UniFirst Corporation (NYSE: UNF) released its first-quarter fiscal 2026 earnings results on Wednesday, revealing a mixed financial performance that prompted a decline in its share price as investors evaluated the details. The company's top-line increased year on year, surpassing analyst forecasts, yet profitability indicators reflected pressures arising from planned spending aimed at accelerating growth and enhancing operational capabilities.
For the quarter, UniFirst posted total revenue of $621.318 million, representing a 2.7% increase compared to the same period last fiscal year. This figure exceeded consensus estimates which had projected revenue at $615.253 million. Despite the positive sales momentum, adjusted earnings per share (EPS) came in at $1.97, falling short of Wall Street expectations of $2.06. When considering generally accepted accounting principles (GAAP), diluted EPS declined to $1.89 from $2.31 in the year-earlier quarter.
Net income followed a similar downward trend, registering $34.363 million versus $43.105 million in the prior-year span. The operating margin contracted to 7.3% from 9.2%, signaling the impact of the company's strategic investments. Likewise, the adjusted EBITDA margin decreased to 13.3% compared to 15.5% last year, reflecting increased expenses attributed to UniFirst’s continuing growth and digital transformation projects.
Management Insights
Steven Sintros, UniFirst’s President and CEO, described the quarter’s results as aligning with anticipated performance levels. He emphasized that the short-term decline in profit margins stems from deliberate expenditures focused on accelerating long-term growth and operational efficiency improvements. He stated that these initiatives, while temporarily weighing on profitability, are designed to position UniFirst for enhanced earnings performance over an extended horizon.
Sintros further highlighted that the company’s organic growth, driven by acquiring new customers and improving client retention, demonstrates the effectiveness of UniFirst's service-oriented business model. This model prioritizes dependability, local presence, and enduring relationships — factors that contribute to its competitive differentiation.
Segment Performance Breakdown
Within UniFirst’s Uniform & Facility Service Solutions segment, revenue increased by 2.4%, amounting to $565.892 million during the quarter. It operated with a margin of 7.4% and achieved an adjusted EBITDA margin of 13.6%, underscoring modest growth and operational stability.
The First Aid & Safety Solutions segment experienced a more pronounced revenue growth of 15.3%, reaching $30.244 million. However, this division recorded an operating loss of $0.402 million, with adjusted EBITDA standing at $0.800 million, suggesting ongoing investment and development efforts underway.
Other revenues, which include various smaller business activities, decreased by 2.9% to $25.182 million. This segment maintained an operating income of $3.873 million and adjusted EBITDA of $4.815 million, indicating profitability albeit with reduced top-line contributions compared to the previous period.
Impact of Enterprise Resource Planning Investment
UniFirst disclosed that its results encompassed approximately $2.3 million in costs related to the implementation of a major enterprise resource planning (ERP) “Key Initiative.” This investment on the technology front negatively affected net income by $1.7 million and diluted EPS by 9 cents for the quarter, reflecting short-term financial impacts tied to digital transformation efforts.
Cash Flow, Balance Sheet, and Capital Allocation
The company generated $14.851 million in net cash from operating activities during the quarter, reinforcing operational cash generation capabilities. At quarter-end, UniFirst held cash, cash equivalents, and short-term investments totaling $129.5 million, and reported it carries no outstanding long-term debt, reflecting a strong balance sheet position.
In capital markets activity, UniFirst repurchased $31.7 million worth of its shares, leaving $8.9 million available under the existing authorization. It also declared a quarterly dividend of $0.365 per share, maintaining its commitment to returning capital to shareholders.
Ongoing Review of Acquisition Proposal
This earnings release follows the company’s December confirmation that it has received an unsolicited, non-binding bid from competitor Cintas Corporation (NASDAQ: CTAS) proposing to acquire all UniFirst shares at $275 per share in cash. This marks Cintas’ third attempt to purchase UniFirst.
UniFirst’s board of directors has engaged independent financial and legal advisors and is currently assessing the proposal in alignment with its fiduciary responsibilities. UniFirst has announced that it does not intend to provide further commentary until the evaluation concludes.
Fiscal 2026 Outlook
Looking ahead, UniFirst reaffirmed its guidance for fiscal year 2026. It anticipates consolidated revenue in the range of $2.475 billion to $2.495 billion, aligning closely with the analyst consensus estimate of $2.485 billion. The company projects fully diluted EPS between $6.58 and $6.98, also consistent with the $6.78 consensus.
This outlook includes forecasted costs of approximately $7.0 million related to the ERP initiative but excludes any potential effects from future share repurchase activity.
Share Price Movement
Following the earnings release, UniFirst's share price experienced a decline of 5.56%, closing at $188.00 on Wednesday. This movement reflects investor reactions to the earnings miss and ongoing strategic expenditures amid the backdrop of a pending acquisition proposal.