Cover Page
Cover Page - shares | 3 Months Ended | |
Aug. 31, 2021 | Sep. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Aug. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-11399 | |
Entity Registrant Name | Cintas Corporation | |
Entity Incorporation, State or Country Code | WA | |
Entity Tax Identification Number | 31-1188630 | |
Entity Address, Address Line One | 6800 Cintas Boulevard | |
Entity Address, Address Line Two | P.O. Box 625737 | |
Entity Address, City or Town | Cincinnati, | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45262-5737 | |
City Area Code | 513 | |
Local Phone Number | 459-1200 | |
Title of 12(b) Security | Common stock, no par value | |
Trading Symbol | CTAS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 103,407,624 | |
Entity Central Index Key | 0000723254 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Income - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Revenue: | ||
Total revenue | $ 1,896,950 | $ 1,746,575 |
Costs and expenses: | ||
Selling and administrative expenses | 508,655 | 476,495 |
Operating income | 394,101 | 349,706 |
Interest income | (56) | (64) |
Interest expense | 21,854 | 24,550 |
Income before income taxes | 372,303 | 325,220 |
Income taxes | 41,124 | 25,215 |
Net income | $ 331,179 | $ 300,005 |
Basic earnings per share (in dollars per share) | $ 3.19 | $ 2.86 |
Diluted earnings per share (in dollars per share) | 3.11 | 2.78 |
Dividends declared per share (in dollars per share) | $ 0.95 | $ 0 |
Uniform rental and facility services | ||
Revenue: | ||
Total revenue | $ 1,508,176 | $ 1,394,411 |
Costs and expenses: | ||
Cost of revenue | 779,301 | 715,412 |
Other | ||
Revenue: | ||
Total revenue | 388,774 | 352,164 |
Costs and expenses: | ||
Cost of revenue | $ 214,893 | $ 204,962 |
Consolidated Condensed Statem_2
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 331,179 | $ 300,005 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustments | (24,016) | 26,946 |
Change in fair value of interest rate lock agreements, net of tax (benefit) expense of $(12,554) and $3,672, respectively | (36,679) | 10,842 |
Amortization of interest rate lock agreements, net of tax benefit of $148 and $116, respectively | (459) | (358) |
Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively | (61,154) | 37,430 |
Comprehensive income | $ 270,025 | $ 337,435 |
Consolidated Condensed Statem_3
Consolidated Condensed Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Change in fair value of interest rate lock agreements, tax (benefit) expense | $ (12,554) | $ 3,672 |
Amortization of interest rate lock agreements, tax benefit | 148 | 116 |
Other comprehensive income (loss), tax (benefit) expense | $ (12,406) | $ 3,788 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Thousands | Aug. 31, 2021 | May 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 79,749 | $ 493,640 |
Accounts receivable, net | 927,360 | 901,710 |
Inventories, net | 463,692 | 481,797 |
Uniforms and other rental items in service | 846,656 | 810,104 |
Income taxes, current | 11,249 | 22,282 |
Prepaid expenses and other current assets | 148,960 | 133,776 |
Total current assets | 2,477,666 | 2,843,309 |
Property and equipment, net | 1,301,233 | 1,318,438 |
Investments | 295,268 | 274,616 |
Goodwill | 2,924,993 | 2,913,069 |
Service contracts, net | 403,982 | 408,445 |
Operating lease right-of-use assets, net | 159,289 | 168,532 |
Other assets, net | 295,319 | 310,414 |
Total assets | 7,857,750 | 8,236,823 |
Current liabilities: | ||
Accounts payable | 202,968 | 230,786 |
Accrued compensation and related liabilities | 155,212 | 241,469 |
Accrued liabilities | 592,384 | 518,910 |
Operating lease liabilities, current | 43,308 | 43,850 |
Debt due within one year | 1,275,167 | 899,070 |
Total current liabilities | 2,269,039 | 1,934,085 |
Long-term liabilities: | ||
Debt due after one year | 1,343,222 | 1,642,833 |
Deferred income taxes | 395,599 | 386,647 |
Operating lease liabilities | 122,291 | 130,774 |
Accrued liabilities | 418,396 | 454,637 |
Total long-term liabilities | 2,279,508 | 2,614,891 |
Shareholders’ equity: | ||
Preferred stock, no par value: 100,000 shares authorized, none outstanding | 0 | 0 |
Common stock, no par value, and paid-in capital: 425,000,000 shares authorized, FY 2022: 190,127,513 shares issued and 103,329,218 shares outstanding; FY 2021: 189,071,185 shares issued and 104,061,391 shares outstanding | 1,625,594 | 1,516,202 |
Retained earnings | 8,109,368 | 7,877,015 |
Treasury stock: FY 2022: 86,798,295 shares, FY 2021: 85,009,794 | (6,395,493) | (5,736,258) |
Accumulated other comprehensive (loss) income | (30,266) | 30,888 |
Total shareholders’ equity | 3,309,203 | 3,687,847 |
Total liabilities and shareholders' equity | $ 7,857,750 | $ 8,236,823 |
Consolidated Condensed Balanc_2
Consolidated Condensed Balance Sheets (Parenthetical) - shares | Aug. 31, 2021 | May 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized (in shares) | 100,000 | 100,000 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, authorized (in shares) | 425,000,000 | 425,000,000 |
Common stock, issued (in shares) | 190,127,513 | 189,071,185 |
Common stock, outstanding (in shares) | 103,329,218 | 104,061,391 |
Treasury stock (in shares) | 86,798,295 | 85,009,794 |
Consolidated Condensed Statem_4
Consolidated Condensed Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock and Paid-In Capital | Retained Earnings | Other Accumulated Comprehensive Income (Loss) | Treasury Stock |
Balance (shares) at May. 31, 2020 | 186,793 | 83,378 | |||
Balance at May. 31, 2020 | $ 3,235,202 | $ 1,274,210 | $ 7,296,509 | $ (153,380) | $ (5,182,137) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 300,005 | 300,005 | |||
Comprehensive income (loss), net of tax | 37,430 | 37,430 | |||
Stock-based compensation | 29,055 | $ 29,055 | |||
Vesting of stock-based compensation awards (shares) | 568 | ||||
Stock options exercised, net of shares surrendered (in shares) | 795 | ||||
Stock options exercised, net of shares surrendered | 72,123 | $ 72,123 | |||
Repurchase of common stock (shares) | (230) | ||||
Repurchase of common stock | (69,011) | $ (69,011) | |||
Balance (shares) at Aug. 31, 2020 | 188,156 | 83,608 | |||
Balance at Aug. 31, 2020 | 3,604,804 | $ 1,375,388 | 7,596,514 | (115,950) | $ (5,251,148) |
Balance (shares) at May. 31, 2021 | 189,071 | 85,010 | |||
Balance at May. 31, 2021 | 3,687,847 | $ 1,516,202 | 7,877,015 | 30,888 | $ (5,736,258) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 331,179 | 331,179 | |||
Comprehensive income (loss), net of tax | (61,154) | (61,154) | |||
Dividends | (98,826) | (98,826) | |||
Stock-based compensation | 36,496 | $ 36,496 | |||
Vesting of stock-based compensation awards (shares) | 493 | ||||
Stock options exercised, net of shares surrendered (in shares) | 564 | ||||
Stock options exercised, net of shares surrendered | 72,896 | $ 72,896 | |||
Repurchase of common stock (shares) | (1,788) | ||||
Repurchase of common stock | (659,235) | $ (659,235) | |||
Balance (shares) at Aug. 31, 2021 | 190,128 | 86,798 | |||
Balance at Aug. 31, 2021 | $ 3,309,203 | $ 1,625,594 | $ 8,109,368 | $ (30,266) | $ (6,395,493) |
Consolidated Condensed Statem_5
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 331,179 | $ 300,005 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 60,955 | 60,574 |
Amortization of intangible assets and capitalized contract costs | 36,994 | 35,605 |
Stock-based compensation | 36,496 | 29,055 |
Gain on sale of operating assets | (12,178) | 0 |
Deferred income taxes | 22,887 | (8,716) |
Change in current assets and liabilities, net of acquisitions of businesses: | ||
Accounts receivable, net | (27,742) | 7,118 |
Inventories, net | 14,986 | (77,944) |
Uniforms and other rental items in service | (39,274) | 16,552 |
Prepaid expenses and other current assets and capitalized contract costs | (36,724) | (42,277) |
Accounts payable | (26,272) | 20,358 |
Accrued compensation and related liabilities | (85,834) | (10,067) |
Accrued liabilities and other | (24,342) | (14,297) |
Income taxes, current | 11,010 | (3,674) |
Net cash provided by operating activities | 262,141 | 312,292 |
Cash flows from investing activities: | ||
Capital expenditures | (48,748) | (30,876) |
Purchases of investments | (8,738) | (4,940) |
Proceeds from sale of operating assets | 15,070 | 0 |
Acquisitions of businesses, net of cash acquired | (35,725) | (1,984) |
Other, net | (6,180) | (2,142) |
Net cash used in investing activities | (84,321) | (39,942) |
Cash flows from financing activities: | ||
Issuance of commercial paper, net | 326,000 | 0 |
Repayment of debt | (250,000) | 0 |
Proceeds from exercise of stock-based compensation awards | 72,896 | 72,123 |
Dividends paid | (79,135) | 0 |
Repurchase of common stock | (659,235) | (69,011) |
Other, net | (610) | (869) |
Net cash (used in) provided by financing activities | (590,084) | 2,243 |
Effect of exchange rate changes on cash and cash equivalents | (1,627) | 1,547 |
Net (decrease) increase in cash and cash equivalents | (413,891) | 276,140 |
Cash and cash equivalents at beginning of period | 493,640 | 145,402 |
Cash and cash equivalents at end of period | $ 79,749 | $ 421,542 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Aug. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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, 2021. A summary of our significant accounting policies is presented beginning on page 40 of that report. 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: (In thousands) August 31, 2021 May 31, Raw materials $ 15,732 $ 15,109 Work in process 30,681 37,664 Finished goods 417,279 429,024 $ 463,692 $ 481,797 Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $110.2 million and $111.0 million at August 31, 2021 and May 31, 2021, respectively. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. The reclassification has been reflected in the consolidated condensed balance sheet and consolidated condensed statement of shareholders' equity for the fiscal year ended May 31, 2021 and the three months ended August 31, 2020, to combine common stock and paid-in capital for disclosure purposes. These reclassifications had no effect on the Company's reported results of operations. New Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . ASU 2019-12 is part of the FASB’s overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes certain exceptions to the general principles of Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740), in order to reduce the cost and complexity of its application in the areas of intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses in interim periods and other areas within ASC 740. The Company adopted ASU 2019-12 on June 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated condensed financial statements currently but may in future periods. No other new accounting pronouncement recently issued or newly effective had, or is expected to have, a material impact on Cintas' consolidated condensed financial statements. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Aug. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31: (In thousands) 2021 2020 Uniform Rental and Facility Services $ 1,508,176 79.5 % $ 1,394,411 79.8 % First Aid and Safety Services 199,116 10.5 % 204,481 11.7 % Fire Protection Services 128,218 6.8 % 108,065 6.2 % Uniform Direct Sales 61,440 3.2 % 39,618 2.3 % Total revenue $ 1,896,950 100.0 % $ 1,746,575 100.0 % Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 12 entitled Segment Information. Revenue Recognition Policy Approximately 95% of the Company's revenues are derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services, performed by a Cintas employee-partner, at the customer's location of business. Revenues from our route servicing customer contracts represent a single-performance obligation. The Company recognizes revenues 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. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company's actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. 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 months ended August 31, 2021 or 2020. The Company reassesses these estimates during each reporting period. Cintas maintains a liability for these discounts and rebates within accrued liabilities on the consolidated condensed balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. Cintas capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue. These assets are included in other assets, net on the consolidated condensed balance sheets. Additionally, certain Uniform Direct Sales operating segment customer contracts contain a provision with an enforceable right of payment, and the underlying product has no alternative use to Cintas. Consequently, when both aforementioned provisions are prevalent in a customer contract, the revenue is recorded for finished goods that the customer is obligated to purchase under the termination terms of the contract. 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 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 estimate of credit loss reserves quarterly, considering recent write-offs and collections information and underlying economic expectations. Costs to Obtain a Contract The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. As permitted by ASC 606, "Revenue", 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 the standard 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 August 31, 2021, the current and noncurrent assets related to deferred commissions totaled $80.2 million and $227.2 million, respectively. As of May 31, 2021, the current and noncurrent assets related to deferred commissions totaled $79.4 million and $227.1 million, respectively. We recorded amortization expense related to deferred commissions of $21.4 million and $20.4 million during the three months ended August 31, 2021 and 2020, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income. |
Leases
Leases | 3 Months Ended |
Aug. 31, 2021 | |
Leases [Abstract] | |
Leases | 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 sheet 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 sheet. 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 were $18.2 million and $17.1 million for the three months ended August 31, 2021 and 2020, respectively. Short-term lease expense and variable lease costs are included within operating lease costs and immaterial for the three months ended August 31, 2021 and 2020. The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31: (In thousands) 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 11,913 $ 12,254 Operating lease right-of-use assets obtained in exchange for new and renewed $ 2,792 $ 9,317 Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows: August 31, May 31, Weighted-average remaining lease term - operating leases 5.22 years 5.33 years Weighted-average discount rate - operating leases 2.29% 2.32% The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2021: (In thousands) 2022 (remaining nine months) $ 35,794 2023 40,285 2024 29,941 2025 22,509 2026 16,995 Thereafter 30,336 Total payments 175,860 Less interest (10,261) Total present value of lease payments $ 165,599 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Aug. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 date. These financial instruments measured at fair value on a recurring basis are summarized below: As of August 31, 2021 (In thousands) Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 79,749 $ — $ — $ 79,749 Other assets, net: Interest rate lock agreements — 18,335 — 18,335 Total assets at fair value $ 79,749 $ 18,335 $ — $ 98,084 Current accrued liabilities: Interest rate lock agreements $ — $ 88,736 $ — $ 88,736 Total liabilities at fair value $ — $ 88,736 $ — $ 88,736 As of May 31, 2021 (In thousands) Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 493,640 $ — $ — $ 493,640 Other assets, net: Interest rate lock agreements — 40,400 — 40,400 Total assets at fair value $ 493,640 $ 40,400 $ — $ 534,040 Long-term accrued liabilities: Interest rate lock agreements $ — $ 61,567 $ — $ 61,567 Total liabilities at fair value $ — $ 61,567 $ — $ 61,567 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 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, current accrued liabilities or long-term accrued liabilities 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. |
Investments
Investments | 3 Months Ended |
Aug. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Cintas' investments are summarized as follows: (In thousands) August 31, May 31, Cash surrender value of insurance policies $ 274,721 $ 252,061 Equity method investments 18,383 19,388 Cost method investments 2,164 3,167 Total investments $ 295,268 $ 274,616 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Aug. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards. The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares for the three months ending August 31: Basic Earnings per Share (In thousands except per share data) 2021 2020 Net income $ 331,179 $ 300,005 Less: income allocated to participating securities 1,765 2,173 Income available to common shareholders $ 329,414 $ 297,832 Basic weighted average common shares outstanding 103,295 104,110 Basic earnings per share $ 3.19 $ 2.86 Diluted Earnings per Share (In thousands except per share data) 2021 2020 Net income $ 331,179 $ 300,005 Less: income allocated to participating securities 1,765 2,173 Income available to common shareholders $ 329,414 $ 297,832 Basic weighted average common shares outstanding 103,295 104,110 Effect of dilutive securities – employee stock options 2,649 3,019 Diluted weighted average common shares outstanding 105,944 107,129 Diluted earnings per share $ 3.11 $ 2.78 For the three months ended August 31, 2021 and 2020, options granted to purchase 0.1 million and 0.2 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 October 29, 2019, Cintas announced that the Board of Directors authorized a $1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022. From the inception of the October 29, 2019 share buyback program through July 2021, Cintas purchased a total of 2.8 million shares of Cintas common stock at an average price of $358.93 per share for a total purchase price of $1.0 billion. On July 27, 2021, Cintas announced that the Board of Directors authorized a new $1.5 billion share buyback program, which does not have an expiration date. The following tables summarize the share buyback activity by program for the three months ended August 31: 2021 2020 Buyback Program (In thousands except per share data) Shares Avg. Price Purchase Shares Avg. Price Purchase October 29, 2019 1,590 $ 365.41 $ 581,220 — $ — $ — July 27, 2021 — $ — $ — — $ — $ — 1,590 $ 365.41 $ 581,220 — $ — $ — There were no share buybacks in the period subsequent to August 31, 2021, through October 7, 2021 under any share buyback program. |
Goodwill, Service Contracts and
Goodwill, Service Contracts and Other Assets | 3 Months Ended |
Aug. 31, 2021 | |
Goodwill, Service Contracts And Other Assets [Abstract] | |
Goodwill, Service Contracts and Other Assets | Goodwill, Service Contracts and Other Assets Changes in the carrying amount of goodwill and service contracts for the three months ended August 31, 2021, by reportable operating segment and All Other, are as follows: Goodwill (in thousands) Uniform Rental First Aid All Total Balance as of June 1, 2021 $ 2,547,510 $ 248,571 $ 116,988 $ 2,913,069 Goodwill acquired 24,512 — 41 24,553 Foreign currency translation (11,565) (1,024) (40) (12,629) Balance as of August 31, 2021 $ 2,560,457 $ 247,547 $ 116,989 $ 2,924,993 Service Contracts (in thousands) Uniform Rental First Aid All Total Balance as of June 1, 2021 $ 369,141 $ 18,294 $ 21,010 $ 408,445 Service contracts acquired 12,807 — 53 12,860 Service contracts amortization (12,380) (991) (1,190) (14,561) Foreign currency translation (2,637) (125) — (2,762) Balance as of August 31, 2021 $ 366,931 $ 17,178 $ 19,873 $ 403,982 Information regarding Cintas’ service contracts and other assets is as follows: As of August 31, 2021 As of May 31, 2021 (In thousands) Carrying Accumulated Net Carrying Accumulated Net Service contracts $ 969,728 $ 565,746 $ 403,982 $ 961,942 $ 553,497 $ 408,445 Capitalized contract costs (1) $ 480,535 $ 253,298 $ 227,237 $ 459,079 $ 231,940 $ 227,139 Noncompete and 45,783 42,601 3,182 44,683 42,408 2,275 Other 89,293 24,393 64,900 105,371 24,371 81,000 Total other assets $ 615,611 $ 320,292 $ 295,319 $ 609,133 $ 298,719 $ 310,414 (1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of August 31, 2021 and May 31, 2021, is $80.2 million and $79.4 million, respectively. Amortization expense for service contracts and other assets was $36.5 million and $35.1 million for the three months ended August 31, 2021 and 2020, respectively. These expenses are recorded in selling and administrative expenses on the consolidated condensed statements of income. As of August 31, 2021, 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) 2022 (remaining nine months) $ 104,871 2023 122,464 2024 110,029 2025 96,113 2026 79,013 Thereafter 204,245 Total future amortization expense $ 716,735 |
Debt, Derivatives and Hedging A
Debt, Derivatives and Hedging Activities | 3 Months Ended |
Aug. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt, Derivatives and Hedging Activities | Debt, Derivatives and Hedging Activities Cintas' outstanding debt is summarized as follows: (In thousands) Interest Fiscal Year Fiscal Year August 31, May 31, Debt due within one year Senior notes 4.30 % 2012 2022 $ — $ 250,000 Senior notes 2.90 % 2017 2022 650,000 650,000 Senior notes 3.25 % 2013 2023 300,000 — Commercial paper 0.20 % (1) 2022 2022 326,000 — Debt issuance costs (833) (930) Total debt due within one year $ 1,275,167 $ 899,070 Debt due after one year Senior notes 3.25 % 2013 2023 $ — $ 300,000 Senior notes (2) 2.78 % 2013 2023 50,707 50,815 Senior notes (3) 3.11 % 2015 2025 51,217 51,301 Senior notes 3.70 % 2017 2027 1,000,000 1,000,000 Senior notes 6.15 % 2007 2037 250,000 250,000 Debt issuance costs (8,702) (9,283) Total debt due after one year $ 1,343,222 $ 1,642,833 (1) Variable rate debt instrument. The rate presented is the variable borrowing rate at August 31, 2021. (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 notes is $50.0 million with a stated interest rate of 3.73%. (3) 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. The principal amount of these 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 August 31, 2021 were $2,626.0 million and $2,863.8 million, respectively, and as of May 31, 2021 were $2,550.0 million and $2,788.8 million, respectively. On June 1, 2021, in accordance with the terms of the notes, Cintas paid the $250.0 million aggregate principal amount of its 4.30%, 10-year senior notes that matured on that date with cash on hand. During the three months ended August 31, 2021, Cintas issued $326.0 million, net of commercial paper borrowings. The credit agreement that supports our commercial paper program has a revolving credit facility with a capacity of $1.0 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 $250.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility is May 23, 2024 . As of August 31, 2021, there was $326.0 million of commercial paper outstanding with maturity dates less than 30 days and with a weighted average interest rate of 0.20% and there was no borrowings on our revolving credit facility. As of May 31, 2021, t her e 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 lock agreements to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2012, fiscal 2013 and fiscal 2017. The amortization of the cash flow hedges resulted in a decrease to other comprehensive income of $0.5 million and $0.4 million three months ended August 31, 2021 and 2020, respectively. During fiscal 2020 and fiscal 2019, Cintas entered into interest rate lock agreements with a total notional value of $950.0 million and $500.0 million, respectively, for forecasted debt issuances in connection with upcoming debt maturities. The fair values of the outstanding interest rate lock agreements are summarized as follows: August 31, 2021 May 31, 2021 Fiscal Year of Issuance (in thousands) Notional Other Current Other Long-term 2020 $ 950,000 $ 18,335 $ 10,264 $ 40,400 $ — 2019 $ 500,000 $ — $ 78,472 $ — $ 61,657 The interest rate locks are also recorded in other comprehensive income (loss), net of tax. These interest rate locks had no impact on net income or cash flows for the three months ended August 31, 2021 or 2020. 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. |
Income Taxes
Income Taxes | 3 Months Ended |
Aug. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In the normal course of business, Cintas provides for uncertain tax positions and the related interest and adjusts its unrecognized tax benefits and accrued interest accordingly. As of August 31, 2021 and May 31, 2021, recorded unrecognized tax benefits were $34.6 million and $34.2 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 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 United States federal income tax returns are closed to audit through fiscal 2017. 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 resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits would not change for the fiscal year ending May 31, 2022. Cintas’ effective tax rate was 11.0% and 7.8% for the three months ended August 31, 2021 and 2020, respectively. The effective tax rate for all periods was impacted by certain discrete items (primarily the tax accounting for stock-based compensation). |
Pension Plans
Pension Plans | 3 Months Ended |
Aug. 31, 2021 | |
Retirement Benefits [Abstract] | |
Pension Plans | Pension Plans In conjunction with the acquisition of G&K in fiscal 2017, Cintas assumed G&K's noncontributory defined benefit pension plan (the Pension Plan) that covers substantially all legacy G&K employees who were employed as of July 1, 2005, except certain employees who were covered by union-administered plans. Benefits are based on the number of years of service and each employee’s compensation near retirement. We will make annual contributions to the Pension Plan consistent with federal funding requirements. The Pension Plan was frozen by G&K effective December 31, 2006. Future growth in benefits will not occur beyond this date. Applicable accounting standards require that the consolidated condensed balance sheets reflect the funded status of the Pension Plan. The funded status of the Pension Plan is measured as the difference between the plan assets at fair value and the projected benefit obligation (PBO). The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. The measurement of the PBO is based on the Company’s estimates and actuarial valuations. The net pension liability is included in long-term accrued liabilities on the consolidated condensed balance sheets. Unrecognized differences between actual amounts and estimates based on actuarial assumptions are included in accumulated other comprehensive (loss) income on our consolidated condensed balance sheets. The difference between actual amounts and estimates based on actuarial assumptions are recognized in other comprehensive (loss) income, net of tax, in the period in which they occur. The Pension Plan assumptions are evaluated annually and are updated as deemed necessary. The components of net periodic pension benefit are summarized as follows for the three months ended August 31: (In thousands) 2021 2020 Interest cost $ 542 $ 512 Expected return on assets (917) (731) Amortization of net loss — 56 Net periodic pension benefit $ (375) $ (163) |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Aug. 31, 2021 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive (loss) income, net of tax: (In thousands) Foreign Unrealized Loss on Other Total Balance at June 1, 2021 $ 41,839 $ (7,308) $ (3,643) $ 30,888 Other comprehensive loss before reclassifications (24,016) (36,679) — (60,695) Amounts reclassified from accumulated other comprehensive (loss) income — (459) — (459) Net current period other comprehensive loss (24,016) (37,138) — (61,154) Balance at August 31, 2021 $ 17,823 $ (44,446) $ (3,643) $ (30,266) (In thousands) Foreign Unrealized Loss on Other Total Balance at June 1, 2020 $ (26,343) $ (112,718) $ (14,319) $ (153,380) Other comprehensive income before reclassifications 26,946 10,842 — 37,788 Amounts reclassified from accumulated other comprehensive (loss) income — (358) — (358) Net current period other comprehensive income 26,946 10,484 — 37,430 Balance at August 31, 2020 $ 603 $ (102,234) $ (14,319) $ (115,950) The following table summarizes the reclassifications out of accumulated other comprehensive (loss) income for the three months ended August 31: Details about Accumulated Amount Reclassified from Affected Line in the (In thousands) 2021 2020 Amortization of interest rate locks $ 607 $ 474 Interest expense Tax expense (148) (116) Income taxes Amortization of interest rate locks, net of tax $ 459 $ 358 |
Segment Information
Segment Information | 3 Months Ended |
Aug. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | 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 Sale 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 operating segment revenue and income before income taxes. 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 First Aid All Corporate (1) Total As of and for the three months ended August 31, 2021 Revenue $ 1,508,176 $ 199,116 $ 189,658 $ — $ 1,896,950 Income (loss) before income taxes $ 329,382 $ 25,728 $ 38,991 $ (21,798) $ 372,303 Total assets $ 6,770,296 $ 636,829 $ 370,876 $ 79,749 $ 7,857,750 As of and for the three months ended August 31, 2020 Revenue $ 1,394,411 $ 204,481 $ 147,683 $ — $ 1,746,575 Income (loss) before income taxes $ 315,028 $ 18,527 $ 16,151 $ (24,486) $ 325,220 Total assets $ 6,628,127 $ 620,169 $ 373,543 $ 421,542 $ 8,043,381 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Aug. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, 2021. A summary of our significant accounting policies is presented beginning on page 40 of that report. 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. |
Inventory | Inventories, net are valued at the lower of cost (first-in, first-out) or net realizable value.Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $110.2 million and $111.0 million at August 31, 2021 and May 31, 2021, respectively. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up. |
Reclassification of Prior Year Presentation | Certain prior year amounts have been reclassified for consistency with the current year presentation. The reclassification has been reflected in the consolidated condensed balance sheet and consolidated condensed statement of shareholders' equity for the fiscal year ended May 31, 2021 and the three months ended August 31, 2020, to combine common stock and paid-in capital for disclosure purposes. These reclassifications had no effect on the Company's reported results of operations. |
New Accounting Pronouncements | In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . ASU 2019-12 is part of the FASB’s overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes certain exceptions to the general principles of Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740), in order to reduce the cost and complexity of its application in the areas of intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses in interim periods and other areas within ASC 740. The Company adopted ASU 2019-12 on June 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated condensed financial statements currently but may in future periods. No other new accounting pronouncement recently issued or newly effective had, or is expected to have, a material impact on Cintas' consolidated condensed financial statements. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventory | Inventory is comprised of the following: (In thousands) August 31, 2021 May 31, Raw materials $ 15,732 $ 15,109 Work in process 30,681 37,664 Finished goods 417,279 429,024 $ 463,692 $ 481,797 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Total Revenue Disaggregated by Operating Segment | The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31: (In thousands) 2021 2020 Uniform Rental and Facility Services $ 1,508,176 79.5 % $ 1,394,411 79.8 % First Aid and Safety Services 199,116 10.5 % 204,481 11.7 % Fire Protection Services 128,218 6.8 % 108,065 6.2 % Uniform Direct Sales 61,440 3.2 % 39,618 2.3 % Total revenue $ 1,896,950 100.0 % $ 1,746,575 100.0 % |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Leases [Abstract] | |
Operating Lease Cost and Additional Lease Information | The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31: (In thousands) 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities $ 11,913 $ 12,254 Operating lease right-of-use assets obtained in exchange for new and renewed $ 2,792 $ 9,317 Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows: August 31, May 31, Weighted-average remaining lease term - operating leases 5.22 years 5.33 years Weighted-average discount rate - operating leases 2.29% 2.32% |
Contractual Future Minimum Lease Payments of Operating Lease Liabilities | The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2021: (In thousands) 2022 (remaining nine months) $ 35,794 2023 40,285 2024 29,941 2025 22,509 2026 16,995 Thereafter 30,336 Total payments 175,860 Less interest (10,261) Total present value of lease payments $ 165,599 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Financial Instruments Measured on a Recurring Basis | These financial instruments measured at fair value on a recurring basis are summarized below: As of August 31, 2021 (In thousands) Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 79,749 $ — $ — $ 79,749 Other assets, net: Interest rate lock agreements — 18,335 — 18,335 Total assets at fair value $ 79,749 $ 18,335 $ — $ 98,084 Current accrued liabilities: Interest rate lock agreements $ — $ 88,736 $ — $ 88,736 Total liabilities at fair value $ — $ 88,736 $ — $ 88,736 As of May 31, 2021 (In thousands) Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 493,640 $ — $ — $ 493,640 Other assets, net: Interest rate lock agreements — 40,400 — 40,400 Total assets at fair value $ 493,640 $ 40,400 $ — $ 534,040 Long-term accrued liabilities: Interest rate lock agreements $ — $ 61,567 $ — $ 61,567 Total liabilities at fair value $ — $ 61,567 $ — $ 61,567 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Investments | Cintas' investments are summarized as follows: (In thousands) August 31, May 31, Cash surrender value of insurance policies $ 274,721 $ 252,061 Equity method investments 18,383 19,388 Cost method investments 2,164 3,167 Total investments $ 295,268 $ 274,616 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares for the three months ending August 31: Basic Earnings per Share (In thousands except per share data) 2021 2020 Net income $ 331,179 $ 300,005 Less: income allocated to participating securities 1,765 2,173 Income available to common shareholders $ 329,414 $ 297,832 Basic weighted average common shares outstanding 103,295 104,110 Basic earnings per share $ 3.19 $ 2.86 Diluted Earnings per Share (In thousands except per share data) 2021 2020 Net income $ 331,179 $ 300,005 Less: income allocated to participating securities 1,765 2,173 Income available to common shareholders $ 329,414 $ 297,832 Basic weighted average common shares outstanding 103,295 104,110 Effect of dilutive securities – employee stock options 2,649 3,019 Diluted weighted average common shares outstanding 105,944 107,129 Diluted earnings per share $ 3.11 $ 2.78 |
Buyback Activity by Program | The following tables summarize the share buyback activity by program for the three months ended August 31: 2021 2020 Buyback Program (In thousands except per share data) Shares Avg. Price Purchase Shares Avg. Price Purchase October 29, 2019 1,590 $ 365.41 $ 581,220 — $ — $ — July 27, 2021 — $ — $ — — $ — $ — 1,590 $ 365.41 $ 581,220 — $ — $ — |
Goodwill, Service Contracts a_2
Goodwill, Service Contracts and Other Assets (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Goodwill, Service Contracts And Other Assets [Abstract] | |
Changes in Carrying Amount of Goodwill by Operating Segment | Changes in the carrying amount of goodwill and service contracts for the three months ended August 31, 2021, by reportable operating segment and All Other, are as follows: Goodwill (in thousands) Uniform Rental First Aid All Total Balance as of June 1, 2021 $ 2,547,510 $ 248,571 $ 116,988 $ 2,913,069 Goodwill acquired 24,512 — 41 24,553 Foreign currency translation (11,565) (1,024) (40) (12,629) Balance as of August 31, 2021 $ 2,560,457 $ 247,547 $ 116,989 $ 2,924,993 |
Changes in the Carrying Amount of Service Contracts by Operating Segment | Changes in the carrying amount of goodwill and service contracts for the three months ended August 31, 2021, by reportable operating segment and All Other, are as follows: Service Contracts (in thousands) Uniform Rental First Aid All Total Balance as of June 1, 2021 $ 369,141 $ 18,294 $ 21,010 $ 408,445 Service contracts acquired 12,807 — 53 12,860 Service contracts amortization (12,380) (991) (1,190) (14,561) Foreign currency translation (2,637) (125) — (2,762) Balance as of August 31, 2021 $ 366,931 $ 17,178 $ 19,873 $ 403,982 |
Information Regarding Service Contracts and Other Assets | Information regarding Cintas’ service contracts and other assets is as follows: As of August 31, 2021 As of May 31, 2021 (In thousands) Carrying Accumulated Net Carrying Accumulated Net Service contracts $ 969,728 $ 565,746 $ 403,982 $ 961,942 $ 553,497 $ 408,445 Capitalized contract costs (1) $ 480,535 $ 253,298 $ 227,237 $ 459,079 $ 231,940 $ 227,139 Noncompete and 45,783 42,601 3,182 44,683 42,408 2,275 Other 89,293 24,393 64,900 105,371 24,371 81,000 Total other assets $ 615,611 $ 320,292 $ 295,319 $ 609,133 $ 298,719 $ 310,414 |
Estimated Future Amortization Expense | As of August 31, 2021, 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) 2022 (remaining nine months) $ 104,871 2023 122,464 2024 110,029 2025 96,113 2026 79,013 Thereafter 204,245 Total future amortization expense $ 716,735 |
Debt, Derivatives and Hedging_2
Debt, Derivatives and Hedging Activities (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Debt Disclosure [Abstract] | |
Summary of Outstanding Debt | Cintas' outstanding debt is summarized as follows: (In thousands) Interest Fiscal Year Fiscal Year August 31, May 31, Debt due within one year Senior notes 4.30 % 2012 2022 $ — $ 250,000 Senior notes 2.90 % 2017 2022 650,000 650,000 Senior notes 3.25 % 2013 2023 300,000 — Commercial paper 0.20 % (1) 2022 2022 326,000 — Debt issuance costs (833) (930) Total debt due within one year $ 1,275,167 $ 899,070 Debt due after one year Senior notes 3.25 % 2013 2023 $ — $ 300,000 Senior notes (2) 2.78 % 2013 2023 50,707 50,815 Senior notes (3) 3.11 % 2015 2025 51,217 51,301 Senior notes 3.70 % 2017 2027 1,000,000 1,000,000 Senior notes 6.15 % 2007 2037 250,000 250,000 Debt issuance costs (8,702) (9,283) Total debt due after one year $ 1,343,222 $ 1,642,833 (1) Variable rate debt instrument. The rate presented is the variable borrowing rate at August 31, 2021. (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 notes is $50.0 million with a stated interest rate of 3.73%. |
Schedule of Interest Rate Lock Agreements | The fair values of the outstanding interest rate lock agreements are summarized as follows: August 31, 2021 May 31, 2021 Fiscal Year of Issuance (in thousands) Notional Other Current Other Long-term 2020 $ 950,000 $ 18,335 $ 10,264 $ 40,400 $ — 2019 $ 500,000 $ — $ 78,472 $ — $ 61,657 |
Pension Plans (Tables)
Pension Plans (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost | The components of net periodic pension benefit are summarized as follows for the three months ended August 31: (In thousands) 2021 2020 Interest cost $ 542 $ 512 Expected return on assets (917) (731) Amortization of net loss — 56 Net periodic pension benefit $ (375) $ (163) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Equity [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive (Loss) Income | The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive (loss) income, net of tax: (In thousands) Foreign Unrealized Loss on Other Total Balance at June 1, 2021 $ 41,839 $ (7,308) $ (3,643) $ 30,888 Other comprehensive loss before reclassifications (24,016) (36,679) — (60,695) Amounts reclassified from accumulated other comprehensive (loss) income — (459) — (459) Net current period other comprehensive loss (24,016) (37,138) — (61,154) Balance at August 31, 2021 $ 17,823 $ (44,446) $ (3,643) $ (30,266) (In thousands) Foreign Unrealized Loss on Other Total Balance at June 1, 2020 $ (26,343) $ (112,718) $ (14,319) $ (153,380) Other comprehensive income before reclassifications 26,946 10,842 — 37,788 Amounts reclassified from accumulated other comprehensive (loss) income — (358) — (358) Net current period other comprehensive income 26,946 10,484 — 37,430 Balance at August 31, 2020 $ 603 $ (102,234) $ (14,319) $ (115,950) |
Schedule of Reclassifications Out of Accumulated Other Comprehensive (Loss) Income | The following table summarizes the reclassifications out of accumulated other comprehensive (loss) income for the three months ended August 31: Details about Accumulated Amount Reclassified from Affected Line in the (In thousands) 2021 2020 Amortization of interest rate locks $ 607 $ 474 Interest expense Tax expense (148) (116) Income taxes Amortization of interest rate locks, net of tax $ 459 $ 358 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Aug. 31, 2021 | |
Segment Reporting [Abstract] | |
Information Related to Operating Segments | Information related to the operations of Cintas’ reportable operating segments and All Other is set forth below: (In thousands) Uniform Rental First Aid All Corporate (1) Total As of and for the three months ended August 31, 2021 Revenue $ 1,508,176 $ 199,116 $ 189,658 $ — $ 1,896,950 Income (loss) before income taxes $ 329,382 $ 25,728 $ 38,991 $ (21,798) $ 372,303 Total assets $ 6,770,296 $ 636,829 $ 370,876 $ 79,749 $ 7,857,750 As of and for the three months ended August 31, 2020 Revenue $ 1,394,411 $ 204,481 $ 147,683 $ — $ 1,746,575 Income (loss) before income taxes $ 315,028 $ 18,527 $ 16,151 $ (24,486) $ 325,220 Total assets $ 6,628,127 $ 620,169 $ 373,543 $ 421,542 $ 8,043,381 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | Aug. 31, 2021 | May 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 15,732 | $ 15,109 |
Work in process | 30,681 | 37,664 |
Finished goods | 417,279 | 429,024 |
Inventories, net | 463,692 | 481,797 |
Reserves for obsolete inventory | $ 110,200 | $ 111,000 |
Revenue Recognition - Total Rev
Revenue Recognition - Total Revenue Disaggregated by Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 1,896,950 | $ 1,746,575 |
Uniform Rental and Facility Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 1,508,176 | 1,394,411 |
First Aid and Safety Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 199,116 | 204,481 |
Fire Protection Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 128,218 | 108,065 |
Uniform Direct Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 61,440 | $ 39,618 |
Revenue | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenue | 100.00% | 100.00% |
Revenue | Product Concentration Risk | Uniform Rental and Facility Services | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenue | 79.50% | 79.80% |
Revenue | Product Concentration Risk | First Aid and Safety Services | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenue | 10.50% | 11.70% |
Revenue | Product Concentration Risk | Fire Protection Services | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenue | 6.80% | 6.20% |
Revenue | Product Concentration Risk | Uniform Direct Sales | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenue | 3.20% | 2.30% |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Deferred commissions, current | $ 80.2 | $ 79.4 | |
Deferred commissions, noncurrent | 227.2 | $ 227.1 | |
Amortization of deferred commissions | $ 21.4 | $ 20.4 | |
Revenue | Product Concentration Risk | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Percentage of revenue | 100.00% | 100.00% | |
Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services | Revenue | Product Concentration Risk | Route Servicing Fees | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Percentage of revenue | 95.00% | ||
Uniform Direct Sales | Revenue | Product Concentration Risk | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Percentage of revenue | 3.20% | 2.30% | |
Uniform Direct Sales | Revenue | Product Concentration Risk | Other | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||
Percentage of revenue | 5.00% |
Leases - Operating Lease Cost a
Leases - Operating Lease Cost and Additional Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | |
Leases [Abstract] | |||
Operating lease costs | $ 18,200 | $ 17,100 | |
Other information related to operating leases | |||
Cash paid for amounts included in the measurement of operating lease liabilities | 11,913 | 12,254 | |
Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities | $ 2,792 | $ 9,317 | |
Weighted-average remaining lease term - operating leases | 5 years 2 months 19 days | 5 years 3 months 29 days | |
Weighted-average discount rate - operating leases | 2.29% | 2.32% |
Leases - Contractual Future Min
Leases - Contractual Future Minimum Lease Payments (Details) $ in Thousands | Aug. 31, 2021USD ($) |
Leases [Abstract] | |
2022 (remaining nine months) | $ 35,794 |
2023 | 40,285 |
2024 | 29,941 |
2025 | 22,509 |
2026 | 16,995 |
Thereafter | 30,336 |
Total payments | 175,860 |
Less interest | (10,261) |
Total present value of lease payments | $ 165,599 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Aug. 31, 2021 | May 31, 2021 |
Fair value on a recurring basis | ||
Cash and cash equivalents | $ 79,749 | $ 493,640 |
Other assets, net: | ||
Total assets at fair value | 98,084 | 534,040 |
Current and long-term accrued liabilities: | ||
Total liabilities at fair value | 88,736 | 61,567 |
Interest rate lock agreements | ||
Current and long-term accrued liabilities: | ||
Interest rate lock agreements | 88,736 | 61,567 |
Interest rate lock agreements | Other assets, net | ||
Other assets, net: | ||
Interest rate lock agreements | 18,335 | 40,400 |
Level 1 | ||
Fair value on a recurring basis | ||
Cash and cash equivalents | 79,749 | 493,640 |
Other assets, net: | ||
Total assets at fair value | 79,749 | 493,640 |
Current and long-term accrued liabilities: | ||
Total liabilities at fair value | 0 | 0 |
Level 1 | Interest rate lock agreements | ||
Current and long-term accrued liabilities: | ||
Interest rate lock agreements | 0 | 0 |
Level 1 | Interest rate lock agreements | Other assets, net | ||
Other assets, net: | ||
Interest rate lock agreements | 0 | 0 |
Level 2 | ||
Fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Other assets, net: | ||
Total assets at fair value | 18,335 | 40,400 |
Current and long-term accrued liabilities: | ||
Total liabilities at fair value | 88,736 | 61,567 |
Level 2 | Interest rate lock agreements | ||
Current and long-term accrued liabilities: | ||
Interest rate lock agreements | 88,736 | 61,567 |
Level 2 | Interest rate lock agreements | Other assets, net | ||
Other assets, net: | ||
Interest rate lock agreements | 18,335 | 40,400 |
Level 3 | ||
Fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Other assets, net: | ||
Total assets at fair value | 0 | 0 |
Current and long-term accrued liabilities: | ||
Total liabilities at fair value | 0 | 0 |
Level 3 | Interest rate lock agreements | ||
Current and long-term accrued liabilities: | ||
Interest rate lock agreements | 0 | 0 |
Level 3 | Interest rate lock agreements | Other assets, net | ||
Other assets, net: | ||
Interest rate lock agreements | $ 0 | $ 0 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |||
Cash surrender value of insurance policies | $ 274,721 | $ 252,061 | |
Equity method investments | 18,383 | 19,388 | |
Cost method investments | 2,164 | 3,167 | |
Total investments | 295,268 | $ 274,616 | |
Losses due to impairment | $ 0 | $ 0 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Basic earnings per share: | ||
Net income | $ 331,179 | $ 300,005 |
Less: income allocated to participating securities | 1,765 | 2,173 |
Income available to common shareholders | $ 329,414 | $ 297,832 |
Basic weighted average common shares outstanding (in shares) | 103,295 | 104,110 |
Basic earnings per share (in dollars per share) | $ 3.19 | $ 2.86 |
Diluted earnings per share: | ||
Net income | $ 331,179 | $ 300,005 |
Less: income allocated to participating securities | 1,765 | 2,173 |
Income available to common shareholders | $ 329,414 | $ 297,832 |
Basic weighted average common shares outstanding (in shares) | 103,295 | 104,110 |
Effect of dilutive securities - employee stock options (in shares) | 2,649 | 3,019 |
Diluted weighted average common shares outstanding (in shares) | 105,944 | 107,129 |
Diluted earnings per share (in dollars per share) | $ 3.11 | $ 2.78 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands | 1 Months Ended | 3 Months Ended | 21 Months Ended | |||
Oct. 07, 2021 | Aug. 31, 2021 | Aug. 31, 2020 | Jul. 31, 2021 | Jul. 27, 2021 | Oct. 29, 2019 | |
Earnings Per Share [Abstract] | ||||||
Options granted and excluded from the computation of diluted earnings per share (in shares) | 100 | 200 | ||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback | $ 659,235,000 | $ 69,011,000 | ||||
Shares acquired for employee payroll taxes on restricted stock awards (in shares) | 200 | 200 | ||||
Shares acquired for employee payroll taxes on restricted stock awards, average price (in dollars per share) | $ 394.19 | $ 300.01 | ||||
Shares acquired for employee payroll taxes on restricted stock awards | $ 78,000,000 | $ 69,000,000 | ||||
October 29, 2019 Plan | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Share buyback program, authorized amount | $ 1,000,000,000 | |||||
Stock purchased under share buyback (shares) | 1,590 | 0 | 2,800 | |||
Stock purchased under share buyback, average price (in dollars per share) | $ 365.41 | $ 0 | $ 358.93 | |||
Stock purchased under share buyback | $ 581,220,000 | $ 0 | $ 1,000,000,000 | |||
July 27, 2021 Plan | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Share buyback program, authorized amount | $ 1,500,000,000 | |||||
Stock purchased under share buyback (shares) | 0 | 0 | ||||
Stock purchased under share buyback, average price (in dollars per share) | $ 0 | $ 0 | ||||
Stock purchased under share buyback | $ 0 | $ 0 | ||||
Subsequent Event | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback (shares) | 0 |
Earnings per Share - Summary of
Earnings per Share - Summary of Buyback Activity by Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 21 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | Jul. 31, 2021 | |
Equity, Class of Treasury Stock [Line Items] | |||
Stock purchased under share buyback | $ 659,235 | $ 69,011 | |
Share Buyback Programs | |||
Equity, Class of Treasury Stock [Line Items] | |||
Stock purchased under share buyback (shares) | 1,590 | 0 | |
Stock purchased under share buyback, average price (in dollars per share) | $ 365.41 | $ 0 | |
Stock purchased under share buyback | $ 581,220 | $ 0 | |
October 29, 2019 Plan | |||
Equity, Class of Treasury Stock [Line Items] | |||
Stock purchased under share buyback (shares) | 1,590 | 0 | 2,800 |
Stock purchased under share buyback, average price (in dollars per share) | $ 365.41 | $ 0 | $ 358.93 |
Stock purchased under share buyback | $ 581,220 | $ 0 | $ 1,000,000 |
July 27, 2021 Plan | |||
Equity, Class of Treasury Stock [Line Items] | |||
Stock purchased under share buyback (shares) | 0 | 0 | |
Stock purchased under share buyback, average price (in dollars per share) | $ 0 | $ 0 | |
Stock purchased under share buyback | $ 0 | $ 0 |
Goodwill, Service Contracts a_3
Goodwill, Service Contracts and Other Assets - Goodwill (Details) $ in Thousands | 3 Months Ended |
Aug. 31, 2021USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 2,913,069 |
Goodwill acquired | 24,553 |
Foreign currency translation | (12,629) |
Ending balance | 2,924,993 |
Uniform rental and facility services | |
Goodwill [Roll Forward] | |
Beginning balance | 2,547,510 |
Goodwill acquired | 24,512 |
Foreign currency translation | (11,565) |
Ending balance | 2,560,457 |
First Aid and Safety Services | |
Goodwill [Roll Forward] | |
Beginning balance | 248,571 |
Goodwill acquired | 0 |
Foreign currency translation | (1,024) |
Ending balance | 247,547 |
All Other | |
Goodwill [Roll Forward] | |
Beginning balance | 116,988 |
Goodwill acquired | 41 |
Foreign currency translation | (40) |
Ending balance | $ 116,989 |
Goodwill, Service Contracts a_4
Goodwill, Service Contracts and Other Assets - Service Contracts (Details) $ in Thousands | 3 Months Ended |
Aug. 31, 2021USD ($) | |
Service contracts [Roll Forward] | |
Beginning balance | $ 408,445 |
Service contracts acquired | 12,860 |
Service contracts amortization | (14,561) |
Foreign currency translation | (2,762) |
Ending balance | 403,982 |
Uniform rental and facility services | |
Service contracts [Roll Forward] | |
Beginning balance | 369,141 |
Service contracts acquired | 12,807 |
Service contracts amortization | (12,380) |
Foreign currency translation | (2,637) |
Ending balance | 366,931 |
First Aid and Safety Services | |
Service contracts [Roll Forward] | |
Beginning balance | 18,294 |
Service contracts acquired | 0 |
Service contracts amortization | (991) |
Foreign currency translation | (125) |
Ending balance | 17,178 |
All Other | |
Service contracts [Roll Forward] | |
Beginning balance | 21,010 |
Service contracts acquired | 53 |
Service contracts amortization | (1,190) |
Foreign currency translation | 0 |
Ending balance | $ 19,873 |
Goodwill, Service Contracts a_5
Goodwill, Service Contracts and Other Assets - Information Regarding Service Contracts and Other Assets (Details) - USD ($) $ in Thousands | Aug. 31, 2021 | May 31, 2021 |
Information regarding service contracts and other assets | ||
Service contracts, net | $ 403,982 | $ 408,445 |
Other assets, carrying amount | 615,611 | 609,133 |
Other assets, accumulated amortization | 320,292 | 298,719 |
Other assets, net | 295,319 | 310,414 |
Capitalized contract costs | ||
Information regarding service contracts and other assets | ||
Other assets, carrying amount | 480,535 | 459,079 |
Other assets, accumulated amortization | 253,298 | 231,940 |
Other assets, net | 227,237 | 227,139 |
Other assets current | 80,200 | 79,400 |
Noncompete and consulting agreements | ||
Information regarding service contracts and other assets | ||
Other assets, carrying amount | 45,783 | 44,683 |
Other assets, accumulated amortization | 42,601 | 42,408 |
Other assets, net | 3,182 | 2,275 |
Other | ||
Information regarding service contracts and other assets | ||
Other assets, carrying amount | 89,293 | 105,371 |
Other assets, accumulated amortization | 24,393 | 24,371 |
Other assets, net | 64,900 | 81,000 |
Service Contracts | ||
Information regarding service contracts and other assets | ||
Service contracts, carrying amount | 969,728 | 961,942 |
Service contracts, accumulated amortization | 565,746 | 553,497 |
Service contracts, net | $ 403,982 | $ 408,445 |
Goodwill, Service Contracts a_6
Goodwill, Service Contracts and Other Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Goodwill, Service Contracts And Other Assets [Abstract] | ||
Amortization expense for service contracts and other assets | $ 36,500 | $ 35,100 |
2022 (remaining nine months) | 104,871 | |
2023 | 122,464 | |
2024 | 110,029 | |
2025 | 96,113 | |
2026 | 79,013 | |
Thereafter | 204,245 | |
Total future amortization expense | $ 716,735 |
Debt, Derivatives and Hedging_3
Debt, Derivatives and Hedging Activities - Summary of Debt Outstanding (Details) - USD ($) | Aug. 31, 2021 | Jun. 01, 2021 | May 31, 2021 |
Debt due within one year | |||
Debt due within one year, gross | $ 0 | ||
Debt issuance costs | $ (833,000) | (930,000) | |
Debt due within one year | 1,275,167,000 | 899,070,000 | |
Debt due after one year | |||
Debt issuance costs | (8,702,000) | (9,283,000) | |
Total debt due after one year | 1,343,222,000 | 1,642,833,000 | |
Commercial paper | |||
Debt due within one year | |||
Debt due within one year | 326,000,000 | $ 0 | |
Debt due after one year | |||
Variable borrowing rate | 0.20% | ||
Senior notes | Senior Notes, 4.30%, 2022 Maturity | |||
Debt due within one year | |||
Debt due within one year, gross | 0 | $ 250,000,000 | |
Debt due after one year | |||
Stated interest rate | 4.30% | 4.30% | |
Senior notes | Senior Notes, 2.90%, 2022 Maturity | |||
Debt due within one year | |||
Debt due within one year, gross | $ 650,000,000 | $ 650,000,000 | |
Debt due after one year | |||
Stated interest rate | 2.90% | ||
Senior notes | Senior Notes, 3.25%, 2023 Maturity | |||
Debt due within one year | |||
Debt due within one year, gross | $ 300,000,000 | ||
Debt due after one year | |||
Debt due after one year, gross | $ 0 | 300,000,000 | |
Stated interest rate | 3.25% | ||
Senior notes | Senior Notes, 2.78%, 2023 Maturity | |||
Debt due after one year | |||
Debt due after one year, gross | $ 50,707,000 | 50,815,000 | |
Stated interest rate | 2.78% | ||
Senior notes | Senior Notes, 2.78%, 2023 Maturity | G&K Services | |||
Debt due after one year | |||
Stated interest rate | 3.73% | ||
Face value | $ 50,000,000 | ||
Senior notes | Senior Notes, 3.11%, 2025 Maturity | |||
Debt due after one year | |||
Debt due after one year, gross | $ 51,217,000 | 51,301,000 | |
Stated interest rate | 3.11% | ||
Senior notes | Senior Notes, 3.11%, 2025 Maturity | G&K Services | |||
Debt due after one year | |||
Stated interest rate | 3.88% | ||
Face value | $ 50,000,000 | ||
Senior notes | Senior Notes, 3.70%, 2027 Maturity | |||
Debt due after one year | |||
Debt due after one year, gross | $ 1,000,000,000 | 1,000,000,000 | |
Stated interest rate | 3.70% | ||
Senior notes | Senior Notes, 6.15%, 2037 Maturity | |||
Debt due after one year | |||
Debt due after one year, gross | $ 250,000,000 | $ 250,000,000 | |
Stated interest rate | 6.15% |
Debt, Derivatives and Hedging_4
Debt, Derivatives and Hedging Activities - Narrative (Details) - USD ($) | Jun. 01, 2021 | Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | May 31, 2020 | May 24, 2019 |
Debt Instrument [Line Items] | ||||||
Debt, carrying value | $ 2,626,000,000 | $ 2,550,000,000 | ||||
Debt, fair value | 2,863,800,000 | $ 2,788,800,000 | ||||
Repayment of debt | 250,000,000 | $ 0 | ||||
Issuance of commercial paper | 326,000,000 | |||||
Amortization of interest rate lock agreements - increase (decrease) to other comprehensive loss | (500,000) | $ (400,000) | ||||
Senior Notes, 4.30%, 2022 Maturity | Senior notes | ||||||
Debt Instrument [Line Items] | ||||||
Repayment of debt | $ 250,000,000 | |||||
Stated interest rate | 4.30% | 4.30% | ||||
Debt term | 10 years | |||||
Treasury Lock Tranche 2 | ||||||
Debt Instrument [Line Items] | ||||||
Notional amount | $ 950,000,000 | |||||
Treasury Lock Tranche 1 | ||||||
Debt Instrument [Line Items] | ||||||
Notional amount | $ 500,000,000 | |||||
Commercial paper | ||||||
Debt Instrument [Line Items] | ||||||
Commercial paper | $ 326,000,000 | 0 | ||||
Weighted average interest rate | 0.20% | |||||
Revolving credit facility | ||||||
Debt Instrument [Line Items] | ||||||
Revolving credit facility, maximum borrowing capacity with accordion feature | $ 1,000,000,000 | |||||
Debt amendment, increase limit (up to) | $ 250,000,000 | |||||
Revolving credit facility amount outstanding | $ 0 | $ 0 |
Debt, Derivatives and Hedging_5
Debt, Derivatives and Hedging Activities - Interest Rate Lock Agreements (Details) - USD ($) $ in Thousands | Aug. 31, 2021 | May 31, 2021 |
Interest Rate Contract, 2020 | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount | $ 950,000 | |
Interest Rate Contract, 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Notional amount | 500,000 | |
Other assets, net | Interest Rate Contract, 2020 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 18,335 | $ 40,400 |
Other assets, net | Interest Rate Contract, 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 0 | 0 |
Current accrued liabilities | Interest Rate Contract, 2020 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 10,264 | |
Current accrued liabilities | Interest Rate Contract, 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 78,472 | |
Long-term accrued liabilities | Interest Rate Contract, 2020 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 0 | |
Long-term accrued liabilities | Interest Rate Contract, 2019 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ 61,657 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefits | $ 34.6 | $ 34.2 | |
Effective tax rate | 11.00% | 7.80% |
Pension Plans (Details)
Pension Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Retirement Benefits [Abstract] | ||
Interest cost | $ 542 | $ 512 |
Expected return on assets | (917) | (731) |
Amortization of net loss | 0 | 56 |
Net periodic pension benefit | $ (375) | $ (163) |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Schedule of Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance | $ 3,687,847 | $ 3,235,202 |
Other comprehensive income (loss) before reclassifications | (60,695) | 37,788 |
Amounts reclassified from accumulated other comprehensive (loss) income | (459) | (358) |
Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively | (61,154) | 37,430 |
Balance | 3,309,203 | 3,604,804 |
Foreign Currency | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance | 41,839 | (26,343) |
Other comprehensive income (loss) before reclassifications | (24,016) | 26,946 |
Amounts reclassified from accumulated other comprehensive (loss) income | 0 | 0 |
Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively | (24,016) | 26,946 |
Balance | 17,823 | 603 |
Unrealized Loss on Interest Rate Hedges | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance | (7,308) | (112,718) |
Other comprehensive income (loss) before reclassifications | (36,679) | 10,842 |
Amounts reclassified from accumulated other comprehensive (loss) income | (459) | (358) |
Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively | (37,138) | 10,484 |
Balance | (44,446) | (102,234) |
Other | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance | (3,643) | (14,319) |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Amounts reclassified from accumulated other comprehensive (loss) income | 0 | 0 |
Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively | 0 | 0 |
Balance | (3,643) | (14,319) |
Total | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance | 30,888 | (153,380) |
Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively | (61,154) | 37,430 |
Balance | $ (30,266) | $ (115,950) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Schedule of Reclassifications Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2021 | Aug. 31, 2020 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest expense | $ 21,854 | $ 24,550 |
Income taxes | (41,124) | (25,215) |
Net income | 331,179 | 300,005 |
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income | Unrealized Loss on Interest Rate Hedges | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Income taxes | (148) | (116) |
Net income | 459 | 358 |
Amount Reclassified from Accumulated Other Comprehensive (Loss) Income | Unrealized Loss on Interest Rate Hedges | Interest Rate Locks | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest expense | $ 607 | $ 474 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2021 | Aug. 31, 2020 | May 31, 2021 | |
Segment Reporting Information | |||
Revenue | $ 1,896,950 | $ 1,746,575 | |
Income (loss) before income taxes | 372,303 | 325,220 | |
Total assets | 7,857,750 | 8,043,381 | $ 8,236,823 |
Uniform rental and facility services | |||
Segment Reporting Information | |||
Revenue | 1,508,176 | 1,394,411 | |
First Aid and Safety Services | |||
Segment Reporting Information | |||
Revenue | 199,116 | 204,481 | |
Operating Segments | Uniform rental and facility services | |||
Segment Reporting Information | |||
Revenue | 1,508,176 | 1,394,411 | |
Income (loss) before income taxes | 329,382 | 315,028 | |
Total assets | 6,770,296 | 6,628,127 | |
Operating Segments | First Aid and Safety Services | |||
Segment Reporting Information | |||
Revenue | 199,116 | 204,481 | |
Income (loss) before income taxes | 25,728 | 18,527 | |
Total assets | 636,829 | 620,169 | |
Operating Segments | All Other | |||
Segment Reporting Information | |||
Revenue | 189,658 | 147,683 | |
Income (loss) before income taxes | 38,991 | 16,151 | |
Total assets | 370,876 | 373,543 | |
Corporate | |||
Segment Reporting Information | |||
Revenue | 0 | 0 | |
Income (loss) before income taxes | (21,798) | (24,486) | |
Total assets | $ 79,749 | $ 421,542 |