UniFirst Corp. (NYSE:UNF) announced its fiscal 2026 first-quarter results on Wednesday, and shares moved lower after the report as investors digested the earnings and outlook.

Revenue was $621.318 million, up 2.7% year over year and above the $615.253 million estimate, while adjusted EPS was $1.97, missing the $2.06 estimate. GAAP diluted EPS was $1.89, down from $2.31 a year earlier.

Net income was $34.363 million, compared with $43.105 million in the prior-year period. Operating margin was 7.3% versus 9.2%, reflecting planned investments in growth and digital transformation initiatives, and adjusted EBITDA margin was 13.3% versus 15.5%.

Management Commentary

“Our first quarter performance was consistent with our expectations and reflects the impact of planned investments designed to accelerate growth and enhance operational efficiency,” said Steven Sintros, UniFirst President and Chief Executive Officer.

“While these initiatives weighed on near-term margins, we believe they position UniFirst for improved profitability over time. Importantly, organic growth driven by new customer wins and improved retention reflects the strength of UniFirst’s differentiated, service-driven model focused on reliability, local accountability and long-term relationships.”

Segment Performance

Uniform & Facility Service Solutions revenue increased 2.4% to $565.892 million, with an operating margin of 7.4% and an adjusted EBITDA margin of 13.6%.

First Aid & Safety Solutions revenue rose 15.3% to $30.244 million, while operating loss was $0.402 million and adjusted EBITDA was $0.800 million. Other revenue fell 2.9% to $25.182 million, with operating income of $3.873 million and adjusted EBITDA of $4.815 million.

UniFirst stated that the results included approximately $2.3 million in costs related to its enterprise resource planning “Key Initiative,” which reduced net income by $1.7 million and diluted EPS by 9 cents.

Net cash provided by operating activities was $14.851 million, and cash, cash equivalents and short-term investments totaled $129.5 million, with no long-term debt outstanding.

The company repurchased $31.7 million of shares, leaving $8.9 million remaining under its authorization, and declared a quarterly cash dividend of $0.365 per share.

Unsolicited Cintas Takeover Proposal Under Review

The earnings report follows UniFirst’s December confirmation that it received an unsolicited, non-binding proposal from Cintas Corporation (NASDAQ:CTAS) to acquire all outstanding UniFirst shares for $275 per share in cash, marking Cintas’ third attempt to acquire the company.

The UniFirst board said at the time it engaged independent financial and legal advisors and is evaluating the proposal consistent with its fiduciary duties. UniFirst stated it does not intend to comment further until the review is complete.

Outlook

For fiscal 2026, UniFirst reaffirmed guidance for consolidated revenue of $2.475 billion to $2.495 billion, compared with an estimate of $2.485 billion, and fully diluted EPS of $6.58 to $6.98, versus an estimate of $6.78.

The company stated that the outlook includes an estimated $7.0 million in costs related to its enterprise resource planning “Key Initiative” and does not include the impact of any future share repurchases.

UNF Price Action: UniFirst shares were down 5.56% at $188.00 at the time of publication on Wednesday, according to Benzinga Pro data.

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