Executive Summary

Q2 2025 delivered modest top-line growth with clear margin progress: revenue rose 1.9% to $602.2M, operating income +11.7% to $31.2M, and diluted EPS +20% to $1.31, aided by lower merchandise and production costs; Adjusted EBITDA increased 6.3% to $68.9M .
Against S&P Global consensus, revenue was essentially in line ($602.2M vs $602.8M*) and GAAP EPS slightly below ($1.31 vs $1.34*); Q1 beat on EPS, Q4 beat on both revenue and EPS* .
FY25 guidance raised on EPS and trimmed on revenue: revenue range cut to $2.422–$2.432B (FX headwind), while diluted EPS lifted to $7.30–$7.70 on improved Core Laundry profitability and lower P&L impact from Key Initiative costs (~$12M, down from prior ~$16M) .
Capital allocation stepped up post-quarter: regular dividend declared and a new $100M share repurchase authorization (inclusive of remaining prior authorization) announced April 8, enhancing return-of-capital optionality .

Values marked with * are from S&P Global.

What Went Well and What Went Wrong

What Went Well

Margin execution: Core Laundry operating margin expanded 100 bps YoY to 4.6% (Adj. EBITDA margin +90 bps to 11.2%), driven by lower merchandise and production costs as a percent of revenue .
Cash generation and balance sheet: YTD operating cash flow rose 20.2% to $128.3M; cash and short-term investments reached $201.0M with no long-term debt .
Management tone on execution: “investments in the business are starting to show returns… improved profitability, cash flow and overall operational execution” — CEO Steve Sintros .

What Went Wrong

Specialty Garments profitability: operating margin fell to 16.7% from 22.8% on higher merchandise/production/selling payroll costs; the segment remains volatile given outage timing .
First Aid profitability: revenue grew 10.6% to $27.5M, but segment posted a nominal operating loss as investments continue in van operations .
Pricing/retention pressures persist: although retention improved YoY, net wearer levels declined and new account pricing remains “very competitive,” sustaining near-term top-line headwinds .

Financial Results

Headline metrics (chronological: oldest → newest)

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($M)	$639.9	$604.9	$602.2
Operating Margin %	8.4%	9.2%	5.2%
Adjusted EBITDA ($M)	$95.0	$94.0	$68.9
Diluted EPS ($)	$2.39	$2.31	$1.31

Versus S&P Global consensus (chronological: oldest → newest)

Metric	Q4 2024 Actual	Q4 2024 Consensus*	Q1 2025 Actual	Q1 2025 Consensus*	Q2 2025 Actual	Q2 2025 Consensus*
Revenue ($M)	$639.9	$634.7	$604.9	$606.6	$602.2	$602.8
Diluted/Primary EPS ($)	$2.39	$2.05	$2.31	$2.21	$1.31	$1.34

Values marked with * are from S&P Global.

Q4 2024: Revenue and EPS beat*. Q1 2025: EPS beat, revenue modest miss*. Q2 2025: essentially in line revenue, slight GAAP EPS miss vs consensus*.

Segment breakdown – Q2 YoY

Segment	Q2 2024	Q2 2025
Core Laundry Revenue ($M)	$522.4	$530.4
Core Laundry Operating Margin %	3.6%	4.6%
Core Laundry Adj. EBITDA Margin %	10.3%	11.2%
Specialty Garments Revenue ($M)	$43.5	$44.4
Specialty Garments Operating Margin %	22.8%	16.7%
Specialty Garments Adj. EBITDA Margin %	25.6%	20.4%
First Aid Revenue ($M)	$24.8	$27.5
First Aid Operating Margin %	-4.0%	-1.8%
First Aid Adj. EBITDA Margin %	-0.1%	1.8%

KPIs – Q2 2025

Energy cost: 4.2% of revenue
Key Initiatives expense (quarter): ~$1.9M; EPS impact ~$0.09
Cash & ST investments: $201.0M; No long-term debt
YTD operating cash flow: $128.3M (+20.2% YoY)
Share repurchases in Q2: 33k shares for $6.2M; $63.7M remaining under old authorization

Guidance Changes

Metric	Period	Previous Guidance (Jan 8)	Current Guidance (Apr 2)	Change
Revenue	FY 2025	$2.425–$2.440B	$2.422–$2.432B (FX headwind vs original)	Lowered (range trimmed)
Diluted EPS	FY 2025	$6.79–$7.19	$7.30–$7.70	Raised
Key Initiative Costs (P&L)	FY 2025	~$16M (expensed)	~$12M (revised down; more capitalized ERP)	Lowered
Core Laundry Organic Growth (midpoint)	FY 2025	~1.8%	~1.8% (unchanged)	Maintained
Guidance Exclusions	FY 2025	Excludes buybacks; one less week	Excludes buybacks; one less week; no tariff impact assumed	Clarified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24, Q1’25)	Current Period (Q2’25)	Trend
Pricing & Retention	“More challenging pricing environment” impacting retention; net wearer slowing; contract renewals/NPS improving	Retention improved YoY; net wearer declined; new account pricing remains very competitive	Stabilizing retention, competitive pricing persists
ERP/Tech & Key Initiatives	ERP through 2027; capitalizing costs; Adjusted EBITDA adopted	Key Initiative P&L cost reduced to ~$12M as more ERP costs capitalized; supports better Core Laundry margins	Positive enablement; lower P&L drag
Tariffs/Macro	Risk-factor mention; no explicit embed in outlook	No tariff impact embedded in guidance; potential short-to-midterm impact if enacted	Uncertain macro risk
First Aid & Cross-sell	Double-digit growth targeted for FY25	+10.6% revenue; investing in van ops; near break-even profitability	Growth ongoing; profitability lagging
Customer Experience (NPS)	NPS rolled out; improving; a lever for share gains	NPS continues to improve; tied to retention improvement	Improving service KPIs
Strategic/Corporate (Cintas)	Board rejected unsolicited proposal	Discussions ceased; focus on standalone plan	Process done; focus on execution

Management Commentary

Strategic focus: “We are excited that our investments in the business are starting to show returns… improved profitability, cash flow and overall operational execution” — CEO .
Margin drivers: “benefits recognized in merchandise and plant production expenses… partially offset by higher health care costs” — CEO .
Outlook confidence: EPS raise “primarily related to improvements… in the Core Laundry Operations” — CFO .
ERP accounting dynamics: higher share of ERP costs now capitalized, lowering P&L drag — CFO .
Growth indicators: “installed more new business… KPIs around contract renewals and NPS… trend favorably; notable improvements in customer retention” — CEO .

Q&A Highlights

Tariffs not in guidance: management lacks visibility; expects potential short- to mid-term impact if implemented, but expects to pivot with partners to mitigate over time .
Pricing/competition: New account pricing “very competitive”; existing customers more sensitive to price as inflation moderated; retention improving alongside NPS .
Margin trajectory: Q2 is seasonally least profitable; second-half margins expected to be better; prior year Q4 benefited from a 14th week (creates YoY headwind in FY25 Q4) .
Organic growth assumption: Core Laundry ~1.8% organic growth midpoint unchanged for FY25, with puts/takes across retention and adds/stops .
ERP cost mix: Reduction in Key Initiative P&L expense reflects greater capitalization in current ERP phase vs. lower total spend .

Estimates Context

Q2 2025: Revenue $602.2M vs $602.8M consensus*; GAAP diluted EPS $1.31 vs $1.34 consensus*.
Q1 2025: Revenue $604.9M vs $606.6M consensus*; GAAP diluted EPS $2.31 vs $2.21 consensus*.
Q4 2024: Revenue $639.9M vs $634.7M consensus*; GAAP diluted EPS $2.39 vs $2.05 consensus*.
Values marked with * are from S&P Global.

Sources: Company results ; consensus from S&P Global via GetEstimates.

Key Takeaways for Investors

Margin traction is real: Core Laundry cost disciplines (merchandise, production, staffing) are flowing through; expect second-half margin uplift vs seasonal trough in Q2 .
Guidance quality improved: EPS raised on operational strength and lower P&L drag from ERP capitalization, despite FX trimming the revenue range; this mix shift is supportive for multiple expansion .
Watch tariff risk: no tariff impact assumed; any adverse development could pressure COGS and margins near term .
First Aid remains a growth vector but near-term profit drag: continued investment in van operations; monitor for incremental profitability improvement as density scales .
Capital return optionality increased: new $100M buyback plus regular dividend; coupled with a net cash, no-debt balance sheet, provides downside support .
Demand indicators stabilizing: improved retention and NPS, strong new business installs; however, net wearer declines temper near-term growth .
Setup into FY26: Management reiterates mid-single-digit revenue growth and high-teens EBITDA margin as multi-year targets enabled by ERP; expect more visible inflection post-implementation cadence through FY27 .

Sources by section: Q2 2025 8‑K/press (financials, segments, guidance) ; Q2 2025 call (themes, drivers, Q&A) ; Q1 2025 8‑K/press/call ; Q4 2024 8‑K/press/call (baseline, seasonality, guidance) ; Dividend/repurchase PR .

UNIFIRST CORP (UNF)·Q2 2025 Earnings Summary