Shane O’Connor: I wouldn’t say there’s really been any shifts. And I think you sort of seeing that in the ads reductions, right? I think we’re probably seeing people a little bit more cautious about growth outlook overall, which is causing maybe some pullback in hiring. But again, I think it’s sort of incrementally cautious. But I wouldn’t say compared to a quarter ago that that’s really changed a heck of a lot.
Luke McFadden: Understood. And then if I can, pivoting to your ERP implementation, could you just provide any update on progress as it relates to that initiative to date just in terms of kind of where that’s trended in term of your internal expectations and in light of that progress is the $150 million number that you’ve given in the past for CapEx for full year 2024 still the right way to be thinking about that.
Steven Sintros: Yes, our ERP projects continues to progress sort of in line with our expectations. Again, we’re in the earlier implementation phases where we are focusing on maybe some more of the foundational items as we implement that system. At this point in time, I would say largely it’s progressing as expected. When you take a lower, as it relates to your question around the CapEx for the year, the $150 million I think through two quarters we spent a little over $72 million in CapEx and I thank the way things are trending that $150 million number still is a good number.
Operator: Our next question comes from the line of Andrew Steinerman with JP Morgan.
Andrew Steinerman: Hi. Could you talk a little bit about UniFirst success in cross-selling? Like right now, how much is cross-selling existing accounts helping the organic revenue growth? And overall, I know you talk about building out your vans business in first aid. This is really kind of a I would say a core laundry question, but are you getting more cross-sell of core laundry from your vans customers in first aid?
Steven Sintros: Yes, I’ll take the second part of the question first. Certainly, we are getting a lot of energy in cross-sell with our first aid expansion, and that was sort of the purpose of expanding that infrastructure to really take advantage of our UniFirst customer base, and I think that’s being successful. As far as from a core laundry perspective, and again, I know we don’t always break down the components of that growth. We’re probably seeing a consistent amount of cross-sell going on right now in the core. I had to guide; I really don’t want to break down the components of the 4.8. It gets a little messy with ads reductions in cross-sell and so on, but I think it’s pretty consistent. I think there’s more we can do there, and some of our strategy over the next couple of years is to increase some investments in that area.
I think without getting into some of the details about some of the products and other things that we’re looking at, we think there’s incremental opportunity there. So right now, it’s probably been pretty steady based on what we’ve been doing, but we think there’s opportunity to improve that area.
Operator: Our next question comes from the line of Justin Hawke with Baird.
Andy Wittmann: Hey, it’s Andy Whitman. Sorry for the confusion there. I just wanted to ask, Shane, you talked about the environmental liability on some of your sites increased and impacted your margins, this question, really two parts to this one. How much was the reserve this quarter, and do you see that reserve being kind of an adjustment that is one time, or do you think this is an ongoing level of greater cost that you’ll be having to take in your PML on a go-forward basis?
Shane O’Connor: Yes, so the first thing I’ll say about those reserve adjustments is those relate to legacy sites and those environmental issues were probably from three or four decades ago. So those are reserves that we’ve carried for a significant amount of time. The headwind that we saw during the quarter, our legal expenses were actually 50 basis points of headwind. The vast majority of that was related to the environmental reserves that we recorded. That isn’t in ongoing, you shouldn’t expect that there’s going to be ongoing reserve adjustments on a quarterly basis from time to time. We do have to adjust those. One of the adjustments that we make to those reserves are change in discount rates, and we’ve talked about that from time to time.
So we’ve had some variability go through our operating margins as a result of those types of changes, but they aren’t normal operating expenses that are routine and consistent. So every now and then, we’ll have to make some adjustments to those reserves, but it’s sporadic.
Steven Sintros: The only other thing I’ll add, Andy, is that some of the progress related to these sites transpires over years, and so we’ll be asked to do a little bit more work on a site, and we’ll try to estimate the impact of that, and then two years later, we’ll have some more feedback about something so as Shane mentioned, it was both that this quarter, as well as somewhat of the interest rate adjustments that we made to those reserves, as well.
Andy Wittmann: Yes. Okay. That all makes perfect sense. Then I guess the other key thing that you mentioned here in your margins was related to merchandise costs. This has been a lingering headwind, but it sounds like this is — the quarter where you saw a little positive benefit from there. Do you feel like that bottom is in place on the merchandise costs? I thought it was particularly interesting, given that new account installs were, sounded like they’re pretty good. You guys said positive things about that. So does that give a firmer base, do you think, Steve, on merchandise costs, and can you give us the quantum of the benefit that you saw in the quarter on that one, as well?
