Shlomo Rosenbaum: Sorry, my line was muted. This is a question basically for Mike, just a little bit going through some of the technical items in the quarter. Receivables days were up two days sequentially. I was wondering if there was a lot of business that came in at the end of the quarter. Are you seeing any changing patterns in what clients are paying or any other factors in that because the last time we saw 48 days was during COVID.
Mike Hansen: Shlomo, when our quarters end on a holiday and it seems like too many of them do, it does create a little bit of disruption in terms of the ability to collect the mail, the application. We have seen maybe just a touch of slowing in the AR, but we’ve not seen any, I’ll say deterioration from the standpoint of additional write-offs. But we did see a little bit of slowing, and the Thanksgiving holiday can usually contribute to that.
Shlomo Rosenbaum: Okay. Then in the OPM, the operating margin, the other unit was up very nicely sequentially, even though there’s one less day sequentially in the quarter. Could you just give us some of the mechanics or tell us just what’s going on on the ground over there? It’s increasing the margin very nicely and is that something that we should expect to continue at kind of that 16% level?
Mike Hansen: Well we — certainly the revenue growth is powerful in all of our businesses and when we see some really nice revenue growth, that’s important. The other thing that I would say is you know the uniform direct sale business went from a negative 2.7% in terms of revenue growth to 4.7%. And that is important for operating margins too. So we did see some nice improvement there in the direct sale. Nothing I would say that is noteworthy other than, again, some nice acceleration in the revenue.
Operator: And our next question comes from Leo Carrington from Citigroup. Please go ahead, Leo.
Leo Carrington: Thank you, and good morning. If I could ask a follow up on that point around the one-off or the cost that you called out in Q2 around current acquisition, training, technology. Were you calling them out to any of these one-off increases in nature or more to highlight where the spend is? And then in terms of the underlying margins and drop through in Q2 on your organic growth, do you see that as sustainable when you factor in the additional investment this quarter?
Mike Hansen: Well, Leo, I’ll start with, we call them out because we think it’s important to make sure that our investors understand that we are looking at the long term and we want to continue to invest in the business. And those investments are really important and they set up, let’s say, more penetration opportunities, more cross-sell opportunities, but also productivity improvements, capacity utilization opportunities. In these cases, we wanted to call them out to show that, look, we’re focused on the long-term and we’re going to continue in the business. As Todd said a couple times, the future is bright for us and we want to make sure that we take advantage of that bright future by investing in the business and the call outs were really more about that.
The future is bright. In the quarter, we had incremental margins of 27%. Look, our expectation is that we’re going to be in the 20% to 30% range going forward. We recognize that when we’re sitting at 21%, they need to be in the higher level of that range. And we think that’s — that we can continue to do that. And when we talk about things like SAP and technology and other investments, and by the way, we’re able to get 27% even when we’re investing in the business. But we give those to say we’re setting up those future margin and revenue opportunities. It’s important for us to, I think, communicate that.
Leo Carrington: Very clear. Thank you.
Operator: And our next question comes from Toni Kaplan from Morgan Stanley. Please go ahead, Toni.
Toni Kaplan: Thanks very much. You mentioned the success that you’ve had with the branded products earlier, particularly with Carhartt and Chef Works. Could you just remind us if these are exclusive relationships and how long the relationships are for and then are there any other areas that could benefit from branded products or equipment that you could offer as well?
Todd Schneider: Good morning, Toni, thank you for the question. So we’ve had a long standing relationship with Carhartt and Chef Works, and we are the exclusive licensees for those folks, for those companies on the rental programs. And so we work with them to design products that the end users want, want to wear, and — but also that goes very well through our processing systems. So that’s all very important to us. As far as, we don’t get into contractual arrangements with them, but I can tell you this. We love products that our end users are, that get excited about wearing them. And Carhartt and Chef Works are two great examples of that, in great companies, great brands, great products. And as far as are there other opportunities, we’re constantly looking for that.
And we spend a lot of time with our customers and with our working partners to talk about that and to see where those opportunities do come from. But those are two great relationships, long-standing relationships that are really important to us.
Toni Kaplan: Yep, terrific. And maybe if you could just give us your latest thoughts on potential international expansion, that’d be great. Thanks.
