Greetings and welcome to the UniFirst Corporation fourth quarter earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an Operator, please press star, zero. I would now like to turn the conference over to Steven Sintros, President and Chief Executive Officer. Please go ahead.

Thank you and good morning. I’m Steven Sintros, UniFirst President and Chief Executive Officer. Joining me today is Shane O’Connor, Executive Vice President and Chief Financial Officer. We’d like to welcome you to UniFirst Corporation’s conference call to review our full year and fourth quarter results for fiscal year 2021. This call will be on a listen-only mode until we complete our prepared remarks, but first a brief disclaimer. This conference call may contain forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties. The words anticipate, optimistic, believe, estimate, expect, intend, and similar expressions that indicate future events and trends identify forward-looking statements. Actual future results may differ materially from those anticipated, depending on a variety of risk factors. For more information, please refer to the discussion of these risk factors in our most recent Form 10-K and 10-Q filings with the Securities and Exchange Commission. As we look back over our fiscal year 2021, we are pleased with what we have accomplished as a team in the face of what continues to be a unique and challenging operating environment. During the year, our company and the communities that we operate in and serve continued to deal with the impact of the COVID-19 pandemic. Progress was certainly made as the introduction of vaccines has allowed for improvements in the overall public health situation as well as the reopening of many businesses. As you are all keenly aware, however, the challenges related to COVID-19 continue to evolve and are not fully behind us just yet. I also want to continue to highlight that for over a year now, our team partners have continued to put forth tremendous efforts in the face of the many…

[Operator instructions] Our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Steve, Shane, good morning.

Good morning.

Maybe one on guidance first. Excluding the $38 million of transitory investment costs, core laundry would be closer to 9.5% operating margin in 2022. If I look back a few years, this segment was more in the 11% to 12% range, so my question is as volumes come back and you can start to get leverage off of some of these extra costs, is there any structural reason why long term the business can’t get back to that double digit operating margin range?

Yes, that’s certainly the goal, Tim. I think when you look at it in the short term, certainly some of the challenges that not only we’re seeing in the environment but a lot of companies around energy, labor costs, supply chain disruption are impacting the numbers for this year. Certainly it’s hard to say how all of those things will play out over the next year or two, but some of those costs we view as being hopefully temporary as things smooth out in terms of the supply chain world and even some of the labor situation, so yes, I think that is certainly the goal. Part of what’s causing the margin headwind, we talk about investments we’re making, not only the big three initiatives but some other things we’re doing to strengthen our capabilities in light of some of these challenges in the market. Yes, I think eventually we will, as volumes grow, kind of grow into that cost structure and get the benefit of those investments to move the margin back over time. Certainly a lot of things are hitting at once in this environment right now causing the outlook to be what it is.

Okay, thanks. Yes, I can appreciate that some of these costs may be--have a little bit more of a tail to them, so, but thank you for that answer. Moving to labor, I know you mentioned last quarter and you talked about it again this quarter, labor availability is an issue, filling all the needed service positions. I’m curious, though, as you kind of look at the labor environment sequentially from last quarter to this quarter, if you’d characterize the environment as having improved at all or gotten worse, or is it about the same over the last six months as it relates to sourcing talent and labor availability specifically?

Yes, I would probably characterize it, Tim, as still extremely challenging, but probably marginally better. I think some of that relates to our efforts around investing in additional capabilities and sourcing and so on, but also quite frankly just moving wages. I think between continuing to move wages along in different key areas as well as--you know, and again, a lot of it is market by market, but in some markets we have heard more improvements that some of our local operators would tie to some of the unemployment benefits lapsing, so I would say marginally better but still very challenging.

Okay, great. Thank you. The last one from me, I think maybe I just missed the fact that you were guys were taking a concerted effort to build out your first aid business by building out the geography of your van operations, so I understand why operating profit was negative in the quarter. I’m curious, though, what that effort looks like if we look at it on a percentage of completion basis. I think the best way to ask the question is what is your current overlap right now geographically between your first aid business and your core laundry business, and where would you like that to ultimately be?

Yes, so I can give you a little bit of context. If you go back, say a couple of years, our first aid business was very regional and there were many markets that we were not in from a first aid and safety perspective, that we had core laundry operations in. We have done two things. We have done some small acquisitions in key markets, we have continued to add vans organically into some markets, and just as importantly, we have really more integrated the operations together where they’re much more closely working together. I don’t have a percent, a reliable percent I can give you right now on the call, but I would say right now we are hitting most of the major markets that we operate in as a laundry business. There still needs to be scale and depth added to some of those markets, like for example we may have had one or two vans in a market that’s a big market and we have a lot of customers from a laundry perspective, so what we’d be doing in that market is adding some sales and service resources so we could more effectively take advantage of the cross-selling opportunities. I’d say for the most part, we have a little bit of a presence in the majority of our markets, but some of those need to continue to be filled out and will be continued to fill out over the next couple of years. When you look at the operating margin challenges of that segment, it’s really about adding routes with capacity and sales resources to build those operations to scale over the next few years. There’s not as many larger acquisitions in that segment, and so this is the way we’re sort of attacking it. Early returns have been very solid from a cross-selling opportunity perspective, but we really just need to continue to invest and get to scale.

Understood. Thank you, and thanks for taking my questions. Good luck in ’22.

Thank you, Tim.

Thank you. As a reminder, to register for a question, please press the one followed by the four on your telephone. There are no further questions at this time--actually, one question just came up. We do have a question coming from the line of Andrew Steinerman with JP Morgan. Please proceed with your question.

Hi Steve and Shane. Could you just circle for us which categories you’re calling transitory costs, both in terms of what are they and if you could give us the amount, and then specifically define for us what you mean by transitory costs? Do you mean that they go in fiscal 2022 and they stay at that level going forward, or do you mean that they go in ’22 and they don’t repeat?

Absolutely, Andrew. When we were talking about transitionary costs in the call, we’re primarily talking about the three large initiatives that we have, so we have a lot of cost tied up in the deployment of our CRM, some of the branding stuff that I talked about, as well as our ERP project that we’ll be kicking off this year. Those costs will be present certainly in 2022, some of them will continue certainly into 2023, for example the CRM rollout I mentioned would be 2022 and 2023, and then those costs will start to be rationalized out. The ERP project will be a multi-year project that we’ll have to continue to talk about the investment in for a few years. Shane can give you a little more detail about maybe the magnitude of each of those for 2022, and then we’ll continue to update you on what they’ll be in future years. Some will fade, some will ramp, some will transition from operating expenses to more capital as we get further into our ERP project, so Shane can give you a little more color there. Shane O’Connor: Yes Andrew, when we take a look at those three key initiatives, that $38 million breakdown between each of them, for the CRM system we’re expecting to incur approximately $20 million worth of costs related to that, and that’s obviously including the teams that we have built to deploy the system, incremental travel costs that we will have for those teams that are going to be traveling to our locations and supporting during the conversions. The ERP, we have $6 million - again, for that, a lot of that is going to be system implementation, additional people that we’re bringing in specifically to support the company’s responsibilities and activities as we go throughout that initiative, and then incremental consulting costs. Then for branding, we have $12 million attributable to that. A large portion of that will be the rebranding of our trucks as we consistently move our new image out to our most visible billboards out there. Our trucks will be rebranded in the new image, and then there’s additional costs for advertising as well as consulting costs as well.

Right, and Shane, you didn’t mention, maybe on the branding costs, is that a one-time thing, is that a ’22 thing, does that go away in ’23, or is branding now an ongoing cost?

Yes, the big investment in branding will be primarily ’22. It may bleed over into ’23, depending on the timing of certain things, but then that will ratchet back down to more of a maybe somewhat elevated rate as we do invest somewhat more in that area, but not nearly to the level of this transition.

Okay, thank you very much.

Thank you.

Thank you, and there are no further questions at this time.

Okay, I would like to thank everyone for joining us today to review our fourth quarter and full year results for fiscal ’21. We look forward to speaking with you again in January when we expect to report our first quarter performance, as well as our outlook for the remainder of fiscal 2022. Thank you, and have a great day.

Thank you. That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.