Item 1. Financial Statements
ITEM 1.
FINANCIAL STATEMENTS
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
(In thousands except per share data) February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024
Revenue:
Uniform rental and facility services $ 2,021,144 $ 1,876,642 $ 5,945,393 $ 5,554,009
Other 588,015 529,531 1,727,136 1,571,671
Total revenue 2,609,159 2,406,173 7,672,529 7,125,680
Costs and expenses:
Cost of uniform rental and facility services
1,009,660 960,208 3,004,875 2,882,022
Cost of other 280,158 258,117 819,479 772,691
Selling and administrative expenses 709,488 667,048 2,085,901 1,949,928
Operating income 609,853 520,800 1,762,274 1,521,039
Interest income ( 1,349 ) ( 930 ) ( 3,561 ) ( 2,121 )
Interest expense 24,764 25,530 77,048 76,664
Income before income taxes 586,438 496,200 1,688,787 1,446,496
Income taxes 122,941 98,621 324,762 289,219
Net income $ 463,497 $ 397,579 $ 1,364,025 $ 1,157,277
Basic earnings per share $ 1.14 $ 0.98 $ 3.37 $ 2.83
Diluted earnings per share $ 1.13 $ 0.96 $ 3.31 $ 2.79
Dividends declared per share $ 0.39 $ 0.3375 $ 1.17 $ 1.0125
See accompanying notes.
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CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Nine Months Ended
(In thousands) February 28,
2025 February 29,
2024 February 28,
2025 February 29,
2024
Net income $ 463,497 $ 397,579 $ 1,364,025 $ 1,157,277
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments
( 15,168 ) ( 450 ) ( 30,003 ) 371
Change in fair value of interest rate lock
agreements, net of tax expense (benefit)
of $ 1,786 , $( 1,726 ), $ 144 and $ 4,195 ,
respectively
5,216 ( 5,042 ) 421 12,256
Amortization of interest rate lock agreements, net of tax benefit of $( 513 ), $( 513 ), $( 1,539 ) and $( 1,503 ), respectively
( 1,523 ) ( 1,524 ) ( 4,569 ) ( 4,461 )
Other, net of tax expense of $ 0 , $ 0 ,
$ 0 and $ 130 , respectively
— — — 379
Other comprehensive (loss) income, net of
tax expense (benefit) of $ 1,273 , $( 2,239 ),
$( 1,395 ) and $ 2,822 , respectively
( 11,475 ) ( 7,016 ) ( 34,151 ) 8,545
Comprehensive income $ 452,022 $ 390,563 $ 1,329,874 $ 1,165,822
See accompanying notes.
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CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) February 28,
2025 May 31,
2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 243,428 $ 342,015
Accounts receivable, net 1,397,824 1,244,182
Inventories, net 420,826 410,201
Uniforms and other rental items in service 1,100,039 1,040,144
Income taxes, current 663 —
Prepaid expenses and other current assets 178,648 148,665
Total current assets 3,341,428 3,185,207
Property and equipment, net 1,610,414 1,534,168
Investments 336,892 302,212
Goodwill 3,353,553 3,212,424
Service contracts, net 315,336 321,902
Operating lease right-of-use assets, net 209,399 187,953
Other assets, net 444,114 424,951
$ 9,611,136 $ 9,168,817
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 408,461 $ 339,166
Accrued compensation and related liabilities 208,952 214,130
Accrued liabilities 825,032 761,283
Income taxes, current — 18,618
Operating lease liabilities, current 48,786 45,727
Debt due within one year 449,915 449,595
Total current liabilities 1,941,146 1,828,519
Long-term liabilities:
Debt due after one year 2,027,477 2,025,934
Deferred income taxes 466,816 475,512
Operating lease liabilities 165,664 146,824
Accrued liabilities 417,785 375,656
Total long-term liabilities 3,077,742 3,023,926
Shareholders’ equity:
Preferred stock, no par value: — —
100 shares authorized, none outstanding
Common stock, no par value, and paid-in capital: 2,525,876 2,305,301
1,700,000 shares authorized
FY 2025: 776,172 shares issued and 403,669 shares outstanding
FY 2024: 773,097 shares issued and 405,008 shares outstanding
Retained earnings 11,507,826 10,617,955
Treasury stock: ( 9,498,504 ) ( 8,698,085 )
FY 2025: 372,503 shares
FY 2024: 368,089 shares
Accumulated other comprehensive income 57,050 91,201
Total shareholders’ equity 4,592,248 4,316,372
$ 9,611,136 $ 9,168,817
See accompanying notes.
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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, 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
Net income — — 448,495 — — — 448,495
Comprehensive loss, net of tax — — — ( 14,853 ) — — ( 14,853 )
Dividends — — ( 158,004 ) — — — ( 158,004 )
Stock-based compensation — 32,417 — — — — 32,417
Vesting of stock-based compensation awards 14 — — — — — —
Stock options exercised 519 26,173 — — ( 122 ) ( 25,829 ) 344
Repurchase of common stock — — — — ( 174 ) ( 36,716 ) ( 36,716 )
Balance at November 30, 2024 775,764 $ 2,474,313 $ 11,202,524 $ 68,525 ( 372,268 ) $ ( 9,452,256 ) $ 4,293,106
Net income — — 463,497 — — — 463,497
Comprehensive loss, net of tax — — — ( 11,475 ) — — ( 11,475 )
Dividends — — ( 158,195 ) — — — ( 158,195 )
Stock-based compensation — 31,802 — — — — 31,802
Vesting of stock-based compensation awards 30 — — — — — —
Stock options exercised 378 19,761 — — ( 101 ) ( 19,637 ) 124
Repurchase of common stock — — — — ( 134 ) ( 26,611 ) ( 26,611 )
Balance at February 28, 2025 776,172 $ 2,525,876 $ 11,507,826 $ 57,050 ( 372,503 ) $ ( 9,498,504 ) $ 4,592,248
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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, 2023 768,796 $ 2,031,542 $ 9,597,315 $ 77,778 ( 361,867 ) $ ( 7,842,649 ) $ 3,863,986
Net income — — 385,085 — — — 385,085
Comprehensive income, net of tax — — — 9,391 — — 9,391
Dividends — — ( 138,272 ) — — — ( 138,272 )
Stock-based compensation — 30,242 — — — — 30,242
Vesting of stock-based compensation awards 625 — — — — — —
Stock options exercised 1,210 59,691 — — ( 472 ) ( 59,212 ) 479
Repurchase of common stock — — — — ( 582 ) ( 73,276 ) ( 73,276 )
Balance at August 31, 2023 770,631 $ 2,121,475 $ 9,844,128 $ 87,169 ( 362,921 ) $ ( 7,975,137 ) $ 4,077,635
Net income — — 374,613 — — — 374,613
Comprehensive income, net of tax — — — 6,170 — — 6,170
Dividends — — ( 137,474 ) — — — ( 137,474 )
Stock-based compensation — 22,940 — — — — 22,940
Vesting of stock-based compensation awards 14 — — — — — —
Stock options exercised 800 35,536 — — ( 273 ) ( 35,087 ) 449
Repurchase of common stock — — — — ( 2,861 ) ( 349,852 ) ( 349,852 )
Balance at November 30, 2023 771,445 $ 2,179,951 $ 10,081,267 $ 93,339 ( 366,055 ) $ ( 8,360,076 ) $ 3,994,481
Net income — — 397,579 — — — 397,579
Comprehensive loss, net of tax — — — ( 7,016 ) — — ( 7,016 )
Dividends — — ( 137,598 ) — — — ( 137,598 )
Stock-based compensation — 31,308 — — — — 31,308
Vesting of stock-based compensation awards 4 — — — — — —
Stock options exercised 912 35,070 — — ( 232 ) ( 34,723 ) 347
Repurchase of common stock — — — — ( 298 ) ( 45,018 ) ( 45,018 )
Balance at February 29, 2024 772,361 $ 2,246,329 $ 10,341,248 $ 86,323 ( 366,585 ) $ ( 8,439,817 ) $ 4,234,083
See accompanying notes.
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CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
(In thousands) February 28, 2025 February 29, 2024
Cash flows from operating activities:
Net income $ 1,364,025 $ 1,157,277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 225,714 207,637
Amortization of intangible assets and capitalized contract costs 146,580 119,815
Stock-based compensation 97,586 84,490
Gain on sale of property and equipment ( 19,341 ) —
Deferred income taxes ( 7,286 ) ( 21,366 )
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net ( 158,761 ) ( 109,040 )
Inventories, net ( 8,053 ) 55,834
Uniforms and other rental items in service ( 60,502 ) ( 9,060 )
Prepaid expenses and other current assets and capitalized contract costs ( 146,062 ) ( 104,873 )
Accounts payable 72,799 5,771
Accrued compensation and related liabilities ( 4,562 ) ( 58,511 )
Accrued liabilities and other 47,617 52,945
Income taxes, current ( 19,598 ) 5,822
Net cash provided by operating activities 1,530,156 1,386,741
Cash flows from investing activities:
Capital expenditures ( 294,260 ) ( 307,558 )
Purchases of investments ( 7,064 ) ( 7,592 )
Proceeds from sale of property and equipment 23,972 —
Acquisitions of businesses, net of cash acquired ( 198,808 ) ( 185,028 )
Other, net 1,788 ( 3,100 )
Net cash used in investing activities ( 474,372 ) ( 503,278 )
Cash flows from financing activities:
Repayment of debt — ( 13,450 )
Proceeds from exercise of stock-based compensation awards 699 1,275
Dividends paid ( 453,703 ) ( 393,310 )
Repurchase of common stock ( 678,129 ) ( 468,146 )
Other, net ( 19,448 ) ( 5,839 )
Net cash used in financing activities ( 1,150,581 ) ( 879,470 )
Effect of exchange rate changes on cash and cash equivalents ( 3,790 ) 341
Net (decrease) increase in cash and cash equivalents ( 98,587 ) 4,334
Cash and cash equivalents at beginning of period 342,015 124,149
Cash and cash equivalents at end of period $ 243,428 $ 128,483
See accompanying notes.
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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, 2024 (Annual Report) filed with the SEC on July 25, 2024. 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) February 28,
2025 May 31,
2024
Raw materials $ 20,223 $ 16,664
Work in process 45,137 48,458
Finished goods 355,466 345,079
Inventories, net $ 420,826 $ 410,201
Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 62.7 million and $ 63.1 million at February 28, 2025 and May 31, 2024, 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.
Stock Split
On May 2, 2024, the Company announced a four -for-one split of its common stock (the Stock Split), in the form of a stock dividend. Shareholders of record, as of September 4, 2024, received three additional common stock shares for each common share held, which were distributed after market close on September 11, 2024. The Company's common stock shares began trading on a post Stock Split basis after the market opening on September 12, 2024. All references made to common stock shares, equity awards, common stock per share amounts and treasury stock shares in the accompanying consolidated condensed financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split.
.
New Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 requires additional disclosures pertaining to significant expenses and other items of an entity’s reportable operating segments. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 (fiscal 2025), and for interim periods within fiscal years beginning after December 15, 2024 (fiscal 2026). Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on the consolidated condensed financial statements.
In December 2023, the FASB issued 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
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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.
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:
Three Months Ended Nine Months Ended
(In thousands) February 28,
2025 February 29,
2024 February 28,
2025 February 29,
2024
Uniform Rental
and Facility
Services $ 2,021,144 77.5 % $ 1,876,642 78.0 % $ 5,945,393 77.5 % $ 5,554,009 78.0 %
First Aid and
Safety Services 301,759 11.6 % 262,602 10.9 % 893,693 11.6 % 789,696 11.1 %
Fire Protection
Services 203,827 7.8 % 182,410 7.6 % 595,073 7.8 % 530,676 7.4 %
Uniform Direct
Sales 82,429 3.1 % 84,519 3.5 % 238,370 3.1 % 251,299 3.5 %
Total revenue $ 2,609,159 100.0 % $ 2,406,173 100.0 % $ 7,672,529 100.0 % $ 7,125,680 100.0 %
The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 11 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 represent 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 are 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.
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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 February 28, 2025, the current and noncurrent assets related to capitalized commissions totaled $ 94.8 million and $ 270.1 million, respectively. As of May 31, 2024, the current and noncurrent assets related to capitalized commissions totaled $ 94.6 million and $ 262.5 million, respectively. The Company recorded amortization expense related to capitalized commissions of $ 27.4 million and $ 25.6 million during the three months ended February 28, 2025 and February 29, 2024, respectively. During the nine months ended February 28, 2025 and February 29, 2024, we recorded amortization expense related to capitalized commissions of $ 80.0 million and $ 75.3 million, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income.
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 $ 22.9 million and $ 21.0 million for the three months ended February 28, 2025 and February 29, 2024, respectively. For the nine months ended February 28, 2025 and February 29, 2024, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 67.5 million and $ 61.5 million, respectively.
The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the nine months ended:
(In thousands) February 28, 2025 February 29, 2024
Cash paid for amounts included in the measurement of operating lease liabilities $ 41,724 $ 38,577
Operating lease right-of-use assets obtained in exchange for new and renewed
operating lease liabilities $ 56,151 $ 41,506
Operating lease right-of-use assets acquired in business combinations $ 2,885 $ 334
Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:
February 28,
2025 May 31,
2024
Weighted-average remaining lease term 5.55 years 5.15 years
Weighted-average discount rate 3.93 % 3.48 %
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The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of February 28, 2025:
(In thousands)
2025 (remaining three months)
$ 14,222
2026 54,431
2027 44,982
2028 38,659
2029 30,034
Thereafter 58,649
Total payments 240,977
Less interest ( 26,527 )
Total present value of lease payments $ 214,450
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 February 28, 2025 As of May 31, 2024
(In thousands) Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Fair Value
Cash and cash equivalents $ 243,428 $ — $ — $ 243,428 $ 342,015 $ — $ — $ 342,015
Other assets, net:
Interest rate lock
agreements — 95,395 — 95,395 — 94,829 — 94,829
Total assets at fair
value $ 243,428 $ 95,395 $ — $ 338,823 $ 342,015 $ 94,829 $ — $ 436,844
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. See Note 9 entitled Acquisitions.
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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 (in each case as adjusted to reflect the Stock Split):
Three Months Ended Nine Months Ended
Basic Earnings per Share
(In thousands except per share data)
February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024
Net income $ 463,497 $ 397,579 $ 1,364,025 $ 1,157,277
Less: net income allocated to participating securities 1,629 1,543 4,791 4,486
Net income available to common shareholders $ 461,868 $ 396,036 $ 1,359,234 $ 1,152,791
Basic weighted average common shares outstanding
403,769 405,910 403,568 406,723
Basic earnings per share $ 1.14 $ 0.98 $ 3.37 $ 2.83
Three Months Ended Nine Months Ended
Diluted Earnings per Share
(In thousands except per share data)
February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024
Net income $ 463,497 $ 397,579 $ 1,364,025 $ 1,157,277
Less: net income allocated to participating securities 1,629 1,543 4,791 4,486
Net income available to common shareholders $ 461,868 $ 396,036 $ 1,359,234 $ 1,152,791
Basic weighted average common shares outstanding
403,769 405,910 403,568 406,723
Effect of dilutive securities – employee stock options
6,538 6,836 6,924 6,666
Diluted weighted average common shares outstanding
410,307 412,746 410,492 413,389
Diluted earnings per share $ 1.13 $ 0.96 $ 3.31 $ 2.79
For the three months ended February 28, 2025 and February 29, 2024, options granted to purchase 1.2 million and 1.9 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. For the nine months ended February 28, 2025 and February 29, 2024, options granted to purchase 0.9 million and 1.5 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).
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.
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The following table summarizes the share buyback activity by program and period:
Three Months Ended Nine Months Ended
February 28, 2025 February 28, 2025
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 — $ — $ — 2,732 $ 173.40 $ 473,617
July 23, 2024 — — — — — —
— $ — $ — 2,732 $ 173.40 $ 473,617
Shares acquired for taxes due (1)
134 $ 197.89 $ 26,611 1,052 $ 194.31 $ 204,512
Total repurchase of Cintas common stock $ 26,611 $ 678,129
Three Months Ended Nine Months Ended
February 29, 2024 February 29, 2024
Buyback Activity
(In thousands except per share data)
Shares Avg. Price
per Share Purchase
Price Shares Avg. Price
per Share Purchase
Price
July 27, 2021 — $ — $ — 2,633 $ 121.64 $ 320,266
July 26, 2022 — — — — — —
— $ — $ — 2,633 $ 121.64 $ 320,266
Shares acquired for taxes due (1)
298 $ 151.13 $ 45,018 1,108 $ 133.41 $ 147,880
Total repurchase of Cintas common stock $ 45,018 $ 468,146
(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:
Three Months Ended Nine Months Ended
February 28, 2025 February 28, 2025
(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 101 $ 196.09 $ 19,637 630 $ 194.15 $ 122,290
Three Months Ended Nine Months Ended
February 29, 2024 February 29, 2024
Shares Avg. Price
per Share Non-Cash
Value Shares Avg. Price
per Share Non-Cash
Value
Non-cash transaction activity 232 $ 149.70 $ 34,723 977 $ 132.17 $ 129,023
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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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 nine months ended February 28, 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, 2024 $ 2,773,565 $ 293,747 $ 145,112 $ 3,212,424
Goodwill acquired 132,452 2,878 20,033 155,363
Foreign currency translation ( 12,983 ) ( 1,204 ) ( 47 ) ( 14,234 )
Balance as of February 28, 2025 $ 2,893,034 $ 295,421 $ 165,098 $ 3,353,553
Service Contracts
(In thousands)
Uniform Rental
and Facility Services First Aid
and Safety Services All
Other Total
Balance as of June 1, 2024 $ 290,498 $ 16,203 $ 15,201 $ 321,902
Service contracts acquired 29,907 1,622 6,633 38,162
Service contracts amortization ( 35,968 ) ( 3,971 ) ( 3,111 ) ( 43,050 )
Foreign currency translation ( 1,629 ) ( 49 ) — ( 1,678 )
Balance as of February 28, 2025 $ 282,808 $ 13,805 $ 18,723 $ 315,336
Information regarding Cintas’ service contracts, net and other assets, net is as follows:
As of February 28, 2025 As of May 31, 2024
(In thousands) Carrying
Amount Accumulated
Amortization Net Carrying
Amount Accumulated
Amortization Net
Service contracts $ 1,065,675 $ 750,339 $ 315,336 $ 1,033,762 $ 711,860 $ 321,902
Capitalized contract
costs (1)
$ 865,080 $ 595,008 $ 270,072 $ 777,535 $ 515,041 $ 262,494
Noncompete and
consulting agreements
and other 247,842 73,800 174,042 233,334 70,877 162,457
Other assets $ 1,112,922 $ 668,808 $ 444,114 $ 1,010,869 $ 585,918 $ 424,951
(1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of February 28, 2025 and May 31, 2024, is $ 94.8 million and $ 94.6 million, respectively.
Amortization expense for service contracts and other assets was $ 43.2 million and $ 40.0 million for the three months ended February 28, 2025 and February 29, 2024, respectively. For the nine months ended February 28, 2025 and February 29, 2024, amortization expense for service contracts and other assets was $ 125.7 million and $ 117.9 million, respectively. These expenses are recorded in selling and administrative expenses on the consolidated condensed statements of income. As of February 28, 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)
2025 (remaining three months) $ 39,536
2026 149,722
2027 126,934
2028 97,663
2029 83,431
Thereafter 195,163
Total future amortization expense $ 692,449
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Note 7 - Debt, Derivatives and Hedging Activities
Cintas' outstanding debt is summarized as follows:
(In thousands) Interest
Rate Fiscal Year
Issued Fiscal Year
Maturity February 28,
2025 May 31,
2024
Debt due within one year
Senior notes (1)
3.11 % 2015 2025 $ 50,042 $ 50,294
Senior notes 3.45 % 2022 2025 400,000 400,000
Debt issuance costs ( 127 ) ( 699 )
Total debt due within one year $ 449,915 $ 449,595
Debt due after one year
Senior notes 3.70 % 2017 2027 $ 1,000,000 $ 1,000,000
Senior notes 4.00 % 2022 2032 800,000 800,000
Senior notes 6.15 % 2007 2037 236,550 236,550
Debt issuance costs ( 9,073 ) ( 10,616 )
Total debt due after one year $ 2,027,477 $ 2,025,934
(1) Cintas assumed these senior notes with the acquisition of G&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate until repayment in fiscal 2025.
Cintas' senior notes, excluding the G&K senior notes assumed with the acquisition of G&K in fiscal 2017, 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 February 28, 2025 were $ 2,486.6 million and $ 2,455.2 million, respectively, and as of May 31, 2024 were $ 2,486.6 million and $ 2,392.8 million, respectively. During the nine months ended February 29, 2024, Cintas repurchased, and subsequently retired $ 13.5 million of its 6.15 %, 30-year senior notes. In conjunction with these transactions, during the nine months ended February 29, 2024, Cintas recognized a loss of $ 0.9 million, which is recorded in interest expense on the consolidated condensed statements of income.
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 February 28, 2025 and May 31, 2024, there was no commercial paper outstanding and no borrowings on our revolving credit facility. The fair value of the commercial paper, which approximates carrying value, is estimated using level 2 inputs based on observable 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 February 28, 2025 and February 29, 2024. For the nine months ended February 28, 2025 and February 29, 2024, the amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 4.6 million and $ 4.5 million, respectively.
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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 February 28, 2025 and May 31, 2024. The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows:
Fiscal Year of Issuance
(In thousands)
February 28,
2025 May 31,
2024
Other Assets, net Other Assets, net
2022 $ 57,577 $ 56,717
2020 $ 37,817 $ 38,112
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 and nine months ended February 28, 2025 or February 29, 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.
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 February 28, 2025 and May 31, 2024, recorded unrecognized tax benefits were $ 40.9 million and $ 32.7 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 2020. 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 2018. 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, 2025.
Cintas’ effective tax rate was 21.0 % and 19.9 % for the three months ended February 28, 2025 and February 29, 2024, respectively. For the nine months ended February 28, 2025 and February 29, 2024, Cintas' effective tax rate was 19.2 % and 20.0 %, respectively. The effective tax rate for all periods was impacted by certain discrete items (primarily the tax accounting impact for stock-based compensation).
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Note 9 - Acquisitions
The purchase price paid for each acquisition has been allocated to the fair value of the assets acquired and liabilities assumed. The fair value summarized in the table below is reflective of the accumulated fair value, as of the date of each acquisition. Cintas acquired the following number of individually immaterial businesses by reportable operating segment and All Other during the nine months ended:
February 28,
2025 February 29,
2024
Uniform Rental and Facility Services 6 7
First Aid and Safety Services 3 1
All Other 11 8
The following summarizes the aggregate purchase price and fair value allocations for all businesses acquired during the nine months ended:
(In thousands) February 28,
2025 February 29,
2024
Fair value of tangible assets acquired $ 25,640 $ 14,350
Fair value of service contracts acquired 38,162 28,860
Fair value of other intangibles acquired 6,868 5,278
Net goodwill recognized 155,363 155,653
Total fair value of assets acquired 226,033 204,141
Total fair value of liabilities assumed ( 2,419 ) —
Total fair value of net assets acquired, net of cash acquired 223,614 204,141
Deferred purchase price consideration ( 24,806 ) ( 19,113 )
Total cash consideration for acquisitions, net of cash acquired $ 198,808 $ 185,028
Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisitions. None of the goodwill is expected to be deductible for income tax purposes.
Cintas is required to provide additional disclosures about fair value measurements as part of the consolidated condensed financial statements for each major category of assets and liabilities measured at fair value on a nonrecurring basis (including business combinations). The working capital assets and liabilities, as well as the property and equipment acquired, were valued using Level 2 inputs which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill and separately identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). The results of operations of the acquisition are included in Cintas' consolidated statements of income subsequent to the date of acquisition and are not material to the consolidated condensed financial statements.
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Note 10 - 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, 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
Other comprehensive (loss) income before
reclassifications ( 18,491 ) 5,161 — ( 13,330 )
Amounts reclassified from accumulated other comprehensive income (loss)
— ( 1,523 ) — ( 1,523 )
Net current period other comprehensive (loss) income ( 18,491 ) 3,638 — ( 14,853 )
Balance at November 30, 2024 ( 33,127 ) 101,052 600 68,525
Other comprehensive (loss) income before
reclassifications ( 15,168 ) 5,216 — ( 9,952 )
Amounts reclassified from accumulated other comprehensive income (loss)
— ( 1,523 ) — ( 1,523 )
Net current period other comprehensive (loss) income ( 15,168 ) 3,693 — ( 11,475 )
Balance at February 28, 2025 $ ( 48,295 ) $ 104,745 $ 600 $ 57,050
(In thousands) Foreign
Currency Unrealized Income
on Interest Rate Locks Other Total
Balance at June 1, 2023 $ ( 17,001 ) $ 96,714 $ ( 1,935 ) $ 77,778
Other comprehensive income before reclassifications 2,634 8,199 — 10,833
Amounts reclassified from accumulated other comprehensive income (loss)
— ( 1,442 ) — ( 1,442 )
Net current period other comprehensive income 2,634 6,757 — 9,391
Balance at August 31, 2023 ( 14,367 ) 103,471 ( 1,935 ) 87,169
Other comprehensive (loss) income before
reclassifications ( 1,813 ) 9,099 379 7,665
Amounts reclassified from accumulated other comprehensive income (loss)
— ( 1,495 ) — ( 1,495 )
Net current period other comprehensive (loss) income ( 1,813 ) 7,604 379 6,170
Balance at November 30, 2023 ( 16,180 ) 111,075 ( 1,556 ) 93,339
Other comprehensive loss before reclassifications ( 450 ) ( 5,042 ) — ( 5,492 )
Amounts reclassified from accumulated other comprehensive income (loss)
— ( 1,524 ) — ( 1,524 )
Net current period other comprehensive loss ( 450 ) ( 6,566 ) — ( 7,016 )
Balance at February 29, 2024 $ ( 16,630 ) $ 104,509 $ ( 1,556 ) $ 86,323
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The following table summarizes the reclassifications out of accumulated other comprehensive income (loss):
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
Three Months Ended Nine Months Ended
(In thousands) February 28,
2025 February 29,
2024 February 28,
2025 February 29,
2024
Amortization of interest
rate locks $ 2,036 $ 2,037 $ 6,108 $ 5,964 Interest expense
Tax expense ( 513 ) ( 513 ) ( 1,539 ) ( 1,503 ) Income taxes
Amortization of interest rate locks, net of tax $ 1,523 $ 1,524 $ 4,569 $ 4,461
Note 11 - 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.
Cintas evaluates the performance of each operating segment based on several factors of which the primary financial measures are revenue and operating income. 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
For the three months ended February 28, 2025
Revenue $ 2,021,144 $ 301,759 $ 286,256 $ — $ 2,609,159
Operating income $ 489,483 $ 71,533 $ 48,837 $ — $ 609,853
For the three months ended February 29, 2024
Revenue $ 1,876,642 $ 262,602 $ 266,929 $ — $ 2,406,173
Operating income $ 420,407 $ 57,717 $ 42,676 $ — $ 520,800
As of and for the nine months ended February 28, 2025
Revenue $ 5,945,393 $ 893,693 $ 833,443 $ — $ 7,672,529
Operating income $ 1,408,280 $ 218,044 $ 135,950 $ — $ 1,762,274
Total assets $ 7,879,273 $ 790,137 $ 698,298 $ 243,428 $ 9,611,136
As of and for the nine months ended February 29, 2024
Revenue $ 5,554,009 $ 789,696 $ 781,975 $ — $ 7,125,680
Operating income $ 1,226,547 $ 175,828 $ 118,664 $ — $ 1,521,039
Total assets $ 7,503,038 $ 745,633 $ 602,096 $ 128,108 $ 8,978,875
(1) Corporate assets include cash and cash equivalents and marketable securities, if applicable, in all periods.
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Note 12 - Litigation and Other Contingencies
Cintas is subject to legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas. Cintas is party to additional litigation not considered in the ordinary course of business, including the litigation discussed below.
The Company is a defendant in a purported class action lawsuit, City of Laurel, Mississippi v. Cintas Corporation No. 2 , filed on March 12, 2021. This is a contract dispute whereby plaintiffs allege that Cintas breached its contracts with participating public agencies and seek, among other things, contract-based damages. In March 2024, an agreement in principle was reached with the plaintiff which would require a one-time monetary payment related to the contract dispute of $ 45.0 million, which was accrued for and included in accrued liabilities on the consolidated condensed balance sheet at February 28, 2025 and May 31, 2024. The amount reserved for this matter did not have a material impact on the consolidated condensed statements of income for any period presented. The Company will also make certain future investments such as people and technology. These future investments are not expected to be material to the Company. The tentative settlement remains subject to approval of the U.S. District Court for the District of Nevada; however, we do not anticipate any material changes in the amounts reflected in the consolidated condensed financial statements.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.