Unifirst Corporation

07/08/2026 | Press release | Distributed by Public on 07/08/2026 11:06

Quarterly Report for Quarter Ending May 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and any documents incorporated by reference may contain forward-looking statements within the meaning of the federal securities laws that reflect the Company's current views with respect to future events and financial performance, including statements regarding the transaction between UniFirst Corporation ("we", "our", the "Company", or "UniFirst") and Cintas Corporation ("Parent" or "Cintas") (the "Transaction"). Forward-looking statements contained in this Quarterly Report on Form 10-Q and any documents incorporated by reference are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "estimates," "anticipates," "projects," "plans," "expects," "intends," "believes," "seeks," "could," "should," "may," "will," "strategy," "objective," "assume," "strive," "design," "assumption," "vision" "drive," or the negative versions thereof, and similar expressions and by the context in which they are used. Such forward-looking statements are based upon our current expectations and speak only as of the date made. Such statements are highly dependent upon a variety of risks, uncertainties and other important factors that could cause actual results to differ materially from those reflected in such forward-looking statements.
The following Transaction-related factors, among others, could cause actual results to differ materially from those expressed in or implied by forward-looking statements: the occurrence of any event, change, or other circumstance that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between Cintas and UniFirst; the outcome of any legal proceedings that may be instituted against Cintas or UniFirst; the possibility that the Transaction does not close when expected or at all because required regulatory, shareholder, or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all (and the risk that seeking or obtaining such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Transaction); the risk that the benefits from the Transaction may not be fully realized or may take longer to realize than expected, including as a result of changes in, or problems arising from, general economic and market conditions, interest and exchange rates, monetary policy, trade policy (including tariff levels), laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which Cintas and UniFirst operate; any failure to promptly and effectively integrate the businesses of Cintas and UniFirst; the possibility that the Transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; reputational risk and potential adverse reactions of Cintas' or UniFirst's customers, employees or other business partners, including those resulting from the announcement, pendency or completion of the Transaction; the dilution caused by Cintas' issuance of additional shares of its capital stock in connection with the Transaction; changes in the trading price of Cintas' or UniFirst's capital stock; and the diversion of management's attention and time to the Transaction from ongoing business operations and opportunities.
Additional factors include, but are not limited to, uncertainties caused by an economic recession or other adverse economic conditions, including, without limitation, as a result of elevated inflation or interest rates or extraordinary events or circumstances such as geopolitical conflicts like the conflicts between Russia and Ukraine and the United States and Iran and other disruption in the Middle East, and their impact on our customers' businesses and workforce levels, disruptions of our business and operations, including limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers in connection with extraordinary events or circumstances, uncertainties regarding our ability to consummate acquisitions and successfully integrate acquired businesses, and the performance of such businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, any adverse outcome of pending or future contingencies or claims, our ability to compete successfully without any significant degradation in our margin rates, seasonal and quarterly fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, which such supply could be severely disrupted as a result of extraordinary events or circumstances such as the conflicts between Russia and Ukraine and the United States and Iran, any loss of key management or other personnel, increased costs as a result of any changes in federal, state, international or other laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding, or adverse impacts from continued high price levels of natural gas, electricity, fuel and labor or increases in such costs, the negative effect on our business from sharply depressed oil and natural gas prices, the continuing increase in domestic healthcare costs, increased workers' compensation claim costs, increased healthcare claim costs, our ability to retain and grow our customer base, demand and prices for our products and services, fluctuations in our nuclear business, political or other instability, supply chain disruption or infection among our employees in Mexico and Nicaragua where our principal
garment manufacturing plants are located, our ability to properly and efficiently design, construct, implement and operate a new enterprise resource planning ("ERP") computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with any changes in or additional Securities and Exchange Commission ("SEC"), New York Stock Exchange and accounting or other rules, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, the impact of U.S. and foreign trade policies and tariffs or other impositions on imported goods on our business, results of operations and financial condition, our ability to successfully implement our business strategies and processes, including our capital allocation strategies, our ability to successfully remediate the material weakness in internal control over financial reporting disclosed in our Annual Report on Form 10-K for the year ended August 30, 2025 and the other factors described under "Part I, Item 1A. Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended August 30, 2025 and in our other filings with the SEC, including, without limitation, under Part II, Item 1A. "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they are made.
Business Overview
UniFirst, a corporation organized under the laws of the Commonwealth of Massachusetts in 1950, together with its subsidiaries, is one of the leading providers of workplace uniforms and protective work wear clothing in North America. We design, manufacture, personalize, rent, clean, deliver, and sell a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety training, to a variety of manufacturers, retailers and service companies. We serve businesses of all sizes across multiple industries and sectors. We provide our products and services to over 300,000 customer locations in the U.S., Canada and Europe.
As mentioned and described in Note 13, "Segment Reporting," beginning with the fourth quarter of fiscal 2025, we reorganized our business into three reportable operating segments based on the information reviewed by our Chief Executive Officer: Uniform & Facility Service Solutions, First Aid & Safety Solutions and Other. Refer to Note 13, "Segment Reporting" to our Consolidated Financial Statements for our disclosure of segment information. We have recast certain prior period segment results to conform with the current presentation.
The Uniform & Facility Service Solutions segment consolidates the former Corporate, Manufacturing ("MFG") and U.S. and Canadian Rental and Cleaning operating segments and includes our cleanroom operations, which was previously part of the Specialty Garments Rental and Cleaning ("Specialty Garments") reporting segment. The Uniform & Facility Service Solutions reporting segment designs, manufactures, purchases, rents, cleans, delivers and sells, uniforms and protective clothing and non-garment items in the U.S. and Canada. Certain operations of the Uniform & Facility Service Solutions reporting segment are referred to by the Company as "industrial laundry operations" and we refer to the locations related to this reporting segment as our "industrial laundries". Additionally, the Uniform & Facility Service Solutions consists of our distribution center, sales and marketing, information systems, engineering, materials management, manufacturing planning, finance, budgeting, human resources, other general and administrative costs and interest expense. The segment, through the Company's cleanroom operations, also purchases, rents, cleans, delivers and sells specialty garments and non-garment items primarily for cleanroom applications and provides cleanroom cleaning at limited customer locations.
We renamed our First Aid reporting segment as the First Aid & Safety Solutions reporting segment to better reflect the scope of services and products offered. The First Aid & Safety Solutions reporting segment sells first aid cabinet services and other safety supplies, provides certain safety training and maintains wholesale distribution and pill packaging operations for non-prescription medicines.
The Other reporting segment currently consists of our nuclear business, which was previously part of the Specialty Garments reporting segment with our cleanroom operations. The segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear applications.
Merger Agreement
On March 10, 2026, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with Cintas, Bruin Merger Sub I, Inc., a wholly owned subsidiary of Cintas ("Merger Sub Inc."), and Bruin Merger Sub II, LLC, a wholly owned subsidiary of Cintas ("Merger Sub LLC").
Pursuant to the terms and conditions of the Merger Agreement, at the effective time of the merger of the Company with and into Merger Sub Inc., each share of (i) our common stock, par value $0.10 per share, and (ii) our Class B common stock, par value $0.10 per share, (clauses (i) and (ii) "Common Stock") issued and outstanding immediately prior to the effective time of this merger (other than shares of our Common Stock held in our treasury or held directly by a subsidiary of the Company, Cintas, Merger Sub Inc. or Merger Sub LLC) will convert into the right to receive: $155.00 in cash and 0.7720 shares of fully paid and nonassessable Cintas common stock. No fractional shares of Cintas common stock will be issued in this merger, and holders of our Common Stock will receive cash in lieu of any fractional shares of Cintas common stock.
For more information, refer to our Current Reports on Form 8-K filed with the SEC on March 11, 2026 and June 12, 2026 and Note 1, Summary of Significant Accounting Policies.
Factors Affecting Our Business
In general, we believe that our results of operations are not dependent on reasonable changes in the inflation rate. Historically, we have been able to manage the impacts of more significant changes in inflation rates through our customer relationships, customer agreements that generally provide for price increases and continued focus on improvements in operational productivity. However, the inflationary environment in recent years had a negative impact on our margins, including increased energy costs for our vehicles and our plants, and increased wages in the labor markets in which we compete. While inflation has moderated recently, a period of sustained inflation could pressure our margins in future periods. Adverse economic conditions resulting from inflationary pressures, U.S. Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issues, U.S. and foreign tariffs or other impositions on imported goods or other causes are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition.
Please see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended August 30, 2025 and Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q for an additional discussion of risks and potential risks of adverse economic conditions on our business, financial condition and results of operations, including, without limitation, as a result of inflation, elevated interest rates and/or increases in interest rates, geopolitical issues, U.S. and foreign tariffs or other impositions on imported goods.
Results of Operations
The following discussion should be read in conjunction with the accompanying consolidated financial statements and related notes. The discussion below highlights the significant factors affecting our results of operations for the thirteen and thirty-nine weeks ended May 30, 2026 compared to the corresponding prior year periods.
General
We derive our revenues from the services described under "Business Overview" above.
Cost of revenues include the amortization of rental merchandise in service and merchandise costs related to direct sales as well as labor and other production, service and delivery costs, and distribution costs associated with operating our Uniform & Facility Service Solutions operations, Other segment facilities, and First Aid & Safety Solutions locations. Selling and administrative costs include costs related to our sales and marketing functions as well as general and administrative costs associated with our corporate offices, non-operating environmental sites and operating locations including information systems, engineering, materials management, manufacturing planning, finance, budgeting, and human resources.
In fiscal 2022, we initiated a multi-year ERP project focused on modernizing our enterprise systems. Early phases focused on master data management and finance capabilities, with subsequent phases focused on supply chain and procurement automation and technology. We believe this initiative will become the foundation of our systems technology footprint and will integrate and complement the capabilities of our other core systems. We expect the ERP system, along with its enhanced supply chain and procurement capabilities, to reduce operating costs and contribute to lower customer churn. Such benefits are expected to be delivered through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes. As of May 30, 2026, we capitalized $62.3 million related to our ERP project. We refer to our ERP project as our "Key Initiative".
We have incurred costs associated with the proposed merger with Cintas, consisting primarily of legal, advisory and other professional service fees ("Transaction-related Costs"), which have been included within selling and administrative
expenses in the Consolidated Statements of Income. During the thirteen weeks ended May 30, 2026, we recognized $20.7 million of Transaction-related Costs.
Thirteen weeks ended May 30, 2026 compared with thirteen weeks ended May 31, 2025
Revenues
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Uniform & Facility Service Solutions $ 575,747 $ 554,331 $ 21,416 3.9 %
First Aid & Safety Solutions 30,809 29,787 1,022 3.4 %
Other 27,846 26,660 1,186 4.4 %
Total consolidated revenues $ 634,402 $ 610,778 $ 23,624 3.9 %
The increase in consolidated revenues of 3.9% during the thirteen weeks ended May 30, 2026, compared to the prior year comparable period was due primarily to growth in our Uniform & Facility Service Solutions of 3.9%. The increase in revenues in our Uniform & Facility Service Solutions was primarily due to organic growth of 3.6%, which was driven by solid new account sales and improved customer retention. The effect of the Canadian dollar exchange rate resulted in changes in our revenues of 0.2%.
First Aid & Safety Solutions revenues in the thirteen weeks ended May 30, 2026 increased 3.4% compared to the prior year comparable period was primarily driven by double-digit growth in our van business. Overall growth rates in the quarter were negatively impacted by the timing of certain direct sale shipments in our wholesale distribution business that we expect to recognize in the fourth quarter of fiscal 2026.
In the thirteen weeks ended May 30, 2026, Other segment revenues increased 4.4% compared to the prior year comparable period due primarily to favorable foreign currency exchange rates and growth in our European operations. These favorable impacts were partially offset by the continued wind-down of a large refurbishment project. Results for the Other segment are often influenced by seasonality, the timing and duration of customer power reactor outages, and project-based activities.
Cost of revenues
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Cost of revenues $ 399,676 $ 385,189 $ 14,487 3.8 %
% of Revenues 63.0 % 63.1 %
Consolidated cost of revenues increased during the thirteen weeks ended May 30, 2026 but remained flat as a percentage of revenues compared to the prior year comparable period. The increase was primarily due to higher payroll costs, a $1.8 million benefit in other production costs recognized during the prior year comparable period and higher merchandise costs. Payroll and merchandise costs each decreased as a percentage of revenues compared to the prior year comparable period, reflecting strong top-line performance.
Selling and administrative expenses
(In thousands, except percentages) May 30, 2026 May 31, 2025
Dollar
Change
Percent
Change
Selling and administrative expenses $ 175,925 $ 142,690 $ 33,235 23.3 %
% of Revenues 27.7 % 23.4 %
The increase in selling and administrative costs during the thirteen weeks ended May 30, 2026 compared to the prior year comparable period was due primarily to $20.7 million of Transaction-related Costs. The increase was further driven by higher payroll and selling-related expenses, healthcare claims expenses and continued investments to accelerate growth and support our digital transformation. Selling and administrative expenses in the current period were also impacted by
increased costs associated with our Key Initiative, which totaled $5.2 million during the current year period compared to $1.0 million in the prior year comparable period.
Depreciation and amortization
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Depreciation and amortization $ 35,771 $ 34,722 $ 1,049 3.0 %
% of Revenues 5.6 % 5.7 %
Depreciation and amortization expense increased by 3.0% during the thirteen weeks ended May 30, 2026 compared to the prior year comparable period, due primarily to continued investment in operating facilities and technology to improve our efficiency and support our continued future growth.
Operating income
For the thirteen weeks ended May 30, 2026 and May 31, 2025, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and margin:
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Uniform & Facility Service Solutions $ 19,665 $ 43,243 $ (23,578) (54.5) %
First Aid & Safety Solutions (1,548) 525 (2,073) (394.9) %
Other 4,913 4,409 504 11.4 %
Operating income $ 23,030 $ 48,177 $ (25,147) (52.2) %
Operating income margin 3.6 % 7.9 %
Other income, net
(In thousands, except percentages) May 30, 2026 May 31, 2025
Dollar
Change
Percent
Change
Interest income, net $ (1,779) $ (2,514) $ 735 (29.2) %
Other expense (income), net 365 (2,704) 3,069 (113.5) %
Total other income, net $ (1,414) $ (5,218) $ 3,804 (72.9) %
Other income, net, for the thirteen weeks ended May 30, 2026 decreased compared to the prior year comparable period, primarily due to $2.8 million in proceeds from the sale of a property in the prior year period. In addition, lower cash reserves and interest rates impacted interest income, net, and contributed to the decline in other income, net.
Provision for income taxes
(In thousands, except percentages) May 30, 2026 May 31, 2025
Dollar
Change
Percent
Change
Provision for income taxes $ 4,528 $ 13,715 $ (9,187) (67.0) %
Effective income tax rate 18.5 % 25.7 %
The decrease in the effective tax rate for the thirteen weeks ended May 30, 2026 as compared to the corresponding period in the prior year was primarily due to provision-to-return adjustments associated with income tax credits recognized upon finalization of the prior-year U.S. federal income tax return. These adjustments reflect refinement of estimates used in the prior year tax provision and resulted in a benefit of approximately $3.1 million.
Thirty-nine weeks ended May 30, 2026 compared with Thirty-nine weeks ended May 31, 2025
Revenues
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Uniform & Facility Service Solutions $ 1,710,447 $ 1,658,490 $ 51,957 3.1 %
First Aid & Safety Solutions 91,846 83,463 8,383 10.0 %
Other 75,932 75,952 (20) - %
Total consolidated revenues $ 1,878,225 $ 1,817,905 $ 60,320 3.3 %
The increase in consolidated revenues of 3.3% during the thirty-nine weeks ended May 30, 2026 compared to the prior year comparable period was due primarily to the growth in our Uniform & Facility Service Solutions segment of 3.1%. The increase in revenues in our Uniform & Facility Service Solutions segment was primarily due to organic growth of 3.0%. The Uniform & Facility Service Solutions organic growth was driven by solid new account sales and improved customer retention. The effect of the Canadian dollar exchange rate resulted in changes in our revenues of 0.1%.
First Aid & Safety Solutions revenues in the thirty-nine weeks ended May 30, 2026 increased 10.0% compared to the prior year comparable due primarily to double-digit growth in our van business.
In the thirty-nine weeks ended May 30, 2026, Other segment revenues were relatively flat compared to the prior year comparable period. Favorable foreign currency exchange rates contributed positively to revenue; however, these benefits were largely offset by the wind-down of a large refurbishment project and a lower number of reactor outages due to the cyclical nature of the nuclear industry. Results for the Other segment are often influenced by seasonality, the timing and duration of customer outages, and project-based activities.
Cost of revenues
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Cost of revenues $ 1,196,391 $ 1,160,388 $ 36,003 3.1 %
% of Revenues 63.7 % 63.8 %
The increase in consolidated cost of revenues of 3.1% during the thirty-nine weeks ended May 30, 2026 compared to the prior year comparable period was primarily attributable to investments in service staffing to drive continued improvement in our customer retention and higher healthcare claims expenses. These increases were partially offset by lower merchandise costs as a percentage of revenues compared to the prior year comparable period.
Selling and administrative expenses
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Selling and administrative expenses $ 481,144 $ 418,119 $ 63,025 15.1 %
% of Revenues 25.6 % 23.0 %
The increase in selling and administrative costs of 15.1% during the thirty-nine weeks ended May 30, 2026 compared to the prior year comparable period was due primarily to approximately $20.7 million of Transaction-related Costs and $2.0 million of shareholder engagement and proxy-related costs incurred in connection with our 2026 Annual Meeting of Shareholders. The increase was further driven by higher payroll and selling-related expenses, healthcare claims expenses and investments to accelerate growth and support our digital transformation. Selling and administrative expenses in the current year were also impacted by increased costs associated with our Key Initiative, which totaled $10.5 million during the current year period compared to $5.4 million in the prior year comparable period.
Depreciation and amortization
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Depreciation and amortization $ 106,338 $ 104,476 $ 1,862 1.8 %
% of Revenues 5.7 % 5.7 %
Depreciation and amortization expense remained relatively consistent during the thirty-nine weeks ended May 30, 2026 compared to the prior year comparable period.
Operating income
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Uniform & Facility Service Solutions $ 86,377 $ 121,935 $ (35,558) (29.2) %
First Aid & Safety Solutions (3,056) 380 (3,436) (904.2) %
Other 11,031 12,607 (1,576) (12.5) %
Operating income $ 94,352 $ 134,922 $ (40,570) (30.1) %
Operating income margin 5.0 % 7.4 %
Other income, net
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Interest income, net $ (5,284) $ (7,422) $ 2,138 (28.8) %
Other expense (income), net 874 (1,620) 2,494 (154.0) %
Total other income, net $ (4,410) $ (9,042) $ 4,632 (51.2) %
Other income, net during the thirty-nine weeks ended May 30, 2026 decreased as compared to the prior year comparable period, primarily due to $2.8 million in proceeds from the sale of a property during the prior year comparable period. Also, lower cash reserves and lower interest rates, which reduced interest income, contributed to the reduced other income, net.
Provision for income taxes
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Provision for income taxes $ 23,999 $ 36,720 $ (12,721) (34.6) %
Effective income tax rate 24.3 % 25.5 %
The decrease in the effective tax rate for the thirty-nine weeks ended May 30, 2026 compared to the corresponding period in the prior year was primarily due to provision-to-return adjustments associated with income tax credits recognized upon finalization of the prior-year U.S. federal income tax return. These adjustments reflect refinement of estimates used in the prior year tax provision and resulted in a benefit of approximately $3.1 million.
Liquidity and Capital Resources
General
Cash and cash equivalents, and short-term investments totaled $168.9 million as of May 30, 2026, a decrease of $40.3 million from $209.2 million as of August 30, 2025. The decrease in cash and cash equivalents and short-term investments was largely driven by our continued investment in our business with capital expenditures totaling $107.0 million, $32.7 million of share repurchases, $18.8 million of dividend payments and $15.8 million paid for acquisitions. These decreases were partially offset by $139.4 million of cash provided from operating activities during the thirty-nine weeks ended May 30, 2026.
On April 8, 2025, our Board of Directors authorized a new share repurchase program to repurchase up to $100.0 million of our outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved in 2023.
Pursuant to the share repurchase program, we repurchased 194,100 shares of our Common Stock for an aggregate of approximately $31.7 million during the thirty-nine weeks ended May 30, 2026. As of May 30, 2026, we had $8.9 million remaining to repurchase shares under the share repurchase program.
We believe, although there can be no assurance, that our current cash and cash equivalents, our cash generated from future operations and amounts available under our Credit Agreement (as defined below) will be sufficient to meet our current anticipated working capital and capital expenditure requirements for at least the next 12 months and will enable us to manage the impacts of inflation and address related liquidity needs.
Cash flows provided by operating activities have historically been the primary source of our liquidity. We generally use these cash flows to fund most, if not all, of our operations, capital expenditure and acquisition activities as well as dividends on our Common Stock and stock repurchases. We may also use cash flows provided by operating activities, as well as proceeds from long-term debt, to fund growth and acquisition opportunities, as well as other cash requirements.
Sources and uses of cash flows for the thirty-nine weeks ended May 30, 2026 and May 31, 2025, respectively, are summarized as follows:
(In thousands, except percentages) May 30, 2026 May 31, 2025 Dollar
Change 		Percent
Change
Net cash provided by operating activities $ 139,350 $ 196,481 $ (57,131) (29.1) %
Net cash used in investing activities (122,045) (98,460) (23,585) 24.0 %
Net cash used in financing activities (57,921) (48,348) (9,573) 19.8 %
Effect of exchange rate changes 340 666 (326) (48.9) %
Net (decrease) increase in cash and cash equivalents $ (40,276) $ 50,339 $ (90,615) (180.0) %
Net Cash Provided by Operating Activities
The net cash provided by operating activities during the thirty-nine weeks ended May 30, 2026 decreased compared to the prior year comparable period due primarily to unfavorable changes in rental merchandise in service of $19.7 million, inventories of $11.0 million, and lower profitability.
The unfavorable impact from rental merchandise in service was driven primarily by the installation of garments for several large customers during the thirty-nine weeks ended May 30, 2026. The increase in inventories was driven primarily by the timing of shipments.
In addition, operating cash flow was negatively impacted by a $7.0 million increase in accounts receivable comparable to the prior year period. The increase in accounts receivable was due primarily to higher revenue volumes.
These unfavorable impacts were partially offset by a $10.8 million increase in accounts payable and a $4.0 million increase in accrued liabilities, both due primarily to the timing of cash payments.
Net Cash Used in Investing Activities
The net cash used in investing activities during the thirty-nine weeks ended May 30, 2026 increased as compared to the prior year comparable period due primarily to lower net investment in certificates of deposit of $13.5 million and an increase in cash paid for acquisitions of $10.4 million, which included the settlement of $0.5 million in acquisition-related holdbacks related to recent acquisitions.
Net Cash Used in Financing Activities
The net cash used in financing activities during the thirty-nine weeks ended May 30, 2026 increased as compared to the prior year comparable period due primarily to a $7.1 million increase in the repurchase of Common Stock and $1.7 million in acquisition-related holdbacks settled more than three months after the acquisition date.
Long-term Debt and Borrowing Capacity
See Note 11, "Long-Term Debt" to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for more information on long-term debt and borrowing capacity.
Derivative Instruments and Hedging Activities
See Item 3. "Quantitative and Qualitative Disclosures About Market Risk" in this Quarterly Report on Form 10-Q for information regarding our derivative instruments and hedging activities.
Environmental and Legal Contingencies
We are involved with environmental investigation, monitoring and remediation activities at certain sites. In addition, from time to time, we are also subject to legal and regulatory proceedings and claims arising from the conduct of our business operations, including but not limited to, personal injury, customer contract, employment claims and environmental and tax matters as described. We maintain insurance coverage providing indemnification against many of such claims, and we do not expect, although there can be no assurance, that we will sustain any material loss as a result thereof. Refer to Note 9, "Commitments and Contingencies," to the Consolidated Financial Statements, as well as Part II, Item 1A. "Risk Factors" below and in our Annual Report on Form 10-K for the year ended August 30, 2025, for further discussion.
In addition, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of over $67.7 million for a total assessment of over $84.7 million. We challenged the validity of the tax assessment through an appeal process. In the first quarter of fiscal 2025, the Federal Tax Court in Mexico made a determination partially in our favor. Following the Federal Tax Court's determination, we filed a constitutional action before the Federal Administrative Court. In addition, the federal tax authority appealed the determination of the Federal Tax Court. While we are unable to ascertain the ultimate outcome of this matter, based on the information currently available, we believe that a loss with respect to this matter is neither probable nor remote. Given the uncertainty associated with the ultimate resolution of this matter, we are unable to reasonably assess an estimate or range of estimates of any potential losses.
While it is impossible for us to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits and environmental contingencies, we believe that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have been properly accrued in accordance with accounting principles under U.S. GAAP. It is possible, however, that the future financial position and/or results of operations for any particular future period could be materially affected by changes in our assumptions or strategies related to these contingencies or changes out of our control.
Contractual Obligations and Other Commercial Commitments
As of May 30, 2026, there were no material changes to our contractual obligations that were disclosed in our Annual Report on Form 10-K for the year ended August 30, 2025. As of May 30, 2026, we did not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The discussion of our financial condition and results of operations is based upon the Consolidated Financial Statements, which have been prepared in conformity with U.S. GAAP. As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based on the information available. These estimates and assumptions affect the reported amount of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Critical accounting estimates are defined as those that are reflective of significant judgments and uncertainties, the most important and pervasive accounting estimates used and areas most sensitive to material changes from external factors. The critical accounting estimates that we believe affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements presented in this report are described in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the Notes to the Consolidated Financial Statements
that are each included in our Annual Report on Form 10-K for the year ended August 30, 2025. There have been no significant changes in our critical accounting estimates since the year ended August 30, 2025.
Recent Accounting Pronouncements
See Note 1, "Summary of Significant Accounting Policies" to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for more information on recently implemented and issued accounting standards.
Unifirst Corporation published this content on July 08, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 08, 2026 at 17:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]