rental and Facility Services reportable operating segment revenue increased 7.0% to $5,945.4 million for the nine months ended February 28, 2025, compared to $5,554.0 million for the nine months ended February 29, 2024.

Organic revenue growth for this reportable operating segment was also 7.0%.

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 uniform rental and facility services increased $73.4 million, or 3.8%, for the six months ended November 30, 2024 over the six months ended November 30, 2023.

The reportable operating segment’s gross margin was $1,929.0 million, or 49.2% of revenue, for the six months ended November 30, 2024, compared to the gross margin of 47.7% for the six months ended November 30, 2023.

The improvement in gross margin was primarily the result of efficiency gains in energy and in-service inventory usage and improved leverage of fixed costs.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $60.8 million but decreased as a percent of revenue for the six months ended November 30, 2024 to 25.7%, compared to 25.8% for the six months ended November 30, 2023.

As a percent of revenue, expenses were largely consistent as compared to the six months ended November 30, 2023.

Income before income taxes increased $112.7 million, or 14.0%, for the Uniform Rental and Facility Services reportable operating segment for the six months ended November 30, 2024, compared to the six months ended November 30, 2023.

Income before income taxes was 23.4% of the reportable operating segment’s revenue, compared to 21.9% for the six months ended November 30, 2023.

Cost of uniform rental and facility services increased $122.9 million, or 4.3%, for the nine months ended February 28, 2025 over the nine months ended February 29, 2024.

The reportable operating segment’s gross margin was $2,940.5 million, or 49.5% of revenue, for the nine months ended February 28, 2025, compared to the gross margin of 48.1% for the nine months ended February 29, 2024.

This improvement as a percent of revenue was primarily due to more efficient usage of in-service inventory and more efficient routing due to our SmartTruck initiative.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $86.8 million but decreased as a percent of revenue for the nine months ended February 28, 2025 to 25.8%, compared to 26.0% for the nine months ended February 29, 2024.

Excluding the items noted previously, selling and administrative expenses as a percent of revenue increased for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024.

The resulting increase as a percent of revenue was primarily due to investments in technology.

Income before income taxes increased $181.7 million, or 14.8%, for the Uniform Rental and Facility Services reportable operating segment for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024.

Income before income taxes was 23.7% of the reportable operating segment’s revenue, compared to 22.1% for the nine months ended February 29, 2024.

The improvement 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, 2024 Compared to Six Months Ended November 30, 2023

First Aid and Safety Services reportable operating segment revenue increased from $527.1 million to $591.9 million, or 12.3%, for the six months ended November 30, 2024, over the six months ended November 30, 2023.

Nine Months Ended February 28, 2025 Compared to Nine Months Ended February 29, 2024

First Aid and Safety Services reportable operating segment revenue increased from $789.7 million to $893.7 million, or 13.2%, for the nine months ended February 28, 2025, over the nine months ended February 29, 2024.

Organic revenue growth for this reportable operating segment was 13.8%.

First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.1% due to acquisitions, negatively impacted by 0.9% due to one less workday in the six months ended November 30, 2024 compared to the six months ended November 30, 2023, 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 0.1% due to acquisitions, negatively impacted by 0.5% due to one less workday in the nine months ended February 28, 2025 compared to the nine months ended February 29, 2024, and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations.

Cost of first aid and safety services increased $15.6 million, or 6.6%, for the six months ended November 30, 2024, compared to the six months ended November 30, 2023, due to higher sales volume.

The gross margin as a percent of revenue was 57.5% for the six months ended November 30, 2024, which was an increase of 230 basis points compared to the gross margin as a percent of revenue of 55.2% in the six months ended November 30, 2023.

The improvement in gross margin was primarily driven by a favorable 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 $20.8 million but decreased as a percent of revenue to 32.7%, for the six months ended November 30, 2024, compared to 32.8% for the six months ended November 30, 2023.

As a percent of revenue, expenses were largely consistent as compared to the six months ended November 30, 2023.

Income before income taxes for the First Aid and Safety Services reportable operating segment was $146.5 million for the six months ended November 30, 2024, compared to $118.1 million for the six months ended November 30, 2023.

Income before income taxes, at 24.8% of the reportable operating segment’s revenue, increased 240 basis points compared to the six months ended November 30, 2023 primarily due to the improvements in gross margin.

Cost of first aid and safety services increased $30.4 million, or 8.7%, for the nine months ended February 28, 2025, compared to the nine months ended February 29, 2024, due to higher sales volume.

The gross margin as a percent of revenue was 57.3% for the nine months ended February 28, 2025, compared to the gross margin as a percent of revenue of 55.6% in the nine months ended February 29, 2024.

The improvement in gross margin as a percent of revenue was primarily driven by a favorable sales mix and sourcing and productivity initiatives.

Selling and administrative expenses increased $31.4 million but decreased as a percent of revenue to 32.9%, for the nine months ended February 28, 2025, compared to 33.3% for the nine months ended February 29, 2024.

Excluding the items noted previously, selling and administrative expenses as a percent of revenue for the nine months ended February 28, 2025 was the same as selling and administrative expenses as a percent of revenue for the nine months ended February 29, 2024.

Income before income taxes for the First Aid and Safety Services reportable operating segment was $218.0 million for the nine months ended February 28, 2025, compared to $175.8 million for the nine months ended February 29, 2024.

Income before income taxes, at 24.4% of the reportable operating segment’s revenue, increased 210 basis points compared to the nine months ended February 29, 2024 primarily due to the improvements in gross margin, in addition to the change in selling and administrative expenses as a percent of revenue noted above.

Liquidity and Capital Resources

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) 2024 2023

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

(In thousands) February 28, 2025 February 29, 2024

Net cash provided by operating activities $ 1,530,156 $ 1,386,741

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Cash and cash equivalents at the end of the period $ 243,428 $ 128,483

Cash and cash equivalents as of November 30, 2024 and 2023, include $63.7 million and $40.7 million, respectively, that is located outside of the U.S.

Cash and cash equivalents as of February 28, 2025 and February 29, 2024, include $34.2 million and $52.4 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 $908.1 million for the six months ended November 30, 2024, compared to $729.6 million for the six months ended November 30, 2023.

Net cash provided by operating activities was $1,530.2 million for the nine months ended February 28, 2025, compared to $1,386.7 million for the nine months ended February 29, 2024.

The increase from the prior fiscal year was primarily due to an increase in net income and favorable changes in working capital, specifically accounts payable and accrued compensation and related liabilities.

These improvements were partially offset by unfavorable changes in working capital, specifically, uniforms and other rental items in service, income taxes and prepaid expenses and other current assets.

These improvements were partially offset by unfavorable changes in working capital, specifically, inventories, net, uniforms and other rental items in service, and accounts receivable, net.

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

Capital expenditures were $194.3 million and $200.5 million for the six months ended November 30, 2024 and 2023, respectively.

Capital expenditures in the six months ended November 30, 2024, included $141.2 million for the Uniform Rental and Facility Services reportable operating segment and $25.3 million for the First Aid and Safety Services reportable operating segment.

Cash paid for acquisitions of businesses was $154.9 million and $74.0 million for the six months ended November 30, 2024 and 2023, respectively.

The acquisitions during both the six months ended November 30, 2024 and 2023, 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.

In addition, during the six months ended November 30, 2024, Cintas received cash proceeds of $5.9 million related to the sale of property and equipment.

Net cash used in investing activities also includes $7.1 million and $7.5 million of purchases of investments during the six months ended November 30, 2024 and 2023, respectively.

Net cash used in financing activities was $776.9 million and $485.8 million for the six months ended November 30, 2024 and 2023, respectively.

The increase in cash used in financing activities was due to the increase in share buyback activity, an increase in dividends paid and a decrease in the net issuance of commercial paper.

This increase in cash used in financing activities was partially offset by a decrease in payments of debt in the six months ended November 30, 2024.

Cintas announced on July 27, 2021, July 26, 2022, and July 23, 2024, that the Board of Directors (the Board) authorized share buyback programs for $1.5 billion, $1.0 billion and $1.0 billion, respectively.

None of the share buyback programs have an expiration date.

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

Capital expenditures were $294.3 million and $307.6 million for the nine months ended February 28, 2025 and February 29, 2024, respectively.

Capital expenditures in the nine months ended February 28, 2025, included $219.3 million for the Uniform Rental and Facility Services reportable operating segment and $37.7 million for the First Aid and Safety Services reportable operating segment.

Cash paid for acquisitions of businesses was $198.8 million and $185.0 million for the nine months ended February 28, 2025 and February 29, 2024, respectively.

The acquisitions during both the nine months ended February 28, 2025 and February 29, 2024, occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection Services operating segment, which is included in All Other.

In addition, during the nine months ended February 28, 2025, Cintas received cash proceeds of $24.0 million related to the sale of property and equipment.

Net cash used in investing activities also includes $7.1 million and $7.6 million of purchases of investments during the nine months ended February 28, 2025 and February 29, 2024, respectively.

Net cash used in financing activities was $1,150.6 million and $879.5 million for the nine months ended February 28, 2025 and February 29, 2024, 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 in cash used in financing activities was partially offset by a decrease in payments of debt in the nine months ended February 28, 2025.

Cintas announced on July 27, 2021, that the Board of Directors (the Board) authorized a $1.5 billion share buyback program, which was completed during the fourth quarter of fiscal year 2024.

On July 26, 2022 and July 23, 2024, Cintas announced that the Board authorized new share buyback programs 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 for the nine months ended:

February 28, 2025 February 29, 2024

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.

There were no share buybacks in the period subsequent to November 30, 2024, through January 8, 2025.

From the inception of the July 26, 2022 share buyback program through January 8, 2025, Cintas has purchased 3.1 million shares of Cintas common stock in the aggregate, at an average price of $172.85 per share, for a total purchase price of $530.7 million.

There were no share buybacks in the period subsequent to February 28, 2025, through April 3, 2025.

From the inception of the July 26, 2022 share buyback program through April 3, 2025, Cintas has purchased 3.1 million shares of Cintas common stock in the aggregate, at an average price of $172.85 per share, for a total purchase price of $530.7 million.

Cintas has made no purchases under the July 23, 2024 share buyback program.

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Per Share Total

Six months ended November 30, 2024

Nine months ended February 28, 2025

April 9, 2024 May 15, 2024 June 14, 2024 $ 0.3375 $ 138.2

July 23, 2024 August 15, 2024 September 3, 2024 0.39 157.4

October 29, 2024 November 15, 2024 December 13, 2024 0.39 158.1

$ 1.1175 $ 453.7

Six months ended November 30, 2023

Nine months ended February 29, 2024

April 11, 2023 May 15, 2023 June 15, 2023 $ 0.2875 $ 117.6

July 25, 2023 August 15, 2023 September 15, 2023 0.3375 138.2

October 24, 2023 November 15, 2023 December 15, 2023 0.3375 137.5

$ 0.9625 $ 393.3

Accrued Dividends

As of November 30, 2024

October 29, 2024 (1)

November 15, 2024 December 13, 2024 $ 0.39 $ 158.0

As of November 30, 2023

October 24, 2023 (1)

November 15, 2023 December 15, 2023 $ 0.3375 $ 137.5

(1) The dividends declared during the three months ended November 30, 2024 and 2023 were included in current accrued liabilities on the consolidated condensed balance sheet at November 30, 2024 and 2023.

As of February 28, 2025

January 14, 2025 (1)

February 14, 2025 March 14, 2025 $ 0.39 $ 158.1

As of February 29, 2024

January 16, 2024 (1)

February 15, 2024 March 15, 2024 $ 0.3375 $ 137.6

(1) The dividends declared during the three months ended February 28, 2025 and February 29, 2024 were included in current accrued liabilities on the consolidated condensed balance sheet at February 28, 2025 and February 29, 2024.

Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board 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 may deem relevant.

During the six months ended November 30, 2024 and 2023, Cintas issued $181.0 million and $210.0 million, net of commercial paper, respectively.

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 nine months ended February 29, 2024, Cintas repurchased, and subsequently retired, $13.5 million of its 6.15%, 30-year senior notes.

The following table summarizes Cintas' outstanding debt:

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Issued Fiscal Year

Maturity November 30,

Maturity February 28,

Debt due within one year

Commercial paper 4.70 % (1)

2025 2025 $ 181,000 $ —

Senior notes (1)

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Total debt due after one year $ 2,027,477 $ 2,025,934

(1) Variable rate debt instrument.

The rate presented is the variable borrowing rate at November 30, 2024.

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

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

As of November 30, 2024, there was $181.0 million of commercial paper outstanding with a weighted average interest rate of 4.70% and no borrowings on our revolving credit facility.

As of May 31, 2024, there was no commercial paper outstanding and no borrowings on our revolving credit facility.

As of February 28, 2025 and May 31, 2024, 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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Our access to the commercial paper and long-term debt markets has historically provided us with sources of liquidity.

We do not anticipate having difficulty in obtaining financing from those markets in the future based on our favorable experiences in the debt markets in the recent past.

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 November 30, 2024, our ratings were as follows:

We do not anticipate having difficulty in obtaining financing from those markets in the future based on our favorable experiences in the debt markets in the recent past and Cintas expects to access such markets from time to time in the future to fund its cash requirements, including the repayment of short-term and/or long-term obligations.

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 February 28, 2025, our ratings were as follows:

Rating Agency Outlook Commercial

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

2 is the issuer of the $2,486.6 million aggregate principal amount of senior notes outstanding as of November 30, 2024, 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 February 28, 2025, 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:

Six Months Ended

Nine Months Ended

Summarized Consolidated Condensed Statements of Income

(In thousands)

2024 November 30,

2025 February 29,

Net sales to unrelated parties $ 7,278,585 $ 6,740,255

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failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety;

the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks;

the effect on operations of exchange rate fluctuations, and other political, economic and regulatory risks;

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

our ability to meet our aspirations relating to sustainability opportunities, improvements and efficiencies;

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

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

the effect of new accounting pronouncements;

risks associated with cybersecurity threats, including disruptions caused by the inaccessibility of computer systems data and cybersecurity management, the initiation or outcome of litigation, investigations or other proceedings;

risks associated with cybersecurity threats, including disruptions caused by the inaccessibility of computer systems data and cybersecurity risk management;

the initiation or outcome of litigation, investigations or other proceedings;

higher assumed sourcing or distribution costs of products;

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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