Aramark (ARMK) 14 Nov 232023 Q4 Earnings call transcript

Good morning, and welcome to Aramark's Fourth Quarter and Full Year Fiscal 2023 Earnings Results Conference Call. My name is Kevin, and I'll be your operator for today's call. At this time, I'd like to inform you that this conference is being recorded for rebroadcast. [Operator Instructions] I will now turn the call over to Felise Kissell, Senior Vice President, Investor Relations and Corporate Development. Ms. proceed. please Kissell,

There welcome and This and CEO, earnings call IR viewed easy Tom conference Zillmer; call for for Thank may website also that we to available will webcast. be Ondrof. CFO, our morning, well the our accompanying be and slides as this webcast you, through as Aramark's are are hearing access. John the from on

statements forward-looking included our is Our notice regarding press in release.

are various forward-looking. will from including we this XX-K and risk that and sections SEC the differ implied making During factors, important in results be materially Form other Actual and filings. comments of those as call, may a risks, factors, or annual expressed our discussed on MD&A result those of uncertainties report

be With financial our now found I be reconciliation also measures. GAAP to website. discussing in turn items call We to non-GAAP IR A that, U.S. and certain John. these of over can the will press release will

and and I quarter will including business. Thank you, detailed performance and morning, 'XX and fourth a our key thanks, This us. Felise, new results of drivers, review year provide Tom fiscal full net joining for everyone,

closed including I continue in teams business weeks, Our growth just few significant will new past to deliver, the shortly. wins which review

the following expectations spin-off. Uniform performance show era for opportunities, client-focused our new approach our year of of strengthen the performance generate. to numerous the also momentum completion the and the done preview positive proud work I'm to this ahead, eager continues we've on culture Aramark and services entering capitalize I'm for We'll which to

and their will high results independent call the Vestis, upcoming provide traded now level, highlight more to and uniforms for moment on a at company. take publicly for an earnings detail a Rick Kim We'll

and profit X meaningful progress a performance improved the the balance stronger Aramark's Analyst nearly sheet, and sustainable Day outlined made demonstrated towards this past fiscal and ago, strategy years resulting financial year goals we've margin at performance growth. in

cash currency was which costs higher million past these cash increased the was grew of payroll associated as payment prior X.Xx flow million. revenue leverage from and $XXX restructuring to debt Act and before in the at $XXX operating the basis. X.Xx million, deferred CARES the Free over year Free year, XX% adjusted a income along nearly as and EBITDA constant year flow transaction items of a spin-off. the net with reduction included related improvement throughout ratio taxes organic with to Over a resulted on $XXX XX% year-end. well That

on compared constant XX% a prior basis increased currency to year. EPS Adjusted

these of of part organic As results, a on currency of growth and of global XX% reportable drove currency year-over-year Corporate and a growth grew the Services the in segment, organic And basis. basis. the food Uniform XX% Foodservice International and revenue for nearly constant AOI segments consisting XX% more X.X% than FSS, increased service on U.S., revenue constant AOI

points basis of third last than improved XX% XX fourth XX The team's points XXX fourth basis margin strategic -- to again grew basis the once quarter nearly constant quarter. the AOI and initiatives than reached XX.X%, better AOI currency profitability its and on points the year. Uniform in better quarter a contributed nearly basis

future outlined and we're We that shape at value for company. a believe and Day taking excited is creation Tim as in the pathway Rick promising Vestis for September stand-alone the Analyst their

retention revenue. business. established, this new global mindset new net growth FSS, of prior priority business now wins rates achieving growth our new area. year momentum a High continued to With drove strong and a X.X% net in now business Turning well

offering, create which our in portfolio clients. repositioning relationships been within Next we business cultivate with believe enhance to resulted enormous new strong and The Level the we our senior opportunistic has as hospitality culture that potential also ahead. we living We've continue has in a

Retention the representing step positive $X.X year. even normalized change rates our versus year prior Annualized maintaining this strength historical X.X% as of of levels nearly the wins portfolio, environment billion, totaled revenue. were the gross XX.X% across new business

NDXXX. year that of reach sports in Speedway, world's we believe added a strong quarter and Now others, clients, expected complexes business starting new speed the multiple Indianapolis lines added and business the fourth We the of cruising Motor delivering and performance. home another a win both growth. biggest across of entering small, We to geographies. consistent large notable Among one the to and was iconic are

XX% from our to historically. outsourcing Favorable wins conversions of in coming trends to with XX% and U.S. compared X/X year, globally self-op continued close the the throughout around

we more our year, the net on is growth fiscal end of disclosures business detailed our focus each at new While provide driving constant. on performance

pediatrics In just a few Hospital. and respected we're Children's selected nutritional 'XX, first weeks services just start, fiscal includes the to off of institutions, of which to Boston and to great been food provide most and the admired children's having one

third pipeline achieve to our year. expect confident revenue new We X% robust of net to for fiscal in year equivalent prior the consecutive for business and remain to 'XX X%

revenue growth. our XX% driven quarter by reflected of pricing business, strong $X.X top a included more FSS. Revenue exclusively bottom strong portfolio. net to year-over-year, growth again, fourth performance business and turning base billion results, line across of new Overall Now global than focused growth and organic the on --

resulted million, income cost the an new revenue income of quarter. was Operating prior year-over-year higher and improved the in of from well constant years, Operating in representing Adjusted basis. on million. leverage $XXX business from and higher above as $XXX economics operating maturing XX% supply a chain was as profitability unit currency management increase year-over-year disciplined

and driven compared greater segment constant sports revenue The as a well favorable XX% grew continued more event trends XX% the than was sector. and organic and capita in on strong as same year, the to AOI more entertainment basis. attendance increased than period currency Performance U.S. across per last spending FSS by B&I

price benefited fourth pricing and quarter fiscal the notable and on more inflation be previewed 'XX fully contribute and will we will in more the lag of first the corrections fully results This last and beyond. quarter As sector progress within the partially made to -- education quarter, business. we've

strong segment International the results for grew clients the approximately busy constant reflected AIM geographies, in the education including school across XX% XX% a without activity events increased on AOI year in greater year-over-year of FSS and rates operations even in South mining calendar more and strong and its currency the following Canada. than higher Europe, in April. The Performance basis, a quarter participation revenue America B&I in divestiture start organic

performance was a of segments. cost focused solid Corporate going year foundation the expenses were and strong the remain we containment sets appropriately international forward. Collectively, supporting in as fiscal quarter end our flat above-unit relatively the on while and year-over-year a U.S.

XX% Given accomplishments. December remain of pre-spin on increase our our driving portion payable X. strengthening of DEI following just the resulted our focused approved in share to strategies, Directors Board The financial a pro rata ESG which We be $X.XXX and on dividend dividend. profile, the recent will per the

their we executive Champion weeks just initiative of announced businesses. on that diverse of by was few focused Black And JPMorgan supplier XXXX Board form of Chase America's footprint. for assisting as as our companies by Greenest Aramark women. in diversity, our the to brand company and and diverse sustainability our is ago, on Newsweek diversity one partnership inclusion We selected with equity the for Enterprise commitment owned the named recognized the best were a

congratulate want to leaders Aramark turning retirements. Tom, Before their I call exceptional well-deserved the to X on

to most Fears, of all business for commitment XX is we're the Bruce our First, President company, of to stellar served Aramark industry. and some grateful of to years Bruce's service stewardship and and and with years the most recently CEO places country's he Aramark iconic this the as Destinations. legendary

where the years ago. as Sasha company to Chief Most Day will Aramark the Officer Hospitality destinations, she joined initially recently, business. lead Sasha XX step to Growth her for in Collegiate returning roots served

his And since named he of Andy Assistant established and and best on Steve roles and client Andy and Regional Canada to Steve and new as in for will Growth been Sasha Bruce Chief of remarkable company. Aramark's in know Andy be has Canadian elevated has Chief results, I within served With Canadian Steve retirement, joined and Financial CEO their Counsel, position Aramark in having experience CEO the Prisco strong Aramark which President XXXX, business, relationships Canada. largest focus Canada's passion Silos, extensive General their to President most in recently, that a and Officer. the including wish operations and roles. VP Officer, I Tom? XXXX.

John, Thanks, another financial towards good 'XX significant represented delivering and strategic morning, step our goals. everyone. and Fiscal

in hospitality-driven helped revenue year which performance, increase our strong reestablished compared has year reviewed, a new net As customer-focused culture a organic third year. full in of XX% resulted John consecutive prior drive to business just

last over growth, delever to XX% cash the income strategic which, and EPS resulting rate to margin at constant on asset revenue, grew year continue improvement combined AOI and led basis. operating twice Adjusted increase through in of and AOI with adjusted year-over-year than significant a when meaningfully organic currency management focused optimization, a we more

major and its as on We vision. performance value business own drive a independent creation the Uniform with strategic believe also spin-off will enhanced completed services we that executes milestone each distinct

on past our food business move Aramark, be and the we in 'XX As facilities exciting this commentary fiscal global beyond. for today and will inflection focused point

the remain unchanged. of fundamentals business The

result the of for business AOI recent actions lag outsized margin primarily We base benefits slowing of and to new and clients; by to and X profitability growth, led and following recovery price a the factors: Revenue driven we be pricing net through maturity new the believe performance of of new inflation appropriate growth increases in is adding by of to our as the expect favorably efficiencies the term, will X ramp continue trends which consecutive related deliver scale. business. next, first, positioned years be operational inflation. will expected profitable business, near expanding from

we [indiscernible] assuming AOI of moderation benefited continue And of fiscal education quarter. will mentioned, here to to 'XX progress we contribute continued sector during particular the John quarter As the first and in business beyond. believe growth our fourth inflation, and made that

product purchasing driven normalized returned and levels both by benefits as run the rationalization rate availability from greater purchasing to scale. compliance, from efficiencies enhanced as internally as new chain well Third, SKU supply has economics deals from improved externally through

coupled recovery ago, our to other relying longer direct variable operating on the where the is of of Labor agency P&L particularly compared flexibility Fourth, of to year to model. profitability hospitality, collegiate middle related a excessive the no continue we are cost unit with labor food, dynamics in labor. continued stabilize, improve cost and

to customer impressive unit the ways frontline to in costs down without innovate Our drive compromising experience. teams continue

As menus. just are effectively and one scheduling plan and more efficiently to AI using we example, labor streamline

disciplined spin of combination The that all more cost even as model, create a so drive once lastly, containment margin our and structure to to play the overhead factors remaining appropriately expected these in a control fit-for-purpose above typical business. the in faster years. continue AOI the we And of rate post business unit than revenue, over strong supports is progression next at at expected few growth than resulting being

As reminder, the quarters, to margin expect in & historic first sector U-shaped with AOI the cadence primarily destinations peak still as as higher well businesses. we fiscal profitability seasonal related education to fourth a in and activity a Entertainment the Sports

same move the global Uniforms. materials the are Let halftime Recently, on goals ensure Day including of review starting more outlook all update in December me morning the in we this from recap FSS to then the the 'XX working from disclosures company, and which just for original 'XX for help published the back certain our point. we now business were broke fiscal to and detail set total Aramark's fiscal XXXX, Analyst include our out assumptions

X% continue XX% for to our AOI constant year-end currency deleveraging cash X% anticipate ratio currently basis, growth constant of growth, of we Organic on of net X% fiscal to through to pricing and of prioritize growth comprised XX% 'XX, X% growth business, fiscal and management a on profit XX% we and of approximately adjusted to Global investment. to X%, currency basis to X% X.Xx FSS disciplined EPS a at growth, leverage focused a as In XX% revenue

fiscal 'XX. We we've accomplished what built momentum we've going solid 'XX, proud into fiscal are in and of

the Assuming than business global to the track couple billion. of the remain uniform we we next services greater FSS, easing inflation of on believe that as continued of a revenue over Day an goals of adjusted years, Analyst spin $XX divestiture and the for follows: deliver for of

higher hit year to a fiscal stronger than captured as a earlier initially and of new the as the in this pricing net We over outlook of result couple past 'XX planned business years. than expect anticipated goal

our X.X%. of When originally global margin to AOI fiscal X.X% was margin 'XX, COVID-impacted X.X%. we FSS AOI target set the following

growth year. Fiscal X.X%. which margin twice AOI AOI the driven significant AOI deliver by grow anticipate 'XX's increased just will AOI coming points more reviewed, this basis the later, we XXX of years X outsized Just nearly has another is to rate factors in expected than margin revenue, jump to

experienced the the AOI fiscal X fiscal a 'XX. XX-year few lag inflation $X the inflation However, of in in income now we years due lines, to to to high reach billion business over on billion the past range margin in and operating remains the 'XX. $X.XX Adjusted be goal by to expect track price

were Adjusted EPS not segment these we and leverage broken originally by specifically down set when targets.

interest the to the of Analyst I'd range is Global result by point since our $X.XX So latest for of expected simply like FSS $X.XX a the share be to as EPS to XXX roughly rise business. Day. in in fiscal take to Adjusted basis rates thinking opportunity here a 'XX,

the a time, for paid goal originally to year be to top of a 'XX. the Since we by reviewed, interest fiscal our divested early in With X.XX just end down as X we X.XX or Analyst achieving we total as and was assets, debt. X.Xx Day initial and of deleveraging. noncontrolling including AIM a committed expect by range target leverage ratio be to inside The range company targeted remain fiscal that that, in certain in in to range 'XX our services just 'XX, to fiscal debt our we at currently

model as for on a providing lot market goals, attractive that continue a to but build services achieving set in growth We and each through these sustainable to value business shareholders. confidence highly can in one have valued a financial getting only not long-term create recession-resilient of we our

focused of this Thanks facilities provider, time a your couldn't food Uniform a era John? spin company. global the With future complete the new and the for dawning we more and excited as be Aramark morning. for for

accomplished positive momentum global proud ahead. this I'm the as we've Tom. year I'm generated the for you, past extremely we of and Thank milestones team, a about the excited year

more is performance established into long strategic to strong in have and near future. commitment the believe driven and to term our success opportunities by for which groundwork our Our we both priorities, come the the

fiscal We're build hospitality the organization. represents confident rooted firmly we've mindset spin-off we'll to history. within chapter a our the With complete, to the call now now leveraging what new culture the company's in the now worked Operator, in upon growth establish, 'XX questions. hard ability and open for

Harry first Our with Instructions] comes [Operator Martin question from Bernstein.

on looks I being year guidance, come the of ahead the XXXX to ahead similar the assuming thought ask one number The pretty the please. into X% I hit, rest growth EBIT AOI can QX quarters number, like to I'd calculate X% as of for of XXXX. next be It XX% in XXXX. a XX%

been wondered just what conservatively there? that, I how set moving parts and the guidance do feel has you are So like that

And then more just a question. strategic

little that other the food are if get today? margin more a GPO what bit to chain you much. is supply going I of the the hospitality that? in could Thanks compliance? how of procurement? have on drive scale deals. And to on help very purchasing forward? improvement volume of sites proportion then new What quantify and of expect What can an the And do versus in wonder the much items mentioned today items that the percentage benefits You from is and I the that compliance, detail

with supply start to want you Do chain?

Sure. supply chain. I'll start with

the all, contract foodservice First statistical business. is of measure compliance a across

to that occurred last in the over And each to numbers. So chain There was overall the in the last achieve month, those is because significant the of of of hard Every statistics course operating always are working couple a supply opportunity. reviewed very and disruption in year, years. that have compliance are those they of with business. terms the their goal achieve

So our compliance close numbers are very, very optimal. to

the push units continue to from suppliers. to the and We get purchase to products right right

So think today, is. to I GPO there very that. spend on I'd opportunity The say don't what always total improve spend in general, is the the numbers. But disclosed GPO we're compliance close we upon

$XX Yes, billion. it's about

through we the as and Yes, includes foodservice Avendra contract that our manage revenues GPOs $XX billion, which other our as for the clients about we both operate. spend well

So we is spend clients our that work suppliers and and expert those and scale have as both deals to we as very supply Aramark with aggressively significant to optimizing method total very to manage that at continue chain manufacturers, we well utilize new as of for all team contingencies.

we're So comfortable the for with potential very GPOs. the growth

both we as economics result and have We supply -- continued chain significant opportunities improvement of grow and that market, the in GPO internationally a that of that in focused area. growth to domestically see

X off 'XX And and We on you doesn't relevant we're X given dynamics to I what Harry, this margin how different it the chasing against about years not 'XX now. accomplish trying conservative? question, if all is here well. or thoughtful it sure margin I'm And anymore we're either what think Yes. very end economic in play the But ago versus 'XX ago is building and and and does, it years model. spin sustainable know

do years, opportunity. it or the that a bit goes be we'll through for headwind. easing way, be we will other next forward a balance over stronger set few our We'll quarters So off out we're and the the margin the of off growth, We're very the opportunity retention, XXX We'll continuing that. timing. said, to confident in there's have needs. will way, of with it trying business happy of with If X.X% a which move in low points business the said, a If to new client as that it couple move so of faster, thoughtful continue and I goals I we'll a far. to continue the in probably and to to we very 'XX, inflation comfortable by like feel, still an improved of some progress push adjustments it that basis driven progression

So we'll the overall, good don't know number. we but it's for if business. right the not, continue to or feel I about what's do conservative

final positioned the add into see our we're rapidly, that if Yes. we'll just built to advantage more to to improvement the slow we're would of a And inflation. model and commentary expectation to moderation be good built take the And in ease into then well quarter. off a That's certainly, I continued We -- is able start plan. in that the continues that. inflation to of

the businesses continue on see we and those our significant As play early in in that we're recovery out we fourth to commentary, in saw lagging. first discussed the quarter, in progress made we've in price that quarter We the that days.

we're So Tom said, at And commitment even better long ourselves and a getting as Investor reaching confident them the have in the established targets. see the Day. we goals We and that in those goals to term. doing through we

next question Redburn comes with Neil from Our Atlantic. Tyler

I'll up on I following about the your question start and comments Actually, think Harry's by there. margin

point basis suggests, calculating So guidance bit be a your the significantly. correctly, the leverage but operating typical if will little improvement I'm not better that than

And comments in extent just cost. That's sort so I really wanted the your growth to just to operating made reinvesting in ask of the an what in maintain to order you with business the mind, first question.

taste One profitability second you in of whether gross way, that's over is last, months? XX or structural margin a a this change look trying sort margin And I'm Business versus in. but suppose, in-unit for the compare any can know at don't coming the of you that, get the of to I part business say, lost the on I business business

business margin the is is than loss. business mean won lower -- always I Yes.

-- is talked before over over because this that bit yields So build improvement for line, That course fiscal it 'XX bottom, model, years. and margin of model get EPS as headwind up my top normal we'll normal XX% we've basis delever. and folks out And in to The on consistently cruising normal is for the where the X/X/XX so mind, But probably in to a that of that we as that's us X% 'XX. we the a time, some of couple to speed a point fiscal here referred to getting churn is the EPS. basis, last a in XX levels be we're cog about John probably the things. X% outsized

to triple expect year. We maybe quarter, over if double, take the that guidance this you the

into we think has the 'XX outsized. or it quite do, probably that's to the would outsourced so the -- doing -- what 'XX. we 'XX they So math, have it is that is hit normal the quite around I I polls but opportunity to and confident and which even And compared years that, XX that And model, next as fiscal and obviously, is everybody think growth, AOI is couple bps. outsized growth be feel of margin the

particularly in mean were suboptimal their I question, Tom, Sorry, I were sort deliberately were profitability. that I apologize. contracts behind of that of in meant clear first the of there whether wasn't part the really sort I terms leaving of you

actually of bits So on when at there's their sort that necessarily profitability of in gained? you in versus thinking difference much I day portions the those the But each X wasn't look whether of that switch. you've at speed, lost cruising

I to think get we your different for John, have margin provide booking in once business speed a not that any mean ultimately, any to -- over No, been has don't profile margin up we I so. operational. no, I to or strong don't good But don't know than implement mean that the time but is Merlin it I going point, how fully us I we've you and feel, past. see

-- Yes. No. the inside mantra organization growth. one the the of And things profitable is

is growth and what earnings accretive margin all is that costs. and that not organization it's on. So accretive focused It's is growth at the

performance expectations portfolio on metrics evaluate capital other and if the in forma new of the utilize we we we've sell our consistent the the to So years as ramp-up you for accounts our to that business them. X all targets invested it's growth, returns pro look met and sold last on the over at

business we've in of that a of hasn't hasn't business period and change time. there we've sold the a been relative been no, expectation there to structural lost the So that value structural change over our the in

engine that And this is everybody designed achieve. I'm us recovery to will it, and happening So we as growth for business. the so confident we in it in anxious margin see the stimulate believe highly

yes, think XXXX. through recovery margin I if you hitting set think and expectations get for growth performance, strong continued leading continued I see that relate we balance year, we've this the of and strong the as to we'll XXXX --

comes Zaffino question Oppenheimer. next with Ian from Our

I Impressive color and kind indicated bit you but what U a can the trends is gives guys and give little of guidance. to some October know you of that results here. maybe shape, maybe on how of point kind can going us you you confidence in

I the but pleased we in very Yes, say the is would month were year pleased a are One results October. very with not we make, with results.

We know, you a come weekly they on the as units results As report to we in. see our us basis.

As we education, higher very well earnings of the year performance and particularly improved that in recovery that area, the price for in bodes the indicated, terms in of we've seen corrections balance improvement.

contracts. Children's So others we wins, Boston still and we're just of to that many talked we new which October working about, -- had to some final also, business some significant get

pleased we're So we're stages very through the early we're as the fiscal X X first 'XX with weeks. or of this

from JPMorgan. comes Next with Steinerman question Andrew

Alex Andrew Hess is for on This Steinerman.

on on be as margins wanted seeing maybe XXXX. where And where down loss? FSS characterization? fair follow XX% traction well. how a Is a Merlin around takes net question verticals inclusive should you're maybe appears share you're up and that net also seeing new Just puts then net with to verticals the I'll ask about year-on-year think then we And in to new. of new

verticals share any loss. not seeing Well, with Yes. we're

So that's to an easy question answer.

last component there of others across the whales much best that. pretty all I our sell a significant year the the for this we're businesses might new some net like think in such years any size Yes, for had growth that given performance based on of represented growth. net that Merlin we and are are board. but across the third year year seeing last bigger than new being historical growth

year and clients' So with we pleased And in while measure basis, terms that of that to very that it one report dates. things remember on by the fiscal is the it people sales the is have activity we're results. driven decision on

And have example, that that 'XX. many so for would the leaked into we potentially decisions XX, decisions were in of expected

from around the year We kind and customers off. size. some a drop see large change of as are it a some see which year don't we just lag very to clients, in So significant the decision-making of as of those large in performance

performance ever a And last of best significant net X-year change third growth record frankly, our or year quite history net X-year terms of contributing which the history in again, the new. a that to is, again, company. track of from So new

pleased So very with it. we're

Got your it, right, margins XX pro interpret up basis this in FSS XX then of to on I points And if forma margins, John. in sort were of range something the XXXX.

least the fair then to sort specifically in of there then sort to this target imply basis optical and have guide a that to X.X%. margin? framing? points compressing would at Your seems that is up fiscal 'XX year. this anything is XX hit something of that now Is closer to of pick And that year perhaps little a

Yes.

XX%, this COVID, the particularly improvement. tailwind year yes, margin this the that, world over think of I in a B&I year. We had still approaching little was bit XXX bp little within a

that a So is result, Again, outsized a helped not performance. us. drive is something Yes. that that margin cause the for

We in focus continue reinvesting dollars, to our driving business. on the the AOI retaining clients

we're it's the as of into we just as laid so it again, we in goals XX forward. financial confident move I'll being all balance and XX, to able out. a say that And achieve

as say, to profitability margin. and business thing to and and for a the balance about feeling we're except I when result, do really that confident else don't to the know continuing So for the drive right what it comes

optimizing earnings for of -- I'll the are It's on in. the achieving just Yes. that we improvement we're add all retention result growth as final that. commentary a and growth

time. reward are scale. achieve We will on think through over margins get way margin So We for best understand the But margin. we're marketplace to we business that -- we grow consistently to the and us that margin the the focused is it. deliver improving expansion

about worried over bps of to so continuing versus about achieve maintaining XX those worried more It's year the And model day objectives year. out. optimizing achieving that day XX sustainable strategy. time. customers of a next bps not it deliver that period for I'm And the and we're And I'm outcome to and is an growth margin our not and this in strategy.

was We the it. have we saw And place you'll translate today, confident. lucky are rapidly, on over predict well. unchanged inflation the And project And then in this where food detailed in morning. performance into we're to which we wanes to reflect rate get market product evaluate team improved inflation food CPI by look category, the So our to deliver more analytic business that at very in not if does we it. go is time probably inflation to world, goals and and ahead see by a as X% product and it's CPI by as we hard basket, closer teams or you But unit, announcement we that the X%. margin for around just have believe that very the

and conservative that new And have advantage terms, continue been ultimately, I agreements as we that plays we customers. new baked if with we've our so well think our our suppliers our with And assumptions. to negotiate into to

BofA. comes question with Heather next from Our Balsky

about start, to the talk statement. could I So flow you was cash hoping

cash flow like Now have cash free quarter-to-quarter. us flow off and spun cadence looks Vestis, that around the shape just like looks perhaps help any your conversion what you what maybe profile

was at the seasonality. Yes, really the driver much the shouldn't global of business because FSS change cadence that all

see cash you So big inflow year. a QX, you'll, QX. seen the big have in in flow the in again, quarter-to-quarter Uniforms as throughout past, was consistent fairly outflow a

slightly just So you'll cadence, see lower the same numbers.

through we're to only best be rate, and looking flow. couple In and as free That at going food settle as on probably this got year of cash a is conversion AOI year XX% stand out a terms we We've really are that about business. a note up conversion of of benchmark. things this probably the facilities

than overall, in given first target that million think hangover talked the So the AOI AM I as the then about or taxes same that we paying do have well, a quarter $XX we we'll again, on that And X pay cadence a that in But we're conversion about the you'll this we first spin about. less talked from items see quarter the bit do same about the $XX to costs have some as sale one-off service those transaction a I amount. that year roughly million. XX%

And helpful. regards with question. a margin less then question, follow-up more a question, That's to it. but Got as an operating

last labor force the your and seeing Over to to X inflation. with you've and years, help make operations what with we're adjustments offset to menu regard had

Or do you think still unwind about this cost is and food How happy menu As are of of it's you and operations? today? you waves, kind inflation you that? there. are where you're sticky Can some thinking

on. No, a I inflation I service head the meet think our and it. think to issue offerings operators have And job adjusting largely menu great done of we're through

were that of couple I supply product place don't we operating structure. really course I now of last essentially we're We think been issues there. and model normalized a at see a so need of a where for think have over And normalized. the all normalized the years additional the kind have prevalent new And the menu new changes

go and way And the able programs the to are so really structure ahead customers want our people them.

I availability to well. environment, as today's improved both think much labor comfortable a we're getting we're time, has over that more food pressures, to very as So and environment cost normalized with inflationary respect for back believe we consistently do in and labor

Andrew question Baird. comes next with Our from Wittmann

I your drivers. Great. a of things I in margin guess heard remarks that couple are

in that And to me always new that should all like the business to You be you needs mature. there talked time, of if maturing business particular. some about selling the new recently business indicates you're new that all sold the

to the that you've going want to the John, guess, targets? operational be Do it's bit Obviously, to targets line. deliver above normal suggest to to margin profit gains margin little your is have But to both. the performance maybe give on maybe next the you delivering years? X growing focus it you philosophically, into more always the as that to a lean margin or So that margin, top aggressively I set X pivot rather you might do a hit the the over here here more going benefit, out than

growing it improvement And over of margin accounts a terms from couple added, both well as chain AOI terms of path time terms and and leads margin. Really, no. comes a see growth the expansion dollars We in to consistently to economics up from of in different new supply profitability growth the of scale sources, the on Andy. as the improved time are The does that both over which in as that spend.

new to better economics manufacturers, supply add to chain craft which everybody. additional for provides to deals leads we and suppliers with spend improved as So for business, managed it

for know, get supply you paid you the chain as So in world, growth.

buying buying might if we get certain we're a of And plus, at x so we're And get x if per level. dollars you number case, more.

add additional So slower a the feeds with above leverage to grow economics overhead creates rate because costs we're growth don't chain supply to rate respect the of at we the business. the -- as company. that's significantly overheads It's we're growth it the growing able unit also and much need than the then to

the profile expansion shut we The that's significant over to maintaining time, we the back we what margin and on growth be to growing. post march days And stopped or that frankly, point focus to a opposed us margin to earlier led down would all counterproductive. back as And a IPO. company in did growth more in growth strategic by that the So margin went needed consistent the make deliver where mid-teens, what change. company the that's, actually on to the seek

get through expenses. at every our as better and on people and growth to also P&L. the that we day deliver focused cost growth. direct and managing consistently middle strategy, can we're but better see We expansion And So margin the of food labor we optimal -- cost, want managing the

and technology and the tools more of them to as P&L middle give more we go well. the effectively So ahead and manage

managing middle that So moderates, inflation as as well. of gets P&L the easier

just that managing cost the same So not at it's time. structure it's about pricing, about

is be company. of -- to will think the we So and growth primary the strategy the driver but continue

up -- It larger looked for shares first then here Is it for year. a the share you're count, at the year-over-year. the high million Tom. number quickly I here seems at are here shares just count million. in And vesting to 'XX. XXX or here about of estimating was shares coming of X were like share X X this the about outstanding the number increase reported, just you lot is share driving share million, million XXX quarter somewhat In there what's that million vest creep? unusually Great. quarter a one something? Or That just looks guys fiscal like you

One, and there's of And X the from of year-to-year. usually $X Yes, options about we normal dilution spend. as got you've to million employee that. shares roughly restricted components rebasing then share sort of secondly, go co the the remain

million related because the $X in the spend as and It's million $X total, about of just million spin. $X of normal So essence, math, a to dilution.

Our Kaplan Morgan next with question Toni Stanley. comes from

just talk you Has the just previously, and business? new talk up been ask for past if the about productivity to as -- the when just you you it of bit to It's gone new if sort it has a wanted about been could question of to wanted you increases technology been versus have I strong but started? accelerating asked sales that bit number you Has a in the meaningfully compare I in that little little decentralization. or salespeople now could this been of business. years couple more now. force the the you very it alluded compare first

of sort talks forward? accelerated business that of new this anything going the Just to sustainability

actually It's all of Sure. those things.

you joined all, made of significant of investments in company, ahead and we we sales as infrastructure as ways. went different may in a the remember, First couple

joined and downstreamed adding company, made leadership, changes probably by and some investment has constant been sales the sales initial for we last First, that business years. resources function the X sales level unit. we the the the to We made X we Street, the to now in back or as as

sitting So it's the in closer to way, get to geography done. the the And get customers. closest where much it's now that to job to needs

dependent And those business essentially sales has reinvestment And so we've manager in made years the they're strategy. ago. we de X a of minimis resources been back upon unit salesperson, invested here over level time

been quantum a So initial since that there business. our hasn't reinvestment change in

has increasing been their the X over in back years sales time seen based you've enhanced their volume and the manager productivity and last based which business, what time on the and to led productivity. was business, really on each wanted the begin to for So We that sales strategy were in that to of for be territories working with. they lines our significant of in people ramp-up their responsible territory

always anything like on general, in there add for state and want to the steady at structure a number good We see continued very we're depending I don't or terms here the set. feel that you But in looking a we of we're may to we we shape So a person add you total optimize, Tom, of have. resources we from perspective. we're the reinvestment. don't need opportunity sales know in if to have think that?

pipeline many a months to our as in they thing and No, contract anywhere and sales work is about just from vary territory I in build a can territory a force talked lot, think only to that is as add continue business a will the important, for their that the we've years. hello multiple years few in time row so because strength I'd to Yes. in

X the this getting is still -- still and workforce, markets. increase sea stability is stability terms our XX% or close which so over the their And before of fiscal in still to from 'XX their legs that in developing in young years and

improve. will productivity So close it to continue I think and rates will

of Great. in very the going how that has strong see you XXXX and growth that improvement with international. growth wanted And there quarter there to international driving anything had really again. a into of if was regard to I sustainability ask been

organization had stability just the and terms described. Tom I rejoined have think they was yes, intact geographies. consistently terrific we largely sales by in say, that in would of part I that company. across all year the is place international another growth in new And large net The Yes. before driven

been organization time. more more they've a longer consistently has period of and that So stable, territories working over been those

I So that, worked that's think their to advantage.

those to I helpful think we where to be. very and have very strategy it's really focused we in disciplined a growth want with that also geographies respect

have on focused translated out countries. a and right in advantage, the into flags markets consistently And those we're really those consistently that's we're new geographies where and businesses. on those focused competitive so planting performance on and focused win not to improvement. And continued we We're

good international very and about markets. stability in team and their beneficiary feel we those the productivity been yes, of the significant So we've

with from comes Shlomo question Rosenbaum next Stifel. Our

bit of My you that to want couple inflationary is follow-up saw? in first of question, little needed I talk is and terms more you made over next renewals, the the a catch -- of effort the the education that you correction going pricing ask efforts that that a part on catch-up really are is going space. there that to contract the us in quarters just to Is then detail on And year? have I be any pictures Or the for further to last fully up business.

Yes.

continue recovery I to of the think see businesses. in just for be those both improve continue we're to to those as side. caught price on persistent inflation up to as to the not work very across being enterprise, food in We'll close we the to continues businesses pricing somewhat and need

XX% able strategy about going to to we where to businesses, very were recover compared -- think going shape, and we're an we it. good not and was we particularly price that for we're to forward. sure And inflation continue costs those very were in So elevated making I XX% to diligent in pricing year last those but be running when

we're the caught and up, work to better. to largely across continue improve say enterprise we'll I'd even So get and

in Okay. Next about since Maybe been a the Level bought growth bit you for back kind business there's whether you before strong Great. of of that strategic in the can business follow-up, marketplace to the bought could mentioned And changes then us think you and just a it. I that repositioning you passing Hospitality. had know it? to little rates talk strategic you get it the positioning

very service a the of providing. first have we to And through significant. work market We Yes. initially a additional was all, -- is next addressable new think level model kind of developing a

market of on capabilities opportunity senior So of terms services addressable is the multiple and which largely as of living we're really well, and billions business the the and dollars range expanding focusing in self-op.

and to bring nursing. core Next of represents operated to business we'll growing both so business, balanced think growth that that There is well skilled in a growth continue a potential. at senior potential very still -- was doing significant Level And And well we living approach as at in sides so of business. we'll the part both look at so as the the

Josh Chan question with UBS. comes next from Our

guidance? you And I that year? the into expect talk then could -- food does shape you inflation through guess of you mentioned the to the of shape What's year? food baked that how through kind

to an food assumption X% Yes. of X% approximately of inflation baked We globally.

inflation little for higher Now U.S. in and less our it's different the overall in Asia. little It's little by in market. the expectations. in for rate a It's Canada, a X.X% lower Europe a

the built in models and And year. into basis X% our it somewhere what's that's built and X%. with size range built planning into on organization, and it, the based on our we a our clients discussions call for to of into the our negotiation So blended of customers. the assumptions do

that product, is instance, in so up by based very expect we for meat X.X% XXXX. market specifically be individual And to on baskets

We X.X. expect be vegetables roots and to

on at X%, down basis. of supplies products kitchen right? business market then we've that So we buy and for a very locations basket we and our a -- monthly have got we detailed by So that monitor unit

we'll lowering how of to a So our seeing -- to continues that's see what the year. as see informed and Street we're we it overall the the moderate and assumption and affecting keep to if as balance and of expectations, inflation we those

that, mentioned color. back this margin that circling And improvement supply catch as I relatively such be John. Okay. year do of outsized years improvement because Tom normalized chain, to that guess how on course. I to outsized the year think understandable being about inflation an normal definitely It's XX be helpful the seem earlier. of I then price maturity, items, up. appreciate guess, That's really you contract they will

year? think improvement beyond this So about how should we margin

Yes.

'XX continued 'XX, business you ramped will see well. and But we new just Tom continue think jump I I in here you'll in normalization that the have the we to improvement an of think outsized as performance margin phenomenon maturity, these described, will the 'XX the see -- as and and see recovery business be this largely couple chain last of drivers price continue sold the for will course of in outsized price over years, of business the cycle. 'XX performance supply to lag throughout we'll done or and margin in inflation lag 'XX

chain to add So as get in supply 'XX, we'll 'XX we economics. scale better 'XX improve continue and and

also rates time be to in period at We low expect SG&A the managed over business. that growth

model performance, all to that outsize consistently. Tom, drivers margin So out see we playing do you? they're and

thing. same Yes. No,

think all included of play hitting of in -- create 'XX outsized cruising off factor Many those this of drops business those factors the We've into still the speed AOI that I and X into most sort play the into slides. XX. growth. maybe a as new

growth more our is the chain over of overall play X it how bps the and next -- to we're of model. to that But X getting manage middle down these move we sustainable XX sort leverage, things than the but where So years, to But going that. into to be core midterm. as out continue page overhead begets of long-term over it's view the supply leverage, we begets the which

Moore next Jefferies. Our sorry, with our Stephanie from from last comes comes question question --

growth range, the AOI the was you inflation, or look guard pricing, would ends there. you wanted cetera, kind Maybe the provide growth. some contribute just macro, of et to Just But factors either roles range. both some you for pick at guidance touch It's hitting that EPS could just of in assumptions about talk 'XX. to a around the on I curious, outlook fiscal pretty tight as of whether to

Yes.

components the just I same about of factor. the talked being think inflation it's we the sort with big

sharper a become think nonfactor. it would and the decline I

ticks help. oversized creates John talk at business, was we and margin plan, that of probably expect headwind headwind be new We we wins. a of becomes think a all, I in baked that. lot on think wins, progression we I over If just the would which new bit into back that's don't underperformed through, bit that huge a good If there levels we a a of the unfortunately, want increases a got that ran little again, upside. it up about

the of go of can and each plus scenario down you and through So lines work sort a minus each. on

as may theme think inflation help in a of present to there headwind. being us the a what I with overachieve or overarching bit

second would I that. Yes.

I there it. will key on the to would key lead actions if and and that very that, improvement driver range, think all of of what trending see as would I based would team the a that one And upper potential the call the be on. the to the we're recovery I end number I the based expectations that think be or we inflation towards hopeful in risk that is ranges. the that in to on we're very we can Too but early hopeful today. being benefit out has marketplace that call around driver it taken focus make be terms would X pricing so that And

going I those supply very the to consistently them, think, are objectives. of new all it's rest chain, think be maturity, I SG&A, delivered those whether business against

And be would the so most on. focused would that be variable one I

back the any for turn now call Mr. Zillmer remarks. I'll to closing

the you much, and company. morning of the attention this Terrific. Well, appreciate very the and thank time support everybody. Really

our for the confident with as in expectations well. We're we and that we've in 'XX As very and 'XX we the pleased confident said, 'XX performance. the are for very year-end in very performance and set

this commitments business well. we've shareholders, our the on margins over to to deliver deliver improved earnings We're here to to not strategy. and committed grow made, time. as going this we're and ourselves are improved to only We but And

company, So in we're believers going to this all the big believers we're deliver. in the strategy and and big go

you So very thank much.

This conference. participating. concludes for you Thank today's

disconnect. now may You