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

Our ability to compete successfully is largely dependent on our ability to provide quality products and services at competitive prices. Our competition comes from a variety of sources, including other distributors, specialty or independent grocery distributors, mass market grocery distributors and cooperatives and customers with their own distribution channels. Mass market grocery distributors, many with substantially greater financial and other resources than us and that may be better established in their markets, continue to increase their offerings of natural and organic products, resulting in more direct competition with our natural and organic product offerings. While natural and organic products typically generate higher margins, these margins could be affected by changes in the public’s perception of the benefits of natural and organic products compared to similar conventional products. As consumers increasingly initiate grocery searches and purchases through third-party digital platforms, social commerce channels and AI-enabled agents, changes in those platforms’ algorithms, commercial terms or access to customer data could reduce the visibility of our customers and the products we distribute.

In addition, many supermarket chains have increased self-distribution or purchases of items directly from suppliers. Relatively low barriers to entry have led to the emergence of alternative business models and channels in our markets. We also encounter indirect competition as a result of the fact that our customers with physical locations compete with online retailers and distributors that seek to sell certain products directly to consumers. Further, club stores, commercial wholesale outlets, direct food wholesalers and online food retailers have developed lower cost structures, creating increased pressure on the industry’s profit margins. Certain retailers operate broader ecosystems or higher-margin businesses, including digital advertising, marketplaces, membership programs, data analytics, financial services and other offerings, which may enable them to fund lower grocery prices, invest more heavily in fulfillment and technology or acquire customers at a cost that we or our customers cannot match. Our current or potential competitors may provide products or services comparable or superior to those provided by us or adapt more quickly than we do to evolving industry trends or changing market requirements. Our current or potential competitors may more effectively deploy AI, automation, advanced analytics or other technologies, which may achieve lower operating costs, improved service levels, more responsive pricing and assortment decisions or other advantages that impair our ability to compete. It is also possible that alliances among competitors may develop and that competitors may rapidly acquire significant market share. Increased competition may result in price reductions, reduced gross margins, lost business and loss of market share, any of which could materially and adversely affect our business, financial condition or results of operations.

If we are not able to capture scale efficiencies and enhance our merchandise offerings, we may not be able to achieve our goals with respect to our operating margins. In addition, if we are not able to refine and improve our systems continually or effectively implement improvements to our systems without disruption, including anyour information technology migration to a cloud environment, we may not be able to reduce costs, increase sales and services, effectively manage inventory and procurement processes, or effectively manage customer pricing plans. As a result, our operating margins may stagnate or decline.

Further, because many of our sales are at prices that are based on our product cost plus a percentage markup, volatilechanges foodin coststhe haverate aof directproduct impactcost uponinflation can materially affect our sales and profitability. WeProduct havecost experiencedinflation has been volatile levelsin ofrecent inflationyears during the past several years, whichand has had varying impacts on our business. For example, we experienced negative impacts on our profitability as inflation slowed in recent years and decreased the positive impact of inflation-related buying activities. Prolonged periods of product cost inflation and periods of rapidly increasing inflation may have a negative impact on our profit margins and results of operations to the extent that we are unable to pass on all or a portion of such product cost increases to our customers, or to the extent our operating expenses increase. In addition, product cost inflation may negatively impact consumer discretionary spending trends and reduce the demand for higher-margin natural and organic products, which could adversely affect profitability. Conversely, our profit levels may be negatively impacted during periods of slowing inflation or product cost deflation even though our Gross profit as a percentage of Net sales may remain relatively constant. If we are unable to reduce our expenses as a percentage of Net sales, including our expenses related to servicing this lower gross margin business, our business, financial condition or results of operations could be materially and adversely impacted.

Our long-term strategy is centered on adding value to our customers and suppliers through our expansive assortment of products, services, programs and insights that help them grow and compete. Simultaneously, we are working to improvebecome freemore cashefficient, flow byincluding focusing on what we can control around the areas of network optimization, reduced levels of capital intensity and optimization of our cost structure. The successful design, implementation and management of these initiatives may present significant challenges, many of which are beyond our control. In addition, the initiatives may not advance our business strategy as expected. We may not realize all or any of the anticipated benefits,expected or may notbe realizerealized themore anticipated benefits within the expected time frame, due to financial or operational challenges, delays, lowerslowly than expected levels of customer and supplier acceptance and implementation or unexpected costs. Any failure to implement the initiatives in accordance with expectations could adversely affect our ability to achieve the anticipated revenue and profitability benefits. In addition, the complexity of the initiatives requires a substantial amount of management and operational resources. Our management team must successfully implement operational changes necessary to achieve the anticipated benefits of the initiatives. These and related demands on its resources may divert the Company’s attention from existing core businesses and could also have adverse effects on existing business relationships with suppliers and customers. As a result, our business, financial condition or results of operations may be adversely affected.anticipated.

The majority of our suppliers are based in the United States and Canada, but we also source products from suppliers throughout the world. For the most part, we do not have long-term contracts with our suppliers committing them to provide products to us. Although our purchasing volume can provide benefits, suppliers may not provide the products needed by us in the quantities or at the prices requested. For example, we experienced higher than usual levels of out-of-stocks leading to reduced fill rates during the COVID-19 pandemic. These shortages caused us to incur higher operating expenses due to the cost of moving products between our distribution and warehouse facilities to maintain expected service levels, and we cannot anticipate whether this trend will recur in the future. We are also subject to supply chain uncertainties and increases in product costs based on conditions outside of our control, which may impact our ability to procure products efficiently. These conditions include work slowdowns, work interruptions, strikes or other job actions by employees of suppliers, challenges with workforce availability, short-term weather conditions or more prolonged climate change, crop conditions, animal diseases, product recalls, water shortages, transportation interruptions, unavailability of fuel or increases in fuel costs, competitive demands, raw material shortages, geopolitical disruptionsdisruptions, trade policies, supplier financial distress, and natural disasters or other catastrophic events (including, but not limited to food-borne illnesses). As consumer demand for natural and organic products continues to increase, certain retailers and other producers have entered the market and attempted to buy certain raw materials directly, limiting availability for use in certain of our suppliers’ products. In addition, increased costs of imported goods, including due to tariffs, import restrictions, global conflict or otherwise, may reduce customer demand for affected products if the parties experiencing those increased costs increase their prices.

We cooperatively engage in and support a variety of promotional programs and services with our suppliers. We manage these programs and services to increase sales while maintaining or improving our margins. We experiencedmay aexperience reductionreductions in promotional spending and payment of slotting fees for new products by our suppliers as a result of the COVID-19 pandemic, including decreased promotional forward-buying opportunities, and we may experience further reductionsopportunities or changes in promotional spending (including as a result of the increasing attractiveness of alternative retail channels), which could have a significant impact on our profitability. We depend heavily on our ability to purchase merchandise in sufficient quantities at competitive prices, and we benefit from our ability to purchase product in advance of price increases. We have no assurances of continued supply, pricing or access to new products, and suppliers could change the terms upon which they sell to us, the services they request from us or discontinue selling to us altogether.

In our attempt to reduce operating expenses, increase operating efficiencies and better serve our customers and suppliers, we have invested and continue to invest in the development and implementation of new information technology. We are in the process of a multi-year implementation of a new enterprise resource planning (“ERP”) system, which has required, and will continue to require, the investment of significant personnel and financial resources over the duration of the project. We are also in the process of converting our existing facilities into a single warehouse management and supply chain platform. In addition, we remain focused on the automation of certain distribution centers and plan to develop further digital solutions for our customers, suppliers and associates. We may not be able to implement these technological enhancements at all or in the anticipated time frame and delays in implementation could negatively impact our business, financial condition or results of operations. In addition, the costs may exceed our estimates and are expected to exceed the benefits during the early stages of implementation. Further, we may experience other complications such as potential design defects, miscalculations, testing requirements and the diversion of management’s attention from day-to-day business operations. Even if implementation of these technological enhancements progresses in accordance with our current plans, and within our current cost estimates, we may not achieve the expected efficiencies and cost savings from our investments. Moreover, as we implement information technology enhancements, disruptions in our business may be created (including disruption with our customers), which may have a material adverse effect on our business, financial condition or results of operations.

In the past, we have experienced a shortage of qualified labor. Recruiting and retention efforts, and actions to increase productivity, may not be successful. Such a shortage could potentially increase labor costs, reduce profitability or decrease our ability to effectively serve customers. If we are unable to realize the anticipated benefits of our efforts to improve labor efficiency,efficiency and safety, including through automation and other technology initiatives, including the use of AI-based technologies, or to increase productivity and efficiency through other methods, we may be more susceptible to labor shortages than our competitors. We have incurred increased costs to retain and address a shortage of qualified labor in certain geographies, particularly for warehouse workers and drivers, including wage actions, sign-on bonus programs, and increased use of third-party labor.

Because our labor costs are, as a percentage of Net sales, higher than in many other industries, we may be significantly harmed by labor cost increases. Further, if we are unable to accurately predict and adjust our labor needs with respect to our sales volume, our cost of labor as a percentage of Net sales may increase. In addition, labor is a significant cost of many of our wholesale customers. Any increase in their labor costs, including any increases in costs as a result of increases in minimum wage requirements or wage competition, or changes in their processes due to adoption of new technology such as AI, could reduce the profitability of our customers and reduce demand for the products we supply. Additionally, the terms of some of our collective bargaining agreements may limit our ability to increase efficiencies.

As of August 2,1, 2025,2026, approximately 10,76811,341 of our 25,60023,431 employees (approximately 42%48%) were covered by 5764 collective bargaining agreements, including existing agreements under negotiation, which expire through MarchMay 22,16, 2030.2031. In the event we are unable to negotiate reasonable contract renewals with our union associates or are required to make significant changes to terms that are unfavorable to us, our relationship with employees may become fractured, and we could be subject to work stoppages or additional expenses. In that event, it would be necessary for us to hire replacement workers or implement other business continuity contingency plans to continue to meet our obligations to our customers. The costs to hire replacement workers, employ effective security measures and, if necessary, serve customers from alternative facilities, could negatively impact the profitability of any affected facility. Depending on the length of time of any work stoppage or if we are required to employ replacement workers and implement security measures these costs could be significant and could have a material adverse effect on our business, financial condition or results of operations.

Our ConventionalNatural and NaturalConventional businesses could be adversely affected if we are not able to attract new customers, increase sales to or retain existing customers or if our customers are unable to grow their businesses.

The efficient operation of our businesses is highly dependent on computer hardware and software systems, including customized information technology systems. Additionally, our businesses increasingly involve the receipt, storage and transmission of sensitive data, including personal information about our customers, employees and vendors and our proprietary business information. Our information technology systems and those of our customers, business partners, suppliers, and third-party providers have been, and will continue to be, subject to cyberthreats such as computer viruses or other malicious codes, security breaches, ransomware, unauthorized access attempts, business email compromise, cyber extortion, denial of service attacks, phishing, deepfakes, social engineering, unintentional or malicious actions of employees or contractors, hacking and other cyberattacks attempting to exploit vulnerabilities by hackers, criminal groups, nation-states and nation-state-sponsored organizations and social-activist organizations, which risks may be more pronounced as associates continue to work remotely. We have seen and may continue to see an increase in the number of such attacks. For example, in the fourth quarter of fiscal 2025, we experienced theour Cybersecuritypreviously Incident,disclosed cybersecurity incident, which temporarily disrupted our business and impacted our results of operations. For further information regarding the Cybersecurity Incident, see “Cybersecurity” in Item 1C of Part I of this Annual Report on Form 10-K and Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Item 7 of Part II of this Annual Report on Form 10-K.

The rapid evolution and increased adoption of emerging technologies, such as artificial intelligence,AI, may also increase the frequencyfrequency, sophistication and magnitude of cyberattacks on the Company and amplify our cybersecurity risks. These threats are constantly evolving and may include attempts by malicious actors to breach our security and compromise our information technology systems, as well as those of our vendors and suppliers. Our security efforts and the security efforts of our third-party providers may not prevent or timely detect future attacks and resulting breaches or breakdowns of our databases or systems. The unavailability of information technology systems or failure of these systems or software to perform as anticipated for any reason, including a ransomware attack, and any inability to respond to, or recover from, such an event on a timely basis, could disrupt our ability to manage or conduct our business, impact our customers and result in decreased performance, reputational harm, governmental fines, penalties, regulatory proceedings, increased overhead costs and increased risk for liability, causing our business and results of operations to suffer.

During periods of economic weakness, small to medium-sized businesses, like many of our independent channelretailer customers, may be impacted more severely and more quickly than larger businesses. Similarly, these smaller businesses may be more likely to be more severely impacted by events outside of their control, like macro-economic shifts or significant weather events. Consequently, the ability of such businesses to make payments to us may deteriorate, and in some cases this deterioration may occur quickly, which could materially and adversely impact our business, financial condition or results of operations.

We estimate the liabilities and required reserves associated with the risks we retain. Any such estimates and actuarial projection of losses is subject to a considerable degree of variability. Among the causes of this variability are changes in benefit levels, medical fee schedules, medical utilization guidelines, severity of injuries and accidents, vocation rehabilitation and apportionment and unpredictable external factors affecting inflation rates, discount rates, rising healthcare costs, litigation trends, legal interpretations, and actual claim settlement patterns. If actual losses incurred are greater than those anticipated, our reserves may be insufficient and additional costs could be recorded in our consolidated financial statements. If we suffer a substantial loss that exceeds our self-insurance reserves and any excess insurance coverage or is excluded under the terms of our insurance policies, the loss and attendant expenses could harm our business, financial condition,condition or results of operations.

Historically, capital expenditures and acquisitions have been large components of our growth and may be important to our growth in the future. As a result, increases in the cost of capital available to us, which could result from volatility in the credit markets, downgrades of our credit ratings, our not being in compliance with restrictive covenants under our debt agreements or our inability to access additional capital to finance acquisitions and capital expenditures through borrowed funds could restrict our ability to grow our business organically or through acquisitions, which could have a material adverse effect on our business, financial condition or results of operations.

Our debt agreements, including the loan agreement (the “ABL Loan Agreement”) related to our $2,730$2,530 million asset-based revolving credit facility (the “ABL Credit Facility”) entered into in JuneApril 2022, as amended,2026, and the term loan agreement (the “Term Loan Agreement”) related to our $500 million term loan facility (the “Term Loan Facility”) entered into onin October 22, 2018, as amended, and the indenture governing our $500 million of unsecured 6.750% Senior Notes due October 15, 2028 (the “Senior Notes”) contain financial covenants and other restrictions that limit our operating flexibility and our flexibility in planning for or reacting to changes in our business. These restrictions may prevent us from taking actions that we believe would be in the best interest of our business if we were not subject to these limitations and may make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.

In addition, our ABL Loan Agreement, Term Loan Agreement and the indenture governing the Senior Notes require that we comply with various financial tests and impose certain restrictions on us, including among other things, restrictions on our ability to incur additional indebtedness, create liens on assets, make loans or investments, or return capital to stockholders through share repurchases or paying dividends. Failure to comply with these covenants could have a material adverse effect on our business, financial condition,condition or results of operations.

Responding to such actions by activist investors can be costly and time-consuming, disruptive to our operations and divert the attention of management, our Board of Directors and our employees, and our ability to execute our strategic plan could also be impaired as a result. For example, we have in the past retained the services of various professionals to advise us on activist stockholder matters, including legal, financial and other advisory fees. In the event of an activist campaign, we could be required to incur substantially increased legal, public relations and other advisory fees and proxy solicitation expenses. In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist investors may result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers, directors, employees, collaborators or other partners, disrupt relationships with the Company, and the market price of our common stock could also experience periods of increased volatility as a result.

Changes in consumer purchasing habits may reduce demand for certain of the products we distribute. Consumer habits could be affected by a number of factors, including changes in disposable income levels, which may be impacted by a number of factors, including a reduction in the level of government spending that supports grocery purchases, changes in product prices or other macro trends, changes in behavior arising from the increased use of pharmaceutical weight-loss therapies such as GLP-1, an increase in food-away-from home options, changes in attitudes regarding benefits of natural and organic products when compared to similar lower margin conventional products, new information regarding the health effects of consuming certain foods, changes in disposable income levels, which may be impacted by a reduction in the level of government spending that supports grocery purchases, changes in product prices or other macro trends.foods. Further, in a sustained economic downturn, consumers may shift their purchases to lower-cost, lower-margin products. For example, recent price changes have shifted consumer purchasing habits toward value-oriented categories and private brands, while dampening demand for certain discretionary and higher-margin products, a dynamic that continues to shape both retailer mix and wholesale distribution. We cannot be certain how consumer habits may continue to evolve. Although there is a growing consumer preference for sustainable, organic and locally grown products, which are higher margin products, there can be no assurance that such trend will continue. Changing consumer preferences also result from generational shifts, including younger generations seeking new and different foods, as well as more multi-cultural menu options and menu innovation. However, there can be no assurance that such trends will continue. If consumer eating habits change significantly, we may be required to modify or discontinue sales of certain items in our product portfolio, and we may experience higher costs associated with the implementation of those changes. Additionally, if we are not able to effectively respond to changes in consumer perceptions or adapt our product offerings to new or developing trends in eating habits, our business, financial condition,condition or results of operations could suffer.

•OurThe products we distribute and our warehouse and distribution centers are subject to regulatory oversight and inspection by a variety of regulators, including the United States Food and Drug Administration, the United States Department of Agriculture, the United States Department of Labor Occupational and Health Administration, the Environmental Protection Agency andAgency, various state health and workplace safety authorities.authorities and comparable Canadian laws and regulations governing food safety and transportation.

In addition, if we fail to comply with applicable laws and regulations or encounter disagreements with respect to our contracts subject to governmental regulations, including those referred to above, we may be subject to investigations, criminal sanctions or civil remedies, including fines, injunctions, prohibitions on exporting, seizures, or debarments from contracting with the U.S. or Canadian governments. The cost of compliance or the consequences of non-compliance, including debarments, could have a material adverse effect on our business, financial condition,condition or results of operations. In addition, governmental units may make changes in the regulatory frameworks within which we operate that may require us to incur substantial increases in costs in order to comply with such laws and regulations.

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the notes thereto, “Risk Factors” included in Part I, Item IA, “Cautionary Note Regarding Forward-Looking Statements” and other risks described elsewhere in this Annual Report. The following includes a comparison of our consolidated results of operations, segment results and financial position for fiscal years 20252026 and 2024.2025. In evaluating financial performance in each business segment, management primarily uses Net sales and Adjusted EBITDA of its business segments as discussed and reconciled within Note 16—Business Segments in Part II, Item 8 of this Annual Report. For a comparison of our consolidated results of operationsoperations, segment results and financial position for fiscal years 20242025 and 2023,2024, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations,”, in our Annual Report on Form 10-K for the fiscal year ended August 3,2, 2024,2025, filed with the Securities and Exchange Commission on October 1, 2024, as supplemented by the additional discussion below, which includes a comparison of our segment results for fiscal years 2024 and 2023 reflecting our updated segments.2025.

•theour relatively low margins of our business,margins, which are sensitive to inflationary and deflationary pressures and intense competition, including as a result of the continuing retailer consolidation of retailers and the growth of consumer choices for grocery and consumable purchases;

•our ability to develop, implement, operate and maintain, and rely on third parties to operate and maintain, reliable and secure technology systems, and the effectiveness of our business continuity plans in response to an incident impacting our technology systems, such as the unauthorized incident on our technology systems;

•union-organizing activities that could cause labor relations difficulties and increased costs; and

•changes in tax laws and regulations, and actions by federal, state and local taxing authorities related to the interpretation and application of such tax laws and regulations;regulations.

UNFI is a leading distributor of grocery and non-food products,wholesaler and support services provider to retailers in the United States and Canada. We believe weour are uniquely positioned to provide the broadestbroad array of products, data, insights, programs and services uniquely positions us to customershelp throughoutmeet a wide range of customer and supplier needs across North America. Our diversified customer base includes over 30,000 customer locations ranging from some of the largest grocers in theNorth countryAmerica to smaller retailers. We offer approximatelyover 230,000200,000 products consisting of national, regional and private label brands grouped into the following main product categories: grocerycenter store and general merchandise; fresh and perishables; frozen foods; wellness and personal care items; and bulk and foodservice products.foodservice. We believe we are North America’s premier grocery wholesaler with 5246 distribution centers and warehouses representing approximately 3026 million square feet of warehouse space. We are a coast-to-coast distributor with customers in all 50 states as well as all ten provinces in Canada, making us a desirable partner for retailers and consumer product manufacturers. We believe our total product assortment and service offerings arehelp unmatcheddifferentiate byUNFI ourin the wholesale competitors.marketplace. We plan to continue to pursue new business opportunities with independent retailers that operate diverse formats, regional and national chains,chains as well asand international customers with wide-ranging needs. Our business is classified into three reportable segments: Natural, Conventional and Retail.

We are executing against theour strategyvalue wecreation introducedstrategy, inwhich Octoberseeks 2024to andbuild three-year financial objectivescapabilities that seek to add value to our customers and suppliers through our portfolio of products, programs, insights and services while improving our effectiveness, efficiencyeffectiveness and cashefficiency. flow. To accomplish the latter, weWe are focused on controllable variables in fourseveral key areas: intensifying and expanding our network optimization; reducingmanaging annual capital spending; optimizing our cost structure; and reducing our net working capital position. OurWe believe our strategy includesuniquely thepositions areasus ofto focushelp detailedour underpartners “Business”differentiate, includedcompete inand Partprofitably 1, Item 1 of this Annual Report.grow.

We expect to continue to use available capital to re-invest in our business and are committed to improving our free cash flow and financial leverage through working to improve our profitability, disciplined capital investment and strengthened working capital management, while reducing outstanding debt.

We believe we can optimize our performance and profitability through our improvement efforts, which we expect will improve our operational effectiveness and cost structure, increase sales of products and services,services to new and existing customers and position us to provide tailored, data-driven solutions to help our customers and suppliers run their businesses more efficiently and expand our customer base.efficiently.

Our results are impacted by macroeconomicseveral macroeconomic, industry, demographic and demographicconsumer-driven trends,trends changesthat inaffect thedemand foodfor distributiongrocery marketproducts, structureproduct mix, pricing and changesoperating incosts. consumerThese behavior,trends which may resultarise from factors beyondlargely outside our control, including broader economic conditions, geopolitical events and other events that may trigger economic volatility and negatively impact discretionary income levels and consumer confidence, social trends, changes in the levels of disposable income and thestructural healthshifts ofin the economyfood indistribution whichmarket our customers and stores operate.structure.

TheEconomic volatility in the U.S. economyhas continues to experience economic volatility,persisted, which has had, and we expect may continue to have, an impact on consumer confidence and purchasing behavior. ConsumerIn spending may continueresponse to bepressure impacted by levels ofon discretionary income withlevels, certain consumers have increasingly prioritized value, including by trading down to a less expensive mix of products for grocery items or buying fewer items. InThis addition,trend inflationhas continuesinfluenced product mix and margin dynamics, with shifts towards lower-margin value-oriented categories. At the same time, there remains stable demand for essential food items and higher unit volumes in natural and organic categories. Based on current conditions, we believe these consumer purchasing patterns are reasonably likely to continue in the near term and could continue to affect our business, and fluctuating commodity and labor input costs may continue to impact the pricesresults of products we procure from manufacturers.operations. We believe our diversified product mix,assortment, which ranges from high-quality natural and organic products to national and local conventional brands, including cost conscious private label brands, helps mitigate the impact of adverse product mix shifts and positions us to serve a broad cross section of North American retailers and end customers, and may lessen the impact of any further shifts in consumer and industry trends in grocery product mix. We are actively monitoring the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies, on all aspects of our business.customers.

WeIn are also impacted byaddition, changes in food distribution trends affecting our wholesale customers, such as the increased use of direct store deliveriesdelivery and otheralternative methodsdistribution ofmodels, distribution.have continued to affect competitive dynamics within the industry. Our wholesale customers manage their businesses independently and operate in a competitive environment.

We continue to evaluate our distribution center network to more effectively and efficiently service customers and suppliers and further optimize performance. In connection with the fourth quartertermination of fiscalour 2025, we came to a mutualsupply agreement with a customer in the East region to terminate our supply agreement, pursuant to which we served as the primary grocery wholesaler to this customer’s locations in thefiscal Northeast. In connection with this termination,2025, we ceased operations at our Allentown, PennsylvaniaPennsylvania, distribution center in earlythe first quarter of fiscal 2026 with the remaining volume consolidated into other facilities in the Northeast. Business with this customer in the Northeast accounted for approximately $1 billion in annual sales. The termination enablesenabled us to accelerate progress toward our longer-term strategic and three-year financial objectives. Additionally, we consolidated the volume of a distribution center into a nearby facility in the West region in the third quarter of fiscal 2026. In the fourth quarter of fiscal 2026, we consolidated the volume of a distribution center primarily serving the Natural segment into a nearby automated facility in the Central region.

We plan to continue to evaluate our distribution center network to further optimize performance and expect tocould incur incremental expenses related to any future network realignment, expansion or improvements, including network optimization and automation initiatives. We are working to both minimize future costs and obtain new business to further improve the efficiency of our distribution network.

We operated 7565 grocery stores, including 5452 Cub Foods stores and 2113 Shoppers stores, as of August 2,1, 2025.2026. In addition, we supplied another 2624 Cub Foods stores operated by our wholesale customers through franchise and minority equity ownership arrangements. We operated 8077 pharmacies primarily within the stores we operate and the stores of our franchisees. In addition, we operated 2423 “Cub Wine and SpiritSpirits” and “Cub Liquor” stores.

In fiscal 2026, we closed two Cub Foods stores and eight Shoppers stores related to our strategic initiatives focused on optimization of our retail footprint. We plan to continue to invest in and optimize our Retail segment in areas such as customer-facing merchandising initiatives, physical facilities, technology and operational tools.

Our Net sales consist primarily of product sales of natural, organic, specialty, produce,specialty and conventional groceryfood and non-food products, adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue. Net sales also include amounts charged by us to customers for shipping and handling and fuel surcharges.

Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including severance costs, facility closure costs, contract exit-related costs, share-based compensation acceleration charges and acquisition and integration related expenses.expenses, when applicable. Integration related expensesexpenses, when incurred, can include certain professional consulting expenses and incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions.

Loss (Gain) on Sale of Assets and Other Asset Charges

Loss (gain) on sale of assets and other asset charges primarily includes losses (gains) losses on sales of assets, losses on sales of financial assets, and asset impairments.

We define Adjusted EBITDA as a consolidated measure which we reconcile by adding Net income (loss) income including noncontrolling interests, less Net income attributable to noncontrolling interests, plus Non-operating income and expenses, including Net periodic benefit income, excluding service cost, Interest expense, net and Other (income) expense, net, plus (Benefit) provision for income taxes and Depreciation and amortization all calculated in accordance with GAAP, plus adjustments for Share-based compensation, non-cash LIFO charge or benefit, Restructuring, acquisition and integration related expenses, Goodwill impairment charges, Loss (gain) on sale of assets and other asset charges, certain legal charges and gains, and certain other non-cash charges or other items, as determined by management.

The following table reconciles Net income (loss) including noncontrolling interests to Adjusted EBITDA.

(1)Fiscal 2026 primarily reflects distribution center and store closure charges, costs associated with certain employee severance and other employee separation costs and adjustments to previously recorded multiemployer pension plan withdrawal liabilities. Fiscal 2025 primarily reflects the $53 million charge related to the Company’s termination of its supply agreement with a customer in the East region and costs associated with certain employee severance and other employee separation costs and outsourcing certain corporate functions under restructuring initiatives. Fiscal 2024 primarily reflects costs associated with certain employee severance and other employee separation costs.

(34)Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, and third-party professional service fees related to strategic initiatives and the board-led financial review in fiscal 2024, all of which are included within Operating expenses in the Consolidated Statements of Operations.

(46)ReflectsPrimarily costsreflects and charges related to the Cybersecurity Incident, primarily including shrink and remediationaccrued costs related to third-partyan cybersecurity,agreement to settle certain legal and governance experts, ofproceedings, which $15 million are included within Gross profit and $11 million are included within Operating expenses in the Consolidated Statements of Operations.

The following table sets forth our Net sales by segment. Refer to Note 16—Business Segments in Part II, Item 8 of this Annual Report for additional information. Within the following table, we have estimated the impact of the additional 53rd week in fiscal 2024 to provide more comparable financial results on a year-over-year basis.

OurNatural Net sales for fiscal 2025 increased $804 million,$1,115, or 2.6%,7.0%, to $31.8$17.1 billion in fiscal 2025,2026, from $31.0$16.0 billion in fiscal 2024, which included an estimated $582 million benefit from the 53rd week. Net sales increased approximately 4.6% when excluding the impact of the 53rd week in fiscal 2024.2025. The increase in Natural Net sales was primarily driven by ana low single digit increase in Natural unit volumes, including new business with existing and new customers, as well as inflation.a Netlow salessingle weredigit adverselyincrease impactedfrom byinflation anand estimatedlapping $400the millionimpact of the cybersecurity incident experienced in lost sales related to the Cybersecurityfourth Incidentquarter inof fiscal 2025.

The U.S. economy continues to experience economic volatility, which has had, and we expect may continue to have, an impact on consumer confidence and behavior. Consumer spending may continue to be impacted by levels of discretionary income with consumers trading down to a less expensive mix of products for grocery items or buying fewer items. In addition, changes in pricing levels continue to affect our business, and fluctuating commoditycommodity, fuel and labor input costs may continue to impact the prices of products we procure from manufacturers. We believe our product mix, which ranges from high-quality natural and organic products to national and local conventional brands, including cost conscious private label brands, positions us to serve a broad cross section of North American retailers and end customers, and may lessen the impact of any further shifts in consumer and industry trends in grocery product mix. We arecontinue activelyto monitoringmonitor the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies,policies and rising fuel costs, on all aspects of our business.

We continue to evaluate our distribution center network to better and more efficiently service customers and suppliers and further optimize performance. In connection with the termination of our supply agreement with a customer in the East region in fiscal 2025, we ceased operations at our Allentown, Pennsylvania distribution center in the first quarter of fiscal 2026 with the remaining volume consolidated into other facilities in the Northeast. Business with this customer in the Northeast accounted for approximately $1 billion in annual sales. The termination enables us to accelerate progress toward our longer-term strategic and three-year financial objectives. Additionally, in the third quarter of fiscal 2026, we consolidated the volume of a distribution center into a nearby facility in the West region and announced the planned consolidation of a facility in the Central region, which is expected to occur in the fourth quarter of fiscal 2026.

We operated 66 grocery stores, including 53 Cub Foods stores and 13 Shoppers stores, as of JanuaryMay 31,2, 2026. In addition, we supplied another 24 Cub Foods stores operated by our wholesale customers through franchise and minority equity ownership arrangements. We operated 77 pharmacies primarily within the stores we operate and the stores of our franchisees. In addition, we operated 23 “Cub Wine and Spirits” and “Cub Liquor” stores.

(1)Fiscal 2026 primarily reflects distribution center and store closure charges, adjustments to previously recorded multiemployer pension plan withdrawal liabilities and costs associated with certain employee severance and other employee separation costs. Fiscal 2025 primarily reflects costs associated with certain employee severance and other employee separation costscosts, outsourcing certain corporate functions under restructuring initiatives and distribution center and store closure charges. See Notes to Condensed Consolidated Financial Statements for additional information.

(2)Fiscal 2026 primarily includes a $14 million non-cash asset impairment charge in the third quarter of fiscal 2026 related to the decision to close a leased retail store location, $5 million in non-cash impairment charges in the second quarter of fiscal 2026 related to the decision to discontinue operations at certain distribution centers, warehouses or offsite storage facilities, a $10 million non-cash asset impairment charge in the first quarter of fiscal 2026 related to the decision to close certain retail store locations and losses on the sales of receivables under the accounts receivable monetization program. Fiscal 2025 primarily includes a $24 million non-cash asset impairment charge related to a distribution center in our East region and losses on the sales of receivables under the accounts receivable monetization program. See Notes to Condensed Consolidated Financial Statements for additional information.

(4)Fiscal 2026 includes insurance recoveries and costs and charges and insurance recoveries related to the Cybersecurity Incident. See Notes to Condensed Consolidated Financial Statements for additional information.

SecondThird Quarter

Our Net sales for the secondthird quarter of fiscal 2026 decreased approximately 2.6%4.2% from the secondthird quarter of fiscal 2025. The decrease in Net sales was primarily driven by a decrease in Conventional and Retail Net Sales, partially offset by an increase in Natural Net Sales.

Natural Net sales for the secondthird quarter of fiscal 2026 increased approximately 6.7%4.4% from the secondthird quarter of fiscal 2025. The increase was primarily driven by ana low single digit increase from inflation and a less than 1% increase in unit volumes, including new business with existing and new customers, asoffset wellby asa inflation.decrease in volume from anticipated lost sales related to the unwind of short-term project-based work.

Conventional Net sales for the secondthird quarter of fiscal 2026 decreased approximately 12.1%13.6% from the secondthird quarter of fiscal 2025. The decrease was driven by a mid-teens decline in unit volumes including the high single digit impact from network optimization actions, largely driven by the transition out of our Allentown, Pennsylvania distribution center,center completed in the first quarter of fiscal 2026, partially offset by increasesa low single digit increase from inflation.

Retail Net sales for the secondthird quarter of fiscal 2026 decreased approximately 8.2%10.1% from the secondthird quarter of fiscal 2025. The decrease was primarily driven by store closures and a 2.1%4.4% decrease in identical store sales from lower volume.

Lower eliminations of Net sales for the secondthird quarter of fiscal 2026 as compared to the secondthird quarter of fiscal 2025 were primarily due to a decrease in Conventional to Retail sales, which are eliminated upon consolidation.

Natural Net sales for fiscal 2026 year-to-date increased approximately 8.5%7.1% from fiscal 2025 year-to-date. The increase was primarily driven by ana low single digit increase in unit volumes, including new business with existing and new customers, as well as a low single digit increase from inflation.

Conventional Net sales for fiscal 2026 year-to-date decreased approximately 11.9%12.4% from fiscal 2025 year-to-date. The decrease was driven by a mid-teens decline in unit volumes including the high single digit impact from network optimization actions, largely driven by the transition out of our Allentown, Pennsylvania distribution center,center completed in the first quarter of fiscal 2026, partially offset by increasesa low single digit increase from inflation.

Our Gross profit decreased $26$33 million, or 2.4%,3.0%, to $1,046$1,049 million for the secondthird quarter of fiscal 2026, from $1,072$1,082 million for the secondthird quarter of fiscal 2025. Our Gross profit as a percentage of Net sales increased to 13.2%13.6% for the secondthird quarter of fiscal 2026 compared to 13.1%13.4% for the secondthird quarter of fiscal 2025. The increase in gross profit rate was primarily impacteddriven by the benefitspositive impact of network optimization actions and customer mix as well as higher levels of procurement gains,mix, which were partially offset by a lower margin rate in the Retail segment.

Our Gross profit decreased $13$46 million, or 0.6%,1.4%, to $2,097$3,146 million for fiscal 2026 year-to-date, from $2,110$3,192 million for fiscal 2025 year-to-date. Our Gross profit as a percentage of Net sales increased to 13.3%13.4% for fiscal 2026 year-to-date compared to 13.2%13.3% for fiscal 2025 year-to-date. The increase in gross profit rate was primarily driven by the positive impact of network optimization actions and customer mix as well as higher levels of procurement gains, which were partially offset by a lower margin rate in the Retail segment and $19$20 million of charges associated with the previously disclosed Cybersecurity Incident.

Operating expenses decreased $59$71 million, or 5.7%,6.9%, to $972$954 million, or 12.2%12.4% of Net sales, for the secondthird quarter of fiscal 2026 compared to $1,031$1,025 million, or 12.6%12.7% of Net sales, for the secondthird quarter of fiscal 2025. The decrease in Operating expenses as a percentage of Net sales was primarily driven by $20 million in cybersecurity insurance proceeds and the benefits from cost saving initiatives, including network optimization actions and higher levels of distribution center productivity,productivity andthat insuranceimproved proceeds.labor cost rates.

Operating expenses decreased $78$149 million, or 3.8%,4.9%, to $1,968$2,922 million, or 12.5%12.4% of Net sales, for fiscal 2026 year-to-date compared to $2,046$3,071 million, or 12.8%12.7% of Net sales, for fiscal 2025 year-to-date. The decrease in Operating expenses as a percentage of Net sales was primarily driven by the benefits from cost saving initiativesinitiatives, including network optimization actions and $20higher levels of distribution center productivity that improved labor cost rates, as well as $40 million in cybersecurity insurance recoveries.recoveries, partially offset by higher costs associated with union and other employee benefits.

Restructuring, acquisition and integration related expenses decreased $1$4 million to $8$10 million for the secondthird quarter of fiscal 2026, compared to $9$14 million for the secondthird quarter of fiscal 2025. The decrease was primarily driven by a decrease in certain employee severance and other employee separation costs and costs associated with outsourcing certain corporate functions under restructuring initiatives,initiatives and certain employee severance and other employee separation costs, partially offset by an increase in closed property charges and costs.

Restructuring, acquisition and integration related expenses increased $9$5 million to $30$40 million for fiscal 2026 year-to-date, compared to $21$35 million for fiscal 2025 year-to-date. The increase was primarily driven by higher closed property charges and costs for fiscal 2026 year-to-date and an adjustment to previously recorded multiemployer pension plan withdrawal liabilities in the first quarter of fiscal 2026 and higher closed property charges and costs,2026, partially offset by a decrease in certain employee severance and other employee separation costs.costs and costs associated with outsourcing certain corporate functions under restructuring initiatives.

Loss on sale of assets and other asset charges increaseddecreased $4$9 million to $9$19 million for the secondthird quarter of fiscal 2026, from $5$28 million for the secondthird quarter of fiscal 2025. The secondthird quarter of fiscal 2026 primarily included $5a $14 million of non-cash asset impairment chargescharge related to decisionsthe decision to discontinueclose operations at certaina leased distributionretail centers,store warehouseslocation. orThe offsite storage facilities as we continue to optimize our distribution center network, while there were no asset impairment charges in the secondthird quarter of fiscal 2025.2025 primarily included a $24 million non-cash asset impairment charge related to the Allentown, Pennsylvania distribution center. The secondthird quarters of fiscal 2026 and 2025 included losses on the sales of receivables under the accounts receivable monetization program.

Loss on sale of assets and other asset charges increased $12$3 million to $23$42 million for fiscal 2026 year-to-date, from $11$39 million for fiscal 2025 year-to-date. The increase was primarily driven by higher asset impairment charges. Fiscal 2026 year-to-date primarily included $15$29 million in non-cash asset impairment charges related to decisions to close certain retail store locations and discontinue operations at certain distribution centers, warehouses or offsite storage facilities,facilities. whileFiscal there2025 wereyear-to-date noprimarily included a $24 million non-cash asset impairment chargescharge inrelated fiscalto 2025the year-to-date.Allentown, Pennsylvania distribution center. Fiscal 2026 and 2025 year-to-date included losses on the sales of receivables under the accounts receivable monetization program.

Reflecting the factors described above, Operating income increased $30$51 million to $57$66 million for the secondthird quarter of fiscal 2026, compared to Operating income of $27$15 million for the secondthird quarter of fiscal 2025. The increase in Operating income was primarily driven by a decrease in Operating expenses, partially offset by a decrease in Gross profit and an increase in Loss on sale of assets and other asset charges and Restructuring, acquisition and integration related expenses, partially offset by a decrease in Gross profit in the secondthird quarter of fiscal 2026, each as described above.

Reflecting the factors described above, Operating income increased $44$95 million to $76$142 million for fiscal 2026 year-to-date, compared to Operating income of $32$47 million for fiscal 2025 year-to-date. The increase in Operating income was primarily driven by a decrease in Operating expenses, partially offset by a decrease in Gross profit and an increase in Restructuring, acquisition and integration related expenses and Loss on sale of assets and other asset charges and Restructuring, acquisition and integration related expenses in fiscal 2026 year-to-date, each as described above.

The decrease in interest expense, net, in the secondthird quarter of fiscal 2026 compared to the secondthird quarter of fiscal 2025 was primarily driven by lower outstanding long-term debt balances.

The effective tax rate for the secondthird quarter of fiscal 2026 was an expense rate of 13.0%21.4% on pre-tax income compared to a benefit rate of 60.0%56.3% on pre-tax loss for the secondthird quarter of fiscal 2025. The change from the secondthird quarter of fiscal 2025 is primarily driven by the impact of a partnership investment entered into in the third quarter of fiscal 2025, as well as a decrease in the discrete tax benefit for return to provision tax credits in the third quarter of fiscal 2026 compared to fiscal 2025, combined with an increase in pre-tax income duringfor the secondthird quarter of fiscal 2026.

The effective tax rate for fiscal 2026 year-to-date was aan benefitexpense rate of 14.3%12.5% on pre-tax income compared to a benefit rate of 24.1%35.6% on pre-tax loss for fiscal 2025 year-to-date. The change from fiscal 2025 year-to-date is primarily driven by the increase in pre-tax income, discrete tax benefits from favorable tax audit settlements and employee stock award vestings during fiscal 2026, as well as the tax credit benefit of a solar array placed in service during the first quarter of fiscal 2026.

Reflecting the factors described in more detail above, Net income attributable to United Natural Foods, Inc. was $20$33 million, or $0.31$0.52 per diluted common share, for the secondthird quarter of fiscal 2026, compared to Net loss attributable to United Natural Foods, Inc. of $3$7 million, or $0.05$0.12 per diluted common share, for the secondthird quarter of fiscal 2025.

SecondThird Quarter

Natural Adjusted EBITDA increased $33$22 million, or 34.0%,17.7%, for the secondthird quarter of fiscal 2026 as compared to the secondthird quarter of fiscal 2025. The increase was driven by an increase in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business SegmentsSegments, combinedpartially withoffset aby decreasean increase in operating expenses.

•Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, increased $29$24 million. Natural gross profit rate decreasedwas approximately 15 basis points drivenflat primarily bydue to lower product margin rates and customer and product mix, which were partially offset by higherthe levelsfavorable impact of procurementsupplier gains.programs.

•Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreasedincreased $4$2 million. Natural operating expense rate decreased approximately 7739 basis points primarily due to the leveraging impact of higher sales and the benefits from cost saving initiatives,initiatives in distribution expenses and selling, general and administrative expenses and lower allocated corporate overhead driven largely by incentive compensation, partially offset by increases in costsdistribution expenses associated with union and other employee benefits.benefits and higher fuel costs.

Conventional Adjusted EBITDA increased $15$17 million, or 25.4%,36.2%, for the secondthird quarter of fiscal 2026 as compared to the secondthird quarter of fiscal 2025. The increase was driven by a decrease in operating expenses, partially offset by a decrease in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments.

•Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $24 million. Conventional gross profit rate increased approximately 7389 basis points driven primarily by the positive impact of network optimization actions and customer and product mix as well as higher levels of procurement gains.mix.

•Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $39$41 million. Conventional operating expense rate increased approximately 814 basis points primarily due to the deleveraging impact of lower sales on fixed costs,costs and increases in distribution expenses associated with union and other employee benefits, partially offset by benefits from cost saving initiatives,initiatives includingin distribution expenses and selling, general and administrative expenses, which included the benefits of network optimization.optimization actions in distribution expenses.

Retail Adjusted EBITDA decreased $12$10 million for the secondthird quarter of fiscal 2026 as compared to the secondthird quarter of fiscal 2025. The decrease was driven by a decrease in gross profit excluding the LIFO charge, partially offset by a decrease in operating expenses.

•Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $12$9 million. Retail operating expense rate wasincreased approximately flat108 tobasis fiscal 2025points primarily due to increases in occupancy-related costs and the deleveraging impact of lower sales on fixed costs, partially offset by lower labor costs from operating efficiencies and store closures.

•Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, increased $77$101 million. Natural gross profit rate decreased approximately 1611 basis points driven primarily by lower product margin rates and customer and product mix, which were partially offset through supplier programs and higher levels of procurement gains and supplier programs.gains.

•Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, increased $19$21 million. Natural operating expense rate decreased approximately 6355 basis points primarily due to the benefits from cost saving initiatives in distribution expenses and selling, general and administrative expenses and the leveraging impact of higher sales and the benefits from cost saving initiatives,sales, partially offset by increases costsin distribution expenses associated with union and other employee benefits.

•Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $34$58 million. Conventional gross profit rate increased approximately 89 basis points driven primarily by the positive impact of network optimization actions and customer and product mix, higher levels of procurement gains and recoveries related to settlements with customers and suppliers in the first quarter of fiscal 2026.

•Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $74$115 million. Conventional operating expense rate increased approximately 1112 basis points primarily due to the deleveraging impact of lower sales on fixed costs,costs and increases in distribution expenses associated with union and other employee benefits, partially offset by benefits from cost saving initiatives,initiatives includingin distribution expenses and selling, general and administrative expenses, which included the benefits of network optimization.optimization actions in distribution expenses.

•Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $16$25 million. Retail operating expense rate increased approximately 3960 basis points primarily due to the deleveraging impact of lower sales on fixed costs and increases in occupancy-related costs, partially offset by lower labor costs from store closures and operating efficiencies.

•Total liquidity as of JanuaryMay 31,2, 2026 was $1,337$1,245 million and consisted of the following:

◦$1,285$1,202 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”), which decreased $168$251 million from $1,453 million as of August 2, 2025, primarily due to a reduction in the borrowing base, partially offset by a reduction in net borrowings under the ABL Credit Facility; and ◦$52$43 million of cash and cash equivalents, which increaseddecreased $8$1 million from $44 million as of August 2, 2025.

•Total debt decreased $146$199 million to $1,716$1,663 million as of JanuaryMay 31,2, 2026 from $1,862 million as of August 2, 2025, primarily related to a redemption of $115 million of the aggregate principal amount of our $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”) in the third quarter of fiscal 2026 and a reduction in net borrowings under the ABL Credit Facility due to net cash provided by operating activities, partially offset by payments for capital expenditures and repurchases of common stock.

•Working capital decreased $12$19 million to $809$802 million as of JanuaryMay 31,2, 2026 from $821 million as of August 2, 2025, primarily due to a decrease in inventoryaccounts levelsreceivable combined with a decrease in accountsinventory receivable,levels, largely offset by a decrease in accounts payable related to lower inventory levels, a decrease in accrued compensation and benefits and an increase in prepaid expenses and other current assets.assets and a decrease in accrued compensation and benefits.

During fiscal 2026 year-to-date, we reduced borrowings by a net $138$70 million under the ABL Credit Facility, and made voluntary and mandatory prepayments on the Term Loan Facility totaling $11$12 million.million and redeemed $115 million aggregate principal amount of the Senior Notes. Refer to Note 9—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for a detailed discussion of the provisions of our credit facilities and certain long-term debt agreements and additional information.

Our term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) and Senior Notes do not include any financial maintenance covenants. Our revolving credit agreement dated as of June 3, 2022 (as amended, the “ABL Loan Agreement”) subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $220 million, or $210$204 million if no ABL FILO Loans are then outstanding at such time and (ii) 10% of the aggregate borrowing base. We have not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Quarterly Report on Form 10-Q. The Term Loan Agreement, Senior Notes and ABL Loan Agreement contain certain operational and informational covenants customary for debt securities of these types that limit our and our restricted subsidiaries’ ability to, among other things, incur debt, declare or pay dividends or make other distributions to our stockholders, transfer or sell assets, create liens on our assets, engage in transactions with affiliates, and merge, consolidate or sell all or substantially all of our and our subsidiaries’ assets on a consolidated basis. We were in compliance with all such covenants for all periods presented. If we fail to comply with any of these covenants, we may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and payable. The potential amount of prepayment under the Term Loan Facility from Excess Cash Flow (as defined in the Term Loan Agreement) in fiscal 2026 that may be required in fiscal 2027 is not reasonably estimable as of JanuaryMay 31,2, 2026.

As of JanuaryMay 31,2, 2026, we had an aggregate of $650 million of floating rate notional debt subject to active interest rate swap contracts, which effectively fix the Secured Overnight Financing Rate (“SOFR”) component of our floating interest payments through pay fixed and receive floating interest rate swap agreements. These fixed rates range from 3.333% to 4.130%, with maturities between October 2026 and December 2028. The fair values of these interest rate derivatives represent a total net liability of $3$0 million as of JanuaryMay 31,2, 2026, and are subject to volatility based on changes in market interest rates.

From time to time, we enter into fixed price fuel supply agreements and foreign currency hedges. As of JanuaryMay 31,2, 2026, we had fixed price fuel contracts and foreign currency forward agreements outstanding. Gains and losses and the outstanding assets and liabilities from these arrangements are insignificant.

The increase in net cash provided by operating activities in fiscal 2026 year-to-date compared to fiscal 2025 year-to-date was primarily due to an increase in cash generated from net incomeincome, andpartially loweroffset by higher levels of cash utilized in net working capital,capital partially offset byand payments related to the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses in fiscal 2026 year-to-date.

The decrease in net cash used in investing activities in fiscal 2026 year-to-date compared to fiscal 2025 year-to-date was primarily due to lower payments for capital expenditures in fiscal 2026 year-to-date.expenditures.