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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedNovember 30, 2023
 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                         to                                        
 Commission file number 0-11399
Cintas Logo - Ready for the Workday.jpg
Cintas Corporation
(Exact name of registrant as specified in its charter)
Washington31-1188630
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification Number)
6800 Cintas Boulevard
P.O. Box 625737
Cincinnati,Ohio45262-5737
(Address of Principal Executive Offices)(Zip Code)
 
Registrant's Telephone Number, Including Area Code: (513) 459-1200
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, no par valueCTASThe NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
Indicate by checkmark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No
Indicate by checkmark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No
Indicate by checkmark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer                 Accelerated Filer                                               Non-Accelerated Filer  
Smaller Reporting Company           Emerging Growth Company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding December 31, 2023
Common Stock, no par value 101,371,435



CINTAS CORPORATION
TABLE OF CONTENTS

Page
November 30, 2023 and May 31, 2023
 



Part I. Financial Information
ITEM 1.                             
FINANCIAL STATEMENTS
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)


 Three Months EndedSix Months Ended
(In thousands except per share data)November 30, 2023November 30, 2022November 30, 2023November 30, 2022
Revenue:  
Uniform rental and facility services$1,850,542 $1,709,987 $3,677,367 $3,407,759 
Other526,635 464,871 1,042,140 933,553 
Total revenue2,377,177 2,174,858 4,719,507 4,341,312 
Costs and expenses:  
Cost of uniform rental and facility services
974,231 906,727 1,921,814 1,797,493 
Cost of other261,398 245,684 514,574 493,260 
Selling and administrative expenses641,865 577,513 1,282,880 1,165,505 
Operating income499,683 444,934 1,000,239 885,054 
Interest income(769)(344)(1,191)(499)
Interest expense26,590 28,920 51,134 56,640 
Income before income taxes473,862 416,358 950,296 828,913 
Income taxes99,249 92,065 190,598 152,931 
Net income$374,613 $324,293 $759,698 $675,982 
Basic earnings per share$3.67 $3.18 $7.43 $6.63 
Diluted earnings per share$3.61 $3.12 $7.32 $6.51 
Dividends declared per share$1.35 $1.15 $2.70 $2.30 
 

See accompanying notes.
3

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)


Three Months EndedSix Months Ended
(In thousands)November 30,
2023
November 30,
2022
November 30,
2023
November 30,
2022
Net income$374,613 $324,293 $759,698 $675,982 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments
(1,813)(9,901)821 (29,107)
Change in fair value of interest rate lock
   agreements, net of tax expense of
   $3,115, $2,531, $5,921 and $2,851,
   respectively
9,099 7,394 17,298 8,328 
Amortization of interest rate lock
   agreements, net of tax benefit of
   $(503), $(513), $(990) and $(1,025),
   respectively
(1,495)(1,521)(2,937)(3,042)
Other, net of tax expense of $130, $0,
   $130 and $0, respectively
379  379  
Other comprehensive income (loss), net
   of tax expense of $2,742, $2,018,
   $5,061 and $1,826, respectively
6,170 (4,028)15,561 (23,821)
Comprehensive income$380,783 $320,265 $775,259 $652,161 


See accompanying notes.






4

CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except per share data)November 30,
2023
May 31,
2023
 (Unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$85,556 $124,149 
Accounts receivable, net1,273,974 1,152,993 
Inventories, net474,840 506,604 
Uniforms and other rental items in service1,035,717 1,011,918 
Prepaid expenses and other current assets166,652 142,795 
Total current assets3,036,739 2,938,459 
Property and equipment, net1,463,826 1,396,476 
Investments270,006 247,191 
Goodwill3,120,506 3,056,201 
Service contracts, net329,511 346,574 
Operating lease right-of-use assets, net179,154 178,464 
Other assets, net414,127 382,991 
 $8,813,869 $8,546,356 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$316,697 $302,292 
Accrued compensation and related liabilities154,452 239,086 
Accrued liabilities619,288 632,504 
Income taxes, current13,102 12,470 
Operating lease liabilities, current44,063 43,710 
Debt due within one year210,000  
Total current liabilities1,357,602 1,230,062 
Long-term liabilities:  
Debt due after one year2,474,287 2,486,405 
Deferred income taxes497,198 498,356 
Operating lease liabilities138,936 138,278 
Accrued liabilities351,365 329,269 
Total long-term liabilities3,461,786 3,452,308 
Shareholders’ equity:  
Preferred stock, no par value:  
100,000 shares authorized, none outstanding
Common stock, no par value, and paid-in capital:2,179,951 2,031,542 
425,000,000 shares authorized
  
FY 2024: 192,861,307 shares issued and 101,347,603 shares outstanding
  
FY 2023: 192,198,938 shares issued and 101,732,148 shares outstanding
Retained earnings10,081,267 9,597,315 
Treasury stock:(8,360,076)(7,842,649)
FY 2024: 91,513,704 shares
  
FY 2023: 90,466,790 shares
Accumulated other comprehensive income93,339 77,778 
Total shareholders’ equity3,994,481 3,863,986 
 $8,813,869 $8,546,356 
See accompanying notes.
5

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)SharesAmountSharesAmount
Balance at June 1, 2023192,199 $2,031,542 $9,597,315 $77,778 (90,467)$(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 awards156 — — — — — — 
Stock options exercised303 59,691 — — (118)(59,212)479 
Repurchase of common stock— — — — (145)(73,276)(73,276)
Balance at August 31, 2023192,658 $2,121,475 $9,844,128 $87,169 (90,730)$(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 awards3 — — — — — — 
Stock options exercised200 35,536 — — (68)(35,087)449 
Repurchase of common stock— — — — (716)(349,852)(349,852)
Balance at November 30, 2023192,861 $2,179,951 $10,081,267 $93,339 (91,514)$(8,360,076)$3,994,481 


6

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)SharesAmountSharesAmount
Balance at June 1, 2022190,838 $1,771,917 $8,719,163 $107,917 (89,127)$(7,290,801)$3,308,196 
Net income— — 351,689 — — — 351,689 
Comprehensive loss, net of tax— — — (19,793)— — (19,793)
Dividends— — (117,461)— — — (117,461)
Stock-based compensation— 26,282 — — — — 26,282 
Vesting of stock-based compensation awards273 — — — — — — 
Stock options exercised543 80,638 — — (193)(79,591)1,047 
Repurchase of common stock— — — — (802)(320,334)(320,334)
Balance at August 31, 2022191,654 $1,878,837 $8,953,391 $88,124 (90,122)$(7,690,726)$3,229,626 
Net income— — 324,293 — — — 324,293 
Comprehensive loss, net of tax— — — (4,028)— — (4,028)
Dividends— — (117,338)— — — (117,338)
Stock-based compensation— 25,255 — — — — 25,255 
Vesting of stock-based compensation awards9 — — — — — — 
Stock options exercised194 29,053 — — (66)(27,975)1,078 
Repurchase of common stock— — — — (68)(28,348)(28,348)
Balance at November 30, 2022191,857 $1,933,145 $9,160,346 $84,096 (90,256)$(7,747,049)$3,430,538 

See accompanying notes.
7

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

 Six Months Ended
(In thousands)November 30, 2023November 30, 2022
Cash flows from operating activities:  
Net income$759,698 $675,982 
Adjustments to reconcile net income to net cash provided by operating activities:
  
Depreciation136,803 126,561 
Amortization of intangible assets and capitalized contract costs79,235 74,693 
Stock-based compensation53,182 51,537 
Deferred income taxes(7,105)18,565 
Change in current assets and liabilities, net of acquisitions of businesses:  
Accounts receivable, net(120,881)(133,897)
Inventories, net32,093 (43,266)
Uniforms and other rental items in service(21,649)(73,475)
Prepaid expenses and other current assets and capitalized contract costs(80,056)(85,532)
Accounts payable14,981 61,421 
Accrued compensation and related liabilities(86,725)(28,212)
Accrued liabilities and other(30,453)(33,352)
Income taxes, current508 8,124 
Net cash provided by operating activities729,631 619,149 
Cash flows from investing activities:  
Capital expenditures(200,527)(146,404)
Purchases of investments(7,475)(5,182)
Acquisitions of businesses, net of cash acquired(73,997)(15,457)
Other, net(196)(4,381)
Net cash used in investing activities(282,195)(171,424)
Cash flows from financing activities:  
Issuance of commercial paper, net210,000 124,046 
Repayment of debt(13,450) 
Proceeds from exercise of stock-based compensation awards929 2,125 
Dividends paid(255,839)(215,017)
Repurchase of common stock(423,128)(348,682)
Other, net(4,322)(8,840)
Net cash used in financing activities(485,810)(446,368)
Effect of exchange rate changes on cash and cash equivalents(219)(2,029)
Net decrease in cash and cash equivalents(38,593)(672)
Cash and cash equivalents at beginning of period124,149 90,471 
Cash and cash equivalents at end of period$85,556 $89,799 
See accompanying notes.
8

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, 2023 (Annual Report) filed with the SEC on July 27, 2023. 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, net are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory is comprised of the following at: 
(In thousands)November 30,
2023
May 31,
2023
Raw materials$19,283 $27,878 
Work in process46,063 56,384 
Finished goods409,494 422,342 
Inventories, net$474,840 $506,604 
Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $73.6 million and $80.1 million at November 30, 2023 and May 31, 2023, 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.
New Accounting Pronouncements
There are no new accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements.

9

Note 2 - Revenue Recognition
The following table presents Cintas' total revenue disaggregated by operating segment:
Three Months EndedSix Months Ended
(In thousands)November 30,
2023
November 30,
2022
November 30,
2023
November 30,
2022
Uniform Rental and
  Facility Services
$1,850,542 77.9 %$1,709,987 78.6 %$3,677,367 77.9 %$3,407,759 78.5 %
First Aid and Safety
  Services
266,401 11.2 %235,974 10.9 %527,094 11.2 %470,135 10.8 %
Fire Protection
   Services
173,950 7.3 %146,602 6.7 %348,266 7.4 %298,449 6.9 %
Uniform Direct
   Sales
86,284 3.6 %82,295 3.8 %166,780 3.5 %164,969 3.8 %
Total revenue$2,377,177 100.0 %$2,174,858 100.0 %$4,719,507 100.0 %$4,341,312 100.0 %

The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 10 entitled Segment Information.

Revenue Recognition Policy
Approximately 95% of the Company's revenue is derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services customers, performed by a Cintas employee-partner, at the customer's location of business. Revenue from our route servicing customer contracts 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 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.

Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Certain of our customer contracts include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract and is not material in any period presented. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company's performance period generally corresponds with the monthly invoice period. No constraints on our revenue recognition were applied during the three or six months ended November 30, 2023 or 2022.

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 operating segment. We update our allowance for credit losses quarterly, considering recent write-offs and collections information and underlying economic conditions and expectations.






10

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. As permitted by Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606), the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of ASC 606 or the amortization period of the asset would have been one year or less. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. We review the deferred commission balances for impairment on an ongoing basis. Deferred 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 November 30, 2023, the current and noncurrent assets related to deferred commissions totaled $93.9 million and $258.6 million, respectively. As of May 31, 2023, the current and noncurrent assets related to deferred commissions totaled $92.5 million and $251.6 million, respectively. We recorded amortization expense related to deferred commissions of $25.2 million and $23.4 million during the three months ended November 30, 2023 and 2022, respectively. During the six months ended November 30, 2023 and 2022, we recorded amortization expense related to deferred commissions of $49.6 million and $45.8 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 $20.8 million and $20.0 million for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $40.5 million and $39.5 million, respectively.


11

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the six months ended November 30:
(In thousands)20232022
Cash paid for amounts included in the measurement of operating lease liabilities$25,321 $25,108 
Operating lease right-of-use assets obtained in exchange for new and renewed
   operating lease liabilities
$22,684 $29,186 
Operating lease right-of-use assets acquired in business combinations $267 $ 

Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:
November 30,
2023
May 31,
2023
Weighted-average remaining lease term5.20 years5.28 years
Weighted-average discount rate3.14%2.87%
The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2023:
(In thousands)
2024 (remaining six months)
$24,842 
202545,671 
202637,932 
202728,682 
202823,489 
Thereafter38,400 
Total payments199,016 
Less interest(16,017)
Total present value of lease payments$182,999 

Note 4 - Fair Value Measurements
All financial instruments that are measured at fair value on a recurring basis (at least annually) 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 November 30, 2023As of May 31, 2023
(In thousands)Level 1Level 2Level 3Fair ValueLevel 1Level 2Level 3Fair Value
Cash and cash equivalents$85,556 $ $ $85,556 $124,149 $ $ $124,149 
Other assets, net:
  Interest rate lock
    agreements
 93,669  93,669  70,449  70,449 
Total assets at fair
   value
$85,556 $93,669 $ $179,225 $124,149 $70,449 $ $194,598 
Cintas’ cash and cash equivalents are generally classified within Level 1 or Level 2 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The types of financial instruments Cintas classifies
12

within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments.

The fair values of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. The fair value was determined by comparing the locked rates against the benchmarked treasury rate. No other amounts included in other assets, net, are recorded at fair value on a recurring basis.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S. GAAP. The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition.

Note 5 - Earnings Per Share 
Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards. The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares:
Three Months EndedSix Months Ended
Basic Earnings per Share
(In thousands except per share data)
November 30, 2023November 30, 2022November 30, 2023November 30, 2022
Net income$374,613 $324,293 $759,698 $675,982 
Less: net income allocated to participating securities1,460 1,372 2,957 2,859 
Net income available to common shareholders$373,153 $322,921 $756,741 $673,123 
Basic weighted average common shares outstanding
101,667 101,637 101,781 101,530 
Basic earnings per share$3.67 $3.18 $7.43 $6.63 
Three Months EndedSix Months Ended
Diluted Earnings per Share
(In thousands except per share data)
November 30, 2023November 30, 2022November 30, 2023November 30, 2022
Net income$374,613 $324,293 $759,698 $675,982 
Less: net income allocated to participating securities1,460 1,372 2,957 2,859 
Net income available to common shareholders$373,153 $322,921 $756,741 $673,123 
Basic weighted average common shares outstanding
101,667 101,637 101,781 101,530 
Effect of dilutive securities – employee stock options
1,599 1,719 1,637 1,813 
Diluted weighted average common shares outstanding
103,266 103,356 103,418 103,343 
Diluted earnings per share$3.61 $3.12 $7.32 $6.51 

13

For the three months ended November 30, 2023 and 2022, options granted to purchase 0.5 million and 1.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. For the six months ended November 30, 2023 and 2022, options granted to purchase 0.3 million and 0.9 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive).

On July 27, 2021, Cintas announced that the Board of Directors authorized a $1.5 billion share buyback program, which does not have an expiration date. On July 26, 2022, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. The following table summarizes the share buyback activity by program and period:
Three Months EndedSix Months Ended
November 30, 2023November 30, 2023
Buyback Activity
(In thousands except per share data)
SharesAvg. Price
per Share
Purchase
Price
SharesAvg. Price
per Share
Purchase
Price
July 27, 2021658 $486.58 $320,266 658 $486.58 $320,266 
July 26, 2022      
658 $486.58 $320,266 658 $486.58 $320,266 
Shares acquired for taxes due (1)
58 $518.89 $29,586 203 $507.61 $102,862 
Total repurchase of Cintas common stock$349,852 $423,128 
Three Months EndedSix Months Ended
November 30, 2022November 30, 2022
Buyback Activity
(In thousands except per share data)
SharesAvg. Price
per Share
Purchase
Price
SharesAvg. Price
per Share
Purchase
Price
July 27, 202112 $377.66 $4,683 544 $395.97 $215,434 
July 26, 2022      
12 $377.66 $4,683 544 $395.97 $215,434 
Shares acquired for taxes due (1)
56 $423.64 $23,665 326 $408.97 $133,248 
Total repurchase of Cintas common stock$28,348 $348,682 
(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 EndedSix Months Ended
November 30, 2023November 30, 2023

(In thousands except per share data)
SharesAvg. Price
per Share
Non-Cash
Value
SharesAvg. Price
per Share
Non-Cash
Value
Non-cash transaction activity68 $514.75 $35,087 186 $506.82 $94,300 
Three Months EndedSix Months Ended
November 30, 2022November 30, 2022
SharesAvg. Price
per Share
Non-Cash
Value
SharesAvg. Price
per Share
Non-Cash
Value
Non-cash transaction activity66 $421.85 $27,975 260 $414.46 $107,566 
14

Note 6 - Goodwill, Service Contracts and Other Assets, Net
Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2023, by reportable operating segment and All Other, are as follows:
Goodwill
(In thousands)
Uniform Rental
 and Facility Services
First Aid
 and Safety Services
All
Other
Total
Balance as of June 1, 2023$2,636,607 $292,868 $126,726 $3,056,201 
Goodwill acquired49,737 962 13,361 64,060 
Foreign currency translation224 20 1 245 
Balance as of November 30, 2023$2,686,568 $293,850 $140,088 $3,120,506 
Service Contracts
(In thousands)
Uniform Rental
 and Facility Services
First Aid
 and Safety Services
All
Other
Total
Balance as of June 1, 2023$310,030 $21,157 $15,387 $346,574 
Service contracts acquired7,632 290 1,558 9,480 
Service contracts amortization(22,103)(2,627)(1,908)(26,638)
Foreign currency translation86 9  95 
Balance as of November 30, 2023$295,645 $18,829 $15,037 $329,511 

Information regarding Cintas’ service contracts and other assets, net is as follows:
 As of November 30, 2023As of May 31, 2023
(In thousands)Carrying
Amount
Accumulated
Amortization
NetCarrying
Amount
Accumulated
Amortization
Net
Service contracts$1,014,332 $684,821 $329,511 $1,004,754 $658,180 $346,574 
Capitalized contract
   costs (1)
$721,921 $463,307 $258,614 $665,705 $413,680 $252,025 
Noncompete and
   consulting agreements
   and other
224,489 68,976 155,513 198,260 67,294 130,966 
Total other assets, net$946,410 $532,283 $414,127 $863,965 $480,974 $382,991 
(1)    The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of November 30, 2023 and May 31, 2023, is $93.9 million and $92.5 million, respectively.

Amortization expense for service contracts and other assets was $39.4 million and $37.3 million for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, amortization expense for service contracts and other assets was $77.9 million and $73.7 million, respectively. These expenses are recorded in selling and administrative expenses on the consolidated condensed statements of income. As of November 30, 2023, 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)
2024 (remaining six months)$77,591 
2025142,842 
2026121,587 
202798,902 
202875,019 
Thereafter176,763 
Total future amortization expense$692,704 
15

Note 7 - Debt, Derivatives and Hedging Activities
Cintas' outstanding debt is summarized as follows:
(In thousands)Interest
 Rate
Fiscal Year
Issued
Fiscal Year
Maturity
November 30,
2023
May 31,
2023
Debt due within one year
Commercial paper5.52 %
(1)
20242024$210,000 $ 
Total debt due within one year$210,000 $ 
Debt due after one year
Senior notes (2)
3.11 %20152025$50,462 $50,630 
Senior notes3.45 %20222025400,000 400,000 
Senior notes3.70 %201720271,000,000 1,000,000 
Senior notes4.00 %20222032800,000 800,000 
Senior notes6.15 %20072037236,550 250,000 
Debt issuance costs(12,725)(14,225)
Total debt due after one year$2,474,287 $2,486,405 
(1)Variable rate debt instrument. The rate presented is the variable borrowing rate at November 30, 2023.
(2)Cintas assumed these senior notes with the acquisition of G&K Services, Inc. (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. The principal amount of these senior notes is $50.0 million with a stated interest rate of 3.88%.

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 general market prices. The carrying value and fair value of Cintas' debt as of November 30, 2023 were $2,486.6 million and $2,396.5 million, respectively, and as of May 31, 2023 were $2,500.0 million and $2,443.8 million, respectively. During the three and six months ended November 30, 2023, Cintas repurchased, and subsequently retired, $3.5 million and $13.5 million, respectively, of its 6.15%, 30-year senior notes. In conjunction with these transactions, during the three and six months ended November 30, 2023, Cintas recognized a loss of $0.1 million and $0.9 million, respectively, which is recorded in interest expense on the consolidated condensed statements of income. During the six months ended November 30, 2023 and 2022, Cintas issued $210.0 million and $124.0 million, net of commercial paper, respectively.

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 November 30, 2023, there was $210.0 million of commercial paper outstanding with a weighted average interest rate of 5.52% and maturity dates less than 90 days and no borrowings on our revolving credit facility. As of May 31, 2023, there was no commercial paper outstanding and no borrowings on our revolving credit facility.

Cintas 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 (loss) of $1.5 million for both the three months ended November 30, 2023 and 2022. For the six months ended November 30, 2023 and 2022, the amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $2.9 million and $3.0 million, respectively.


16

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 November 30, 2023 and May 31, 2023. The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows:
November 30, 2023May 31, 2023
Fiscal Year of Issuance
(In thousands)
Other
assets, net
Other
assets, net
2022$56,054 $44,803 
2020$37,615 $25,646 

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 six months ended November 30, 2023 or 2022.

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 November 30, 2023 and May 31, 2023, recorded unrecognized tax benefits were $31.3 million and $29.3 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 2019. 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 2014. 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, 2024.

Cintas’ effective tax rate was 20.9% and 22.1% for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, Cintas' effective tax rate was 20.1% and 18.4%, respectively. The effective tax rate for both periods was impacted by certain discrete items (primarily the tax accounting for stock-based compensation).
17

Note 9 - Accumulated Other Comprehensive Income (Loss)
The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss), net of tax:
(In thousands)Foreign
Currency
Unrealized Income
on Interest Rate Locks
OtherTotal
Balance at June 1, 2023$(17,001)$96,714 $(1,935)$77,778 
Other comprehensive income before reclassifications2,634 8,199  10,833 
Amounts reclassified from accumulated other
   comprehensive income (loss)
 (1,442) (1,442)
Net current period other comprehensive income2,634 6,757  9,391 
Balance at August 31, 2023(14,367)103,471 (1,935)87,169 
Other comprehensive (loss) income before
   reclassifications
(1,813)9,099 379 7,665 
Amounts reclassified from accumulated other
   comprehensive income (loss)
 (1,495) (1,495)
Net current period other comprehensive (loss) income(1,813)7,604 379 6,170 
Balance at November 30, 2023$(16,180)$111,075 $(1,556)$93,339 

(In thousands)Foreign
Currency
Unrealized Income
on Interest Rate Locks
OtherTotal
Balance at June 1, 2022$17,006 $92,688 $(1,777)$107,917 
Other comprehensive (loss) income before
   reclassifications
(19,206)934  (18,272)
Amounts reclassified from accumulated other
   comprehensive income (loss)
 (1,521) (1,521)
Net current period other comprehensive loss(19,206)(587) (19,793)
Balance at August 31, 2022(2,200)92,101 (1,777)88,124 
Other comprehensive (loss) income before
   reclassifications
(9,901)7,394  (2,507)
Amounts reclassified from accumulated other
   comprehensive income (loss)
 (1,521) (1,521)
Net current period other comprehensive (loss) income(9,901)5,873  (4,028)
Balance at November 30, 2022$(12,101)$97,974 $(1,777)$84,096 


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 EndedSix Months Ended
(In thousands)November 30,
2023
November 30,
2022
November 30,
2023
November 30,
2022
Amortization of interest
   rate locks
$1,998 $2,034 $3,927