Good morning, and welcome to Aramark’s Third Quarter 2021 Earnings Results Conference Call. My name is Paul, and I will be your operator for today's call. At this time, I would like to inform you that this conference is being recorded for rebroadcast and that all participants are in a listen-only mode. We will open the conference call for questions at the conclusion of the company’s remarks. I will now turn the call over to Felise Kissell, Vice President, Investor Relations and Corporate Affairs. Ms. Kissell, please proceed.

Thank you, and welcome to Aramark’s third quarter fiscal 2021 earnings conference call and webcast. I hope those listening are doing well. This morning, we will be hearing from our Chief Executive Officer, John Zillmer as well as our Chief Financial Officer, Tom Ondrof. As a reminder, our notice regarding forward-looking statements is included in our release this morning, which can be found on our website. During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the risk factors and D&A and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to US GAAP can be found in this morning's press release as well as on our website. With that, I will turn the call over to John.

Thanks, Felise, and thanks to all of you for joining us today. This morning, I will provide a strategic review of the business as well as highlight the significant opportunities ahead that we believe will contribute to Aramark's strong and profitable growth trajectory. In the third quarter, revenues improved as the quarter progressed, led by an accelerated pace of client reopenings in the United States, particularly with our Sports & Entertainment and Leisure portfolios. This upward momentum continues largely due to our team’s dedication to serving clients and focusing on our growth agenda. Our ongoing commitment to be a trusted partner has led to a significant new year-to-date business and high levels of client retention that exceed 96%. The selling season and higher education just finished and we achieved a record number of new account wins, driven by historically high closure rates, a testament to our investment and leadership, sales resources and training. In the past few months alone, we’ve added numerous higher ed institutions to the client portfolio, including the University of South Carolina-Beaufort and St. Peters University. And we are in the process of analyzing additional contracts that are preparing to begin operations for the fall semester. We are also extremely proud to announce we’ve added five historically black college and university clients this year, including North Carolina Central University and Elizabeth City State University. We continue to expand and extend our current partnerships and are pleased to announce that we have finalized a 10-year contract with the University of North Carolina at Chapel Hill, extending a 20-year partnership. Beyond higher education, new business wins occurred throughout the organization, including our B&I sector, adding Walmart's headquarters and our Sports & Entertainment business gaining the athletics programs for the University of Arizona and Virginia Tech, just to name a few. And in K-12, we now provide food service to the Fort Worth Independent School District, a significant self-op conversion. We are seeing greater first-time outsourcing activity, with nearly half of our wins in the U.S. segment coming from self-op conversions this fiscal year, up from historical levels of approximately one-third. In our International segment, we proceeded to win broad-based new business across all geographies that most recently includes the addition of the University of Toronto Mississauga. We are pleased with our overall sale progress to date. And there are additional significant opportunities in our pipeline that we expect to close in the coming months as well as into our new fiscal year. Turning now to Aramark's performance in the third quarter. Organic revenue increased 34% year-over-year and reflected ongoing sequential quarterly improvement. AOI margins grew to 3.6% in the quarter, driven by cost discipline and scalable operating efficiencies. In reviewing the quarter by business segment, U.S. Food and Facilities drove an organic revenue increase of 52% year-over-year, resulting in solid sequential quarterly revenue improvement. Education began notably recovering before the final bell of the academic year. The team is aggressively preparing for the upcoming fall semester, one we expect essentially all clients to return to in-person learning. K-12 continues to benefit from Universal government-sponsored meal programs that are extended through June of 2022. In higher ed, we're providing additional meal flexibility, new offerings and digital innovation. This includes the launch of Food Lab that features rotational menu concepts, unique product introductions and seasonal events, in addition to premiering restaurant row in partnership with local restaurant entrepreneurs. In Sports, Leisure and Corrections demonstrated significant improvement, especially at the end of the quarter. The NBA steadily increased fan counts throughout the playoffs and all of our major league baseball clients moved to full capacity by July 1. Aside from the Toronto Blue Jays who just returned home last week, permitting partial fan attendance. Leisure kicked off the recreational season that typically begins in late May, with strong visitor frequency following a record reservation demand. Corrections has already returned to pre-COVID levels. The sector has experienced highly encouraging trends as many return to typical summer activities, attending baseball games, concerts, and the national parks. In the coming months, we are also gearing up for full capacity expected throughout our NFL portfolio. Business & Industry experienced an uptick in activity throughout the quarter as companies execute return to work strategies. We expect a greater proportion of clients to be in-person post-Labor Day. Many clients are offering food services as an added incentive to further attract employees back to the workplace. That includes adopting subsidized pricing or offering complimentary meals. And we've recently implemented our artificial intelligence and touchless payment technologies in many of our client locations to create speed of service and compelling grab-and-go options. Facilities and Other has outperformed pre-COVID levels driven by more frequent and comprehensive services. The facilities business had great success in vertical sales, extensively expanding its offerings to existing client locations. Healthcare steadily improved, largely reflecting increased retail activity as visitor restrictions eased. The business is expected to greatly benefit from heightened demand and elective procedures that had been delayed due to COVID. Our acquisition of Next Level Hospitality officially closed on June 4, and has already contributed over $23 million in revenue, which we believe is indicative of the growth opportunities ahead. International continues to effectively manage through various stages of geographic recovery, as the team exhibits ongoing agility and responsiveness in addressing real-time client needs. Organic revenue increased 28% year-over-year, with areas such as China already surpassing pre-COVID levels and Chile operating at high capacity, driven by mining services given the very high demand for copper. From serving world leaders and delegations at the NATO Summit in June to the athletes of the Olympic and Paralympic villages, it is a privilege to provide clients the support that they need. Uniforms continues to make progress in its strategies to optimize new sales resources, in addition to implementing the ABS rollout currently underway. Organic revenue increased 5% in the third quarter compared to last year, as most base volumes rebound. We have seen a slower recovery in our hospitality business, approximately 20% of pre-COVID revenues and the Canadian market where government-imposed restrictions were still in place throughout the quarter. Adjacency services, including first aid and restaurant management, once again drove double-digit growth and we continue to see a significant opportunity to expand these offerings. Retention rates have improved 300 basis points and customer satisfaction scores increased to 10% higher than pre-COVID levels, a reflection of the transformative actions underway. In supply chain, our team has been effectively managing through market and category needs working in close collaboration with our clients and supplier partners. This includes leveraging our significant purchasing scale and a broad bench of cross-channel partners. We're also deliberate in our menu design given the inflationary environment and apply flexibility on menu alternatives as appropriate. While it's not our preference, we are able contractually to pass on increases in supply chain pricing. Supply chain’s overall focus remains to optimize spend, ensure availability of innovative products, honor our commitments around local and diverse suppliers and stay true to our sustainability efforts. On the labor side, we're confident in our ability to appropriately navigate the current marketplace. We have a strong talent acquisition team and compelling programs in place designed to attract top-tier talent, including our newly instituted employee stock purchase program, all featured in our recently launched Aramark careers website designed to create an optimal candidate experience. Aramark is consistently recognized as an employer of choice and highlighted as one of the world's Most Admired Companies by Fortune. We've been successfully implementing strategies to mitigate labor costs led by discipline, scheduling protocols, and efficient resource management aligned with demand as well as differentiation through innovative technology. We're also able to benefit from our scale by utilizing our full employee base and leveraging client locations in adjacent geographies. Lastly, I'm extremely proud of our Be Well. Do Well. commitment that continues to make important strides to reduce inequity and improve the health of those across the globe. Through our Healthy for Life initiative, we were honored to have recently been recognized by the American Heart Association with their award for meritorious achievement based on our efforts to promote better nutrition and lifestyle. We are also appreciative to just be named as one of the best companies for multicultural women by Seramount as well as one of the best places to work for disability inclusion with a score of 100% on the Disability Equity Index for the fifth consecutive year, a reflection of our dedication to create equity and increase access to opportunities for our team. Before turning it over to Tom, I want to take a moment to thank our Board member Calvin Darden for his many contributions to Aramark following his retirement announced a few weeks ago. Cal closely partnered with me to create an Executive Diversity Council that is focused on leveraging diversity, equity, and inclusion to elevate our culture, drive business outcomes, and advance positive social impact. We wish Cal the best. Now, Tom will provide a detailed financial review of the business.

Thanks and good morning, everyone. Over the next few minutes, I will discuss our financial results in the quarter as well as provide our outlook for the remainder of the year. As John mentioned, we are encouraged by the continued base revenue recovery in the quarter tied to improved levels of business activity throughout the portfolio as well as increasing contributions from net new business. The accelerated pace of client reopenings driven primarily by the Sports & Entertainment and Leisure businesses contributed to the organic revenue reaching 73% of pre-COVID levels, compared to just 55% during the third quarter last year. These improving trends have extended into the fourth quarter. New business wins continue to build within all segments, and the pipeline is robust as we approach the new fiscal year. With the education selling season just finishing, the K-12 and higher education businesses should deliver their highest level of annualized new business revenue since Aramark's IPO in 2013. And the Uniform segment, fueled by the sales investments made over the past 18 months, along with our international segment, are on pace to approach record levels of new business revenue as well. We will provide annualized components of revenue growth and a summary of wins detail on the year-end earnings call. Adjusted operating income was $106 million in the quarter, resulting in a constant currency AOI margin of 3.6%, up over 250 basis points from the second quarter. Higher profitability across all segments was driven by rebounding sales volumes, combined with effective cost management, partially offset by ongoing investment in growth resources, and inventory write-downs for certain PPE in uniforms. Corporate expenses increased primarily due to higher equity-based compensation associated with the company's incentive strategies to align the organization with shareholders. Adjusted EPS was $0.03 compared to a loss of $0.69 in the same period last year. This significant improvement was led by the profitability drivers just discussed as well as a partial quarter interest expense benefit from the $500 million debt repayment completed in early June. In the third quarter, Aramark generated net cash provided by operating activities of $12 million and spent $101 million on capital expenditures, resulting in a use of $89 million in free cash flow. Typically based on historical cadence of the fiscal quarter. Net cash from operating activities benefited from increased operating income as well as strong working capital management. Capital expenditures continue to be managed with purpose to drive performance in existing accounts associated with client reopenings and support growing new business activity. Through nine months, the company has driven a $309 million year-over-year improvement in net cash provided by operating activities, combined with a favorable $50 million variance in capital expenditures to produce a $324 million improvement in free cash flow. This strong year-to-date result was led by improved operating income and effective working capital management, as well as the benefit of deferred payroll taxes and a $94 million federal tax refund that occurred in the second quarter related to the CARES Act. Note that we continue to participate in the appropriate country-specific government assistant programs from which we received approximately $130 million fiscal year-to-date in labor credits. These credits offset the costs we incur globally related to the retention of employees and for absorbing 100% of the benefit cost associated with furloughed employees. As a result of our solid performance in free cash flow, we had over $1.9 billion in cash availability at quarter end allowing us to advance our capital allocation priorities, including our acquisition of next level and dividend payment in the quarter. We remain well-positioned to evaluate additional deleveraging opportunities while balancing our disciplined use of capital investment to facilitate new business wins and drive results in existing client accounts as well as pursue select accretive M&A. As previewed last earnings call, we took further actions this quarter that strengthen our balance sheet in addition to debt repayment, including refinancing $833 million of the 2024 term loan B credit facility to extend its maturity to 2028, close to a three-year extension on substantially all of our revolving credit facility as well as term loans A and C to 2026, reflecting approximately $400 million. Upsized our revolving credit facility to $1.2 billion, increasing cash availability by over $200 million, and most recently finalized an extension of our existing receivables facility by two years through June 2024 to provide additional financial flexibility. These refinancing actions together with the $500 million debt repayment mentioned earlier are expected to result in a quarterly interest expense savings of approximately $3 million going forward. I will now briefly review our GAAP results. Consolidated revenue was $3 billion, operating income was $74 million and diluted earnings per share was $0.13. Results for diluted earnings per share included the benefit of a non-cash gain on an equity investment in the San Antonio Spurs of $138 million, partially offset by a non-cash loss of $61 million from the termination of certain defined benefit pension plans in Canada. Exiting the pension plans was a proactive action to eliminate uncertain future liabilities. Before moving to our outlook for the fourth quarter, I want to quickly review a few key modeling assumptions. As you can see in our third quarter results, the performance in the Next Level Hospitality will be excluded from organic revenue and adjusted operating income metrics until we lap the acquisition date in Q3 of fiscal '22. Beginning of the fourth quarter, our share count is expected to be approximately 258 million, with the increase driven by the timing of equity-based compensation as well as the cumulative participation in the employee stock purchase program. So let me wrap up by sharing our outlook for the remainder of the fiscal year. We are extremely encouraged by the upward trends of the business, while appreciating the exact pace and timing of recovery is evolving, as we continue to monitor the broader environment. While developing and executing a wide array of client reopening plans, we will leverage our resilient variable costs in unit business model, continue to implement our supply chain strategies and drive above unit operating efficiencies. Based on our current expectations for the fourth quarter, we anticipate continued organic revenue recovery, reaching 80% to 85% of 2019 levels, adjusted operating income margin in a range of 4.5% to 5%, and free cash flow outlook raised to generating $150 million to $250 million for fiscal 2021, driven by an expected strong seasonal cash inflow in the fourth quarter associated with the higher education business. Thanks for your time this morning. And now I'll turn the call back over to John.

Thank you, Tom. I'm enormously pleased with our business execution and successfully reopening client locations now at an even more accelerated rate, combined with driving our growth strategies that are expected to result in a record new wins by the end of this fiscal year. And this is just the beginning. Our teams across the globe are our greatest asset and I want to personally thank them for their heroic acts that are driving trust and confidence in Aramark's prosperous future. Thank you, operator. And we will now open the call for questions.

Thank you. We will now begin the question-and-answer session. Jaafar Mestari from Exane BNP Paribas is online with the question.

Hi. Hi, everyone. Thanks for taking my question. And I've got two short ones if that's okay. Firstly, just on the September reopening outlook, it looks like you have solid visibility now on which clients want to be back at which level, et cetera. You're guiding on revenue, you've also tweaked that cash flow guidance to reflect the working capital that comes with those reopenings. So I'm curious whether this September reopening also has an impact on margins. And in particular, if there have been any reopening costs in your Q3 operating profits, or if there will be reopening costs in Q4 that are included in your margin guidance and effectively if they're one-off and does that provide upside into next year? And then just briefly, I couldn't help but notice that we've almost discussed procurement as a division. You've promised some more disclosure on net new business, gross new business, retention, all those components. So far you've refrained from making any reporting changes or disclosure changes. So just curious if there's a batch of those coming from the full year results.

Yes, I'll take that last question first and then Tom will address the first one. Yes, we don't recognize new business wins until we have a signed contract. So we are always hesitant to go ahead and name those accounts until we have the document in our hands. That's our general approach. And so even though we have new wins that are under letters of intent, we wait until we have a signed contract before we announce them. And we always wait for our clients to give us their approval to do so. So our intention is to document our new business wins for the year in our year-end call. When we'll catalogue those opportunities and those wins from the year and we will give a greater level of detail at that time.

Yes. And on the margin question there, certainly, Q4 is shaping up to be a little bit more uncertain, given the events of the last few weeks. So the reopening within business, dining, in particular, a little bit within education K-12, we'll include some uncertainty and costs above the unit that we're factoring into that guidance as we tried to, in B&I, engineer the work week is the phrase we're using, and understand when people will be and how many people will be in the flow that will be recreated for the companies that are coming back after Labor Day. That all comes at a cost. Our first priority is to serve our clients and to be fully staffed for what they expect to come in. But I think there's still a lot of uncertainty client-to-client as to those coming back what that will take. So, we're client first, that could carry some cost transitory in the quarter as we reestablish ourselves and we factor that in.

All right. Thank you.

Yes. Hey, thanks. Good morning, guys. Maybe just following up on that last comment, the reopening commentary all positive, returns in the quarter is good. I didn't hear much mention of until Tom's last comment sort of Delta and how that may be changing. What is the recent increase, John, in terms of what you're seeing from client activity today, and/or discussion or planning around reopening? Is there any meaningful changes you're seeing at this point?

Yes, thank you for the question, Gary. We are noticing some customers pushing back their reopening dates by 30 to 60 days, particularly in the B&I sector. People seem to be adopting a wait-and-see approach due to the timing of the Delta variant and its potential effects on their businesses. Over the past year and a half, we have demonstrated our ability to adapt to various circumstances and manage client expectations. We are prepared for their return, which will result in some costs in the fourth quarter as we ensure we have sufficient management and staff in place. We anticipate a slight delay in the recovery for B&I because of the Delta variant, but we don't expect this to affect higher education or Sports & Entertainment significantly; it's mostly limited to companies and their return-to-work strategies.

Okay, thanks. And then on the really positive new business commentary you provided, is there any way to tease a part out of that how much of the improved performance this fiscal year results from the many strategies you've put in place to really prioritize growth in winning business versus just a positive environment where the self-op guys want to get the heck out of running it themselves, given the complexity of doing so in a pandemic? And to the extent that's not easy to tell, I guess, if we just think more long-term, how are you thinking about pipelines of business looking even beyond this fiscal year and the positioning to continue to deliver strong new business going forward? Thank you.

Yes, that's a great question, Gary. And absolutely, I think our strategy, the changes we've made to leadership, the additional sales resources, the sales training and development activities that we've engaged in over the course of the last year-and-a-half have really paid significant dividends and it's resulting in very significant win rates, higher closure rates than we've had historically. And I think that's a testimony to the quality of the leadership team and the quality of the sales team. And so even though we are seeing more self-op conversions, you still have to win those conversions, you still have to compete for those wins, and nobody hands you the business. So, I think it's a result of those improved capabilities and the improved focus. And frankly, the incentive compensation approaches that the company has taken and that the Board has adopted towards incenting net new sales growth or net growth for the leadership team. So I think those are all components of it. But I think it's primarily due to the improvement in the quality of the people and the improvement in the quality of the offerings that we're putting in front of customers.

Thank you. That’s great.

Great. Thank you. Good morning, and thank you for taking my questions. And this one might be more for Tom. Tom, could you kind of quantify the impact of like inflation on the quarterly results? And kind of your expectation for 4Q, maybe just some more color on what's happening exactly what the wage is and with the input costs?

Yes, for Q3, there wasn't a massive impact in the input costs. I think they really started to accelerate right at the end of the quarter. As we get into this quarter, I mean, we're expecting the U.S in the fourth quarter to be sort of in the 3.5% range on product costs. Europe, well below that. It's remained actually below expectations at the moment. So there's a bit of an offset there. Asia have been pretty steady and as about as expected. So, the impact is really just coming through the U.S. business on product costs. And as you well know, the business model is set and we're pretty adept at being able to manage those costs. As always, we're trying not to lean completely on passing that through as our contracts primarily allow us to do and manage it in other ways to provide that value to customers. So, it's not really a driver too much for us in the Q4 guidance. We feel we can manage through it both on the product costs and the labor side.

Great. And then what was going on exactly in the Uniforms division? Maybe you could talk a little bit more about the PPE write-down. And then just in general, kind of the expectations for the acceleration of revenue growth in the fourth quarter, and whatever outlook you can give beyond that, if possible.

The Uniform business has largely returned to pre-COVID levels in our core area. However, our linen operations have not fully recovered, which is a major reason for the shortfall. Restaurant operations are still not using tablecloths and napkins despite being strong businesses right now, leading to ongoing softness in the linen segment. Additionally, Canadian operations faced significant restrictions up until the end of the third quarter. We are pleased with the progress in Uniform services and observe a solid recovery pace in the core business. Excluding linen and Canada, the business has mostly bounced back to pre-COVID levels. We see growth opportunities ahead, with retention rates considerably higher than usual and impressive closure rates on new business acquisitions. We've invested in adding a significant number of sales resources over the past two years. We're optimistic that the recovery in Uniforms will persist and hope to close the gap in the linen segment soon.

What about the write-down?

The write-down from a year ago is primarily due to us investing in personal protective equipment and building up inventory to meet client needs and sell to third parties. The KN95 masks, which were initially in high demand, were later classified by the CDC as unsuitable for medical use. Consequently, we have been reducing the value of that inventory as it has been moving very slowly.

Thank you.

Hi, great. Thank you. Very good quarter. Thanks for taking my question. I kind of want you to talk about some of the new wins here. I know you mentioned, first of all, please tell us maybe specific areas where you think most of those businesses coming from or should be coming from, what areas in education and I think B&I has been big areas, but is it really exclusive to that? What are the areas there? And also, is there any one area that maybe you see more competition in or less competition in? I know, you've talked about self-op being somewhat competitive, but is that more competitive, less competitive than what you're seeing? And just kind of overall, where you see the opportunities? Thanks.

Yes, absolutely. The industry has always been highly competitive, especially among the major players and various regional competitors. This competitive landscape remains unchanged. Everyone is focused on acquiring new business. We have seen success across the enterprise, including notable achievements in higher education and at Walmart's corporate headquarters. Additionally, we've had significant wins in the facilities sector, some of which we haven't disclosed yet but will soon as we finalize those contracts, which will greatly enhance our facilities business in food, manufacturing, and other sectors. We are also experiencing good success in health care, both in retaining existing clients and gaining new ones. Overall, we are achieving significant success with new account acquisitions and look forward to sharing the full details at year-end. This business has a cyclical nature. We started with a 100% retention rate, and as we approach year-end, we can provide a final retention figure. Currently, retention is trending at 96% and above, and we are pleased with this outcome. Our new account acquisitions are at a record pace, and we will disclose them by name once the contracts are signed. Importantly, our successes are widespread, not confined to a single sector, with particular achievements noted in higher education, B&I facilities, and uniform services this year.

Okay, great. And, Tom, can you just talk about cash flow a little bit with the raise. Is that a function of the cadence of the recovery being smoother than you expected? Are there any other drivers that are driving that increase? Thanks.

Yes, I think if you go back a year, I mean, it's certainly the bond issue a year ago was out of caution. I think John and I believe that the business was resilient enough, and certainly the cost base variable enough to manage through the massive uncertainty that we're all facing a year ago. So, that cash as you know, the $1.5 billion was not used and needed. And so, the business has really just delivered on that variable cost base. We've all seen it this past year, and been very proud of the business and its ability to execute what the teams have brought. And so, the cash flow generation, I think hasn't been surprising. It's got its normal seasonal cadence quarter-to-quarter, but by and large is a relatively working capital neutral business, which is very attractive. We've been able to manage CapEx appropriately without sacrificing any of the needs of the clients. So again, we've been very pleased with how the cash flow has been managed throughout this past year. And this solid base that we've had cash availability, and now we're in a position to start to delever.

Okay, great. Thank you very much. And I will talk to you guys later. Thank you.

Thank you.

Thanks.

Hey, guys, this is Jeff Goldstein on for Toni. Thanks for taking my questions. I just wanted to ask on Uniform. Margins came up quarter-over-quarter, but are still fairly below 2019 levels. Even though like you said, revenue is getting fairly close to even there. So I imagine this gap is still driven by investments in the business. So maybe you can confirm that and then just talk about when we would expect to see these investments roll off and for more margins to move closer to 2019 levels.

Yes, that's a great point. It is still related to the investments we are making in the ABS rollout and in hiring new sales executives. The significant write-down of PPE also contributed to the softness in the margin from the previous quarter. However, we see the trajectory beginning to improve with the start of the new fiscal year as some of those costs diminish. As we adjust for the new account sales executive additions and start to see the benefits of the ABS rollout in our operations, we anticipate an improving trajectory. We've discussed our expectations for this, and we believe we will begin to see those results starting in 2022.

Okay, great. And then I'm curious what you're hearing from your higher ed clients in terms of the fall environment. Are you expecting fully in-person learning with full attendance? Do you anticipate any continued pressure on enrollments there? Are universities looking for more unique services, given the environment, maybe things around delivery, maybe just some broader thoughts around the higher ed environment going into the fall would be helpful.

Sure. You bet. I was with a University President on Friday of this week, as a matter of fact, and they are planning for full enrollment and full participation and the in-class learning. There is an expectation that throughout the higher education community that classes will largely be in-person and they may make some modifications, but they'll be relatively small. And our expectations are that enrollments are going to be at very high levels, given the fact that you had many students defer from prior years, from prior year into this year to start their campus, their on-campus experience. So the commentary inside of higher education is all very strong. And we're planning for a very robust reopening. In fact, some of the universities are going to be starting up here in just a very short period of time, and our people are working full-time day and night to be ready for those students to get back to campus.

Hi. It's Andrew. I heard you say, new wins are at a record pace year-to-date. And I also appreciate the client retention number of 96% is a high number for you. So I just wanted to make sure I'm putting these two things together correctly. So when I put them together, I think you're saying net new sales year-to-date is notably higher than the year-to-date number in recent years. I think that's what you said, I'm not expecting a number, but I just want to make sure that's what you're saying. And then on the other part of that equation, the 96% client retention that you shared with us today, which is obviously an awesome number. My question is, do you feel like that rate might be benefiting right now from renewal decision deferrals during COVID? And that number could inch down as we get into a post-COVID environment?

Yes, first of all, your math is completely correct. The new business has significantly improved over prior years due to those substantial new business wins and high customer retention. We expect to maintain this retention rate going forward. Earlier in the year, there may have been some slowdown in activity regarding client contract changes, but that pace has picked up throughout the year. We have a very active pipeline of new account wins and have been aggressive in terms of renewals and retention. Our expectation is to keep this number moving forward. Our goal has always been to stay in the 96% range, so we're very pleased to be there. I don't believe it's COVID affected; rather, it's due to our performance, meeting client expectations, and the proactive retention efforts we've implemented.

That's great, John. Thank you very much.

Thank you, Andrew.

Thank you. I have a technical question. Regarding facilities, you noted in the press release and the figures indicate that your revenues have surpassed pre-COVID levels, which is excellent. In the prepared remarks, you mentioned cross-selling. I'm curious about the nature of the new cross-selling work you experienced this quarter. Are these related to deep cleaning services or other COVID-related services, or are they other offerings that will continue even if COVID ends? My second question is for Tom, concerning Uniforms and the installation of ABS, which seems to be progressing well. Can you quantify the costs associated with those transition expenses and confirm that they are included in the adjusted EPS number? Those are my two questions. Thank you.

I will address the facilities question first. We do not consider project cleaning as a new account win; it represents revenue growth from an existing account. The new wins in facilities are additional services offered to either existing or new customers. Over the past year, many existing customers have decided to outsource significant parts of their facilities management, transitioning from self-operation to conversion. Some of these transitions have included additional services that were previously handled in-house and are now managed by our facilities group. Therefore, these represent new business wins rather than just growth from base business.

Yes, on ABS, the installation costs are not adjusted out. And we will consider putting together a bit of an overview into next year as we complete the project and provide some guidance as to the cost and the benefits going forward, if that would be helpful. So we'll consider that, disclosing those two pieces of information around the ABS project at a later date.

Okay, look forward to that. Thank you.

Yes, good morning, everybody and thanks for taking my question. Two questions, please if I may. Firstly, on B&I clients. Can you talk about how maybe they are structurally reconfiguring their restaurant spaces, maybe to allow for or to compensate for the low attendance in the office, but maybe get higher participation as a result. And whether there's sort of capital required from yourselves to support that reconfiguration? And then just secondly, just on sort of temporary nature of some of the contract terms that you've had over the last year, 18 months, are those largely rolled off or should we expect them to roll off over the next quarter? Thank you.

Yes, regarding the contract terms, we haven't observed a significant shift back to P&L yet. Most of our B&I locations are still operating under management fee contracts, and we do not anticipate a rapid transition back. We believe it will take time as companies adapt their strategies and return to work environments. Some companies are contemplating changes in how they serve customers, primarily through technological implementations such as touchless payment systems and grab-and-go options, which do not require substantial capital investment for existing operations. Even for organizations adopting remote or hybrid work models, we do not foresee any structural changes to the service areas as necessary. Many companies are beginning to adopt more aggressive subsidized payment plans or subsidized food service approaches to encourage employees to return to work. We've observed numerous companies considering reinstating free meals, which we believe will significantly boost participation. Moreover, the safety and security protocols will take time to evolve back to pre-COVID norms. Therefore, we believe participation will naturally increase as it becomes easier for people to utilize the serving environment in their existing facilities rather than leaving and returning. We anticipate higher participation moving forward in the B&I sector, which we think will be very advantageous.

Very good. Thank you.

All right, thanks. I guess another follow-up on the new business wins. And I know you're going to give more detail coming up, but is there any color that you can provide directionally on the onboarding timing as we think about the sales contribution, and also any margin impact as it relates to these new contracts, which sometimes start at lower margin rates? Thanks.

Yes, timing typically, given if you take the total blend of business wins across higher ed business, dining, health care, etc., typically, about 40% of that is in year, and the balance rolls into the following year as a basic metric. In terms of margin, yes, you're absolutely right, that typically in the year of our opening between startup costs and just general unit efficiencies, that will start at a lower than average unit contribution, and then build from there.

Yes, we typically see a learning curve as we open new accounts. Obviously, higher ed tends to open all at one-time, so you have a big burst of activity in the fall. Same with the K-12 business. So that's immediate impact almost beginning in the beginning of the fiscal year. But B&I wins are spread throughout the timeframe, and even though we've been awarded the account in, say June, it may not open for us or transition until December. So there's some timing in terms of the opening that may impact the in-year volume. But as Tom said, about 40% generally affects the in-year sales. So, we're excited by the new business wins. We see significant growth coming from new business, and we're excited to see those new accounts open and begin to contribute to the organization.

That's helpful. Maybe one other follow-up. And again, I know it's hard to have a lot of visibility on '22. But are there any one-time items discrete things that you can at least flag to us and investors? Thanks.

Not that now. We're already sitting here looking at each other now.

Yes. But Tom and I are staring at each other going, huh. I think we're, I think nothing that comes to mind.

Hi. Good morning. Thanks for taking my questions. I'm looking at your Q4 guidance, and it seems you expect revenues to be about 15% lower than 2019, but margins will only be around 60% of 2019 levels. I know you've mentioned some factors for this, but generally the industry expectation is that margins should recover faster than volumes. Is that what you anticipate? Is the remaining 15% essential for progress? Is this related to renegotiations, or what steps are being taken to bring margins back to 2019 levels and higher?

Yes, I think it's just continued progression that last 15% matters, as you saw on the way down, last year. So I think the uncertainty as I talked about earlier certainly doesn't help right now. We like certainty, we like predictability. We can schedule staff order more appropriately and efficiently with certainty. So that's playing in a little bit right now, but that's transitory. But we still feel very good about getting back to '19 margins ultimately beyond because as we grow, we're going to leverage our above unit costs, we continue to build the supply chain and empower that with growth and just generally operate more efficiently in unit as we improve our retention rates. So, all those things still hold. But I think given the phase we're in now, we've got to be client first as we reopen, making sure we do it safely and appropriately and play this a little bit long.

Yes, I would like to emphasize that the last 15% is crucial. The additional profit from that 15% is significantly high because we have all our labor and management in place, as well as our fixed costs, allowing us to recover fully. This 15% is important and not up for negotiation; we are not waiting on client approvals. The focus is on enhancing efficiency as employees return to the work environment. Analyzing the businesses, some will show pre-COVID margins, others may be slightly below, particularly those that haven't fully resumed operations, where we still see margin discrepancies. However, in the other businesses, margin recovery is happening quickly as they return to pre-COVID levels.

Thanks for that. And maybe just a quick question on your Sports, Leisure and Corrections division. I mean, I would expect Corrections part of that is probably pretty stable compared to 2019. We're hearing lots about national parks being at record attendance. The overall revenues, they're still in the quarter about $200 million lower than they were in 2019. So just maybe want to understand the bridge there. Is that just all the sports component, there's still a long way off capacity? Maybe what's your anticipation for that into the fourth quarter?

Yes, it is, as John mentioned, I mean, sports is the driver there. If you go through the timeline of Major League Baseball reopening, everything really with the quarter cutting off June 30-ish. That's right when things were fully reopening. And so this quarter really had partial attendance at best in all of our facilities. So it was the primary drag.

Yes, on the National Park side, we're experiencing record demand at Lake Powell and Yosemite, but operations at Denali are still mostly shut down because cruise ships have not yet returned to Alaska. That park mainly relies on cruise ship traffic. Even though it is open and operational, it has not reached pre-COVID activity levels and likely won't until next summer when cruise ships resume operations in the Alaskan corridor. This is probably the main impact on parks. The rest of the parks are operating at very high levels with strong demand.

Hey, good morning. Thank you. On just the new business wins, could you maybe comment on who you're gaining share from. I know you mentioned self-op being sort of half of your wins versus one-third historically. I guess on that, do you expect that to continue going forward because of better sales execution and maybe COVID? And then maybe just talk about who you're gaining share from as well in the same answer, if possible?

Sure. Well, we're winning accounts from a broad base of our competitors. I don't want to single anybody out, in particular. But I would say that we've got, as we have achieved a very high level of self-op conversion wins across a range of the businesses that we believe will continue. We think that, that trend will continue to evolve. It may not stay at the 50% level, maybe it'll drop back a little bit. But we see continued interest in self-op conversion across a range of the businesses, so in a range of industry. So we expect that we'll continue to have very good results there. In terms of share gains from competitors, I would say it's consistent with past performance. We win some from Sodexo, we win some from Compass, we win some from regional competitors and they win some from us. So it's a very competitive industry. We try to develop programs that are consistent with our clients' expectations and strategies. And we try to offer proposals that offer them the best solution. I'm not so much worried about who I'm competing against as making sure that the offering that I design and the offering that I customize for my clients is best suited to serve their needs. And that's how I think about winning. By winning the customer and not winning against my competition.

Got it. Very helpful. And just my follow-up question on the Uniform side, could you maybe talk about where you are in terms of adding further ancillary services to your product line. Whether it be first aid or other stuff? Maybe if you could talk about where you are there. I know you touched on the ABS software, et cetera, but maybe on the ancillary services side, just update us there. Thank you.

Yes, we can. We have continued to experience double-digit growth in revenue and new accounts for our ancillary services, specifically in first aid and restroom services. There is still significant potential within our current client base and in competitive accounts. We consider these two areas as our main focus, with first aid being the key execution strategy. Moving forward, we will concentrate on these services and do not plan to introduce any additional offerings. Both of these services are high margin and beneficial to our earnings, and we have the necessary sales staff and support to implement our strategies, which are yielding double-digit success rates.

Got it. Thank you so much.

Thank you.

I will now turn the call back over to Mr. Zillmer for closing remarks.

Again, thank you, everybody, for joining us this morning. We really appreciate your support of the company and the hard work and dedication of the Aramark team. I can't say enough about the performance of this organization over the course of COVID-19. We're proud to lead it. We're proud to be here and looking forward to a strong close to this fiscal year and onto a great 2022. Thank you very much.

Thank you for participating. This concludes today's conference. You may now disconnect.