Good morning and welcome to Aramark’s First Quarter 2021 Earnings Results Conference Call. My name is Kevin and I will be your operator for today’s call. [Operator Instructions] I will now turn the call over to Felise Kissell, Vice President, Investor Relations and Corporate Affairs. Ms. Kissell, please proceed.

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

Thank you, Felise and hello everyone. First, I would like to wish all of you a bright year ahead that includes good health and a return to a more conventional way of life for all of us. As we progress through the new year, I am exceptionally encouraged by the resiliency of our business through this unprecedented period as well as the considerable opportunities emerging for Aramark. This morning, I will highlight our first quarter performance, provide insight into our immediate expectations for the business and share our progress in Aramark’s accelerated growth strategies. We remain committed to unlocking significant value for our stakeholders. Importantly, we continue to promote an ownership mentality within the organization, having just approved an employee stock purchase program that provides employees an opportunity to participate more broadly as owners of the business. We believe this action will further align our people, values and performance. Turning now to the first quarter, revenue was in line with expectations that we articulated in the last quarter’s earnings call and subsequent disclosures with organic revenue down 36% year-over-year, consistent with fourth quarter fiscal ‘20 organic revenue levels. These results reflected various stages of client re-openings as well as the expected timing shift within higher education as the majority of schools we serve intentionally concluded their first quarter early to preserve the ongoing ability to keep students safely on campus. Our teams across the business demonstrated unwavering resolve by effectively managing and maintaining extraordinary cost discipline that resulted in an AOI drop-through rate of 20%, at the low end of our stated expectations. This dedication contributed to a free cash flow improvement of $225 million compared to the prior year period, while reflecting seasonal outflow in the quarter. We maintained ample cash availability with approximately $2.4 billion at quarter end.…

Thanks, John and good morning everyone. Before we begin, I want to also commend our teams around the globe on their collective ability to rapidly adapt to the current environment, while maintaining an unwavering commitment to safely serve our clients. Their focus and dedication continue to be reflected in our strong operating and financial performance. As John mentioned, while our results remained impacted by COVID-19, the first quarter materialized as we discussed on the last earnings call, including stable sequential quarterly organic revenue performance across all segments, a favorable AOI drop-through rate of 20% on corresponding revenue decline, and continued effective cash flow management, resulting in an improvement in free cash flow of $225 million compared to the same quarter last year. These results enabled us to maintain ample cash availability of approximately $2.4 billion at quarter end. For the total company, organic revenue was down 36% in the quarter compared to the prior year, in line with the preceding quarter and a considerable improvement since the trough early in the third quarter of last year. U.S. Food & Facilities reported organic revenue decline of 45% versus the prior year, similar to the fourth quarter. All lines of business had stable revenue trends with the exception of Higher Ed, which was unfavorably affected by the early completion of the academic semester and nearly all of our operations and Facilities, which benefited from higher frequency of services, provided for existing clients and increased demand for project work. International organic revenue was down 29% compared to the prior year, which reflected a modest improvement compared to the fourth quarter of fiscal ‘20. Teams continue to effectively navigate the government-imposed restrictions while also benefiting from the impact of delivering strong new business and retention rates. Organic revenue in Uniforms decreased 10% versus the…

Thank you, Tom. I am immensely grateful for our exceptional teams around the globe who demonstrate an unwavering commitment to best serve our clients, employees and communities, resulting in Aramark’s latest inclusion in Fortune’s most admired companies as well as being named the Best Place to Work for LGBTQ Equality by the Human Rights Campaign. As we focus on our extraordinary future, we remain highly committed to executing transformative actions across the business capitalize on Aramark’s extensive growth opportunities. Our belief in the company’s success has never been stronger. Thank you for your time, and operator, please open the call now for questions.

Thank you. [Operator Instructions] Our first question comes from Ian Zaffino with Oppenheimer.

Thank you very much. Good morning, everybody. Great to hear from you guys. Question would be on the free cash flow, you took it up you took the range up. Just trying to understand what’s driving that? You seem to be very confident in the quarterly dividend as well. What are you seeing that’s giving you the confidence and maybe like how you think about the business as COVID-19 wanes? And then I have a follow-up. Thanks.

Sure. Tom and I can both address this. First of all, we are extraordinarily confident in our management team’s ability to manage through the variations that affect the business due to COVID-19. We have been able to demonstrate very strong cash flow management results over the course of the last 9 months. We believe our team is very well positioned to continue to do that. And generally, we believe that the business is improving quarter-to-quarter and will through the balance of the year. And Tom, do you want to add some commentary?

Yes. I think it’s just that, I think we are getting more comfortable with the environment, how our clients and suppliers are working with us on receivables and payables and certainly how our teams are managing the inventory, if you just talk about the core working capital management, so more and more comfortable as time goes on there, which gives us some confidence as well as the team’s ability to manage CapEx.

Okay, great. And then can you guys just touch upon the bidding environment, what are you seeing there maybe versus last quarter and then also maybe year-over-year? And then also, I know you guys have really been working hard on pitching to customers what Aramark is able to deliver, almost like a new Aramark. Is that sort of resonating with customers right now? And what are you sort of hearing from them as far as feedback about that, what you guys have done as far as the changes? Thanks.

Yes, wow. Okay, that’s a good question. Well, first of all, yes, we think that the messaging is resonating very well with clients and customers that Aramark’s evolution and our recommitment to hospitality culture and serving our clients and customers has been received very, very well. And from a cultural perspective, the people in this organization are extraordinarily committed to doing what’s right for the business just – are making heroic efforts around the world to really serve their customers. And I think that’s resulting in significant improvement in retention rates and it’s being demonstrated also in our ability to sell new business around the world and have strong results throughout the international sector in the last quarter. In terms of new business growth, we are seeing strong results domestically. With respect to bidding activity, we are seeing very strong pipelines in the business, with significant additions across the enterprise and we are also seeing significant self-op conversion opportunities begin to appear across a number of different businesses, some of which would not historically have looked at outsourcing as a way of serving their customers. So, we see continued opportunity in the bidding sector. The business is – we are in the bidding of the business. I would say that the companies in this industry have been very disciplined about the bid process. Obviously, we are all very focused on operating our individual businesses in cost containment and cost management, but we see significant opportunity for growth going forward and that’s why we continue to invest in growth resources across the enterprise.

Great. Thanks so much for the color.

Our next question comes from Richard Clarke with Bernstein.

Hi, good morning. Thanks for taking my question. Just a question, Tom, you hinted that from the second half, you are going to stop talking about drop-through rates and start talking about a margin recovery. What signals that sort of change in language that change in mentality? And I am sure you are aware that your European counterparts kind of dropped the drop-through language in this year and have already turned to that kind of margin guidance profile. Anything we should think different about Aramark that they are still seeing some drop-through maths maybe compared to your European peers?

No, I don’t think there is anything unique about it. I think we are just finding it a little easier to talk about the business and explain the business and manage the business to a drop-through rate as we are pre-lapping COVID with the declines. And as we flip in the second half of the year, it will be a growth measurement. And so I think it’s just that natural evolution as you begin to lap the end of March, but that nomenclature will change.

So maybe just as a follow-up to that then, can we assume that sort of from the second half your margin recovery becomes a little bit less volume dependent or will you still be dependent on sort of volumes getting back for margin to come back?

I think it’s a bit of both. Certainly, the margins help in areas like Uniforms where it’s got a bit more of a fixed cost base, but certainly not completely dependent on the volume recovery.

Okay. That’s very clear. Thank you.

Our next question comes from Jaafar Mestari with Exane BNP Paribas.

Hi, good morning, everyone. It’s Jaafar from Exane. Two questions for me, please if that’s okay. Firstly, on this revenue to EBIT drop-through, obviously, 18%, 20% or 22%, they are all significantly better than anyone would have assumed a year ago. But if I can be picky, global competitors like Sodexo, I would calculate that they are actually talking about a drop-through below 15% in their new guidance and that 15% is a level you have actually did acknowledge was theoretically achievable in the past. So, my question is when you talk about investing in growth resources, is this something you could quantify in dollar terms and would it be fair to assume you are probably at a 15% drop-through, but then you are making those investments into the business?

Yes. I would say that, that’s probably a relatively – that’s probably a good assumption. I am not going to specifically identify the dollars to growth investments. They come across a range of different businesses. And for competitive reasons, I really don’t want to disclose what I am doing with respect to adding salespeople and sales resources. We have been very explicit about the number of people we have added in Uniform Services. We added 150 last year. We are adding an additional 100 this year on the Uniform side and that’s making significant progress and the sales productivity is ramping up pretty rapidly. On the foodservice side, we continue to add resources throughout a number of the lines of business, if you will. So we did guide early on that we believe if we were in a long-term cost cutting environment that we could get drop-through down to the 15% range, but we have been very disciplined about doing what’s right in terms of the long-term health of the business. We have not made a single cut to a growth part of the organization or the marketing organization. We have been very disciplined about cost containment and cost management at all levels of the company, but we are still focused on accelerating growth in the future. So, I would say we are managing the business, we e are controlling it very effectively, we are focused on the priorities that we have for the business and there maybe differences in terms of both mix and seasonality between us, Compass and Sodexo that might drive some of that difference as well. So – but we think we are doing the right things for the business and we are focused on our strategy, not theirs.

Super. Very clear. And actually, my follow-up would have been on that specific case of Uniforms actually. So that sales push is still happening. Is there a date at which you stop and reflect and decide more clearly if the Uniforms business can be significantly improved under your leadership with those investments or whether it’s due for a more open-ended strategy review?

Yes. Well, that reflection has already taken place. So, I know that the business can significantly improve, that we can improve both margins and growth rates in that business dramatically by taking the actions that we are taking. We see significant improvement as a result of the ABS implementation. We are transitioning the sales organization from one that was roughly one-third the size of Cintas to one that has significantly greater level of resources. So yes, we believe the business can strongly improve – is showing – is beginning to show that improvement and so we are focused on that on effectively changing that organization and making it as competitive and as profitable as we possibly can.

Super. Thank you very much.

Thank you.

Our next question comes from Toni Kaplan of Morgan Stanley.

Just a question on debt pay-down, given it seems that you have weathered the storm pretty well to this point and cash flow is trending positive, can you talk about the decision to still have so much cash on the balance sheet? Just looking forward now, how are you thinking about the pacing and scale of pay-down as the economy recovers?

Well, we are certainly looking at it. And we were prudent back in April and we will continue to be prudent. There is still uncertainty out there and we all know that. Certainly, the vaccine is starting to roll and there is other positive signs from a macro standpoint, but we have all seen things change fairly quickly and we just don’t want to get too far ahead of ourselves. So, we are looking at it a couple of progress payments so to speak last quarter and we will continue to review that as we go.

Okay. That’s helpful. And then within Uniform, can you talk about any success you’ve had integrating the ABS routing system and the financial benefits you’re seeing when beginning to convert routes to the system? And then can you just remind us of the time line of when this should be fully implemented and any long-term margin savings you think you can get from that?

Yes. That’s a great question. First of all, we are rapidly deploying ABS throughout the business. We anticipate that we’ll have somewhere in the range of 75% of our revenues covered by the end of this fiscal year and that we’ll finish deployment probably through the first quarter of next year. So that by January of 2022, we’ll have the vast majority, if not all of the revenues, of the company operating under ABS. We’ve undertaken this in a, obviously, a pretty difficult operating environment, but the team has done extraordinarily well. We have got multiple teams doing implementations across the enterprise. And as you are probably aware, there is certainly pre-work when we go ahead and do these versions in our existing facilities, plus we are converting the former facilities that were operating on ABS to the new updated versions. So there is multiple conversions taking place. In those locations where we have transitioned to ABS from our old route accounting system, the margin improvements are dramatic and the customer service improvements are dramatic. It allows us to spend much more time with our customers to maintain – to have 100% customer visitation schedules, to have our in the field managing the business as opposed to having to manage the accounting aspects of it. So they are significant, and we’re seeing progress across all of those operations. Those results that were demonstrated during the pilot are – we’re seeing those results replicated as we move through the organization, and we’re very excited about the long-term margin enhancement potential of this conversion. And I think in the past, we’ve talked about a couple of hundred basis points margin improvement that we can articulate from the impact of ABS.

Thank you. Our next question comes from Andrew Steinerman with JPMorgan.

Hi, good afternoon. I wanted to talk about, Tom, your comment that you expect modest organic revenue growth improvement in the second quarter year-over-year fiscal quarter compared to the first quarter of the 36% decline. I just want to make sure that I am understanding that point correctly, in particular, how are you thinking about those last 2 weeks of March of this quarter, which hits the easy comps. In other words, are you saying maybe mid-30s revenue declines organically from now until 5 weeks from now and then growth in the last 2 weeks of the quarter? And if that is the way you are lining things up, could you just give us a sense of if volumes stay just where they are now, how might that year-over-year growth look like in those kind of last 2 weeks as we enter that kind of new period of easy comps?

Yes, Andrew, it’s really hard to dissect 2 weeks in March and tell you exactly what I think at this point in time, again because things continue to be positive but subject to change. So we thought we saw the first step some modest improvement in January, primarily as we said in our guidance and primarily in the U.S. So we remain hopeful, and we will stay very diligent on our costs because a month doesn’t necessarily make a trend, but we are confident based on January that the modest improvement will be there. And to your point, that’s exactly how the mask going to work that will continue to show, we believe, some improvement the first sort of two-thirds of the quarter and then should show some growth right at the end.

Right. But could you just give me a sense of if volumes stayed the way they are now, the way they are now not showing improvement. And just mathematically, when we got to that kind of last 2 weeks of March, pre what type of growth would we be entering?

We are just not prepared to give that level of granularity at this point.

Okay, fair enough. Thank you very much.

The next question comes from James Ainley with Citi.

Yes. Good morning. Good afternoon everybody. I’m interested to hear what maybe some of your B&I clients are saying to you about their plans to get people back into the office. And I’m thinking more particularly about how clients are planning their future office locations, how they can figure the space? And you mentioned, I think you said much mail. Can you expand maybe about how clients plan to use that and whether they are thinking maybe about hybrid models where you’ve got some people onsite, some people offsite, but they provide some kind of food service between those two groups?

Yes. I would say there are still companies that are still wrestling with what their eventual office situations are going to look like, particularly the pure white collar kinds of locations. And I would say that the – there is a range of viewpoints. We have many customers who are basically saying we are coming back. We are committed to our space. We are committed to bringing our employees back together, and that’s extraordinarily and important for our culture. Therefore, that’s what we’re going to do. And we have some companies who are evaluating – having return-to-work strategies that include some return to the office and some work from home. So it’s just a very broad range. Hard to say that there’s any trend yet in terms of what the impact might be for the business. But the good thing is our operating model and our service capabilities, which are flexible, we can adapt to serve whatever the client wants us to do for them, whether that includes just an in-office environment or a combination of service capabilities to serve customers at home and in an office location. So we have been busy designing solutions to serve our customers’ needs across that range of opportunities and have flexibility to go ahead and do whatever they need us to do for them. So we’ll adapt. I’m very confident to that. But we have such a large range of different kinds of customers that really is, at this point, there’s really no definitive model, if you will. In the blue collar sector, most of those companies are back to work and operating in location because they need to have employees on site in production capacities and the like. So the mixed environment, both white and blue collar operations, most of those operations are returning to work. So it will be a broad spectrum, I think, of course, for several months that evolve in business lining. That’s one business where we think we really have a much longer tailwind in terms of a longer recovery period, if you will, to get that business back to some normal levels, but it’s still too early to say how it will end up.

Thank you. Our next question comes from Manav Patnaik with Barclays.

Hi, this is actually Greg on the line today. I was hoping to just talk about the food services sales force retention. I think you talked about a couple of efforts around employee engagement and senior management retention and all of that. So just hoping for some more color on efforts around engagement and incentivization on the sales force side for food services? Thanks.

Sure. With respect to engagement, I think we have got a – I think we have a terrific team of sales leaders. We have an organization now that is very much committed to the growth focus of the enterprise and incentive on growth. So you have both the operating team as well as the sales team working very closely together to achieve the growth objectives of the company, so a very high level of engagement. We’ve redesigned incentive programs to address the sales force. We’ve changed commission structures, enhanced commission structures in such a way to really allow them to earn very significant improvements in potential income. And so frankly, we’re very – I think they are very excited about their prospects. And we’ve got a very good team. We are growing it. We are adding people throughout the business. We’re adding resources to almost all of the lines of business. And so I think that’s exciting for our organization to really be focused on growth, be engaged. Our entire team has incentives for growth built into their incentive compensation for this year, including the senior management of this company. So, it’s singular focus and one that’s got the entire company engaged not just sales force.

Okay. And then I also wanted to quickly hit on delivery. It seeing gone across almost all of the food services segment, delivery is a theme. Do you view that as sort of a transitory offering during this period or do you think that becomes more of a permanent part of the strategy going forward? Thanks.

Yes. I would say we are prepared to whatever evolves with respect to delivery. And whether that’s on-campus, whether it’s in B&I locations or whether it’s patient at home services, we’re prepared to go ahead and offer that service and have that capability designed and developed and ready to be implemented where necessary. So I think there are some parts of the business where it will become permanent, particularly in-patient delivery of meals, that in-patient at home support is very important for the health of patients when they return from hospital setting, and that’s an area that our hospital clients have really begun to focus on and find to be a very effective service offering. So I think it will have some more permanent implications with in B&I, and we’ll have solutions develop and/or we have solutions developed to go ahead and serve that need. And we’ll continue to try to take advantage of that marketplace in both partnership ventures as well as direct offerings.

Thank you. Your next question comes from Shlomo Rosenbaum of Stifel.

Hi, good morning. Thank you for taking my questions. Hey, John, I just want to talk a little bit on the Uniforms business. And you might have touched on this in your comments or maybe Tom did. The Uniforms growth seems to be kind of flat, maybe down a little bit more like I think it was like 8.6% decline last quarter or like 9.8% this quarter. Does it have to do with like the geographic impact like was there more shutdowns in Canada or something like that? I am just trying to kind of contrast that with some of the consistent growth I have seen with you beforehand and what I am seeing like with Cintas where they made more progress in the last quarter in terms of year-over-year improvements on a sequential basis. I don’t know if there is a geographic difference over there?

Yes. Thanks for the question, Shlomo. There is really two differences. So I think the geographic difference is, one, obviously, the restrictions in Canada have been very dramatic. So that’s impacted the Canadian results much more than the U.S. results and that – so that is definitely a factor. Also geographically for us, our concentration of business on the West Coast reacted pretty significantly in December to the shutdowns in California. And then the business mix across the enterprise. As you know, we have a little bit more of a hospitality focused, restaurant focused. And so the shutdowns had affected restaurant operators where they were limited to – had to serve in limited capacity and then had to shut down during various time periods impacted us more significantly than it would have Cintas and our other competitors. So I think it’s primarily shutdown related and geographic mix related more than anything else. I think in our core business, we’re very comparable. When we disaggregate the business and look at all of our competitors, we think our year-over-year growth rates are very, very similar with exception to that – with the exception of those geographic differences and the mix difference.

Okay, great. And then if you remind, just commenting a little bit more, there has been – you talked about it through the year in terms of companies that have been kind of self-service looking to more outsourced and the time period that it would take for that to kind of show up in the numbers. Are you seeing that kind of snowballing? In other words, are you seeing more activity as time goes on in terms of companies looking to outsource more? And if that is true, do you think that, that could potentially overtake the headwinds that we’re seeing kind of in the B&I sector, where it’s really taking a while for people to return to office, particularly in the white collar jobs?

Yes, that’s a good question. And I think, yes, we are seeing an acceleration in that self-op conversion opportunity trend, if you will. And we are seeing some closures of new accounts included in that the Sacramento State University, for example. It’s a self-op conversion that we’ll be taking over that was recently announced. And there are several – there are lots more in the pipeline. I hate to – I can’t really identify them because from a competitive perspective, I don’t want to give my competitors any information about things that I may be working on. But I would say, generally, the trend is accelerating, and there are opportunities being presented to us across a range of business types, health care, universities, facilities, sports and entertainment conversions that are very significant.

Thank you. Our next question comes from Stephen Grambling with Goldman Sachs.

Hi. Thanks. Can you just remind us of where retention rates are, what is the ideal rate you’d be targeting and how the changes to incentives may also impact retention in addition to spur new contract wins?

Sure. Great question. The – first of all, retention is running at very high rates right now. And we see continued improvement across the enterprise and all the businesses we operate, including uniform service, we have higher retention than our historic standards. We are targeting ultimately a corporate goal of 96% to 97%. I would say at this point, we are operating at a level higher than that. But of course, you know retention is a metric that only goes down. So today, we’re operating at very high levels of retention. We have had very good results across the business. And we are very excited about that. We are also – we did also include retention as the element of our incentive compensation programs for the operations team as well as sales retention specialists. So yes, we are all very much focused on it, we are seeing significant improvement and we expect to be able to deliver very good results in this. And we want to hit that long-term target of, call it, 96% to 97% of corporate retention on an annualized basis.

That’s helpful. And one quick clarification on the Uniform segment, based on your comments, is it fair to assume that excluding the headwind from some of the government restrictions in Canada, growth would have sequentially improved? And should we generally assume that you would have a step function improvement once these are lifted or do you have to rebase and build off of that lower base because you will lose some sales opportunities or demand permanently?

Yes. That’s – I think you’ll see an acceleration of growth once the restrictions are limited are lifted. We saw that as restrictions were eased during the summertime, we were able to recapture significant revenues on a very short – very quickly. I would say there are elements of the business that have permanently shut down. There are customers, restaurants, small businesses that have closed as a result of COVID that were our customers. And so there will be some decremental impact from that. I can’t really tell you what that number is today, but we anticipate that we will be able to sell our way through that. One of the reasons that we continue to be very bullish about this business is the productivity that our new account sales managers are delivering, both ancillary services like first aid as well as core rental revenues. So we feel very good about our ability to overcome any of the closed business kinds of impacts that we may face or our competitors may face as a result of COVID-19.

Thank you. Our next question comes from Jay Hanna with Bank of America.

Hey, guys. This is Jay on for Gary Bisbee today. Just going back to some of the prior questions with regard to increased flexibility and new offerings within the – particularly the B&I customers of yours, I mean, how do you expect costs to trend within a lot of those accounts as they begin to reopen and you start to see some of these new services and events from these customers?

From a – that’s great question. I would say that our contract types, essentially today are – allow us to ask along any of those cost of increase – those increases in cost for providing those different kinds of services. And definitely, the development of alternative service models and approaches will, as those get implemented and impacts on a more permanent basis, those will be baked into our contract structures. So I don’t anticipate any margin implications for Aramark. We may find that we actually have margin improvement potential as a result of these – some of these secondary offerings that we’re adding to that core contract. So the cost will be variable, and we think we can manage through those to effectively deliver a service offering for our customers.

Okay, great. And then back to the Uniform business, for the customers that have stayed open, have you seen any sort of sustained reduction in the actual number of Uniform wearers on the customer sites or have you seen that trend back positively or any other insight there would be appreciated?

Yes. I haven’t seen that level of granularity to the data. I would tell you that based on – if I look at base business versus base business, and extract the closed accounts, it looks to me like the weekly revenues are holding as they return that the number of words pretty consistent location to location, particularly when you book some blue-collar operations. But again, I haven’t done that level of analytics in terms of the total business so hard to really – as to guess, if you will.

Thank you. Our next question comes from Hamzah Mazari with Jefferies.

Hi, this is Ryan Gunning for Hamzah. How much room do you guys have, how much more room do you guys have to move toward management fee contracts from P&L? And is it only in particular verticals? And what does that mix stand at today? And what would make you revert back the P&L contracts in the future?

Yes. I would tell you that it’s different by vertical, obviously, in the B&I sector, those contracts are all management fee now, various few P&Ls left than that business. They were all renegotiated as part of our strategy with respect to responding to the changing needs for our customers during the original days of the pandemic. And they would revert to P&L when populations and facilities are back to more normalized levels, and they can report a profit and loss operation. We’re hopeful that we get to the point where we will be converting them back from management fee to P&L at some point in the future. In terms of our other contract types or our other verticals, if you will, they have different contract structures. In Higher Education, those contracts have been modified. We’re operating under memos of understanding or letters of understanding with our university customers as they’re impacted. But I think throughout the organization, we’re committed to doing what’s right for our clients and our customers. We are committed to doing our right for our shareholders. And so we will manage through the contract change process in a very disciplined way to be able to meet everybody’s needs in that respect. We’ve been able to do that historically. We responded very rapidly during the initial days of pandemic to change contract structures. And I anticipate we will be able to evolve and adapt as we come out of this and don’t expect any significant long-term impact with respect to the overall margins of the company or the overall profitability of the company.

Got it. Thank you. And for my follow-up, how are you thinking about the sports book of business? And anything you are hearing there now from implications from a successful vaccine rollout?

Yes. I think right now, you have got both the NHL and NBA working through crafting solutions for their arenas. And obviously, this is also something that’s impacted by local jurisdictions, both political and the health environment and local jurisdictions driving some of that decision making. Major league baseball for us is a significant contributor during the spring and summer months. At the present time, it looks like spring training is planned to start on time. It will be roughly 1-month spring training and opening days somewhere around the first of April for teams and those teams are working with their local jurisdictions and the league to go ahead and develop approaches. I think the fact that the NFL was able to have a complete season without any missed games with fans in attendance, outdoors, in stadiums gives us a lot of encouragement and major league baseball will find a solution that also allows fans to be in stadiums. And that as higher vaccination rates occur and some infection and hospitalization rates drop, you will see an acceleration of the opportunity for fans to be in sports venues. So we anticipate that we’ll have some recovery in the third and fourth quarter coming through major league baseball and sports and entertainment and we are excited about those prospects to have fans back in ballparks.

Thank you. I’ll now turn the call back over to Mr. Zillmer for closing remarks.

Again, thank you very much, everybody, for your time this morning. We are extraordinarily excited about the prospects of the company and frankly just the resilience of this business and the efforts of, I think, the best management team in the industry and just an ordinary bunch of people running this company day-to-day. People who really dedicated their lives to hospitality and to serving customers are doing a terrific job, and I just want to thank all of them for the work that they do. I am so proud to be leading this organization and to be a part of a reborn Aramark. So, thank you very much, everybody.

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