UNF 10-K & 10-Q changes, risk factors and insider trading

This Annual Report on Form 10-K and any documents incorporated by reference may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements contained in this Annual Report on Form 10-K 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” 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. Such 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 conflict between Russia and Ukraine and 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 conflict between Russia and Ukraine, 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 Specialty Garmentsnuclear 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 SEC, New York Stock Exchange (the “NYSE”) and accounting or other rules, including, without limitation, recent rules adopted by the SEC regarding climate-related and cybersecurity-related disclosures, 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 weaknessesweakness in internal control over financial reporting disclosed in this Annual Report on Form 10-K in an appropriate and timely matter or at all, and the other factors described under “Part I, Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K. We undertake no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they are made.

The rental and sales industry with respect tofor uniforms, workwear and facility services sector is highly competitive. The main sources of differentiation in the industry are quality of products,products qualityand of serviceservices, and price. Our leadingprincipal competitors include Cintas Corporation, Alsco and Vestis Corporation. The remainder of the market, however, is divided among hundreds of smaller businesses, many of which serve one or a limited number of markets or geographic service areas. In addition to our traditional rental competitors, we compete with businesses that focus on selling uniformsuniforms, facilities service products and other related items, including single-use disposable garments for use in the nuclear industry. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which could have a material effect on our results of operations and financial condition. We also compete with industry competitors for acquisitions, which has the effect of increasing the price for acquisitions and reducing the number of acquisition candidates available to us. If we pay higher prices for businesses we acquire, our returns on investment and profitability may be reduced.

We supply uniform, workwear and facility services to many industries that have been in the past, and may be in the future, subject to adverse economic and business conditions resulting in shifting employment levels, workforce reductions, changes in worker productivity, uncertainty regarding the impacts of rehiring and shifts to offshore manufacturing. In addition, geopolitical conflicts, calamities or other events, including the conflict between RussianRussia and Ukraine, disruption in the Middle East and public health events, may disrupt domestic and global business and financial markets and conditions.

Increases in inflation rates,rates could have a material adverse impact on our revenues and operating margins. In addition, if our costs increase and we are not able to pass along these price increases to our customers, our results of operations would be adversely affected, and the adverse impact may be material.

Elevated inflation rates have at times had an adverse impact on our operating margins.margins, including increased energy costs for our vehicles and plants and increased wages in the labor markets in which we compete. Any period of sustained inflation could pressure our margins in future periods. In addition, the U.S. Federal Reserve rapidly increased its benchmark interest rate from 2021 through 2023 in response to sustained elevated inflation and has only modestly reduced that rate thus far in 2024. Adverse economic conditions resulting from inflationary pressures, U.S. Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issuesissues, U.S. and foreign tariffs or otherwiseother 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.

Continued high interest rates or increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks, which may result in an economic recession. In an inflationary environment, we may be unable to raise the prices of our products and services at or above the rate at which our costs increase, which may reduce our operating margins and have a material adverse effect on our financial results. We also may experience lower than expected sales and potential adverse impacts on our competitive position if there is a decrease in customer spending or a negative reaction to our pricing. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.

Our failure to successfully implement successfully our acquisition strategy and to grow our business could adversely affect our ability to increase our revenues and could negatively impact our profitability.

As part of our growth strategy, we intend to continue to actively pursue additional acquisition opportunities. However, as discussed above, we compete with others within our industry for suitable acquisition candidates. This competition may increase the price for acquisitions and reduce the number of acquisition candidates available to us. As a result, our ability to acquire businesses in the future, and to acquire such businesses on favorable terms, may be limited. Even if we are able to acquire businesses on favorable terms, managing growth through acquisition is a difficult process that includes integration and training of personnel, combining plant and operating procedures and additional matters related to the integration of acquired businesses within our existing organization. Unanticipated issues related to integration may result in additional expense or in disruption to our operations, either of which could negatively impact our ability to achieve anticipated benefits. While we believe we will be able to fully integrate acquired businesses, such as Clean Uniform (“Clean”), we can give no assurance that we will be successful in this regard.

Growth of our business will likely require us to increase our workforce, the scope of our operating and financial systems and the geographic area of our operations. We believe this growth will increase our operating complexity and the level of responsibility for both existing and new management personnel. Managing and sustaining our growth and expansion may require substantial enhancements to our operational and financial systems and controls, as well as additional administrative, operational and financial resources. There can be no assurance that we will be able to manage our expanding operations successfully, that any acquired business, including Clean,business will perform as we expect, or that we will be able to maintain or accelerate our growth, and any failure to do so could have an adverse effect on our results of operations and financial condition.

As of August 31,30, 2024,2025, we employed approximately 16,000 persons and less than 1% of our U.S. employees are represented by a union pursuant to a collective bargaining agreement. Competitors within our industry have been the target of corporate unionization campaigns by multiple labor unions. While our management believes that our employee relations are good, we cannot assure you that we will not become the target of campaigns similar to those faced by our competitors. The potential for unionization could increase if the U.S. Congress passes federal “card check” legislation in the future. If we do encounter pressure from any labor unions in connection with our acquisitions of other businesses, any resulting labor unrest could disrupt our business by impairing our ability to produce and deliver our products and diverting the attention of our management. In addition, significant union representation would require us to negotiate wages, salaries, benefits and other terms with many of our employees collectively and could adversely affect our results of operations by increasing our labor costs or otherwise restricting our ability to maximize the efficiency of our operations.

We may incur unexpected cost increases due to rising healthcare costs, the Affordable Care Actcosts and other labor costs.

In general, the cost of healthcare that we provide to our employees has grown over the last few years at a rate in excess of our revenue growth and, as a result, has negatively impacted our operating results. Moreover, it is generally expected that healthcare costs in the U.S. will increase over the coming years. In addition, we may incur significant healthcare costs if a significant number of our employees experience injury or illness, including in connection with public health emergencies. As a result of these factors, and depending on the effect of any modifications we have made and may make in the future to our employee healthcare plans and enrollment levels in those plans, including as a result of the Affordable Care Actplans or any future legislation or regulation affecting the healthcare industry, we expect that our future operating results will continue to be further adversely impacted by increasing healthcare costs.

Fluctuations in theour nuclear portionbusiness ofin our Specialty GarmentsOther segment, including the loss of key customers or a significant reduction in our business derived from key customers, could disproportionately impact our revenue and net income and create volatility in the price of our Common Stock.

Our nuclear decontamination business is affected by shut-downs, outages and clean-ups of the nuclear facilities we service. We are not able to control or predict with certainty when such shut-downs, outages and clean-ups will occur. In addition, our nuclear decontamination business tends to generate more revenue in the first and third fiscal quarters, which is when nuclear power plants typically schedule their plant outagesrefueling and refuelingsmaintenance outages and thereby increase nuclear garment utilization. Moreover, a significant percentage of this segment’s revenues are generated from a limited number of nuclear power plant operator customers. This concentration subjects this business to significant risks and may result in greater volatility in this segment’s results of operations. Fluctuations in our nuclear decontamination business, including the loss of key customers of our SpecialtyOther Garments business,segment, or a significant reduction in our business derived from such key customers, could materially adversely affect our results of operations and financial condition.

In fiscal 2022, we initiated a multiyear ERP project with a strong focus on supply chain and procurement automation and technology. We believe that this initiative will become the core of the UniFirst technology footprint and will integrate and complement the capabilities of our customer relationship management (“CRM”) system. We expect the ERP system and the new supply chain and procurement capabilities that it will provide to enable lower operating costs and customer churn through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes. We believe these capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges we experienced during the COVID-19 pandemic.challenges. The failure to properly, efficiently and economically design processes, implement and operate an ERP system on a timely basis or at all could materially disrupt our operations, including our supply chain, adversely impact the servicing of our customers and have a material adverse effect on our financial results.

Our information technology systems serve an important role in the efficient operation of our business. The failure of these information technology systems to perform as we anticipate could disrupt our business and negatively impact our results of operations. In addition, our information technology systems could be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, ransomware, computer viruses or cyber-based attacks. Further, state-sponsored cyber-attacks could expand, including in connection with geopolitical conflicts such as part of the conflict between Russia and Ukraine, which could adversely affect our or our suppliers’ ability to maintain and enhance key cyber securitycybersecurity and data protection measures. While we have contingency plans in place to prevent or mitigate the impact of these events, if such events were to occur and our disaster recovery plans do not effectively address the issues on a timely basis, we could suffer interruptions in our ability to manage our operations and service our customers, and we may be required to make a significant investment to fix or replace our information technology systems, each of which may have a material adverse effect on our business and financial results. In addition, if customer, employee or our proprietary information is compromised by a security breach or cyber-attack or other event, it could have a material adverse effect on our business, including as a result of remedial actions that we may be required to take, potential liabilities and penalties, loss of business and reputational damage. Our failure to properly respond to any such event could also result in exposure to liability. We are subject to numerous laws and regulations in the U.S. and internationally designed to protect the information of clients, customers, employees, and other third parties that we collect and maintain. These laws and regulations are increasing in complexity and number. If we fail to comply with such laws or regulations, we may be subject to litigation, monetary damages, enforcement actions or fines in one or more jurisdictions, which could have an adverse effect on our business.

We manufactured approximately 65%62% of all garments we placed in service during fiscal 2024.2025. These were primarily work pants and shirts manufactured at two of our plants located in San Luis Potosi, Mexico, at one plant located in Managua, Nicaragua, and by subcontracted manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs. The balance of the garments used in our programs are purchased from a variety of industry suppliers. While we currently acquire the raw materials with which we produce our garments from a limited number of suppliers, we believe that such materials are generally readily available from other sources. Furthermore, overseas garment contractors could be subject to supply chain disruptions. We also source or import various facility services products, such as towels, microfiber, conventional mops, aprons, disposable gloves, etc., and our ability to obtain these supplies could potentially be impacted by supply chain disruptions. To date, we have experienced no significant difficulty in obtaining any of our raw materials or supplies, although at certain times, we have sourced raw materials or supplies from alternative sources or experienced cost increases for such raw materials and supplies. However, if we were to experience difficulty obtaining any of our raw materials from such suppliers and were unable to obtain new materials or supplies from other industry suppliers, or if the cost of obtaining such materials or supplies were to increase, including in any case as a result of inflation, high or rising interest rates, tariffs or other impositions on imported goods, geopolitical issues such as the conflict between Russia and Ukraine or disruption in the Middle East, or other supply chain disruptions, it could adversely affect our results of operations.

Unexpected events could disrupt our operationsoperations, including our reliance on key facilities, and have a material adverse impact on our operating results.

Unexpected events, including, without limitation, fires at facilities, natural disasters as a result of climate change or otherwise, such as hurricanes, earthquakes, floods and tornadoes, public health emergencies, terrorist activities, geopolitical issues including war or terroristother activities,conflicts includingsuch theas conflicts in the Middle East or between Russia and Ukraine, unplanned utility outages, pandemics such as the COVID-19 pandemic, supply disruptions, failure of equipment or information systems, temporary or long-term disruption of our computer systems, or changes in laws and/or regulations impacting our business, could have a material adverse impact on our operating results. These events could result in disruption of customer service, physical damage to one or more key operating facilities, the temporary closure of one or more key operating facilities or the temporary disruption of information systems. In addition, the destruction or permanent or temporary loss of, or other disruptions with respect to, key facilities such as our distribution facility in Owensboro, Kentucky or our manufacturing facilities in Mexico,Mexico or Nicaragua as a result of geopolitical issues or otherwise, or our manufacturing facility in Cave City, Arkansas, would have a material adverse effect on our operations and financial results.

We identified material weaknessesweakness in our internal control over financial reporting related to certain information technology general controls (“ITGCs”) supporting the manage change and manage access processes. If not remediated appropriately and timely, such material weaknessesweakness could adversely impact our ability to record, process and report financial information accurately, result in loss of investor confidence and have a material adverse impact on our business, results of operations, financial condition and stock price.

As a public company, we are required to establish and periodically evaluate and assess procedures with respect to our internal control over financial reporting. In connection with our year-end assessment as part of this Annual Report, we determined that, as of August 31,30, 2024,2025, we did not maintain effective internal control over financial reporting due to material weaknessesweakness we identified in the design and operation of certain ITGCs relevant to our key accounting, reporting, and proprietary information technology (“IT”) systems, as more fully described in Part II, Item 9A, “Controls and Procedures” of this Form 10-K. These material weaknessesweakness did not result in any identified misstatements to the financial statements, and there were no changes to previously issued financial results.

While we are in the process of implementing changes to remediate the material weaknessesweakness identified, there can be no assurance that such remedial measures will be successful and we will be able to remediate the material weaknessesweakness in a timely manner. If we are unable to remediate the material weaknessesweakness appropriately and timely, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and have a material adverse effect on our business, results of operations, financial condition and stock price.

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, including as a result of the material weaknessesweakness identified by management and discussed above.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting, including new and revised financial and information technology-related controls that we have been designing, implementing and operating, may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies in our internal control over financial reporting, including the material weaknessesweakness identified by management and discussed above and any additional material weakness which may occur in the future, could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.

In addition to contingencies and claims relating to environmental matters, we are subject from time to time to legal or regulatory proceedings, including, without limitation, with respect to tax matters, and to claims and disputes arising from the conduct of our business operations, including personal injury claims, customer contract matters and employment claims such as claims alleging violations of, and damages under, the Fair Labor Standards Act (the “FLSA”). Refer to Note 11, “Commitments and Contingencies”, of our Consolidated Financial Statements for further discussion. For example, 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 $67.7 million for a total assessment of $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, the we are unable to reasonably assess an estimate or range of estimates of any potential losses. Accordingly, we have not recorded a liability related to this matter.

The rules dealing with U.S. federal, state and local and non-U.S. taxation are regularly under review by persons involved in the legislative process and by the Internal Revenue Service (“IRS”) and, the U.S. Treasury Department and other taxing authorities. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our Common Stock. Any such tax laws, regulations, interpretations, or rulings could have an adverse effect on our financial condition and results of operations. These changes could subject us to additional income taxes and non-income taxes (such as payroll, sales, use, import, value-added, digital tax, net worth, property, and goods and services taxes), which in turn could materially affect our financial position and results of operations. Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our customers’ and our compliance costs, operating and other costs, as well as the costs of our products. In recent years, many such changes have been made, and changes are likely to continue to occur in the future. As we expand the scale of our business activities, any changes in the U.S. and non-U.S. taxation of such activities may increase our effective tax rate and harm our business, financial condition, and results of operations.

In addition, we are also subject to tax audits in the U.S.U.S., Canada, Mexico, and other jurisdictions in which we do business, including, but not limited to, various states, as well as Canadastates and the Canadian provinces of Alberta, British Columbia, Ontario, Saskatchewan, Quebec and New Brunswick, and Mexico.provinces. These audits can be complicated and can require several years to resolve. The final resolution of any such tax audit could result in an increase in our income tax and other tax liabilities. Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures. Any increase in the amount of taxes we owe, including any fines or penalties, as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition. Refer to Note 11, “Commitments and Contingencies”, of our Consolidated Financial Statements for further discussion, including regarding the tax assessment matter in Mexico.

UniFirstWe Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, isare 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 provideprovides restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety trainingtraining, 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.

U.S. GAAP establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in interim financial reports issued to shareholders. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. Our chief operating decision-maker is our Chief Executive Officer. We have six operating segments based on the information reviewed by our Chief Executive Officer: U.S. Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (“MFG”), Specialty Garments Rental and Cleaning (“Specialty Garments”), First Aid and Corporate. The U.S. Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the U.S. and Canadian Rental and Cleaning reporting segment. Refer to Note 15, “Segment Reporting”, of our Consolidated Financial Statements for our disclosure of segment information.

TheWe Specialtyrenamed Garmentsour operatingFirst Aid reporting segment purchases,as rents,the cleans,First deliversAid & Safety Solutions reporting segment to better reflect the scope of services and sells,products specialty garments and non-garment items primarily for nuclear and cleanroom applications and provides cleanroom cleaning services at limited customer locations.offered. The First Aid operating& Safety Solutions reporting segment sells first aid cabinet products and services and other safety suppliessupplies, asprovides wellcertain assafety training and maintains wholesale distribution and pill packaging operations for non-prescription medicines.

Approximately 88.1%91.2% of our revenues in fiscal 20242025 were derived from our U.S.Uniform and& CanadianFacility RentalService andSolutions Cleaning and Corporate segments.segment. A key driver of this business is the number of workers employed by our customers. Our revenues are directly impacted by fluctuations in these employment levels. First Aid & Safety Solutions represented approximately 4.7% of our total revenues in fiscal 2025. Revenues from Specialtyour Garments,Other segment, which accounted for approximately 7.5%4.1% of our fiscal 20242025 revenues, increaseincreases during outages and refueling by nuclear power plants, as garment usage increases at these times. First Aid represented approximately 4.4% of our total revenues in fiscal 2024.

Our inventories are stated at the lower of cost or net realizable value, net of any reserve for excess and obsolete inventory. Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead. Judgments and estimates are used in determining the likelihood that new goods on hand can be sold to our customers or used in our rental operations. We monitor canceled or terminated contracts (and reductions in customer orders) as part of its ongoing assessment of realizability. If such cancellations or reductions indicate that inventory held for those contracts may not be sold or used, additional reserves or write-downs are recorded. Historical inventory usage and current revenue trends are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than thethose amountprojected weby projected,management, additional inventory write-downs may be required. We use the first-in, first-out (“FIFO”) method to value our inventories, which primarily consist of finished goods. Rental merchandise in service is being amortized on a straight-line basis over the estimated service lives of the merchandise, which range from six to thirty-six months. In establishing estimated lives for merchandise in service, our management considers historical experience and the intended use of the merchandise. Material differences may result in the amount and timing of operating profit for any period if we make significant changes to our estimates.

In general, we believe that our results of operations are not dependent on moderate 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 ofin operational productivity. However, the inflationary environment in recent years had a negative impact on our margins, including as a result of increased energy costs for our vehicles and our plants, asand well as increasingincreased 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. In addition, the U.S. Federal Reserve rapidly increased its benchmark interest rate from 2021 through 2023 in response to sustained elevated inflation and has only modestly reduced that rate thus far 2024. Adverse economic conditions resulting from inflationary pressures, U.S. Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issuesissues, U.S. and foreign tariffs or otherwiseother 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 this Annual Report on Form 10-K for an additional discussion of risks and potential risks of inflationinflation, elevated interest rates and/or increases in interest rates, geopolitical issues, U.S. and foreign tariffs or other impositions on imported goods and adverse economic conditions on our business, financial condition and results of operations.

The following table presents certain selected financial data, including the percentage of revenues represented by each item, for fiscal years 20242025 and 2023.2024. For discussion of fiscal 20232024 results compared to fiscal 20222023 results, see the Part II, Item 7 “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 August 26,31, 2023,2024, filed with the SEC on OctoberNovember 26,14, 2023.2024.

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 CoreUniform Laundry& Operations,Facility SpecialtyService GarmentsSolutions 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.

A portion of our sales is derived from international markets, including Canada. Revenues denominated in currencies other than the U.S. dollar represented approximately 6.9%7.0% and 7.0%6.9% of total consolidated revenues for fiscal 20242025 and 2023,2024, respectively. The operating results of our international subsidiaries are translated into U.S. dollars and such results are affected by movements in foreign currencies relative to the U.S. dollar. In addition, a weaker Canadian dollar increases the costs to our Canadian operations of merchandise and other operational inputs that are sourced from outside Canada, which has the effect of reducing the operating margins of our Canadian business if we are unable to recover these additional costs through price adjustments with our Canadian customers. In fiscal 20242025 and 2023,2024, foreign currency fluctuations impacted our consolidated revenues negatively by 0.1% and a nominal percentage and 0.6%,percentage, respectively. These impacts were primarily driven by fluctuations in the Canadian dollar. Our operating results in future years could be negatively impacted by any further devaluation, as compared to the U.S. dollar, of the Canadian dollar or any of the currencies of the other countries in which we operate.

In fiscal 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party software application we licensed. This new solution is intended to improveimproves functionality, capability and information flow as well as increaseincreases automation for our operations in servicing our customers. We began deployment of our new CRM project during the second half of fiscal 2021 and concluded the deployment to our U.S. locations in the first quarter of fiscal 2024. We are depreciating this system over a 10-year life and recognized $3.6$4.1 million and $3.3$3.6 million of amortization expense in fiscal 20242025 and fiscal 2023,2024, respectively.

In fiscal 2022, we initiated a multiyear ERP project that we plan to continue through 2027, with early phases focused on master data management and finance capabilities followed by subsequent phases with a strong focus on supply chainchain, and procurementprocurement, automation and technology. We believe that this initiative will become the core of the UniFirstour systems technology footprint and will integrate and complement the capabilities of the CRM system. We expect the ERP system and the new supply chain and procurement capabilities that it will provide to enable lower operating costs and reducedreduce 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. TheseAs capabilitiesof willfiscal allow2025, uswe capitalized $45.3 million related to moreour effectivelyERP respondproject. We refer to andour mitigate the types of supply chain challenges that we experienced during the COVID-19 pandemicCRM and inflationaryERP environmentprojects oftogether 2022as andour 2023.“Key Initiatives”.

The following section of this Annual Report on Form 10-K generally discusses fiscal 2025 and fiscal 2024 items and year-to-year comparisons between fiscal 2025 and fiscal 2024. Discussions of fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023. Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended August 26,31, 2023,2024, which was filed with the SEC on OctoberNovember 26,14, 2023.2024.

First Aid & Safety Solutions revenues for fiscal 20242025 increased 12.1%7.8% compared to the prior fiscal year. This increase was driven by our continued investment in expanding the first aid van business, which accounted for growth of 10.1%,10.1%. andExcluding growththe fromestimated fiscalimpact 2024'sof the extra week of 2.2%.operations in fiscal 2024, First Aid & Safety Solutions revenues increased 10.0% compared to fiscal 2024.

The increasedecrease in consolidated cost of revenues of 6.7%2.4% during fiscal 20242025 compared to the prior fiscal year was due primarily to the impact of the revenue growthchange mentioneddiscussed above. WhileAlso overallcontributing costto the decrease were the effects of revenuesthe increased,one costfewer week of revenuesoperations decreasedin fiscal 2025 compared to fiscal 2024, and lower merchandise and production payroll costs as a percentage of revenue due primarily to lower merchandise costs, payroll and other operating input costs.revenues.

The increase in selling and administrative costs of 5.2%8.1% during fiscal 20242025 compared to the prior fiscal year was due primarily to continued investments we have made in our corporatesales organization capabilities to support our digital transformation over the last yearyear. andThe incrementalincrease costsalso fromreflects theapproximately Clean$12.8 acquisitionmillion asin higher healthcare claims compared to the prior year.fiscal Inyear addition,and thereapproximately was$5.7 million of advisory and legal expenses related to a strategic matter and an extraemployee weekmatter, respectively. We expensed $6.8 million and $11.8 million of spendnon-recurring costs related to our Key Initiatives, primarily relating to our ERP project, in thefiscal current2025 year.and fiscal 2024, respectively.

Depreciation and amortization expense increased by 16.7% in fiscal 20242025 asremained relatively consistent compared to the prior fiscal yearyear. dueDepreciation increased approximately $2.0 million, primarily toreflecting continued investment in our systems andsystems, technology capabilitiescapabilities, and infrastructure to support our future growth. AlsoAmortization contributingdecreased approximately $3.0 million, due primarily to thislower increaseamortization wasrelated higherto the acquisition of Clean Uniform in fiscal 2023. On a combined basis, depreciation and amortization ofdecreased $8.0$1.0 millionmillion, relatedor 0.8%, year over year. The comparison to the Cleanprior acquisitionyear thatis occurredalso earlyaffected inby the thirdadditional quarterweek of fiscaloperations 2023. Total depreciation and amortization for Clean was $14.7 million and $6.7 millionincluded in fiscal 2024 and 2023, respectively, of2024, which $9.8modestly million and $4.6 million were intangibles amortization, respectively. In addition, there was an extra week of depreciation and amortization inelevated the currentprior-year year.expense.

The completion of the Mergers (as defined in Note 1, Summary of Significant Accounting Policies) is subject to a number of conditions, including, among others, (i) the approval by UniFirst shareholders of the UniFirst merger proposalproposal, which such shareholder approval was obtained at a virtual special meeting of the shareholders of UniFirst on June 11, 2026, and (ii) certain regulatory approvals, including the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which make the completion and timing of the Mergers uncertain. Also,On eitherJune 11, 2026, each of Cintas orand UniFirst mayreceived terminatea request for additional information and documentary material (the “Second Request”) from the Federal Trade Commission (the “FTC”) in connection with the FTC’s review of the transactions contemplated by the Merger AgreementAgreement. (as defined in Note 1, SummaryIssuance of Significantthe AccountingSecond Policies)Request ifextends the Mergerswaiting have not been consummated on or before 5:00 p.m. (New York, New York, Untied States time) on January 10, 2027 (or, in certain circumstances, as such date may be extended to May 10, 2027 or September 10, 2027 pursuant to the Merger Agreement), except that this right to terminate the Merger Agreement is not available to any party that has materially breached any of its obligationsperiod under the MergerHSR AgreementAct ifuntil such30 breachdays hasafter both Cintas and the Company substantially comply with the Second Request, unless the waiting period is extended voluntarily by Cintas and the Company or terminated earlier by the FTC. Cintas and UniFirst have been theworking principalcooperatively cause of or principally resulted inwith the failureFTC ofand thewill closingcontinue to havedo occurred on or before such date.so.

•the market price of our stock could decline to the extent that the current market price reflects a market assumption that the transaction will be completed;

•we could owe Cintas a termination fee of $213,300,000 if the Merger Agreement were terminated under specified circumstances; 1.3.

•if the Merger Agreement is terminated and the UniFirst Board of Directors seeks another business combination, UniFirst shareholders cannot be certain that UniFirst will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms in the Merger Agreement; 1.4.

•time and resources committed by our management to matters relating to the Mergers could otherwise have been devoted to pursuing other beneficial opportunities; 1.5.

•we may experience negative reactions from the financial markets or from customers, suppliers or employees; 1.6.

•we will be required to pay our costs relating to the Mergers, such as legal, accounting, financial advisory and printing fees, whether or not the Mergers are completed; and 1.7.

•litigation related to any failure to complete the Mergers or related to any enforcement proceeding commenced against us to perform our obligations pursuant to the Merger Agreement.

These variations could result from changes in the business, operations or prospects of Cintas or UniFirst prior to or after the completion of the Mergers, regulatory considerations, general market and economic conditions and other factors both within and beyond the control of Cintas or UniFirst. At the time of the special meeting, UniFirst shareholders willdo not know with certainty the value of the shares of Cintas common stock that they will receive upon completion of the Mergers. Neither Cintas nor UniFirst is permitted to terminate the Merger Agreement solely because of changes in the market price of either company’s common stock.

For more information, refer to our Current ReportReports on Form 8-K filed with the SEC on March 11, 2026 and June 12, 2026 and Note 1, Summary of Significant Accounting Policies.

In general, we believe that our results of operations are not dependent on moderatereasonable 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.

In fiscal 2022, we initiated a multiyearmulti-year ERP project thatfocused weon planmodernizing toour continueenterprise throughsystems. 2027, with earlyEarly phases focused on master data management and finance capabilitiescapabilities, followed bywith subsequent phases with a strong focusfocused on supply chain and procurement automation and technology. We believe that 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, andalong thewith newits enhanced supply chain and procurement capabilities that it will providecapabilities, to enable lowerreduce operating costs and contribute to the reduction oflower 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 FebruaryMay 28,30, 2026, we capitalized $57.8$62.3 million related to our ERP project. We refer to our ERP project as our “Key Initiative”.

Thirteen weeks ended FebruaryMay 28,30, 2026 compared with thirteen weeks ended MarchMay 1,31, 2025

The increase in consolidated revenues of 3.4%3.9% during the thirteen weeks ended FebruaryMay 28,30, 20262026, compared to the prior year comparable period was due primarily to growth in our Uniform & Facility Service Solutions of 3.2%.3.9%. The increase in revenues in our Uniform & Facility Service Solutions was primarily due to organic growth of 2.8%.3.6%, The Uniform & Facility Service Solutions organic growth ratewhich was primarilydriven the result ofby solid new account sales and benefited from improved customer retention. The effect of the Canadian dollar exchange rate resulted in changes in our revenues of 0.3%.0.2%.

First Aid & Safety Service Solutions revenues in the thirteen weeks ended FebruaryMay 28,30, 2026 increased 12.2%3.4% compared to the prior year comparable period duewas primarily todriven 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 FebruaryMay 28,30, 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 impactedpartially offset by the continued wind-down of a large refurbishment project,project. asResults well as a lower number of reactor outages due tofor the cyclical nature of the nuclear business. Other segment results are often affectedinfluenced by seasonality andseasonality, the timing and lengthduration of its customers’customer power reactor outagesoutages, as well as itsand project-based activities.

The increase in selling and administrative costs during the thirteen weeks ended FebruaryMay 28,30, 2026 compared to the prior year comparable period was due primarily to planned$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. Our sellingSelling and administrative expenses in the current period were furtheralso impacted by (1) approximately $2.0 million inincreased costs related to shareholder engagement and proxy-related matters in connectionassociated with our 2026 annual meeting of shareholders and the proposed merger with Cintas, and (2) legal expenses related to an employee matter of $2.5 million (referred to collectively as the “Strategic and Employee Matters”). In addition, our costs incurred related to our Key InitiativeInitiative, which totaled $3.0$5.2 million during the current year period compared to $1.9$1.0 million duringin the prior year comparable period.

Depreciation and amortization expense remainedincreased relativelyby consistent3.0% during the thirteen weeks ended FebruaryMay 28,30, 2026 compared to the prior year comparable period.period, due primarily to continued investment in operating facilities and technology to improve our efficiency and support our continued future growth.

For the thirteen weeks ended FebruaryMay 28,30, 2026 and MarchMay 1,31, 2025, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and margin:

Other income, net, for the thirteen weeks ended FebruaryMay 28,30, 2026 decreased compared to the prior year comparable period, primarily reflectingdue to $2.8 million in proceeds from the sale of a property in the prior year period. In addition, lower cash reserves and lower interest rates,rates which reducedimpacted interest income, alongnet, withand highercontributed bankto fees.the decline in other income, net.

The increasedecrease in the effective tax rate for the thirteen weeks ended FebruaryMay 28,30, 2026 as compared to the corresponding period in the prior year was primarily due primarily to theprovision-to-return timing and amount of excess tax benefits and deficienciesadjustments associated with employeeincome share-basedtax payments.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.

Twenty-sixThirty-nine weeks ended FebruaryMay 28,30, 2026 compared with twenty-sixThirty-nine weeks ended MarchMay 1,31, 2025

The increase in consolidated revenues of 3.0%3.3% during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 compared to the prior year comparable period was due primarily to the growth in our Uniform & Facility Service Solutions segment of 2.8%.3.1%. The increase in revenues in our Uniform & Facility Service Solutions segment was primarily due to organic growth of 2.6%.3.0%. The Uniform & Facility Service Solutions organic growth rate was primarilydriven the result ofby solid new account sales and benefited from 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 twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 increased 13.7%10.0% compared to the prior year comparable due primarily to double-digit growth in our van business.

In the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026, Other segment revenues were impactedrelatively 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,project as well asand a lower number of reactor outages due to the cyclical nature of the nuclear business.industry. Results for the Other segment results are often affectedinfluenced by seasonality andseasonality, the timing and lengthduration of itscustomer customers’outages, power outages as well as itsand project-based activities.

The increase in consolidated cost of revenues of 2.8%3.1% during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 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.

Depreciation and amortization expense remained relatively consistent during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 compared to the prior year comparable period.

Other income, net during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 decreased as compared to the prior year comparable period, primarily reflectingdue 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, alongcontributed withto higherthe bankreduced fees.other income, net.

The increasedecrease in the effective tax rate for the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 as compared to the corresponding period in the prior year was primarily due primarily to theprovision-to-return timing and amount of excess tax benefits and deficienciesadjustments associated with employeeincome share-basedtax payments.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.

Cash and cash equivalents, and short-term investments totaled $157.5$168.9 million as of FebruaryMay 28,30, 2026, a decrease of $51.7$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 $77.3$107.0 million, $32.7 million of share repurchases, $14.6 million of acquisitions and $12.5$18.8 million of dividend payments.payments and $15.8 million paid for acquisitions. These decreases were partially offset by $88.5$139.4 million of cash provided from operating activities during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026.

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 twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026. As of FebruaryMay 28,30, 2026, we had $8.9 million remaining to repurchase shares under the share repurchase program.

Sources and uses of cash flows for the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 and MarchMay 1,31, 2025, respectively, are summarized as follows:

The net cash provided by operating activities during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 decreased compared to the prior year comparable period due primarily to unfavorable changes in rental merchandise in service of $18.6$19.7 million, accrued liabilitiesinventories of $3.9$11.0 million, prepaid and accrued income taxes of $3.6 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 twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026. The accruedincrease liabilitiesin wereinventories largelywas attributabledriven toprimarily by the timing of disbursements. The decrease in prepaid and accrued income taxes reflects federal and state tax payments made during the first half of fiscal 2026.shipments.

In addition, operating cash flow was negatively impacted by a $2.9 million increase in prepaid expenses and other current assets and a $1.0$7.0 million increase in accounts receivable comparable to the prior year period. The increase in prepaid expenses and other current assets was driven primarily by higher prepayments for annual renewals of information technology contracts and insurance policies, while the increase in accounts receivable was due primarily to higher revenue volumes.

These unfavorable impacts were partially offset by a $2.7$10.8 million increase in accounts payable,payable and a $4.0 million increase in accrued liabilities, both due primarily due to the timing of cash payments and a $0.7 million decrease in inventories, driven by the timing of shipments.payments.

The net cash used in investing activities during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 increased as compared to the prior year comparable period due primarily to anlower increasenet investment in capital expenditurescertificates of $11.2deposit million,of $13.5 million and an increase in cash paid for acquisitions,acquisitions of $9.3$10.4 million, which includesincluded the settlement of $0.5 million in acquisition-related holdbacks fromrelated priorto periodrecent transactions and increased net investment in certificates of deposit of $4.0 million.acquisitions.

The net cash used in financing activities during the twenty-sixthirty-nine weeks ended FebruaryMay 28,30, 2026 increased as compared to the prior year comparable period due primarily to a $20.2$7.1 million increase in the repurchase of Common Stock duringand $1.7 million in acquisition-related holdbacks settled more than three months after the period.acquisition date.

As of FebruaryMay 28,30, 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 FebruaryMay 28,30, 2026, we did not have any off-balance sheet arrangements.