CINTAS CORP (CTAS) FY 2026 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations
Business Strategy
Cintas helps more than one million businesses of all types and sizes, primarily in the U.S., as well as Canada and Latin America, get READY™ to open their doors with confidence every day by providing a wide range of products and services that enhance our customers’ image and help keep their facilities and employees clean, safe and looking their best. With products and services including uniforms, mats, mops, shop towels, restroom supplies, workplace water services, first aid and safety products, eye-wash stations, safety training, fire extinguishers, sprinkler systems and alarm services, Cintas helps customers get Ready for the Workday®.
We are North America's leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, first aid and safety services and fire protection products and services.
Cintas' principal objective is "to exceed customers' expectations in order to maximize the long-term value of Cintas for shareholders and working partners," and it provides the framework and focus for Cintas' business strategy. This strategy is to achieve revenue growth for all our products and services by increasing our penetration at existing customers and by broadening our customer base to include market segments to which we have not historically served. We will also continue to identify additional product and service opportunities for our current and future customers.
To pursue the strategy of increasing penetration, we have a highly talented and diverse team of service professionals visiting our customers on a regular basis. This frequent contact with our customers enables us to develop close personal relationships. The combination of our distribution system and these strong customer relationships provides a platform from which we launch additional products and services.
We pursue the strategy of broadening our customer base in several ways. Cintas has a national sales organization introducing all its products and services to prospects in all market segments. Our broad range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic expansion. Finally, we evaluate strategic acquisitions as opportunities arise.
Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations section focuses on discussion of fiscal 2026 results compared to fiscal 2025 results and should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this filing. The discussion contains forward-looking statements that involve known and unknown risks and uncertainties, including those set forth under "Item 1A. Risk Factors." For discussion of fiscal 2025 results compared to fiscal 2024 results, see the "Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, filed with the SEC on July 28, 2025.
Cintas classifies its business into two reportable operating segments and places the remainder of its operating segments in an All Other category. Cintas’ two 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, as well as workplace water services. The remainder of Cintas’ business, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other. These operating segments consist of fire protection products and services and the direct sale of uniforms and related items. Cintas evaluates operating segment performance based on revenue and operating income. Revenue and operating income for the reportable operating segments for the fiscal years ended May 31, 2026, 2025 and 2024 are presented in Note 14 entitled Operating Segment Information of "Notes to Consolidated Financial Statements." The Company regularly reviews its operating segments for reporting purposes based on the information its chief operating decision maker (CODM) regularly reviews for purposes of allocating resources and assessing performance and makes changes when appropriate.
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On March 10, 2026, the Company entered into a Merger Agreement pursuant to which the Company will acquire all outstanding shares of UniFirst common stock. UniFirst is a North American company in the supply and servicing of uniform and workwear programs, facility service products, as well as first aid and safety supplies and services. Under the terms of the Merger Agreement, subject to the satisfaction (or, to the extent permitted by applicable law in accordance with the Merger Agreement, waiver) of certain conditions, Cintas will acquire all the outstanding shares of UniFirst common stock in a transaction valued at approximately $5.5 billion. Each share of UniFirst common stock will be converted into the right to receive $155.00 in cash and 0.7720 shares of validly issued, fully paid and non-assessable Cintas common stock, with no par value (with, if applicable, cash in lieu of fractional shares), in each case without interest and subject to any applicable withholding taxes. Completion of the Transaction is subject to a number of conditions, including, among others, the receipt of required regulatory approvals, including the expiration or termination of applicable waiting periods under the HSR Act.
The following table sets forth certain consolidated statements of income data as a percent of revenue by reportable operating segment, All Other and in total for the fiscal years ended May 31:
| 2026 | 2025 | ||
|---|---|---|---|
| Revenue: | |||
| Uniform Rental and Facility Services | 76.5% | 77.1% | |
| First Aid and Safety Services | 12.4% | 11.8% | |
| All Other | 11.1% | 11.1% | |
| Total revenue | 100.0% | 100.0% | |
| Cost of sales: | |||
| Uniform Rental and Facility Services | 50.0% | 50.7% | |
| First Aid and Safety Services | 42.3% | 42.8% | |
| All Other | 52.4% | 52.7% | |
| Total cost of sales | 49.4% | 50.0% | |
| Gross margin: | |||
| Uniform Rental and Facility Services | 50.0% | 49.3% | |
| First Aid and Safety Services | 57.7% | 57.2% | |
| All Other | 47.6% | 47.3% | |
| Total gross margin | 50.6% | 50.0% | |
| Selling and administrative expenses: | |||
| Uniform Rental and Facility Services | 25.9% | 25.8% | |
| First Aid and Safety Services | 32.3% | 33.0% | |
| All Other | 32.3% | 30.6% | |
| Total selling and administrative expenses | 27.4% | 27.2% | |
| UniFirst transaction expenses | 0.1% | —% | |
| Operating income: | |||
| Uniform Rental and Facility Services | 24.1% | 23.5% | |
| First Aid and Safety Services | 25.4% | 24.2% | |
| All Other | 15.3% | 16.7% | |
| Total operating income | 23.1% | 22.8% | |
| Interest expense, net | 0.9% | 0.9% | |
| Income before income taxes | 22.2% | 21.9% |
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Fiscal 2026 Compared to Fiscal 2025
Fiscal 2026 total revenue was $11.3 billion, an increase of 8.9% over the prior fiscal year. Revenue increased organically by 8.3% primarily as a result of increased sales volume. Organic revenue growth adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations. Total revenue was positively impacted by 0.6% due to acquisitions.
Organic revenue growth by quarter for fiscal 2026 is as follows:
| First quarter ended August 31, 2025 | 7.8% |
|---|---|
| Second quarter ended November 30, 2025 | 8.6% |
| Third quarter ended February 28, 2026 | 8.2% |
| Fourth quarter ended May 31, 2026 | 8.4% |
| For the fiscal year ended May 31, 2026 | 8.3% |
Uniform Rental and Facility Services reportable operating segment revenue consists predominantly of revenue derived from the rental of corporate identity uniforms and other garments, including flame resistant clothing and the rental and/or sale of mats, mops, shop towels, restroom supplies and other rental services. Revenue from the Uniform Rental and Facility Services reportable operating segment increased 8.1%, to $8,621.6 million compared to $7,976.1 million in fiscal 2025. Organic revenue growth for this reportable operating segment was 7.6%. Revenue growth was positively impacted by 0.4% due to acquisitions and 0.1% due to foreign currency exchange rate fluctuations. Revenue growth was a result of new business, the penetration of additional products and services into existing customers and price increases, partially offset by lost business. New business growth resulted from an increase in the number and productivity of sales representatives. Generally, sales productivity improvements are due to increased tenure and improved training, which produce a higher number of products and services sold.
Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 11.8%, to $2,643.1 million compared to $2,364.1 million in fiscal 2025. Revenue improved from increases in sales representative productivity and price increases. Revenue increased organically by 10.6%. Revenue growth was positively impacted by 1.2% due to acquisitions.
Cost of uniform rental and facility services increased 6.7% compared to fiscal 2025. Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in-service inventory, including uniforms, mats, shop towels and other ancillary items. The change from the prior year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, as well as an increase in material cost to support increased revenue growth. As a percent of revenue, the cost of uniform rental and facility services improved from 50.7% in fiscal 2025, to 50.0% in fiscal 2026, primarily due to more efficient use of in-service inventory and production efficiency gains.
Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, personal protective equipment, uniforms and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other. Cost of other increased 10.6% in fiscal 2026 compared to fiscal 2025, as a result of higher other revenue, but decreased as a percent of revenue to 47.1%, compared to 47.6% in fiscal 2025. The improvement in cost of sales as a percent to revenue was primarily due to favorable changes in the sales mix and sourcing and productivity initiatives in the First Aid and Safety Services reportable operating segment.
Selling and administrative expenses increased $271.7 million, to 27.4% as a percent of revenue, compared to 27.2% in fiscal 2025. In fiscal 2025 we recorded a $15.0 million gain on a sale of property which impacted all segments by the same percent of revenue of approximately 0.2%. Excluding that gain on the sale of property, selling and administrative expenses were consistent from fiscal 2025 to fiscal 2026.
As a result of the Transaction with UniFirst, the Company incurred $16.1 million in transaction expenses in fiscal 2026 which relate primarily to legal and professional services, regulatory fees and financing fees. Of the $16.1 million, $15.1 million was recorded in selling and administrative expenses, and $1.0 million was recorded in interest expense, on the consolidated statements of income. No transaction expenses were incurred in fiscal 2025.
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Net interest expense (interest expense less interest income) was $101.2 million in fiscal 2026 compared to $95.5 million in fiscal 2025 but was the same as a percent of revenue.
Income before income taxes was $2,505.3 million, an increase of $241.1 million, or 10.6%, compared to fiscal 2025. The increase in income before income taxes was primarily due to revenue growth, as well as the improvements in gross margin previously mentioned.
Cintas' effective tax rate for fiscal 2026 and fiscal 2025 was 20.2% and 20.0%, respectively. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation.
Net income for fiscal 2026 of $2,000.0 million was a 10.4% increase compared to fiscal 2025. Diluted earnings per share of $4.91 was an 11.6% increase compared to fiscal 2025 diluted earnings per share of $4.40. Diluted earnings per share increased primarily due to the increase in net income.
Uniform Rental and Facility Services Reportable Operating Segment
Uniform Rental and Facility Services reportable operating segment revenue increased $645.6 million, or 8.1%, and the cost of uniform rental and facility services increased $271.2 million, or 6.7%, due to the reasons previously discussed. The reportable operating segment's fiscal 2026 gross margin was 50.0% of revenue compared to 49.3% in fiscal 2025. The improvement in gross margin was primarily due to more efficient use of in-service inventory and production efficiency gains.
Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $170.7 million in fiscal 2026 compared to fiscal 2025 in order to support revenue growth as well as invest in technology and selling resources. Selling and administrative expense as a percent of revenue for fiscal 2026 was 25.9% compared to 25.8% in fiscal 2025. Excluding the gain on sale of property noted previously, selling and administrative expenses as a percent of revenue were largely consistent as compared to the prior fiscal year.
Operating income for the Uniform Rental and Facility Services reportable operating segment increased $203.6 million, or 10.9%, for fiscal 2026 compared to fiscal 2025. The increase in operating income was due to the previously discussed growth in revenue and improvements in gross margin. Operating income as a percent of revenue was 24.1% compared to 23.5% in fiscal 2025. The improvement over the prior fiscal year was primarily a result of the previously discussed improvement in gross margin.
First Aid and Safety Services Reportable Operating Segment
First Aid and Safety Services reportable operating segment revenue increased $173.8 million in fiscal 2026, a 14.3% increase compared to fiscal 2025. Organic revenue growth for this reportable operating segment was 14.0%. Revenue growth was positively impacted by 0.3% due to acquisitions. The increase in revenue was driven by many factors including increases in new business sold by sales representatives, penetration of additional products and services into existing customers, price increases and strong customer retention.
Cost of sales for the First Aid and Safety Services reportable operating segment increased $67.9 million, or 13.0%, in fiscal 2026, due to higher sales volume. Gross margin for the First Aid and Safety Services reportable operating segment is defined as revenue less cost of goods, warehouse expenses and service expenses. Gross margin as a percent of revenue was 57.7% for fiscal 2026 compared to 57.2% in fiscal 2025. The improvement in gross margin as a percent of revenue was primarily driven by favorable changes in the sales mix, sourcing and productivity initiatives, as well as improved leverage of fixed costs and a reduction in energy expense as a percent of revenue.
Selling and administrative expenses for the First Aid and Safety Services reportable operating segment increased by $47.2 million, or 11.7%, in fiscal 2026 compared to fiscal 2025, but decreased as a percent of revenue to 32.3% in fiscal 2026 compared to 33.0% in fiscal 2025. The improvement in selling and administrative expenses as a percent of revenue was largely due to operating leverage as revenue grew at a faster rate than expenses.
Operating income for the First Aid and Safety Services reportable operating segment was $353.4 million in fiscal 2026, an increase of $58.7 million, or 19.9%, compared to fiscal 2025. Operating income as a percent of revenue at 25.4%, increased from 24.2% in fiscal 2025 due to the previously discussed growth in revenue and improvements in gross margin and selling and administrative expenses.
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Liquidity and Capital Resources
The following table summarizes our cash flows and cash and cash equivalents as of and for the fiscal years ended May 31:
| (In thousands) | 2026 | 2025 | ||||
|---|---|---|---|---|---|---|
| Net cash provided by operating activities | $ | 2,276,280 | $ | 2,165,905 | ||
| Net cash used in investing activities | $ | (568,428) | $ | (623,638) | ||
| Net cash used in financing activities | $ | (1,682,072) | $ | (1,619,011) | ||
| Cash and cash equivalents at end of year | $ | 289,018 | $ | 263,973 |
Cash and cash equivalents as of May 31, 2026 and 2025, include $78.5 million and $57.8 million, respectively, that is located outside of the U.S.
Cash flows provided by operating activities have historically supplied us with a significant source of liquidity. We generally use these cash flows to fund most, if not all, of our operations and expansion activities and dividends on our common stock. We may also use cash flows provided by operating activities, as well as proceeds from long-term debt and short-term borrowings, to fund growth and expansion opportunities, as well as other cash requirements such as the repurchase of our common stock and payment of long-term debt.
We expect our cash flows from operating activities to remain sufficient to provide us with adequate levels of liquidity. In addition, we have access to $2.0 billion of debt capacity from our revolving credit facility under our credit agreement. We believe the Company has sufficient liquidity to operate in the current business environment for at least the next 12 months and the foreseeable future thereafter. Acquisitions, repurchases of our common stock and dividends remain strategic objectives, but they will be dependent on the economic outlook and liquidity of the Company.
Net cash provided by operating activities was $2,276.3 million for fiscal 2026, which was an increase of $110.4 million, or 5.1%, compared to fiscal 2025. The increase was primarily the result of an increase in net income, deferred income taxes and favorable changes in working capital, primarily income taxes, current, accounts receivable, net, and inventories, net. These improvements were partially offset by unfavorable changes in working capital, specifically accounts payable, accrued liabilities and other, and uniforms and other rental items in service.
Net cash used in investing activities was $568.4 million in fiscal 2026, compared to $623.6 million in fiscal 2025. Net cash used in investing activities includes capital expenditures, purchases of investments and cash paid for acquisitions of businesses. Capital expenditures were $395.1 million and $408.9 million for fiscal 2026 and fiscal 2025, respectively. Capital expenditures for fiscal 2026 included $279.4 million for the Uniform Rental and Facility Services reportable operating segment and $59.0 million for the First Aid and Safety Services reportable operating segment. Cash paid for acquisitions of businesses, net of cash acquired, was $164.5 million and $232.9 million for fiscal 2026 and fiscal 2025, respectively. The acquisitions in both fiscal 2026 and 2025 occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection operating segment, which is included in All Other. In addition, during fiscal 2025, Cintas received cash proceeds of $24.0 million related to the sale of property and equipment. Net cash used in investing activities also included $8.3 million and $7.2 million of purchases of investments during fiscal 2026 and fiscal 2025, respectively.
Net cash used in financing activities was $1,682.1 million for fiscal 2026, compared to $1,619.0 million in fiscal 2025. The increase in cash used in financing activities was primarily due to an increase in dividends paid, repurchases of common stock and debt issuance costs.
On July 26, 2022, July 23, 2024 and October 28, 2025, Cintas announced that the Board authorized share buyback programs, each for $1.0 billion. The July 26, 2022 share buyback program was completed during the second quarter of fiscal 2026. Neither of the outstanding share buyback programs have an expiration date.
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The following table summarizes the share buyback activity by program and fiscal years ended May 31:
| 2026 | 2025 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Buyback Program(In thousands except per share data) | Shares | Average Price per Share | Purchase Price | Shares | Average Price per Share | Purchase Price | |||||||||||||||
| July 26, 2022 | 1,272 | $ | 207.13 | $ | 263,564 | 3,794 | $ | 179.07 | $ | 679,329 | |||||||||||
| July 23, 2024 | 2,688 | 191.29 | 514,221 | — | — | — | |||||||||||||||
| October 28, 2025 | — | — | — | — | — | — | |||||||||||||||
| 3,960 | $ | 196.38 | $ | 777,785 | 3,794 | $ | 179.07 | $ | 679,329 | ||||||||||||
| Shares acquired for taxes due (1) | 829 | $ | 210.50 | $ | 174,319 | 1,297 | $ | 196.87 | $ | 255,471 | |||||||||||
| Total repurchase of Cintas common stock | $ | 952,104 | $ | 934,800 |
(1) Shares of Cintas stock acquired for employee-partner payroll taxes due on options exercised and vested restricted stock awards.
In the period subsequent to May 31, 2026, through July 29, 2026, we purchased 0.2 million shares of Cintas common stock at an average price of $199.70 per share, for a total purchase price of $48.4 million. From the inception of the July 23, 2024 share buyback program through July 29, 2026, Cintas has purchased 2.9 million shares of Cintas common stock in the aggregate, at an average price of $191.99 per share, for a total purchase price of $562.7 million. Cintas has made no purchases under the October 28, 2025 share buyback program.
Our Board declared the following dividends:
| Paid Dividends | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Declaration Date(In millions except per share data) | Record Date | Payment Date | Dividend Per Share | Total Amount | |||||
| Fiscal Year 2026 | |||||||||
| April 8, 2025 | May 15, 2025 | June 13, 2025 | $ | 0.39 | $ | 157.8 | |||
| July 29, 2025 | August 15, 2025 | September 15, 2025 | 0.45 | 182.3 | |||||
| October 28, 2025 | November 14, 2025 | December 15, 2025 | 0.45 | 180.8 | |||||
| January 20, 2026 | February 13, 2026 | March 13, 2026 | 0.45 | 180.6 | |||||
| Total | $ | 1.74 | $ | 701.5 | |||||
| Fiscal Year 2025 | |||||||||
| April 9, 2024 | May 15, 2024 | June 14, 2024 | $ | 0.3375 | $ | 137.6 | |||
| July 23, 2024 | August 15, 2024 | September 3, 2024 | 0.3900 | 158.0 | |||||
| October 29, 2024 | November 15, 2024 | December 13, 2024 | 0.3900 | 158.1 | |||||
| January 14, 2025 | February 14, 2025 | March 14, 2025 | 0.3900 | 157.9 | |||||
| Total | $ | 1.5075 | $ | 611.6 | |||||
| Accrued Dividends | |||||||||
| As of May 31, 2026 | |||||||||
| April 14, 2026 (1) | May 15, 2026 | June 15, 2026 | $ | 0.45 | $ | 180.7 | |||
| As of May 31, 2025 | |||||||||
| April 8, 2025 (1) | May 15, 2025 | June 13, 2025 | $ | 0.39 | $ | 157.8 |
(1) The dividends declared on April 14, 2026 and April 8, 2025 were included in current accrued liabilities on the consolidated balance sheets at May 31, 2026 and 2025, respectively.
Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board and dependent upon then-existing conditions, including the Company's consolidated results of operations and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board may deem relevant.
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During the fiscal year ended May 31, 2026, Cintas paid $5.2 million in prepaid short term debt financing fees related to bridge loan financing in connection with the Transaction.
The following table summarizes Cintas' outstanding debt at May 31:
| (In thousands) | Interest Rate | Fiscal Year Issued | Fiscal Year Maturity | 2026 | 2025 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt due within one year | ||||||||||||
| Senior notes | 3.70% | 2017 | 2027 | $ | 1,000,000 | $ | — | |||||
| Debt issuance costs | (1,013) | — | ||||||||||
| Total debt due within one year | $ | 998,987 | $ | — | ||||||||
| Debt due after one year | ||||||||||||
| Senior notes | 3.70% | 2017 | 2027 | $ | — | $ | 1,000,000 | |||||
| Senior notes | 4.20% | 2025 | 2028 | 400,000 | 400,000 | |||||||
| Senior notes | 4.00% | 2022 | 2032 | 800,000 | 800,000 | |||||||
| Senior notes | 6.15% | 2007 | 2037 | 236,550 | 236,550 | |||||||
| Debt issuance costs | (7,464) | (11,551) | ||||||||||
| Total debt due after one year | $ | 1,429,086 | $ | 2,424,999 |
Cintas Corporation No. 2 (Corp. 2) entered into a credit agreement which supports our commercial paper program on March 27, 2026 (the Credit Agreement). The Credit Agreement has capacity under the revolving credit facility of $2.0 billion and contains a letter of credit sub-facility of up to $300.0 million and a swing line sub-facility of up to $150.0 million. The Credit Agreement has an accordion feature that provides Cintas with the ability to request increases to the borrowing commitments under the revolving credit facility of up to $1.0 billion in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility is March 27, 2031. In connection with the entry into the Credit Agreement, on March 27, 2026, Corp. 2 terminated all commitments and repaid all obligations under its existing Third Amended and Restated Credit Agreement, dated as of March 23, 2022 (as amended, restated, supplemented or otherwise modified from time to time prior to such date, the “Existing Credit Agreement”). Upon the termination of the Existing Credit Agreement, all the obligations under the Existing Credit Agreement were terminated. As of both May 31, 2026 and 2025, there was no commercial paper outstanding and no borrowings on our revolving credit facility.
In connection with the Transaction, we also entered into a commitment letter on March 10, 2026 with certain debt commitment parties, who have committed to provide a 364-day senior unsecured bridge facility in an aggregate principal amount of $2.85 billion (the Bridge Facility) consisting of two separate tranches. The funding of the Bridge Facility provided for in the commitment letter is subject to the satisfaction of certain customary limited conditions, including the consummation of the mergers in accordance with the merger agreement and the execution and delivery of definitive documentation with respect to the Bridge Facility in accordance with the terms set forth in the commitment letter. As of May 31, 2026, there was no borrowings on our Bridge Facility.
The Credit Agreement includes, among other things, “certain funds” provisions pursuant to which $1.25 billion of the commitments under the Credit Agreement are available for, subject to the satisfaction of certain limited conditions (including the consummation of the mergers in accordance with the merger agreement), the consummation of the Transaction. The commitments under one of the two tranches of the Bridge Facility were replaced by the revolving credit facility.
Cintas' debt agreements contain certain covenants. These covenants limit our 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 a certain debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) ratio. 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.
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Our access to the commercial paper and long-term debt markets has historically provided us with sources of liquidity. We do not anticipate having difficulty in obtaining financing from those markets in the future based on our favorable experiences in the debt markets in the recent past. Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rates and other terms will depend, to a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As of May 31, 2026, our ratings were as follows:
| Rating Agency | Outlook | Commercial Paper | Long-term Debt | |||
|---|---|---|---|---|---|---|
| Standard & Poor’s | Stable | A-2 | A- | |||
| Moody’s Investors Service | Stable | P-2 | A3 |
In the event that the ratings of our commercial paper or our outstanding long-term debt issues were substantially lowered or withdrawn for any reason, or if the ratings assigned to any new issue of long-term debt securities were significantly lower than those noted above, particularly if we no longer had investment grade ratings, our ability to access the debt markets may be adversely affected. In addition, in such a case, our cost of funds for new issues of commercial paper and long-term debt would be higher than our cost of funds would have been had the ratings of those new issues been at or above the level of the ratings noted above. The rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.
To monitor our credit rating and our capacity for long-term financing, we consider various qualitative and quantitative factors. One such factor is the ratio of our total debt to EBITDA. For the purpose of this calculation, debt is defined as the sum of short-term borrowings, long-term debt due within one year, long-term debt and standby letters of credit.
Financial and Nonfinancial Disclosure About Issuers and Guarantors of Cintas’ Senior Notes
Corp. 2 is the indirectly, wholly owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the $2,436.6 million aggregate principal amount of senior notes outstanding as of May 31, 2026, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly owned, direct and indirect domestic subsidiaries. See Note 6 entitled Debt, Derivatives and Hedging Activities of "Notes to Consolidated Financial Statements" for more information on Cintas' outstanding debt.
Basis of Preparation of the Summarized Financial Information
The following tables include summarized financial information of Cintas Corporation, Corp. 2 (issuer) and subsidiary guarantors (together, the Obligor Group). Investments in and equity in the earnings of non-guarantors, which are not members of the Obligor Group, have been excluded. Non-guarantor subsidiaries are located outside the U.S., and therefore, excluded from the Obligor Group.
The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with non-guarantors have been presented in separate line items, if they are material.
Summarized financial information of the Obligor Group is as follows as of and for the fiscal years ended May 31:
| Summarized Consolidated Statements of Income(In thousands) | 2026 | 2025 | |||||
|---|---|---|---|---|---|---|---|
| Net sales to unrelated parties | $ | 10,689,746 | $ | 9,813,929 | |||
| Net sales to non-guarantors | $ | 17,267 | $ | 15,662 | |||
| Operating income | $ | 2,438,437 | $ | 2,214,295 | |||
| Net income | $ | 1,861,199 | $ | 1,677,277 |
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| Summarized Consolidated Balance Sheets(In thousands) | 2026 | 2025 | |||||
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Receivables due from non-obligor subsidiaries | $ | 93,386 | $ | 59,346 | |||
| Total other current assets | $ | 3,583,716 | $ | 3,203,986 | |||
| Total other noncurrent assets | $ | 6,192,423 | $ | 5,972,476 | |||
| Liabilities | |||||||
| Amounts due to non-obligor subsidiaries | $ | 122,931 | $ | 93,926 | |||
| Current liabilities | $ | 2,580,416 | $ | 1,560,058 | |||
| Noncurrent liabilities | $ | 2,626,542 | $ | 3,429,841 |
Contractual and Other Material Cash Obligations
| Payments Due by Period | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | Total | One year or less | Two to three years | Four to five years | After five years | |||||||||||||
| Debt (1) | $ | 2,436,550 | $ | 1,000,000 | $ | 400,000 | $ | — | $ | 1,036,550 | ||||||||
| Operating leases (2) | 316,548 | 66,543 | 116,293 | 73,065 | 60,647 | |||||||||||||
| Interest payments | 401,482 | 94,181 | 108,496 | 93,096 | 105,709 | |||||||||||||
| Total contractual and other material cash obligations | $ | 3,154,580 | $ | 1,160,724 | $ | 624,789 | $ | 166,161 | $ | 1,202,906 |
(1)See Note 6 entitled Debt, Derivatives and Hedging Activities of "Notes to Consolidated Financial Statements" for a detailed presentation of Cintas' debt.
(2)See Note 7 entitled Leases of "Notes to Consolidated financial Statements" for a detailed presentation of Cintas' operating leases.
Cintas also makes payments to defined contribution plans and may make payments to defined benefit plans to satisfy minimum funding requirements. The amount of contributions made to the defined contribution plans are at the discretion of the Board. Future contributions to the defined contribution plans are expected to be $156.7 million in the next fiscal year, $337.2 million in the next two to three fiscal years and $371.8 million in the next four to five fiscal years. Future contributions to the defined benefit plans are expected to be $2.1 million in the next fiscal year, $3.4 million in the next two to three fiscal years and $2.9 million in the next four to five fiscal years.
Other Commitments
| Amount of Commitment Expiration per Period | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | Total | One year or less | Two to three years | Four to five years | After five years | |||||||||||||
| Lines of credit (1) | $ | 1,999,298 | $ | — | $ | — | $ | 1,999,298 | $ | — | ||||||||
| Standby letters of credit and surety bonds (2) | 125,825 | 125,825 | — | — | — | |||||||||||||
| Total other commitments | $ | 2,125,123 | $ | 125,825 | $ | — | $ | 1,999,298 | $ | — |
(1)Back-up facility for the commercial paper program (reference Note 6 entitled Debt, Derivatives and Hedging Activities of "Notes to Consolidated Financial Statements" for further discussion).
(2)These standby letters of credit and surety bonds support certain outstanding debt (reference Note 6 entitled Debt, Derivatives and Hedging Activities of "Notes to Consolidated Financial Statements"), self-insured workers' compensation and general liability insurance programs.
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Inflation and Changing Prices
Changes in wages, benefits and energy costs have the potential to materially impact Cintas' consolidated results of operations. In fiscal 2026, 2025 and 2024, we experienced impacts from inflation, including, but not limited to, higher labor, fuel and transportation costs. Management has been able to mitigate these inflationary pressures through pricing and various efficiency initiatives. Management has mitigated these impacts such that net of the mitigation strategy and initiatives, inflation and changing prices have not had a material impact on Cintas' consolidated financial condition or a negative impact on the consolidated results of operations.
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. While the results of any such legal proceedings cannot be predicted with certainty, management believes, 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.
New Accounting Standards
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (ASU 2023-09), which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023-09 will be effective for annual periods beginning after December 15, 2024 (fiscal 2026). The Company adopted the standard on a prospective basis, for the fiscal year ended May 31, 2026, see additional disclosures in the "Notes to Consolidated Financial Statements."
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03), which requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the statement of income. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 (fiscal 2028), and for interim periods within fiscal years beginning after December 15, 2027 (fiscal 2029), with early adoption permitted. The Company is currently evaluating the impact of ASU 2024-03 on the consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06), which amends the guidance in Accounting Standards Codification (ASC) 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 (fiscal 2029) and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of ASU 2025-06 on the consolidated financial statements.
There are no other accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated financial statements.
Critical Accounting Policies and Estimates
These critical accounting policies should be read in conjunction with Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements." The preparation of Cintas' consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, specifically the insurance reserve, which have an effect on the amounts reported in the consolidated financial statements and accompanying notes. Significant changes in critical accounting policies or significant changes in estimates or assumptions, specifically related to the insurance reserve, could possibly have a material impact on the consolidated financial statements.
Revenue recognition. Over 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
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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.
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. The Company's performance period generally corresponds with the monthly invoice period. See Note 2 entitled Revenue Recognition of "Notes to Consolidated Financial Statements".
Uniforms and other rental items in service. Uniforms and other rental items in service are valued at cost less amortization, calculated using the straight-line method. Uniforms in service (other than cleanroom garments) are amortized over their useful lives, which range from 18 to 30 months. Other rental items, including shop towels, mats, mops, cleanroom garments, linens and restroom dispensers, are amortized over their useful lives, which range from 8 to 60 months. The amortization rates used are based on industry experience and Cintas' specific experience. These factors are critical to determining the amount of in-service inventory and related cost of uniforms and facility services that are presented in the consolidated financial statements.
Insurance reserve. The insurance reserve represents the estimated ultimate cost of all asserted and unasserted claims (incurred but not reported), primarily related to workers' compensation, auto liability and other general liability exposure through the consolidated balance sheet dates. Our incurred but not reported reserves are estimated through actuarial procedures, with the assistance of third-party actuarial specialists, of the insurance industry and by using industry assumptions, adjusted for specific expectations based on our claims history. Cintas records an increase or decrease in selling and administrative expenses related to development of prior claims, recent claims activity and other industry factors in the period in which it becomes known. These changes in estimates may be material to the consolidated financial statements.