Please standby, we are about to begin. Good day. And welcome to ARAMARK’s Third Quarter Fiscal 2014 Earnings Results Conference Call. At this time, I would like to inform you that this broadcast is being recorded for rebroadcast and all participants are in listen-only mode. We'll open the conference call for questions at the conclusion of the company's prepared remarks. In order to accommodate all participants in the question queue, the company has requested that you limit yourself to one question then re-queue if needed. I will now turn the call over to Ian Bailey, Vice President of Investor Relations. Mr. Bailey, please proceed.

Thank you. And welcome to ARAMARK 's conference call to review operating results for the third quarter of fiscal 2014. Here with me today are Eric Foss, our President and Chief Executive Officer; and Fred Sutherland, our Executive Vice President and Chief Financial Officer. I would like to remind you that any recording used or transmission of this audio may not be done without the prior written consent of ARAMARK. In today's discussion of results, unless otherwise noted we will be referencing ARAMARK's adjusted operating income, adjusted net income, adjusted corporate expenses, and adjusted EPS metrics, which are non-GAAP financial measures. These measures exclude amortization and depreciation resulting from the company's going-private transaction in 2007, share-based compensation expenses, acquisition and divestitures, changes in currency translation rates, gains, losses and settlements that impact period-over-period comparability, severance, expenses related to our initial public offering, refinancing expenses, re-branding and other transformation-related expenses. We will also be referencing adjusted organic sales which exclude the impact of acquisitions, divestitures and currency translation. A full reconciliation of these calculations is available in the press release we issued this morning which has been posted to our website at www.aramark.com. Additionally, various remarks that we may make in this call relating to matters that are not historical facts, including remarks about anticipated future costs and savings, future expectations, anticipations, beliefs, estimates, plans and prospects constitute forward-looking statements. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors including those discussed in Risk Factors, MD&A and other sections of our SEC filings. We disclaim any duty to update or revise such forward-looking statements whether as a result of future events or otherwise. Lastly, I would like to reiterate our goal of addressing the full queue of questions during the Q&A session. Limiting yourself to one question and then re-queuing if needed will greatly help us in addressing all of the participant inquiries today. With that, I'll turn the call over to Eric. Eric?

Thank you, Ian, and good morning. And thanks to everyone for joining us. We are pleased to report another quarter of solid financial results. This is our third earnings call since the IPO and it’s the third call in a row, where we are posting solid numbers and delivering meaningful improvements in our profitability and we are achieving this despite the challenging consumer and macro environment. This is also the second call in the row where we have been able to increase our adjusted EPS outlook for the year. As you saw in our release this morning, our full year fiscal 2014 expectations was taken up to a range of a $1.45 to a $1.50 per share on a 53-week journey basis. Year-to-date, we have deliver organic sales growth at the upper end of our annual guidance framework of 3% to 5% and an 11% increase year-to-date, the improvement in our adjusted operating income is also at the upper end of that framework. An adjusted EPS for the first nine months of 2014 is up in excess of 20%. So, clearly, we have a lot to be proud of with our financial performance this year and our results are reflective of several factors. The, first, is the 270,000 team members across ARAMARK that made this success possible and I want to show my appreciation and thank them for their efforts. It’s also the results of our clearly defined strategy, which is focused on and organized around accelerating growth, activating productivity for growth, as well as margin expansion and then attracting and retaining the best talent. Through this strategy, consumer insights are really leading to innovations and we are increasingly able to deliver on our right to win to compete and win effectively in the marketplace. This innovation comes in many…

Thanks, Eric. In the third quarter, we achieved sales of $3.6 million and adjusted operating income of $192.4 million. As Eric mentioned, organic sales growth in the period was 4% and adjusted operating income growth was 10%. Adjusted net income for the quarter was $77.8 million compared to $59.4 million in the third quarter of 2013. Adjusted earnings per share were $0.32 versus $0.28 in the third quarter of 2013. The diluted share count in the third quarter was 243.7 million shares, up from 208.3 million shares in the same period last year, primarily as a result of the company's IPO this past December. As detailed in the non-GAAP schedules attached to our press release, changes in currency rates from the prior year reduced sales by approximately $23 million, with a minimal effect on operating income. Now looking at the third quarter and a bit more detail, our North America Food and Support Services segment sales were $2.5 million with adjusted operating income of $122.2 million. Sales were up 4% organically and adjusted operating income was up 10%. Sales growth was particularly solid in the Education, Healthcare, Hospitality, Corrections and Parks businesses from higher new business. In our International segment, third quarter sales were $765.2 million, a 6% organic increase. This increase was led by continuing double-digit growth in our key emerging market geographies and positive organic sales growth in Europe. Third quarter adjusted operating income increased 22% to $39.2 million from our food, labor and SG&A productivity efforts. In our Uniform segment, sales in the third quarter increased 3% organically to $367.1 million. Adjusted operating income grew 8% to $45.6 million from a combination of solid sales growth in both merchandise and plant productivity initiatives. Corporate expenses adjusted for the items described in our opening comments were $14.6 million…

Thanks Fred. Well, that let concludes our prepared comments. And John, if you would, we’re happy to entertain any questions.

(Operator Instructions) Our first question comes from Manav Patnaik with Barclays.

Hey good morning gentlemen, good quarter. I guess, I just wanted to get an update from you in terms of the competitive environment in the U.S. and maybe specifically tie it up to the M&A pipelines as well. Because one of your European competitors, obviously, just went public. And they've been touting their story as being more aggressive of acquisitions in the U.S. And I just want to get your perspective on that?

Sure, well, let me take the first and then I’ll ask Fred to comment on the M&A front. But I think relative to the competitive environment, I think the competitive environment remains rational. If you look at, what we try to do the last couple of years, certainly what we try to do since going public is to accelerate our growth momentum. We’ve successfully done that. I think if you look at our results competitively versus our primary competitors both in third quarter as well as year-to-date, I think you are seeing industry-leading growth come from us right now. So we’d like know what we’re seeing in the marketplace relative to improving our competitive position in picking up market share. That growth has been pretty balanced across both improving our base performance, which is about 50% of that growth as well as picking up net new business. We mentioned a couple of wins in the quarter. So as we go forward, I mean, that’s very consistent with not only our expectations, but what we’ve talked about in terms of the long-term growth model. Fred, you want to comment on M&A.

Sure. On M&A, specifically in North America, if we like where we stand in food service business, as you know, we’re one of the top providers. We really compete pretty effectively across all of the geographic geographies and the market verticals. And while there are opportunities from time-to-time in food services in North America, we don't see that, for us, as a particularly important driver of our overall performance. With respect to facility services and uniform services, there are also opportunities from time to time. And they probably would be for us over time a little more important to help us build out geography and provide particular facilities, some additional scope of services, so we can see M&A probably playing a little bit more role in those two service categories.

We’ll take our next question from Andrew Steinerman with J.P. Morgan.

Hi everybody. When looking at the wording of the outlook, you chose to, kind of, quote over 3% to 5% multi-year outlook and then give the EPS range for the year. Given we only have one last quarter, I just wanted to confirm on a same week basis, you're still looking to be kind of 3% to 5% organic growth in the fourth fiscal quarter?

Yeah. I think -- Andy, this is Eric. I think that algorithm that we’ve committed to that is multiyear, is one that we want to keep out there at that 3% to 5%. I think you’ve heard us talk before and will continue to hear us talk about. There can and will be some quarter-to-quarter variability to that. But I think the important point is as we look at the numbers that we delivered, we continue, as we look to the future to be encouraged by the outsourcing opportunity. The confidence that we’ve got and the strategies and plans leads us to the continued outlook of driving continued growth in creating long-term shareholder value. So I think, that's very consistent with where we’ve been certainly and where we’re headed. So having said that, we don't want to get into specific quarterly guidance.

We’ll go next to Gary Bisbee with RBC Capital Markets.

Hi, guys. Good morning. The fiscal year guidance, if you look at what that implies for earnings in the fourth quarter, it is little profit growth. I guess I just wanted to get a sense for how much of that may be conservatism or are there some reasons that we should think about either I don't know, if it's something on the margins? And as part of that, if you could also just confirm what the extra week means for earnings. Obviously, it's helpful for revenue. I believe you'd said it's actually negative for cash flow because some costs get pulled forward, cash costs but what about earnings? Thank you.

So we expect in general as you’re saying, our framework for the annual -- our annual increase in adjusted operating income is in the high single-digits. As Eric mentioned, we’re operating now as far as in the upper half, top end of that range. We continue to expect that our adjusted operating income growth would be consistent and that annual framework will hold up. And with respect to EPS, the impact of the 53rd week is somewhere around the penny a share, maybe slightly higher than that.

We’ll take our next question from Andrew Wittmann with Baird.

Hi, guys. Good morning.

Morning.

Eric, I wanted to dig into some of your comments that you had about the business environment and, specifically, kind of your overall impression about the net new business and maybe how that's tracking versus the targets that you had going into the year. I think there's been some pretty good wins here, but I didn't know how this compared to what you thought you'd be getting. So I think some commentary on that to flesh that out would be helpful?

Sure. Andrew, happy to, again, if you look at our third quarter, if you look at our year-to-date performance and if you look at our kind of long term growth of that 3% to 5% top-line, again, the way this business model will work is about half of that growth will come from the performance of our base business. That’s certainly consistent with what we saw in third quarter, its consistent with what we’ve seen year-to-date where roughly two points of that's coming from our base business combination of pricing as well as is volume growth coming from our pursuit of adjacency selling opportunities. The other half of that growth, again, in the quarter a couple of points is coming from net new business. And as we look at the full year and as you go back and think about what we've added this year relative to some of the key client wins. It’s going to be one of our best years ever. We had a record year, if you remember in 2013 and again had some big wins late in the year, a couple of the State Department corrections businesses. But if you look at year-to-date, we feel very comfortable with the net new business that we’ve won and as we look at that pipeline, as it develops for the rest of this year in 2015 again, we’re very encouraged.

Our next question will come from Jeff Farmer with Wells Fargo.

Thank you. Just following up on that question and sort of the line of earnings questions that you talked about earlier, you had these two pretty healthy upward EPS revisions for ‘14. So again, what, if anything, does this mean to FY ‘15 EPS growth in the context of the longer term, low-double-digit EPS growth guidance? You alluded to it, but I'm just curious. Have you pulled forward any revenue recognition opportunities, any margin opportunities? Any reason to believe that life gets a little bit more challenging in terms of meeting that double-digit EPS growth guidance as you get into FY ‘15?

Well, we talk about full-year 2015 guidance later as we close down the year. But I think the fact is that what we feel comfortable with is the multi-year guidance that we give. Again, 3% to 5% top-line growth, which translates to mid to high single-digit, adjusted operating income, which translates to double-digit earnings per share is the algorithm and the business model that we continue to be comfortable with.

(Operator Instructions) We’ll go next to Suzi Stein with Morgan Stanley.

Hi. This is Denny Galindo on for Suzi Stein. As we look at the margin expansion this year, it's been better than expected every quarter. And I wonder if you could give a little bit more color on where this margin expansion is coming from and maybe the mix of drivers, whether more of it's from pricing, more of it from efficiency or something else. And then how does this compare to your expectations during the roadshow?

Well, the answer of last question, it’s very consistent with what we laid out at the roadshow. So I think what you heard us talk a lot about at the roadshow is the game we’re playing is one of continuing to accelerate our growth, well, also expanding margin. So I think I use the term multiple times. This is an organization where have to dribble with both hands and make sure we accelerate the top-line revenue growth while also expanding margins. That's exactly the game and the skills set we’ve demonstrated through the first three quarters as a public company. I also mentioned as we did the roadshow that we will invest back in the business. So as we capture some of the cost and productivity, we will invest back in the business, that will be largely focused on growth initiatives and building our brand. It will be focused on making sure, we’ve got an investment in people capability, particularly in the frontline. And it will be focused on making sure we’ve got the right tools and technology to effectively run this business. If you look at what's driving the 40 basis points of margin improvement year-to-date, it comes across the spectrum of supply chain food, labor and SG&A. Again, if you look at our performance this year, I think about half of that will probably come from SG&A and the other half will come from a combination of food and labor with the heaviest part of that, probably being on the labor side. We do have some headwind as we have some of the start-up contracts, particularly, on the food side. So that's just typical what you’d experience as you’re gaining new business wins. But -- and as we go forward, I think the composition of that will shift probably more to about 80% of the cost captured on food and labor and 20% to 25% on the SG&A side. So does that answer your question?

Yes, it does. Thank you very much.

Okay. Thanks.

We’ll take our next question from Sara Gubins with Bank of America Merrill Lynch.

Thank you. Just following up on that. For food pricing, what are you assuming in your guidance for the end of the year? And maybe could you help us think about the potential drag headed into next year?

I just want to make sure, I understand your question. When you say food price, are you talking about food inflation or you talking about our pricing approach?

Sorry. Inflation and probably therefore after that, your pricing approach but primarily inflation.

Okay. So a couple things on inflation. I think as Fred mentioned in his comments. I think there's a couple of things to keep in mind relative to food inflation. Number one is just the diversity of this business model allows you to manage inflationary pressures, I think pretty proactively. So let me try to describe that to you. Part of that diversity model is driven by the sectors and services in which we provide service. So again, remember, in addition to the food business, we have a uniform business, facilities business, the healthcare technology business. Second is if you look at our contract structure, we have both P&L contracts where we would absorb those costs but we also have client interest contracts where those costs would get pass through to the client. Third, we have the option of both menu management optionality as well as pricing actions. So again, we purchase a very diverse market basket of goods and when you have a few of those categories there might be pressure, recently we've seen some pressure in protein and dairy category. Again it's important to note that those two categories represent a pretty small portion of the overall market basket of about 15%. And again, this point around uniforms and facilities, about 25% of our business is non-food and then 30% of our contract types are client interest where the cost gone of flow-through to our P&L. That then lead just to what can we do about menu and pricing. And we’re confident in our ability that we can price through a lot of inflationary pressures and our offset debt with the cost and productivity initiatives. So I think my simple point here is we feel confident in our ability to deal effectively with inflationary concerns.

We’ll take our next question from Stephen Grambling with Goldman Sachs.

Hey, good morning and thanks for taking my questions. I guess, the first is a follow-up on some of the margin commentary. And if you could just expand on, maybe the puts and takes in cost control, specifically helping to quantify the investments being made in the sales force versus the benefits that you're getting for some of these labor management tools?

Sure. I'll comment and then let Fred jump in as well. I think relative to the cost and productivity in the investments. We feel very good and I think the accelerated revenue growth is depicting the investments that we've made on the selling resource side are actually paying off for us. I think the same is true relative to the capability and what's happening on the customer experience side, as well as the technology and tools that are front-line managers in particular very excited about to help them manage fairly dynamic business. So, I think, those investments are ones that, in the branding work is one that we talk a little bit about and I think it's important that as we rolled out the brand, the early reaction has been very, very positive, whether you talk to consumers or clients or our current or potential employee. So, I think, we feel good about the investments and the return we’re getting. Do you want to make any comments, Fred, about just the whole cost bucket.

Yeah. I think, we've gotten balance. Clearly, the SG&A initiatives are little easier to execute because they don’t involve the broad field down to the unit level but as Eric mentioned, we're rolling out significant number of tools and training and standardized process for our frontline manager. On the sales reinvestment, remember that our business outside of Uniform business is not a business with literally hundreds of sales folks, hundreds and hundreds. Its -- these markets are higher education, business market, fairly well-defined, finite -- business to business, finite set of clients. And so, we look at each one of those market verticals. What are sales resources? What should those sales force resource be? And then we are gradually where we think we’re a bit short, spending money to bring more sales resources. And as we do that there is no reason to believe that their productivity, once they hit, once they hit sort of run rate would be any different then our existing sales recourses.

(Operator Instructions) We go next to Andrew Wittmann with Baird.

Hi, guys. Thank for taking my follow up. I wanted to dig in a little bit to the growth rates and particularly in maybe Uniform and International. While still good, they did decelerate a little bit, particularly in International. I guess, maybe a little commentary around that would be helpful. Specifically, how much of a contributor was the World Cup and was there a lost contract there or it was just kind of normal lumpiness that you'd see in that segment?

Sure, Andrew. Let me take the international one and I'll let, Fred, talk about Uniform business. I think, if you look our International business, I think we are pretty pleased. We saw our International business, if you look at Europe business, we grew in the quarter, I think, probably one of the few competitors to see that type of growth in Europe. We saw business across the U.K., Ireland and Germany all grow. The important emerging market business are double-digit growth again was up about 11%, again I think that compares very well versus what have you seen from others and we’ve done that, we are also making good progress on the margin front. So, we saw double-digit growth in the emerging markets across China and South America. Relative to your question on the FIFA World Cup, it’s a really small contributor to the overall revenue, I mean, it's well less than a 0.5% of revenue in the quarter. So it's very deminimis.

On Uniform, our growth outlook for the Uniform business is pretty much the same, I think, you’ll see that our growth rate may bounce around a little bit quarter-to-quarter, its not a typical for the industry just given some of the ebbs and flows of the business, direct sales as they affect one quarter versus another. So we still view Uniform business is a business that will fit very much within our overall growth model I'd add one thing that Eric -- what Eric said about the FIFA World Cup. Because we work through -- largely through other contracts to work with us at these venues, in fact, we were not recognizing the full gross revenues of all of the FIFA volume, just an accounting thing and so that’s why, as Eric mentioned, it really had deminimis impact on the quarter.

We’ll go once again to Suzi Stein with Morgan Stanley.

Hey. I just had a follow-up on the CapEx, it ticked up in the quarter, as you mentioned. And I was curious exactly maybe some more color on what types of investments you were making and is any of this CapEx related to the Kentucky win or other big wins? And how do client investments play a big role in winning a large contract like the Kentucky contract?

Sure. So our CapEx did tickup in the third quarter, so year-to-date was in first six months of the year. Year-to-date we were running behind prior year, we are about even a little bit above prior year through the nine month. And think of our CapEx growth being divided into a couple of buckets. One is key renewals and another is key new business, another is the ramp up and technology spend and another, which is not a factor right now, but will be more of a factor over the year, next year to is increasing our capacity in the Uniform business. So we have successfully renewed several large key accounts in our higher education space and there have been and will be some capital associated with that, these are new long-term contracts and then some of these key new accounts that we brought on U.K as one. That capital associated with them. And capital is, in some of these bid not an important. But really think of the capital as a way to transform, let’s say a college campus. So as the college, particularly university the self-operated is looking to really become much more sophisticated and modernize, and much more student focused and what they offer. There is typically some sort of physical transformation that goes along with that. It may be the dinning hall or it maybe the student union, it maybe food service, portable food service facilities, it maybe food service, many facilities inside dome and typically we are happy to work with client to help fund part of that. We look at as an investment in the account. We expect a good return on that investment and then as you probably know from the accounting point of view, we amortize that investment against our P&L over the life of the contract, typically if there is meaningful investment we would be getting a long-term contract, 10 or 15 years. And then finally that investment if the contract were to be terminated earlier would be essentially the unamortized value owed back to us from the client.

And we’ll take another follow-up from Stephen Grambling with Goldman Sachs.

Hey. Thanks again. And this is, I think, another follow-up to, I think, Andrew's question earlier. As you look at the number of contracts that are coming up for proposal. Are you seeing any change in the number from, I guess, previously insourced potential customers versus those that are already outsourced?

I would say the trend is fairly consistent. Again as we look at the pipeline, again, one of the things we absolutely don’t control is the timing of that. But I think one of things that has happened over the last couple of years is with the healthcare situation and labor costs rising as we have seen particularly in the education space, in the healthcare space probably an increased movement from in-housed to outsource. But I think as we look at the pipeline going forward, the composition of that looks fairly consistent.

That’s helpful. Thank you.

Thank you.

It appears there are no further questions at this time. Ian, I’d like to return the conference to you.

Thank you for joining us today and I’ll be available if you have any follow-up questions all day long. Thanks operator.

Thank you for participating and have a nice day. All parties may now disconnect.