Ian Bailey – VP, Investor Relations Eric Foss - Chairman, President and Chief Executive Officer Steve Bramlage – EVP and Chief Financial Officer.

Denny Galindo - Morgan Stanley Andrew Steinerman - JPMorgan Manav Patnaik - Barclays Flavio Campos - Credit Suisse Sara Gubins - Bank of America Merrill Lynch Gary Bisbee - RBC Capital Markets Justin Hauke - Robert W. Baird Stephen Grambling - Goldman Sachs Carla Casella - JPMorgan.

Good morning, and welcome to Aramark’s Third Quarter 2015 Earnings Results Conference Call. 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 call for questions at the conclusion of the company's prepared remarks.

In order to accommodate all participants in the question queue, please initially limit yourself to one question and one follow-up. I will now turn the call over to Ian Bailey, Vice President of Investor Relations. Mr. Bailey, please proceed..

Thank you, Shannon. Welcome to Aramark's conference call to review operating results for the third quarter of 2015. Here with me today are Eric Foss, our Chairman, President and Chief Executive Officer; and Steve Bramlage, our Executive Vice President and Chief Financial Officer.

I would also like to remind you that our notice regarding forward-looking statements, which is included in our press release this morning, can also be found on our website. It is also detailed on Page 2 of the earnings slide deck, which is additionally available on our website in the Investor Relations tab.

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 SEC filings.

We disclaim any duty to update or revise such forward-looking statements whether as a result of future events or otherwise. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in both, this morning’s release and on our website as well.

Before I turn the call over to Eric, I did want to provide a brief reminder regarding the 53rd-week calendar shift. Recall that this shift has only a small negative impact for the full year fiscal 2015, but it has a fairly significant impact on the cadence of 2015's quarterly results.

In the third quarter of 2015, the calendar shift is estimated to have reduced third quarter sales by approximately 2%, adjusted operating income by approximately 4% and adjusted earnings per share by approximately $0.02. You may also recall the impact on our North America segment is more significant.

You should be mindful of this shift, particularly when making comparisons to prior year results. With that, I will turn the call over to Eric.

Eric?.

Thanks, Ian. Good morning and thanks to everyone for joining us. As we reported in this morning's news release, third quarter results were solidly in line with our previously committed expectations. Adjusted earnings per share were $0.29. Excluding the calendar shift, we estimate total company organic sales were up about 2%.

We continue to make good progress against our transformation agenda and we are reaffirming our earnings outlook for the fiscal year of $1.50 to $1.60 in adjusted EPS.

As you know, I would like to anchor these calls in the three pillars of our transformations strategy or what I refer to as our three As, accelerating growth, activating productivity and attracting the best talent. Looking at sales growth in the quarter, excluding the calendar impact total company sales were up about 2%.

In our North America segment, our sports and entertainment business was impacted negatively by the previously disclosed large account non-renewal, which resulted in a flattish net organic sales result in the quarter, as anticipated and previously communicated.

In our largest sector education as well as our healthcare hospitality business, we saw mid-single growth. In both cases, we continue to onboard strong net new account wins and our base business performed well as we saw strong retention rates broadly. In our International segment, we experienced another strong quarter.

Revenue growth was up 6%, European sales grew in the mid single-digits led by Germany, emerging markets was up double-digit, with strong double-digit performance in China. In our Uniforms segment, organic sales increased another 4%, and the business remains on track for another year of solid growth.

Our selling strategy and efforts continue to meet with success in the marketplace and resulted in some great new client additions in the quarter, including the recently awarded Yosemite contract from the National Park Service. This is the biggest client contract win in Aramark's history.

Yosemite becomes the ninth park that we are serving for the National Park System. Under a 15-year contract scheduled to begin in March of 2016, we will begin to manage all of Yosemite's hospitality programs, including lodging, food and beverage, retail, recreational and transportation services.

The addition of Yosemite reconfirms that our Parks business is a core competency for us. As a matter of fact in 2014, Aramark hosted over 22 million visitors at our 16 different national and state parks.

In addition to Yosemite, other notable wins include the Archdiocese of Chicago, Floatel International in the U.K., several higher edge self-op conversions and a number new facility and healthcare clients.

On a near-term note, we have also been named the official provider of food and beverages as well as retail merchandise in conjunction with Pope Francis's visit to Philadelphia next month, which is expected to bring over 1 million visitors to the city. Aramark will also provide uniforms to the over 10,000 volunteers staffing this event.

As I have mentioned before, mission at Aramark is all about dreaming and doing, to make sure we enrich and nourish lives. At Aramark, dreaming is all about innovation. Innovation is important in retaining and winning clients by creating a superior and differentiated customer experience.

Over the longer-term, it is also a significant driver of the shareholder value creation. To these points, there are several important innovation developments worth mentioning in the areas of convenience, culinary and the community.

In the area of inconvenience, we know the value of convenience to enhance the overall consumer experience and technology really affords us the greatest opportunity to deliver against that promise. We continue to expand a number of locations utilizing Apple Pay, and we will have several hundred campuses using the system as the school year opens.

We are also increasing the number of sports and entertainment venues featuring Apple Pay, as the fall sports seasons begins to kickoff. In the area of culinary, we have relied on consumer insights to set the table and we are keeping pace with that ever-changing interest of consumers.

That includes testing health and wellness concepts like Greens to Go, which are tossed order salads, customized protein bowls along with fast casual offerings like the Republic of Spice Indian fare that appeals to the growing variety need states of consumers.

In the community, our recently announced American Heart Association initiative really represents the most innovative alliance in Aramark's history. The initiative is titled Healthy for Life 20 by 20, and it is a five-year commitment aimed at improving American's diets and health by 20% in year 2020.

The initiative includes industry-leading menu commitments that will reduce calories, reduce saturated fats and sodium levels 20%, while increasing fruits, vegetables and whole grains to 20%, and these changes will touch more than 2 billion meals that Aramark serves annually at thousands of schools, businesses, hospitals and sports venues with the expected impact of 10 billion meals by 2020.

Our partnership with the American Heart Association reinforces both, the alignment with our marketplace preferences and trends that insurers were doing our part to contribute to the health and wellness of our consumers.

Our commitment to innovation is a critical driver of both client retention and new business wins and I am convinced that these efforts are meaningful contributor to new business wins year-to-date as well as the healthy retention rates we are experiencing, which remain at mid-90s run rate for the year.

Now let me turn to the second pillar, activating productivity. I am pleased with the progress we are making with our initiatives in this area. In the third quarter and year-to-date, we estimate that we have achieved 40 and 50 basis points of margin expansion, respectively, driven by these base productivity improvements.

These improvements are being driven by, one, in food cost, we continue to benchmark our supply chain across the value chain from procurement to distribution, to preparation while also making sure we improve our processes and tools to eliminate menu complexity, reduce waste and leverage our scale.

We focused on reducing our labor costs as we drive productivity through standardizing our in-unit labor model, which addresses staffing, scheduling, over time and agency expenses; as well as by lowering our SG&A costs by optimizing the above unit spans and layers and implementing zero base budgeting cost controls.

As I have previously shared, investments in growth capability and technology are significant facilitators to unlock the productivity opportunity that lies before us and we are currently reinvesting heavily in these areas.

As expected, the timing of these reinvestments combined with the start up costs on a few significant new accounts has been a headwind to margin expansion year-to-date.

Also as expected, we will begin to lap these start up costs and our reinvestment levels are lower in fourth quarter, which should result in meaningful margin expansion during the quarter.

In fact, over the next few years, we expect this level of reinvestment to normalize at which point we anticipate more of the gross productivity savings will flow through to margin. We continue to expect those savings to meaningfully close the margin gap to industry leading peers.

Ultimately, through these cost actions, additional purchasing initiatives and improvement in our pricing strategies, we believe, industry-leading margins are achievable.

This is going to be more of a marathon than an overnight road race, but again our quarterly results will vary, but ultimately we have the right strategy and a very good line of sight to our goals. I will move onto our third pillar of our focus strategy attracting the best talent.

We continue to build our culture and provide tools to ensure that we attain and retain the best team capitalizing on new technology to help achieve that goal. During the third quarter, we reduce new tools that will accelerate the hiring process, reduce our time to fill open positions and improve the candidate experience.

This technology will also free our front-line manager schedules enabling them to spend more time on delivering great experiences for our key stakeholder. The well-being of our employees also remains a top priority and we continue to expand our health and wellness programs to educate, enable and encourage our employees to lead healthier lifestyle.

Our program has expanded beyond assessments and screening and we have taken an outcomes-based approach that includes quarterly fitness challenges, where employees earn incentives and rewards for participation and completion.

We will also be leveraging our American Heart Association alliance to expand the health and wellness impact to our own employees and their families. Finally, I am pleased to report that our efforts in this area have again earned us national recognition as the Best Employer for Healthy Lifestyles for the fifth consecutive year.

In the area of recognition, which is an integral component of our employee engagement, we recently announced that are top front-line associates who have earned our highest employee recognition what we refer to as Aramark's Ring of Stars. This annual recognition really aligns the entire company with our front-line first and focus strategy.

It really spotlights our service stars who deliver exceptional experiences at the moment of truth for our consumers and clients every day. All of these efforts continue to serve to ensure that Aramark continues to be an employer of choice and a great place to work.

Overall, a solid quarter replete with great new account wins productivity momentum and an innovative partnership that will help shape our consumer offerings for the future.

Despite the choppy earnings seasons and the uncertain macro environment we are navigating, I am pleased to reaffirm our earnings outlook for the year and look forward to a calendar shift-free 2016 that will benefit from our multi-year sales and productivity framework. With that, let me turn the call over to Steve..

Thanks, Eric, and good morning everyone. I will start on Slide 4, with the year-over-year third quarter sales reconciliation. We achieved nearly $3.5 billion dollars in sales during the third quarter of 2015 compared to $3.6 billion in the third quarter of the prior year. This is a decline of 4.

As you can see from the slide, adverse currency trends in the form of a stronger U.S. dollar provided the largest single reconciling item compared to the prior year and on a net basis account for essentially all of the year-over-year change.

In our third quarter, we were most impacted by the Canadian dollar and the Euro, which strengthened by 11% and 21%, respectively, versus a year ago. The impact of M&A year-over-year was not material. The calendar shift impact was a negative 2% or almost $70 million of a headwind.

These impacts have been discussed at great length previously and disclosed in our earnings materials, so I will not revisit the specifics other than to note the calendar shift impact was completely consistent with our expectations. Adjusting for the aforementioned items, growth for the company as a whole was a positive 2%.

This includes an approximate 1% headwind due to the previously discussed loss of a large client account in our SME business, excluding this single account, the remainder of our business would have grown at approximately 3% or more than $100 million in the quarter versus the prior year.

Let us now move to Slide 5, for discussion of our adjusted operating income year-over-year performance.

Please note that we adjust our prior year adjusted operating income figure for currency changes, therefore the 2014 adjusted operating income figure of $185 million has already been reduced by approximately $7.5 million versus to $192 million we reported a year ago, for the impact of 4% due to currency translation.

The calendar shift impact was approximately $7 million negative or 4% in the quarter, coming almost exclusively from our North American FSS segment. The underlying base business AOI performance was essentially flat on a year-over-year basis. In our North America FSS segment, we reported adjusted AOI of $107 million in the quarter.

This is a 10% decline from our prior year reported figure of $120 million. The calendar shift is most visible in this line item accounting for approximately 6% of the 10% headwind or approximately $7 million to $8 million of the $13 million change. The base business experienced to 4% decline in adjusted operating income of roughly $5 million.

As we disclosed previously, the timing of reinvestment in the business and account startups are the largest factors influencing the cadence of quarterly results this year.

Additionally, in Q3, the large sports entertainment account loss, as well as some modest deterioration in our Canadian Oil and Gas business also impacted North America AOI in the quarter. As you would imagine with oil back in the $40 per barrel range, we are receiving many inquiries regarding our exposure to the oil and gas sector.

Our global exposure remains relatively small as we have approximately $400 million depending on the exchange rates or less than 3% of our total revenue being derived from the sector.

While our North American FSS segment contains less than half of our global energy exposure of this business, especially the Canadian remote business, it is more susceptible to short-term volatility due to its higher extraction costs.

While we have experienced pressures in this area, we have been able to largely offset the volume declines with new business wins in other sectors outside of Canada, thus far in 2015.

While our energy-related businesses in Europe in general held up better than in North America, we remain cautious and prudent in our global outlook and we will manage our cost base appropriately going forward. Our adjusted operating income in International FSS was $38 million, an increase of 9% versus the prior year.

We achieved double-digit improvements in AOI across most of our European businesses through the combination of new business margin drop-through and productivity initiatives. Our Chinese business also contributed a double-digit increase in AOI growth, driven by both, revenue and progress and productivity.

The Uniform segment was up 8% on a year-over-year basis to $49 million. New business wins, better efficiency in our plants and overall progress on productivity initiatives have all contributed once again to a good quarter for this segment. Neither, Uniforms or International were materially impacted by the calendar shift.

Unallocated corporate expense was up $2 million to $17 million. This increase is reflective of our ongoing investment programs and both, capability and systems. I would like to spend a moment on Slide 6, expanding on Eric's earlier comments regarding the productivity progress in our base business.

While reiterating that these initiatives do not move in straight lines, we are very pleased with the productivity progress we are making across all of our businesses. As Eric mentioned, year-to-date, we estimate on average margins in our base accounts have increased by about 50 basis points.

We are becoming more efficient each and every day in the management of food, labor and overhead across all of our businesses and geographies. We have a long way to go relative to the opportunity in front of us, but the progress is real and it is tangible.

As the slide illustrates, during the first nine months of the year, we did continue to reinvest in the business through improvements in our systems and capabilities, which we refer to his transformation investments as well as startup accounts, which include the ramping of several very large new accounts.

As you know, over the last few years, the company has accelerated its top-line growth, which has been achieved in part by securing many large notable new accounts.

In general, we are quite pleased with the state of this new business and confident in its prospects, but not surprisingly both, the magnitude of the startups as well as the speed of a ramp up has influenced the rate of our margin flow-through over the past three quarters.

In the rare cases, what we are not happy with some aspect of the new business and we are unable to find confidence in a path to achieve our expected returns on capital and margin levels. We will take action to protect our financial performance and preserve shareholder value.

As an example, we have recently undertaken just such a step with respect to one account in our Corrections line of business. The accounted issue is a large contributor to the year-to-date investment in this category and our exit from it over the next several months will have positive outcomes for us financially in fiscal 2016.

As my last note on the slide, I would point out that the calendar shift is a 10-basis point headwind to margins for the nine-month period. This will reverse in Q4, which combined with the timing of reinvestments should lead to significant margin expansion in Q4.

As we will discuss in a moment, our expectations for performance are unchanged for the year and remain consistent with our long-term financial algorithm. On Slide 7, I will touch on just a few aspects of our balance sheet and cash flow.

Our liquidity remains quite strong and in a seasonally low earnings quarter, our cash revolver availability is good at over $600 million. We continue to retain quite a bit of flexibility to strategically manage our debt maturity profile given the lack of any maturities of note for the next several years.

For the year, our anticipated capital spending should be between 3.25% and 3.5% of sales. As we anticipated, we are well ahead of prior year free cash flow given the impact to the 53rd week in 2014. We continue to expect to be significantly better than the prior year on the full-year basis on cash flow.

We are pleased to have recently received a one-notch upgrade from Moody's, which we believe is reflective both, of our improving overall leverage profile as well as our commitment to prudently manage the capital structure of the company.

We are committed to preserving the appropriate financial flexibility, to ensuring we are optimizing our cost of capital, to investing in appropriate growth opportunities that meet our return expectations and to allocating capital to create value by balancing dividends and deleveraging.

Our total debt to EBITDA ration 4.4 times was a 30-basis point improvement from prior year and we continue to expect improvement in this figure to around 4 to 4.1 times by year end. On Slide 8, we are reaffirming our views on the second half of the year as well as the full-year for fiscal 2015. These are all unchanged from our prior communications.

In general, as it relates to Q4, I would remind you the calendar impact will positively affect our reported results, so both sales and adjusted operating income will likely be higher by 2% and 4%, respectively, for the company and more so within the North America FSS segment.

In that segment specifically, we do continue to expect organic revenue to be down year-over-year for the second half. The revenue loss from the previously mentioned client account in SME and the previously discussed non-recurring facilities work that took place in the fourth quarter of 2014 will present 4% and 3% headwinds specifically.

Again in spite of the substantial revenue headwind, we continue to expect strong year-over-year adjusted operating income improvement in FSS North America as our productivity initiatives accelerate.

I would summarize our second-half in as fourth quarter expectations for International and Uniform segments quite simply should be more of the same, consistent revenue, operating income growth as well as progress on productivity initiatives.

For Aramark as a whole, the previously mentioned items in North America will prevent us from exceeding prior year reported figures for second half revenue, so the company's adjusted operating income and profitability levels will be better than 2014. Currency remains essentially unchanged from the time of our last call.

As Eric referenced, our currency adjusted EPS expectations for the whole year remain unchanged at $1.50 to $1.60. At this point in time, we would expect to be around the mid-point of that range by the time the year closes.

Before I turn the call back to Shannon for Q&A, I did want to make the audience aware that the company is planning to hold the Market Day event in the fourth quarter of the calendar year of 2015. More details will soon be forthcoming.

With that Shannon and I would ask you to please start putting people into the queue for the question-and-answer session. Thank you..

Yes, sir. Thank you. [Operator Instructions]. First question comes from Denny Galindo with Morgan Stanley..

Hi. Good morning. Thanks for taking my question..

Hi. Good morning..

Yes. I really like the new disclosure on the margin progress. I think that will be helpful going forward and that is a nice addition to the slide deck. I wanted to ask a question on Yosemite to start off. That win obviously sounds like a nice win, but usually it does take a while to become profitable on big contracts like that.

If we are thinking about that startup line item in your new disclosure is this a pretty big margin headwind in like Q2 or maybe even Q3 before it starts helping margins or maybe you could give us a little idea about how that contract should ramp up..

Yes. Denny, it is Eric. Just a couple of comments, again, we are extremely excited to be adding another large or as I said our largest client win ever, so Yosemite is about $140 million in revenue. We will start that up in March, so literally it will be a second half impact to our fiscal 2016.

It is a business that has attractive margins and I would say relative to some of our businesses if you really think about the degree of difficulty of startups, think about the very heavy people-intensive businesses.

I would say certainly our K-12 business, our corrections business are much higher degree of difficulty our Sports business probably a little higher degree of difficulty.

The Parks business and therefore this account will be a much smoother transitions than the typical startup, so I think you know as we look at this, this is an account that will be accretive to the top-line and accretive to the bottom-line very, very early..

Okay. That is helpful. Then just turning in a different direction, this is a big contract from the past. On Chicago you have a big, I think, $120 million contract out there. They are in the news for firing people potentially going to bankruptcy and I just want to get a feeling for how that might affect numbers over the next year.

There is one piece is that potentially, if there were to declare bankruptcy they could get out of any kind of capital investments you have made I think it is probably below the average, but I just want to get idea of exactly how much that potential loss would be? Of course, they’ve done the layoffs, so like how much might that affect the top-line if any.

Maybe it is not a big impact..

Denny, we do not usually comment about specific clients, but let me just say the following. I think, we are an industry leader in the in the K-12 education sector. We have got about 500 schools nationally. We are actually the leader I think of the top-10 schools that are outsourced.

We have all three of those top-10 and only three that are outsourced and we have them all, one of which is Chicago Public Schools, we have both the foodservice and the facilities business and we continue to be very pleased with our relationship with the Chicago Public Schools..

Any idea on how much investment was tied up there, like start-up investment?.

Again, Denny, it been our past practice that we are not going to talk about individual clients relative to the outlook..

Okay. Then just one last one, on energy it sounds like that is potentially getting better. It was an 8-basis point impact to margins.

This quarter, is this kind of the worst of it? Is it getting better from here on out or maybe it is more of the same from here on?.

I think, to some extent obviously it is going to be driven by what is happening in the broader exogenous environment.

I mean, we certainly have continued to see modest deterioration on a year-to-date basis over the first nine months, so you know the expectations we have for the remainder of the year assume that the markets do not get any better than they currently are, but also that they would not continue to get significantly worse, so we are essentially living right now in a $40-ish type of a barrel of oil world and that is driving both of our projections or expectations and how we’re managing the business..

That is it for me. Thanks..

Next question comes from Andrew Steinerman with JPMorgan..

Hi. Just because there are few moving parts, I would like to ask you about the implied margin expansion in the fourth quarter when Aramark says we are trending towards the middle of the full-year guide given we only have one quarter left.

Then sort of the addendum to that question, so we should think about 2015 as a 20 basis points or better year of margin expansion?.

Yes. Andrew it is Eric. I guess, what I would say relative to the margin march again is what we have tried to do and hopefully we were doing as a result of some of the charts we are showing you is to try to give you a sense of what is happening in the area of base productivity improvement.

Again, as we articulated on the call and have demonstrated in the slides, we are seeing strong base productivity gains both in Q3 as well as year-to-date. That is driven by everything we have talked about from food and labor, SG&A, et cetera.

As we get into the fourth quarter, just like as we signaled to you at the end of the second quarter, you will begin to see some of the startup headwinds as well as some of the investments begin to trail off.

If you looked at our investment bucket for the year, the majority of that has already been spent, so as the startups in investments fall off you will see increased margin growth in fourth quarter. I think to answer your specific last question, yes, that 20 basis points is a number that I think you will see on a full year basis..

Excellent. Thank you..

Next question comes from Manav Patnaik with Barclays..

Thank you. Good morning.

I wonder if you guys could remind us or refresh us lot of your, I guess, the cost-saving initiatives in the food and labor side, just update us on the number of locations you guys are testing all these new initiatives and when you anticipate sort of the rollout to continue or even get to full rollout?.

Yes. Manav, it is Eric. Again, I think, the way we have tried to describe it is as this is very much a journey and you have heard us use the term we continue to be in the early innings.

So I guess the best way to describe it is, if you think about what we have done to-date, we have worked really hard on the SG&A side looking at spans and layers, we have worked really, really hard in the area of food this year, specifically in the area of waste.

We also fund the labor side, really begun to put in place a pilot across our lines of business about a more standardized in-unit labor model. Again, you will continue to see this evolve.

The heavy lifting to-date has been largely in the area of managing over time and agency on the labor side, managing on the food side waste and then getting at the above unit SG&A. Going forward, we will be far more holistic particularly on the food and labor side as we look to streamline activities across the value chain.

On the food side everything from procurement through distribution, through the food production process, where the need for us to simplify that drives a lot of savings, so this is a multi-year journey again very early innings, but the good news is as is evidenced by the improvement in our base productivity, the initiatives are paying off.

What is relative to the timing and how many accounts, we will always be at various points on different initiatives from piloting in a couple of accounts to in-process of the rollout to full implementation, so it is almost impossible to give you a sense of how many accounts are our through these.

It is really - they are at varying stages depending on the particular initiative..

Okay. That is helpful. Then just thoughts on M&A pipeline, just a general update there? Thank you..

Yes. Maybe I will make a comment on that.

I mean, obviously, we are always actively engaged in terms of thinking about the portfolio and thinking about what can we do in our various segments strategically that would enhance the competitive position or profile of any of our businesses, so as anybody in this space knows there is a lot more talk than there is action over any particular period of time, so I would say the company continues to be engaged in this space.

We continue to have active dialogue with the Board of Directors around where we think we would be best positioned from an augmentation point of view to help our current lines of business and that will continue going forward obviously when we have something specific to talk about in that space, we will do that in an appropriate fashion..

All right, thanks a lot, guys..

Next question comes from Flavio Campos with Credit Suisse..

Good morning. Thank you for taking my questions. Thank you again for that margin expansion detail with the growth expansion as well.

I just wanted to dig in a little bit more here, because we have seen so much strength coming from the International and the Uniform business and I just wanted some more color on that that expansion, how much that is coming from the North America for the facility services segment and how much of that was coming from the other divisions?.

Well, again, if you if you look at history, we have seen significant or the way I would describe it our International business literally across every indicator from top-line growth to margin expansion to bottom-line profitability has worked very, very well and I would apply that our Europe business, I would apply that to our emerging markets business.

I would also apply it to our uniform business, so I would say in that instance, we are actually clicking on cylinders across each and every one of those businesses. I think if you look at our North American business as Steve is highlighted and as we have talked about, again, we have had a variety of things, one is the calendar shift.

The second is most of the investment bucket goes into North America. Most of that new business headwind goes into North America. I guess what I would say is, as we look to the full year, you will see us expand margins in North America..

Yes. I would reiterate that. I mean, the way I think about it is, there is all three disclosed segments benefits to some extent pro rata from progress on the productivity initiatives, because many of the productivity initiatives certain things like labor are applicable to all of them.

However as Eric referenced, the reality is North America takes a disproportionate amount of the headwinds on both capability investment because a lot of that is system infrastructure and where our probably most pressing system issues are a little more North American centric than anywhere and certainly to start up fee, so everybody is getting the benefit of progress, but one of them is taking a lot of weight associated with the investment side..

All right. Thanks. Perfect. Thank you very much for that. That is great color. Just a quick follow-up now working capital, that that was a drag again on the quarter.

I know that Q3 is usually a drag, but there was a outsized drag on Q1, right, how is working capital looking for the full-year? Is it still going to be a drag? Is it going to be flat or are we going to see some cash coming out of there?.

Yes. We should have a better working capital outcome for the entire year.

I will take you back to the end of 2014 as the starting point, right? This is where the 53rd third week really starts to come into play on the balance sheet, so by picking up an extra week at the end of fiscal 2014, we had a significantly worse working capital outcome because of that just based on the timing of how we did payments et cetera associated with that, so the way the calendar will work that will accrue to our benefit in 2015 and in terms of going the other direction.

As a general rule, we also had some somewhat off items in the fourth quarter of last year that we referenced in some of our revenue comments earlier North America that also impacted working capital as a general rule, so we should have a better working capital outcome, which is part of the reason we are anticipating significantly better year-over-year performance on free cash flow as a general matter..

Perfect. Very helpful. Thank you for taking my question..

Next question comes from Sara Gubins with Bank of America Merrill Lynch..

Hi. Thank you..

Good morning, Sara..

Just to start off on a couple of quick margin questions. I want to make sure I understood you correctly.

Did you just say that North America adjusted operating margins should be up for the full year in fiscal '15?.

Yes..

Okay.

Then could you give us the comparable 4Q margin or adjusted operating income for the last year for the company's as a whole? Sometimes given the adjustment that you are making, we do not necessarily have the right base?.

Can you give me a little more specifically what you are looking for?.

Yes. When you report the fourth quarter, you will be basing your margin expansion comments and the actual dollar amount off of an adjusted number from last year.

Do you have that adjusted number for 4Q '14?.

Yes.

I am a little bit reticent to provide that because of the currency impact on that, so the starting point would be the table, where we disclosed the fourth quarter last year number, but that number will be precisely wrong, because we are going to currency adjusted per share and given the magnitude of the currency, adjustments we have seen each quarter it could certainly move it by 10 basis points to 20 basis points easily there, so I would start with that figure and now that you are immediately going to have a currency reconciliation and then obviously you are going to have a calendar shift adjustment on top of that..

Okay. That makes sense. I will echo that I thought Slide 6 was really helpful.

As you think about fiscal '16, it sounds like it drag from startup should begin to fade and transformation investment should also begin to fade, but I am guessing that you do not want to incorporate 50 basis points of margin expansion to our models next year, so maybe any comments that you might have to help us set expectations or other investments that might come up would be helpful?.

Sure. Sara, I would just say a couple things. One, we will talk about 2016 guidance later in the year. The reality is as I think what I take it back to is the long-term framework that we have talked you about at multiple times.

If you look at that revenue growth number the 3 to 5, if you look at that drives mid to high single-digit AOI and that translates into double-digit EPS, I think that is the long-term algorithm you should continue to model. Just to be clear I want to make sure that I do not misrepresent or you do not misunderstand my point.

We will continue to have investments, so that along with the startups which creates the lumpiness of the business, those two do not go away. Certainly, again, we will continue win new business hopefully.

We are encouraged by the pipeline and we will continue to invest in the areas of growth, capability and technology as we have, so my point around in falling often fourth quarter is when we put the plan together for this year 2015, we heavy-ied [ph] up the annual investments into the first three quarters. That will falloff in fourth quarter.

As we build the 2016 plan, we will calendarized those investments as needed to fund the business..

Yes.

Sara, I would characterize as it do not let the exit rates in the fourth quarter of this year deceive you in terms of setting an expectation around the entry rate for the year going into '16 for all the reasons Eric mentioned and then I would also refer you back to last year's fourth quarter, where there were several one-time items that are essentially helping our comparability when we do quarter-over-quarter comparisons modestly in fourth quarter of this year, but we will certainly impact the exit rate, so we want to check those as well..

Thank you..

Next question comes from Gary Bisbee with RBC Capital Markets..

Hey, guys. Good morning..

Good morning, Gary..

Could you give us a sense how should we think about net new business for fiscal '15 or year-to-date if you want to talk about that, including both walking away from Michigan and the Live Nation loss, are we likely to be flattish with last year up down and I am really thinking about how this gets you towards thinking about the 3% to 5% revenues for next year? Thanks..

Yes.

I think Gary, if you look at year-to-date I think we are kind of in line from a net new business with what you have seen the last two years now again that is adjusted for Live Nation, so I think from the run rate standpoint, we the last couple of years have been $300 million we had the one year of $500 million and I think as we go forward based on the pipeline run rate of net new business somewhere in around that $300 million to $350 million is a number that we would expect to be to deliver against that long-term framework..

Is that enough to get there? Then I get that assume some base business growth and any updates on how we should think about that it is the price is it merchandizing initiatives you have talked about in the past?.

Yes.

I think, again the simplest way I would have you think about it in terms of the math is if you take 3% or 4% growth rate as we look forward that will be built by the following math roughly maintaining a mid-90s retention rate and then about half of that growth will come from net new business and about half of that growth will come from base business with a portion of that base business being pricing..

Okay. Then just the follow-up on that, I know since the IPO we have all been disproportionately focused on the margin story, but you have also had top-line growth that has moderately trail compassed for four years.

How do you think about the potential to narrow that gap as well or are you much more focused at this point on delivering the margin? Thank you..

No. I think as we said at the beginning Gary, you heard me use the term dribble with both hands. I think the encouraging thing for us is, we actually were the industry leader last year.

If you look at our growth in 2014, I think we actually did lead the pack, so I think we will successfully close that gap that we had talked about as we went through the IPO.

This year obviously with the loss of Live Nation it has created a pretty stiff headwind for us to overcome, but having said that I mean we certainly want to be out here growing in line and preferably ahead of the industry therefore picking up share while also expanding the margin and hence the point that I have made several times that this is an organization where we are attempting to dribble with both hands, therefore trading off some margin to achieve growth is something that is in many instances the right thing to do for us.

Having said that, rest assured that, we are very focused on closing that margin gap..

Great. Thank you..

Next question comes from Andy Wittmann with Robert W Baird..

Hi, good morning. It is actually Justin Hauke on for Andy this morning..

Good morning..

Morning, I just wanted to ask, so international the growth rate has been really good. I think you mentioned again double-digit on the emerging markets piece.

I am just curious how sustainable that is and what you are seeing out of China given some of the commentary from some of the restaurant chains and whatnot this earnings season about the weakness there?.

Yes. A couple of things, Gary, I think again we had a great third quarter, double-digit revenue, solid margin expansion. Our China momentum is very strong. It is strong at the top-line.

Again, we saw a very good growth in the quarter and we will post very growth for the year, so if you looked at our third quarter, our China business was up about 18% at the top-line, so at this point in time and maybe just a reminder just so you understand the actual composition of our China business, it actually is more heavily skewed to facilities than it is food, but we have a very good business there, we have got a great local leadership team on the ground so they have over the last several years and we will continue their results each year be a strong, strong contributor to Aramark's overall growth and profitability..

Thanks. That is helpful. I guess my second question in margins have kind of already have been addressed [ph] here, but maybe one question just to the extent that it does benefit you, food inflation was an issue earlier this year and I know you guys had some initiatives to offset some of that.

I am wondering as those costs have kind of moderated is there any margin benefit that some of the prior actions, cost actions would give you a maybe the fourth quarter into '16? Thanks..

Yes. Let me take a shot at that. I mean overall clearly food inflation for the year-to-date has been relatively modest, right? I mean, we are not in a deflationary environment for sure, however it is a very low single-digit inflation.

As there are some benefit for us as we make progress on the food side of our productivity initiatives because we have less of a headwind year-over-year on food inflation than we might otherwise have had for sure and that is helping us, but also we got to think of the nature of our contracts, right, so food inflation does directly impact how much pricing we are able to achieve in a portion of our contracts that are essentially cost-plus type of contracts.

To the extent there is lower inflation, there is actually lower revenue associated with some of those contracts as well. By and large, clearly low inflation is a good thing for us and it is obviously helping us on food in general and we do not see any reason that is going to radically change here within the remainder of the fiscal year right now..

Thank you very much..

Next question comes from Stephen Grambling with Goldman Sachs..

Hi. Good morning. Thanks for taking the question..

Good morning, Stephen. Thanks..

One quick follow-up, just on the tools and system implementation, the fact that these are all at various stages, are you already able to start rationalizing SKUs and suppliers that you need to kind of get further down the road to start really having those discussions and really using your buying power in a bigger way?.

Yes. Stephen. It is Eric. I would say what we have done on the food largely to-date is really focus on waste reduction.

The good news is that is paying off for us, but to your question getting to a point where we address the holistic value chain from procurement to distribution to the food production process to streamline those activities and to really simplify that, that is one that as you have seen us invest in systems and technology we need to stand that out before we can largely address that opportunity.

I would say almost none of our progress on food side, which we have shown really good progress in the quarter and year-to-date is driven by that, so that work is still ahead of us.

We have invested in the technology, but until we get that system stood up, our ability to get control of a lot of that complexity remains very, very challenging, so we will stand up the technology before we address that..

That is helpful. Thank you so much and best of luck..

Thanks, Stephen..

Next question comes from Carla Casella with JPMorgan..

Hi.

I was wondering on, your Yosemite contract sounds really exciting and I am wondering what percentage of your contract today, do you do a full suite of services like you will be doing at Yosemite as oppose to just the food side of the business?.

Well, that is a complicated question when you say the full suite of activity. Depending on the line of business you are talking about, we could have facilities.

As you get into some of the sports business, we have an opportunity to have the retail business, so I would say for the most part the majority of our clients that have food service would not necessarily have facilities bundled with it. It would be low percentage.

On the sports side, it would be a higher percentage where we might have retail connected to the food service business.

Because of the parks, the dynamics in that segment, they bid all of those services as one that is different from the go to market model in the other channels where, again if you look at our two big businesses food services and facilities, those tend to be bid separately in each and every client whether that is an education clients, healthcare client, sports and entertainment client, et cetera, so a very small percentage would be the answer..

Okay.

That sounds like you have more opportunity there, but would your customers do you think other third parties for that or are they probably the only outsourcing food services and not transportation, logistics, lodging and anything else like that?.

Yes. It is tough to answer. It is certainly not a one-size-fits-all. I guess that the best way to describe it and maybe articulate it is the self-op opportunity in food service is very similar.

It is actually a little higher on the facility side than it is the food services side, but both of them with a lot of opportunity and you look at the big sectors like education and healthcare, over half of the business is still self-operated. That would be a applicable both, on the food service and the facility side..

Okay. Great. That is helpful. Thank you..

Okay. Thank you..

Ladies and gentlemen, that does conclude today's question-and-answer session. I would now like to turn the conference back to Mr. Foss for closing remarks..

Thanks, Shannon. I just want to thank everybody again for joining us. We appreciate your continued time and interest in Aramark. We look forward to seeing you, as Steve referenced, at our Market Day later in fourth quarter. Have a great day..

Ladies and gentlemen, thank you for participating and have a nice day. All parties may now disconnect..