Good morning and welcome to ARAMARK’s Fiscal 2014 Earnings Results Conference Call. At this time, I would like to inform you that this conference is being recorded for rebroadcast and all participants are in listen-only mode. We will 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 and then re-queue if needed. I will now turn the call over to Ian Bailey, Vice President of Investor Relations. Mr. Bailey, please proceed.

Thanks Doug. And welcome to ARAMARK’s conference call to review operating results for the fourth quarter and full year 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. I would also like to remind you about our notice regarding forward-looking statements, which is included in our press release this morning can be found on our website aramark.com and it is included in our other SEC filings. During this call, we will making comments that are forward-looking, actual results may differ materially from those expressed or implied as a results of various risks, uncertainties and important factors including those discussed from the 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. Additionally, we will be discussing certain non-GAAP financial measures including adjusted operating income, adjusted net income, adjusted corporate expenses and adjusted EPS which are adjusted as defined. A reconciliation of these items can be found both in this morning’s press release and on our website as well. Before turning the call over to Eric, a bit of housekeeping. As many of you are aware once every six years we recorded 53rd week in our financials which occurred in the fourth quarter of fiscal 2014. This results from a standard quarterly reporting convention of 13 weeks per quarter compared to a year of 365 days. This extra week obviously affects comparison to 2013 and 2015 forward guidance. Our organic sales growth calculation adjusts for this week. The other metrics that we report such as adjusted operating income, adjusted net income, adjusted EPS and as reported metrics do not adjust for the extra week. So we’ve provided additional color on the estimated impact to allow for comparison. With that, I’ll turn the call over to Eric. Eric?

Thanks, Ian and good morning and thanks to everyone for joining us. We’re excited to share ARAMARK’s record 2014 financial and operational results which are reflective of the breadth, diversity and strength of ARAMARK brand, the success of our clear and focused strategy and the power and resilience of our operating model. As our results demonstrate, we have and continue make significant progress in our transformation journey. And while our results over the last two years have been gratifying we’re still in the early phases of this transformation effort and have lots of opportunities ahead of us. As we look forward, we expect the 2015 will be another year of great progress along this journey. We’re clearly pleased with our results for 2014 and are excited about our future. And I’d like to spend a little time this morning expanding a bit on both of those topics. In 2014 we saw a meaningful momentum and continued contributions pretty much across the board from each of our business units which led the organic sales growth up 5% to 14.8 billion. Adjusted operating income grew 12% to 878 million which included an estimated 2% boost from the 53rd week. And we continue to show solid margin improvement of 20 basis points. Our adjusted EPS was $1.51 which includes about $0.02 from the extra week up over 20% from 2013’s adjusted EPS of $1.24. For the fourth quarter, organic sales growth was 6% with about 2% coming from a non-recurring facilities project work we did with the major North American client. Adjusted operating income was up 15% and adjusted EPS was $0.39 with the lift from the extra week of about 7% and $0.02 respectively. Now I’d like to talk about how we’re achieving these results. Our team has been very busy the…

Thanks Eric. To recap the year we’re very pleased with the results. Sales were 14.8 billion with organic sales growth which again is on a 52-week basis at 5%. Our adjusted operating income grew 12% to $878 million versus $781 million prior year, which includes an estimate of 2% boost from the extra week. Our adjusted net income of $359 million was up well over 30% including the 2% benefit from the week and EPS was $1.51 which as Eric mentioned included about 2% from the extra week and was up 20%. Now turning to the balance sheet, total debt at year-end was $5.4 billion the company’s total debt to adjusted-EBITDA ratio on a trailing 12 months basis improved in fiscal 2014 to 4.3 times and liquidity remains strong. The company’s $770 million revolving credit facility was undrawn at year’s end. We expect continued debt ratio reduction prior to the effect of any acquisitions from a combination of higher EBITDA and lower debt. Net capital expenditures for the year were $505 million compared to $385 million in fiscal 2013 about 3.5% of sales. The company’s rate of capital spending increased year-over-year as a result of several key account renewals, a number of large new client wins and spending on technology. In fiscal 2015, the company expects capital expenditures in the range of 3% to 3.5% of total sale including higher expenditures on the uniform segment to expand plan capacity. As we look forward and as Eric mentioned we clearly have the opportunity to drive additional productivity through continuation of programs such as labor scheduling to more efficient food production, coupled with supply chain and menu standardization further use of shared services including outside of the U.S. and better standardizing our end unit organization structure as Eric mentioned. In Q4, we…

Thanks Fred. And Doug I think if you could open the lines we are happy to take any questions at this moment.

(Operator Instructions) And our first question comes from Manav Patnaik from Barclays.

Good morning, gentlemen. Congratulations, a good end to the year. I just wanted to probe a little bit more on your Phase 2 of the productivity plans, and to compare it with Phase 1. You are guiding to similar $300 million of gross savings. So on a net basis, should we be expecting that $100 million similar to what you delivered for Phase 1? And just in terms of the amount of traction you can get in Phase 2, should that realistically be something that you could get done earlier like you did with Phase 1, as well?

I think as we think about our progress first of all we are obviously very pleased to deliver the combination of Phase 1 a year early. I think as we look at Phase 2 let me maybe talk a little bit about the comp position of how that might differ. If you look at Phase 1 I think we have said historically about little more than 50% of that savings was driven by SG&A with the other 40% to 50% split between food and labor. I think as we go forward you’ll see a lot more of that savings to be driven out of the big buckets of food and labor in a little less so reliance on SG&A. Having said that if you look at our plans, we continue to focus on making sure from an SG&A standpoint our above unit labor, we get at both layer and span opportunities to make sure we’ve got a nimble and agile organizational structure to move decision making to the appropriate point close to the market place and make sure we’re very responsive to consumers and clients. As we go forward again in the area of labor you’ll see us put a pretty large focus on coming up with the standard in-unit organizational structure which will be a big driver of that phase 2 along with the point that Fred and I made around making sure we streamline our supply chain from food standpoint and then focus holistically on whole food preparation process. So I think all-in we’re comfortable with the number we put out there a 300 million obviously as was the case in phase 1 that will continue to part of client interest base contracts and we will continue to invest as we’ve set said all along technology and people. So you can expect that to be the case but we’re pleased with our progress and the great news is as we’ve got not only an opportunity but a clear line of sight of how we are going to deliver and get it that opportunity.

Okay. Thank you. If I can just squeeze one quick in for Fred just in terms of FX exposure, how should we be thinking about that going forward.

Our FX exposure is really pretty minimal and if you look at the overall impact on our sales and adjusted operating income for the year I think it was about $100 million of sales and about $6 million in adjusted operating income and it’s pretty much driven by the U.S. currency versus the various foreign currencies. Balance sheet exposure is pretty minimal because we tend to have financing country-by-country to minimize our net asset position, our inputs, our sales are all by large recorded in local currency from our clients are cost which are food and labor and overhead are all paid in local currency. We limit our dividends in the form of earnings which are relatively small compared to the overall asset positions. So I don’t think there is any reason to think about the impact of currency going forward is much different than what you’re seeing over the last couple of years.

And our next question is from Flavio Campos with Credit Suisse.

Good morning. Thanks for taking my question. I just wanted to focus on North America margins for a second, I understand there is some pressure down from the ramp up cost for new clients, but if you can just give us some color on those cost and how should we be thinking about margins here going on the go forward basis and if this is going to be the biggest driver of margin improvement for the company’s growth.

Well, a couple of things, our North America margins are from the geographic standpoint the best margins in the portfolio. So I think we’ve said from the beginning that our objective here is across the company and across each of geographies to triple with both hands meaning we want to make sure we accelerate revenue growth while at the same time capturing margin opportunity. And I think if you look at our results, we certainly did that. We saw a growth across all three of our geographic business segments and we saw margin improvement across all three as well. In North America, as we mentioned in particular as you have new clients those startup cost associated with those new clients particularly when you’re looking at big university or any sector really when you sign some of these larger clients you’re going to be dealing with some headwinds particularly in that first year and that was certainly the case as we look at 2014. But as we look forward we would expect our North America business to certainly deliver margin improvement and probably even at a faster rate than we did in 2014.

Just as an addition, much of our reinvestment in growth, people and technology as you would expect is focused against our North American business.

Very helpful. Just a quick follow up on the same topic, international have been performing very well in the margin expansion, and is this 5% plus towards like mid 5% with sustainable for the short term or was that just a temporary thing for Q4 in the year?

I’m sorry, the 5%?

Operating margin on international.

No, I think again I want to keep coming back to the same point probably it sound a little bit like a broken record but hopefully its music to your ears. The fact is that we expect our international business obviously if you look at our international business, our Europe business I think we were the only ones, of our peers in the sector to show growth. So European business show 3% growth 50 basis points of margin improvement in our emerging market business, and showed double-digit growth and 50 basis points of margin improvement. So the key here is dribbling with both hands to make sure we are not just even in emerging markets growing the top line we have to make margin progress as well and that’s --- those two metrics are very critical to each of our businesses and I think again as I said in my comment on North America we would expect that journey to continue to in our investment business as well.

And our next question is from Sara Gubins with Bank of America.

Good morning, this is Brian Davis in for Sara Gubins. Thanks for taking my questions. First off, regarding the large client that added 2% to North America in the fourth quarter, I'm just wondering what vertical that was in, and do you expect any similar wins in the future. And is any of that revenue going to trickle into the first quarter, as well?

The large client was a business client, so within the B&I vertical the large leading manufacturing company in the U.S. however we do facilities work one of their plants. And the bulk of the sales the vast bulk of the sales are really recognized in the fourth quarter, and that’s why we called out. It was a great opportunity, we did a very good job, the client was very happy but we are not counting on getting individual project work of that new material in the future. There was a onetime event connected to disaster recovery, so because of that it was one-time in nature.

Okay, very good. Thank you. And then just one follow-up, if I may. We talked before about food inflation. I'm wondering how that came in, in the fourth quarter, and what your expectations are for fiscal ’15? Thank you.

So for 2014 our overall food inflation was in the range of 1% or so. I think everyone knows food inflation generally was more of an earlier in the year compared to later in the year. As we look at 2015 we are expecting overall food inflation to be in the range of 2% to 3%. So certainly well higher than ’14 manageable within our framework consistent with price increases. And again, I just want to remind everybody when you think about food inflation the impact it has on our business there is a couple of key things to keep in mind, one is just remember the diversity of our business model. So again if you look at it just remember that in addition to the food’s business because of our uniform business, our facilities business and our healthcare technology business those businesses 25% or so of our revenues are non-food connected. And again when you take our food business remember about 30% of those contracts are client interest, so cost do not flow through inflationary cost on those client do not flow through to our P&L. And then finally again we are pricing opportunities as Fred said which we certainly pursue as we go into 2015 but we also have menu optionality, and that menu optionality allows us to move the menu around and flex the menu to deal with in reasonable inflationary price. But I think the punch line is we are highly confident in our ability to deal effectively with any inflationary concern.

And our next question is from Denny Galindo with Morgan Stanley.

Good morning, guys. My question is on minimum wage. So there was four or five states that passed minimum wage increases, and most of them were small, but also the City of San Francisco. And I was curious if you can talk about what kinds of impact these changes might have on North American margins.

First of all let me start with our whole commitment around this frontline first monitor is that we want to make sure that our frontline associates are Fred and Eric competitively. About 90% plus of our employees are actually already paid off of the minimum wage. And so again as we look at this the key question I guess on any action taken to make sure it’s right for the overall environment. And I think the fact is if we look at there is serving in the state you referred to we can deal with the kind of minimum wage increase as we have seen effectively and we have multiple ways to deal with that. So at this point in time I think we are highly confident in our ability to continue to manage this thing as it evolves.

And just one more on that topic. It's also been discussed nationally as a potential area of compromise. Have you guys talked about how many of your employees are in between that $7.25 and $10.10 range? Or $10.10 was the minimum wage that President Obama was looking to increase minimum wages to President Obama was looking to increase minimum wages to [indiscernible].

I think it’s again is tough to talk about the hypothetical, so I think from our advantage point to keep question on any particular action taken is to look at its overall impact holistically impact on employment, the broader economy so on and so forth. And so again as I said we certainly understand where our associates are paid and as we look at that we continue to monitor both at the federal and state level and again we’ll continue to do so as we go forward. But at this moment in time we’ve been able to successfully manage to any of these increases at the state level.

And our next question is from Gary Bisbee with RBC Capital Markets.

Hi guys, good morning. I want to just ask, with the second straight year of very strong new business sales, and several of those being very long-term contracts, how should we think about that in the context of this 3% to 5% growth? I think the last two fiscal years; you've been in the upper half of that. Does that range potentially increase over time? Is 3% like a worst-case scenario if the economy deteriorates a little bit? Or is that really still the right medium-term range, even with the real momentum you seem to have created in the business in the last 24 months?

I think Gary it’s the right range for us. To your point we’ve had and as I referenced in my comments we’ve had two really strong years in business results and I think as we look at this again the composition of our growth if you think about it on a year-to-date basis we had good growth not just from new but very good growth half of our base business as well. But as we think about it going forward I mean the fact is that the new business pipeline continues to very robust. The great news is for us and for the sector you still have 50% of business that basically self-operated. And one of things we have seen the last two years as we’ve seen an uptick in the amount of self-op that get accrues to our new business. So that’s moved from what used to be something mid-teens as a percentage of our new business, up to kind of the mid-20s, which is encouraging for us. So I’d say we still remain comfortable with the three to five. We’re very encouraged by our progress the last couple of years and we’re also very positive about the pipeline we see right now.

Okay, great. And then, you had talked prior to the IPO about the importance of significantly increasing technology investments. And there were some opportunities you talked about where the managers of many of your facilities didn't even have real-time data to allow them to make the best decisions. I just wanted to ask for an update on that. How far are you along, in terms of developing the systems that you need number one? And number two, actually implementing them and having your people improve the decisions and improve the processes because of that? Is that still a big future opportunity, or are you are already making progress? Thanks.

Gary I appreciate the question. I think it’s both I think we’re making progress but it’s still a big future opportunity I would say we’re very much in the early phases of the deployment of technology and tools. The good news is again we’ve made progress again each line of business is at various stages of development we’re probably further along and our sports or education, higher education business some of the other business verticals. But expect us to continue to invest for multiple years to come in the area of technology. Fred may want to share with you some of the specific things we’re deploying right now, but the fact is that we’re making progress but a long continued journey ahead of us to continue to invest and obviously in the marketplace with the changes you see Apple Pay is a great example I mean we need to stay current with any and all of these technologies in terms of getting exposure to those.

If I can just add to that Gary, so we think about our IT investment in bucket that really support the overall framework. So this IT investment going in growth that through salesforce.com, good news there is that’s been largely implemented worldwide just completed really over the last couple of months which helps us we’re tracking pipeline and progress with prospects. On the HR front we’ve implemented the article HR package which we call Human Capital Management System that helps us particularly in controlling wages and wage increases out in the field. As Eric mentioned we’re mid-way through the rollout of [Kronos] which is a field labor scheduling tool and that’s another year or two I think fully rolled out. We’re rolling out -- we’re in the very early stages of rolling out the food production system, automated food production system at the field level, which we call PRIMA Web, and that's early on. So that's another few years. And we’re rolling out a field financial system, an updated field data reporting system that reduce administrative burden and provide faster reporting which we call global field financials and that’s going to be another year in North America and then after that in the international. So we’ve identified the key systems, fewer them are down some of them are in early stages, some of them halfway through rollout. We’ve got another couple of years to go for sure.

And if I could just sneak in one last one. I understand the commentary on margins, investments and whatnot. But was there anything in particular in the fourth-quarter North America segment operating income margin? It went down. I wonder, was the margin lower on that project work, or was that start-up costs, as you referenced? Or the 53rd week impact? Or is it just the regular ebb and flow of the business? Thank you.

It was no real 53rd week impact for question on the margin, it was really just the timing of realization of productivity, reinvestment some fairly heavy reinvestments in the fourth quarter. And then as Eric mentioned we did have some pretty significant startups. Several of those were in education and related to the new school year and several in healthcare.

And our next question is from Jeff Farmer with Wells Fargo.

Thank you. I have a question from a little bit different perspective for you guys. So restaurant companies have seen, I would say, some unexpected same-store sales growth acceleration over the last three to four months. Most of these management teams have been pointing to lower gas prices, lower energy costs, as basically key drivers of that increased demand. I'm just curious in looking at your business, really, across the business dining, even food service segments, across education, sports leader sectors. Have those sectors historically benefited from a similar demand in revenue growth tailwind when you do see lower energy costs and theoretically increased disposable income? Would you expect a similar sort of supply/demand dynamic when you do see lower energy costs?

I think for us Jeff it’s probably a little less than some of the businesses that you are referring to. Again there is couple of dynamics, one we have got several sectors large important sectors for us in healthcare and education tend to be less economically sensitive either benefitting from good times or being heard in more difficult economic times. And then I think the other thing is as our markets tend to be a little more captive than maybe some of the examples you are using. So we see some connection but it’s probably not nearly as one year as you are referencing.

And our next question comes from Justin Hauke with Robert W. Baird & Company.

Good morning, guys. Two quick ones here. The first one is just the cash components of the $100 million of the restructuring for the next phase. How much of that is cash? And then what is your expectation for how that will be realized over the next few years? It looks like it was pretty front-loaded with the $21 million in the fourth quarter.

Sure, this is Fred. Just to clarify, the 21 million was in the fourth quarter of the $100 million that we referred to is going forward over the next couple of years. And again or as Eric mentioned Phase 2 of the transformation program which is three year journey, most of that which is a headline numbers it’s obviously an estimate, is related to labor efficiencies as the $21 million was in the fourth quarter, as supposed to impairments of asset right offs so that means that it would have a cash impact. And we would expect to have the effect pretty much over the next two years and from an income recognition effect probably 50% to 60% in the first year and remaining 40% or so in the second year, the cash impact pretty much following that probably trailing that a little bit.

Okay, that's helpful. My next question is -- turning to the uniforms, it's interesting that you mentioned investing in new facilities. I think that's the first time you guys have highlighted that. I was just hoping you could talk about that a little bit. Where are capacity levels in that business? And then also, how do you think about investments in that business just from a portfolio perspective, of a return on capital versus the food services? Thanks.

It’s a great business we have got a very strong market position, has got very good margins. The returns on capital are quite good too, although it is the more capital intensive business than our food business. And with our growth which we see continuing and increasing over the next year or so. We have clearly had some emerging capacity constraints, we planned to do some expansion out in the West Coast where we have very strong position, and with our growth we are having some capacity issues and then couple of other selected markets across the country. So we do expect as we look at 2015 and beyond to see some uptake in our spending in the uniform to expand our capacity.

(Operator Instructions). And our next question is from Denny Galindo with Morgan Stanley.

Just had a couple more quick modeling questions for you guys. Number one, on stock comp in the IPO process you have talked about -- one-time stock comp and recurring stock comp. As you move into your next year as a public company, what do you expect that the long-term recurring stock comp to look like as a percentage of revenue or expenses, or however you guys think about it?

Some of the stock comp associated with the IPO we categorize as part of the IPO expenses. Our stock comp increased 2014 over 2013 as we have said because of the transition to a public company. And as we move into options in respective stock unit programs are little more difficult. So we expect that to increase somewhat over the next year or two and they more or less in line with the relative competitors.

And then on capital allocation, you increased the dividend this quarter. You also made more aggressive investments in the CapEx line. And then of course, your debt came down. So how do think about allocation of capital between these priorities in the future, going forward?

We start first and foremost with what we need to reinvest the business in order to support our profitable growth and that is of course principally in the bucket of capital expenditures. From time-to-time we’ll make acquisitions for strategic purposes to strengthen our business. So we didn’t make much in the way of acquisitions in ‘14 but that certainly also out there potentially it will be lumpy. The dividend as we’ve said at the time of the IPO we expect overtime to increase our dividend consistent with the growth in the company. So we consider the dividend to be important. But having said all of that and particularly before considering acquisitions the cash flows strong flow and we expected to be regular debt reduction.

And our next question comes from Barbara Noverini with Morningstar.

How would you classify the bulk of your revenue growth in uniform services? Is it also coming from new account wins? Are you starting to see customers add uniforms or shop more regularly with the strengthening of the employment environment?

We’re seeing our base business if you will the at step ratio staying about flat overall and I think that’s pretty consistent with the industry. We’re adding lots of new customers. Our sales forces reports really a pretty strong pipeline overall in the uniform business. Our client retention rates have been pretty constant. So that’s pretty much how we see the dynamics between the components of growth.

Okay. And then what would you say is the mix a new accounts that are starting a uniform program for the first time, versus those that are switching from another vendor?

I think in general it’s not in consistent with the staff that Eric referenced the overall company generally not programs as we call them account for somewhere around a third or so of our new business.

And we have no further questions in queue at this time.

Well, thank you Doug. And just again, in closing, let me thank everybody again for joining us. I want to reiterate how pleased we are with the 2014 results I think it’s a clear indication that we’ve got a right strategy in place and are executing well as progressed on this transformation journey. As we’ve said we’re excited about the future and again as we think about this business going forward rest assured will continue to deliver innovative solutions and focused on profitable growth and providing a great customer experience and making sure importantly that as we look to the future we’ve got more quarters and years the strong results to create one from shareholder value. So thanks for your interest in ARAMARK.

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