Cover
Cover - shares | 6 Months Ended | |
Nov. 30, 2023 | Dec. 31, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Nov. 30, 2023 | |
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 | 101,371,435 | |
Entity Central Index Key | 0000723254 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Revenue: | ||||
Total revenue | $ 2,377,177 | $ 2,174,858 | $ 4,719,507 | $ 4,341,312 |
Costs and expenses: | ||||
Selling and administrative expenses | 641,865 | 577,513 | 1,282,880 | 1,165,505 |
Operating income | 499,683 | 444,934 | 1,000,239 | 885,054 |
Interest income | (769) | (344) | (1,191) | (499) |
Interest expense | 26,590 | 28,920 | 51,134 | 56,640 |
Income before income taxes | 473,862 | 416,358 | 950,296 | 828,913 |
Income taxes | 99,249 | 92,065 | 190,598 | 152,931 |
Net income | $ 374,613 | $ 324,293 | $ 759,698 | $ 675,982 |
Basic earnings per share (in dollars per share) | $ 3.67 | $ 3.18 | $ 7.43 | $ 6.63 |
Diluted earnings per share (in dollars per share) | 3.61 | 3.12 | 7.32 | 6.51 |
Dividends declared per share (in dollars per share) | $ 1.35 | $ 1.15 | $ 2.70 | $ 2.30 |
Uniform Rental and Facility Services | ||||
Revenue: | ||||
Total revenue | $ 1,850,542 | $ 1,709,987 | $ 3,677,367 | $ 3,407,759 |
Costs and expenses: | ||||
Cost of revenue | 974,231 | 906,727 | 1,921,814 | 1,797,493 |
Other | ||||
Revenue: | ||||
Total revenue | 526,635 | 464,871 | 1,042,140 | 933,553 |
Costs and expenses: | ||||
Cost of revenue | $ 261,398 | $ 245,684 | $ 514,574 | $ 493,260 |
Consolidated Condensed Statem_2
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 374,613 | $ 324,293 | $ 759,698 | $ 675,982 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustments | (1,813) | (9,901) | 821 | (29,107) |
Change in fair value of interest rate lock agreements, net of tax expense of $3,115, $2,531, $5,921 and $2,851, respectively | 9,099 | 7,394 | 17,298 | 8,328 |
Amortization of interest rate lock agreements, net of tax benefit of $(503), $(513), $(990) and $(1,025), respectively | (1,495) | (1,521) | (2,937) | (3,042) |
Other, net of tax expense of $130, $0, $130 and $0, respectively | 379 | 0 | 379 | 0 |
Other comprehensive income (loss), net of tax expense of $2,742, $2,018, $5,061 and $1,826, respectively | 6,170 | (4,028) | 15,561 | (23,821) |
Comprehensive income | $ 380,783 | $ 320,265 | $ 775,259 | $ 652,161 |
Consolidated Condensed Statem_3
Consolidated Condensed Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Change in fair value of interest rate lock agreements, tax expense | $ 3,115 | $ 2,531 | $ 5,921 | $ 2,851 |
Amortization of interest rate lock agreements, tax benefit | (503) | (513) | (990) | (1,025) |
Other comprehensive income (loss), other adjustments, tax | 130 | 0 | 130 | 0 |
Other comprehensive income (loss), tax expense | $ 2,742 | $ 2,018 | $ 5,061 | $ 1,826 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Thousands | Nov. 30, 2023 | May 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 85,556 | $ 124,149 |
Accounts receivable, net | 1,273,974 | 1,152,993 |
Inventories, net | 474,840 | 506,604 |
Uniforms and other rental items in service | 1,035,717 | 1,011,918 |
Prepaid expenses and other current assets | 166,652 | 142,795 |
Total current assets | 3,036,739 | 2,938,459 |
Property and equipment, net | 1,463,826 | 1,396,476 |
Investments | 270,006 | 247,191 |
Goodwill | 3,120,506 | 3,056,201 |
Service contracts, net | 329,511 | 346,574 |
Operating lease right-of-use assets, net | 179,154 | 178,464 |
Other assets, net | 414,127 | 382,991 |
Total assets | 8,813,869 | 8,546,356 |
Current liabilities: | ||
Accounts payable | 316,697 | 302,292 |
Accrued compensation and related liabilities | 154,452 | 239,086 |
Accrued liabilities | 619,288 | 632,504 |
Income taxes, current | 13,102 | 12,470 |
Operating lease liabilities, current | 44,063 | 43,710 |
Debt due within one year | 210,000 | 0 |
Total current liabilities | 1,357,602 | 1,230,062 |
Long-term liabilities: | ||
Debt due after one year | 2,474,287 | 2,486,405 |
Deferred income taxes | 497,198 | 498,356 |
Operating lease liabilities | 138,936 | 138,278 |
Accrued liabilities | 351,365 | 329,269 |
Total long-term liabilities | 3,461,786 | 3,452,308 |
Shareholders’ equity: | ||
Preferred stock, no par value: 100,000 shares authorized, none outstanding | 0 | 0 |
Common stock, no par value, and paid-in capital | 2,179,951 | 2,031,542 |
Retained earnings | 10,081,267 | 9,597,315 |
Treasury stock | (8,360,076) | (7,842,649) |
Accumulated other comprehensive income | 93,339 | 77,778 |
Total shareholders’ equity | 3,994,481 | 3,863,986 |
Total liabilities and shareholders' equity | $ 8,813,869 | $ 8,546,356 |
Consolidated Condensed Balanc_2
Consolidated Condensed Balance Sheets (Parenthetical) - shares | Nov. 30, 2023 | May 31, 2023 |
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) | 192,861,307 | 192,198,938 |
Common stock, outstanding (in shares) | 101,347,603 | 101,732,148 |
Treasury stock (in shares) | 91,513,704 | 90,466,790 |
Consolidated Condensed Statem_4
Consolidated Condensed Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock and Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Treasury Stock |
Beginning balance (in shares) at May. 31, 2022 | 190,838,000 | ||||
Beginning balance at May. 31, 2022 | $ 3,308,196 | $ 1,771,917 | $ 8,719,163 | $ 107,917 | $ (7,290,801) |
Beginning balance (in shares) at May. 31, 2022 | (89,127,000) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 351,689 | 351,689 | |||
Comprehensive (loss) income, net of tax | (19,793) | (19,793) | |||
Dividends | (117,461) | (117,461) | |||
Stock-based compensation | 26,282 | $ 26,282 | |||
Vesting of stock-based compensation awards (in shares) | 273,000 | ||||
Stock options exercised (in shares) | 543,000 | (193,000) | |||
Stock options exercised | 1,047 | $ 80,638 | $ (79,591) | ||
Repurchase of common stock (in shares) | (802,000) | ||||
Repurchase of common stock | (320,334) | $ (320,334) | |||
Ending balance (in shares) at Aug. 31, 2022 | 191,654,000 | ||||
Ending balance at Aug. 31, 2022 | 3,229,626 | $ 1,878,837 | 8,953,391 | 88,124 | $ (7,690,726) |
Ending balance (in shares) at Aug. 31, 2022 | (90,122,000) | ||||
Beginning balance (in shares) at May. 31, 2022 | 190,838,000 | ||||
Beginning balance at May. 31, 2022 | 3,308,196 | $ 1,771,917 | 8,719,163 | 107,917 | $ (7,290,801) |
Beginning balance (in shares) at May. 31, 2022 | (89,127,000) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 675,982 | ||||
Comprehensive (loss) income, net of tax | (23,821) | ||||
Repurchase of common stock | (348,682) | ||||
Ending balance (in shares) at Nov. 30, 2022 | 191,857,000 | ||||
Ending balance at Nov. 30, 2022 | 3,430,538 | $ 1,933,145 | 9,160,346 | 84,096 | $ (7,747,049) |
Ending balance (in shares) at Nov. 30, 2022 | (90,256,000) | ||||
Beginning balance (in shares) at Aug. 31, 2022 | 191,654,000 | ||||
Beginning balance at Aug. 31, 2022 | 3,229,626 | $ 1,878,837 | 8,953,391 | 88,124 | $ (7,690,726) |
Beginning balance (in shares) at Aug. 31, 2022 | (90,122,000) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 324,293 | 324,293 | |||
Comprehensive (loss) income, net of tax | (4,028) | (4,028) | |||
Dividends | (117,338) | (117,338) | |||
Stock-based compensation | 25,255 | $ 25,255 | |||
Vesting of stock-based compensation awards (in shares) | 9,000 | ||||
Stock options exercised (in shares) | 194,000 | (66,000) | |||
Stock options exercised | 1,078 | $ 29,053 | $ (27,975) | ||
Repurchase of common stock (in shares) | (68,000) | ||||
Repurchase of common stock | (28,348) | $ (28,348) | |||
Ending balance (in shares) at Nov. 30, 2022 | 191,857,000 | ||||
Ending balance at Nov. 30, 2022 | $ 3,430,538 | $ 1,933,145 | 9,160,346 | 84,096 | $ (7,747,049) |
Ending balance (in shares) at Nov. 30, 2022 | (90,256,000) | ||||
Beginning balance (in shares) at May. 31, 2023 | 192,198,938 | 192,199,000 | |||
Beginning balance at May. 31, 2023 | $ 3,863,986 | $ 2,031,542 | 9,597,315 | 77,778 | $ (7,842,649) |
Beginning balance (in shares) at May. 31, 2023 | (90,466,790) | (90,467,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 385,085 | 385,085 | |||
Comprehensive (loss) income, net of tax | 9,391 | 9,391 | |||
Dividends | (138,272) | (138,272) | |||
Stock-based compensation | 30,242 | $ 30,242 | |||
Vesting of stock-based compensation awards (in shares) | 156,000 | ||||
Stock options exercised (in shares) | 303,000 | (118,000) | |||
Stock options exercised | 479 | $ 59,691 | $ (59,212) | ||
Repurchase of common stock (in shares) | (145,000) | ||||
Repurchase of common stock | (73,276) | $ (73,276) | |||
Ending balance (in shares) at Aug. 31, 2023 | 192,658,000 | ||||
Ending balance at Aug. 31, 2023 | $ 4,077,635 | $ 2,121,475 | 9,844,128 | 87,169 | $ (7,975,137) |
Ending balance (in shares) at Aug. 31, 2023 | (90,730,000) | ||||
Beginning balance (in shares) at May. 31, 2023 | 192,198,938 | 192,199,000 | |||
Beginning balance at May. 31, 2023 | $ 3,863,986 | $ 2,031,542 | 9,597,315 | 77,778 | $ (7,842,649) |
Beginning balance (in shares) at May. 31, 2023 | (90,466,790) | (90,467,000) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 759,698 | ||||
Comprehensive (loss) income, net of tax | 15,561 | ||||
Repurchase of common stock | $ (423,128) | ||||
Ending balance (in shares) at Nov. 30, 2023 | 192,861,307 | 192,861,000 | |||
Ending balance at Nov. 30, 2023 | $ 3,994,481 | $ 2,179,951 | 10,081,267 | 93,339 | $ (8,360,076) |
Ending balance (in shares) at Nov. 30, 2023 | (91,513,704) | (91,514,000) | |||
Beginning balance (in shares) at Aug. 31, 2023 | 192,658,000 | ||||
Beginning balance at Aug. 31, 2023 | $ 4,077,635 | $ 2,121,475 | 9,844,128 | 87,169 | $ (7,975,137) |
Beginning balance (in shares) at Aug. 31, 2023 | (90,730,000) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 374,613 | 374,613 | |||
Comprehensive (loss) income, net of tax | 6,170 | 6,170 | |||
Dividends | (137,474) | (137,474) | |||
Stock-based compensation | 22,940 | $ 22,940 | |||
Vesting of stock-based compensation awards (in shares) | 3,000 | ||||
Stock options exercised (in shares) | 200,000 | (68,000) | |||
Stock options exercised | 449 | $ 35,536 | $ (35,087) | ||
Repurchase of common stock (in shares) | (716,000) | ||||
Repurchase of common stock | $ (349,852) | $ (349,852) | |||
Ending balance (in shares) at Nov. 30, 2023 | 192,861,307 | 192,861,000 | |||
Ending balance at Nov. 30, 2023 | $ 3,994,481 | $ 2,179,951 | $ 10,081,267 | $ 93,339 | $ (8,360,076) |
Ending balance (in shares) at Nov. 30, 2023 | (91,513,704) | (91,514,000) |
Consolidated Condensed Statem_5
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Nov. 30, 2023 | Nov. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 759,698 | $ 675,982 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 136,803 | 126,561 |
Amortization of intangible assets and capitalized contract costs | 79,235 | 74,693 |
Stock-based compensation | 53,182 | 51,537 |
Deferred income taxes | (7,105) | 18,565 |
Change in current assets and liabilities, net of acquisitions of businesses: | ||
Accounts receivable, net | (120,881) | (133,897) |
Inventories, net | 32,093 | (43,266) |
Uniforms and other rental items in service | (21,649) | (73,475) |
Prepaid expenses and other current assets and capitalized contract costs | (80,056) | (85,532) |
Accounts payable | 14,981 | 61,421 |
Accrued compensation and related liabilities | (86,725) | (28,212) |
Accrued liabilities and other | (30,453) | (33,352) |
Income taxes, current | 508 | 8,124 |
Net cash provided by operating activities | 729,631 | 619,149 |
Cash flows from investing activities: | ||
Capital expenditures | (200,527) | (146,404) |
Purchases of investments | (7,475) | (5,182) |
Acquisitions of businesses, net of cash acquired | (73,997) | (15,457) |
Other, net | (196) | (4,381) |
Net cash used in investing activities | (282,195) | (171,424) |
Cash flows from financing activities: | ||
Issuance of commercial paper, net | 210,000 | 124,046 |
Repayment of debt | (13,450) | 0 |
Proceeds from exercise of stock-based compensation awards | 929 | 2,125 |
Dividends paid | (255,839) | (215,017) |
Repurchase of common stock | (423,128) | (348,682) |
Other, net | (4,322) | (8,840) |
Net cash used in financing activities | (485,810) | (446,368) |
Effect of exchange rate changes on cash and cash equivalents | (219) | (2,029) |
Net decrease in cash and cash equivalents | (38,593) | (672) |
Cash and cash equivalents at beginning of period | 124,149 | 90,471 |
Cash and cash equivalents at end of period | $ 85,556 | $ 89,799 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Nov. 30, 2023 | |
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, 2023 (Annual Report) filed with the SEC on July 27, 2023. See Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements" of that Annual Report for a summary of our significant accounting policies. There have been no material changes in the accounting policies followed by Cintas during the current fiscal year. Interim results are subject to variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, adjustments (which include only normal recurring adjustments) necessary for a fair statement of the consolidated results of the interim periods shown have been made. Inventories, net are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory is comprised of the following at: (In thousands) November 30, May 31, Raw materials $ 19,283 $ 27,878 Work in process 46,063 56,384 Finished goods 409,494 422,342 Inventories, net $ 474,840 $ 506,604 Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $73.6 million and $80.1 million at November 30, 2023 and May 31, 2023, respectively. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up. New Accounting Pronouncements There are no new accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Nov. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The following table presents Cintas' total revenue disaggregated by operating segment: Three Months Ended Six Months Ended (In thousands) November 30, November 30, November 30, November 30, Uniform Rental and $ 1,850,542 77.9 % $ 1,709,987 78.6 % $ 3,677,367 77.9 % $ 3,407,759 78.5 % First Aid and Safety 266,401 11.2 % 235,974 10.9 % 527,094 11.2 % 470,135 10.8 % Fire Protection 173,950 7.3 % 146,602 6.7 % 348,266 7.4 % 298,449 6.9 % Uniform Direct 86,284 3.6 % 82,295 3.8 % 166,780 3.5 % 164,969 3.8 % Total revenue $ 2,377,177 100.0 % $ 2,174,858 100.0 % $ 4,719,507 100.0 % $ 4,341,312 100.0 % The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 10 entitled Segment Information. Revenue Recognition Policy Approximately 95% of the Company's revenue is derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services customers, performed by a Cintas employee-partner, at the customer's location of business. Revenue from our route servicing customer contracts represent a single-performance obligation. The Company recognizes revenue over time as services are performed, based on the nature of services provided and contractual rates (output method) or at a point in time when the performance obligation under the terms of the contract with a customer are satisfied, at the customer's location of business. The Company's remaining revenue, primarily within the Uniform Direct Sales operating segment, and representing approximately 5% of the Company's total revenue, is recognized when the obligations under the terms of a contract with a customer are satisfied. This generally occurs when the goods are transferred to the customer. Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Certain of our customer contracts include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract and is not material in any period presented. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company's performance period generally corresponds with the monthly invoice period. No constraints on our revenue recognition were applied during the three or six months ended November 30, 2023 or 2022. We are exposed to credit losses primarily through our trade receivables. We determine the allowance for credit losses using both an estimate, based on historical rates of collections, and reserves for specific accounts identified as uncollectible. The portion of the allowance for credit losses that is an estimate based on Cintas' historical rates of collections is recorded for overdue amounts, beginning with a nominal percentage when the account is current and increasing substantially as the account ages. The amount provided as the account ages will differ slightly between the Uniform Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each operating segment. We update our allowance for credit losses quarterly, considering recent write-offs and collections information and underlying economic conditions and expectations. Costs to Obtain a Contract The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. As permitted by Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606), the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of ASC 606 or the amortization period of the asset would have been one year or less. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. We review the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense. The current portion is included in prepaid expenses and other current assets and the noncurrent portion is included in other assets, net on the Company's consolidated condensed balance sheets. As of November 30, 2023, the current and noncurrent assets related to deferred commissions totaled $93.9 million and $258.6 million, respectively. As of May 31, 2023, the current and noncurrent assets related to deferred commissions totaled $92.5 million and $251.6 million, respectively. We recorded amortization expense related to deferred commissions of $25.2 million and $23.4 million during the three months ended November 30, 2023 and 2022, respectively. During the six months ended November 30, 2023 and 2022, we recorded amortization expense related to deferred commissions of $49.6 million and $45.8 million, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income. |
Leases
Leases | 6 Months Ended |
Nov. 30, 2023 | |
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 sheets with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the consolidated condensed balance sheets. Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of uniform rental and facility services and other on the Company's consolidated condensed statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $20.8 million and $20.0 million for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $40.5 million and $39.5 million, respectively. The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the six months ended November 30: (In thousands) 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 25,321 $ 25,108 Operating lease right-of-use assets obtained in exchange for new and renewed $ 22,684 $ 29,186 Operating lease right-of-use assets acquired in business combinations $ 267 $ — Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows: November 30, May 31, Weighted-average remaining lease term 5.20 years 5.28 years Weighted-average discount rate 3.14% 2.87% The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2023: (In thousands) 2024 (remaining six months) $ 24,842 2025 45,671 2026 37,932 2027 28,682 2028 23,489 Thereafter 38,400 Total payments 199,016 Less interest (16,017) Total present value of lease payments $ 182,999 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Nov. 30, 2023 | |
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 dates. These financial instruments measured at fair value on a recurring basis are summarized below: As of November 30, 2023 As of May 31, 2023 (In thousands) Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 85,556 $ — $ — $ 85,556 $ 124,149 $ — $ — $ 124,149 Other assets, net: Interest rate lock — 93,669 — 93,669 — 70,449 — 70,449 Total assets at fair $ 85,556 $ 93,669 $ — $ 179,225 $ 124,149 $ 70,449 $ — $ 194,598 Cintas’ cash and cash equivalents are generally classified within Level 1 or Level 2 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments. The fair values of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. The fair value was determined by comparing the locked rates against the benchmarked treasury rate. No other amounts included in other assets, net, are recorded at fair value on a recurring basis. The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Nov. 30, 2023 | |
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: Three Months Ended Six Months Ended Basic Earnings per Share (In thousands except per share data) November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022 Net income $ 374,613 $ 324,293 $ 759,698 $ 675,982 Less: net income allocated to participating securities 1,460 1,372 2,957 2,859 Net income available to common shareholders $ 373,153 $ 322,921 $ 756,741 $ 673,123 Basic weighted average common shares outstanding 101,667 101,637 101,781 101,530 Basic earnings per share $ 3.67 $ 3.18 $ 7.43 $ 6.63 Three Months Ended Six Months Ended Diluted Earnings per Share (In thousands except per share data) November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022 Net income $ 374,613 $ 324,293 $ 759,698 $ 675,982 Less: net income allocated to participating securities 1,460 1,372 2,957 2,859 Net income available to common shareholders $ 373,153 $ 322,921 $ 756,741 $ 673,123 Basic weighted average common shares outstanding 101,667 101,637 101,781 101,530 Effect of dilutive securities – employee stock options 1,599 1,719 1,637 1,813 Diluted weighted average common shares outstanding 103,266 103,356 103,418 103,343 Diluted earnings per share $ 3.61 $ 3.12 $ 7.32 $ 6.51 For the three months ended November 30, 2023 and 2022, options granted to purchase 0.5 million and 1.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. For the six months ended November 30, 2023 and 2022, options granted to purchase 0.3 million and 0.9 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive). On July 27, 2021, Cintas announced that the Board of Directors authorized a $1.5 billion share buyback program, which does not have an expiration date. On July 26, 2022, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. The following table summarizes the share buyback activity by program and period: Three Months Ended Six Months Ended November 30, 2023 November 30, 2023 Buyback Activity (In thousands except per share data) Shares Avg. Price Purchase Shares Avg. Price Purchase July 27, 2021 658 $ 486.58 $ 320,266 658 $ 486.58 $ 320,266 July 26, 2022 — — — — — — 658 $ 486.58 $ 320,266 658 $ 486.58 $ 320,266 Shares acquired for taxes due (1) 58 $ 518.89 $ 29,586 203 $ 507.61 $ 102,862 Total repurchase of Cintas common stock $ 349,852 $ 423,128 Three Months Ended Six Months Ended November 30, 2022 November 30, 2022 Buyback Activity (In thousands except per share data) Shares Avg. Price Purchase Shares Avg. Price Purchase July 27, 2021 12 $ 377.66 $ 4,683 544 $ 395.97 $ 215,434 July 26, 2022 — — — — — — 12 $ 377.66 $ 4,683 544 $ 395.97 $ 215,434 Shares acquired for taxes due (1) 56 $ 423.64 $ 23,665 326 $ 408.97 $ 133,248 Total repurchase of Cintas common stock $ 28,348 $ 348,682 (1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards. In addition to the share buyback activity presented above, Cintas acquired shares of Cintas common stock, via non-cash transactions, in connection with net-share settlements of option exercises. The following table summarizes Cintas' non-cash share buyback activity: Three Months Ended Six Months Ended November 30, 2023 November 30, 2023 (In thousands except per share data) Shares Avg. Price Non-Cash Shares Avg. Price Non-Cash Non-cash transaction activity 68 $ 514.75 $ 35,087 186 $ 506.82 $ 94,300 Three Months Ended Six Months Ended November 30, 2022 November 30, 2022 Shares Avg. Price Non-Cash Shares Avg. Price Non-Cash Non-cash transaction activity 66 $ 421.85 $ 27,975 260 $ 414.46 $ 107,566 |
Goodwill, Service Contracts and
Goodwill, Service Contracts and Other Assets, Net | 6 Months Ended |
Nov. 30, 2023 | |
Goodwill, Service Contracts And Other Assets [Abstract] | |
Goodwill, Service Contracts and Other Assets, Net | Goodwill, Service Contracts and Other Assets, Net Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2023, by reportable operating segment and All Other, are as follows: Goodwill (In thousands) Uniform Rental First Aid All Total Balance as of June 1, 2023 $ 2,636,607 $ 292,868 $ 126,726 $ 3,056,201 Goodwill acquired 49,737 962 13,361 64,060 Foreign currency translation 224 20 1 245 Balance as of November 30, 2023 $ 2,686,568 $ 293,850 $ 140,088 $ 3,120,506 Service Contracts (In thousands) Uniform Rental First Aid All Total Balance as of June 1, 2023 $ 310,030 $ 21,157 $ 15,387 $ 346,574 Service contracts acquired 7,632 290 1,558 9,480 Service contracts amortization (22,103) (2,627) (1,908) (26,638) Foreign currency translation 86 9 — 95 Balance as of November 30, 2023 $ 295,645 $ 18,829 $ 15,037 $ 329,511 Information regarding Cintas’ service contracts and other assets, net is as follows: As of November 30, 2023 As of May 31, 2023 (In thousands) Carrying Accumulated Net Carrying Accumulated Net Service contracts $ 1,014,332 $ 684,821 $ 329,511 $ 1,004,754 $ 658,180 $ 346,574 Capitalized contract costs (1) $ 721,921 $ 463,307 $ 258,614 $ 665,705 $ 413,680 $ 252,025 Noncompete and 224,489 68,976 155,513 198,260 67,294 130,966 Total other assets, net $ 946,410 $ 532,283 $ 414,127 $ 863,965 $ 480,974 $ 382,991 (1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of November 30, 2023 and May 31, 2023, is $93.9 million and $92.5 million, respectively. Amortization expense for service contracts and other assets was $39.4 million and $37.3 million for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, amortization expense for service contracts and other assets was $77.9 million and $73.7 million, respectively. These expenses are recorded in selling and administrative expenses on the consolidated condensed statements of income. As of November 30, 2023, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, is as follows: Fiscal Year (In thousands) 2024 (remaining six months) $ 77,591 2025 142,842 2026 121,587 2027 98,902 2028 75,019 Thereafter 176,763 Total future amortization expense $ 692,704 |
Debt, Derivatives and Hedging A
Debt, Derivatives and Hedging Activities | 6 Months Ended |
Nov. 30, 2023 | |
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 November 30, May 31, Debt due within one year Commercial paper 5.52 % (1) 2024 2024 $ 210,000 $ — Total debt due within one year $ 210,000 $ — Debt due after one year Senior notes (2) 3.11 % 2015 2025 $ 50,462 $ 50,630 Senior notes 3.45 % 2022 2025 400,000 400,000 Senior notes 3.70 % 2017 2027 1,000,000 1,000,000 Senior notes 4.00 % 2022 2032 800,000 800,000 Senior notes 6.15 % 2007 2037 236,550 250,000 Debt issuance costs (12,725) (14,225) Total debt due after one year $ 2,474,287 $ 2,486,405 (1) Variable rate debt instrument. The rate presented is the variable borrowing rate at November 30, 2023. (2) Cintas assumed these senior notes with the acquisition of G&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these senior notes is $50.0 million with a stated interest rate of 3.88%. Cintas' senior notes, excluding the G&K senior notes assumed with the acquisition of G&K in fiscal 2017, are recorded at cost, net of debt issuance costs. The fair value of the long-term debt is estimated using Level 2 inputs based on general market prices. The carrying value and fair value of Cintas' debt as of November 30, 2023 were $2,486.6 million and $2,396.5 million, respectively, and as of May 31, 2023 were $2,500.0 million and $2,443.8 million, respectively. During the three and six months ended November 30, 2023, Cintas repurchased, and subsequently retired, $3.5 million and $13.5 million, respectively, of its 6.15%, 30-year senior notes. In conjunction with these transactions, during the three and six months ended November 30, 2023, Cintas recognized a loss of $0.1 million and $0.9 million, respectively, which is recorded in interest expense on the consolidated condensed statements of income. During the six months ended November 30, 2023 and 2022, Cintas issued $210.0 million and $124.0 million, net of commercial paper, respectively. The credit agreement that supports our commercial paper program has capacity under the revolving credit facility of $2.0 billion. The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under the revolving credit facility of up to $500.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility is March 23, 2027. As of November 30, 2023, there was $210.0 million of commercial paper outstanding with a weighted average interest rate of 5.52% and maturity dates less than 90 days and no borrowings on our revolving credit facility. As of May 31, 2023, there was no commercial paper outstanding and no borrowings on our revolving credit facility. Cintas uses interest rate locks to manage its overall interest expense as interest rate locks effectively change the interest rate of specific debt issuances. The interest rate locks are entered into to protect against unfavorable movements in the benchmark treasury rate related to forecasted debt issuances. Cintas used interest rate locks, which represent cash flow hedges, to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2017 and fiscal 2022. The amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $1.5 million for both the three months ended November 30, 2023 and 2022. For the six months ended November 30, 2023 and 2022, the amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $2.9 million and $3.0 million, respectively. During fiscal 2022 and fiscal 2020, Cintas entered into interest rate lock agreements for forecasted debt issuances. The aggregate notional value of outstanding cash flow hedges was $500.0 million at both November 30, 2023 and May 31, 2023. The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows: November 30, 2023 May 31, 2023 Fiscal Year of Issuance (In thousands) Other Other 2022 $ 56,054 $ 44,803 2020 $ 37,615 $ 25,646 The changes in fair value of the interest rate locks are recorded in other comprehensive income (loss), net of tax. These interest rate locks had no impact on net income or cash flows for the three and six months ended November 30, 2023 or 2022. Cintas has certain covenants related to debt agreements. These covenants limit Cintas' ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets. These covenants also require Cintas to maintain certain debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) and interest coverage ratios. Cross-default provisions exist between certain debt instruments. If a default of a significant covenant were to occur, the default could result in an acceleration of the maturity of the indebtedness, impair liquidity and limit the ability to raise future capital. Cintas was in compliance with all of the debt covenants for all periods presented. |
Income Taxes
Income Taxes | 6 Months Ended |
Nov. 30, 2023 | |
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 November 30, 2023 and May 31, 2023, recorded unrecognized tax benefits were $31.3 million and $29.3 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheets. The majority of Cintas' operations are in North America. Cintas is required to file U.S. federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated results of operations in any given period. All U.S. federal income tax returns are closed to audit through fiscal 2019. Cintas is currently in various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2014. Based on the status and resolution of the various audits and other potential regulatory developments, it is expected that the balance of unrecognized tax benefits will not materially change for the fiscal year ending May 31, 2024. Cintas’ effective tax rate was 20.9% and 22.1% for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, Cintas' effective tax rate was 20.1% and 18.4%, respectively. The effective tax rate for both periods was impacted by certain discrete items (primarily the tax accounting for stock-based compensation). |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Nov. 30, 2023 | |
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 income (loss), net of tax: (In thousands) Foreign Unrealized Income Other Total Balance at June 1, 2023 $ (17,001) $ 96,714 $ (1,935) $ 77,778 Other comprehensive income before reclassifications 2,634 8,199 — 10,833 Amounts reclassified from accumulated other comprehensive income (loss) — (1,442) — (1,442) Net current period other comprehensive income 2,634 6,757 — 9,391 Balance at August 31, 2023 (14,367) 103,471 (1,935) 87,169 Other comprehensive (loss) income before (1,813) 9,099 379 7,665 Amounts reclassified from accumulated other comprehensive income (loss) — (1,495) — (1,495) Net current period other comprehensive (loss) income (1,813) 7,604 379 6,170 Balance at November 30, 2023 $ (16,180) $ 111,075 $ (1,556) $ 93,339 (In thousands) Foreign Unrealized Income Other Total Balance at June 1, 2022 $ 17,006 $ 92,688 $ (1,777) $ 107,917 Other comprehensive (loss) income before (19,206) 934 — (18,272) Amounts reclassified from accumulated other comprehensive income (loss) — (1,521) — (1,521) Net current period other comprehensive loss (19,206) (587) — (19,793) Balance at August 31, 2022 (2,200) 92,101 (1,777) 88,124 Other comprehensive (loss) income before (9,901) 7,394 — (2,507) Amounts reclassified from accumulated other comprehensive income (loss) — (1,521) — (1,521) Net current period other comprehensive (loss) income (9,901) 5,873 — (4,028) Balance at November 30, 2022 $ (12,101) $ 97,974 $ (1,777) $ 84,096 The following table summarizes the reclassifications out of accumulated other comprehensive income (loss): Details about Accumulated Amount Reclassified from Affected Line in the Three Months Ended Six Months Ended (In thousands) November 30, November 30, November 30, November 30, Amortization of interest $ 1,998 $ 2,034 $ 3,927 $ 4,067 Interest expense Tax expense (503) (513) (990) (1,025) Income taxes Amortization of interest rate locks, net of tax $ 1,495 $ 1,521 $ 2,937 $ 3,042 |
Segment Information
Segment Information | 6 Months Ended |
Nov. 30, 2023 | |
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 For the three months ended November 30, 2023 Revenue $ 1,850,542 $ 266,401 $ 260,234 $ — $ 2,377,177 Income (loss) before income taxes $ 399,611 $ 58,531 $ 41,541 $ (25,821) $ 473,862 For the three months ended November 30, 2022 Revenue $ 1,709,987 $ 235,974 $ 228,897 $ — $ 2,174,858 Income (loss) before income taxes $ 369,095 $ 45,495 $ 30,344 $ (28,576) $ 416,358 As of and for the six months ended November 30, 2023 Revenue $ 3,677,367 $ 527,094 $ 515,046 $ — $ 4,719,507 Income (loss) before income taxes $ 806,140 $ 118,111 $ 75,988 $ (49,943) $ 950,296 Total assets $ 7,405,444 $ 733,074 $ 589,795 $ 85,556 $ 8,813,869 As of and for the six months ended November 30, 2022 Revenue $ 3,407,759 $ 470,135 $ 463,418 $ — $ 4,341,312 Income (loss) before income taxes $ 733,866 $ 86,341 $ 64,847 $ (56,141) $ 828,913 Total assets $ 7,142,226 $ 699,184 $ 495,798 $ 89,799 $ 8,427,007 (1) |
Litigation and Other Contingenc
Litigation and Other Contingencies | 6 Months Ended |
Nov. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation and Other Contingencies | Litigation and Other Contingencies Cintas is subject to legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas. Cintas is party to additional litigation not considered in the ordinary course of business, including the litigation discussed below. The Company is a defendant in a purported class action lawsuit, City of Laurel, Mississippi v. Cintas Corporation No. 2 , filed on March 12, 2021. This is a contract dispute whereby plaintiffs allege that Cintas breached its contracts with participating public agencies and seek, among other things, contract-based damages in an unspecified amount. In March 2022, the U.S. District Court for the District of Nevada denied Cintas’ motion to compel arbitration, and on March 6, 2023, the Ninth Circuit Court of Appeals affirmed. Any liability in this matter is not probable nor estimable at this time. The Company, the Board of Directors, Scott Farmer (Executive Chairman) and the Investment Policy Committee are defendants in a purported class action, filed on December 13, 2019, pending in the U.S. District Court for the Southern District of Ohio alleging violations of The Employee Retirement Income Security Act of 1974 (ERISA). The lawsuit asserts that the defendants improperly managed the costs of the employee retirement plan, breached their fiduciary duties in failing to investigate and select lower cost alternative funds and failed to monitor and control the employee retirement plan’s recordkeeping costs. In November 2023, an agreement in principle was reached with the plaintiffs, which would require a payment of an immaterial amount that would be covered by the Company's insurance. The settlement remains subject to reaching a definitive agreement and the approval of the U.S. District Court for the Southern District of Ohio. Cintas records an accrual for legal contingencies when Cintas determines that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of November 30, 2023 and May 31, 2023, Cintas did not accrue any material amounts for legal contingencies. The litigation discussed above, if decided or settled adversely to Cintas, may result in liability material to Cintas' consolidated financial condition, consolidated results of operations or consolidated cash flows and could increase costs of operations on an ongoing basis. Cintas may enter into discussions regarding settlement of these and other lawsuits and may enter into settlement agreements if it believes such settlement is in the best interest of Cintas' shareholders. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 30, 2023 | Aug. 31, 2023 | Nov. 30, 2022 | Aug. 31, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Pay vs Performance Disclosure | ||||||
Net income | $ 374,613 | $ 385,085 | $ 324,293 | $ 351,689 | $ 759,698 | $ 675,982 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Nov. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Nov. 30, 2023 | |
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, 2023 (Annual Report) filed with the SEC on July 27, 2023. See Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements" of that Annual Report for a summary of our significant accounting policies. There have been no material changes in the accounting policies followed by Cintas during the current fiscal year. Interim results are subject to variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, adjustments (which include only normal recurring adjustments) necessary for a fair statement of the consolidated results of the interim periods shown have been made. |
Inventory | Inventories, net are valued at the lower of cost (first-in, first-out) or net realizable value.The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up. |
New Accounting Pronouncements | There are no new accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventory | Inventory is comprised of the following at: (In thousands) November 30, May 31, Raw materials $ 19,283 $ 27,878 Work in process 46,063 56,384 Finished goods 409,494 422,342 Inventories, net $ 474,840 $ 506,604 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue | The following table presents Cintas' total revenue disaggregated by operating segment: Three Months Ended Six Months Ended (In thousands) November 30, November 30, November 30, November 30, Uniform Rental and $ 1,850,542 77.9 % $ 1,709,987 78.6 % $ 3,677,367 77.9 % $ 3,407,759 78.5 % First Aid and Safety 266,401 11.2 % 235,974 10.9 % 527,094 11.2 % 470,135 10.8 % Fire Protection 173,950 7.3 % 146,602 6.7 % 348,266 7.4 % 298,449 6.9 % Uniform Direct 86,284 3.6 % 82,295 3.8 % 166,780 3.5 % 164,969 3.8 % Total revenue $ 2,377,177 100.0 % $ 2,174,858 100.0 % $ 4,719,507 100.0 % $ 4,341,312 100.0 % |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
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 six months ended November 30: (In thousands) 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 25,321 $ 25,108 Operating lease right-of-use assets obtained in exchange for new and renewed $ 22,684 $ 29,186 Operating lease right-of-use assets acquired in business combinations $ 267 $ — Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows: November 30, May 31, Weighted-average remaining lease term 5.20 years 5.28 years Weighted-average discount rate 3.14% 2.87% |
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 November 30, 2023: (In thousands) 2024 (remaining six months) $ 24,842 2025 45,671 2026 37,932 2027 28,682 2028 23,489 Thereafter 38,400 Total payments 199,016 Less interest (16,017) Total present value of lease payments $ 182,999 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
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 November 30, 2023 As of May 31, 2023 (In thousands) Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Fair Value Cash and cash equivalents $ 85,556 $ — $ — $ 85,556 $ 124,149 $ — $ — $ 124,149 Other assets, net: Interest rate lock — 93,669 — 93,669 — 70,449 — 70,449 Total assets at fair $ 85,556 $ 93,669 $ — $ 179,225 $ 124,149 $ 70,449 $ — $ 194,598 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
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: Three Months Ended Six Months Ended Basic Earnings per Share (In thousands except per share data) November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022 Net income $ 374,613 $ 324,293 $ 759,698 $ 675,982 Less: net income allocated to participating securities 1,460 1,372 2,957 2,859 Net income available to common shareholders $ 373,153 $ 322,921 $ 756,741 $ 673,123 Basic weighted average common shares outstanding 101,667 101,637 101,781 101,530 Basic earnings per share $ 3.67 $ 3.18 $ 7.43 $ 6.63 Three Months Ended Six Months Ended Diluted Earnings per Share (In thousands except per share data) November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022 Net income $ 374,613 $ 324,293 $ 759,698 $ 675,982 Less: net income allocated to participating securities 1,460 1,372 2,957 2,859 Net income available to common shareholders $ 373,153 $ 322,921 $ 756,741 $ 673,123 Basic weighted average common shares outstanding 101,667 101,637 101,781 101,530 Effect of dilutive securities – employee stock options 1,599 1,719 1,637 1,813 Diluted weighted average common shares outstanding 103,266 103,356 103,418 103,343 Diluted earnings per share $ 3.61 $ 3.12 $ 7.32 $ 6.51 |
Buyback Activity by Program | The following table summarizes the share buyback activity by program and period: Three Months Ended Six Months Ended November 30, 2023 November 30, 2023 Buyback Activity (In thousands except per share data) Shares Avg. Price Purchase Shares Avg. Price Purchase July 27, 2021 658 $ 486.58 $ 320,266 658 $ 486.58 $ 320,266 July 26, 2022 — — — — — — 658 $ 486.58 $ 320,266 658 $ 486.58 $ 320,266 Shares acquired for taxes due (1) 58 $ 518.89 $ 29,586 203 $ 507.61 $ 102,862 Total repurchase of Cintas common stock $ 349,852 $ 423,128 Three Months Ended Six Months Ended November 30, 2022 November 30, 2022 Buyback Activity (In thousands except per share data) Shares Avg. Price Purchase Shares Avg. Price Purchase July 27, 2021 12 $ 377.66 $ 4,683 544 $ 395.97 $ 215,434 July 26, 2022 — — — — — — 12 $ 377.66 $ 4,683 544 $ 395.97 $ 215,434 Shares acquired for taxes due (1) 56 $ 423.64 $ 23,665 326 $ 408.97 $ 133,248 Total repurchase of Cintas common stock $ 28,348 $ 348,682 (1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards. Three Months Ended Six Months Ended November 30, 2023 November 30, 2023 (In thousands except per share data) Shares Avg. Price Non-Cash Shares Avg. Price Non-Cash Non-cash transaction activity 68 $ 514.75 $ 35,087 186 $ 506.82 $ 94,300 Three Months Ended Six Months Ended November 30, 2022 November 30, 2022 Shares Avg. Price Non-Cash Shares Avg. Price Non-Cash Non-cash transaction activity 66 $ 421.85 $ 27,975 260 $ 414.46 $ 107,566 |
Goodwill, Service Contracts a_2
Goodwill, Service Contracts and Other Assets, Net (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
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 six months ended November 30, 2023, by reportable operating segment and All Other, are as follows: Goodwill (In thousands) Uniform Rental First Aid All Total Balance as of June 1, 2023 $ 2,636,607 $ 292,868 $ 126,726 $ 3,056,201 Goodwill acquired 49,737 962 13,361 64,060 Foreign currency translation 224 20 1 245 Balance as of November 30, 2023 $ 2,686,568 $ 293,850 $ 140,088 $ 3,120,506 |
Changes in the Carrying Amount of Service Contracts by Operating Segment | Service Contracts (In thousands) Uniform Rental First Aid All Total Balance as of June 1, 2023 $ 310,030 $ 21,157 $ 15,387 $ 346,574 Service contracts acquired 7,632 290 1,558 9,480 Service contracts amortization (22,103) (2,627) (1,908) (26,638) Foreign currency translation 86 9 — 95 Balance as of November 30, 2023 $ 295,645 $ 18,829 $ 15,037 $ 329,511 |
Information Regarding Service Contracts and Other Assets | Information regarding Cintas’ service contracts and other assets, net is as follows: As of November 30, 2023 As of May 31, 2023 (In thousands) Carrying Accumulated Net Carrying Accumulated Net Service contracts $ 1,014,332 $ 684,821 $ 329,511 $ 1,004,754 $ 658,180 $ 346,574 Capitalized contract costs (1) $ 721,921 $ 463,307 $ 258,614 $ 665,705 $ 413,680 $ 252,025 Noncompete and 224,489 68,976 155,513 198,260 67,294 130,966 Total other assets, net $ 946,410 $ 532,283 $ 414,127 $ 863,965 $ 480,974 $ 382,991 (1) |
Finite-lived Intangible Assets Amortization Expense | As of November 30, 2023, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, is as follows: Fiscal Year (In thousands) 2024 (remaining six months) $ 77,591 2025 142,842 2026 121,587 2027 98,902 2028 75,019 Thereafter 176,763 Total future amortization expense $ 692,704 |
Debt, Derivatives and Hedging_2
Debt, Derivatives and Hedging Activities (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Outstanding Debt | Cintas' outstanding debt is summarized as follows: (In thousands) Interest Fiscal Year Fiscal Year November 30, May 31, Debt due within one year Commercial paper 5.52 % (1) 2024 2024 $ 210,000 $ — Total debt due within one year $ 210,000 $ — Debt due after one year Senior notes (2) 3.11 % 2015 2025 $ 50,462 $ 50,630 Senior notes 3.45 % 2022 2025 400,000 400,000 Senior notes 3.70 % 2017 2027 1,000,000 1,000,000 Senior notes 4.00 % 2022 2032 800,000 800,000 Senior notes 6.15 % 2007 2037 236,550 250,000 Debt issuance costs (12,725) (14,225) Total debt due after one year $ 2,474,287 $ 2,486,405 (1) Variable rate debt instrument. The rate presented is the variable borrowing rate at November 30, 2023. (2) |
Schedule of Interest Rate Lock Agreements | The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows: November 30, 2023 May 31, 2023 Fiscal Year of Issuance (In thousands) Other Other 2022 $ 56,054 $ 44,803 2020 $ 37,615 $ 25,646 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
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 income (loss), net of tax: (In thousands) Foreign Unrealized Income Other Total Balance at June 1, 2023 $ (17,001) $ 96,714 $ (1,935) $ 77,778 Other comprehensive income before reclassifications 2,634 8,199 — 10,833 Amounts reclassified from accumulated other comprehensive income (loss) — (1,442) — (1,442) Net current period other comprehensive income 2,634 6,757 — 9,391 Balance at August 31, 2023 (14,367) 103,471 (1,935) 87,169 Other comprehensive (loss) income before (1,813) 9,099 379 7,665 Amounts reclassified from accumulated other comprehensive income (loss) — (1,495) — (1,495) Net current period other comprehensive (loss) income (1,813) 7,604 379 6,170 Balance at November 30, 2023 $ (16,180) $ 111,075 $ (1,556) $ 93,339 (In thousands) Foreign Unrealized Income Other Total Balance at June 1, 2022 $ 17,006 $ 92,688 $ (1,777) $ 107,917 Other comprehensive (loss) income before (19,206) 934 — (18,272) Amounts reclassified from accumulated other comprehensive income (loss) — (1,521) — (1,521) Net current period other comprehensive loss (19,206) (587) — (19,793) Balance at August 31, 2022 (2,200) 92,101 (1,777) 88,124 Other comprehensive (loss) income before (9,901) 7,394 — (2,507) Amounts reclassified from accumulated other comprehensive income (loss) — (1,521) — (1,521) Net current period other comprehensive (loss) income (9,901) 5,873 — (4,028) Balance at November 30, 2022 $ (12,101) $ 97,974 $ (1,777) $ 84,096 |
Schedule of Reclassifications Out of Accumulated Other Comprehensive (Loss) Income | The following table summarizes the reclassifications out of accumulated other comprehensive income (loss): Details about Accumulated Amount Reclassified from Affected Line in the Three Months Ended Six Months Ended (In thousands) November 30, November 30, November 30, November 30, Amortization of interest $ 1,998 $ 2,034 $ 3,927 $ 4,067 Interest expense Tax expense (503) (513) (990) (1,025) Income taxes Amortization of interest rate locks, net of tax $ 1,495 $ 1,521 $ 2,937 $ 3,042 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Nov. 30, 2023 | |
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 For the three months ended November 30, 2023 Revenue $ 1,850,542 $ 266,401 $ 260,234 $ — $ 2,377,177 Income (loss) before income taxes $ 399,611 $ 58,531 $ 41,541 $ (25,821) $ 473,862 For the three months ended November 30, 2022 Revenue $ 1,709,987 $ 235,974 $ 228,897 $ — $ 2,174,858 Income (loss) before income taxes $ 369,095 $ 45,495 $ 30,344 $ (28,576) $ 416,358 As of and for the six months ended November 30, 2023 Revenue $ 3,677,367 $ 527,094 $ 515,046 $ — $ 4,719,507 Income (loss) before income taxes $ 806,140 $ 118,111 $ 75,988 $ (49,943) $ 950,296 Total assets $ 7,405,444 $ 733,074 $ 589,795 $ 85,556 $ 8,813,869 As of and for the six months ended November 30, 2022 Revenue $ 3,407,759 $ 470,135 $ 463,418 $ — $ 4,341,312 Income (loss) before income taxes $ 733,866 $ 86,341 $ 64,847 $ (56,141) $ 828,913 Total assets $ 7,142,226 $ 699,184 $ 495,798 $ 89,799 $ 8,427,007 (1) |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | Nov. 30, 2023 | May 31, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 19,283 | $ 27,878 |
Work in process | 46,063 | 56,384 |
Finished goods | 409,494 | 422,342 |
Inventories, net | 474,840 | 506,604 |
Reserves for obsolete inventory | $ 73,600 | $ 80,100 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 2,377,177 | $ 2,174,858 | $ 4,719,507 | $ 4,341,312 |
Uniform Rental and Facility Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,850,542 | 1,709,987 | 3,677,367 | 3,407,759 |
First Aid and Safety Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 266,401 | 235,974 | 527,094 | 470,135 |
Fire Protection Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 173,950 | 146,602 | 348,266 | 298,449 |
Uniform Direct Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 86,284 | $ 82,295 | $ 166,780 | $ 164,969 |
Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue | 100% | 100% | 100% | 100% |
Revenue | Product Concentration Risk | Uniform Rental and Facility Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue | 77.90% | 78.60% | 77.90% | 78.50% |
Revenue | Product Concentration Risk | First Aid and Safety Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue | 11.20% | 10.90% | 11.20% | 10.80% |
Revenue | Product Concentration Risk | Fire Protection Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue | 7.30% | 6.70% | 7.40% | 6.90% |
Revenue | Product Concentration Risk | Uniform Direct Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenue | 3.60% | 3.80% | 3.50% | 3.80% |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | May 31, 2023 | |
Disaggregation of Revenue [Line Items] | |||||
Deferred commissions, current | $ 93.9 | $ 93.9 | $ 92.5 | ||
Deferred commissions, noncurrent | 258.6 | 258.6 | $ 251.6 | ||
Amortization of deferred commissions | $ 25.2 | $ 23.4 | $ 49.6 | $ 45.8 | |
Revenue | Product Concentration Risk | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of revenue | 100% | 100% | 100% | 100% | |
Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services | Revenue | Product Concentration Risk | Route Servicing Fees | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of revenue | 95% | ||||
Uniform Direct Sales | Revenue | Product Concentration Risk | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of revenue | 3.60% | 3.80% | 3.50% | 3.80% | |
Uniform Direct Sales | Revenue | Product Concentration Risk | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of revenue | 5% |
Leases - Operating Lease Cost a
Leases - Operating Lease Cost and Additional Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | May 31, 2023 | |
Leases [Abstract] | |||||
Operating lease costs | $ 20,800 | $ 20,000 | $ 40,500 | $ 39,500 | |
Other information related to operating leases | |||||
Cash paid for amounts included in the measurement of operating lease liabilities | 25,321 | 25,108 | |||
Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities | 22,684 | 29,186 | |||
Operating lease right-of-use assets acquired in business combinations | $ 267 | $ 0 | |||
Weighted-average remaining lease term | 5 years 2 months 12 days | 5 years 2 months 12 days | 5 years 3 months 10 days | ||
Weighted-average discount rate | 3.14% | 3.14% | 2.87% |
Leases - Contractual Future Min
Leases - Contractual Future Minimum Lease Payments (Details) $ in Thousands | Nov. 30, 2023 USD ($) |
Leases [Abstract] | |
2024 (remaining six months) | $ 24,842 |
2025 | 45,671 |
2026 | 37,932 |
2027 | 28,682 |
2028 | 23,489 |
Thereafter | 38,400 |
Total payments | 199,016 |
Less interest | (16,017) |
Total present value of lease payments | $ 182,999 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Nov. 30, 2023 | May 31, 2023 |
Fair value on a recurring basis | ||
Cash and cash equivalents | $ 85,556 | $ 124,149 |
Other assets, net: | ||
Total assets at fair value | 179,225 | 194,598 |
Interest rate lock agreements | ||
Other assets, net: | ||
Interest rate lock agreements | 93,669 | 70,449 |
Level 1 | ||
Fair value on a recurring basis | ||
Cash and cash equivalents | 85,556 | 124,149 |
Other assets, net: | ||
Total assets at fair value | 85,556 | 124,149 |
Level 1 | Interest rate lock agreements | ||
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 | 93,669 | 70,449 |
Level 2 | Interest rate lock agreements | ||
Other assets, net: | ||
Interest rate lock agreements | 93,669 | 70,449 |
Level 3 | ||
Fair value on a recurring basis | ||
Cash and cash equivalents | 0 | 0 |
Other assets, net: | ||
Total assets at fair value | 0 | 0 |
Level 3 | Interest rate lock agreements | ||
Other assets, net: | ||
Interest rate lock agreements | $ 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 | 6 Months Ended | ||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Basic earnings per share: | ||||
Net income | $ 374,613 | $ 324,293 | $ 759,698 | $ 675,982 |
Less: net income allocated to participating securities | 1,460 | 1,372 | 2,957 | 2,859 |
Net income available to common shareholders | $ 373,153 | $ 322,921 | $ 756,741 | $ 673,123 |
Basic weighted average common shares outstanding (in shares) | 101,667 | 101,637 | 101,781 | 101,530 |
Basic earnings per share (in dollars per share) | $ 3.67 | $ 3.18 | $ 7.43 | $ 6.63 |
Diluted earnings per share: | ||||
Net income | $ 374,613 | $ 324,293 | $ 759,698 | $ 675,982 |
Less: net income allocated to participating securities | 1,460 | 1,372 | 2,957 | 2,859 |
Net income available to common shareholders | $ 373,153 | $ 322,921 | $ 756,741 | $ 673,123 |
Basic weighted average common shares outstanding (in shares) | 101,667 | 101,637 | 101,781 | 101,530 |
Effect of dilutive securities - employee stock options (in shares) | 1,599 | 1,719 | 1,637 | 1,813 |
Diluted weighted average common shares outstanding (in shares) | 103,266 | 103,356 | 103,418 | 103,343 |
Diluted earnings per share (in dollars per share) | $ 3.61 | $ 3.12 | $ 7.32 | $ 6.51 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | ||||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | Jul. 26, 2022 | Jul. 27, 2021 | |
Earnings Per Share [Abstract] | ||||||
Options granted and excluded from the computation of diluted earnings per share (in shares) | 0.5 | 1.1 | 0.3 | 0.9 | ||
July 27, 2021 Plan | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Share buyback program, authorized amount | $ 1,500,000,000 | |||||
July 26, 2022 Plan | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Share buyback program, authorized amount | $ 1,000,000,000 |
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 | 6 Months Ended | ||||
Nov. 30, 2023 | Aug. 31, 2023 | Nov. 30, 2022 | Aug. 31, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback | $ 349,852 | $ 73,276 | $ 28,348 | $ 320,334 | $ 423,128 | $ 348,682 |
Shares acquired for taxes due (in shares) | 58 | 56 | 203 | 326 | ||
Shares acquired for taxes due, average price (in dollars per share) | $ 518.89 | $ 423.64 | $ 507.61 | $ 408.97 | ||
Shares acquired for taxes due | $ 29,586 | $ 23,665 | $ 102,862 | $ 133,248 | ||
Share Buyback Programs | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback (in shares) | 658 | 12 | 658 | 544 | ||
Stock purchased under share buyback, average price (in dollars per share) | $ 486.58 | $ 377.66 | $ 486.58 | $ 395.97 | ||
Stock purchased under share buyback | $ 320,266 | $ 4,683 | $ 320,266 | $ 215,434 | ||
July 27, 2021 Plan | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback (in shares) | 658 | 12 | 658 | 544 | ||
Stock purchased under share buyback, average price (in dollars per share) | $ 486.58 | $ 377.66 | $ 486.58 | $ 395.97 | ||
Stock purchased under share buyback | $ 320,266 | $ 4,683 | $ 320,266 | $ 215,434 | ||
July 26, 2022 Plan | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback (in shares) | 0 | 0 | 0 | 0 | ||
Stock purchased under share buyback, average price (in dollars per share) | $ 0 | $ 0 | $ 0 | $ 0 | ||
Stock purchased under share buyback | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings Per Share - Summary _2
Earnings Per Share - Summary of Non Cash Buyback Activity by Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 30, 2023 | Aug. 31, 2023 | Nov. 30, 2022 | Aug. 31, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback | $ 349,852 | $ 73,276 | $ 28,348 | $ 320,334 | $ 423,128 | $ 348,682 |
Noncash Share Repurchase Transaction | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock purchased under share buyback (in shares) | 68 | 66 | 186 | 260 | ||
Stock purchased under share buyback, average price (in dollars per share) | $ 514.75 | $ 421.85 | $ 506.82 | $ 414.46 | ||
Stock purchased under share buyback | $ 35,087 | $ 27,975 | $ 94,300 | $ 107,566 |
Goodwill, Service Contracts a_3
Goodwill, Service Contracts and Other Assets, Net - Goodwill (Details) $ in Thousands | 6 Months Ended |
Nov. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 3,056,201 |
Goodwill acquired | 64,060 |
Foreign currency translation | 245 |
Ending balance | 3,120,506 |
Uniform Rental and Facility Services | |
Goodwill [Roll Forward] | |
Beginning balance | 2,636,607 |
Goodwill acquired | 49,737 |
Foreign currency translation | 224 |
Ending balance | 2,686,568 |
First Aid and Safety Services | |
Goodwill [Roll Forward] | |
Beginning balance | 292,868 |
Goodwill acquired | 962 |
Foreign currency translation | 20 |
Ending balance | 293,850 |
All Other | |
Goodwill [Roll Forward] | |
Beginning balance | 126,726 |
Goodwill acquired | 13,361 |
Foreign currency translation | 1 |
Ending balance | $ 140,088 |
Goodwill, Service Contracts a_4
Goodwill, Service Contracts and Other Assets, Net - Service Contracts (Details) $ in Thousands | 6 Months Ended |
Nov. 30, 2023 USD ($) | |
Service contracts [Roll Forward] | |
Ending balance | $ 692,704 |
Service Contracts | |
Service contracts [Roll Forward] | |
Beginning balance | 346,574 |
Service contracts acquired | 9,480 |
Service contracts amortization | (26,638) |
Foreign currency translation | 95 |
Ending balance | 329,511 |
Service Contracts | Uniform Rental and Facility Services | |
Service contracts [Roll Forward] | |
Beginning balance | 310,030 |
Service contracts acquired | 7,632 |
Service contracts amortization | (22,103) |
Foreign currency translation | 86 |
Ending balance | 295,645 |
Service Contracts | First Aid and Safety Services | |
Service contracts [Roll Forward] | |
Beginning balance | 21,157 |
Service contracts acquired | 290 |
Service contracts amortization | (2,627) |
Foreign currency translation | 9 |
Ending balance | 18,829 |
Service Contracts | All Other | |
Service contracts [Roll Forward] | |
Beginning balance | 15,387 |
Service contracts acquired | 1,558 |
Service contracts amortization | (1,908) |
Foreign currency translation | 0 |
Ending balance | $ 15,037 |
Goodwill, Service Contracts a_5
Goodwill, Service Contracts and Other Assets, Net - Information Regarding Service Contracts and Other Assets, Net (Details) - USD ($) $ in Thousands | Nov. 30, 2023 | May 31, 2023 |
Information regarding service contracts and other assets | ||
Total future amortization expense | $ 692,704 | |
Other assets, carrying amount | 946,410 | $ 863,965 |
Other assets, accumulated amortization | 532,283 | 480,974 |
Other assets, net | 414,127 | 382,991 |
Capitalized contract costs | ||
Information regarding service contracts and other assets | ||
Other assets, carrying amount | 721,921 | 665,705 |
Other assets, accumulated amortization | 463,307 | 413,680 |
Other assets, net | 258,614 | 252,025 |
Other assets current | 93,900 | 92,500 |
Noncompete and consulting agreements and other | ||
Information regarding service contracts and other assets | ||
Other assets, carrying amount | 224,489 | 198,260 |
Other assets, accumulated amortization | 68,976 | 67,294 |
Other assets, net | 155,513 | 130,966 |
Service Contracts | ||
Information regarding service contracts and other assets | ||
Service contracts, carrying amount | 1,014,332 | 1,004,754 |
Service contracts, accumulated amortization | 684,821 | 658,180 |
Total future amortization expense | $ 329,511 | $ 346,574 |
Goodwill, Service Contracts a_6
Goodwill, Service Contracts and Other Assets, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Goodwill, Service Contracts And Other Assets [Abstract] | ||||
Amortization expense for service contracts and other assets | $ 39.4 | $ 37.3 | $ 77.9 | $ 73.7 |
Goodwill, Service Contracts a_7
Goodwill, Service Contracts and Other Assets, Net - Finite-lived Intangible Assets Amortization Expense (Details) $ in Thousands | Nov. 30, 2023 USD ($) |
Goodwill, Service Contracts And Other Assets [Abstract] | |
2024 (remaining six months) | $ 77,591 |
2025 | 142,842 |
2026 | 121,587 |
2027 | 98,902 |
2028 | 75,019 |
Thereafter | 176,763 |
Total future amortization expense | $ 692,704 |
Debt, Derivatives and Hedging_3
Debt, Derivatives and Hedging Activities - Summary of Debt Outstanding (Details) - USD ($) | Nov. 30, 2023 | May 31, 2023 |
Debt due within one year | ||
Debt due within one year | $ 210,000,000 | $ 0 |
Debt due after one year | ||
Debt issuance costs | (12,725,000) | (14,225,000) |
Total debt due after one year | 2,474,287,000 | 2,486,405,000 |
Senior notes | Senior Notes, 3.11%, 2025 Maturity | ||
Debt due after one year | ||
Debt due after one year, gross | $ 50,462,000 | 50,630,000 |
Effective 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 3.45%, 2025 Maturity | ||
Debt due after one year | ||
Debt due after one year, gross | $ 400,000,000 | 400,000,000 |
Stated interest rate | 3.45% | |
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 4.00%, 2032 Maturity | ||
Debt due after one year | ||
Debt due after one year, gross | $ 800,000,000 | 800,000,000 |
Stated interest rate | 4% | |
Senior notes | Senior Notes, 6.15%, 2037 Maturity | ||
Debt due after one year | ||
Debt due after one year, gross | $ 236,550,000 | 250,000,000 |
Stated interest rate | 6.15% | |
Commercial paper | ||
Debt due within one year | ||
Debt due within one year | $ 210,000,000 | $ 0 |
Debt due after one year | ||
Variable borrowing rate | 5.52% |
Debt, Derivatives and Hedging_4
Debt, Derivatives and Hedging Activities - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | May 31, 2023 | |
Debt Instrument [Line Items] | |||||
Debt, carrying value | $ 2,486,600,000 | $ 2,486,600,000 | $ 2,500,000,000 | ||
Debt, fair value | 2,396,500,000 | 2,396,500,000 | 2,443,800,000 | ||
Issuance of commercial paper | 210,000,000 | $ 124,000,000 | |||
Amortization of interest rate lock agreements - decrease to other comprehensive income (loss) | 1,500,000 | $ 1,500,000 | 2,900,000 | $ 3,000,000 | |
Notional value | 500,000,000 | 500,000,000 | 500,000,000 | ||
Commercial paper | |||||
Debt Instrument [Line Items] | |||||
Commercial paper | $ 210,000,000 | $ 210,000,000 | 0 | ||
Weighted average interest rate | 5.52% | 5.52% | |||
Revolving credit facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility, maximum borrowing capacity with accordion feature | $ 2,000,000,000 | $ 2,000,000,000 | |||
Debt amendment, increase limit (up to) | 500,000,000 | 500,000,000 | |||
Revolving credit facility amount outstanding | 0 | 0 | $ 0 | ||
Senior Notes, 6.15%, 2037 Maturity | Senior notes | |||||
Debt Instrument [Line Items] | |||||
Repayment of debt | $ 3,500,000 | $ 13,500,000 | |||
Stated interest rate | 6.15% | 6.15% | |||
Debt term | 30 years | ||||
Loss recognized | $ 100,000 | $ 900,000 |
Debt, Derivatives and Hedging_5
Debt, Derivatives and Hedging Activities - Interest Rate Lock Agreements (Details) - USD ($) $ in Thousands | Nov. 30, 2023 | May 31, 2023 |
Interest Rate Contract, 2022 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 56,054 | $ 44,803 |
Interest Rate Contract, 2020 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 37,615 | $ 25,646 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | May 31, 2023 | |
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits | $ 31.3 | $ 31.3 | $ 29.3 | ||
Effective tax rate | 20.90% | 22.10% | 20.10% | 18.40% |
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 | 6 Months Ended | ||||
Nov. 30, 2023 | Aug. 31, 2023 | Nov. 30, 2022 | Aug. 31, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | $ 4,077,635 | $ 3,863,986 | $ 3,229,626 | $ 3,308,196 | $ 3,863,986 | $ 3,308,196 |
Other comprehensive (loss) income before reclassifications | 7,665 | 10,833 | (2,507) | (18,272) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | (1,495) | (1,442) | (1,521) | (1,521) | ||
Other comprehensive income (loss), net of tax expense of $2,742, $2,018, $5,061 and $1,826, respectively | 6,170 | 9,391 | (4,028) | (19,793) | 15,561 | (23,821) |
Ending balance | 3,994,481 | 4,077,635 | 3,430,538 | 3,229,626 | 3,994,481 | 3,430,538 |
Total | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | 87,169 | 77,778 | 88,124 | 107,917 | 77,778 | 107,917 |
Other comprehensive income (loss), net of tax expense of $2,742, $2,018, $5,061 and $1,826, respectively | 6,170 | 9,391 | (4,028) | (19,793) | ||
Ending balance | 93,339 | 87,169 | 84,096 | 88,124 | 93,339 | 84,096 |
Foreign Currency | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | (14,367) | (17,001) | (2,200) | 17,006 | (17,001) | 17,006 |
Other comprehensive (loss) income before reclassifications | (1,813) | 2,634 | (9,901) | (19,206) | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||
Other comprehensive income (loss), net of tax expense of $2,742, $2,018, $5,061 and $1,826, respectively | (1,813) | 2,634 | (9,901) | (19,206) | ||
Ending balance | (16,180) | (14,367) | (12,101) | (2,200) | (16,180) | (12,101) |
Unrealized Income on Interest Rate Locks | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | 103,471 | 96,714 | 92,101 | 92,688 | 96,714 | 92,688 |
Other comprehensive (loss) income before reclassifications | 9,099 | 8,199 | 7,394 | 934 | ||
Amounts reclassified from accumulated other comprehensive income (loss) | (1,495) | (1,442) | (1,521) | (1,521) | ||
Other comprehensive income (loss), net of tax expense of $2,742, $2,018, $5,061 and $1,826, respectively | 7,604 | 6,757 | 5,873 | (587) | ||
Ending balance | 111,075 | 103,471 | 97,974 | 92,101 | 111,075 | 97,974 |
Other | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | (1,935) | (1,935) | (1,777) | (1,777) | (1,935) | (1,777) |
Other comprehensive (loss) income before reclassifications | 379 | 0 | 0 | 0 | ||
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||
Other comprehensive income (loss), net of tax expense of $2,742, $2,018, $5,061 and $1,826, respectively | 379 | 0 | 0 | 0 | ||
Ending balance | $ (1,556) | $ (1,935) | $ (1,777) | $ (1,777) | $ (1,556) | $ (1,777) |
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 | 6 Months Ended | ||||
Nov. 30, 2023 | Aug. 31, 2023 | Nov. 30, 2022 | Aug. 31, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Interest expense | $ 26,590 | $ 28,920 | $ 51,134 | $ 56,640 | ||
Income taxes | (99,249) | (92,065) | (190,598) | (152,931) | ||
Net income | 374,613 | $ 385,085 | 324,293 | $ 351,689 | 759,698 | 675,982 |
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized Income on Interest Rate Locks | ||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Income taxes | (503) | (513) | (990) | (1,025) | ||
Net income | 1,495 | 1,521 | 2,937 | 3,042 | ||
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Unrealized Income on Interest Rate Locks | Interest Rate Locks | ||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||||
Interest expense | $ 1,998 | $ 2,034 | $ 3,927 | $ 4,067 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2023 | Nov. 30, 2022 | Nov. 30, 2023 | Nov. 30, 2022 | May 31, 2023 | |
Segment Reporting Information | |||||
Revenue | $ 2,377,177 | $ 2,174,858 | $ 4,719,507 | $ 4,341,312 | |
Income (loss) before income taxes | 473,862 | 416,358 | 950,296 | 828,913 | |
Total assets | 8,813,869 | 8,427,007 | 8,813,869 | 8,427,007 | $ 8,546,356 |
Uniform Rental and Facility Services | |||||
Segment Reporting Information | |||||
Revenue | 1,850,542 | 1,709,987 | 3,677,367 | 3,407,759 | |
First Aid and Safety Services | |||||
Segment Reporting Information | |||||
Revenue | 266,401 | 235,974 | 527,094 | 470,135 | |
Operating Segments | Uniform Rental and Facility Services | |||||
Segment Reporting Information | |||||
Revenue | 1,850,542 | 1,709,987 | 3,677,367 | 3,407,759 | |
Income (loss) before income taxes | 399,611 | 369,095 | 806,140 | 733,866 | |
Total assets | 7,405,444 | 7,142,226 | 7,405,444 | 7,142,226 | |
Operating Segments | First Aid and Safety Services | |||||
Segment Reporting Information | |||||
Revenue | 266,401 | 235,974 | 527,094 | 470,135 | |
Income (loss) before income taxes | 58,531 | 45,495 | 118,111 | 86,341 | |
Total assets | 733,074 | 699,184 | 733,074 | 699,184 | |
Operating Segments | All Other | |||||
Segment Reporting Information | |||||
Revenue | 260,234 | 228,897 | 515,046 | 463,418 | |
Income (loss) before income taxes | 41,541 | 30,344 | 75,988 | 64,847 | |
Total assets | 589,795 | 495,798 | 589,795 | 495,798 | |
Corporate | |||||
Segment Reporting Information | |||||
Revenue | 0 | 0 | 0 | 0 | |
Income (loss) before income taxes | (25,821) | (28,576) | (49,943) | (56,141) | |
Total assets | $ 85,556 | $ 89,799 | $ 85,556 | $ 89,799 |