UNF · UniFirst Corporation

UniFirst Corporation reported revenue of $622.5 million for Q2 FY2026, up 3.4% from $602.2 million in the prior year quarter. This growth stemmed from organic expansion in the Uniform & Facility Service Solutions segment, which encompasses core industrial laundry operations, distribution, sales, marketing, and supporting functions like information systems and human resources. Gross profit improved to $218.8 million, a 5.2% increase from $208.1 million, lifting the gross margin to 35.2%. This expansion occurred despite service staffing investments, likely from favorable merchandise costs relative to revenue growth.

Operating income decreased to $26.0 million from $31.2 million, a 16.7% decline, compressing the operating margin to 4.2%. The erosion reflects heightened selling, general, and administrative expenses tied to growth initiatives, including the ongoing ERP system rollout. Management notes the ERP implementation is advancing, with expectations that its supply chain and procurement capabilities will enable lower operating costs over time through enhanced inventory utilization, vendor management, improved customer order response times, and more efficient back-end processes. These enhancements are positioned to reduce customer churn, supporting long-term retention in the competitive uniform rental market.

Net income followed suit, falling 16.3% to $20.5 million, with diluted EPS at $1.13 versus $1.31 year-over-year. Cash generation remained robust at the operating level, with net cash provided by operating activities at $88.5 million, though down from prior periods. After capital expenditures of $77.3 million—elevated to fund industrial laundries and capacity expansions—free cash flow measured $11.2 million.