Good morning, and welcome to Aramark's 1Q 2024 earnings results conference call. My name is Kevin, and I'll be your operator for today's call. At this time, I'd like to inform you that this conference is being recorded for rebroadcast and that all participants are on a listen-only mode. We will open the conference call for questions at the conclusion of the company's remarks. I will now turn the call over to Felise Kissell, Senior Vice President, Investor Relations and Corporate Development. Ms. Kissell, please proceed. Thank you, and welcome to Aramark's 1Q Fiscal 2024 Earnings Conference Call and Webcast. This morning, we will be hearing from our Chief Executive Officer, John Zillmer, as well as our Chief Financial Officer, Jim Tarangelo, who started in this role in January. We at Aramark are excited for Jim's appointment. As a reminder, our notice regarding forward-looking statements is included in our press release this morning, which can be found on our website. During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the Risk Factors, MD&A, and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in this morning's press release as well as on our website. With that, I'll now turn the call over to John. Good morning, and thanks for joining us. Before we get started, I first want to acknowledge our team in Chile as they are dealing with devastating wildfires near Santiago. Although our operations are not affected, scores of our employees have been impacted. We're working with our leadership team on the ground to ensure everyone's safety, and we'll be coordinating a thorough response with the appropriate relief organizations. Now to the quarter. I am really pleased with our great start to the new fiscal year, generating broad-based revenue and AOI growth, with solid margin improvement across the business. The strong performance resulted in record revenue for both the FSS U.S. and International segments, along with record 1Q profit in International. Our growth-focused strategies are working, and we're seeing favorable margin trends driven by prior year's new contract maturities, scale efficiencies in our purchasing, and tight SG&A cost management, and which has been helped by moderating inflation. We're extremely encouraged by what we are seeing in the business, and Jim will be reviewing in greater detail shortly. We're excited to have Jim as Aramark's newly appointed CFO. As you know, Jim is a 20-year veteran of the company with a proven track record, and he's worked closely with Tom over the past 4 years. His depth of knowledge about the company across the board and across borders, having served as CFO for our International segment, is a tremendous asset in his new role. Tom is also joining us today as he continues to serve as a trusted partner and strategic advisor to help ensure a seamless transition over the next few months. Tom leaves a strong legacy that is both broad and deep, focused on accelerating net new business, optimizing supply chain economics, containing above-unit costs, and instilling a value-creating mindset throughout the organization. Our top-line momentum continued in the 1Q with year-over-year organic revenue growth of 13%, which was driven by especially strong base business growth, net new business, and pricing. A combination of higher sales volume and pricing contributed to the favorable trends that are positively driving the top line. The U.S. segment increased organic revenue 10% compared to the prior year, starting with Collegiate Hospitality, which experienced strong performance in residential dining, retail, and catering, as well as improved pricing with the start of the academic year. We're having early success with our recently launched Eat to Excel health and wellness program, which is focused on providing student-athletes with a balanced nutrition regimen to support peak competitive performance, personalized to each athlete's training schedule, goals, and biometrics. The dietary recommendation is fully integrated with our Collegiate Hospitality dining program and is easily accessible through a digital app. Sports & Entertainment demonstrated strong per capita spending and high attendance levels from the NFL and NCAA regular seasons, along with more concert events. Our culinary team had great success partnering with well-known NFL mom, Donna Kelce, during the holidays at Lincoln Financial Field and Arrowhead Stadium, adding the famous cookies she makes for her sons in support of the Eagles Autism Foundation and Kansas City-based Operation Breakthrough, a win for everyone involved. I also want to congratulate the Kansas City Chiefs for reaching this weekend's Super Bowl. Workplace Experience benefited from the startup of significant new client wins and strong base business growth, as our services provide a compelling solution for employers, with revenue in this business now fully recovered from pre-COVID levels. International organic revenues increased 21% year-over-year. Performance was driven by consistently strong net new business, combined with an active events calendar in Europe, particularly in the U.K. and Germany, continued strength in education in Canada, and greater mining activity in Chile. New business wins at this early stage in the fiscal year have been broad-based across the company. This includes adding Tulane University in Collegiate Hospitality, expanding our services for the European Central Bank in Germany, and more locally, being awarded the Philadelphia Zoo, among others. We believe our new business pipeline is robust, and we continue to see high retention levels across the client portfolio. Now let me turn to global supply chain.... Our overall focus continues to be growing and leveraging spend to generate value for the enterprise, while also providing quality product and services to clients and our, and our customers. We've seen inflation moderating over the past quarter, and while some areas of the globe are slower to show this trend, overall inflation is running better than originally expected, and the 1Q benefited from this tailwind in improved product costs. We believe the current supply chain landscape presents enormous opportunities, and we are actively seeking to take further advantage of this potential, working closely with our manufacturing and distribution partners. Last week, we released our Be Well. Do Well. progress report, highlighting our commitments on responsible business practices, specifically on people, which includes enabling equity and wellbeing for millions, on the planet, including promoting planetary health on our path to net zero, and on governance by ensuring robust ethics and compliance in everything we do. We're proud of our efforts in these areas and encourage you to review this in-depth update. Before turning the call over to Jim, I'd also like to welcome Brian DelGhiaccio as our newest member of Aramark's Board of Directors following our annual meeting last week. Brian is currently Executive Vice President and Chief Financial Officer of Republic Services, a company I know well from my time at Allied Waste. Brian's extensive executive experiences will provide valued perspectives, particularly in strategic planning and M&A. I want to also thank Art Winkleblack for his immense contributions to our board. Art announced his retirement and did not stand for re-election. On behalf of all of us at Aramark, we're extremely grateful for Art's service to the company. Jim? Thanks, John, and good morning, everyone. I wanted to start by thanking Tom for his tremendous leadership and partnership over the past four years. Combined, we have over fifty years of industry experience, and it's been a real pleasure and privilege to be on this transformational journey with you. We look forward to continuing to have you as a strategic advisor and wish you well as you transition toward a full retirement in May. We are off to a terrific start in fiscal 2024. The company generated strong financial performance with broad-based revenue and profit growth. In the 1Q, Aramark reported consolidated revenue of $4.4 billion, representing organic growth of 13% versus the prior year period, driven by strong base business growth through a combination of volume and pricing, as well as the contribution from net new business. Both the U.S. and international segments reported double-digit top-line growth in the quarter. Operating income in the 1Q was $167 million, up 10% versus the prior year. Adjusted operating income was $231 million, up 28% on a constant currency basis compared to the same quarter last year. AOI margin was 5.2%, increased 64 basis points year-over-year on a constant currency basis. The higher profitability was from leveraging higher sales volume, disciplined cost management at both unit-level P&L and SG&A, as well as supply chain efficiencies. We also did experience favorable inflation trends overall, which benefited the quarter. Our results were aided by our innovative, yet practical approach to technology. We continue to leverage technology, including most recently, utilizing AI throughout our supply chain to aggregate spend more effectively and get better pricing from our suppliers and manufacturers. Turning to the business segments, the U.S. reported AOI growth of 19%, with an AOI margin improvement of almost 50 basis points compared to the same period last year. Education, B&I, and sports, leisure, and corrections all had particularly strong quarters, driven by effectively leveraging higher revenue, especially in our collegiate hospitality and corrections businesses, from our ability to recover the price inflation lag we've previously discussed. On a constant currency basis, the international segment had year-over-year AOI growth of 37% and an AOI margin improvement of 54 basis points, led by the team's efforts in the U.K., Germany, and Canada. Turning to the remainder of the income statement, interest expense in the quarter benefited from the $1.5 billion debt repayment associated with the proceeds from the Uniform Services spin transaction. The $1.5 billion debt repayment will result in interest expense savings of about $100 million in fiscal 2024 compared to the prior year. Our adjusted tax rate was approximately 26%. The quarterly performance resulted in GAAP EPS of $0.11, which included expenses related to the completion of the spin, and adjusted EPS of $0.41, an increase of 33% versus the prior year on a constant currency basis. Regarding cash flow, as expected, and consistent with our normal 1Q cadence, we experienced a cash outflow due to the natural seasonality of the business, specifically in collegiate hospitality and sports and entertainment. This increased moderately compared to the 1Q last year due to a higher use of working capital as a result of the strong growth of the business and increased capital expenditures, which is consistent with historic levels as a percentage of revenue. In addition, we also had the one-time impact of cash taxes paid on our gain on sale from AIM. We've taken several strategic and proactive steps to strengthen our balance sheet, resulting in a reduction of our net debt position by more than $2.2 billion compared to the end of the prior year period. This includes debt repayments of $1.5 billion from the spin proceeds and another $630 million from divesting our non-controlling interest in AIM and the San Antonio Spurs. We continue to expect our leverage to be at approximately 3.5x for fiscal 2024, and our debt repayments, combined with improved business performance, has us on the right path to achieve this goal. This would represent the lowest leverage Aramark has experienced since 2017. At quarter end, the company had over $1 billion in cash availability. We will continue to opportunistically enhance our capital structure, given our financial flexibility. This includes evaluating additional shareholder returns as our leverage ratio comes down. I'll wrap up with our performance expectations for this fiscal year. We are highly encouraged by what we saw in the 1Q and the continued strength of the business around organic revenue growth, supply chain initiatives, and cost discipline, combined with inflation moderating. As a result, we are updating our fiscal 2024 outlook for both AOI and adjusted EPS growth to reflect these favorable profitability trends and reaffirming our expectations for organic revenue growth and our leverage targets. With that, we expect organic revenue growth between 7% and 9%, AOI growth between 17% and 20%, adjusted EPS growth between 30% and 35%, and a leverage ratio of approximately 3.5x by the end of the fiscal year, as I mentioned. I'm very pleased with the financial results this quarter. We are confident in the momentum that continues to build across the business. I've had the honor to be at Aramark for 20 years of my career. I clearly see in the Aramark of today the unwavering commitment to serve our clients, the energy and focus of our growth teams to win profitable new business, and our collective ability to achieve strong, sustainable performance. Our strategy is working and producing great results. Thank you for the time this morning. With that, I'll turn it back to John. Thank you, Jim. With fiscal 2024 now underway, we look ahead with great confidence. The work we've done has centered on building a consistent and sustainable business focused on providing valued hospitality services to our clients. The foundation is set for continued success, and we expect our momentum to carry through this year and beyond. I couldn't be more excited about what's to come. The operator will now open the call for questions. Thank you. We'll 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 first 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 Lizzie Dove with Goldman Sachs. Your line is open. Hi, good morning. Thank you for taking the question. Firstly, I just wanted to wish Jim a big congratulations on the appointment to CFO, and this is certainly a great set of results to start with. One main question for me is that you really outperformed pretty much across the board. I'd point out, you know, organic revenue coming in much higher than expected, particularly on the international side, and then, of course, your guidance range being adjusted to the higher end. I'm curious what drove the outperformance in these areas, and if you can just provide some more details and color there. Sure. Thanks, Lizzie, and appreciate it. Yeah, I think if you think about the main drivers of the margin performance, right, it's really the underlying leverage we've talked about, scale and SG&A, supply chain efficiencies. We're seeing good results at the middle of the P&L with food and labor costs. So I think really primarily the overperformance, if you think about the 67 basis points, is sort of 50 basis points coming from the underlying performance, and then I think inflation moderating probably delivered a little bit of the upside. Perfect. Thanks so much. Thank you. Our next question comes from Harry Martin with Bernstein. Your line is open. Hi, morning, everyone. Thanks for taking my question. I guess I'll ask the obvious question on the guidance. You know, you did 13% organic growth in the 1Q and kept the guide at 7%-9%. I mean, to hit the bottom end of that range would be quite a slowdown. So I wondered why you didn't change that guidance and what your expectations are for the rest of the year on organic growth. And then I guess a question for Jim. In the presentation, in the revenues by segment, you're now including FM services within the healthcare line, and that line was, you know, the spot of weakness down in Q1. I assume that's related to the Next Level of portfolio actions, but could you just add a little bit of detail on the underlying trend in the healthcare market and how long that Next Level headwind could last for? Thanks very much. Sure will do. I'll kick it off. On the revenue outlook, so we're very, you know, encouraged by what we saw in the 1Q and the trends we're seeing with revenue, particularly strong base business growth. You know, it's still early in the year to make the call on revenue. As you know, the timing of new and lost could affect how we think about revenues going forward. As inflation moderates, obviously, price can moderate, having an effect on the top line, as well. And then the base business trends that we've seen, they were very strong in the 1Q. I think it's early to see if those are still sustainable. So with that and some seasonality, that's why you see a decline in revenue for the growth through the remainder of the year. And we're continuing to keep folks posted with how that progresses. On, yes, with respect, we've now have our reclassified how we show our healthcare revenue. And with that, you can see, as we've previously discussed, some pruning and optimization of our portfolio within Next Level is a key driver for why you see the revenues being moderately down in that segment. Yeah, and I'll just add that that's still a segment that we have a very strong level of confidence in going forward, and growth opportunity in that segment remains robust. And so we see this as really kind of a temporary restructuring and a reoptimization of the portfolio, and then turning back to significant growth going forward. Great. Thanks very much. Our next question comes from Andrew Steinerman with JP Morgan. Your line is open. When looking at the fiscal year 2024 guide, I wanna know what the implied AOI margin range is. You know, I kind of try to calculate it, and it's either 40-50 or kind of 30-60, depending on how you do the math on revenues and AOI. And I also wanna know if there's been any change of assumption in the food inflation for the fiscal 2024 margin guide. Yeah, Andrew, this is Jim. So yeah, I think the straight math of the sort of the low to the high, right, it's 17-20, would be 43-47 basis points. Again, that's sort of the straight math. If you're at the sort of the lower end of the revenue range and higher end of the profit range, I think you're sort of be closer to the 55-60 basis points. And then I also asked about, is there a change of assumption in food inflation in the 2024 margin guide? The current guidance reflects how inflation is running today. So the guidance that we provided reflects our current outlook for inflation, and it's pretty consistent with how it ran in the 1Q. Okay, thank you very much. Our next question comes from Shlomo Rosenbaum with Stifel. Your line is open. Hi, thank you. Could you talk a little bit about the pricing trends, just, you know, maybe give something quantitative to see where things are and just compare it to the last few quarters to see what the trends are there? And then also, maybe you could give a free cash flow range that we should think about in terms of fiscal year 2024. I know that there's that seasonality, but this is also the first year without the, you know, the uniforms business in it, and maybe you could give us some guidance on how to think about those items. Sure. This is John. I'll tackle the pricing question, and Jim can tackle free cash flow. You know, first of all, we're seeing, you know, we've largely caught up in terms of pricing. You know, we had the pricing lag in some of the businesses that were contractually bound over the course of the last year, and we've seen that pricing catch up, where we feel like we're in very good position from a pricing perspective now, and that we're able to go ahead and recover our cost increases as a result of that, of that pricing. If, in fact, we enter a, an environment where inflation moderates more aggressively, it may put a little bit of pressure on pricing going forward, but we're not seeing that currently. So right now, it's a pretty benign pricing environment. We're able to recover our costs, and we've caught up on the pricing lag, which existed last year in, say, higher education and corrections. And on free cash flow, yeah, so we had a normal heavy seasonal use, as we always do in the 1Q. I think some of the drivers there, additional working capital, again, due to the growth of the business, so it's not a bad problem to have. Capital expenditures up as well, driven by the timing of new, but still in line with our historic averages. And then finally, cash taxes were up about $35 million in the quarter, and as I noted, we paid our cash taxes on the gain of sale of AIM. For the full year, again, we're not providing specific guidance on cash flow. We're, you know, we're guiding more toward achieving the leverage of 3.5 x. You know, I noted the $35 million or so in cash taxes, the one-time, you know, part of that being with the AIM gain on sale. And then we have about $20 million-$30 million of additional incremental transaction cash costs from the spin that trailed into fiscal 2024. Thank you. Our next question comes from Jasper Bibb with Truist Securities. Your line is open. Hey, good morning. Wanted to follow up on the margin upside. I guess, curious if there's been any change in what you're seeing in, in labor cost inflation. I, I think your peers indicated that the growth in labor costs was remaining kind of sticky, even as the, the food costs were coming down. So I'm curious if your experience has been similar there. Yeah, I would, I would say that generally we're seeing, labor costs moderate a touch as, as well as food costs. You know, clearly there is less pressure in the, labor environment, particularly as it relates to contract, workers and, and the like, and the payment of overtime. That's one of the, one of the benefits running through the P&L as our people are managing the, those, those middle of the P&L cost structures. There's been significant improvement on the labor side, there. But overall, wage inflation, I think, our expectations are probably no different than our competitors. Somewhere in the, in the 5% range would probably be kind of an appropriate estimate, on a, on a going-forward basis. ... Thanks. And then wanted to ask what you're seeing from a new sales and pipeline perspective, and has there been any change with respect to the mix of new outsourcing opportunities and competitive or takeaways? No, I'd say the pipeline continues to be very robust. We're very, very pleased with the results to date and have a lot in the pipeline that we're working to close, and so we're very encouraged by what we're seeing so far. And no, no change in the level of outsourcing activity. It's still our pipeline is as big as it's ever been. So, you know, without getting into specific opportunities, we're very encouraged. Appreciate the detail there. Thanks for taking the questions, guys. Thank you. Our next question comes from Heather Balsky with BofA. Your line is open. Hi, thank you. I guess I'd like to add on to the prior question with regards to your pipeline and just when you think about the different segments you're in, you know, where you might be seeing the most demand, and also kind of how you think about the right mix to your business in terms of the end markets you want to be in. Well, we're seeing very broad-based opportunity, both domestically and internationally. And we're really seeing it across all the businesses, whether it's workplace experience or collegiate hospitality, significant opportunities in healthcare, significant opportunities arising in virtually every vertical. So it's really, we're in the businesses we want to be in. We're focused, and we're resourced to grow all of them. And we're seeing opportunity literally in every market that we serve. So that's what makes it so encouraging. There is no... I'm not limited to one particular vertical or another, one business or another. We've got a range of opportunities that we can pursue, and our people are delivering across the board, and that both domestically and internationally, and that's what makes the growth story so exciting. That's really helpful. I'm going to ask an inflation question, which is, I think a lot of investors are also looking or reading what the food distributors are saying and seeing, you don't necessarily report at the same time. I'm curious, kind of when they talk about pricing, for example, center of the plate, you know, how we, you know, when we're looking at your food costs, should be thinking about things? Because presumably you have a different business mix than the food distributors have in terms of what they're selling. Just, does any kind of color you can provide that helps us kind of interpret what they're saying and what it might mean for your business? Yeah, that's a great question, Heather, and it's one that is that can be a little bit confusing given the kind of numbers that they report, which are really focused more on commodities as opposed to the market basket of products that we buy. And, you know, our inflation numbers are very specific. It's the products we buy from the, you know, that our clients and our customers want us to serve. So, ours are, we look at this number literally on a weekly basis. We know exactly what we're paying for goods and services across the enterprise, by business unit, by, you know, by country. So, we have a high degree of correlation to what our market basket costs are. The distributors do have much more spot kind of exposure to various commodities. Typically, our contract pricing normalizes for that. So it's very hard to make a direct comparison between the distributor costs and our costs. But I would, I would say, as you see commodity pricing modulating, you'll see that eventually transfer into lower prices to our products that we, that we buy and, and utilize as well. So tough to make the correlation, but always happy to confuse you further if that hasn't helped. We appreciate it. The more confusion, the better, I guess. Thank you. Thanks very much. Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open. Thanks so much. In the past, you've had some creative technology initiatives that you've deployed. Can you talk about where you're focusing on innovation and any AI initiatives in particular? Yeah, that's a great question, and both Jim and I can comment on this. It is a very significant initiative inside the company to apply technology to the parts of the business where we can really benefit both the frontline managers as well as the customer. And literally had a report to our board in our board meeting last week on the technology initiatives underway inside the company. And, you know, some that are the most prevalent, as you might expect, are things around menu design and menu optimization, using AI technologies to go ahead and evaluate customer need sets and optimal menu structures to serve them. And we literally have pilots going on in multiple businesses for menu optimization, both from a cost perspective as well as a customer acceptability perspective. Because you can use AI to create the lowest cost menu in the world, and guess what? Nobody will buy it. So you have to balance both of those objectives, and so we're using the large language models in AI to go ahead and develop programs that really optimize both for us as well as the consumer. And it's very exciting, and the pilots have shown dramatic results, and we're very encouraged by what the possibilities are. Yeah, I'll just add to that. We're seeing, you know, good opportunities, as I mentioned in, in my script. We're utilizing AI within our supply chain group to harmonize... our spend data, and that AI is enabling really effective and optimizing our matching and aggregation of SKUs across the board, and, and enables us to negotiate better pricing with our suppliers and manufacturers. Terrific. Wanted to follow up on competition. Are you seeing any changes in the market with regard to either the large competitors or even the smaller mid-sized competitors in the space? Yeah, I would say the short answer is no, really no change. It's always been a very competitive environment. We're all pursuing, you know, those brand name clients all the time, and the range of competitors continues to evolve and change. You know, still plenty of regional companies out there, smaller organizations positioned against certain businesses and niches that they like. But overall, I'd say, I'd say it's a very disciplined, competitive environment, really no change to economic structure, bidding strategies. You know, we are always focused on selling quality and customization, and that's what we continue to focus on. And frankly, we're seeing our competitors also doing the same thing. So, we like the environment, we like the opportunity, and, you know, I would say it's been very consistent, over the course of the last, you know, several years. Terrific. Thank you. Thank you. Our next question comes from Neil Tyler with Redburn Atlantic. Your line is open. Yeah, good morning. Thank you. A couple from me, please. Just going back to the margin, and the way you think about achieving the or hitting the midpoint and the components contributing to that. The question is, really over the remainder of the year, do you expect the, the bridge, if you like, year-on-year, in terms of the relative contribution of things like, you know, price versus inflation, ramping new volumes, and, and the, the GPO? Do you expect that sort of contribution to remain consistent or for those components to sort of change in, in terms of their relative importance as we move through the year? That's the first question. And then second question on the, the base business ramp up, and I'm- and particularly, I suppose, you know, in the international business. Just to, you know, I wonder if you could talk a little bit more about the, you know, what's going on there and whether to what extent there is a sort of acceleration in volumes in relatively recently won contracts that might not be classified as sort of net new, but you know, still seeing a sort of normalization upwards. Thank you. Yeah, I'll, I'll take the first one with respect to the underlying lever. So I think, I think the results we're generating in Q1 and the sources of those margins coming from, again, scale and SG&A, supply chain efficiencies, disciplined at the middle of the P&L with food and labor, and the continued progression of new business margin maturity. I, I think we expect a similar mix as we look toward the remainder of the year. As I mentioned, I think if you look at the core leverage drove the majority of the margin improvement in Q1, I sort of rounded to about 50 basis points. And again, if you look at the midpoint of our guidance at 45 basis points, that's pretty consistent with what we're, we're seeing. Like I said, in Q1, the sort of upside, I think, generally came from inflation moderating, and that's, you know, obviously not definitively built into the outlook. Yeah, and I would just add, I think... I'm sorry, didn't mean to interrupt you. I was just gonna add on the base business acceleration that we're seeing. I think it's a combination of things. It's improved volume in existing locations, more customers having returned to work on a full-time basis. So you're seeing a ramp of improving customer counts, and you're also seeing the ramp up of accounts that we sold over the course of the last couple of years beginning to mature in terms of the range of offerings as well. So it's a combination of both. You know, I think we, I think we can basically put COVID in the rearview mirror and say that we've fully recovered, you know, any of the base business losses that we experienced during COVID, and now we're just beginning to really get back to a steady state and working on volume growth and improving customer counts. Thank you very much. That's very helpful, very clear. Thank you. Our next question comes from Ashish Sabadra with RBC Capital Markets. Your line is open. Jim, congrats on the appointment and, and solid results. I just wanted to see if you had any thoughts on M&A, if you're thinking of any tuck-in acquisition or even in terms of portfolio. You've done some pretty good portfolio rationalization, but anything remaining on that front in terms of non-core ownership? Thanks. Yeah, I would say, this is John. You know, we're always looking at potential tuck-in acquisitions to go ahead and build out capabilities of the various businesses we operate. We're always open to looking for those kinds of extensions, if you will, as we did with Union Supply. And nothing, you know, nothing on the horizon today to talk about, but we're always open and willing to pursue things that may become available if we can do it on an accretive basis. So while we don't view M&A as our primary growth driver, it's really a secondary driver, and we'll be opportunistic, but we'll be very disciplined. ... That's very helpful color. Solid results. Thank you. Our next question comes from Josh Chan with UBS. Your line is open. Hi, good morning. Thanks for taking my questions. I know that, on the net new side, you aim at 4%-5% a year. So I guess with one quarter in, how do you feel about that target for this year, and what do you see are the biggest opportunities or risks on that front? Thank you. Yeah, I would say that's, that's absolutely a target that we have established for ourselves. It's also built into our compensation system, so you have the entire management team focused on those initiatives on net new growth. And, so the organization is very disciplined and very focused on it. You know, we believe, obviously, in setting those targets that they're achievable, and there's nothing that's transpired in the last quarter that would, that would cause me to change that target. I would say, as I said earlier, our opportunities are very robust. Our pipeline is very large, and without getting into specific opportunities, I have no concern around the 4%-5% net new number being a challenge. Perfect. Thank you for that color. And if I can ask one on the corporate expense, that was lowered nicely. I'm sure the spin had to do with that, but I guess, is the new level of corporate expense what we should expect going forward? Yeah, that's right. It's sort of a rebase for the spin. Yeah, we're very focused on SG&A. That's an area that I oversee and oversaw my prior role, and you know, we work very closely with the functional groups to try to be flat to the prior year. We did have some moderate benefit with some share-based comp, a few true-ups there, and some forfeitures that provided a moderate benefit to the quarter. But generally, I think that run rate should be fairly consistent. Okay, great. Thank you both for the color and the time. Thank you. Our next question comes from Andrew Wittman with Baird. Your line is open. Yeah, great. Thanks for taking my question, guys. I guess, with the benefit of a few months here since the Uniform Rental business has been separated out, John, I was just wondering if you look at the kind of the corporate structure that supports the business, if there's anything that you're identifying that could result from that to make you more efficient, maybe either now, today, or as you look at their transition services agreement runs out, probably later this calendar year, when they're probably off your systems, if there's anything to think about there? Yeah, there are minor adjustments. We've really rebased the organization already, and we're able to provide those services with a base level of employee that we'll probably maintain going forward. So don't anticipate any further restructuring or any significant change. I think we're very happy with the level of resourcing in the organization today, and we expect that we'll be able to absorb additional growth as the organization continues to add net new business and grow, both domestically and internationally, that we can absorb that growth without having to add any SG&A. So that's why we're very confident in being able to manage that lever, you know, very aggressively and appropriately going forward. So no anticipated significant change going forward. Okay, that's helpful. And then I guess I wanted to ask on retention, and obviously, retention, you know, you said COVID's in the rearview mirror, but one of the good things that happened from COVID, I guess, from a retention point of view, is that that kind of spiked. I was just wondering if you could address the trends in your retention that you've seen here in the last few months, and maybe how that relates to those, those spikes during the COVID period and versus the historical averages. Yeah, I would say we're, you know, we're basically right on the historical average. We expect to be in that range again this year, and really no change to the pattern. And yes, during the first year of COVID, retention spiked pretty dramatically, but I think it'll settle in this 96% range. You know, and I don't see any real, really any change to that as our expectation. You know, some years it'll be 96.5%, some years it might approach 97%. But in general, I think that that level of retention is certainly achievable and don't see any threat to that. Thank you very much. Thank you, Andrew. Our next question comes from Harold Antor with Jefferies. Your line is open. Hello, this is Harold Antor in for Stephanie Moore. So Jim, quick question. Just want to get an idea, you know, as COVID is in the rearview, of what your focus, priorities, and strategies are for the company looking forward for over the next fiscal year and further. Sure. So I've worked with John and Tom, obviously, in implementing our growth-oriented strategy, right, over the years, and it's working, right? You see what growth can do in the 1Q, and we're producing great results. So, you know, the strategy is very consistent as I transition into this role. I think over the next year or so is really about execution, continuing to drive the underlying levers that we've discussed. I think it's sort of back to the basics in terms of operational discipline now that COVID and the supply chain disruption is behind us, so there are some opportunities, I think, with food and labor middle of the pay now without disrupting the high-quality service that we deliver to our clients. So that's really the focus for me. You know, I am fully committed and very confident in the outlook we provided for this year and committed to the 26 targets the company has established. Thank you. Our next question comes from Faiza Alwy with Deutsche Bank. Your line is open. Yes. Hi, thanks, and good morning. I wanted to follow up around supply chain. So we talked a little bit about inflation and product costs improving, but you made a comment around how the current landscape presents significant opportunities. So wanted to hear a little bit more around your, you know, supply chain initiative beyond just, you know, inflation decelerating. Yeah, it's, you know, we, as, as you know, we have a very robust supply chain organization that includes not only the, the core contract food service business, but also Avendra and a number of different GPOs in the Avendra family, focused on different verticals and different businesses, both domestically and internationally. And we continue to, to be very, interested in expanding the size and scope of the GPOs, both, organically through new sales efforts, by taking on new customers, as well as extending geographies that we serve, in the GPO arena. And so it is an important component of our, of our future growth and our future profitability. It is, you know, it's a terrific organization. Autumn Bayles, who runs that organization, having taken over for John Orobono last year when he passed away, is doing a terrific job. Has really integrated very, efficiently and, and effectively, into the leadership of that role, and, so we're very, we're very pleased with the overall performance. You know, they are hyper-focused on optimizing for our frontline managers, through the right products, the right services, the right partners. They're very focused on sustainability and all those efforts that we have from an ESG perspective as well. And, so we're, we're committed to it. We believe that we can continue to accelerate the growth, of the supply chain profitability, and, that will be an important part of our long-term margin improvement, going forward. Great. Thank you for that. And then just wanted to clarify or, you know, follow up around comments you made on pricing. I think you said that as, you know, as inflation moderates, pricing will moderate as well. Are you starting to get any pushback around pricing? Or just curious sort of how you're anticipating, you know, pricing going forward to the, to the extent inflation moderates, should we assume that it's really just moderation in incremental pricing? Or are you starting to see, you know, some sort of... Do you have to give back on pricing, I guess, is the question? Yeah. No, we wouldn't be giving back on pricing, but we'll see the rate of increase in price may moderate to more closely align with inflation expectations. So, you know, as you think about last year, for example, we had outsized pricing because of the very high inflation rate. That's kind of what drove our pricing lag, if you will. We were pursuing very aggressive price increases to recover cost increases that were beyond the norm. You know, I think this industry is likely to go back to a much more normalized pricing model, which is really inflation recovery, and you know, without any significant future spikes, I think you'll just see pricing kind of moderate to around the level of inflation, somewhere in that range. Great. Thank you so much. Our last- Our last question comes from Ian Zaffino with Oppenheimer. Your line is open. Hi, great. Thank you very much, and congratulations, Jim. Welcome aboard. You know, we're very happy to see these numbers here. You know, just so a question I guess, would be, you know, on this new environment, how does this impact your ability to, to win new business, to get, you know, new outsourcing versus competitive wins? You know, how are we seeing this now, I guess, as you're getting more confident in the business, we're seeing inflation coming down, you know, pricing seems to be good, it seems like your sales force is really, you know, tip top. So, so how do we think about that now going forward as far as, you know, what will be the big drivers of growth in those buckets? And, how to think about the environment, you know, either accelerating or decelerating, et cetera. Thanks. Yeah, listen, I think, you know, the overall environment as we talk about is still a tremendous opportunity for us, right? There's a significant portion. It's a very large market that continues to have a significant portion that is currently insourced. So, you know, the strategy going forward remains focused on net new, and like I said, driving the levers that we talked about previously. I think with the supply chain disruption behind us and COVID behind us, it just makes driving those levers sort of more important and brings us toward, you know, the underlying strategy that we've outlined. Yeah, I think, you know, I'll just add a couple comments. First of all, you know, we believe that, you know, achieving the net new numbers is important for the long-term success of the organization. We've resourced the company, we've rebuilt the organization, we've rebuilt the sales and growth culture, and those things are in place and are sustainable and will continue to drive our long-term performance. So, you know, the model really is around retention of our existing customers and maintaining retention at that, you know, call it 96% range, net new of 4%-5% a year, and then, cost recovery through inflationary pricing, recovery going forward. And that all translates into a very sustainable long-term value-creating growth model, and we're absolutely committed to it. The marketplace certainly can support it. The range and the scope of opportunities available to us are literally limitless, both from a geographic perspective as well as a conversion perspective. So plenty of self-op conversion left in all the markets, and we're gonna be competing very aggressively to continue the growth of the organization. So we love the business model. You know, we've built an organization that can now take advantage of it. It is focused on it, is compensated on it, and we're delivering on those results. Okay, thank you very much. That's a great call. I will now turn the call- Thank you. I will now turn the call back over to Mr. Zillmer for any closing remarks. Well, first of all, I would like to say thank you for all of the team members at Aramark who have produced terrific results in the 1Q. Thank you for all your hard work and efforts. Really proud of the work that the team has done. I'd also like to thank all of the investment community for their support of the organization, and we're looking forward to a good 2024. Thank you very much for your time and attention this morning. Thank you for participating. This concludes today's conference. You may now disconnect.