Good morning, and welcome to Aramark's third quarter fiscal 2023 earnings results conference call. My name is Kevin, and I'll be your operator for today. At this time, I would like to inform you that this conference is being recorded for rebroadcast and that all participants are in a listen-only mode. We will open the conference with questions after the conclusion of the company's remarks. I will now turn the call over to Felice Torcivia, Vice President of Investor Relations and Corporate Development. Ms. Torcivia, please proceed. Thank you. Welcome to Aramark's third quarter fiscal 2023 earnings conference call and webcast. This morning, you'll be hearing from our Chief Executive Officer, John Zillmer, as well as Chief Financial Officer, Tom Ondrof. As a reminder, our notice regarding forward-looking statements is included in our press release this morning, which can be found on our website. During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the risk factors, MD&A and other sections of our annual report on Form 10-K, and other SEC filings. Also, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in this morning's press release as well as on our website. With that, I will now turn the call over to John. Thanks, Felice. Thanks to all of you for joining us today. This morning, Tom and I will review our third quarter results, which reflect a strong focus on growth across the organization and momentum in our return to normalized margins. We will also share an update on the significant progress we've made on the Uniform Services spin-off transaction. We will turn to our raised financial expectations for this fiscal year with just one quarter to go before opening the line for questions. We believe that our performance-driven culture and all that it represents has created substantial opportunities that we expect to capitalize on in the months and quarters ahead. Before I get into the results, I want to acknowledge a tremendous loss the Aramark family had a few weeks ago. John Orobono, our Senior Vice President of Supply Chain, lost his hard-fought battle with cancer. As many of you know, John returned to Aramark in October of 2019 and was with the company for almost 40 years in total. He was a true inspiration, a dear friend to so many of us, and a visionary who changed the way supply chain is managed, first for Aramark and then throughout the food service industry, establishing a true gold standard. True to his focus on doing everything he could for Aramark, he left a strong, capable team and a solid succession plan. Our hearts are heavy, but we have full confidence in those who learned from all John so generously shared. I will now turn to the quarter. Aramark's organic revenue grew over 14% compared to the same period last year. Global Food and Support Services, consisting of the FSS U.S., FSS International, and Corporate Reportable segments, contributed year-over-year growth of more than 16%, and Uniform Services increased by approximately 5%. Within Global FSS, the U.S. segment grew organic revenue nearly 15% year-over-year, led by continued momentum from net new business, strong per capita spending, and increased event attendance in sports and entertainment, and continued favorable trends across the business and industry sector as a result of greater return to work activity at client locations. International organic revenue increased more than 20% versus the comparable period last year. Performance was driven by robust net new business performance, a busy sports and concerts calendar in Europe, particularly in Germany and Spain, as well as strong mining activity in South America. Global FSS continues to add broad-based new business contributions from all sectors and geographies, with retention rates maintained above 95%. Since last quarter, just to name a few, our student nutrition team won D.C. public schools. Within B&I, we expanded our relationship with Walmart to serve their new headquarters and add micro markets and vending locations across the country. Collegiate Hospitality has been active during its typical selling season and was recently awarded Towson University and The College of William and Mary, among others. The international segment also gained new clients in higher education, including Kingston University in the U.K. and Ridley College in Canada, and had ongoing success with other bread and butter wins across the portfolio. One of the most important developments of the quarter that Tom will review more in detail, was our work with customers in the education sector and corrections business. As we have said in the past, the margins in these businesses have been artificially compressed due to the sudden and significant inflation not seen in this country for decades. We're very pleased to report that our clients have recognized our strong service levels and the cumulative effect of many quarters of outsized inflation. They've recently agreed to meaningful price adjustments that will bring us a big step closer to normalized margins. The benefit from this will occur partially in the fourth quarter and more fully in the first quarter of fiscal 2024 and beyond. The progress and spirit of partnership we've seen in this quarter makes us more confident than ever that our return to normalized margins is proceeding apace and we fully expect will inevitably be achieved. The meaningful progress this quarter is a gratifying proof point of the strength of our bond with our clients and their satisfaction with our service to them. Organic revenue growth in Uniform Services was driven primarily by pricing actions and growth in adjacency sales, partially offset by the rollback of an energy surcharge that was implemented in the third quarter last year that represented approximately 80 basis points. We're pleased to have Uniform Services leadership well in place, the strategic growth plan is underway, with early signs of success coming from improved analytics, portfolio targeting analysis, and adjacency sales. We expect this underlying momentum to build into next year and well beyond. Regarding the spin-off, our collective teams have made significant progress related to the operational, regulatory, and financial logistics. We expect to complete the spin-off at the end of our fiscal year, subject to customary closing conditions and based on the current macroeconomic and capital market environment. A few key milestones as we work towards execution of the transaction. Just this morning, we announced the future board of directors for Uniforms as an independent public company, composed of a strong mix of industry expertise, public company experience, and diverse perspectives. This impressive and highly qualified group will provide helpful strategic insight to the Uniforms leadership team in their mission to drive significant value. The board will be chaired by Uniforms industry veteran, Phillip Holloman, former president and chief operating officer of Cintas, with over two decades of experience in the industry. The Uniforms board will also include other seasoned leaders who have strong, relevant backgrounds in Uniform and similar route-based businesses. AUS is finalizing terms on approximately $1.8 billion in financing through banking partners, consisting of $1.5 billion in term loans and a $300 million revolving credit facility. Given the attractive cash flow attributes of the Uniforms business, the interest rates are anticipated to be comparable to Aramark's most recent refinancing. With these proceeds, SpinCo is expected to transfer approximately $1.5 billion to Aramark, maintaining neutral net leverage for the total company. All with an eye to continue a path of delevering for both Aramark and AUS. Finally, Kim and her team will host an Analyst Day in New York City on the morning of September 13th, excuse me, September 13th, which will also be available via webcast, to review the strategic plan for Uniforms and the next phase of value creation. This will be a great opportunity for you to meet the strong team of executives, including exceptional new hires from leaders within the industry, and we'll share more details with you soon. We're excited about the potential and strategic benefits of both businesses operating as independent companies. Before turning the call to Tom, I'd like to highlight a few key accomplishments related to our ESG and DEI initiatives, reflecting our ongoing commitment to positively impact people and the planet through our Be Well. Do Well. plan. These initiatives remain highly important to us, as well as our clients, partners, and shareholders across the globe. First, we've taken another step forward in our sustainability efforts. Just last month, we received confirmation from the Science Based Targets initiative of our goals to reduce our carbon footprint according to their Net-Zero Standard. These targets follow and complement our existing ESG commitments. Also, I'm proud of our recent recognition as a best place to work for disability inclusion and perfect 100% score on the Disability Equality Index once again. We continue to be focused on creating a welcoming and inclusive culture across the organization, and diversity, equity, and inclusion will continue to be a top priority for us. We believe that our focus on our people has become a key differentiator for the company that has led to tremendous outcomes. I could not be more proud of what our team has been able to achieve. Tom? Thanks, John, and good morning, everyone. Our performance in the third quarter reflected continued strong top and bottom-line momentum across the portfolio. As John mentioned, Aramark reported consolidated revenue of more than $4.7 billion in the period, representing year-over-year organic growth in excess of 14%, underpinned by 6% pricing and strong contributions from net new business, as well as continued recovery of the base business. Operating income in Q3 was $203 million. Adjusted operating income of $240 million was 34% higher on a constant currency basis compared to the same quarter last year. AOI margin of 5.1% increased 75 basis points year-over-year and was more than 40 basis points higher than the second quarter, which typically has similar margin levels. As a reminder, AIM Services, which historically contributed 15 to 20 basis points to total company AOI margin, is not included given the sale of our non-controlling stake at the beginning of April. Across all segments, higher year-over-year profitability in the quarter was driven by operating leverage from higher revenue and the maturing of new business from prior years, as well as improved supply chain economics and disciplined above-unit cost management. Organic revenue and AOI and Global FSS increased 16% and 47%, respectively, year-over-year on a constant currency basis. Organic revenue growth was led by contributions from strong net new business and pricing actions, as well as base business growth, coming most notably from higher per capita spending in sports and entertainment business and return to work activity in the business and industry sector. Global FSS AOI margin increased 86 basis points compared to the third quarter last year, and 27 basis points sequentially versus the second quarter. On a constant currency basis, Uniform Services organic revenue increased 5%, and AOI grew nearly 13% compared to Q3 last year. AOI margin was up approximately 80 basis points to 11.1%, reflecting a nearly 140 basis point sequential improvement compared to the second quarter. As John mentioned, revenue growth in the period was impacted by 80 basis points due to the rollback of an energy surcharge put in during the third quarter last year.... The segment's significant margin expansion versus prior year was driven by the initial benefits from implementing a sales strategy focused on a more balanced revenue mix, including adjacency and add-on services, as well as early savings related to efficiency initiatives, including the organizational restructuring earlier in the year. Across the portfolio, supply chain normalization continues to be a key contributor to growing profitability this year, and we believe will be a significant future opportunity for the business. As John and I have mentioned before, a few of our food services businesses experience a lag in recovering inflation due to a more periodic pricing, generally once a year, including Collegiate Hospitality meal plans, student nutrition, and corrections. These businesses account for roughly 25% of our total company revenues. Over the past few quarters, the teams have worked hard with our customers to attain significant pricing actions across these business lines, much of which will be implemented during Q4. At the same time, we've seen inflation moderate over the past quarter. While we obviously cannot control the precise path of inflation going forward, we feel good about our ability to recover this price cost lag, which, coupled with our normal year-end seasonality, gives us confidence in the expected upward margin inflection during Q4 and further benefit rolling into next year. Turning to the remainder of the income statement. Net interest expense was $113 million in the quarter, reflecting $630 million of debt repayment, and the adjusted tax rate was approximately 27%. Our quarterly performance resulted in earnings per share of $1.29, which included the net gain on sale of equity investments and adjusted EPS of $0.36. On a constant currency basis, adjusted EPS was $0.37 in the quarter, compared to $0.25 in the same period last year, representing a year-over-year increase of 48%. With regard to cash flow, net cash provided by operating activities was $23 million, and free cash flow was a use of $80 million in the quarter, which is consistent with the typical seasonality of the business. The $16 million year-over-year free cash flow improvement was driven by stronger net income results and favorable working capital, partially offset by higher capital expenditures, which at 3% of revenues year to date, is still lower than historical levels. At quarter end, Aramark had over $1 billion in cash availability. Net cash provided by investing activities included approximately $635 million in combined proceeds from the sale of our 50% equity stake in AIM Services and a portion of our ownership position in the San Antonio Spurs NBA franchise. We also took another big step forward in strengthening our balance sheet with a proactive $1.1 billion refinancing of the company's 2025 Term Loan B to extend the debt maturity by more than 5 years to June 2030. We are pleased with the outcome of the transaction that was completed at attractive terms, adding a run rate of just $2 million per quarter in interest expense and is net leverage neutral, while maintaining a comparable fixed to floating debt ratio. We will continue to be opportunistic in enhancing our capital structure and financial flexibility. Let me finish up with our current outlook for fiscal 2023. We are raising our expected organic growth, revenue growth to near 15%, compared to greater than 13% previously. This growth is anticipated to be comprised of Global FSS at near 17%, compared to approximately 15% in our last update, and Uniform Services remaining around 5.5%. We are also lifting our expected AOI growth to approximately 33%, compared to approximately 32% previously. This growth is anticipated to be comprised of Global FSS at 46%, compared to approximately 45% previously, and Uniform Services raised to 8% from approximately 7% previously. We continue to expect free cash flow to be around $475 million before payment of the $64 million FICA payment completed in the first quarter, and the anticipated cash flow impact of approximately $100 million-$120 million related to restructuring charges and transaction fees associated with the Uniform spin-off. After these specific items, we expect our free cash flow to be approximately $300 million. Finally, leverage ratio at the end of the fiscal year continues to be projected at less than 4x. I'm pleased with our performance in the quarter and the momentum we are building. The spin-off transaction continues on pace, and we believe strongly in the many opportunities ahead for both companies. Our teams across the globe continue to control what can be controlled with a sharp and resolved focus on delivering great service to our clients and growing the business profitably. Thanks for your time. John? Thank you, Tom. I'm extremely pleased with our performance this quarter and remain confident in our ability to close the year strong. The 4th quarter is historically our highest margin and free cash flow period. We're laser focused on delivering strong results. As I said last quarter, we've set a high bar for ourselves as a company and have a lot to accomplish in the coming months. I'm confident in the Aramark team to get the job done with a focus on being the most admired employer and trusted hospitality partner. I'm excited about the opportunities ahead to further our success and drive top and bottom line growth into the 4th quarter, fiscal 2024, and well beyond. Operator, we will now open the line for questions. Thank you. We will now begin the question and answer session. If you have a question, please press star then one one on your touchtone phone. If you're using a speakerphone, you may need to pick up a handset before pressing the numbers. In order to accommodate participants in the question queue, please limit yourself to one question and one follow-up. To remove yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Harry Martin with Bernstein. Your line is open. Hi, good, good morning, everyone. Hope, hope you're well. Three questions from me. The first one, I think on the, the international, organic growth, that acceleration, you know, certainly sequentially, if you look versus 2019, up over 30% organically. Yeah, I think there has been some acceleration in inflation in those markets. Can you dimension how much of that is from new wins and market share gains and, you know, what's driving that continued success in the international business? The second question I have is, you know, you made quite a few comments about the ramp-up of new business wins contributing to margin. I wondered if you could give a little bit more specific commentary on some of the, the vintage of contract wins from 2020 and 2021 that are starting to hit that 2-3-year maturity level that you spoke about at the Investor Day. Are margins in those contracts ramping and starting to be accretive to the group level, even with some of the accelerated cost inflation? Is there a lot more to come in terms of inflection in the next 6-12 months? The final question is just on the disclosure of your major shareholder, that they're, you know, looking to reduce the stake in Aramark and, you know, give up the board seat. I wondered if you have any, sort of early comments on, the relationship with Mantle Ridge and, and where you see that, going in the future. Thanks very much. This is John. I'll answer the question on the 13D first. You know, first of all, I think the forum speaks for itself. I think they were very explicit with respect to what their intentions were or are. You know, Paul and his team at Mantle Ridge have been great thought partners. As I think the 13D described, the Mantle Ridge general partner will continue to be invested for the long term. The 13D also does indicate the fact that the fund will, fund will be winding down. I think the forum speaks for itself, and, you know, they, they would have to comment, I think, any further on that. You know, with respect to international growth, you know, we're very pleased with the performance in the international group. We've had a lot of bread and butter wins and new account sales, over the course of the last, couple of years, and most of those accounts have been, you know, what I would characterize as mid-sized accounts. They ramp to profitability more rapidly, and, they've grown very nicely. Retention rates remain high in international as well as in domestic, so we're seeing that, really impact the growth line. Plus, we've had strong performance in the sports entertainment sector year-over-year and in the concert season. That, that has, contributed significantly to that, to that year-over-year growth as well. Tom, I'll leave it to you to answer on the, the individual account ramp up. Yeah, the maturity is, you know, On new business continues to, to move along, very much as we expect. You know, some of the bigger accounts that we've won, Corning comes to mind back in 2021, Purdue, of course, Merlin, you know, continue their, their, you know, efficiency and, and, and maturity ramp. I think overall it's, it's, you know, fairly linear. We don't expect any, you know, significant jump as we move forward, but just a continued, you know, move forward. The key for us going forward, as we've mentioned many times before, is just to continue to, to deliver a consistent, net growth number, so that we don't have, you know, years where there's, there's really nothing, and then years where there's a lot. That maturity is, is, is, is moving up, as we would expect, and, and, we're very pleased with it. Great. Thanks very much. Thanks, Harry. Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open. Hi, it's Andrew. Two questions. Sorry about the static. The first one is, Tom, if I did my math right, I see the implied middle of the range, AOI margins are about 6.9% for the fourth quarter. Is that correct? Again, 6.9 for the fourth quarter is what I got in the implied fourth quarter. Secondly, with the price increases that you talked about in the areas of education and prison for the fourth quarter, does Aramark feel all caught up with, you know, with underlying input cost inflation at this point? Yeah, I'll, I'll trust your math on the on the margin, Andrew. It's usually better than mine. Then on the price increases, I don't think we are fully caught up. I think it continues to be a journey. As John mentioned, inflation hit hard and fast, in these 3 businesses, K-12, higher ed, corrections, it's been a journey over the last 18 months to get on the right side of that, the teams keep chipping away at it. Big, big July first or thereabout, then in September for higher ed, they've made a big, you know, step in the direction, but I think there's still more to come in the next year. Thank you. Our next question comes from Heather Balsky with Bank of America. Your line is open. Hi, thank you for taking my question. Two, two questions for you. First, can you talk about the, I guess, underlying leverage that's planned for the Uniform Services business? You talked about the $1.8 billion, but I think we're all kind of backing into what EBITDA may be for Uniform Services. So, so can you help us there, in terms of what the leverage ratio is? Then separately, just on the margin topic, with regards to your short midterm goal, you know, with regard- with what you're seeing with pricing, this inflationary environment, are you still thinking that you'll end up at the low end, or is there a change in view there? Thanks. On the leverage, you know, the idea here is to come out, you know, roughly 4 times, where the companies will split at parity, ideally. That's, I think that's the math that you can work off of to get the underlying EBITDA for AUS. On the margin in the midterm, yeah, I mean, we're tracking. There are 2 adjustments over the past 2 years, I think, to the margin flow for us. One, of course, is the divestiture of AIM, which, as I said before, is about, you know, roughly 20 basis points to the total company margin. The other, if you were putting, you know, the two companies together a couple of years from now, in FY25, the public company costs for AUS would also be a factor. You know, with inflation, we talked about before, step, you know, really ramping up post the Analyst Day, we were trending towards the lower end of that range. With those two adjustments that I just mentioned, you know, we still feel comfortable that we're moving forward. We'll progress to and through the margin we had in 19 and, you know, should feel, feel, feel pretty good about getting into that, the range we indicated on the Analyst Day. Great. Thank you. Our next question comes from Ian Zaffino with Oppenheimer. Your line is open. You know, congratulations on the quarter, firstly, and great to see the great guide. You know, as far as what that guide now means, how should we be thinking about your return or at least the pathway of your return to pre-COVID margins? You know, does this now accelerate when you thought you were going to get back? You know, as buy side and sell side, how should we think about the cadence on the return back to pre-COVID? Thanks. Yeah, you know, again, I, it, the margin will progress, and we will, like I just said, get to and through the 19 margin. We really have a lot of confidence in that. The timing of it, you know, again, we can't predict the pace of inflation and what will happen. You know, we're, we're, we've had significant margin progression this quarter and will this year, you know, up 75 basis points. We expect to move it forward, you know, quite a bit into 2024, and we'll update you, you know, on that outlook in November. We continue apace, so to speak, to progress the margin. You know, it will continue in a fairly, you know, linear way. I, you know, I just, I'd, I'm loathe to, to sort of step out in front of the margin, at this point from a guidance standpoint, given that, you know, the uncertainties at, with inflation and, and, and whatnot. But again, the overall business, and, and what we see going forward and the progress we've made and the progress we have in sight, we've continued to progress the margin significantly, you know, in the quarters ahead. Okay, understood. Also on, on the spin, seems like the board is, is pretty stacked there. You've had some, you know, really great additions or appointments. Can you tell us maybe what's driving that? You know, what are some of these members seeing that's really attracting them there? Thanks. Sure. You know, I think we have assembled a very dynamic board for AUS, and it was a work over many months between me and Art Winkleblack, our Nom and Gov Chair, who began the selection process more than a year ago to build what we wanted to be a very dynamic and high-energy board that could add significant value t- to that, to the new co, to the SpinCo. We, frankly, targeted very significantly several individuals who we thought would be great, and we were able to attract all of them based on the opportunity that exists at AUS and what they see as the p- the future potential of the business and a strong management team that we have in place. I think all of them were very eager to work with Kim, and to move forward in the business and saw it as a, as a great opportunity, you know, for value creation for the shareholders, for the employees, and just an opportunity to participate in what would be a terrific board. Yeah, we're very excited by all the appointments. We've got a great, a great group of people, seasoned executives with, with very relevant experience, very diverse, viewpoints and perspectives, and, so we are very excited about it. Okay, thank you very much. Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open. Thanks very much. I was hoping you could give some additional color on the new business wins, from the quarter or on the pipeline. You know, anything incrementally different versus last quarter in terms of the strength of the pipeline? You know, also, I know you've given the gross new business in, in past quarters, and maybe also just focus on education as well. Yeah, I think it's been a very active selling season, still underway in all the businesses. We have a very robust pipeline with lots of opportunities both domestically and internationally. We feel very good about another strong year of net new performance. You know, I think the specific accounts individually, you know, many of them have been awarded, and yet contracts haven't yet quite been signed, and we're not operating them. We'll be a little bit more hesitant about naming names yet at this stage while we're working through some of those processes. Yes, we feel very good about another, a third year of very strong net new and solid business performance. You know, Walmart, a great addition in terms of their corporate headquarters. You know, we've also had significant wins in higher education, both domestically and internationally. You know, I'm very pleased with the results and very pleased with the level of pipeline activity. As you know, as a senior leadership team, we review these results on a monthly basis with each of the business units. The momentum is there, the focus is there, and you know, we feel very good about the overall results for the organization. Great. Hoping you could talk maybe a little bit about international, very strong quarter there. You know, I guess maybe, but thinking about the different regions, you know, how is the U.K. faring? You know, any strengths to call out across the different geographies, or challenge areas? Thanks. Yeah, I would, I would say we've got, you know, good, actually strengths across all sectors, and all geographies, you know, leading to that significant performance year-over-year. In, you know, in specific call-outs, I would say, obviously, the sports and entertainment season in Europe has been very strong, in particular, in Spain and in Germany. You know, that's been very robust. The concert season, has been terrific. Strong mining performance in Chile, and, you know, strong results in Canada as well. It's very, it's very broad-based, and I wouldn't, I wouldn't characterize any region as being, you know, below our expectations. We're very pleased with the overall results from international. Thanks a lot. Thanks. Our next question comes from Shlomo Rosenbaum, Stifel. Your line is open. Hi, thank you very much for taking my question. Can you, I want to focus a little bit more on kind of the things that have been inflating and deflating. A lot of the food staple items have really been deflating, just not, not even, you know, slowdown in inflation, but actual deflation. Can you talk about how this is impacting the gross margin currently? You know, is this more of a benefit than you were expecting to see at this point in time? You know, should we see a really strong margin, you know, going forward if this kind of continues? You know, what, what about the wage inflation part of the package? Is that slowing down as much, or, you know, is that kind of offsetting still some of the food staple items that are, are deflating? Yeah, I would say, first of all, there, there are certain commodities that have come off significantly year-over-year, and that's, that is certainly benefiting us from a supply chain perspective. Keep in, keep in mind that even, even though it is moderating, it is still higher year-over-year. We are recovering through pricing the impacts of that inflation. Food Away From Home Index, still a little, running a little higher than, you know, the original expectations. While certain commodities are breaking down and having an impact, overall, net-net, in the business, we're still working to recover the total, you know, total inflationary pressures on the, on the food side. Making significant progress, no doubt about it, and if we continue to see the trend, moving forward, there will be, you know, will be an enhanced margin impact as a result of that. Just hard to predict the exact timing of it when it all flows through. The higher energy prices over the course of the last few weeks, as you see the oil price begin to shoot back up again, can be, can be an impact item on transportation, which could affect food cost inflation as well. We see a moderating trend. We're very pleased with that. We anticipate that it'll continue to improve, and, but really not in a position to call the precise pathway, if you will. From a labor perspective, you know, we are seeing moderating, inflation and pressures in labor, as labor availability continues to, you know, continues to improve very slowly. Overall, we feel very comfortable in our ability to recover both wage pressures and food cost inflation over the course of the 12 months as it, as it moderates. As Tom said, you know, we're still working, still pricing, still managing every day in the middle of the P&L to optimize, for our customer locations and our client expectations. Having, I think, significant success. We're looking forward to the results in the fourth quarter and the ramp into next year. Thank you. Our next question comes from Neil Tyler with Redburn. Your line is open. Yeah, thank you. Good morning, John. Good morning, Tom. A couple left from me, please. Firstly, the price adjustments that you've achieved in, in, in education and corrections, during the negotiations around that, is there anything different in the structure, or that has been altered in, in the structure or terms of those contracts that, that might mean more immediate price adjustments if costs, you know, y- you know, decline significantly? That's, that's the first part of that question. The second is, you know, any might these negotiations have any knock-on effect on, on retention? I'm thinking more positively than negatively, but, but I'd, I'd appreciate your, your, your thoughts on either. Then just as, a sort of, a smaller question relating to your comments on the strength of the, entertainment, activities in international. Should we think about that as a, as a slightly sort of abnormally high base? I know it's not a big number in the scheme of things, but, you know, the concert season in Germany and Spain, is that sort of especially strong and unusually strong? You know, just, just wary of, of, of not wanting to sort of cast off the wrong number for next year. Thank you. Yeah, no, I'll take the last part first. You know, first of all, I wouldn't say it's abnormally strong. I would say that it's a-- it's stronger than prior, than the prior year, based on, you know, improved overall, you know, customer opportunities and improved attendance. So, you know, you still had last year, somewhat of a lag from COVID that was impacting some of the sporting events and some of the, and some of the concert seasons. So it's really more back to normal, would be the way I would characterize the, both the concert and soccer seasons in Europe. So I wouldn't, I wouldn't call it out as being abnormally high, just higher than prior year due to that circumstance. Great. Yeah, so I, I think that's, I think that's right. Tom, do you want to take the- Yeah, and I'd just add to that comment, Neil, that it's sort of like playoff baseball or weather or whatever. I mean, we're not going to call that out. It's just, these things ebb and flow, and you take the good and the bad with in each year, and you just build upon it. You know, it's not something. Okay ... that I would call out as an exceptional. Pricing negotiations, you know, changed contracts, not really where it's a, you know, existing client in the middle of a term. Certainly, we're, we're using the last year and a half as an experience and a, and a way to modify new contracts going forward, so that, you know, the old escalators and some of the contract language that we had in the past, you know, when there's 20 years of benign inflation, isn't, isn't particularly going to work anymore. Where we've had opportunities, obviously with new contracts, but then with, with renewals and retention efforts, we've, we've worked to change language so we have more flexibility. If it's just midterm and we're just getting a pricing, you know, exception for those contracts, I don't think it's really changed, the contract language much. Impact on retention, I, I, if I'm following the question, you know, not really anything notable there. Okay. I just wondered whether you, you were able to use the opportunity to, to extend any contracts? Yeah, I would add that, yes, we have taken the opportunity to extend and use the negotiation process not only to recover costs for the near term, but as, as I've said many times before, we look at these contracts as annuities. That's why, in many cases, we were willing to wait to get appropriate pricing because we didn't want to put the contract at risk, you know, by pushing it out to bid because we were, we were in a tough profit situation in a, in a given year. We look at these as long-term deals, long-term relationships, you know, average contract life, close to 20 years. As, you know, as we've worked through these negotiations, we've done it very carefully with an eye towards keeping that customer for the long term, and solving, and solving for, cost recovery as well. I would say no impact to retention, on a from a negative perspective, and I would say, proactive extensions included with many of those renegotiations. That's great. Very helpful. Thank you very much. Thank you. Our next question comes from Leo Carrington with Citi. Your line is open. Leo, your line is open, you can ask your question. Again, Leo Carrington, your line is open, you can ask your question. One moment for our next question. Our next question comes from Faiza Alawi with Deutsche Bank. Your line is open. Yes. Hi, thank you. I wanted to talk about the increase in organic guide for FSS. I think when you initially guided for the year, it was a mix of, you know, new business growth, around 4.5%-5%, sort of pricing and underlying recovery in COVID volumes. It sounds like where we are now, is it primarily just incremental pricing that has helped you, you know, increase that guide? It sounds like maybe there's better recovery of COVID volumes as well. I just wanted to get your perspective on, you know, disaggregating the various factors that have helped you increase the outlook. Yeah, at the end of the year, we'll, you know, in November, we'll recap the year, you know, by components, you know, once the dust settles, and we've got a good picture of it. I'd say if I'm, if I'm looking at this point, three-quarters of the way through the year, against those original assumptions, I would say the pricing is had to have been higher than we thought. I think as we talked about at the beginning of the year, inflation has persisted all year or longer than we thought at the beginning of the year. I think price, pricing has probably been a slightly oversized driver of the overperformance. You know, the realized net growth has been, has been strong. I think less so the, the COVID recovery, a little bit, better. I'd, I'd say pricing is the bigger driver, with the other two slightly overperforming expectations. Understood. Then just to follow up, you know, how do you think about, you know, your sort of market share? Are you continuing to see sort of increased trend in outsourcing? Or do you think you're still continuing to, you know, win share? I know you've previously talked about a combination of both, but, you know, how has your thinking evolved there? Yeah, I don't think it's really changed from our beliefs about the, the, you know, the normal kind of run rate in the business. We don't, you know, we are focused on growing the business. The total addressable market is huge, and so we continue to be focused on delivering net new from both organic new account wins from both competitors as well as self-op conversions. We see that self-op conversion trend continuing this year. We, you know, overall, we don't really measure it in terms of share shift between the competitors. You know, we look at, we look at the gross business wins and our net new as being the drivers and the things that we can manage and the opportunity set that we, that we pursue. We look at closure rates, and we look at, ultimately, that total addressable market. You know, I would say we continue to get our fair share of new opportunities. We continue to see increasing self-op conversion and overall, you know, terrific, terrific opportunities ahead. Yeah, we're very, very pleased with overall performance of the organization as it relates to, to growth, and we'll continue to focus on it. Great. Thank you so much. Our next question comes from Leo Carrington with Citi. Your line is open. Thank you. Good morning. If I could ask- Good morning. -two, just firstly on, I appreciate you'll, you'll sort of square that organic growth bridge towards, towards the end of the year. But when it comes to thinking about pricing specifically, can you indicate sort of the pricing levels in Q3? And just presumably, when it comes to thinking about pricing into the end of the year and maybe more FY 2024, will this fade in importance as it sort of catches down to CPI? Or do you think you're... Do you think the price recovery will sort of continue to be a growth driver or a sort of margin driver into 2024? And then secondly, maybe just a follow-up question on that. In terms of, in terms of the uniforms margin, specifically, Q3 was obviously pretty strong, I think as good as the best quarter in 2019. Is this all underlying? Is there anything to sort of call out that, that was favorable? Or is this just the impacts of the actions you've taken and the, perhaps the energy impact fading away? Yeah, no, on the AUS question, I think it's underlying. I mean, it's, it's the impact of, of, you know, the management team. Kim's been in place, coming on 2 years. The focus, the, the ability of the, of the team to, you know, to drive the performance of the business forward. The revenue line is, is shifting, if you will, as they look at the client base, more emphasis on, on adjacencies and add-on services, you know, continue to build the selling machine. Andy, Andy Panos has come in to, to lead the sales group here in the last couple of quarters. I think that will start to shift and move forward and as we lap this energy surcharge that's artificially holding down the year-on-year growth optics, I think they'll deliver good momentum as we move into 2024 and beyond on the top line. Bottom line, you know, again, Kim and Rick and the team have really focused in on making the business more efficient this past year in anticipation of the spin. I think, you know, they'll talk more about what the opportunities that they have ahead of them on a profit perspective, you know, as they speak next month and then, you know, post the spin. I know they're excited about both the top and bottom lines, opportunities that they have going forward. In terms of pricing, I mentioned it was 6% in the quarter. Roughly where we were last quarter as well. Those benefits will carry into next year. We, we typically have not been able to, to price for margin, but just for cost recovery. As the inflation- ... cost dynamic, you know, trends downward and that pricing stays in place, and we're quite confident that it will, I think that, that, that recovery of that price inflation lag will become more apparent as we move into 2024 and beyond. How important a piece of the puzzle it is to our revenue growth going forward totally depends on inflation. I mean, if we, if we revert back to the sort of 2% norm that we had for 20 years, it becomes much less of an impact. If it stays elevated, you know, it'll be more prominent in, in, in the revenue numbers. Okay. Thanks, Tom. Appreciate that. Our next question comes from Ashish Sabharwal with RBC Capital Markets. Your line is open. Thanks for taking my question. Maybe just a couple of quick clarifying question. One was just on the surcharge, in the Uniform Services, the 80 basis point headwind. Is that the right level that we should think about for the next 3 quarters? On the pricing side, how should we think about the pricing in Uniform Services going forward? How is it trending and how should the trend going forward, any color on those trends will be helpful. Thanks. Yeah, I would, I would say, first of all, the, the impact in the, in this quarter was, was approximately 80 basis points. The impact in the, in the fourth quarter is actually a little bit higher year-over-year with respect to the fuel recovery fee that's been eliminated, so it's nearly 2% in the fourth quarter. That would, you know, that would normalize starting in the first quarter of next year. There's a little bit, a little bit of a lag yet, as they anniversary those fuel recovery fees that are now eliminated. Their pricing in the rest of the business has been robust, and they've been able to recover their costs, as demonstrated by their improving margin performance, both coming from both, improving pricing recapture and improving cost leverage. You know, I would expect that pricing leverage to continue going forward. The comps will get better, just as they anniversary that fuel recovery fee that's now no longer in place. That's very helpful. Thank you. Our next question comes from Josh Chen with UBS. Your line is open. Congrats on a very good quarter, guys. Thank you. Yeah, hi. I guess when Tom, when you mentioned the, the pricing dynamic into next year and then, then moderating inflation, how should we think about y- y- your margin seasonality in, in 2024 as compared to normal, when you seem to have, you know, those two favorable dynamics kind of moving into the start of the year? Again, we'll give you sort of more of a, of a look or a little bit more granular when we get to November, around 24. By and large, it's not gonna change the shape. You know, we'll still have the, the, the U-shaped margin dynamic as we move into next year. Any dynamic on, on, you know, pricing outpacing inflation as we, as we go through the year, next year, would be around the edges, but the, the, the true shape is still gonna hold and not be materially affected. Okay, that's fair. On the retention side, you mentioned that retention continues to be very strong. I guess underneath it, are you seeing any more desires from customers to kind of shop around now that we're past the supply constraint environment? Just anything there, recognizing that you continue to maintain very strong retention rates. Thank you. Yeah, no, I would say it's, it's pretty normal level of activity from a, from a rebid perspective. I mean, some years are higher than others based on kind of structural impacts to the business. As you know, the USDA has very strong requirements with respect to rebid activity in the K-12 sector. There is kind of years where you have heavier retention and some years where it's lighter, just dependent upon where, where school districts are in the cycle. By and large, I think the activity level is very consistent year-over-year. The, you know, the pipeline is, you know, very, very strong. I don't, I don't see a higher degree of propensity for change across the industry. I think it's just kind of at its normal level. We always, we always are pursuing new opportunities, and we're always working aggressively against a targeted list of prospects. Some are, some are scheduled rebids and some are unscheduled. We just work aggressively against that target list of prospects and work to, work to grow the business. I would say, not a change in customer behavior that I would-- that I could identify. Great, and thank you for the color, and thanks for your time. Thank you. Our next question comes from Manav Patnaik with Barclays. Your line is open. Hi, good morning. This is Ronen Kennedy. I'm from Manav. Condolences on the passing of your colleague. Thank you for taking my question. As a follow-up, I think, to Leo's question on pricing, can you... The confidence that you've expressed in it sticking, can you just kind of give insight or articulate how and why prices will stick, whether it's a function of the contact- contract structure, the value, and high level of service provided to clients, et cetera? Also just a reminder on where we stand in terms of% of contracts that are P&L, cost plus, or management fee, and how, you know, you see there being benefits to each through the expected moderation of inflation? Yeah, I would say, you know, first of all, our expectation that pricing sticks is based on the history of the business and based on the way it's, you know, operated as an industry. It's, you know, very rare for us to take pricing down, except maybe on a particular commodity that's had a unusual price spike that may have some artificial pricing approach. You know, think, think back to the days when coffee was impossible to get and coffee prices were elevated. Coffee prices moved up and then, and then moved down when that particular commodity had an impact. That's not the way the business gets priced anymore. We really price across a market basket of products. You know, so it's rare for us to move a price down once, you know, once the consumer has already begun to pay that price for the product. Pricing is, I would say, highly sticky. Remember, you're pricing to the consumer, not to the client. These aren't contractual prices buried in a, you know, in the client relationship. They're consumer-based prices that are, that are, that, that the end user is paying. You know, with respect to pricing, I think, I think we, we all believe it'll be very, very sticky, and that we'll continue to be able to price to recover costs going forward, as, as we've discussed. I'm sorry, what was the second? On contract types. Oh, yeah, go ahead. Yeah, we continue to move back towards P&L. I mean, there the, the changes still reside primarily in B&I, where, where the volumes aren't fully recovered. That's really the driver of converting, you know, to a P&L or, or running a P&L, is having adequate volume. Not quite, you know, back to where we were in 2019, but, but, you know, continuing to move towards that. The inflation dynamic and pricing dynamic with each contract, it does have its plus and minuses, you know, no pun intended on that. The cost plus is obviously a immediate pass-through to the client, but does have a margin headwind. Again, if we were billing them $100 previously, now we're billing them $120, but we're still getting our $10 fee on both, so it, it depresses the margin, even though it increases the revenue. When prices fall, you lose the revenue on a cost plus contract, but your margin goes up. That dynamic is, is cost plus typically are, you know, a lower risk, you know, scenario for us, and it ebbs and flows on the top line as pricing moves up and down. P&L is, is, is the dynamic, you know, we really like, because we, we control the, control the, the cost component. Pricing in an inflationary environment, you know, accrues to us, and as John just mentioned, we'll we believe will stay in place and be sticky. Then we can also manage through the cost components so that we don't have that headwind against the margin, typically, that we might have with a cost plus contract that limits our profitability in most cases. You know, we like the P&L format. In an inflationary environment, we'd be happy to continue to move, you know, back to that P&L cost plus mix that we had prior to the pandemic, to take advantage of that. Thank you. Appreciate it. Our last question comes from Harold Antos with Jefferies. Your line is open. Good morning. This is Harold Antos on for Stephanie Moore. Just on the new business wins, could you provide us, you know, an idea of what it represented in the quarter, and then just give us an understanding on the size and shapes of the new business wins and the industries that you won them in? Provide any insight on were you winning this business from regionals or some of your competitors? Yeah, we'll give you more up, you know, update at the year end on it, as we typically do, you know, on, on net growth, on all those factors, on, on the contribution to the year. You know, where we're winning it from. Suffice it to say that, you know, it's, it's moving along, as John said, a very solid year for us. Continues to be a third year of significant growth versus where we were prior to the pandemic. The source of wins, you know, continues to be pretty broad-based, both where it's coming from and where we're winning it, you know, geographically. Overall, you know, continue to be pleased with the growth engine within the business. Give, give you further updates when we get to year-end. Got it. I guess for my last question, with you having such a lot of, the contracts locked in and, high confidence in the pricing, what could help you, achieve or exceed, you know, the guidance, for on the, on the revenue and operating income for, for the, for the quarter and for the year? Thank you. Yeah, I would just add that, you know, I think if, you know, if inflation continues to moderate and we don't see any unexpected economic, consequences, you know, we, we see continued improvement going into the, fourth quarter, as we've discussed. We see continued improvement going into next year. It really is, you know, an exciting time inside the company. We feel very good about the results for the quarter and feel good about the trajectory for the fourth quarter, for the year. You know, we're very resolved, in terms of delivering very strong results. You know, I would say the inflation outlook is improving, and, that has a potential, impact opportunity going forward. I will summarize the call basically by saying thank you very much for your support of the organization. We're excited about what's going on inside the business. We feel good about the third quarter. We feel very good about the opportunity to go ahead and get the spin completed at the end of the fiscal year. We've made very significant progress around a range of activities, the balance sheet, the, you know, improving profit performance, improving margin performance, and solid growth. We're, we're pleased with where we are, have a lot of work to do, and we are committed to delivering for our shareholders. Thank you very much, everybody. Thank you for participating. This concludes today's conference. You may now disconnect.