Please welcome to the stage Chief Legal Officer, Vestis, Tim Donovan. Good morning, everyone! No, I wasn't just channeling Richard Nixon. At Vestis Nation, we call that the Vestis Wave, and I think you're gonna see a few of those during today's presentation. if you like, you can wave back. And I also got a few comments and questions about the hat. What's up with the hat? All I'm gonna say about that is, I am not an all hat, no cattle cowboy. this is my favorite part. I'm gonna read this in its entirety. No, just kidding. But our presentation today does include certain forward-looking information and certain forward-looking statements that involve risks and uncertainties. For more information about these risks and uncertainties, I'll direct your attention to this slide, as well as to our information statement, which we filed with the SEC on a Form 8-K just this past Monday. It is my pleasure to be able to welcome you all to what is the very first Vestis Analyst Day, exciting stuff. You're gonna hear some exciting things, and I wanna walk you briefly through what we're gonna talk about. We're gonna introduce you to Vestis. We're gonna walk you through the pathway to our value creation, and we're gonna provide you with a financial overview, and finally, open up the floor for questions. without further ado, I would like to introduce you to our Chairman, Mr. Phillip Holloman. Good morning. I'm Phillip Holloman, the incoming chairman of the board for Vestis. On behalf of the entire board, I am honored to welcome you to our Analyst Day. Although I'm not able to attend in person, I wanted to share with you how important this moment is for all of us as we look ahead to becoming a stand-alone, publicly traded company. I've been an executive in the uniform and workplace supplies industry for 22 years, and I am proud to chair an exceptional board made up of accomplished business leaders. I'm confident we have assembled a group with relevant knowledge, operational and financial expertise, and a diversified perspective to provide oversight and guidance to our President and CEO, Kim Scott, and her team. We have worked with the Vestis management in an advisory capacity to provide our feedback and direction on the strategy for value creation that you will hear about today. We believe there is tremendous opportunity ahead, and we are excited to share more detail on the company's plans to accelerate growth. We are proud of what has been achieved since Kim joined about two years ago. We also recognize there is more work to be done to create greater value for you, our shareholders, our customers, and our employees, and we know we have what it takes to get the job done. Today, Kim Scott and Rick Dillon will discuss the key elements of their strategic plan and provide an overview of the historical and expected financial performance. Kim is a dynamic leader with deep expertise in managing route-based businesses. She has brought together seasoned leaders, many with public company experience, that have diverse backgrounds and skills from relevant and adjacent industries. Rick is an experienced CFO with a strong public company background. Together, Kim and Rick have complementary skills, and they both have our utmost confidence. We believe that Kim, with the support of her talented and experienced leadership team, is the ideal person to lead this company to its next phase of value creation and growth. Please allow me to introduce Kim Scott, President and CEO of Vestis, who will kick off the conversation with you today. Good morning. I wanna start by thanking all of you for being here. We have f or those of you on the webcast, we have an amazing room full of people, thank you, guys, for coming out to be with us. But I understand we have more than 200 people who have also joined for our webcast. for those of you who have joined remotely, we're grateful to you as well. We have a great day planned for you guys, and I'm so excited about this business that I can't wait to dive into the details. But before we do that, I thought I'd just set up a little bit about what we've all been doing for the last 2 years to get ready for this exciting moment. We're preparing this business to spin out, as you all know, by the end of September, and this thing is primed and ready to go. Today I'm gonna talk with you about the strategy that we've put in place. I'm gonna talk with you about the leadership team, who's ready to take that strategy forward, who has helped us build that strategy. We're also gonna talk about all the proof points of the strategy and the fact that it's already coming to life inside our business. Before we do that, I'll introduce myself. For those of you I have not had the opportunity to meet, my name is Kim Scott. I'm the CEO of Vestis, and I joined Aramark Uniform Services a couple of years ago with the intent of preparing this business for this exact moment. we are all thrilled and delighted to be here, and there are great things in store for Vestis. I want to start by thanking Aramark for the opportunity to spin this business out, for the opportunity that it's given myself and my team to be a part of this amazing story, and for the confidence that our board and John Zillmer have placed in us to take this thing forward. We are primed, and we are ready, and you're gonna hear that story today. And I hope that you leave as excited as we all are about the future of this business. For myself, I came to Aramark Uniform Services, now Vestis, from Terminix. I worked in B2B, industrial services, route-based businesses, and B2C, route-based businesses, and I have grown to love the recurring revenue model and the route-based team. I also spent time in the waste management industry, and I also spent time at a logistics company that provided pool pallets across the CPG sector in a very complex logistics environment, also a reuse and pooling and rental environment. And so this is a very, very comfortable space for me to play in. I love this model, I love recurring revenue, and I'm very excited about the opportunity to grow our relationship with our customers. You're gonna hear us today talk about the importance of our customer base and the opportunity to build strong relationships with those customers, not only for retention, but also to harvest the opportunity to gain share of wallet and to provide additional products and services to our customers. But you're also gonna hear a great deal about logistics and operations today, and the things that we can do simultaneously to make our operation more efficient. we'll dive in. We're gonna introduce Vestis to you today, so hopefully you have enjoyed learning about our new name and had an immersion experience out here in the foyer around our products and our offerings and our brand. Later today, in our session, I'll talk about our name and our marketing campaign and how we are presenting ourselves to the marketplace as Vestis, as we spin out from Aramark. But to introduce you to our company, I think it's really important to start with our purpose. we're gonna talk a lot today about growth and operational efficiencies and metrics, but our people come to work every day. Our 20,000 people come to work every day with a greater purpose in mind. It is incredibly important when you are operating a business that relies on people to make that business special and to make that business different, that the people inside your team, our teammates, believe in what they do, and they operate with a sense of higher purpose. Our purpose is to deliver uniforms and supplies that empower people to do good work and good things for others while at work. When you think about our opportunity to touch millions of people's lives, our business model affords us that opportunity and that responsibility. We are providing uniforms and workplace supplies to millions of people, our customers' teammates. But those teammates are touching millions of people every day in the course of the businesses that they're operating in, whether it is a young lady working in the drive-thru at a fast food restaurant, wearing the uniform that we provided, touching millions of people that are going through that drive-thru every day, or it is the mechanic working at the truck stop, who's touching people's lives when their car breaks down, they have a flat tire, they're having a bad moment, and they're counting on him to make that day just a little bit better and make some things work for them. We're having an influence on how those people feel throughout the course of their day. With the uniforms that we provide, with the supplies that we provide, we equip them to feel good about what they're doing, to feel good about how they look, to operate more safely, and to be able to engage in the work that they're doing in a positive way that they feel confident about. That is a tremendous responsibility, and it's a very important mission. And so our people are anchored around that, and we believe in what we do, and we know that it has a higher purpose beyond just renting uniforms, and laundering clothes, and delivering them on trucks. And so we're very proud to be a part of this story and have the opportunity to affect millions of lives. what do we do? Our product offering is very comprehensive, and we like to think of it as a one-stop shop. not only an opportunity to just rent uniforms, and you hear us, people often refer to our business as a uniforms company, but what you'll learn today is we do quite more than just rent uniforms. We offer towels and aprons, floor mats, linen services, managed restroom services, first aid products, and you can see our diverse mix, but you can also see the balance of penetration that we have here, and the revenue mix presents material opportunity, for us to gain revenue in some of these under-penetrated categories. And we're gonna talk some about how we are cross-selling, across our existing customer base to drive, increased volume and to manage our revenue mix in a more balanced way. By the numbers, we're a $2.7 billion top-line business, the No. 2 largest provider in the market, 20,000 amazing teammates, and I'll talk about them a little more, today as well. 300,000 customer locations served. when I talk about those millions of people whose lives we're touching, every week, 300,000 locations that we're visiting and serving. We have 350 locations in our footprint. Today, I'll talk a lot about the footprint and how we can better optimize the footprint and leverage the footprint, leverage the fixed assets that are already in our network, and we'll talk about how we're doing that today, a nd then 3,400 routes, roughly. Every week, touching thousands of customers, engaging in them, building relationships so that we have loyalty. Today, we'll talk about great tenure that we have with our customers and the power of that weekly touch, and that recurring service that we provide. As we go through the course of today, there are six things that we're going to continuously put forward here and talk about, and so I want to start with them, and I want to kind of remind you to think about these as we go through today's discussion. The first one is, this is a very attractive B2B industrial services model. I know many of you follow industrial service companies very carefully. Many of you have chosen to invest in that sector, and this is a highly attractive sector that we're operating in today. It's also a very large industry. When we look at the products and services that we provide, we've done some extensive market sizing. We'll share some of that with you today. It is a $48 billion industry, and as I mentioned a moment ago, we have $2.6 billion of that industry, so there is tremendous opportunity to gain penetration across this industry. One important thing for you to take away today, 'cause we're gonna talk a lot about our strategy to grow, and that strategy includes cross-selling our base, is that we are only providing 30%-40% of our services to our existing customers today. It's a very important point for you to understand and take away when we talk about tremendous opportunity to cross-sell the base. Today, we're only providing 30%-40% of our products and services to our existing customers. It is a recurring revenue model, which I know many of you understand how attractive recurring revenue models are, and 92% of our volume in FY 2022 was recurring revenue, which is also highly attractive. It is a diversified customer base. I'll take you through our customer mix, and I'll share some about that, but our customers stay with us for a very long time. if you look at our data, you'll see that our small to medium enterprise customers, on average, are with us for 11 years. You'll also see that our national account customers are with us for 26 years. These are very loyal customers. We have very strong relationships, and we are seen as great partners. and I'll even share some stories from our own customers with you today so that you can hear directly from them. 20,000 teammates strong. this is a people business. Nothing happens unless our people make it happen, and we take great care of our people, and we're very proud of the amazing teammates that we have. For the first time last year, we conducted an employee engagement survey that went all the way down to the field level. about 18,000 of our teammates are frontline teammates who do not have company emails, and they do not have company-issued devices, yet 68% of them found a way to take the survey on their own personal devices, on their own time with a QR code. This is unheard of 68% of our frontline team, speaking in multiple languages, we had to translate the survey, chose to take the survey on their own time, on their own phone, using a QR code that they scanned, and 81% of them were highly engaged. This is a wonderful story as it relates to the current workforce and the team that we have in place. You can do great things with a team that is highly engaged, and our team is highly engaged. And the reason that they are is because we have great leadership throughout our teams, all the way down to our frontline, taking great care of our teammates, and they are a very important part of our growth story as we talk about our future. And then last, but certainly not least, the other theme that you're going to hear throughout the course of today is a theme about our extensive network and footprint and scale. We have outstanding scale. It allows us to serve any customer across North America on a national basis, but it also presents significant opportunity for us to optimize our footprint and drive efficiencies across our system, and you're gonna hear about that today as well. we'll start with market sizing. We have sized the market through a very rigorous process. Bottoms up, tops down, we have done a significant amount of analysis to size this market at $48 billion. In the appendix of the deck we filed this morning, you'll have a little more methodology around that, so you can go and look at the sizing and how that sizing was derived. $48 billion total addressable market. Of that, $27 billion is workplace supplies. When Rick comes up later today, he's gonna take you through the financials. He's also gonna share with you how our segmented reporting is going to work. And you're gonna hear us talk about uniforms and workplace supplies, and those are gonna be the two categories that we speak about. And he'll share with you what's inside the uniform segment and what's inside the workplace supply segment. But workplace supplies represents $27 billion, and uniforms represents $21 billion. What's very important to note is, of that $48 billion, our assessment reveals that 74% of it is either self-served or it is served by a local regional player with the opportunity for roll-up, consolidation, or local competition. You can see that there are three main competitors, ourself, as well as two others who are the public companies that are listed in the market that some of you may be following. But between the three of us, we have the remainder of that share. Large and diverse existing customer base. We have a large and diverse customer base. I mentioned earlier how sticky our customers are, but I'm gonna give you the mix as well. 84% of them are small to medium enterprise customers, and the remaining 16% of them are national accounts. We value both sets of customers greatly. They both provide different levels of leverage and opportunity as they are supporting our network, either the opportunity to cross-sell and get great density with a local customer, or the opportunity to get massive density with a large customer who has many, many locations across our footprint. Low concentration is very important to note. Our largest 10 customers represent less than 10% of our total revenue in FY 2022. You can see here also the mix. We are across a wide range of industries, from manufacturing to government, to retail, to automotive, and what that does is it allows us to optimize our mix to make sure we have a balanced portfolio, and that we are insulated in downturns for specific industries, and we're able to grow in other spaces as some industries are facing, recessionary issues, downturns, declines in their industry. all that said, why would customers choose us? obviously, we offer a compelling product, and service. We have a great opportunity to provide them that service with our network and our scale and our awesome 20,000 people. But why would they choose us? They choose us for a variety of reasons, and those reasons are our scale. Allows us to be a low-cost provider. we have great density, we can leverage our spin, we have an amazing supply chain that's sourcing garments and products, and we're cutting and sewing them in Mexico with 2,000 of our amazing teammates. We have the opportunity to provide our products and services at a lower cost, in many cases, than our customers can procure it on their own for themselves. That's one reason they would choose us. They also choose to be in a program, in a rental program, to have a weekly service provider so that they can focus on the things that matter most to them. We take care of the back locker room, we take care of the lockers, we take care of the towels. We'll refill your first aid kit so that you can focus on your own value proposition and taking care of your customers. We also help them enhance their brand. They choose us because they want to go to market as a unified team, they want to wear matching uniforms, they want to present themselves in a professional way, and they want their teammates to feel engaged and connected to their company. they choose to wear uniforms and present themselves as a unified team, and we help them present that positive image. We also help support workplace safety. We have products and supplies that support workplace safety, and they also help our customers adhere to regulatory standards. And then lastly, and most importantly, above all, why would they choose us over a competitor? And it's because of the amazing teammates that service them with excellence every single day. You're going to hear me continuing to come back to our 20,000 people, our 20,000 people, because they are what makes the difference for Vestis. I think it's better that you hear from a customer. I can tell you why I think they choose me, but we have some amazing customers who were pleased to share with you directly today why they choose us. I'm very grateful to both American Airlines and Raising Cane's Chicken Fingers, who are awesome customers for us, who agreed and wanted to be present here today in our discussion so they could share with you directly, why they choose to do business with us. American Airlines says: "I would recommend Vestis to any organization looking for a uniform provider with quality products, safety enhancements, and excellent service. Most importantly, they're such a wonderful team to work with. I truly look forward to speaking with them on a weekly basis." That weekly touch matters. Our customers look forward to it. They know we're coming, and American Airlines is specifically calling that out here in their verbatim. Raising Cane's Chicken Fingers hits on so many things that are important and many of the things that I just spoke with you about. "Vestis allows us not to think about the towels and aprons, so it's not a concern for our operators, and we can stay focused on our customers. The route reps get in there, know what we need, and when we need it. It's seamless. They're in and out in the background. Every Vestis employee makes my job simpler. It's the people who make it worth recommending." we appreciate our customers for sharing that feedback with you. And hopefully, you can see that our value proposition is resonating with our customer base, and we are bringing great value, and that's why they choose Vestis. as we have rebranded the company, it's also really important that everyone is connecting the transition from Aramark Uniform Services to Vestis. You've had an experience today, but we want to make sure the entire marketplace knows who we are, and they know that we've spun out, and they know the products and services that we offer. But as part of this journey and this transition to Vestis, we've also had an opportunity to really think about how we go to market and how we present our brand. A shift is happening inside our company around putting our customer first, around really recognizing that our customer is the reason that we exist, and our customers do amazing, great things for the world every day. Those of you who are here see it out in the foyer. We're highlighting and recognizing our customers for what they do and who they are and the value that they bring to the world through the work that they do. you're going to see us shifting our messaging and our value proposition around making it about the people we support. It's not about us, it's not about our products, it's not about our services, it's about them, and it's about helping them do a better job every day. I want to show you the marketing campaign. This is a teaser to the marketing campaign that we're going to be launching as we transition post-spin to our new name, Vestis. We're also going to be doing some marketing and communications in the market around Vestis, around our value proposition. I wanted to share with you some of the campaign materials. Let's take a look. who you are. You get up every morning, and you make it all work. You make the clean rooms and the cafeterias work. You make the hospitals and the labs work. You keep the stadiums and the school districts running. You keep the production lines producing. You keep the rigs flowing, the shelves stocked, the cash registers ringing. You bring people the things they need. You make things people need. You do things people need. You are people. who make things work. And every day, we're there for you, your partners at Vestis, making sure that the clothes you wear can stand up to your shift, no matter how tough it is. You're always there for us, and because of that, we'll always be there for you with the uniforms and workplace supplies you need. Vestis, for the people who make it all work. You'll see more about that post-October. We'll be out in the marketplace launching that in a very practical and smart way. Our marketing campaign is really geared around our desired target customers, not broad, top-of-the-funnel awareness, but you're going to see us out in the right places, targeting the right end users and buyers in the verticals of interest for us. B e on the lookout for that, and you'll see it's very geographically targeted, based on the buyers that we're aiming to attract to Vestis., we also have some great communications and touch points with our existing customers. later today, I'll share with you some of the launch that we did across our internal network with our own teammates, and how we're engaging them and our customers around the brand as well. But what I'd like to do now is shift gears and talk about value creation. I know many of you are here today to hear about our strategy, our plans to create value. The strategy that we built, that we've been talking about for some time now, is really gaining traction, and I'm excited to share with you some of the progress we've made. But most importantly, we're going to put some commitments on the board today. we're here to share with you some long-range guidance that's gonna take us through 2028, and I'm gonna take you through that, and then I'm going to tell you how we're going to get there. we're gonna start by making a commitment here that we're gonna grow our top-line revenue CAGR on an organic basis 5%-7% through 2028, and we're gonna deliver 18%-20% Adjusted EBITDA margin by FY 2028. Rick is gonna take you through some detailed components of the makeup of that, but first, I'm going to take you through the strategy that underpins it and the initiatives that we have in place to deliver against it. we'll start with the strategy. our strategy is very detailed, very rigorous, and underpinned by a very robust set of initiatives. We're gonna talk about many of those initiatives today. We're gonna talk about the evidence and proof points of the work that's already being done and the results that are already being generated, and we're gonna talk about the amazing leadership team that's been built that is well-equipped to deliver this strategy. And this strategy has four components. The first component is high-quality growth, and I'm gonna take you through what that means. But essentially, it's retain the customers that you have, cross-sell the customers that you have, and gain new customers in very targeted verticals that are highly attractive to your base and have the propensity for cross-selling. we're gonna talk about those three components and how we're focused on delivering against those. Efficient operations is the second component, and that includes workforce productivity. We're gonna talk a little bit today about some things we've already done to deliver in that area. We're gonna talk about optimization of our network and logistics and our footprint. Managing costs, just good old-fashioned cost discipline, managing every dollar and every place that it goes, but also merchandise inventory, which is a key lever in this model. Rick is gonna talk at length about disciplined capital allocation, but I'm gonna give you the CliffsNotes here as we go through the day, and the CliffsNotes are, we have a very robust, and very comfortable plan around our capital allocation, and we are very confident that we are well-positioned to deliver the strategy and to deliver our commitments as it relates to capital. Delivering this over the period, so we're gonna come out around 4x leverage. Rick's gonna talk about that, and then we're gonna talk about how we will be delivering through the period across the 5 years plan. We have been extremely methodical about the capital that is required to support our strategy, and we have included that in our modeling and our plan, and we feel very confident about that. He will also talk about a dividend, as he goes through capital allocation. all of that is to come later in the day, but we have a very robust plan around capital allocation, a very disciplined plan, and we feel very confident about that plan. And then last, but certainly not least, a performance-driven culture. it all comes back to our 20,000 people, all moving together in the right direction, advancing the strategy, taking great care of our customers, cross-selling our base, running efficient routes. All of that is part of a performance-driven culture. Today, when I get to that part of our discussion, I'm gonna talk about what's different so that everyone has a good understanding of why now? Why are you able to do these things now, and you weren't able to do these things before? I'm gonna share with you the journey that we've been on for the last 2 years, what is different, great things that we've leveraged from our past, and new things that we've brought forward for our future. Let's start with high-quality growth, and high-quality growth includes retaining customers through making life easy for them. Just like those quotes that you heard from our customers, they're in and they're out, they're in the back room, I never see them, it happens invisibly, and that's exactly how most customers like for their B2B industrial services to work. They don't want to think about you. They want you to make it happen quietly and seamlessly, and when they think about you, it's because something went wrong. You want to be seamless and invisible, and you want to get in and out while building relationships so that you have the opportunity for cross-sell. Cross-sell the base with those products and services. I mentioned that we are only providing 30%-40% of our services to our existing customers today, so significant opportunity for cross-sell and high-quality new growth. Let's start with retaining our customers. I talked already about the fact that this is all about taking great care of your customers so that you can retain them and cross-sell them, and our team is very focused on doing exactly what we say we're going to do: deliver on the promise, show up on time every week, deliver the products and services that you provide and promise to your customers, and do that with consistency and excellence. The other thing that really matters, though, is that interaction. as our teammates are showing up every week and they're engaging with our customers. You heard one of our customers say, "I look forward to that weekly interaction." Creating an environment where our customer is looking forward to that connection, they're excited to engage with our teammates, allows us the opportunity to do things like cross-sell. For us, what's different when you say, "Well, why are you doing this now? What were you doing before?" What's different is we're bringing our team better training and better tools and better predictive analytics so that they can understand what is happening with our customers. you don't just want to show up to a customer, deliver a product, and think that it feels good. You want to have data to support what is happening with that customer. we have launched an intensive territory manager. We call them territory managers. They're our service managers who are responsible for a grouping of routes and a group of teammates, route service representatives, who run those routes. We've launched an extensive territory manager playbook, giving them all the tools that they need, all of the rules of the road, so that they understand exactly how to effectively run their routes and how to coach their teammates, their route service representatives, to take great care of our customer. It includes KPIs, it includes metrics, it includes data by customer, so that you understand if something is changing with a customer. How many service requests, if any, have we had from that customer? What is happening with your DSO, your days of sales outstanding? Are we starting to see an issue with payment? Are we headed towards a bad debt situation by customer, so that we understand exactly what's happening with the customer? Then what happens is we've now brought back something that we did very successfully in the past, which is a daily route check-in. Every afternoon, when our route service representatives finish their route, they huddle, and they gather together with their leader, and they go through those KPIs, they go through those metrics. They talk about how the customer is doing and what we can do to better serve the customer. In that moment, they also talk about cross-selling. did you try to cross-sell today to the customers on your route? We're providing them with leading data at the beginning of the day so that they know which customers they should cross-sell which products to. And when I talk about cross-selling, we'll talk about how that works in a few minutes. And then lastly, digital tools. our customers also want an easier interface with us, and I'm gonna talk about the customer portal that we just launched a few weeks ago that our customers are delighted about, and I've had the opportunity to meet with many of them and to talk in person about our portal, and I'll take you through the functionality of that portal and the value that that portal is bringing to our customers. But also giving our frontline team tools. many of you have heard us talk about the implementation of ABS, which is a system that we launched across our entire network, both in Canada and the U.S. It is our operating system, and it has provided a standardized common platform for all of our facilities to operate off of. What that has allowed us to do is to put a handheld in the hand of every route service representative who's in a customer location, and they're able to do things much more rapidly and efficiently with this handheld. Add a new customer, add a new product, look up information for the customer, and so we've given them digital tools in their hands so that they can interact more seamlessly and more efficiently with the customer. the customer portal is digitizing the experience, and as I've said, I've had the opportunity to meet with several customers myself to talk about this portal and the functionality of the portal. The portal provides great benefits to our customers. They are giving us incredibly positive feedback, and the portal was built through their voice. We held sessions with our customers, we gained their insights, and we have designed a system that is desirable to them and useful to them. They're able to do things like pay their invoices. My customers are starting to consolidate. They don't want invoices to go to single locations. They wanna have control over their multi-location operation and consolidate those. Our portal is allowing them to do that. we're providing great value to our customers. They can pay invoices. They can assign administrators. Let's say they want a couple of people in some of their locations to have the opportunity to see the activity and the data. They can now make those choices about who has that control and who has the ability to do that. I'm very proud of our team, both our technology team, our marketing team, and our commercial team, who've come together to build this. We're not done, so this thing has been launched, and we will continue to iterate, and we will continue to add new features. We have customers sharing their feedback of things that they'd like to see in the portal, and we have multiple phases already queued up and planned to roll out over time. Next is the opportunity, after we've done a great job taking care of our customers and harvesting that relationship, to cross-sell the base. I mentioned earlier, 30%-40% of our products are being used by existing customers. Those customers who stay 11 and 26 years, we have a tremendous opportunity to cross-sell our base with those products that I showed you earlier that are highly underutilized today when you look at our revenue mix. To give you a rule of thumb, if we were to add one product to every customer that we have, just using our average value of a product, it would be worth $900 million in revenue. This opportunity is significant. we are a $2.6 billion business, and we have the opportunity, just by cross-selling one product to existing customers, to generate $900 million in top-line value. it is a tremendous opportunity, and we are mobilized around delivering against that opportunity. We are focused on bolting on highly under-penetrative, margin-accretive products. Examples of those are mats, managed restroom services, first aid kits, and a variety of other things. But these are tremendous opportunities to take an existing customer and add a product or two, or in total, seven would be great as well. But we're continuing to focus on getting share of wallet with those customers. Why do we do that? Why is that so attractive? It's attractive because it allows us to leverage fixed assets and get great flow-through and margin expansion. We already have plants. We're already running routes on our fleet. We already have teammates going to that customer location every single week. the opportunity to drop one additional product at that customer location while we are already there, presents tremendous opportunity for revenue flow-through and margin expansion. I wanna give you an example of how that works. This is an actual customer example in Paramount, California. This is a customer who was renting uniforms from us and still is. A great customer. We had the opportunity to cross-sell them by adding mats as part of the offering. We added 2 mats, so we're going to one location, helping them with their uniforms and their rental, laundering them, and delivering them every week. Now, that same truck is also dropping down 2 mats when they go to that location, and it has expanded the margin profile of this customer by 373 basis points. this is just proof point that the strategy works, and we're leveraging fixed assets. how did you do it? Why are you doing this now? Why didn't you do it before? What's different? all of a sudden, how are you able to go out and start cross-selling your customers? Well, we recognize these amazing relationships that we have. You heard it directly from our customer testimonials. You see it in the data when you look at the retention metrics. I asked the same question when I got here: Why aren't we cross-selling our customers? And we have decided that we should and will and are utilize our amazing route service representatives to be our agent of cross-selling. me companies tend to have other sales forces, their own sales force, independent sales force doing that. I have always used my frontline teammates that are running routes to cross-sell, and it has been highly effective, and that strategy is being employed here now, and it is working for us. in the past, we have made the decision that we did not want route service representatives to cross-sell customers. We wanted sales team members to do that, and we've made the decision that we do want them to cross-sell, and it's working greatly. When you see the numbers from Rick, you're going to see that our workplace supplies volume is rising, and it's rising because we are purposefully focused on this initiative of cross-selling the customer base so that we can get a higher margin flow through. Do we know that it's working? Yes, we do. if you go back and you look at all of our routes in FY 2021, and you look at the sales activity, so routes that we sold something on, and you compare it to all of our routes in FY 2023 year to date, and all of the routes that we sold something on, 108% increase in selling activity on routes. our route teammates are fully engaged. They are selling, they are excited. We're having contests. We're celebrating. We have winners. If you're the top provider or top performer, you get a gift at your house from me and my team saying, "Thank you." There's so much energy around this. People are so excited and fired up about cross-selling the base, and our teammates are very proud of the work that they're doing to provide these additional services to our customers. Next, we're gonna talk about after you retain the customer, after you cross-sell the customer, you also want to continue to bring new customers to the base. we want to continue to feed that base, and we want to feed that base in a really smart way with the right types of customers. Customers that can use many products and services, customers who are in industries that are here to stay, customers who are in industries that are growing. we want to be very smart about where we put all of our new sales. You all will recall, many of you who have been following us for some time, that Aramark made a great decision, when John Zillmer, our CEO, around 2019, a decision was made to increase the investment in our sales force, and we increased our sales force by 35%. And I applaud the team because that happened right before COVID, and they ramped that sales force all through COVID. Prior to my arrival here, the team pushed through that. We added that great, great headcount, and we have amazing sales teammates on our team now that we ramped through COVID, and they are now hitting the productivity levels that we desire for them. And those teammates are here, and we want to make sure that we use those teammates in the wisest possible way, and that we're going after the highest value opportunity. they're out there doing a great job selling, and now we are getting them very focused, very specifically on eight micro verticals that we've identified. we have gone out and done significant market sizing, both at the macro level and down to the vertical level, and we have identified eight sub verticals that we're highly interested in. We did this with math and a good bit of analysis around four key attributes. The first one is, is the opportunity worth it? is the juice worth the squeeze? What is the opportunity size? And we said, "Look, it's got to be greater than $300 million opportunity before we're gonna organize and rally our whole team to go after this industry." Secondly, does the customer have scale? High revenue per stop, are they gonna increase our weekly revenue in a meaningful way? they have to be greater than $300 weekly contribution on average to a route. Next, product penetration. Do they have the propensity to use many of our products? That makes them extremely attractive when you think about the cross-sell, the base strategy that I just talked about a minute ago. go find the right customer, bring them into your base, and then harvest them over time and capture share of wallet. we want to have high product penetration opportunity with the verticals that we choose. Greater than 3 average penetration, but we would love it if they could use greater than 5. we use those attributes to score these verticals. And then lastly, they need to think we're valuable, so they need to perceive value. This needs to be a product of interest to them, and it needs to be perceived to be, value add at the right price point. it's very attractive if their spend with us is less than 1% of their total spend, because we're just a blip on the radar, something they've got to have, but it's a very low spend with low attention and low impact to their organization, or there's a regulatory reason. they have an obligation. They have to use the product or service, and we can provide that product or service. These are the attributes that we use to choose the verticals. Now, I'm not gonna give away our wholesale strategy here in the meeting today, but I'm going to share one with you so that you can get an idea for how this analysis worked and how the segmentation was conducted. I'm going to show you one of the eight, and it is automotive dealers. We did a great amount of analysis to conclude, using those attributes that I spoke about earlier, that automotive dealers are highly attractive to us. We have these customers today, so we know that we like them, and we know that they are amazing customers. They meet our criteria for opportunity size, greater than $500 million in annual revenue opportunity is what we estimate for this market. Roughly 4% annual growth rate in this industry, and we assess they have around 257,000 technicians that could be wearing uniforms. They will contribute more than $300 per stop on a weekly basis, and they can use roughly 4 products based on the existing dealers that we serve today. But our analysis shows a propensity and a capability and a possibility to use 7 out of 7. this is a very attractive customer that you can cross-sell the base on for quite some time. And they perceive our service is very valuable based on the customers that we have today and the feedback. why car dealerships? How do you know they're around to stay just because they meet your 4 attributes? We also did an analysis around the industry itself. The number of new car dealerships has remained steady since 2017, so they're not closing. An all-time high, 34% of electric vehicles were sold at car dealerships, physical locations. The expectation is that only 5% of cars will be sold online in 2025. that data tells us the automotive dealerships are here to stay, at least for this period, and they are very attractive based on our four attributes. we're going after those. Here's the size of the market. We size it at $545 million, and we've broken it down by geography. you guys can see here, we've put a lot of analytical rigor into identifying these micro verticals and into organizing our team around those. On the other side of the chart, you can see our actual penetration by region. we know in the West Coast, we've done a very good job of focusing on the automotive dealers. Our team has done a very good job of campaigning around that space and growing in that space, and we have a great playbook that works, and we'll replicate that playbook in other regions. again, I hope this gives you a flavor. When we say eight micro verticals, we have been very methodical about identifying these opportunities, and we're organizing our team around the highest value, new growth. I also want to share with you a case study just to explain also how focused we have been on making sure that our growth is attractive and that it's of high quality. And inside our business, we have a business called Direct Sale. Many of you may be familiar with it, but it is not a rental model. it's the opportunity to buy jackets for your teammates in the winter. Maybe you want to get some baseball caps, maybe you want to buy some products that are not a rental product, but you want to outfit your team with those. We have awesome rental customers who love to do that for their teammates. Every winter, they want to buy them a jacket or a hat. But what happened with this business, which has been in our portfolio for a very long time, is it became a wonderful way to drive top-line growth by just selling anything that you could possibly put in a portfolio that one of our customers might want to buy as a one-way product. And what happened to this business is it drove massive SKU proliferation across our system. we had all these one-off SKUs jamming up our distribution centers with, you know, a coverall for someone to go hunting in or, a baseball cap that's hot pink for one customer that wanted one. No one else is ever going to buy that ball cap. we ended up with this massive SKU proliferation, and we had all these products and SKUs all over the system, but the team was still selling those. what's happening is, it's become very margin dilutive to our business to continue to grow our direct sale business in that way. when I came into the business a couple of years ago, we all sat down together as a leadership team, and we said: Let's break this thing down. Let's figure out what we like about it, what we don't like about it, and what we want to do with it going forward. Well, what we like about it is we have some amazing, amazing customers, national account customers who've been with us for a very long time, and we will continue to serve those customers and build those relationships with those customers. But what we did decide is we could stop selling bespoke uniforms that were driving SKU proliferation across our system. we shut down any new bespoke, customized uniforms that aren't our standard SKUs, aren't fast-moving products, aren't fungible, aren't reusable, and we shut that down, and we said, "We're going to slow that down. We're going to throttle that down, and we're going to focus on selling direct sale products that align with our rental SKUs." let's sell it as a direct sale product, but let's sell a rental SKU, that we know we enjoy and that we can leverage and get good economies of scale when we buy it, and it doesn't jam up our distribution centers and our warehouses with non-slow-moving product that may never move. And so we did that. And when we did that, and we said, "Let's get focused on profitability. Let's expand the margins of this business," that's exactly what happened. The team, they moved themselves in the right direction. They reoriented. No more bespoke uniforms across large groups of customers. Let's focus on the SKUs that we like the most, that drive margin into our business, and they started expanding the margins of this business. I'm incredibly proud of the work that's been done here. On a consolidated basis, they have driven 40 basis points of margin expansion for the company, and in doing that, sometimes you got to slow down to do things right. We drove 70 basis points of erosion on top line growth, and we did that on purpose. I think it's really important for everyone to understand we are making strategic decisions for the long-term future of this business. It could be hard to make that decision. One might say, "How can you give up 70 bips of growth?" I'll give it up for margin and high-quality growth all day long, and we will get our engine running on our cross-selling and on our new business and our 8 micro verticals, but we are not going to grow just for growth's sake so that we can say we hit a top-line number. we throttled that down on purpose. We drove 40 bips of margin expansion, and we're going to continue to build that business the right way over time. Okay, so those are our 3 components of growth: retain what we have, cross-sell the base, and then target high-quality new verticals. Now we're going to shift gears, and we're going to talk about operational capability and really, really driving an efficient operation. It has 3 components. The first is workforce productivity. let's make sure all our people are working efficiently and that we have the right organizational structure, and that we are set up and aligned with the strategy to drive success. Optimize our network and logistics. There's a tremendous opportunity. I'm going to take you through that in detail. And then cost management and merchandise management. let's dive in. I'm going to start with a case study. We've already taken some action to make sure that our organization is aligned properly, it is structured properly, and that we are all moving and advancing the strategy the way that we want to and should. we have already taken $28 million of cost out of our business by aligning our structure and organizing our team appropriately. We've done that through some optimization in our field team. We've done that through functional alignment. Our functional leaders lined up and organized appropriately to support the strategy. We've done some shared services, so we've consolidated some fragmented teammates that were working across various facilities and moved them into a centralized shared services program, and we've done some regional consolidation and going from five regions to four regions. All of those actions have already taken place, and they're worth $28 million in annualized savings. And so some may ask, and some have asked: You guys had some margin expansion this year. Was that just cost-cutting? Were those one-offs? Is that repeatable? Is that sustainable? It's absolutely sustainable, and I wanted you to see the pathway to that $28 million, so that you knew exactly how we got there and what we did, and it was very strategic. it wasn't a knee-jerk, cost-cutting reaction. It was in organizing this team for success and aligning everyone into the right structure. And in doing that, we freed up $28 million of wasted cost. All right, now we're gonna move to logistics, and I love logistics. you guys are gonna learn there's, like, three things that I love: leadership and taking great care of our 20,000 people. I love logistics, so you're gonna hear me talk about that a lot today. And I love math, so you're gonna hear us talk a lot about data and KPIs and how we're gonna measure this thing to make sure that we stay on track and that we drive success. you guys are gonna bear with me while I go through the logistics, because I'm gonna get excited about this because it is a very exciting opportunity. I want you to look at this map, and I want to demonstrate to you the opportunity that we have found. Over the last 2 years, we've been building our logistics muscle, and we've been analyzing and interrogating this network to figure out how we can operate it more efficiently. You're gonna meet the team here in a little while, but I brought the best logistics leader that I've ever worked with. We worked together for 11 years. He's on our management team now, driving logistics for us. His name is Scott Roberts. He's fantastic, and he has built a fantastic strategy to optimize this footprint and build this muscle. We brought in Chainalytics as a partner. I've used them very successfully in the past, and they have helped us map our entire network. All of our customer flows, our footprint, our facilities, our depots, our market centers, and our customer locations. We have spent the last year building a map and a model around the optimal footprint and network and how our customer volume should be flowing. What you see on this chart on the top left-hand side, you can see the density. You see the dark colors, kinda like the strings that look like they're crossing over one another. Those are teammates and routes moving past each other. Highly inefficient. Density is not good. the dark blue that you see there means that we're not efficient. If you look at the chart on the right, this is what we look like when we're optimized. when we remap the flows, and we are serving customers from the right locations, then you start to see that density and that concentration go away, and that's when you begin to see a more efficient network. we've done a master mapping of all of our network, all of our footprint, our customer flows, and we know that there is about $30-$50 million of pent-up value inside this network. We'll either drop that down to the bottom line while we execute the strategy I'm gonna take you through, or we will redeploy the capacity that we free up and grow for free, basically. those are the opportunities that we see here with this network. how are we gonna do that? It starts with optimizing customer flows. we have customers, literally today, who are mapped into the wrong market centers or the wrong plants. we're literally serving them from the wrong location. We're driving empty miles, we're wasting money, we're wasting fuel, we're wasting windshield time, we're wasting our fleet because we're servicing them in a non-optimal way. The other thing that we're doing, believe it or not, is we're actually serving some customers from more than one location. we are literally serving them from multiple locations. we will isolate that to a single source that presents tremendous opportunity for efficiency. We are also restricting serving them, or we were. I say we are. We're improving all of this now, of course, but we were also restricting them because of the impression that we did not have capacity in a plant. Well, we restricted our capacity by defining the number of shifts that we were willing to operate. we left latent capacity in our facilities, and there is tremendous opportunity to leverage that capacity. And then lastly, we have an opportunity to upgrade some of our plants so they can handle the customer volume. I think it's really important to share with you. Our strategy is not to go rebuild our plant network. That would be a massive investment in infusion and CapEx and a massive disruption. We have a great network today that we can upgrade and that we can continue to create capacity and the right capacity for the right product mix, and in some instances, we may desire to open a plant or to close a plant. But this is not a strategy that employs blowing up our footprint and closing a bunch of facilities and building a bunch of new facilities. There will be time and a place for that, and when it makes sense to build one or open one, we will. But this strategy is very measured around leveraging our existing footprint without a large infusion of capital. We have idle capacity all over our network, and that is the most exciting thing that this study has revealed, is that we have the opportunity to take that growth strategy and push it through those fixed assets that we've already invested in, with limited additional investment as we grow. is it working? This is the case study. I have two of these for you because I wanna make sure you see we are already doing these things. We are already mobilized around making our network more efficient. this is Southern California, and this is route optimization in Southern California. We have five, what we call market centers. a market center, if you all are not aware of that term, a market center for us is basically a geography where we operate. we have a group of customers in that regional area. We have a plant, we have a group of routes that are attached to that area, and we have a sales team that belongs to that area. that's what we mean when we say market center. In this particular region, there are five. we took five market centers in Southern California, and we optimized across that footprint, that geography that those five market centers sit in. When we did that, you can see the before and the after, and what I want you to do is look at the colors, and you can see, particularly as you look at the red inside the blue, you can see the green inside the yellow if you look at the top chart. Now look at the bottom chart, and you can see the colors have become more joined together as one. you have yellow together, blue together, green together. You see what's happening there? What that means is that we had non-optimal routing and scheduling, where we had, again, routes moving across one another to serve each other. or to serve our customers, rather. What happened when we did this, when we reformatted this, when we redesigned our routes coming out of these facilities, we drove 21.4% of distance out of our, out of our routing. 6.3% increase in revenue per hour. 33.2% increase in revenue per mile. And last but not least, we took about 1,000 gallons of fuel a week out of that market. This is one grouping of 5 market centers that we've optimized, and you can see a massive step change in the operating metrics for that market. we did it again in Orlando. This is just Orlando, 1 market center, and you can see that same set of activities. Look at the colors, see how they're all running across each other, and now we're grouping them together better in the after. You can see 20.7% reduced distance driven to serve those customers, 3.1% increased revenue per hour, 25.9% increase in revenue per mile, and 341 gallons a week saved. This is a massive opportunity. Again, these are just two examples of the work that we're doing across our entire system. We're also focused on driving density by using logistics tools and capabilities. We're optimizing the network that we have. Are our plants all in the right place? Are our customers mapped correctly into those plants? Are we running our routes efficiently? And then last but not least, after we've done all of that, where are the holes? Once you have an optimal route, you can still see empty miles on that route. how long are we driving between one customer to the next customer? we are also implementing tools around geo-prospecting, and this is an example in Decatur, Alabama, where we've taken a map, and we've said, "Let's look across our entire Decatur market and let's understand where are the customer prospects in that market," leveraging data to gather that information. Overlay those prospects against current customers. let's find customers, prospective customers, that are near the customers that we already have, so we can define an optimal geographical area in which to hunt. And then let's analyze cost and pricing for those customers so that we choose absolutely the right prospects for our salespeople to go after. when they're hunting, they're hunting in the right geography, the right zip code, and they're also focused on the right types of customers that we've identified through those eight micro verticals. And then zoom in on every territory and make strategic decisions about, the precise area. And also, there's some customers where we may want to retract if the high cost to serve, and they're not in the right geographical location. And then lastly, on efficient operations, I wanna close this section on merchandise management, and this is a fantastic opportunity. I'm sure that many of you already understand our business model, but when we acquire a new customer, we actually source new garments for them, and those garments begin to amortize when they're issued to our customer. We amortize them across our system over a period. But when that customer has a teammate who leaves and they have a new teammate who joins, you have an opportunity to give that new teammate who joined, potentially, a used garment instead of issuing a new garment. you're working in a mechanic shop, you have a mechanic who wears an XXL, and that mechanic leaves and no longer works at that mechanic shop. New mechanic comes in. Just so happens, he's also an XXL. There's an opportunity to launder that garment and reissue that same XXL to that new mechanic who just joined the team. Our team has been doing that, but not doing that as well as we can. we have a metric called use fill rate, that we monitor very closely to make sure that every opportunity to use a fungible, used garment that's already being amortized in our system is being used to serve that new teammate with that existing customer. In many cases, we have not been doing that with disciplined operational excellence, so we see significant opportunity for us to use more used garments as we are providing uniforms to our customers when they have new teammates coming on board. We're doing this in multiple phases, but this is a significant opportunity. If we improve by 1%, it is worth, or by a 1 percentage point, it is worth $1.4 million. And I will just tell you that we have tremendous room to go. there is a lot of opportunity to capture, around percentage point improvements. As an example, as we go through this, it's kind of three phases. The first phase is, let's just teach our people in the stock rooms what garments can be reused. there's an educational process that's taking place. We have stock rooms in every market center, or we have a stock room that serves a geography of market centers, and educating our teammates on the SKUs that have a high propensity for reuse, that should be readily accepted, very easy to access, and the ability to issue those to our customers instead of new garments. And then let's get rid of all the clutter, the hundreds of SKUs that we're not going to reuse, that are jamming up our stock rooms, that are distracting our teammates, and they're getting in the way of them efficiently reusing the reusable garments. And so it starts with education and training. The second step, though, is there's an opportunity to consolidate stock rooms. at some point in time, we will look at creating mother stock rooms, consolidating and geographically pooling things together so that we can get density with these garments and reuse them in even more of a sophisticated fashion. And then the last stage of the journey is: Let's automate this thing. Let's get an inventory system so we can see every product and every facility at any given time, so that we know and have access to these garments, and we can effectively reuse them. I have a couple of stats for you guys, because just, just in one location, just by teaching and training our team in Highland, Illinois, "Hey, let's go in your stock room, and let's find the items that have the propensity for reuse. Let's put them in the front of the stock room. Let's take those other 300 SKUs that you're not using, and let's purge them and get them out of the way and remove the clutter. And let's start focusing on issuing these great and very productive and useful used garments to our existing customers.".By doing that, just in one location, no investment, no new stockroom, no logistics costs, no moving of assets, just by going in the stockroom that we already have full of garments, over a 6-week period, we improved by 11%. If you look at the highest three weeks out of the six weeks, we improved by 17%. Just by sitting down with our stockroom leader, who's been amazing, and sharing with her what this opportunity looks like, and her leading her team and getting them mobilized around the opportunity, we are seeing massive improvements just by focusing on stockroom optimization. this is a tremendous opportunity yet to come that the team is working through, and I'm very pleased to share with you. Okay, so you've heard about growing, you've heard about operational excellence. None of this is gonna happen unless our teammates are rallied behind this. we have a great strategy. We've brought amazing functional leaders in who know how to run this play. They know how to drive improvements, but none of it works unless our teammates are behind us and they're 100% engaged. We're taking the time to educate, just like we did with our teammate, Alex, in the stockroom in Illinois. We're sitting down with them, and we're helping them learn better ways to operate this business. this takes leadership, and it takes discipline, and it takes a militant beating of the drum around what we want people to do and teaching them and helping them do it. our performance-driven culture is incredibly important. And when I came here a couple of years ago, I shared with you, I was blown away at the engagement results. I was so excited to see that we have this amazing group of teammates, who I believe are so highly engaged, but yet we have an opportunity to teach them how to win. And that's really what it came down to. We need to teach people how to win. We need to give them real functional leadership, people who are really good at running logistics plays, people who are really good at targeting the right micro verticals, but then we need to keep score, and we need to teach people how to win. And so the biggest opportunity that we found here was we've got to bring data to the organization. We have great people. We love the people that we have. We got to teach them how to keep score. we have been focused on bringing a database approach to this company, KPIs, leading indicators. When you do your route check-in, here's your predictive analytics around your customer behaviors. When you're planning a route, here's your empty miles, here's your revenue per mile, the things that you need to be thinking about to build an efficient organization. We're teaching them how to do those things. Building on the great, great spirit and culture and familial environment that we have, which is incredibly powerful, but now we're teaching them how to be winners, and we're also teaching the team how to build their competitive muscle. your best day can't be your best day here yesterday. Your best day needs to be moving towards the watermark that's already been set for outstanding performance. And we have amazing opportunities to close the gap to some of our competitors. They've already come before us. They've already proven it can be done, and we're gonna go run our plays to start closing that gap. And so it's about teaching them how to compete and how to win, and how to really understand what's happening in the external marketplace, what's happening with your peers, what's happening with your customers. That is starting to come to life inside the organization. We wanna keep score, we wanna win, but at the end of the day, we also want people to really, really thrive here. Because when people know that you're taking care of them, when they know that this is a safe place and that they're loved, and that we care about their dreams, and we care about their families, and we're gonna make investments in them, people will do all the other stuff for you. They will do all this stuff. Who doesn't want to be a winner? Of course, people want to keep score and win. They need to know that we care about them and that we're taking great care of them. I'll, I'll be honest with you guys, as you get to know me, I wake up every day, and the first thing that I think about is I'm responsible for these 20,000 people. if I take good care of these 20,000 people, and I teach them how to do these things better, the numbers will take care of themselves. We do have an amazing strategy, and we're gonna run this play, and we're gonna deliver great results, but we're gonna do it by taking amazing care of our 20,000 people. Then they're going to line up, and they already are. They're gonna line up behind this plan. They're already doing it, and amazing things are happening in this business, and our teammates are winning. For me, that's what I really come here for every day, to change those 20,000 lives and be a part of that story. Let's talk about them. There are 20,000 of them. Based on that survey, we got great results. They're very engaged, and we're just helping them keep score. We're helping them learn how to win, how to celebrate those wins, how to stretch themselves, how to learn new things, do things that they didn't think was possible because no one taught them how to do those things. I mean, watching them is so exciting, just to see the light bulb go off, the notion that you can replan your routes, and you can get all these empty miles out, the notion that you can cross-sell, and you can win, and you can get a higher commission, and you can make more money by doing those things. Watching them get excited about the things that we're bringing them is incredibly powerful, and it is going to be what differentiates Vestis from everyone else, I'm telling you, because running routes is running routes, logistics is logistics, Chainalytics studies are Chainalytics studies. You can do all of those things. Everyone can do those things. What's gonna be different is the power of our 20,000 people and the team that we're building here, which is unstoppable. here they are. This is our team, at least some of them. And I wanted to share with you, last week, we unveiled the name. last week was amazing inside our company. hopefully, you love our new name. Vestis is a Latin word. It means clothing or garments. There are Latin phrases that mean the clothes make the person tied to Vestis. It's a really powerful name. We spent a lot of time choosing this name because we wanted it to be very important to our future, and we feel great about the name that we've chosen. But last week, we had the opportunity to unveil it. we went across all of our market centers with our teammates, and we unveiled our new name. We had celebrations that were simultaneously planned, and they were absolutely awesome. You heard Tim talk about our Vestis, our call sign or our wave. We had all of our teammates engaging around that and getting excited about that. I sat in one of the market centers where I was for the celebration, gauging, how is all this going down? Are people responding? Are they excited? How does our future feel through their eyes? We celebrated a couple of frontline teammates who had been promoted from the front line to a leadership role. In that moment, I thought, "This is what it's all about." I watched these two young people get their certificate in the plant, go up on the stage at the front of the room, and be recognized for moving from being the plant frontline teammate to being the supervisor of that line. Watching the joy on their face and knowing that this is what we're doing, like, we're changing people's lives, and seeing how committed they are to this company and how excited they are about the opportunities that Vestis gives them, that's when I knew in that moment, like, we have what it takes to get this done, because we are changing people's lives, and they are committed to this plan, and they are committed to this company. Well, then there's another young man sitting across from me, and when we introduced our Vestis Wave, and we had everybody, I mean, 20,000 people across the company taking photos and sending in their wave. This young man that works in our plant on the front line stood up, and he looked at me, and he did his hands like this, and he said, "We're coming." When he did that, I thought, "We're here." Like, this is exactly what we've been waiting for. Our team is energized, they're mobilized. When he said, "We're coming," he meant we're about to win. We're about to take this thing, we're gonna drive this strategy, and we are going to be number one in the marketplace. When I saw it on his face, and when he had that moment, I thought, "This is, this is happening. The culture is shifting, and our teammates are mobilized around bringing this plan to life." That's what it takes. That's what it's going to take to make this happen. next, I'd like to introduce you to our board. we've talked about our strategy, we've talked about growing the business, we've talked about driving efficient operations, creating an amazing culture of people who are thriving and growing and getting to be their best selves while they're a part of us. But we also have built a phenomenal board, and I wanna take a minute to talk about this board because they have already been so incredibly impactful to me. we set off on this journey, myself and Aramark, John Zillmer, our CEO, and Art Winkleblack, who chairs the Nom Gov committee for the Aramark board. And together, we sat down and said, "Who's the right board for Vestis?" we're gonna build this thing, spin out into a separate, publicly traded company, and you have kind of a rare opportunity to hand choose every board member at one time. And I am so delighted to introduce you to this board because we got every first-round draft pick that we put on the list. we sat down, we mapped out who we wanted on this board, very specifically for their skills, for their experience, for their backgrounds, for their culture, for who they are, for what they believe. All of these people were chosen precisely because of who they are, and every person that we put on our list for our first choice is on this page today. And I'm so honored to have this board. You heard from Phillip, our Chairman. He brings tremendous industry experience. He has been an amazing sounding board for me. Doug Pertz, many of you know, comes from B2B, industrial route-based businesses. Doug and I have a past going way back from when we were both a part of another company. He was most recently at Brinks. He has been an amazing sage sounding board for me as we're thinking through planning this business and getting ready for the spin. Richard Burke has become also an amazing, amazing sounding board and supporter of the culture of this company. He has tremendous experience in the waste management background. Many of you probably know Richard as well. Tracy Jokinen comes to us with amazing industry experience from her time at G&K, but also many other places that she's been. She's bringing great governance. She is a great sounding board. She's chairing our audit committee. She's a fantastic, fantastic teammate. Lynn McKee comes to us from Aramark, and Lynn has been with me from day one. in March 2021, when Aramark first called me to talk about this role, Lynn was one of the first people that I met, and Lynn has been with me as we have built this amazing leadership team. She's been with me as we've built this amazing board, and now she's with us going forward, and we're very honored to have her. Mary Ann Whitney, who is the current CFO at Waste Connections. Many of you guys are probably seeing and interacting with Mary Ann. She is an amazing, amazing teammate on this board, and she brings great wisdom. Her knowledge in the B2B route-based businesses is incredibly correlated to what we do, and she has already been an amazing resource. And then last, but certainly not least, is Ena Williams, and Ena is the current Chief Operating Officer at Casey's General Stores. They have an amazing culture. They have an awesome frontline, set of teammates, and she brings amazing, amazing knowledge around, our frontline team and engaging our team and managing a workforce such as ours, because she does the same, and she's a great operator. I would just tell you guys, this board, I would put against any board, any day of the week. They have been amazing, already, resources to myself and my management team, and we are very honored to have them. I'll also tell you, the chemistry is really powerful. these are folks that are ready to take our call 24/7, to provide counsel, to provide wisdom. They have just already been amazing support to me. Next is my management team. I'm also pleased to introduce you to the management team that we have assembled that is here in the room today. you're gonna meet Rick Dillon here in a few minutes after the break. I'll save the introduction of Rick here for a few minutes. You met Tim. Tim introduced us in the cowboy hat, but Tim is our Chief Legal Counsel, and he has tremendous experience and wisdom, very knowledgeable around spins and around what it takes to become ready to operate as a public company. And we are very, very blessed to have him on our team, and he has provided tremendous counsel to this team, and he continues to do that. I'm also delighted to introduce you guys to Chris Synek. Chris is on day 3. He has joined us as our Chief Operating Officer. Their bios are in the back of the document that we filed this morning, but take the time to look at their backgrounds. Chris has a significant background in B2B, industrial, route-based businesses. He also has 16 years in the industry, and he is a very, very seasoned operator who is going to lead our sales and operations team as our Chief Operating Officer, and we're delighted to have him. Angie Kervin is our Chief Human Resources Officer. Angie has been with the company the longest out of all of us, and I think that while I love our teammates, I'm gonna say Angie might love them more than all of us. She is an amazing advocate for our 20,000 people, making sure that we are taking great care of them so that this strategy works and our people are thriving. And then last, but certainly not least, is Grant Shih, and Grant has joined us as our Chief Technology Officer. And I'm gonna tell you guys, when you get a good technology person, the things that you can do to transform the customer experience and to drive efficient operations are tremendous. And he is absolutely the right business partner, not just IT guy. He's the right business partner to take our business forward and to enable our strategy, and we're already seeing that through our business intelligence, our KPIs, all the things that we're automating and bringing to our teammates, are through his leadership and through the team that he has built. we are simply delighted to have Grant on our team. All right, before we go to break, and we are about to go to break, in case you guys are wondering, before we go to break, I want you to hear from our extended leadership team. you've met my direct reports here in the room today, but you've heard me talk about this strategy. You've heard me talk about high target, new, new growth. Andy Panos, who was brought here to lead our sales team, significant experience in the industry. You're going to hear from him. Scott Roberts, who leads logistics and built this whole wonderful logistics strategy and plan. You're going to hear from him. Our amazing supply chain leader, Luis Pacheco, you're going to hear from him. James Baltzegar, who leads plant operations, who's going to help us drive efficient operations and automation and all kinds of things across our plants. And then also Annie Houle, who is an amazing leader, who runs Canada, Cleanr oom, and Western First Aid. let's hear what they have to say. Hello, I'm Andy Panos, Senior Vice President of Sales and Marketing at Vestis. I'm Angie Kirven, the Chief Human Resources Officer here at Vestis. I'm Grant Shih, Chief Technology Officer at Vestis. I oversee the convergence of innovation and strategy to propel our organization forward. My role encompasses driving profitable growth through customer retention and expansion, as well as the acquisition of new business. It is my privilege to lead the charge in creating an environment where every teammate can thrive. During my career, I've been a part of diverse industries. I've served in startups, Fortune 100 companies, and everything in between. Prior to Vestis, I spent more than 15 years orchestrating and executing HR strategies for large, distributed workforces in several well-known US retailers in clothing, sporting goods, and the footwear industries. I am thrilled to be part of this team and contribute to our journey of unprecedented growth and profitability. My journey has been shaped by a diversity of professional experiences, starting with a decade in a management development program at a leading consumer packaged goods beverage company, to managing the complete overhaul of a major U.S. supplier distributor network relationship. In my 11 years at G&K Services, as Regional Sales Director and VP of Sales, I learned the uniform and facility services business and how to drive transformation at a publicly traded company. I'm Scott Roberts, Vice President of Logistics at Vestis. I'm Annie Houle, President of Canadian Linen, Clean Room, and Western First Aid. My name is James Baltzegar. I'm the Vice President of Plant Operations. I am Luis Pacheco, Vice President of Global Sourcing and Manufacturing at Vestis. I'm deeply committed to fostering a safe environment for our teammates and delivering outstanding service to our valued customers. With over 25 years in the uniform and industrial laundry industry, I have a wealth of experience in driving growth, optimizing service models, and creating operational efficiencies. At Vestis, I lead a team of 1,900 dedicated individuals who craft innovative product designs, plan meticulous inventory strategies, source materials worldwide, and oversee garment manufacturing in our state-of-the-art facilities in Mexico. Our goal is to strike the perfect balance between supply and demand, optimize our inventories while ensuring cost control and impeccable service levels for our valued customers. My responsibilities include plant operations, leadership, engineering, and supply chain management. Prior to joining Vestis, I led operations, strategy, continuous improvement, and engineering in paper and packaging, power systems, metal fabrication, and building materials industries. I'm responsible for transportation procurement, material distribution, private fleet management, distribution center operations, and customer service planning. Before joining Vestis, I dedicated over two decades to a publicly traded global supply chain provider, where I held leadership roles across North America, Europe, and globally. My journey has taken me across the globe, exposing me to best practices from different sectors, which I now bring to Vestis. What drew me to Vestis is the extraordinary blend of talent and backgrounds that Kim has assembled to pave the way for an exciting new chapter. I joined Vestis because I believe we have a once-in-a-lifetime opportunity to build something amazing. This team and company are truly exceptional. Here, success just isn't about me, it's about us. It's about every teammate united in purpose. Vestis is a place where careers flourish, new experiences are embraced, and we collectively shine as we grow together. We stand as the industry's finest because we don't just work passionately, we work with purpose. Together, we combine our expertise to tackle challenges with fresh ideas that are swiftly put into action. This is a time of immense excitement and opportunity for us. As we embark on this journey as a separate entity, we're better equipped to tailor our strategies and allocate resources to meet the unique needs of our business. All right, so we love our team, we're proud of our team, but most importantly, this is the team for this season, for this business. These guys are experts at what they do. They have built this strategy, they have built their teams around this strategy, and you can see evidence that they're already mobilized around the strategy. this is exactly the right team for this season, for Vestis. They have been personally curated by myself, and Angie, and the rest of our management team, to make sure that we have the right people in the right seats. I would put this team against any team, any day. We have gone out and found the best and the brightest in each of these functional areas, but you can also see culturally, they embody what we're all about, taking care of our teammates, taking great care of our customers, and operating with purpose. we're going to go to a break now, and then we'll come back, and you're going to hear from Rick Dillon, our Chief Financial Officer, and we're going to take you through the numbers. Please welcome back Kim Scott. Welcome back. Hope you guys enjoyed hearing about our strategic plan for value creation. We are excited about this business, and the future for Vestis is very bright. Next, I'm very pleased to introduce to you Rick Dillon. Rick is our Chief Financial Officer. He joined me and all of us on this journey together back in May 2022. And he has been off about the business of getting us ready to be a public company. helping us build out this strategic plan and map all the financial implications of that plan, but also the tremendous work that goes into building out a proper finance team that is ready to operate in a public company environment. And he has been an amazing partner to me and to the rest of our management team, and he has built a tremendous team. we are very pleased with our public company readiness, all of the work that's been done, to get that team put in place so that we are prepared to spin by the end of September. we're thrilled about that. A little bit about Rick. Rick does come to us with extensive public company operating experience, so we're very pleased to have a seasoned executive leader managing our finance organization. But he is also highly operational and has been very focused on helping us build our data and our analytics, and our focus on using business intelligence to make smart decisions and to move this team forward. And he's made tremendous stride, since joining the company about a year and a half ago. today, Rick is going to take us through the financials in more detail. He's specifically going to take us through our capital allocation priorities, which I think is critically important for today's discussion. without further ado, I'll introduce Rick Dillon to the stage. Rick? I love the theme music. thanks, Kim. Appreciate the opportunity to work with the incredible team. It's definitely. This is our season as Kim mentioned, I'm gonna kick off the financial overview. I'll start by reviewing the year-to-date performance from a segment perspective, kind of the, the historical, segment results. I'll get into standalone reporting, and then we'll kinda close with what is the value creation strategy that Kim walked through? What does it mean for us, and how do we get there? And lastly, capital allocation priorities. if we just start with the trajectory of the operating segment as a part of the parent, we're very pleased with where we're trending for the fiscal year. year to date, we're showing top-line growth of 5.7%. We've got adjusted operating profit increase of 8% and an adjusted operating margin of about 10.1%. incredibly strong performance coming out of the COVID. We've shown here 2019-2022, and those year-to-date results, we feel really good about how we're coming out, where we are from a trajectory perspective. I would say during that COVID period, as Kim mentioned, we also invested in our sales team. We got the business up and running on ABS, and all of those things were big enablers for us to deliver the kind of results that you see in 2022, as well as what I've just talked about for 2023. strong trajectory as we kinda head into 2024, and we start to execute this, this plan. I think if you look at that from a quarterly perspective, you see our, our growth, for 2023 year to date on a quarterly roadmap, that 5% strong, 6%, coming out of Q1 and Q2, landing at about 5% in Q3. It's important to note that this business has historically grown at less than 2%. we're very pleased with our ability to kind of accelerate growth of the business. We're at 5% year to date, 2023, and that allows us to kind of close the gap and continue to drive growth beyond historical levels. That operating margin improvement as we go through the year, particularly like the 9.3, the 9.7, the 12.5, 11.1, rather, from, from a margin perspective, that growth is driven by strategy and execution. You see us cross-selling the base. You see the impact of the accretive nature of that. You see us taking the actions that Kim described in terms of workforce optimization. That $28 million was implemented across the back half of our year, so you're seeing some of the benefit of that in our Q3 results, and that'll continue as we progress here. And then you're also seeing the early impact of network optimization and those efficiencies that we talked about. all of these things, what I love about today's message is, these aren't all things we got to go do. These are things that are in flight that we've spent the last year defining the strategy, putting the teams, and launching the activity, and you see it in our results. we're very pleased with the trajectory of these results, how we're coming in, and the momentum we're building heading into 2024. Many of you have asked me about taking a look at our quarterly performance and the historical performance, so I thought I'd take a minute here and just level set on what you see in the Form 10 and what you can expect going forward. from a standalone financial perspective, these results were included, the audited carve-out financials were included in the Form 10. The basis of these financials are still on a carve-out basis, and so that means the financials include certain allocations from the parent that are direct to our business and certain administrative allocations to kind of give a proxy of what standalone might look like. these results include those allocations, and then on the top line, it includes the revenue associated with the service that we provide for Aramark, the parent. there's about $50 million of revenue that's included in these numbers, and then we've done this effort to try to allocate, the actual costs being incurred at the parent to our standalone financial statements, following all the rules, to get to a set of carve-out financials. it's not perfect. It doesn't necessarily approximate what actual activity will be once we become public, but it's what we can do right now, to kind of restate history so you get an idea of what the standalone might look like. From a trajectory perspective, you see here the fiscal years, it doesn't change the trajectory that we just talked about. Even from a standalone perspective, we're still positioned really well. You see in the Form 10, the 9-month year-to-date standalone pro forma. But again, those include those allocations. They include the revenue, not necessarily indicative of the cost, that we'll need to incur as we actually stand up these functions. We put the team that we have in place to work and all of the underlying infrastructure. But these are the standalone financials we have today. if we just talk a little bit more here about the public company costs. We will incur about $20 million-$25 million of incremental costs, as we spin out and become a public company. Those costs will include things like the IT infrastructure, the risk management process of being a pub. That you need for a public company or a standalone company, and that includes all of our compliance, tax, taxes, compliance costs, SEC, all of those things that we need, as well as the executive leadership team. Some of the folks you've met, we've brought in, for fit for purpose, public company reporting. I've got a team of folks that exist at corporate today that we don't have, so we had to put that corporate structure in place. And then lastly, we've got all of our corporate governance and our board of directors activities. those costs will come into the organization. And what I would say is the best way to look at this is to take our segment, our Aramark segment, reporting, and think about $20-25 million of costs coming in on top of that, the existing segment reporting, and then also think about the approximate $50 million of revenue coming on top of that. That's the best proxy we have for what will look like kind of heading into 2024. public company costs definitely out there, $20-25 million incremental public company costs. Applying that to the existing segment reporting, we saw on the last slide, you see the AOI margin tick down. EBITDA margin still stays at around 13%-14%, and so for 2022, which we saw on the slide. It's just kind of a reset of where that starting point will be as we become a standalone company. A little bit more on the reporting that you'll see here. We're a $2.7 billion company. Spoke about that earlier. We're very US-centric, so Canada, $240 million, US, $2.4 billion. Our segment reporting will be US and Canada, because that's how we run the business. you'll see that going forward. You'll see us give disaggregated revenue information for both uniforms and workplace supplies. what's included in uniforms? Because I think this is important as you look at our results going forward. Our uniforms business includes all of the normal uniform activity. That's shirts, pants, coveralls, coats, all of those uniform items and accessories, as well as our direct sale business. the business that Kim talked about optimizing before sits in our uniforms section of our revenue. In workplace supplies, we have other recurring revenue items, but it's the focused around the items that we talk about when we talk about cross-selling the base. it's the towels and aprons, floor mats, linens, restroom services, as well as first aid. very different categories, and I think it's important as we're looking at peer comparisons on a quarterly annual basis, that we understand what's in each of the segments as you look at them. uniforms, workplace supplies for us, uniforms, traditional uniforms, plus direct sale, workplace supplies, all of our other recurring revenue items. in segment reporting, you'll see U.S. and Canada revenue disaggregated by those two, and then you'll see operating income, not disaggregated, just U.S. and Canada. let's give the breakdown of what our long-term path to value will deliver from a target performance perspective. We've talked earlier, 5%-7% top line growth on the CAGR. We're gonna split that between high-quality new growth, which is targeting the attractive verticals with the key characteristics that Kim talked about earlier, and then driving route density. I think it's important to note that this, what's different here, is this is not growth for growth's sake. Kim hit on that when we talked about direct sale. This is going after very targeted, very strategic businesses that we think have sustainable growth profiles and will give us the opportunity to do the second half of our top line strategy, and that's grow, grow our base business. 2%-3% from high quality new growth, and then 2%-3% from retaining our existing customers, which is the single most profitable thing you can do in this model, and then gaining by cross-selling the business, deploying all of the techniques that Kim talked about. We've enabled our sales force with the ability to do that. Our route reps are cross-selling. They're incentivized to do it, and so leveraging that to drive that 2%-3% from retaining and gaining with our base. The last piece of it would be about 1% of pricing on average. That's not across the board. That's just on average, we'll do about 1% of pricing. It's important to note that this is truly an organic growth strategy. This is about growing volume with new customers and retaining our existing and cross-selling them. the 5% is not a pricing play. However, we're acknowledging that we will take price. But from a modeling perspective, we've assumed that our cost structure will remain flat, or assumed costs will remain flat. I shouldn't say our structure. We've assumed costs will remain flat. We've made assumptions around labor, but when we think about costs, things like energy, and some of our, garment-level costs, we've made no assumption there other than they will remain flat to where they are today. We've also demonstrated our ability to take price and pass through inflation as one of the ways we deal with an inflationary environment. 5%-7%, 2-3 from high quality new growth, 2-3 from retaining the base, about a percentage point of pricing over the horizon. 18%-20% margin expansion. That's 400-600 basis points of margin improvement from where we are today. That leverage on the sales growth, many of you have asked me, you know, kind of what's the split, new growth versus retaining the base? When you look at the. The good way to look at this is look at the range we have on the leverage of on the sales. We got 200-300 basis points. As Kim mentioned, very profitable, highly accretive to cross-sell the base, and so think about that as the high end, driving the high end of our margin. New business, you do have an investment of new garments, which we talked about. That will drive kind of the low end of our margin over time. that 200-300 basis points from the sales growth, that'll help drive that 18%-20% EBITDA margin. From an operating efficiencies perspective here, 100-200 basis points of that expansion will come from the flow and network optimization activity, the cost and merchandise management activities that we talked about, and lastly, the plant and fleet efficiencies. We've got new leadership teams in place. We've got all of the activities that Kim talked about. Important, again, already in flight, not things we need to go do. And so continuing to see the benefit from those activities rev up here as we go through our five-year plan. Lastly, here we've got the field and workforce optimization of 100 basis points. We showed the $28 million in structural costs that we took out here in the back half of the year. That's a part of this. We know we have additional opportunities here as we go through to again, drive those efficiencies., underneath here, I talk about $20-$25 million of incremental public company costs. We're putting a structure in place. We still believe we have opportunities to compress that over time. We have opportunities to leverage across our business. As you saw in our videos, Chris has joined us. We got James, who joined us from a operational perspective. lots of field and workforce optimization benefits to come. $28 million was just the start. And again, enjoying that already here in the back half of the year. Expect to continue to execute on that in the future. The $20 million-$25 million of public company costs will be absorbed, and we'll still deliver our 18%-20%, 400-600 basis points of margin expansion. those are our targets. We're very confident in our ability to drive each of those areas. As we go through the year, we're gonna keep you. The years, we'll keep you updated on how each of these are tracking. Kim walked through a series of KPIs, be it use-fill ratio, be it our network optimization KPIs. We talked about cross-selling the base, the impact of that. We talked about merchandise management. All of those things will continue to let you track with us, along with the obvious financial metrics. When we have additional good opportunities or good examples, rather, good case studies as we progress, we'll take you along that journey with us as we execute our strategy. a lot here, very excited about it, confident in our ability to achieve it, and looking forward to helping take you guys along with us on the journey. if we just kinda pause for a second and talk about the transaction, a little bit of details here. we've executed a credit facility. It's a $1.8 billion credit facility. That's a 5-year facility that we're using to complete the transfer of cash to the parent. the way this works is we will take down $1.5 billion in debt in 2 tranches, A1 term loan, A2 term loan, and we will transfer cash to the parent net of transaction fees. you see the $1.472 billion transferred to the parent. That's net of expected transaction fees, and at the end of that, we'll emerge with $30 million in cash and $1.5 billion in debt. the billion 5, as I mentioned, two tranches, Term Loan A-1, 2 years, Term Loan A-2, 5 years. And we've got plans underway to take that A-1 and refinance it in the public debt markets, so we feel very confident about that. And so we'll ultimately end up with a capital structure that's a little bit more permanent shortly after the spin. we expect to emerge with a leverage of 4x. And as I mentioned, about, that's a net leverage of 4x, because we'll have about $30 million in cash, day one. And, the maximum, just a little bit of details here from a credit facility perspective. Maximum leverage is 5.25x through March of 2025, and then it dips down to 4.5x, and the required interest coverage rate ratio is about 2x., a lot of debt, gonna need a lot of cash, and we're ready for it. this business, strong cash flow generation, and that's what we love about the model. It generates strong and stable cash flows. When you look at our operating cash flow, 2021 and 2022, very stable, despite the cyclicality of, of the. Not cyclicality, but despite the COVID environment that we were living in, we were able to kind of hold our cash flow generation on over that period, and that's just reflective of the model. It's one of the beauties of the recurring revenue weekly model. It's a very short conversion cycle for us, and it provides a high degree of visibility and predictability from a cash perspective. we feel really good about this business's ability to generate cash. When you look at even 2021, which was, you know, as we were in the heart of the pandemic, you actually saw our free cash flow or our operating cash go up. And that's just a reflection of our ability. There's a lot of working capital agility in this model. Garment issues come down naturally, and that's a big, it's a huge piece of our working capital usage. And the operating cash flow you see there is indicative of what makes this a very attractive cash model. We talked about merchandise management., we haven't even tapped the full benefit of a reuse model here, and so that's only gonna contribute to our ability to kind of drive that operating cash flow by reducing the working capital associated with issuing garments when we already have garments that we could use in the field. our Adjusted EBITDA to free cash flow ratio is a little over 50%, and it's well over 100% of net income. what does that mean from a capital allocation perspective? Our priorities for capital allocation will start with focusing on delevering. I just talked about our ability to generate consistent cash flow. In excess of 50% of our EBITDA generation is in fact cash, and we will use that to really focus early on delevering. With that cash profile, we expect to be in what we believe is a more comfortable range for us, and that's 1.5-2.5 of leverage, net leverage by the end of fiscal 2026. And we believe our cash generation, our cash on hand, the undrawn revolver, provide us ample liquidity to continue to execute on the strategy. This is all a self-funded strategy, and so we will invest in ourselves. Our annual capital investment is, will be about 3% of revenue, and we're target, and those investments will be a ROIC of 15%. You may have seen on the previous slide, you know, that CapEx number. The good thing to note is we invested in ABS over that period, and we will continue to self-fund our capital requirements as we move forward. feel really good about the liquidity of this business, feel really good about us, our ability to get the leverage back into what we believe is a more manageable level while supporting growth and supporting other investment opportunities. We look at our next priority, it's returning capital to shareholders. The distribution ratio is one base, Vestis share to two Aramark shares. And we expect to pay a dividend, post-spin, commensurate with our peers, and that'll be a decision that will be announced in November, and it's a decision that will be made by our new board. Lastly here, from an opportunistic M&A perspective, this is, as I mentioned earlier, this is an organic strategy, real growth, and we're focused there. However, we'll always be opportunistic, and we'll always consider accretive, acquisitions that support either, category expansion or, network, enhancements. Those are our capital allocation priorities. Feel really good about our ability to self-fund those, feel really good about our ability to deliver here in a timely manner, and excited about what that gives us the opportunity to do from an investment perspective. With that, I'm going to ask Kim to come back, and we'll close out here. But again, very excited, convinced in our ability to execute on the strategy and looking forward to kind of getting to the Q&A. I've already started to talk to most of you, and so looking forward to doing more here. Thanks, Rick. Before we move to Q&A, I just want to close by summarizing everything that you've heard today. This is an amazing company, and it is incredible, the opportunity that lies before us. This is a very compelling investment case, and we are very excited about the future for Vestis. We are mobilized around it. We are already delivering the proof points of the strategy, and hopefully, all of that was very clear to you today. It's a great market, a $48 billion market, and I'll remind you, we have $2.7 billion of that $48 billion, with a very, very large opportunity for the self-serve, a non-programmers, as well as the fragmented competitors that we have across the network. this is ripe for the taking. We are well positioned to grow. We have the network, we have the footprint. We are applying the logistics know-how to do that efficiently, and as effectively as we possibly can, and you saw evidence of that today as well. We are mobilized around a very deliberate strategy. This thing is underpinned with rigor and detail, and that math I told you I love is all over this plan, and we have a set of initiatives tied to every one of these priorities that we spoke with you about today. We have leaders tied to them, and we have numbers tied to them, and we have them moving through a five-year model, and we are very deliberate about the activity that is taking place here, and we feel highly confident in our plan to deliver on these commitments that we shared with you. We're excited about our future. I hope that you are taking away an understanding of who we are, what we're about, and where we're headed, because great things are in store for this team. what I'd like to do now is open the floor for Q&A. I apologize to the folks on the webcast that are not able to ask questions. I encourage you to follow back up with our investor relations team with any questions that you have. But for those of you who are in the audience today, we have Felise and Scott. They're manning the microphone. I would ask that you please just wait until they get fully to you so that our participants on the webcast can actually hear your question. the floor is open for questions. Hi, my name is Anne Houle. I also have sort of a historical question, and for what are you doing in the past and as you move forward? Great. Thank you for your question, and thank you for being here with us. the first part of the question was, in your growth strategy, were you already doing some of those things or are those new things? And so if you think about our growth strategy, it had three components. The first one is, protect the base, so retain the customers that you have. Of course, our team has always been focused on that, and we care about our customers, and we want to take great care of them, but what's different is we've brought them better tools, right? they have data, analytics. They can really trend customer behaviors and understand what's happening with that customer so that we can provide excellent service to them. what's different are the tools that we're giving them. The second piece of the strategy is cross-sell the base. Remember, we only have 30%-40% of our products flowing through our existing customer base and that massive opportunity to cross-sell the base that we shared with you. What is different is that the strategy prior to my time here and to the current management's team time here, is that we wanted to use sales representatives to cross-sell the base rather than taking advantage of our amazing route service representatives' relationships that they've built with our customer. what is different is we now have route service representatives cross-selling the same customers that they visit every week and serve every week. We are seeing great success. You saw that in the workplace supplies number coming up for us. You see that in the margin flow through happening because we are driving penetration across that product line. the difference now is we always wanted to cross-sell them. Now we're doing a much better job cross-selling them by taking advantage of, of our awesome teammates' relationships with our customers. that's the difference. The last piece around high-quality new growth, the difference is we also have been out selling new customers. Now we're focused on new customers that are margin accretive. being very thoughtful about where we hunt. Let's don't just hunt so we can drive volume for volume's sake. Let's go win customers that are in attractive industries, that are, accretive to our base, that have the propensity for cross-selling, that are of the right size, that are in industries that are growing, and that we know we can drive revenue, higher revenue per stop, and penetration, and share of wallet, and multiple products and services. All of these things have always been top of mind for the team. We're just helping them bring more discipline and rigor into the approach and to use some more modernized thinking around customer segmentation and go-to-market strategies. . Hi, Kim. Hi, Andrew. Thanks for taking some time. Andrew Wittmann from Baird. I had one question on the network density, and then a follow-up question I wanted to ask on free cash flow. starting out with the network density question, I just wanted to understand how far along on the execution of this, your case studies were helpful, and I think the visuals were helpful for everyone in the room. But I wanted to understand kind of where you think you are on that. Also, given that you're changing that point of contact with your route service representatives to—from sometimes somebody who's been there for years, what are your change management processes to make sure that you retain those customers when you make a change of their RSR? Great. Thanks, Andrew, and thank you for being here. on the route density, we completed the massive network study that I spoke with you about, the entire modeling of our footprint. We completed that probably 4-6 months ago. Then we've gone about the business of building a dedicated team, so we're putting resources against this. we've taken some of our most qualified and capable teammates from within our field team, and we have brought them into this team. we are actually now systematically going into geographies and beginning to mobilize around this. We are in very early stages, but you can see we're attacking this sort of geographically by market, one market center or one geographical grouping at a time. It is very early in the process, but we have certainly done enough of this to validate that the model works and that our actions are gonna deliver great value. lots of, lots of work yet to be done. Your question about change management is a very important one. one of the reasons that we are also taking a very methodical and thoughtful approach to this is because at times you can reroute a customer, and they end up on a new route, and we don't take that lightly because they have great relationships with our route drivers, and they have grown to trust them. there is a robust change management plan. There is a handoff. There is a process where we shadow, where one route driver goes with another route driver to make sure that we are effectively conducting that handoff with the customer, that everyone is comfortable, their needs are understood, any nuances around servicing that customer in that location and in that back locker room are known, known and made clear, and that we're doing that handoff appropriately. change management is very important, and so we will take a very measured approach. And the way that we have modeled this in our plan is it is over a five-year period. this is not, we're going to do all of this next year. We are going to do this in a very measured way by market center, delicately managing any customer impacts and making sure that's done, done right. And you had a question on capital allocation as well? Oh, sorry. Scott was withholding the microphone. Just on free cash flow, I guess probably for you, Rick. The comment on the free cash flow conversion of 50% of EBITDA, I just wanted to make sure I understood that correctly, 'cause prior to the split, I guess, the holding company that was uniforms didn't have any debt on it. It was all corporate-level debt. is that 50% of free cash flow conversion on EBITDA after a pro forma interest expense, or how should we think about that? It's 50% of EBITDA. And so it's not pro forma, it's just 50% of EBITDA. That's after a cost for paying interest expense that's on. 'cause you're gonna have $1.5 billion of debt at 7.5%. Is that after paying that interest expense? Before. It's before that. Okay. I just wanted to make sure I understood that. And then just on the, on the CapEx, number of 3% of revenue? I'm just kind of wondering, how much, is there any growth CapEx in that? That seems like a, compared to the other competitor that's relatively your size, they've been spending a lot more of that. They've also done IT. There's been some unique things that spent a little bit more, but 3% is more like the, the industry leaders level, where I think they might have some efficiency. I just wanted to understand, what you expect to get for the 3%, if there's any growth CapEx that would might be incremental to that, and if that's more of a maintenance number or how we should think about that 3%? Sure. Thank you. Our 3% is the average over the five-year period. When you look at our spend, historically, we have kind of bumped around, so it won't be straight-line 3%. Also, our system—the very large system investment is behind us. When you look at what that means on an annual basis, early on, it is more focused on maintenance. However, right away, beginning in 2024, and then as we progress through the strategic period, the maintenance will start to come down, but how much of that is spent on maintenance, and then we've layered in growth CapEx on top of that. That growth CapEx will support things like the network optimization, investments in certain very accretive and targeted category investments, as well as investments in technology. And so it is the mixture of both, and it's 3% on average. It will there will be some lumpiness to digest there, but overall, that's how we're thinking about our investment. I'd also, as we take this next question, comment on the idle capacity again. I just think it's really important to continue to remind everyone that we have found significant idle capacity across our system, so we are not running full shifts. We are not maximizing the opportunity to use the existing assets. as we grow the business and drive volume, we've got capacity in our facilities and within our footprint to absorb that without incremental investment to service those customers. Hi, Kim. It's Andrew Steinerman at JP Morgan. Hey, Andrew. it's a question about, as Vestis really becomes a enlightened organic revenue grower in the industry, going from historically 2% to projected 5%-7%, do you think the industry organic revenue growth, which we've measured to be 4% over time, will be enhanced because of Vestis's enhancements here? Or do you think it's more likely that Vestis's organic revenue growth acceleration will come from market shift of Aramark vended business? Thanks, thanks for your question, Andrew., the way that we are focused on growth is less about looking at the macro level market share and more about gaining our revenue mix that we desire. we are incredibly focused, I would say, even myopically somewhat, on gaining penetration in these particular products and services. That will largely come from existing customers who are self-serving. if we look at our customers today who are using a first aid kit on their wall, as an example, they are a customer today that we provide uniforms or mats to, and they need a first aid kit. In many cases, they're falling in that self-serve category. when you look at the market sizing and the wheel that we showed you, most of those customers are self-serving, those other products and services. there's not a competitor in there next to us, in most instances, providing those other products. They're choosing to provide those for themselves. a lot of our growth strategy is tied to grabbing that self-serve portion of those products and services that we're not providing existing customers today. When we look at new business, there is an opportunity for us, of course, always on the national account front, to take business from competitors, because there are only a few of us that have the footprint and the scale to serve national account customers. when you're talking about competing for national accounts, you're talking about share shift, one competitor taking away from another. that's a playing field that you can battle on, and we will do that when it makes sense for us, when those customers are attractive and they fall in the interesting verticals. But most of our strategy is tied around converting those self-serve customers, those non-programmers, as we call them, onto our rental programs, which could be seen as industry growth. It depends on how you model your numbers. Good. Oh, hi. Good, good morning, Stephanie Moore here with Jefferies. First off, War Eagle. Oh, War Eagle! Very good. you're enjoying the orange and blue of Vestis, correct? I am. Thank you. But I wanted to touch a little bit, and Rick, this might be for you. When you think about the. I appreciate the granular color on the margin improvement. When you think about the investments that you've called out today, whether it's first, even just some of the name change campaign, but you obviously mentioned some technology and some other investments are on the table, what does that mean in terms of maybe the progression of the margin improvement? Should we expect kind of a linear improvement, or how should we think about that over the course of the next 5 years? we've been very thoughtful about the investments that we need to make, and we intend to drive margin expansion quarter over quarter throughout the five-year period. You are not going to hear us come and say, "We need to make a large investment, and we'll be back in a year or two." You're not going to hear us come say, "There's a big transformation initiative underway, and we're gonna spend $hundreds of millions so that we can achieve this plan." We have been extremely prudent about the way that we built this plan, and we've been very measured about modest investments, leveraging the investments that Aramark already quite wisely made in this business, the ramping of the sales force, the investment of our operating system platform. Those investments are in place. They've been made, they're in our run rate, and we're gonna take great, great advantage of those. And then we're gonna make very surgical investments, like a market, maybe, that we want to consolidate and open a new facility because of our network optimization strategy. Those things will be rare and thoughtfully done. There will be some one-time costs for rebranding. You'll see us talk about that, on a, in a one-time bucket. Rick, if you want to comment further on that, feel Yeah, I mean, I think in 2024, you will see some separation costs. And so you will see us call those out. We will be through those largely through the first 12 months. But outside of that, it aligns exactly with the way Kim described it. Hi, Toni Kaplan from Morgan Stanley. I was hoping you could talk a little bit about the workforce., one, in terms of, employee turnover during this period, or, or lack of, either way. Two, like, just, are you able to attract the people that you need, enough, enough supply of workforce labor? And then maybe three, just the union dynamics. I know some investors have viewed that as a limitation in the past. Do you view that as a limitation, and do you see that percentage going down over time? Thank you for your question, Toni. I'll start with employee turnover. we actually are seeing improvements in employee turnover. We've been working very hard to drive a culture of leadership throughout this system, through not just the rebranding and the spin, but making sure that we have the right leaders that are communicating our strategy, that are engaging our teammates. I talked about the story that I was very proud to see of two frontline teammates getting promoted to their shift supervisor opportunity. We have been really, really focused on making sure that people are having an amazing experience, and that is driving a very positive response from our teammates, and we're very pleased with the progress that we're seeing. We've also seen the ability to staff lighten up, so there was pressure in the system across America, as everyone is aware, over the last couple of years, post-COVID, trying to get pe- excuse me, I got choked up. Not, not literally, but trying to get people back to work. We're seeing that subside, so we're able to recruit in. We've also strengthened our talent acquisition capability. We brought in a great new leader. He's bringing new strategies and some more modernized ways of recruiting teammates as well, so we're doing some self-help there. But we feel good about staffing. We're starting to see that improve, and at the same time, it's also providing relief on overtime. when we're not staffed, we've got overtime happening across our system. as part of our margin improvement story this year, we also see that overtime lightening up, which is helping drive some margin expansion. it's a very important lever for us to keep those teammates staffed and keep those teammates in place. When you look at overall tenure, we actually have very positive tenure inside the organization. We're pleased. I hope for those of you who are here in the room, when you go on the break or when you leave, if you haven't seen our wall of teammates, we actually have some of our most tenured teammates highlighted, with their photographs out here in the foyer, and I encourage you to take a look at that. But we have some amazing teammates who have been here 40-plus years. On average, our route representative teammates are here around 10 years. we have very good staying power with the team, and we think we're through the worst challenges as it relates to recruiting. What was the other part of your question, Toni? Unions. Yeah, so on the unions, I'll hit that very directly because I think we should have this conversation because a lot of people ask me about this in individual sessions and one-on-ones. We do have a largely unionized frontline team, about 70%, roughly. I'm estimating that about 70% of our frontline teammates, and those are our plant teammates and our route service representatives, are unionized. That means about 50% of our total workforce, just on average, is unionized. And we have a really very good, first of all, strategy, and secondly, relationship with our unions. we operate with about 200+ collective bargaining agreements. it is a very fragmented strategy on purpose. And we have individual relationships at our individual locations with those unions who are responsible for those individual collective bargaining agreements. Those are phased. They come up for renewal at various and staggered times, which is also great because it provides for predictable negotiations, and we have history as our guide for what we believe those impacts will be during those negotiations. We have multiple unions as well. in total, I think we have 18 total unions, 2 large or 17, 2 large unions, and then we have a tail of about 15 more. it's also fragmented as it relates to the union relationship. The union's presence in our environment presents higher wages, and I think it's important to hit that straight on because people ask that question many times, and we're very aware of that, and we do not see that as a hindrance to our strategy. We do not see that as an impediment to delivering against our plan. In many cases, we leverage it because it creates predictability, and it can also drive tenure. we take advantage of the situation, and we find the good in the fact that we have higher wages, because we can do amazing things with those great teammates who have been with us for a very long time., it's a difference that we accept in our model, and we still feel very confident about our plan to deliver against our strategy. thank you for asking that, Tony. I think it's good to have that discussion and get that out there. Hi, thank you. It's Shlomo Rosenbaum from Stifel. I want to ask you to address what you talked about a little bit in terms of purposeful growth and sometimes, you know, stepping back a little bit, because if you go through the Form 10 financials, you see, like, the workplace supplies had very good growth, but the uniforms were kind of were basically flat revenue year over year. Can you talk about the dynamics that were behind that and why we didn't see uniforms growth? And then I have another question after that on costs. Yeah, absolutely. we've been very focused on workplace supplies, and we've been targeting that as our key growth lever for quite some time now. the reason you see the acceleration in the workplace supplies is very purposeful. It's around the cross-sell strategy. It's engaging the RSR. You also see the purposeful strategy. The ADS numbers, the direct sell numbers, do hit uniforms. you also see that step back of roughly 70 basis points in the growth rate, very purposefully tied to throttling down ADS so that we can expand it more profitably. you saw a step back, a scale back, purposefully. And then you also have a couple of, quite frankly, non-regrettable losses around some accounts that just didn't make sense for our portfolio. you've got a couple of accounts that have left the portfolio as well, that are depressing that uniforms number., all in, we feel very confident that we are growing where we want to grow, not just in workplace supplies, but in new customers that are uniform rental customers as well. And we're very pleased with the mix that we're driving and the profitability that's coming from that mix., while you may see that as a depressed number or a flat number, it's very intentional. Okay, thank you. And then just on costs, can. I think there was a comment you made that the costs are gonna be kind of flat, and I'm trying to understand what you mean by that in terms of what areas are gonna be flat, and, and what have you factored in over the, you know, projection period for labor costs? Because even though they're coming down, they still are Sure. , pretty. They grow every year. A couple of things. I'll start with labor. As Kim mentioned, we have over 200 CBAs. Those are typically three-year contracts. as we're digesting the labor increase that everyone saw, ours comes in over time. And so it gives us a great deal of predictability. And so when I look at the labor assumptions, which on average is five years, five years, 5%, over the period for our operational personnel, I look at that, and I can go contract by contract. I have very good clarity on what those labor numbers will be. And so when I talk about the assumption, we've made no assumption on cost other than they'd kind of stay where they are. That's excluding labor. And it includes things like energy, some of our merchandise costs. We've kind of just assumed those costs stay where they are. And when you think about pricing and operational efficiencies, we'll take the steps we need, and we've demonstrated that we can, to offset any movements in those costs that is exaggerated, like we saw, over the last couple of years. to the statements that have been out there, we are seeing costs moderate. me of those high dollar costs, like for us, energy, we are starting to see those costs moderate and some of the inflationary pressures moderate. We've just assumed costs like that stay where they are, rather than trying to guess what inflation looks like, and we'll respond accordingly with either operating or pricing actions as needed. Hi, Josh Chan with UBS. Thanks for taking my questions. I guess I have two- a two-parter on growth, and so first, on cross-selling, you mentioned that the average customer uses 30%-40% of your service. What do you think that number should be, for you to be kind of happy with the penetration of your services? And then secondly, you also gave a breakdown for how you're gonna get to your 5%-7%, and just given how much higher that is versus the historical, I was wondering if you can give us a breakdown of, you know, the high quality growth, the pricing, and then the retention, and what do you think those metrics were historically, so that we can kind of build towards what your targets are? Okay. Thank you for your question. I'll start with the 30-40, and then I'll let you give the layers of growth and the contribution to the margin or, excuse me, to the, to the top line. the 30%-40% is definitely low, so we know that there's great opportunity, but at the same time, we've got to get the mix right. I talked about we got to hunt in the right places so that we can continue to bring in customers that have the propensity for more products and services. We're confident, I'm not gonna give you the exact number, we have that number, but we're confident that we know what the right, penetration is with existing customers and what the opportunity is, and we've modeled that opportunity. But we're also gonna continue to make that opportunity larger by hunting in the right places and bringing more customers in from those micro verticals. But we can absolutely move well beyond the 30%-40% penetration of our products with existing customers. We're, we're confident about that, and we're seeing evidence of that. Many of our customers are using, you know, 1, 2, 3, when they could be using 4, 5, 6 easily. it's not just one product per customer. We feel very strongly there are multiple products that can be added to many of our existing customers. Rick, do you want to answer the layers of revenue? Sure. When you look at the historical, as we said, historical was less than 2%. That's less than 2%, including price. And so the historical breakdown of growth ends up being pretty, pretty muted. When you talk about going forward, we've kind of given you where we see that growth coming into place. And I'll take you back to the quarterly progression that you see, that post-COVID tailwind, we feel like that's behind us, and so we feel like the mid-single digit numbers that you're seeing out there for growth is the starting point. I think the earlier question, kind of migrating from 5%-7% over the strategic plan. Okay. Hi, it's Faiza Alwy from Deutsche Bank back here. Hi, Faiza. I wanted to ask, you know, are you assuming a certain macro environment in your outlook? I know you've talked about how diversified your business is, but are there any factors that we should consider? How do you. Is it mostly just self-help? And are you really immune to sort of any macro factors? And then secondly, just wanted to talk a bit more about pricing, because I think, Rick, you mentioned sort of 1% is the average. And I'm curious if, you know, are there specific areas where you think you can take more pricing? And are there specific areas where you think you might have to give back on pricing? Is it more macro inflation driven, or, you know, or are there other dynamics in place? I'll take the first part, and I'll let Rick take the pricing question., Faiza, thank you for your question. It's good to see you here, so thanks for being here. To begin, we made no assumptions that we got free tailwinds. as we look. If I can just state it that way. as we built this plan, we did not assume certain lifts coming from certain industries because we expect that they're going to have lifts. We did not model this based on getting kind of, as I say, tailwinds coming from certain industries who will naturally grow at higher rates and contribute. This is 100% self-help. this plan was built with minutiae detail, going down to existing customers that we can cross-sell to and targeting micro verticals that we're not penetrated in today, with no assumptions that you get a free lift because that industry is getting a tailwind, and I think that was sort of the point of your question. Generally speaking, also, there are no assumptions that you get a lift in growth because you have inflation and you pass price through to cover it. That's not part of the strategy either, and Rick can talk about how we think about pricing and how we've approached pricing, but the numbers that we're giving you and our growth strategy, which is purely organic, is all about driving volume. it is good old-fashioned hard work and getting out there and selling new business in the right target markets and cross-selling existing customers. You want to touch on pricing? Sure. from a pricing perspective, we don't feel like we have to give any pricing back. And when you look at the 1% on average, there are some. As we did the model, there's definitely some segmentation going on, some specific areas where we think there is an opportunity to still price, or value-added services that maybe we historically have not priced different, we will price different going forward. And then we're just saying, overall, we've assumed kind of an average of 1% across. And there'll be customers that, you know, pricing is up, pricing is down, but just overall. a little bit of segmentation, an overall assumption, not assuming we lose or have to give back any price. Thanks. Hi, Scott Schneeberger with Oppenheimer. Two questions. First one, you speak to retention being the highest growth value lever. Could you speak to where you are right now in retention and what the long-term guidance implies that's gonna grow to? Exact numbers would be nice, but if not, maybe, basis point improvement. I'll take it, and then you can- he's gonna clean me up, probably, but I'll take it. It's a really important question, and it's a very important point to note in our assumptions and in our model, because we have not assumed material improvement in retention, and we are very focused on driving great improvement in retention. we have been very practical and very conservative about the guidance that we're giving and about the way that we've modeled this. And until we see evidence of our retention rates rising from our efforts, we are going to assume that retention stays flat, and that's how we've modeled it. As we continue to gain traction with our customer-first initiatives, as Chris gets a foothold as the leader of this team and begins driving the team's strategy even more deeply than we have today, if we begin to see a lift in retention and we begin to see improvements there, that would be upside to the plan. Thanks. And then the second one, just Kim, very intriguing, the eight micro verticals. How much are you going to share about those other ones? And I appreciate the car dealerships. Are they, are they all equal weighted right now, or are some much larger and some much smaller? Just kind of curious if you can go a little bit deeper there. Thanks. Yeah, they all, they all vary, but they all follow the attributes. the attributes that I talked about that we use to select them, they all fall within that criteria. we were very specific that they had to meet that criteria. they had to be of a certain size, they had to be in an industry that was growing, they had to have the propensity to use 3-5 or more of our products, and they had to add at least $300 of revenue per stop. every, every vertical that we chose carries those attributes and represents them. me are much larger. I showed you the auto dealers. There are markets that are smaller and markets that are or industries that are smaller rather than industries that are larger, but they all follow the attributes that we laid out. Unfortunately, I'm not going to share the others with you because then I would just give my sales playbook away for free, and we spent a lot of time building this strategy and putting this work together for those verticals., it's competitive, sensitive information that we don't want to share more publicly. But we wanted to show you the auto dealers because we wanted you to understand the methodology and how rigorous we've been about building this plan. But some of them are, very, very surgical and specific to certain geographies and certain types of industries that are present in those geographies, and some are North American-wide opportunities. it varies greatly, depending on the vertical that we're, that we've chosen. Hi, good morning. It's Neil Tyler, Redburn Atlantic. Oh, hey. Yeah, thanks very much for the presentations. You've given lots. a wide range of examples of, you know, a lot of the efforts and investments you've made, you know, since joining. me of the and some efforts and investments were made prior to your joining. Can you give us your best estimate of the extent to which those costs have, you know, or a dollar estimate or a percentage estimate of what those costs might have constrained margins by over the last couple of years? Or, you know, how much OpEx, additional OpEx has been added, that that is now sort of, you know, within the business and able to be leveraged? thanks for your question, Neil. I'll let Rick come behind me more surgically, but when you look at the investments that were made before our arrival, and that's really the larger dollar investments that were made in the business, we ramped up our sales force by about 35%, and you're highly inefficient for a period. While you bring on that team, you're teaching them to sell, they're getting their sales numbers up, and so for a while, you carry a burden of that inefficiency. And now they have reached their stride, and we're managing performance very effectively, and we're making sure that we get the right revenue per head. I think the numbers that you see flowing through now are productive sales heads. And so you should assume that that's just part of the run rate of carrying that headcount. The implementation of the work order management system that was put in place, so the system that we standardized across all of our locations, that investment is complete, and that cost is carried forward, just the ongoing licenses fees to use that system, and that is already at steady state and has been rolling through our number for the last year or so. You're not seeing any more inflated investment costs in our numbers. You shouldn't expect those to roll off in an automatic margin lift to come through. Those things have already stabilized, and they've been stabilized roughly for the last year. The numbers that you'll see when we close 2023 are normal run rates to carry that operating system and pay for the licenses and to have the headcount that we desire to have on our sales team. All of that is, I would assume, you can assume a steady state when you see us close FY 2023. Rick, anything that you would add there? I think you did a good job of characterizing the spend. What I would say is over that time period, because you had COVID activity going on, it's very difficult to say how much of that attributed to the change in the margin over that period. The spend for the sales folks, they're in there. It happened across the three years. The ABS also happened across the three years. I think most importantly, the sales force numbers stay with us because we think we're at the right team level. And the ABS, the actual implementation costs are behind us, and the depreciation will stay with us. But the good thing is we're done. Kind of that go forward, where you are in 2023 is kind of a good run rate, too, so. Hi, thanks for taking my question. Ashish Sabadra from RBC. I had a couple of quick clarifying questions on margins. the first question on. There was a question asked on the linear progression, so we just want to understand, should we think about it like a 80-120 basis point of margin expansion every year, or do you see some pressure upfront because of the public company cost before you start to see those benefits? that was one. And second was, just on the sales, which is going to drive 200-300 basis point of margin expansion, how do we think about the incremental operating margins on just the incremental sales versus how does the margin profile for the cross sell looks compared to the core business? any clarifying clarification there? Thanks. Sure. I'll start with the incremental margins. I think we said 200-300 basis points on all of the sales. The incremental margin associated with the cross sell is higher, and that does drive kind of that 300 basis point or better. And then the new business, that incremental margin is a little, it's lower because of the inventory investment associated with new customers. That's gonna drive that low end. And as we stabilize here, we'll try to give more clarity on what our incremental and our decremental margins are, but for now, I just kinda wanna stick with that 200-300 basis points. You can do the math on the mix. And as we go through our quarterly and annual discussions, we'll provide more clarity around where—what those drivers are and what those incremental margins are, and it will become even more clear, the delta between those two. From a progression of the EBITDA, I think you're spot on right away, and we'll give more on 2024, but right away in 2024, you'll see an uplift in costs that you didn't have in 2023, and doesn't even show in the carve-out. there is a period of digesting the costs. What I would say is, we've done enough by way of the $28 million in actions and the costs that are coming in to where, it shouldn't be a big drop-off in margin, but it'll take a minute to start to see the tailwind come back. Any more? Twice, what? I think we have one here. Just wanted to see if you'd let me back in. Hi, thank you. Shlomo Rosenbaum, just to follow up, just on that last comment about the cadence of margins, it sounds like we could see maybe a little bit of a step down in the first year as you absorb the, the separation costs. After that, should we expect that the margin expansion goes through kind of a progression linearly? Or is this more like a- as time goes on, you know, you're gonna get, you know, you're gonna get 100 basis points a year, or is this the way to think of it, that you start out at 50 and it kinda grows? I-- what I'm trying to figure out is, is this a back-end-loaded margin expansion plan, or is this., how should we- how should investors think about it? A couple of things. We don't anticipate a big step down in 2024. I do anticipate it'll be a bit muted, but to, to Kim's point, we'll see margin progression every year. And so that's the goal, is to kind of have this be kind of a step forward every year. As you, as you think about some of the actions that we're taking to drive margin expansion, the good news there is you get that, you get that benefit right away. And so the, the efficiency actions, the workforce optimization, all of those things kind of flow through immediately. As we gain new customers and, and we cross-sell the base, you get that on a weekly basis. It takes a year to get the full absorption in there. I always think of it as the margin will show, and it'll be very., you'll see consistent growth year-over-year. The sales will build over time, as we digest in the new business. This is not back-end loaded, just to answer your question really directly. This is base hit, base hit, base hit. we'll have to digest the PubCo costs. Those are coming in. We're being very transparent about those. But the underlying performance of the business, the strategy is very level-loaded and measured to drive incremental margin expansion as we move that 5%-7% CAGR along through the period. And I think we've been very appropriate about the growth assumptions, given our historical performance. We have cranked that engine. It is moving. If we can go faster, then we can get flow-through faster. We'll update our plans and tell you about that in due course. But when we give the FY 2024 guidance, you'll be able to clearly see some of these are taking root. You'll see those flowing through the 2024 numbers, while we're still, of course, absorbing the PubCo costs. But this is a slow and steady wins the race strategy. We did not put big bets in the back end that we haven't figured out yet. This is a very methodical approach to creating value through these strategies, and they take time. we're going to work our way market by market, through logistics. We're gonna work our way through those eight verticals. We're gonna work our way through every customer that can be cross-sold, and it just takes time to move through that. But there's not some big hockey stick in the back that we'll get to later. We're working all of these now, and methodically, we'll work our way through our market. Andrew? Yeah, thanks for the follow-up. Andy Wittmann from Baird. Just, I guess, a clarifying question here. I think, Rick, you talked about $50 million of revenue that you would add to the company. That was presumably intracompany revenue that you sold to the, the food side of the business at Aramark. that's incremental revenue on that side. I guess I'm just curious, as a result of the separation of the company, do any of your customers that you have on the uniform side need to be recontracted with Vestis specifically, or are the contracts easily transferable from parent company? Just wanted to understand if there's a touch point that needs to happen there with your customers. There's not. the customers all sit with Vestis today, so we have relationships with our food teammates that have a separate contract. When we spin out from Aramark, we'll have a master services agreement, an arm's length, of course, agreement, to continue to serve those food customers. But those contracts sit with us today, and we're just crafting those into a master services agreement so that we have good clarity and line of sight to them, so that there's no confusion. But we hold the contracts today. Aramark Food or Aramark parent does not hold that contract. we have that agreement either in place directly with food, with the food business, and they outsource it to the customer. They provide that third-party kind of handover to the customer, or we have it directly with the customer. there's- Balance to your customers? . Oh, those all sit with Vestis. We don't. Yeah, so the question, for those of you on the web who couldn't hear, Andy was asking: What about all your other customers? not the ones that are connected to us through the food business or the actual food business, who is a great customer to us. The question was, do all of your other contracts, are they papered through Aramark corporate, and do you have to go redo your contracts with your customers? And the answer is no. Those contracts were all papered directly with Aramark Uniform Services, and they automatically transfer to Vestis Corporation when we spin off. there's no need to repaper contracts with customers. Nothing changes for our customers, and we've been able to communicate that to them very effectively. no, no risk that we see there related to the customer transition. Okay, great! it looks like we've answered everyone here in the room's questions, but for those of you who are on the webcast, we wanna thank you, because I know it's hard to do this remotely, and you didn't get the opportunity to ask questions. I wanna encourage you to reach out to our investor relations team, either to Vestis directly or to the Aramark team through Felise and Scott. If you have any questions that you'd like to ask us, we'd be happy to take those offline and answer them. I'd like to thank everyone for joining today. For those of you on the webcast, this concludes our session. We're excited about the future. I do wanna leave you with just one final thought, which is the commitment. we have committed to 5%-7% organic revenue growth CAGR through 2028, and we are committed to delivering an adjusted EBITDA margin of between 18%-20%. Hopefully, you leave today feeling confident about what you heard, confident that we have the right team in place, we have the right strategy, and we delivered proof points to you here today so that you can see evidence that our strategy is working. we're grateful for your interest in Vestis, and we look forward to telling you more when we reconvene, in November after our year close. thank you for your interest, and this concludes our webcast. Thank you.