Cintas CTAS · USD

Operating Segment InformationCintas’ 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 Sale operating segment, is included in All Other. Our CODM is the chief executive officer. The CODM is responsible for setting the Company's strategic direction, managing overall operations, and is the main point of communications between the Board and key operational personnel within the organization. The CODM evaluates each operating segment's performance primarily based on revenue and operating income, using this information to guide strategic decisions and allocate resources across the Company. The accounting policies of the operating segments are the same as those described in Note 1 entitled Significant Accounting Policies.

Revenue RecognitionThe following table presents Cintas' total revenue disaggregated by operating segment for the fiscal years ended May 31: (In thousands)202520242023Uniform Rental and Facility Services$7,976,073 77.1 %$7,465,199 77.8 %$6,897,130 78.2 %First Aid and Safety Services1,218,090 11.8 %1,067,334 11.1 %951,496 10.8 %Fire Protection Services817,463 7.9 %728,610 7.6 %627,747 7.1 %Uniform Direct Sales328,555 3.2 %335,472 3.5 %339,396 3.9 %Total revenue$10,340,181 100.0 %$9,596,615 100.0 %$8,815,769 100.0 %The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 14 entitled Operating Segment Information. Costs to Obtain a ContractThe 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 balance sheets. As of May 31, 2025, the current and noncurrent assets related to capitalized commissions totaled $96.5 million and $275.3 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. We recorded amortization expense related to capitalized commissions of $106.3 million, $101.4 million and $94.8 million during the fiscal years ended May 31, 2025, 2024 and 2023, respectively. These expenses are classified in selling and administrative expenses on the consolidated statements of income.

Debt, Derivatives and Hedging ActivitiesCintas' outstanding debt is summarized as follows at May 31:(In thousands)Interest RateFiscal YearIssuedFiscal YearMaturity20252024Debt due within one yearSenior notes (1)3.11%20152025$— $50,294 Senior notes3.45%20222025— 400,000 Debt issuance costs— (699)Total debt due within one year$— $449,595 Debt due after one yearSenior notes3.70%20172027$1,000,000 $1,000,000 Senior notes4.20%20252028400,000 — Senior notes4.00%20222032800,000 800,000 Senior notes6.15%20072037236,550 236,550 Debt issuance costs(11,551)(10,616) Total debt due after one year$2,424,999 $2,025,934 (1) Cintas assumed these senior notes with the acquisition of 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.The average interest rate for all Cintas debt at May 31, 2025 was 4.1%, with maturity dates through fiscal year 2037. Cintas' senior notes, excluding 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 May 31, 2025 were $2,436.6 million and $2,404.7 million, respectively, and as of May 31, 2024 were $2,486.6 million and $2,392.8 million, respectively. On April 15, 2025, in accordance with the terms of the senior notes, Cintas paid the $50.0 million aggregate principal amount outstanding of its 3.11%, private placement, 10-year senior notes that matured on that date with cash on hand. On May 1, 2025, in accordance with the terms of the senior notes, Cintas paid the $400.0 million aggregate principal outstanding of its 3.45%, 3-year senior notes that matured on that date with cash on hand. On May 2, 2025, Cintas issued $400.0 million aggregate principal amount of senior notes that bear an interest rate of 4.20% and mature on May 1, 2028. During the fiscal year ended May 31, 2024, Cintas repurchased and subsequently retired, $13.5 million of its 6.15%, 30-year senior notes. In conjunction with these transactions, Cintas recognized a loss of $0.9 million, which is recorded in interest expense on the consolidated statement of income for the fiscal year ended May 31, 2024.Letters of credit outstanding were $129.6 million and $118.0 million at May 31, 2025 and 2024, respectively.

Income TaxesIncome before income taxes consists of the following components for the fiscal years ended May 31:(In thousands)202520242023U.S. operations$2,117,251 $1,860,859 $1,632,391 Foreign operations146,951 112,776 60,757 $2,264,202 $1,973,635 $1,693,148 Income tax expense consists of the following components for the fiscal years ended May 31:(In thousands)202520242023Current: Federal$352,652 $327,616 $248,413 State and local96,808 79,583 56,589 Foreign10,580 25,344 13,205 460,040 432,543 318,207 Deferred(8,119)(30,500)26,931 $451,921 $402,043 $345,138 Reconciliation of income tax expense using the statutory rate and actual income tax expense is as follows for the fiscal years ended May 31:(In thousands)202520242023Income taxes at the U.S. federal statutory rate$475,482 $414,463 $355,561 Permanent differences (1)(75,966)(67,310)(59,502)State and local income taxes, net of federal benefit64,052 49,560 46,245 Other(11,647)5,330 2,834 $451,921 $402,043 $345,138 (1) Primarily consists of the excess tax benefits related to stock-based compensation. The components of deferred income taxes included on the consolidated balance sheets are as follows at May 31:(In thousands)20252024Deferred tax assets: Allowance for credit losses$17,352 $13,478 Inventory reserves17,734 18,913 Insurance reserves45,029 45,154 Stock-based compensation66,260 71,146 Net operating loss and foreign related carry-forwards1,630 2,169 Operating lease liabilities58,219 48,964 Deferred compensation and other132,210 114,786 338,434 314,610 Valuation allowance(1,556)(2,129)336,878 312,481 Deferred tax liabilities: Uniform and other rental items in service274,781 251,394 Property and equipment163,247 175,214 Intangibles and other amortizable assets173,362 178,583 Treasury locks37,014 37,202 Capitalized contract costs95,069 91,551 Operating lease right-of-use assets58,219 48,964 State taxes and other6,926 5,085 808,618 787,993 Net deferred tax liability$471,740 $475,512 Although realization is not assured, management has evaluated its deferred tax assets to determine whether a valuation allowance is required or should be adjusted. This evaluation considers, among other items, the nature, frequency and amount of recent losses, reversal periods of taxable temporary differences, duration of statutory periods and tax planning strategies. As a result of this analysis, management believes it is more likely than not that the recorded deferred tax assets will be realized.Income taxes paid were $454.

Stock-Based CompensationOn July 23, 2024, the Board approved and adopted the Cintas Corporation 2016 Amended and Restated Equity and Incentive Compensation Plan (the Amended 2016 Plan) to replace the existing 2016 Equity Compensation Plan (the 2016 Plan). The Amended 2016 Plan was approved by Cintas shareholders at its Annual Meeting on October 29, 2024, at which time the Amended 2016 Plan became effective. Under the Amended 2016 Plan, Cintas may grant officers and key employee-partners equity compensation in the form of stock options, stock appreciation rights, restricted and unrestricted stock awards, performance awards and other stock unit awards representing up to an aggregate of 50,000,000 shares of Cintas' common stock, inclusive of shares represented by grants previously made under the 2016 Plan. At May 31, 2025, 19,246,017 shares of common stock were reserved for future issuance under the Amended 2016 Plan. Total compensation cost for stock-based awards was $128.3 million, $117.0 million and $103.6 million for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. Cintas accounts for forfeitures of stock-based awards as they occur. The total income tax benefit recognized in the consolidated statements of income for share-based compensation arrangements was $32.7 million, $29.8 million and $26.4 million for the fiscal years ended May 31, 2025, 2024 and 2023, respectively.Stock OptionsStock options are granted at the fair market value of the underlying common stock on the date of grant. The option terms are determined by the Compensation Committee of the Board, but no stock option may be exercised later than 10 years after the date of the grant. The option awards generally have 10-year terms with graded vesting in years 3 through 5 based on continuous service during that period. The majority of stock option grants occur in the first quarter of each fiscal year in connection with the annual grant, which is earned in the prior fiscal year. Cintas recognizes compensation expense for these options using the straight-line recognition method over the vesting period.The fair value of options was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions for the fiscal years ended May 31:202520242023Risk-free interest rate4.3%3.9%2.8%Dividend yield1.1%1.1%1.1%Expected volatility of Cintas' common stock26.5%26.9%26.0%Expected life of the option in years5.55.55.5The risk-free interest rate is based on U.

LeasesCintas 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 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 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 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 each period, were $91.1 million, $83.2 million and $79.8 million for the fiscal years ended May 31, 2025, 2024 and 2023, respectively.

AcquisitionsThe purchase price paid for each acquisition has been allocated to the fair value of the assets acquired and liabilities assumed. Cintas acquired the following number of individually immaterial businesses by reportable operating segment and All Other during the fiscal years ended May 31: 20252024Uniform Rental and Facility Services77First Aid and Safety Services41All Other178The following summarizes the aggregate purchase price and fair value allocations for all businesses acquired during the fiscal years ended May 31: (In thousands)20252024Fair value of tangible assets acquired$25,649 $14,350 Fair value of service contracts acquired45,749 29,416 Fair value of other intangibles acquired9,309 5,278 Net goodwill recognized189,511 157,239 Total fair value of assets acquired270,218 206,283 Total fair value of liabilities assumed(3,541)— Total fair value of net assets acquired, net of cash acquired266,677 206,283 Deferred purchase price consideration (33,778)(19,446)Total cash consideration for acquisitions, net of cash acquired$232,899 $186,837 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.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 financial statements.

We have a cross-departmental approach to addressing cybersecurity risk, including input from employees and our Board of Directors (the Board). The Board, Audit Committee and senior management devote significant resources to cybersecurity and risk management processes to adapt to the changing cybersecurity landscape and respond to emerging threats in a timely and effective manner. Our cybersecurity risk management program is incorporated into our enterprise risk management program and leverages industry standards and best practices, such as the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF 2.0), which organizes cybersecurity into six functions: govern, identify, protect, detect, respond and recover. We regularly assess the threat landscape and take a holistic view of cybersecurity risks, with a layered cybersecurity strategy based on prevention, detection and mitigation. We have a set of Company-wide policies and procedures concerning cybersecurity matters, which include numerous written information technology (IT) security policies, standards, procedures and guidelines as well as other policies that directly or indirectly relate to cybersecurity, such as policies related to encryption standards, antivirus protection, remote access, multifactor authentication, confidential information and the use of the internet, social media, email and wireless devices. These policies go through an internal review process and are approved by appropriate members of management. The Company’s Chief Information Security Officer (CISO) is responsible for developing and implementing and managing our cybersecurity security program and reporting on cybersecurity matters to the Audit Committee and the Board. Our CISO has over twenty-five years of IT and cybersecurity experience, has served over fifteen years in various cybersecurity management roles, and has various industry related degrees and certifications, including a master’s in information technology and the Certified Information Systems Security Professional (CISSP) and Certified in Risk and Information Systems Control (CRISC) certifications. Our CISO is a part of, and is supported by, our IT security team, which includes other security leaders, security engineers, and security analysts. The Board has ultimate oversight of cybersecurity risk, which it manages as part of our enterprise risk management program.