CINTAS CORPORATION Business Strategy
Cintas helps more than one million businesses of all types and sizes, primarily inthe United States (U.S. ), as well asCanada andLatin 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, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday®. We areNorth 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
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. 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 income before income taxes. Revenue and income before income taxes for the three months endedAugust 31, 2022 and 2021, for the two reportable operating segments and All Other are presented in Note 1 2 entitled Segment Information of "Notes to Consolidated Condensed Financial Statements." 21
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Consolidated Results
Three Months Ended
Total revenue increased 14.2% to$2,166.5 million for the three months endedAugust 31, 2022 , compared to$1,897.0 million for the three months endedAugust 31, 2021 . The organic revenue growth rate, which adjusts for the impact of acquisitions, divestitures and foreign currency exchange rate fluctuations, was 13.9%. Revenue growth was positively impacted by 0.5% due primarily to acquisitions and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations. Uniform Rental and Facility Services reportable operating segment revenue was$1,697.8 million for the three months endedAugust 31, 2022 , compared to$1,508.2 million for the same period in the prior fiscal year, which was an increase of 12.6%. The organic revenue growth rate for this reportable operating segment was 12.3%. Revenue growth in the Uniform Rental and Facility Services reportable operating segment was positively impacted by 0.6% due to acquisitions and negatively impacted by 0.3% 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. Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 20.6% for the three months endedAugust 31, 2022 , compared to the same period in the prior fiscal year, from$388.8 million to$468.7 million . The organic revenue growth rate for other revenue was 20.6%. Revenue growth was positively impacted by 0.1% due primarily to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations. 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. Cost of uniform rental and facility services increased$111.5 million , or 14.3%, for the three months endedAugust 31, 2022 , compared to the three months endedAugust 31, 2021 . This change from the same period in the prior fiscal year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, as well as increased energy costs and investments in labor and material cost to support increased revenue growth achieved during the three months endedAugust 31, 2022 . 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$32.7 million , or 15.2%, for the three months endedAugust 31, 2022 , compared to the three months endedAugust 31, 2021 , primarily due to increased sales volume in each of the underlying operating segments. Cost of other improved as a percentage of revenue, decreasing from 55.3% for three months endedAugust 31, 2021 to 52.8% for the three months endedAugust 31, 2022 . The improvement in cost of sales as a percent to revenue was primarily due to favorable changes in the sales mix for each of the underlying operating segments as well as efficiencies gained in labor and delivery routes, partially offset by increases in energy costs. Selling and administrative expenses increased$79.3 million , or 15.6%, in the three months endedAugust 31, 2022 , compared to the same period of the prior fiscal year. In the three months endedAugust 31, 2021 , there was a gain on the sale of certain operating assets within the Uniform Direct Sales operating segment of$12.2 million , which was recorded as a reduction of selling and administrative expenses. The remaining increase of$67.2 million , or 12.9%, was primarily due to increases in labor and other employee-partner expenses. Selling and administrative expenses as a percent of revenue were 27.1% for the three months endedAugust 31, 2022 , compared to 26.8% for the same period in the prior fiscal year. The previously mentioned gain on the sale of certain operating assets of$12.2 million in the same period of the prior year reduced selling and administrative expenses by 70 basis points for such period. The remaining selling and administrative expenses improved as a percent to revenue due to employee-partner related expenses increasing at a lower rate than revenue growth in the three months endedAugust 31, 2022 . Operating income was$440.1 million , or 20.3% of revenue, for the three months endedAugust 31, 2022 , compared to$394.1 million , or 20.8% of revenue, for the three months endedAugust 31, 2021 . The decrease in operating income as a percent of revenue was due to a gain on the sale of certain operating assets within the Uniform Direct Sales operating segment of$12.2 million , or 70 basis points, recorded in the three months endedAugust 31, 2021 . 22
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The remaining operating income for the three months ended
Net interest expense (interest expense less interest income) was$27.6 million for the three months endedAugust 31, 2022 , compared to$21.8 million for the three months endedAugust 31, 2021 . The change was primarily due to an increase in interest rates on commercial paper and an increase in outstanding short-term debt during the three months endedAugust 31, 2022 compared to the three months endedAugust 31, 2021 . Cintas' effective tax rate for continuing operations was 14.8% and 11.0% for the three months endedAugust 31, 2022 and 2021, 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 the three months endedAugust 31, 2022 , increased$20.5 million , or 6.2%, compared to the three months endedAugust 31, 2021 . Diluted earnings per share were$3.39 for the three months endedAugust 31, 2022 , which was an increase of 9.0% compared to the same period in the prior fiscal year. Diluted earnings per share increased primarily due to the increase in net income combined with the decrease in diluted weighted average common shares outstanding. The decrease in diluted weighted average common shares outstanding resulted from purchasing an aggregate of approximately 2.7 million shares of common stock under the board approved share buyback programs since the beginning of the third quarter of fiscal 2022 through the first quarter of fiscal 2023.
Uniform Rental and Facility Services Reportable Operating Segment
Three Months Ended
Uniform Rental and Facility Services reportable operating segment revenue was$1,697.8 million for the three months endedAugust 31, 2022 compared to$1,508.2 million for the same period of the prior fiscal year. The organic revenue growth rate for the reportable operating segment was 12.3%. The cost of uniform rental and facility services increased$111.5 million , or 14.3%. The reportable operating segment's gross margin was$807.0 million . Gross margin as a percentage of revenue was 47.5% for the three months endedAugust 31, 2022 and 48.3% for the three months endedAugust 31, 2021 . The change in gross margin was caused by a 40 basis point increase in energy-related expenses and investments in labor and material cost to support increased revenue growth achieved, partially offset by improved leverage of fixed costs. Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased$42.7 million in the three months endedAugust 31, 2022 compared to the same period of the prior fiscal year. Selling and administrative expenses as a percent of revenue for the three months endedAugust 31, 2022 improved to 26.0% compared to the 26.5% in the first quarter of the prior fiscal year. The improvement as percent of revenue was primarily due to efficiencies in labor realized in the three months endedAugust 31, 2022 . Income before income taxes increased$35.4 million , or 10.7%, for the Uniform Rental and Facility Services reportable operating segment for the three months endedAugust 31, 2022 , compared to the same period in the prior fiscal year. Income before income taxes was 21.5% of the reportable operating segment's revenue, which was a 30 basis point decrease from the first quarter of the prior fiscal year of 21.8%. This decrease was primarily due to the previously discussed decrease in gross margin partially offset by the improvements in selling and administrative expenses.
First Aid and Safety Services Reportable Operating Segment
Three Months Ended
First Aid and Safety Services reportable operating segment revenue increased from$199.1 million to$234.2 million , or 17.6%, for the three months endedAugust 31, 2022 , over the same period in the prior fiscal year. The organic revenue growth rate for the reportable operating segment was 15.8%. First Aid and Safety Services reportable operating segment revenue was positively impacted by 1.8% due to acquisitions. The increase in revenue was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers, price increases and strong customer retention. Cost of first aid and safety services increased$8.2 million , or 7.4%, for the three months endedAugust 31, 2022 , over the three months endedAugust 31, 2021 , due to higher sales volume. The gross margin as a percent of 23
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revenue was 49.6% for the quarter endedAugust 31, 2022 , compared to the gross margin as a percent of revenue of 44.8% in the same period of the prior fiscal year. The improvement in gross margin from the first quarter of the prior fiscal year was primarily driven by favorable changes in the sales mix as well as efficiencies gained in labor and delivery routes. Selling and administrative expenses increased$11.7 million in the three months endedAugust 31, 2022 , compared to the same period of the prior fiscal year. Selling and administrative expenses as a percent of revenue for the three months endedAugust 31, 2022 were 32.2%, compared to 31.9% in the first quarter of the prior fiscal year. The change as a percent of revenue from the same period in the prior fiscal year was primarily due to an increase in bad debt expense partially offset by lower labor in selling and administrative expenses. Income before income taxes for the First Aid and Safety Services reportable operating segment increased$15.1 million to$40.8 million for the three months endedAugust 31, 2022 , compared to the same period in the prior fiscal year. Income before income taxes was 17.4% of the reportable operating segment's revenue compared to the first quarter of the prior fiscal year of 12.9%. The increase in income before income taxes was due to the previously discussed increase in gross margin.
Liquidity and Capital Resources
The following is a summary of our cash flows and cash and cash equivalents as of
and for the three months ended
(In thousands) 2022
2021
Net cash provided by operating activities$ 298,156 $
262,141
Net cash used in investing activities$ (86,595) $
(84,321)
Net cash used in financing activities$ (226,199) $
(590,084)
Cash and cash equivalents at the end of the period
Cash and cash equivalents as of
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 amended and restated revolving credit facility. We believe the Company has sufficient liquidity to operate in the current business environment. 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$298.2 million for the three months endedAugust 31, 2022 , compared to$262.1 million for the three months endedAugust 31, 2021 . The change from the prior fiscal year was primarily due to an increase in net income and favorable changes in working capital, specifically accounts payable and current income taxes, which was partially offset by unfavorable changes in working capital, specifically, accounts receivable and uniforms and other rental items in service, which resulted from the growth in revenue. Net cash used in investing activities includes capital expenditures, purchases of investments, proceeds from sale of operating assets and cash paid for acquisitions of businesses. Capital expenditures were$70.0 million and$48.7 million for the three months endedAugust 31, 2022 and 2021, respectively. Capital expenditures in the three months endedAugust 31, 2022 included$54.1 million for the Uniform Rental and Facility Services reportable operating segment and$11.7 million for the First Aid and Safety Services reportable operating segment. The increase in capital expenditures during the three months endedAugust 31, 2022 over the same period in the prior fiscal year is due to an investment in the operating segments to support continued market penetration and revenue growth. Cash paid for acquisitions of businesses was$7.1 million and$35.7 million for the three months ended 24
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August 31, 2022 and 2021, respectively. The acquisitions during both the three months endedAugust 31, 2022 and 2021 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. During the three months endedAugust 31, 2021 , the Company received proceeds of$15.1 million from the sale of certain operating assets, net of cash disposed in the Uniform Direct Sales operating segment, which is included in All Other. Net cash used in investing activities also includes$5.9 million and$8.7 million of purchases of investments during the three months endedAugust 31, 2022 and 2021, respectively. Net cash used in financing activities was$226.2 million and$590.1 million for the three months endedAugust 31, 2022 and 2021, respectively. The decrease in cash used in financing activities was primarily due to the decrease in share buyback activity and debt payments, partially offset by the decrease in net issuance of commercial paper in the three months endedAugust 31, 2022 . OnOctober 29, 2019 , we announced that the Board of Directors authorized a$1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022. OnJuly 27, 2021 , Cintas announced that the Board of Directors authorized a$1.5 billion share buyback program, which does not have an expiration date. From the inception of theJuly 27, 2021 share buyback program throughAugust 31, 2022 , Cintas purchased a total of 2.7 million shares of Cintas common stock at an average price of$385.66 per share for a total purchase price of$1.0 billion . OnJuly 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 buyback activity by program for the three months endedAugust 31 : 2022 2021 Buyback Activity (In thousands except per Avg. Price Purchase Avg. Price Purchase share data) Shares per Share Price Shares per Share Price October 29, 2019 - $ - $ - 1,590$ 365.41 $ 581,220 July 27, 2021 532 396.39 210,751 - - - July 26, 2022 - - - - - - 532$ 396.39 $ 210,751 1,590$ 365.41 $ 581,220 Shares acquired for taxes due (1) 270$ 405.93 $ 109,583 198$ 394.19 $ 78,015 Total repurchase of Cintas common stock$ 320,334 $ 659,235
(1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards.
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Our Board of Directors declared the following dividends:
Paid Dividends Declaration Date (In millions except per share Record Payment Dividend Total data) Date Date Per Share Amount Three months endedAugust 31, 2022 April 12, 2022 May 16, 2022 June 15, 2022$ 0.95 $ 97.7 Three months endedAugust 31, 2021 April 13, 2021 May 15, 2021 June 15, 2021$ 0.75 $ 79.1 Accrued Dividends As ofAugust 31, 2022 July 26, 2022 (1) August 15, 2022 September 15, 2022$ 1.15 $ 117.5 As ofAugust 31, 2021 July 27, 2021 (1) August 13, 2021 September 15, 2021$ 0.95 $ 98.8 (1) The dividends declared during the three months endedAugust 31, 2022 and 2021 were included in current accrued liabilities on the consolidated condensed balance sheet atAugust 31, 2022 and 2021. Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board of Directors and dependent upon then-existing conditions, including the Company's consolidated operating results and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors may deem relevant.
During the three months ended
The following table summarizes Cintas' outstanding debt:
Interest Fiscal Year Fiscal Year August 31, May 31,
(In thousands) Rate Issued Maturity 2022 2022
Debt due within one year
Commercial paper 2.69 % (1) 2023 2023 $ 457,200 $ 261,200
Senior notes (2) 2.78 % 2013 2023 50,272 50,380
Debt issuance costs (5) (6)
Total debt due within one year $ 507,467 $ 311,574
Debt due after one year
Senior notes (3) 3.11 % 2015 2025 $ 50,881 $ 50,965
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 250,000 250,000
Debt issuance costs (16,279) (17,033)
Total debt due after one year $ 2,484,602 $ 2,483,932 (1) Variable rate debt instrument. The rate presented is the variable borrowing
rate at
(2) Cintas assumed these senior notes with the acquisition ofG&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is$50.0 million with a stated interest rate of 3.73%. 26
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(3) Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is$50.0 million with a stated interest rate of 3.88%. The credit agreement that supports our commercial paper program has a revolving credit facility with a capacity 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 isMarch 23, 2027 . As ofAugust 31, 2022 , there was$457.2 million of commercial paper outstanding with a weighted average interest rate of 2.69% and maturity dates less than 120 days and no borrowings on our revolving credit facility. As ofMay 31, 2022 , there was$261.2 million of commercial paper outstanding with a weighted average interest rate of 1.20% and maturity dates less than 120 days and no borrowings on our revolving credit facility. Cintas has certain covenants related to debt agreements. 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 certain debt to 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. 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 in view of our favorable experiences in the debt markets in the recent past, including, without limitation, to repay our long-term debt that is maturing in the next twelve months. Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As ofAugust 31, 2022 , our ratings were as follows: Commercial Long-term Rating Agency Outlook Paper 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. 27
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Financial and Nonfinancial Disclosure About Issuers and Guarantors of Cintas' Senior Notes
Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly owned principal operating subsidiary ofCintas. Corp. 2 is the issuer of the$2,550.0 million aggregate principal amount of senior notes outstanding as ofAugust 31, 2022 , which are unconditionally guaranteed, jointly and severally, byCintas Corporation and its wholly owned, direct and indirect domestic subsidiaries.
Basis of Preparation of the Summarized Financial Information
The following tables include summarized financial information ofCintas Corporation (Issuer), Corp. 2 and subsidiary guarantors (together, theObligor Group ). Investments in and equity in the earnings of non-guarantors, which are not members of theObligor Group , have been excluded. Non-guarantor subsidiaries are located outside theU.S. , and therefore, excluded from theObligor Group . The summarized financial information of theObligor Group is presented on a combined basis with intercompany balances and transactions between entities in theObligor Group eliminated.The Obligor Group's amounts due from, amounts due to and transactions with non-guarantors have been presented in separate line items, if they are material. Summarized financial information of theObligor Group is as follows: Three Months Ended Summarized Consolidated Condensed Statement of Income August 31, August 31, (In thousands) 2022
2021
Net sales to unrelated parties$ 2,046,494 $ 1,788,303 Net sales to non-guarantors$ 2,828 $ 1,493 Operating income$ 427,521 $ 380,322 Net income$ 342,321 $ 320,957
Summarized Consolidated Condensed Balance Sheets
2022 2022
ASSETS
Receivables due from non-obligor subsidiaries$ 9,690 $ 11,759 Total other current assets$ 2,559,715 $ 2,427,494 Total other noncurrent assets$ 5,097,949 $ 5,081,265 LIABILITIES Amounts due to non-obligor subsidiaries$ 3,846 $ 11,383 Current liabilities$ 1,568,885 $ 1,388,310 Noncurrent liabilities$ 3,373,716 $ 3,346,851 28
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Litigation and Other Contingencies
Cintas is subject to other 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.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor from
civil litigation for forward-looking statements. Forward-looking statements may
be identified by words such as "estimates," "anticipates," "predicts,"
"projects," "plans," "expects," "intends," "target," "forecast," "believes,"
"seeks," "could," "should," "may" and "will" or the negative versions thereof
and similar words, terms and expressions and by the context in which they are
used. Such statements are based upon current expectations of Cintas and speak
only as of the date made. You should not place undue reliance on any
forward-looking statement. We cannot guarantee that any forward-looking
statement will be realized. These statements are subject to various risks,
uncertainties, potentially inaccurate assumptions and other factors that could
cause actual results to differ from those set forth in or implied by this
Quarterly Report. Factors that might cause such a difference include, but are
not limited to, the possibility of greater than anticipated operating costs
including energy and fuel costs; lower sales volumes; loss of customers due to
outsourcing trends; the performance and costs of integration of acquisitions;
inflationary pressures and fluctuations in costs of materials and labor,
including increased medical costs; interest rate volatility; costs and possible
effects of union organizing activities; failure to comply with government
regulations concerning employment discrimination, employee pay and benefits and
employee health and safety; the effect on operations of exchange rate
fluctuations, tariffs and other political, economic and regulatory risks;
uncertainties regarding any existing or newly-discovered expenses and
liabilities related to environmental compliance and remediation; our ability to
meet our goals relating to environmental, social and governance (ESG)
opportunities, improvements and efficiencies; the cost, results and ongoing
assessment of internal controls for financial reporting; the effect of new
accounting pronouncements; disruptions caused by the inaccessibility of computer
systems data, including cybersecurity risks; the initiation or outcome of
litigation, investigations or other proceedings; higher assumed sourcing or
distribution costs of products; the disruption of operations from catastrophic
or extraordinary events including global health pandemics such as the COVID-19
coronavirus; the amount and timing of repurchases of our common stock, if any;
changes in federal and state tax and labor laws; and the reactions of
competitors in terms of price and service. Cintas undertakes no obligation to
publicly release any revisions to any forward-looking statements or to otherwise
update any forward-looking statements whether as a result of new information or
to reflect events, circumstances or any other unanticipated developments arising
after the date on which such statements are made. A further list and description
of risks, uncertainties and other matters can be found in our Annual Report on
Form 10-K for the year ended May 31, 2022 and in our reports on Forms 10-Q and
8-K. The risks and uncertainties described herein are not the only ones we may
face. Additional risks and uncertainties presently not known to us, or that we
currently believe to be immaterial, may also harm our business.
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ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
In our normal operations, Cintas has market risk exposure to interest
rates. There has been no material change to this market risk exposure to
interest rates from that which was previously disclosed on page 30 of our Annual
Report on Form 10-K for the year ended
Through its foreign operations, Cintas is exposed to foreign currency
risk. Foreign currency exposures arise from transactions denominated in a
currency other than the functional currency and from foreign currency
denominated revenue and profit translated into
ITEM 4.
CONTROLS AND PROCEDURESDisclosure Controls and Procedures
With the participation of Cintas' management, including Cintas' President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, Cintas has evaluated the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as ofAugust 31, 2022 . Based on such evaluation, Cintas' management, including Cintas' President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas' disclosure controls and procedures were effective as ofAugust 31, 2022 , in ensuring (i) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in theSecurities and Exchange Commission's rules and forms and (ii) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is accumulated and communicated to Cintas' management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
There were no changes in Cintas' internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter endedAugust 31, 2022 , that have materially affected, or are reasonably likely to materially affect, Cintas' internal control over financial reporting. 30
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