Income Taxes

12 Months Ended

Aug. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

4. Income Taxes

The provision for income taxes consists of the following (in thousands):

Year ended	2025		2024		2023
Current:
Federal	$	33,597	$	30,932	$	7,269
Foreign		1,907		1,231		2,519
State		8,667		6,007		2,695
Total current	$	44,171	$	38,170	$	12,483
Deferred:
Federal	$	2,282	$	4,027	$	19,227
Foreign		642		1,269		568
State		9		439		2,885
Total deferred	$	2,933	$	5,735	$	22,680
Total provision for income taxes	$	47,104	$	43,905	$	35,163

The following table reconciles the provision for income taxes using the statutory federal income tax rate to the actual provision for income taxes:

Year ended	2025			2024			2023
Income taxes at the statutory federal income tax rate		21.0	%		21.0	%		21.0	%
State income taxes		3.9			3.6			3.8
Adjustments to tax reserve		(0.4	)		(0.5	)		0.8
Other		(0.4	)		(0.9	)		(0.3	)
Effective income tax rate		24.1	%		23.2	%		25.3	%

The increase in the effective tax rate for fiscal 2025 compared to the prior fiscal year was to an increase in taxable permanent differences in fiscal 2025.

The components of deferred income taxes included on the Consolidated Balance Sheets are as follows (in thousands):

	August 30, 2025		August 31, 2024
Deferred tax assets:
Payroll and benefit related	$	16,578	$	16,009
Insurance related		14,694		14,067
Environmental		7,412		7,807
Accrued expenses		7,236		8,169
Operating lease liabilities		17,911		17,083
Research and development		4,891		6,243
Other		13,121		12,884
Total deferred tax assets	$	81,843	$	82,262
Deferred tax liabilities:
Payroll and benefit related	$	26,441	$	24,655
Property, plant and equipment		57,953		59,113
Purchased intangible assets		54,169		48,908
Rental merchandise in service		56,617		59,692
Operating lease right-of-use assets		17,356		16,575
Other		48		320
Total deferred tax liabilities		212,584		209,263
Net deferred tax liability	$	130,741	$	127,001

The Company regularly reviews deferred tax assets for recoverability based upon projected future taxable income and the expected timing of the reversals of existing temporary differences. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets will be realized.

Foreign tax effect

As of August 30, 2025, unremitted foreign earnings have been retained by the Company’s foreign subsidiaries for indefinite reinvestment. If the Company were to repatriate those earnings, in the form of dividends or otherwise, the Company could be subject to immaterial withholding taxes payable to the various foreign countries.

In October 2021, the Organization for Economic Co-operation and Development (“OECD”) introduced an inclusive framework to address tax challenges arising from the digitalization of the economy through a two-pillar solution. One of the components of the solution is the implementation of a global minimum corporate tax rate of 15% for large multinational corporations (“Pillar Two”). The OECD continues to release additional guidance on the two-pillar solution with implementation began in 2024 while reporting of the tax applicable will not occur until calendar 2026. Based on currently enacted guidelines, the Company does not expect Pillar Two to have a material impact upon its tax expense, cash taxes, and effective tax rate.

Uncertain tax positions

As of August 30, 2025, and August 31, 2024, there were $3.9 million and $4.6 million, respectively, of unrecognized tax benefits, of which $3.7 million and $4.5 million, respectively, would favorably impact the Company’s effective tax rate, if recognized. The Company recognized interest and penalties related to uncertain tax positions as a component of income tax expense which is consistent with the recognition of these items in prior reporting periods. As of August 30, 2025, and August 31, 2024, the Company had accrued a nominal amount in interest and penalties, in its long-term accrued liabilities. For fiscal 2025, 2024 and 2023, the Company recognized a nominal expense in its Consolidated Statements of Income related to interest and penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows (in thousands):

Balance at August 26, 2023	$	7,751
Additions based on tax positions related to the current year		1,069
Additions for tax positions of prior years		142
Reduction for tax positions of prior years		(4,257	)
Statute expirations		(67	)
Balance at August 31, 2024		4,638
Additions based on tax positions related to the current year		1,202
Additions for tax positions of prior years		—
Reduction for tax positions of prior years		(1,826	)
Statute expirations		(128	)
Balance at August 30, 2025	$	3,886

The Company has a significant portion of its operations in the U.S. and Canada. The Company is required to file federal income tax returns as well as state income tax returns in most of the U.S. states and in several Canadian provinces. At times, the Company is subject to audits in these jurisdictions, which typically are complex and can take several years to resolve. The final resolution of any such tax audits could result in either a reduction in the Company’s accruals or an increase in its income tax provision, both of which could have a material impact on the consolidated results of operations in any given period.

All U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2021 and 2017, respectively. With a few exceptions, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2022. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.