MSC INDUSTRIAL DIRECT CO INC
For the period ended Aug 29, 2026. Filed Oct 22, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Oct 22, 2026
MSM$113.27+2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-08-30; filed 2025-10-23.
0001003078-25-000123
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2026-08-29; filed 2026-10-22.
0001003078-26-000110
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 121 current paragraphs.
62 unchanged; 40 reworded; 18 added; 10 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
We intend to complement our foundational strengths with investments in capabilities that support future growth. In fiscal year 2026, we invested in our dedicated customer experience organization, expanded our marketing programs, rolled out several E-commerce enhancements and completed our sales optimization initiative. These investments target continued expansion of our solutions offerings, engagement with the core customer, productivity improvements and our goal of reducing operating expenses as a percentage of net sales.
Current report
•We recognized asset impairments and other charges, primarily related to the Company’s digital core implementation, of $43.7 million. See Note 8, “Asset Impairments and Related Charges” in the Notes to Consolidated Financial Statements for additional information.
Current report
•We amended our Receivables Purchase Agreement (the “RPA”) which increased the amount available under the facility by $50.0 million. Proceeds from the amended RPA were utilized to pay down existing debt on our credit facilities.
Current report
•We acquired the remaining noncontrolling interest of Wm. F. Hurst Co. LLC, and of both MSC Industrial Supply, S. de R.L. de C.V. and MSC Import Export LLC, which, as of the respective acquisition dates, eliminated the consolidated noncontrolling interest balance and the allocation of future earnings to noncontrolling shareholders. See Note 6, “Acquisitions” in the Notes to Consolidated Financial Statements for additional information.
Current report
International Emergency Economic Powers Act (“IEEPA”) Tariff Refunds
Current report
On February 20, 2026, the United States Supreme Court issued a ruling invalidating certain tariffs originally mandated under IEEPA. As a result, the United States Court of International Trade ordered the United States Customs and Border Patrol to process refunds for tariffs collected under IEEPA. As a distributor, we are not the importer of record for most products we sell. However, during the fiscal year ended August 29, 2026, we formally submitted refund claims and received cash refunds for certain tariffs which had previously been paid by the Company as the importer of record and are now disallowed under the United States Supreme Court ruling. As of August 29, 2026, cash refunds received were not material. Refunds attributable to inventory previously sold have been recognized within Cost of goods sold on the Consolidated Statement of Income, while refunds attributable to inventory remaining on hand have been reflected in Inventories on the Consolidated Balance Sheet and will be recognized through Cost of goods sold as the related inventory is sold. The ultimate availability, timing and amount of potential refunds remains uncertain and subject to regulatory, legal and administrative developments. As of August 29, 2026, we have not recorded an additional receivable related to such tariff refunds due to the aforementioned uncertainty; however, we may recognize additional benefits in future periods.
Current report
Following the Supreme Court’s ruling on IEEPA tariffs, the United States Executive Branch introduced new tariffs under a different statutory authority. There remains significant uncertainty regarding the scope and duration of current and potential tariffs. The Company continues to monitor and evaluate these developments and assess their potential impact on the Company’s business, financial condition and results of operations.
Current report
During fiscal year 2026, the Company experienced a more constructive demand environment compared to much of fiscal year 2025. The heavy manufacturing industry, which represented 58% of our revenues during the year ended August 29, 2026, showed signs of expansion. Several IP subindexes, including Aerospace, Machinery and Equipment, Primary Metals and Fabricated Metals improved. Non-manufacturing demand, in particular the Company’s public sector end-market, recovered from lower sales resulting from the federal government shutdowns earlier in fiscal year 2026.
Current report
Depreciation and amortization was $99.5 million for fiscal year 2026, as compared to $88.4 million for fiscal year 2025. The increase was primarily driven by capital expenditures to support our strategic growth initiatives and expanded solutions footprint.
Current report
Advertising expense was $53.5 million for fiscal year 2026, as compared to $46.7 million for fiscal year 2025. The primary driver of the increase was higher search engine marketing spend and paid media investments as part of the Company’s enhanced marketing efforts which began midway through fiscal year 2025.
Current report
Asset Impairment and Related Charges
Current report
We incurred $43.7 million in asset impairments and related charges for fiscal year 2026, which were primarily attributable to the Company’s digital core implementation. See Note 8, “Asset Impairments and Related Charges” in the Notes to Consolidated Financial Statements for additional information.
Current report
•an increase in inventories in the current fiscal year compared to relatively flat inventories in the prior year due to inventory management countermeasures in response to tariffs and to support sales growth;
Current report
•an increase in accounts receivable in the current fiscal year compared to relatively flat accounts receivable in the prior year attributable to increased sales levels, which was partially offset by the RPA amendment;
Current report
•an increase in non-cash transactions in the current fiscal year, including $43.7 million of impairment and related charges, higher stock-based compensation and higher depreciation and amortization; and
Current report
Working capital and current ratio increased compared to August 30, 2025, primarily due to higher balances of inventories and accounts receivable.
Current report
•acquisition of the remaining interest of Wm. F. Hurst Co., LLC for $8.2 million which increased the Company's ownership from 80% to 100%.
Current report
The Company has issued several series of unsecured senior notes in private placement transactions. As of August 29, 2026, the total amount of outstanding private placement notes was $200.0 million. See Note 11, “Debt” in the Notes to Consolidated Financial Statements for more information about these transactions.
Removed paragraphs (10)
Previous report
•We disposed of the Columbus CFC with a sales price of $32.0 million, which resulted in a loss on sale of property of approximately $1.2 million after the settlement of certain closing costs and fees. See Note 7, “Property, Plant and Equipment” in the Notes to Consolidated Financial Statements for additional information.
Previous report
The first phase of our Company-wide initiative, referred to as “Mission Critical,” focused on market share capture and improved profitability. We successfully executed on the first phase of Mission Critical initiatives at the end of fiscal year 2023, which included solidifying our market-leading metalworking business, with an emphasis on selling our product portfolio, expanding our solutions, improving our digital and E-commerce capabilities and diversifying our customers and end-markets. The next phase of our Mission Critical journey, which began in fiscal year 2024, is anchored in three pillars: (i) maintaining the momentum of the first phase of the Mission Critical program and our existing growth drivers, (ii) increasing our focus on both core customers and OEM fasteners, and (iii) driving productivity improvements and reducing operating expenses as a percentage of net sales. To accomplish the next phase of our Mission Critical journey, we intend to leverage investments in advanced analytics to improve supply chain performance and upgrade our digital core to unlock productivity within our order-to-cash and procure-to-pay processes. We completed our web price realignment initiative in fiscal year 2024 and launched our enhanced marketing efforts and rolled out several E-commerce enhancements during fiscal year 2025.
Previous report
During fiscal year 2025, the Company experienced soft demand for the products and services it offers. This soft demand was felt more acutely in the heavy manufacturing industry, which represented 58% of our revenues during the year ended August 30, 2025. These trends did improve during the fourth quarter, with several subindexes such as Machinery & Equipment, Aerospace, Automotive and Primary Metals indicating expansion. Despite moderate improvement in certain end-markets during the fourth quarter, including our public sector end-market, the demand environment for the Company’s products was softer than the demand environment for the economy as a whole during fiscal year 2025, which we believe is due to the concentration of the Company’s customers in these and other subindex industries, which lagged the IP index as a whole.
Previous report
(3)Includes changes in customer end-market classifications as a result of the transition from the Standard Industrial Classification (SIC) to the North American Industry Classification System (NAICS) in the first quarter of fiscal year 2025.
Previous report
(4)Includes reclassifications of certain customers during fiscal year 2024, primarily between national account customers and core and other customers.
Previous report
Depreciation and amortization was $88.4 million for fiscal year 2025, as compared to $80.5 million for fiscal year 2024. The primary drivers of the increase in depreciation and amortization were increased capital expenditures related to E-commerce and digital initiatives.
Previous report
•a decline in inventories in the prior year period primarily attributable to lower sales and purchase volume as well as inventory optimization efforts; partially offset by
Previous report
Working capital decreased compared to August 31, 2024, primarily due to a higher balance in the Current portion of debt including obligations under finance leases.
Previous report
The components contributing to the use of cash for fiscal year 2025 and fiscal year 2024 were primarily the following:
Previous report
In July 2016, we completed the issuance and sale of unsecured senior notes. In June 2018 and March 2020, we entered into additional note purchase agreements. In April 2024, the Company completed the issuance and sale of unsecured senior notes. See Note 10, “Debt” in the Notes to Consolidated Financial Statements for more information about these transactions.
Reworded paragraphs (40)
Previous wording
MSC is a leading North American distributor of a broad range of metalworking and MRO products and services. We help our customers drive greater productivity, profitability and growth with approximately 2.5 million products, inventory management and other supply chain solutions, and deep expertise from more than 80 years of working with customers across industries. We continue to implement our strategies to gain market share, generate new customers, increase sales to existing customers, and diversify our customer base.
Current wording
MSC is a leading North American distributor of a broad range of metalworking, MRO and production fastener and hardware products and services. We help our customers drive greater productivity, profitability and growth with approximately 2.5 million products, inventory management and other supply chain solutions, and deep expertise from more than 80 years of working with customers across industries. We continue to implement our strategies to gain market share, generate new customers, increase sales to existing customers, and diversify our customer base.
Previous wording
Our experienced team of more than 7,000 associates works with our customers to help drive results for their businesses, from keeping operations running efficiently today to continuously rethinking, retooling and optimizing for a more productive tomorrow. We offer approximately 2.5 million active, saleable SKUs through our catalogs; our brochures; our E-commerce channels, including the MSC website; our inventory management solutions; and our customer care centers, customer fulfillment centers, regional inventory centers and warehouses. We service our customers from five customer fulfillment centers, nine regional inventory centers, 38 warehouses and five manufacturing locations. Many of our products are carried in stock, and orders for these in-stock products are typically fulfilled the day on which the order is received.
Current wording
Our experienced team of more than 7,000 associates works with our customers to help drive results for their businesses, from keeping operations running efficiently today to continuously rethinking, retooling and optimizing for a more productive tomorrow. We offer approximately 2.5 million active, saleable SKUs through our catalogs; our brochures; our E-commerce channels, including the MSC website; our inventory management solutions; and our customer care centers, customer fulfillment centers, regional inventory centers and warehouses. We service our customers from five customer fulfillment centers, eight regional inventory centers, 37 warehouses and five manufacturing locations. Many of our products are carried in stock, and orders for these in-stock products are typically fulfilled the day on which the order is received.
Previous wording
Our business model centers on delivering value-added services that address complex procurement challenges for our customers, with a focus on reducing total procurement costs and enabling just-in-time delivery through integrated solutions. We focus on offering inventory, process and procurement solutions that reduce supply chain costs and improve plant floor productivity for our customers. We aim to achieve ongoing cost reductions throughout our business by implementing cost-savings strategies and leveraging our existing infrastructure. Additionally, we support our customers' growth and profitability by ensuring operational efficiency through technologies such as our VMI, CMI and vending programs — helping reduce downtime and ensure critical products are available when and where they are needed. Our vending machines in service totaled 29,611 as of August 30, 2025, compared to 27,003 as of August 31, 2024, and our in-plant programs totaled 411 locations as of August 30, 2025, compared to 342 as of August 31, 2024. Our sales force, which focuses on a more complex and high-touch role, drives value for our customers by enabling them to achieve higher levels of growth, profitability and productivity. Our field sales and service associate headcount was 2,636 at August 30, 2025 compared to 2,697 at August 31, 2024.
Current wording
Our business model centers on delivering value-added services that address complex procurement challenges for our customers, with a focus on reducing total procurement costs and enabling just-in-time delivery through integrated solutions. We focus on offering inventory, process and procurement solutions that reduce supply chain costs and improve plant floor productivity for our customers. We support our customers' growth and profitability by ensuring operational efficiency through technologies such as our VMI, CMI and vending programs.
Previous wording
Our primary objective is to grow sales profitably while offering our customers highly technical and high-touch solutions to solve their most complex challenges on the plant floor. We have experienced success to date as measured by the growth rates of our high-touch programs, such as vending and in-plant programs, and the rate of new customer implementations. Our strategy is to position ourselves as a mission-critical partner to our customers. We intend to selectively pursue strategic acquisitions that expand or complement our business in new and existing markets or further enhance the value and offerings we provide.
Current wording
Our strategy is to position ourselves as a mission-critical partner to our customers. We focus on our existing growth drivers including our market-leading metalworking business and providing customers highly technical and high-touch solutions to solve their most complex challenges on the plant floor. We have experienced success to date as measured by the growth rates of our high-touch programs, such as vending and in-plant programs. To supplement our metalworking and MRO business, we have expanded our Class C Consumables and original equipment manufacturer (“OEM”) product offerings through strategic acquisitions to further enhance value to our customers and enable cross-selling across our broad product portfolio.
Previous wording
•We generated $333.7 million of cash from operations compared to $410.7 million in fiscal year 2024. The decrease was primarily from lower net income and a decline in inventories in the prior year period.
Current wording
•We generated $306.5 million of cash from operations compared to $333.7 million in fiscal year 2025.
Previous wording
•We had net payments of $21.5 million on our credit facilities and private placement debt compared to net borrowings of $53.5 million in fiscal year 2024.
Current wording
•We had net payments of $5.0 million on our credit facilities and private placement debt compared to net payments of $21.5 million in fiscal year 2025.
Previous wording
•We repurchased $39.3 million of Class A Common Stock compared to $187.7 million in fiscal year 2024, excluding excise taxes in both years. The higher share repurchase volume in the prior year included shares purchased to offset the share dilution resulting from the Reclassification.
Current wording
•We repurchased $14.0 million of Class A Common Stock compared to $39.3 million in fiscal year 2025, excluding excise taxes in both years.
Previous wording
•We paid out an aggregate $189.7 million in regular cash dividends, compared to an aggregate $187.3 million in regular cash dividends in fiscal year 2024.
Current wording
•We paid out an aggregate of $194.3 million in regular cash dividends, compared to an aggregate of $189.7 million in regular cash dividends in fiscal year 2025.
Previous wording
•We incurred $11.0 million in restructuring and other costs compared to $14.5 million in fiscal year 2024. Restructuring and other costs primarily consisted of associate severance and separation costs and consulting-related costs.
Current wording
•We incurred $8.7 million in restructuring and other costs compared to $11.0 million in fiscal year 2025, consisting primarily of current year severance and separation costs as well as consulting-related costs in the current and prior fiscal year.
Previous wording
1 Both fiscal years 2025 and 2024 had 252 sales days
Current wording
1 Fiscal year 2026 had 253 sales days and fiscal year 2025 had 252 sales days.
Previous wording
The United States economy has experienced various macroeconomic pressures in recent years including an elevated inflationary environment, sustained high interest rates and general economic and political uncertainty. These pressures have impacted, and may continue to impact in the future, the Company’s business, financial condition and results of operations. More recently, new and expanded tariffs have contributed to heightened macroeconomic uncertainty. The impact from tariffs was most significant in the Company’s fourth fiscal quarter of 2025, and the Company anticipates increased pressure from tariffs in fiscal year 2026 as the impact from such tariffs continues.
Current wording
The United States economy has experienced various macroeconomic pressures in recent years including pricing pressure from tariffs and inflation, sustained high interest rates, increased fuel costs and general economic and political uncertainty. The impact from tariffs, which was most significant in the latter half of the Company's fiscal year 2025, has continued through fiscal year 2026. Furthermore, as a supplier to the United States federal government, the federal government shutdown during the Company’s fiscal first quarter and the partial federal government shutdowns during the Company’s fiscal second quarter negatively impacted sales to our public sector end-market. Additionally, increased fuel costs resulting from the conflict within Iran and geopolitical tensions in the region have increased macroeconomic uncertainty generally and may lead to higher freight expense and cost pressure on the products offered by the Company. These pressures have impacted, and may continue to impact in the future, the Company’s business, financial condition and results of operations.
Previous wording
We utilize various indices when evaluating the level of our business activity, including the Industrial Production (“IP”) Index. Approximately 67% of our revenues came from sales in the manufacturing sector during the quarter and year ended August 30, 2025. Through statistical analysis, we have found that trends in our customers’ activity have correlated to changes in the IP Index. The IP Index measures short-term changes in industrial production. Growth in the IP Index from month to month indicates growth in the manufacturing, mining and utilities industries. The IP Index over the three months ended August 30, 2025 and the average for the three- and 12-month periods ended August 30, 2025 were as follows:
Current wording
We utilize various indices when evaluating the level of our business activity, including the Industrial Production (“IP”) Index. Approximately 67% of our revenues came from sales in the manufacturing sector during the quarter and year ended August 29, 2026. Through statistical analysis, we have found that trends in our customers’ activity have correlated to changes in the IP Index. The IP Index measures short-term changes in industrial production. Growth in the IP Index from month to month indicates growth in the manufacturing, mining and utilities industries. After giving effect to the annual technical revisions to calculations of the IP Index which occurred in November 2025, the IP Index over the three months ended August 29, 2026 and the average for the three- and 12-month periods ended August 29, 2026 were as follows:
Previous wording
The average IP Index for the 12 months ended August 30, 2025 of 103.3 increased from the average from the prior fiscal year of 102.7. The IP Index for the fourth fiscal quarter of 2025 of 104.0 increased compared to the prior year period of 102.9 and increased slightly compared to the prior quarter of 103.7.
Current wording
The average IP Index for the 12 months ended August 29, 2026 of 102.0 increased from the average from the prior fiscal year of 100.7. The IP Index for the fourth fiscal quarter of 2026 of 103.0 increased compared to the prior year period of 101.7 and increased slightly compared to the prior quarter of 102.3.
Previous wording
Net sales in fiscal year 2025 decreased 1.3%, or $51.4 million, from the prior fiscal year. The $51.4 million decrease in net sales was comprised of $88.1 million of lower sales volume and $5.9 million of unfavorable foreign exchange impact, partially offset by $21.6 million from improved pricing, inclusive of changes in customer and product mix, discounting and other items and $21.0 million of net sales from recent acquisitions. Of the $51.4 million decrease in net sales during fiscal year 2025, sales to our core and other customers decreased by $45.5 million, sales to our national account customers decreased by $33.1 million, partially offset by an increase in sales to our public sector customers of $27.2 million.
Current wording
Net sales in fiscal year 2026 increased 6.4%, or $240.2 million, from the prior fiscal year. The $240.2 million increase in net sales was comprised of a positive impact from pricing of $236.3 million and favorable foreign exchange impact of $5.7 million, partially offset by $1.8 million of lower sales volume. The positive pricing impact was inclusive of changes in customer and product mix, discounting, favorable pricing actions and other items. Of the $240.2 million increase in net sales during fiscal year 2026, sales to our core and other customers increased by $165.4 million, sales to our national account customers increased by $72.3 million, and sales to our public sector customers increased by $2.5 million.
Previous wording
We believe that our ability to transact business with our customers through various electronic portals and directly through the MSC website gives us a competitive advantage over smaller suppliers. Sales made through our E-commerce platforms, including sales made through electronic data interchange systems, VMI systems, Extensible Markup Language ordering-based systems, vending, hosted systems and other electronic portals, represented 63.8% of consolidated net sales for fiscal year 2025, compared to 63.6% of consolidated net sales for fiscal year 2024.
Current wording
We believe that our ability to transact business with our customers through various electronic portals and directly through the MSC website gives us a competitive advantage over smaller suppliers. Sales made through our E-commerce platforms, including sales made through electronic data interchange systems, VMI systems, Extensible Markup Language ordering-based systems, vending, hosted systems and other electronic portals, represented 63.7% of consolidated net sales for fiscal year 2026, compared to 63.8% of consolidated net sales for fiscal year 2025.
Previous wording
Gross profit decreased 2.3% to $1,536.1 million in fiscal year 2025, as compared to $1,572.8 million in fiscal year 2024. Gross profit margin was 40.8% in fiscal year 2025, as compared to 41.2% in fiscal year 2024. The decrease in gross profit was primarily a result of lower sales volume, as described above. The decrease in gross profit margin was primarily a result of higher inventory cost and change in customer mix, as sales to public sector customers grew as a percentage of overall sales and our sales to public sector customers transact at lower gross profit margins than the business as a whole.
Current wording
Gross profit increased 6.7% to $1,639.3 million in fiscal year 2026, as compared to $1,536.1 million in fiscal year 2025. Gross profit margin was 40.9% in fiscal year 2026, compared to 40.8% in fiscal year 2025. The increase in gross profit was primarily a result of higher net sales, as described above, while the increase in gross profit margin was primarily a result of favorable pricing actions.
Previous wording
Operating expenses increased 4.8% to $1,223.6 million in fiscal year 2025, as compared to $1,167.9 million in fiscal year 2024. Operating expenses were 32.5% of fiscal year 2025 net sales, as compared to 30.6% for fiscal year 2024. The increase in operating expenses and operating expenses as a percentage of net sales was primarily attributable to higher payroll and payroll-related costs and investments supporting our digital initiatives and solutions growth.
Current wording
Operating expenses increased 3.5% to $1,266.3 million in fiscal year 2026, as compared to $1,223.6 million in fiscal year 2025. Operating expenses were 31.6% of fiscal year 2026 net sales, as compared to 32.5% for fiscal year 2025. The increase in operating expenses was primarily attributable to higher depreciation and amortization expense, advertising expense and stock-based compensation expense. The decrease in operating expenses as a percentage of net sales was primarily due to growth in net sales outpacing the increase in operating expenses.
Previous wording
Payroll and payroll-related costs were approximately 57.0% of total operating expenses in fiscal year 2025, as compared to 56.1% in fiscal year 2024. Payroll and payroll-related costs, which include salary, incentive compensation, sales commission, and fringe benefit costs, increased by $42.4 million for fiscal year 2025. The majority of this increase compared to the prior fiscal year was due to higher incentive compensation as well as higher salary expenses from our annual merit increases.
Current wording
Payroll and payroll-related costs were approximately 54.8% of total operating expenses in fiscal year 2026, as compared to 57.0% in fiscal year 2025. Payroll and payroll-related costs, which include salary, incentive compensation, sales commission, and fringe benefit costs, decreased by $3.9 million for fiscal year 2026. Headcount reduction actions during fiscal year 2026 resulted in lower salary and sales commission costs, which were partially offset by our annual merit increase, higher incentive compensation accrual and fringe benefit costs.
Previous wording
Freight expense was $150.5 million for fiscal year 2025, as compared to $148.5 million for fiscal year 2024. The primary driver of the increase in freight expense was higher shipping rates incurred while servicing certain customers in the public sector.
Current wording
Freight expense was $147.2 million for fiscal year 2026, as compared to $150.5 million for fiscal year 2025. The primary driver of the decrease was favorable third-party shipping rates achieved through our network optimization initiatives and higher freight costs in the prior year incurred while servicing certain customers in the public sector.
Previous wording
We incurred $11.0 million in restructuring and other costs for fiscal year 2025, as compared to $14.5 million for the prior fiscal year. The decrease was primarily due to decreases in both associate severance and separation costs and consulting-related costs compared to the prior fiscal year. See Note 14, “Restructuring and Other Costs” in the Notes to Consolidated Financial Statements for additional information.
Current wording
We incurred $8.7 million in restructuring and other costs for fiscal year 2026, as compared to $11.0 million for the prior fiscal year. The decrease was primarily due to the decrease in consulting-related costs compared to the prior fiscal year. See Note 15, “Restructuring and Other Costs” in the Notes to Consolidated Financial Statements for additional information.
Previous wording
Income from operations decreased 22.8% to $301.6 million in fiscal year 2025, as compared to $390.4 million in fiscal year 2024. Income from operations as a percentage of net sales decreased to 8.0% infiscal year 2025, as compared to 10.2% in fiscal year 2024. The decrease in income from operations as a percentage of net sales was primarily attributable to, as described above, lower sales volume and gross profit margin and an increase in Operating expenses as a percentage of net sales.
Current wording
Income from operations increased 6.3% to $320.6 million in fiscal year 2026, as compared to $301.6 million in fiscal year 2025. Income from operations as a percentage of net sales remained comparable at 8.0% in both fiscal years 2026 and 2025. The increase in income from operations was primarily attributable to an increase in net sales, partially offset by higher operating expenses and asset impairments, as described above.
Previous wording
Total other expense decreased 20.3%, or $9.7 million, to $38.0 million for fiscal year 2025, as compared to $47.6 million for the prior fiscal year. The decrease was primarily due to lower interest rates and lower outstanding balances on our credit facilities, lower fees incurred associated with the Receivables Purchase Agreement (the “RPA”) entered into during fiscal year 2023 and the impact of prior year realized and unrealized losses on foreign exchange
Current wording
Total other expense decreased 24.9%, or $9.5 million, to $28.5 million for fiscal year 2026, as compared to $38.0 million for the prior fiscal year. The decrease was primarily due to the recognition of $5.1 million of employee retention credit (“ERC”) funds, lower interest costs on our credit facilities and current year remeasurement gains from foreign exchange.
Previous wording
Our effective tax rate for fiscal year 2025 was 24.9%, as compared to 25.3% for fiscal year 2024. See Note 8, “Income Taxes” in the Notes to Consolidated Financial Statements for further information.
Current wording
Our effective tax rate for fiscal year 2026 was 24.7%, as compared to 24.9% for fiscal year 2025. See Note 9, “Income Taxes” in the Notes to Consolidated Financial Statements for further information.
Previous wording
As of August 30, 2025, we had $56.2 million in cash and cash equivalents, substantially all with well-known financial institutions. Historically, our primary financing needs have been to fund our working capital requirements necessitated by our sales growth and the costs of acquisitions, new products, new facilities, facility expansions, investments in vending solutions, technology investments, and productivity investments. Cash generated from operations, together with borrowings under our credit facilities and net proceeds from the private placement notes, have been used to fund these needs, to repurchase shares of Class A Common Stock from time to time, and to pay dividends to our shareholders.
Current wording
As of August 29, 2026, we had $65.0 million in cash and cash equivalents, substantially all with well-known financial institutions. Historically, our primary financing needs have been to fund our working capital requirements necessitated by our sales growth and the costs of acquisitions, new products, new facilities, facility expansions, investments in vending solutions, technology investments, and productivity investments. Cash generated from operations, together with borrowings under our credit facilities and net proceeds from the private placement notes, have been used to fund these needs, to repurchase shares of Class A Common Stock from time to time, and to pay dividends to our shareholders.
Previous wording
As of August 30, 2025, total borrowings outstanding, representing amounts due under our credit facilities and notes, as well as all finance leases and financing arrangements, were $485.7 million, net of unamortized debt issuance costs of $1.5 million, as compared to total borrowings outstanding of $508.8 million, net of unamortized debt issuance costs of $0.8 million, as of August 31, 2024. The decrease in total borrowings outstanding was driven by a lower level of private placement debt. See Note 10, “Debt” in the Notes to Consolidated Financial Statements for more information about these balances.
Current wording
As of August 29, 2026, total borrowings outstanding, representing amounts due under our credit facilities and notes, as well as all finance leases and financing arrangements, were $476.9 million, net of unamortized debt issuance costs of $1.3 million, as compared to total borrowings outstanding of $485.7 million, net of unamortized debt issuance costs of $1.5 million, as of August 30, 2025. See Note 11, “Debt” in the Notes to Consolidated Financial Statements for more information about these balances.
Previous wording
We believe, based on our current business plan, that our existing cash, financial resources and cash flow from operations will be sufficient to fund anticipated capital expenditures and operating cash requirements for at least the next 12 months. We will continue to evaluate our financial position in light of future developments and to take appropriate action as it is warranted.
Current wording
We believe, based on our current business plan, that our existing cash, financial resources and cash flow from operations will be sufficient to fund anticipated capital expenditures, debt maturities and operating cash requirements for at least the next 12 months. We will continue to evaluate our financial position in light of future developments and to take appropriate action as it is warranted.
Previous wording
Net cash provided by operating activities for fiscal year 2025 and fiscal year 2024 was $333.7 million and $410.7 million, respectively. The decrease was primarily due to the following:
Current wording
Net cash provided by operating activities for fiscal year 2026 and fiscal year 2025 was $306.5 million and $333.7 million, respectively. The decrease was primarily due to the following:
Previous wording
•an increase in the change in accounts payable and accrued liabilities as compared to the prior year period primarily due to higher accounts payable and payroll and payroll related accruals
Current wording
•a decrease in the change in accounts payable and accrued liabilities as compared to the prior year period primarily due to lower accounts payable and payroll and payroll-related accruals; partially offset by
Previous wording
•a decrease in net income, as described above; and
Current wording
•an increase in net income, as described above
Previous wording
Days’ sales outstanding as of August 30, 2025 remained consistent compared to August 31, 2024.
Current wording
Days’ sales outstanding as of August 29, 2026 declined compared to August 30, 2025. The improvement in days’ sales outstanding was driven by the RPA amendment in the second quarter of fiscal year 2026.
Previous wording
Inventory turnover as of August 30, 2025 increased compared to August 31, 2024. Inventory turnover continues to improve due to lower purchase volumes, category management efforts and supply chain efficiencies to optimize inventory levels.
Current wording
Inventory turnover as of August 29, 2026 increased compared to August 30, 2025. Inventory turnover continues to improve due to category management efforts and supply chain efficiencies to optimize inventory levels. The recent increase in inventories is due to inventory management countermeasures in response to tariffs and to support recent sales growth.
Previous wording
Net cash used in investing activities for fiscal year 2025 and fiscal year 2024 was $63.3 million and $123.4 million, respectively. The use of cash for both fiscal years was primarily due to expenditures for property, plant and equipment mainly related to vending programs and other infrastructure and technology investments. The use of cash in fiscal year 2025 was partially offset by proceeds from the sale of the Columbus CFC and the use of cash in fiscal year 2024 also included payments for the acquisitions of KAR Industrial Inc., ApTex, Inc., Premier and SMRT.
Current wording
Net cash used in investing activities for fiscal year 2026 and fiscal year 2025 was $80.5 million and $63.3 million, respectively. The use of cash for both fiscal years was primarily due to expenditures for property, plant and equipment mainly related to expanding our solutions footprint and other infrastructure and technology investments. The use of cash in fiscal year 2025 was partially offset by proceeds from the sale of the Columbus CFC.
Previous wording
Net cash used in financing activities for fiscal year 2025 and fiscal year 2024 was $243.6 million and $307.4 million, respectively.
Current wording
Net cash used in financing activities for fiscal year 2026 and fiscal year 2025 was $217.1 million and $243.6 million, respectively, primarily due to the following:
Previous wording
•$189.7 million of regular cash dividends paid during fiscal year 2025 compared to $187.3 million of regular cash dividends paid during fiscal year 2024;
Current wording
•$194.3 million of regular cash dividends paid during fiscal year 2026 compared to $189.7 million of regular cash dividends paid during fiscal year 2025;
Previous wording
•$39.3 million in aggregate repurchases of Class A Common Stock during fiscal year 2025 compared to $187.7 million in aggregate repurchases of Class A Common Stock during fiscal year 2024; and
Current wording
•$14.0 million in aggregate repurchases of Class A Common Stock during fiscal year 2026 compared to $39.3 million in aggregate repurchases of Class A Common Stock during fiscal year 2025;
Previous wording
•net payments under our credit facilities and private placement debt of $21.5 million during fiscal year 2025 compared to net borrowings of $53.5 million during fiscal year 2024.
Current wording
•net payments under our credit facilities and private placement debt of $5.0 million during fiscal year 2026 compared to net payments of $21.5 million during fiscal year 2025; and
Previous wording
In April 2017, the Company entered into a$600.0 million revolving credit facility, which was subsequently amended and extended in August 2021, May 2023 and July 2025 (as amended, the “Amended Revolving Credit Facility”). Subsequent to the end of fiscal year 2025, the Company made additional net payments of $15.0 million through October 2, 2025 on the Amended Revolving Credit Facility. The current unused balance of $543.7 million from the Amended Revolving Credit Facility, which is reduced by outstanding letters of credit, is available for working capital purposes if necessary. As of August 30, 2025, the Company also had three uncommitted credit facilities, totaling$230.0 million of aggregate maximum uncommitted availability. As of August 30, 2025, we were in compliance with the operating and financial covenants of our credit facilities. See Note 10, “Debt” in the Notes to Consolidated Financial Statements for more information about our credit facilities.
Current wording
In April 2017, the Company entered into a$600.0 million revolving credit facility, which was subsequently amended and extended in August 2021, May 2023 and July 2025 (as amended, the “Amended Revolving Credit Facility”). Subsequent to the end of fiscal year 2026, the Company made additional net payments of $25.0 million through October 1, 2026 on the Amended Revolving Credit Facility. The unused balance of $555.5 million from the Amended Revolving Credit Facility, which is reduced by outstanding letters of credit, is available for working capital purposes if necessary. As of August 29, 2026, the Company also had three uncommitted credit facilities, totaling$230.0 million of aggregate maximum uncommitted availability. As of August 29, 2026, we were in compliance with the operating and financial covenants of our credit facilities. See Note 11, “Debt” in the Notes to Consolidated Financial Statements for more information about our credit facilities.
Previous wording
As of August 30, 2025, certain of our operations were conducted on leased premises. These leases are for varying periods, with the longest extending to fiscal year 2031. In addition, we are obligated under certain equipment and automobile operating and finance leases, which expire on varying dates through fiscalyear 2029.
Current wording
As of August 29, 2026, certain of our operations were conducted on leased premises. These leases are for varying periods, with the longest extending to fiscal year 2032. In addition, we are obligated under certain equipment and automobile operating and finance leases, which expire on varying dates through fiscal year 2030.
Previous wording
(1)Certain of our operations are conducted on leased premises. These leases (many of which require us to provide for the payment of real estate taxes, insurance and other operating costs) are for varying periods, with the longest extending to fiscal year 2031. In addition, we are obligated under certain equipment and automobile operating leases, which expire on varying dates through fiscal year 2028. See Note 11, “Leases” in the Notes to Consolidated Financial Statements for additional information on our operating lease arrangements.
Current wording
(1)Certain of our operations are conducted on leased premises. These leases are for varying periods, with the longest extending to fiscal year 2032. In addition, we are obligated under certain equipment and automobile operating leases, which expire on varying dates through fiscal year 2028. See Note 12, “Leases” in the Notes to Consolidated Financial Statements for additional information on our operating lease arrangements.
Previous wording
As of August 30, 2025, the Company had recorded a non-current liability of $2.6 million for tax uncertainties and interest. This amount is excluded from the table above, as the Company cannot make reliable estimates of these cash flows by period. See Note 8, “Income Taxes” in the Notes to Consolidated Financial Statements.
Current wording
As of August 29, 2026, the Company had recorded a non-current liability of $1.6 million for tax uncertainties and interest. This amount is excluded from the table above, as the Company cannot make reliable estimates of these cash flows by period. See Note 9, “Income Taxes” in the Notes to Consolidated Financial Statements.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Our vending machines in service totaled 31,078 as of August 29, 2026, compared to 29,611 as of August 30, 2025, and our in-plant programs totaled 431 locations as of August 29, 2026, compared to 411 as of August 30, 2025. Our sales force, which focuses on a more complex and high-touch role, drives value for our customers by enabling them to achieve higher levels of growth, profitability and productivity. Our field sales and service associate headcount was 2,515 at August 29, 2026 compared to 2,636 at August 30, 2025. The reduction in field sales and service associate headcount was attributable to headcount reduction actions taken during the first two quarters of fiscal year 2026 related to the Company’s sales optimization efforts and refreshed go-to-market strategy. See Note 15, “Restructuring and Other Costs” in the Notes to Consolidated Financial Statements for additional information.