Shane O’Connor : Yes. So again, when we acquired Clean, it was about $90 million. Their run rate for the quarter is largely in line with that. And actually — I’m sorry, I missed the second part of the question.
Timothy Mulrooney : No worries. I was just curious, is that extra work week always in the fourth quarter? Does it sometimes sit in different quarters? just curious when we should be adjusting for that out of organic growth?
Shane O’Connor : Yes, that’s a good question. Yes, the extra week is going to be in our fourth quarter. And we usually time it in the fourth quarter, historically have over the last number of instances, where we’ve had a 53-week year.
Timothy Mulrooney : Got it. Thank you.
Operator: Our next question comes from the line of Kartik Mehta with Dorscoast Research. Please proceed with your question.
Kartik Mehta : Good morning. Steve, maybe just your thoughts on where — how your customers are feeling about the economy. And obviously, based on the guidance, it seems as though you’re not anticipating much of a pullback on the economy, and I’m assuming that your customers are giving you pretty positive feedback on how they’re feeling about their business.
Steven Sintros: Yes. I would say a pretty stable environment. I think you see it with the some of the job creation numbers coming out recently. We’re obviously always cautious given the environment with interest rates, whether there’s another shoe to drop. But right now, I would say companies are still making investments, hiring. We see it a little bit on our own hiring side. It may be a little bit easier to bring in employees, but it’s still a competitive labor environment out there. Which, to us, tells us that people aren’t pulling back, and that’s really what we’re seeing from our customers right now. So, we think it’s a pretty healthy environment right now. Obviously, we continue to look out for any indicators of that turning, but we have not built any of that into our assumptions.
Kartik Mehta : And then, Steve, I think you had said or maybe, Shane, on pricing that you’re expecting a little bit of a pullback from where you were last year just because of what’s happened with inflation. And I’m wondering, is any of that pullback related to a change in the environment, where you’re seeing extra competition? Or is this all related to just lower inflation or customers are asking — aren’t willing to pay that extra like they did a year or two ago?
Steven Sintros: Yes. I think everyone is trying to be as cautious as they can with cost. Ourselves included and our customers included. I think as far as the competitive environment goes, I think it remains, right? It remains stable from prior quarters, prior years. It’s aggressive, it’s competitive, but I wouldn’t say there’s been any near-term change in that. And we continue to work with our customers. So, I don’t want to give the impression that we can’t obtain price as necessary given the environment, but it’s a little bit pulled back from a year ago, I would say.
Kartik Mehta : Right. And just one last question. I think, Shane, you talked about on the Specialty Garment side that you’re expecting nuclear. That part of the business to be down, but Clean energy should continue to grow. What’s the breakout of that business within that segment?
Shane O’Connor : At this point in time, that segment is about 50-50 nuclear versus cleanroom.
Operator: Our next question comes from the line of Andy Wittman with Brad. Please proceed with your question.
Andrew Wittmann: Good morning. I guess I just wanted to make sure I understood the ’24 guidance a little bit better. So, Shane, I guess maybe this one is coming our way. If I looked at it on a Clean basis, excluding your key initiatives costs, it looks like the EBITDA margins implied about 13% compares to about 13% if you adjust out the factors in ’23 by my calculation. So, first I wanted to confirm that. But also, it feels like with the cleanroom — not the cleanroom, the nuclear business being down and penalizing margin there, you’re picking up a little bit of margin on the Core segments because the merchandise because of the labor, some of the things you called about, but it’s just a pretty modest increase on those factors. Am I thinking about that the way you’re thinking about the ’24 guidance correctly, just to start out with?
Shane O’Connor : No, that’s exactly right. If I take a look at my Core, I’m expecting a little bit of margin improvement the 20 basis points, 30 basis points of improvement. Sort of excluding the impact of the lower key initiative costs. Really what that is, just to break that down for you, we had mentioned the fact that merchandise is moderating. Still seeing a little bit of a headwind. It’s probably 10 basis points to 20 basis points on the merchandise side. But obviously, the headwind that we’re seeing there is significantly reduced from the — what we’ve experienced over the last couple of years, which is a positive trend. The Clean acquisition and the nontangible amortization, which actually is impacting my operating income, but not my EBITDA.
But on the operating income side, that’s probably about 30 basis points of headwind as well. Energy is about 20 points or 20 basis points of benefit. And then there’s a number of other input costs that have trended lower as Steve sort of articulated — and I articulated in my comments, as the inflationary pressures are continuing to ease, we’re seeing some favorable trends there as a percentage of revenues that are sort of offsetting those other items.
Andrew Wittmann: Okay. That makes sense. I guess maybe my question is with the CRM being effectively fully implemented here, the items that you talked about really are not, I don’t think, affected by the implementation of the CRM. So, the question, I guess, is where can there be benefits to the CRM in 2024, that may arise as positive or maybe why isn’t there more contribution from some of the efficiencies that — I know you’ve talked about this as kind of a customer retention tool and it’s not all about efficiencies. But I would think there’d be maybe a little bit more. So maybe, Steve, could you address that?
Steven Sintros: Sure. I think some of it — you mentioned some of it, right? And we talked about some of the modernization of the work that our route drivers have to do, which was critical in us kind of getting in place from an employee retention perspective and a customer service perspective. Overall, I’ve talked about merchandise control, as being one of the areas that the CRM helps enhance. And I think we are starting to see some of that. So, when we talk about the moderation of our merchandise. And our ability to collect on charges, if there’s loss merchandise and the overall tracking of merchandise, I think we are seeing improvements in that area. I think as we’ve deployed the CRM, some of that has been muddied by the inflationary condition.
