A：In the third quarter, Cpas Corporation's total revenue grew 8.9% to $2.84 billion. On an organic basis, which adjusts for impacts of acquisitions and foreign currency fluctuations, the revenue growth rate was 7%. Gross margin as a percent of revenue reached 51%, a 40 basis point increase over the prior year. Operating income grew to $659.9 million, and diluted EPS of $1.24 grew 9.7% over the prior year.

A：The updated guidance for fiscal 2026 is expecting revenue to be in the range of $11.21 billion to $11.24 billion, representing a total growth rate of 8.4% to 8.7%. The adjusted diluted EPS is expected to be in the range of $4.86 to $4.90, indicating a growth rate of 10.5% to 11.4%. However, the adjusted EPS guidance does not include the impact of non-recurring transaction expenses related to the acquisition of Unifi.

A：The merger with Unifi is subject to approval by Unifi shareholders, regulatory clearance in both the U.S. and Canada, and other customary closing conditions. The company has begun the process of satisfying these conditions to avoid speculation and will update the market appropriately, without providing further commentary on the process.

A：Cpas Corporation's business segments performed exceptionally well with traffic growth rates across all segments. Organic growth varied by segment: uniform rental and facility services grew by 14.6%, first aid and safety services by 10%, fire protection services by 3.1%, and uniform direct sale by script. Gross margin percentage varied across segments, with the highest increase of 30 basis points in the uniform rental facility services segment.

A：The strong financial performance was driven by continued top line growth and the effective management of many inputs within the company's control. Technologies like SAP were invested in to improve capabilities, and the supply chain's strong performance was a significant strategic advantage. Incremental margins were 28% for the quarter, adjusted for the one-time gain on the asset sale last year. The company remained focused on managing costs and investments to drive results.

A：The integration of Unifi's operations is expected to strengthen Cpas Corporation's ability to serve customers. The transaction is anticipated to close in the second half of calendar year 2026.

A：Selling and administrative expenses as a percentage of revenue were 27.8%, a 60 basis point increase from last year when adjusted for the one-time gain on the asset sale. Operating income was $659.9 million compared to $609.9 million last year. Operating income as a percentage of revenue was 23.2%, in line with 23.4% in the prior year's third quarter, adjusted for the one-time gain. The effective tax rate for the third quarter was 20.3%, impacted by discrete items such as the tax accounting for stock-based compensation. Net income for the third quarter was $502.5 million compared to $463.5 million last year, with diluted earnings per share of $1.24 compared to $1.13, an increase of 9.7%.

A：The non-recurring transaction costs related to the Unifirst acquisition are estimated to impact diluted earnings per share by an amount in the range of 3 cents to 4 cents and will be broken out on the income statement as a separate line item to provide visibility to these transaction-related costs.

A：Recent strategic investments in technology, capacity, talent, and sales capabilities are driving solid growth and margin progression, positioning the company to sustain long-term performance while helping customers achieve and surpass their image safety and compliance goals.

A：A one-time gain of about $60 million last year impacted the company's SG&A expenses. After accounting for this gain, SG&A expenses were effectively flat year over year. Sequentially, in the last fiscal year, SG&A expenses were up 100 basis points, which is actually 70 basis points when adjusted for the one-time gain.

A：The company has considered the potential impact of increased energy costs in their guide. Only 60% of their energy costs are related to fuel for their vehicles, which equates to about 100 basis points. A 30% increase in fuel cost, if sustained over an entire quarter, would add approximately 150 basis points of cost to their results. The company is aware of the impact but believes it is manageable and has contemplated this in their guide.

A：The company does not have a fuel surcharge and prefers not to just pass on costs but instead focuses on being consistent for customers, extracting out inefficiencies in other ways, and still hitting financial goals.

A：The company expects to continue generating strong cash flow and maintaining a strong balance sheet after the merger. They anticipate keeping debt to EBITDA at 1.5, and do not foresee any material changes in capital allocation priorities, including reinvesting in the business through CapEx, strategic M&A, and returning capital to shareholders through dividends and buybacks.

A：Unifirst's higher CapEx was attributed to their efforts to catch up on technology systems. Post-merger, the company is in a good position from a technology footprint and plans to continue investing to ensure competitiveness in the marketplace. They expect that their similar approach to investments and long-term thinking, as well as the similarity in company culture, will position them well for the future.

A：The company aims for a mid to high single-digit total growth rate, with major contributors being new business acquisitions and retention rates. Approximately two-thirds of new business acquisition comes from the do-it-yourself space and continues to perform well. The company is comfortable with their current retention rate of around 95%. Cross-selling opportunities within the current customer base have also been highly effective for the company.

A：Gross margin at 51% for the quarter is a result of the team's excellent execution and a culture of continuous process improvement. Key drivers include strong revenue growth creating leverage, and ongoing initiatives to remove inefficiencies and expenses. The company is focused on maintaining and improving gross margins, with investments in technology and product lines to support customers in a complex environment. They believe there is a long runway of opportunity within their current customer base and expect new business and cross-selling to continue to slightly improve.

A：The factors that contributed to the company's strong revenue mix and investment timing include the fluctuation of revenue mix in both first aid and fire protection businesses and the strategic timing of investments, which the team executed well.

A：It is important to continue making investments in the business to ensure long-term delivery of results and to position the company for long-term success, as running a business is not linear.

A：The company faces challenges with tariffs, but their supply chain team has responded effectively by minimizing the impact of any increases in tariffs. The team is handling the process and it is not expected to be material in terms of affecting future results.

A：The company's investments and growth initiatives are expected to continue at a steady pace, as they have been actively investing and plan to continue doing so. The future looks incredibly bright due to the immense opportunity in the market.

A：The company has a strong balance sheet and cash flow, which allows for share repurchases. Although there were limitations during the quiet period, post-vote and agreement restrictions, the company will be able to buy back stock opportunistically once those restrictions are lifted.

A：The company views its customer base as resilient and has observed slight improvements in growth from current customers. However, job reports are not as robust as desired, yet customers remain confident in the company's products.

A：The company is acquisitive in all its business segments and is focused on being opportunistic in the fire business, preferring service business over installation type business. The company will continue to pursue acquisitions, with an emphasis on the right mix of business.

A：The focus of the apparel plus program is to align with the company's culture of innovation and dynamic movement towards future opportunities. It aims to outfit people for various jobs across North America with the right apparel for their work preferences.

A：The strategy for route integration and optimization following acquisitions involves using smart car technology to approach routing efficiency with minimal disruption within facilities and when making acquisitions. This includes retaining existing route structures and allowing incremental moves for gaining efficiency over time rather than consolidating all routes at once, which could be highly disruptive.

A：Larger customers are reacting positively to the acquisition. They understand they have many options and are clear that they can choose whether to work with the company on a national or local level, just as they would with any other local company. National customers are mainly focused on negotiating centralized terms and conditions, allowing their locations to decide whom to do business with. The feedback indicates that customers see improvements in technology, infrastructure, and delivery speed, as well as more time dedicated to their business, as positive changes that outweigh any potential one-time costs.

A：The company does not describe the feedback from customers as dissynergies, although there will be one-time costs. However, the combination of the company's script companies is expected to be beneficial for all constituents, including customers, employees, partners, teams, and shareholders. The company's approach to managing the business and timing of investments has not changed, and the attractiveness of the projected incremental margins in Q4 is due to the company's long-term strategy and prudent investment approach.

A：The conversion cycle and win rate for first-time buyers have not shown any significant changes. The company's verticals, such as healthcare, hospitality, education, and state and local government, have all performed well in terms of employment and are expected to continue to do so in the future.

A：The progress on the fire ERP implementation is satisfactory, although the exact timing for a full rollout in the next fiscal year is still uncertain. The previously mentioned 100 basis point margin headwind for next year is still a relevant figure, but the actual impact will depend on when the business goes live with the new system. Since the full rollout is not expected by June, the margin impact will be less than the 100 basis points referenced.