ARMK - Earnings call transcript Q3 2018

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Operator

Good morning and welcome to Aramark's Third Quarter 2018 Earnings Results Conference Call. My name is Christine and I will be your operator for today's 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. I will now turn the call over to Kate Pearlman, Vice President of Investor Relations. proceed. please Kate,

Kate Pearlman

welcome results and conference to call Thank the to third operating for XXXX. quarter review you Aramark's of fiscal

www.aramark.com, me on Chief included press which that Financial our Foss, deck. in Eric I would Executive our Bramlage, today regarding our slide remind President be and Officer. Executive can with you to our and Chief our Steve Officer; morning, forward-looking our President release Vice notice website, this like and earnings found and Here Chairman, are statements is

this making other discussed various During of fiscal comments are the in of forward-looking, or differ call, filings. sections results materially expressed SEC MD&A Report Annual our those result Actual a risks, XX-K for Risk Factors, expectations uncertainties on that implied we will as Form those from and be including important and other and XXXX. may including our our factors

non-GAAP U.S. in of be reconciliation financial Additionally, A discussing press morning's our this can we GAAP as website. release, as certain will on measures. well to be items these found

Eric, Before our AmeriPride wanted call the Avendra over I I of quarter to quarter results. includes to third mention the turn full and that

the over as to quickly separately Eric. we call ability earnings are the next distinguish few deals the for losing We continue to to I'll that, we the turn related but them, revenue integrate to will track quarters. With

Eric J. Foss

driven a up increase currency quarter in bottom were and earnings from was X%. Total morning, strong good company balanced were third XX% and the constant the an and constant reported sectors results, across broad-based by both line basis. top geographies. Kate, $X.XX the Adjusted Thanks, share, morning, This currency across These on last everyone. year execution on record sales quarter, and per portfolio. results we

business. of currency Adjusted XX% growth. up margins growth a operating both was expanded constant which Building our outlook growth. fifth XX would wins we and as solid new earnings and share, productivity operating broad-based adjusted share momentum, affirming improvements strong delivered of basis. double-digit drove Adjusted on this million, EPS $X.XX on an base by expenses across of $X.XX per X%, per impressive to business basis be driven points, the we the net year business income legacy consecutive Our $XXX are lowered income overhead adjusted

our another X.X% the also we XXXX. achieving for approximately outlook And are set record line We have clear Net-net, legacy XXXX to increasing Day. margin point of a revenue business basis full year results. target expect Investor our year at we growth sight we of for to XXX our

third our and communities united are by to lives Before live work. detail and of an The improve exciting portfolio like by communities by our footprint across quarter to to just the keys speak and reducing wellness, to plastics to we to recent by single-use and our demonstrated serve, back and decrease review value our really company and we as customers, our health environmental significantly track ability by XXXX. giving pledge employees drive results, with purpose-driven the promise. through values our purpose highlighted, the enrich performance, associates, our These our distinguish uncompromising shareholders, the that us is of foundation more commitment performance discuss we nourish our passion Aramark let minute. XXX,XXX and day, a commitments to mindset our we'll in every our delivers It to me financial and performance, I and as that deliver to begins record our unparalleled unwavering

future. very bright purpose, and is and Taken promise and fuel unmatched the about our together, creating really at Aramark performance really position are strong which we our

us relentless deliver these is us enabling guides on the strategic move to focus from strong framework philosophy now results. how our Let's to our that

accelerating is imperative growth. strategic first Our

broad-based geographies. across was As X% I mentioned, our sectors legacy and which grew business

U.S. delivered growth sports, education, and leisure, corrections, business facilities. led Our X% by healthcare

our Canada, well constant of was delivered across performances International increased growth business. all with X% legacy currency as Our which Uniforms, Uniform growth from as Europe, sales our XX% emerging X% in strong regions, of segment markets. Revenue

overall indicator drive four We relentless service portfolio with Rising satisfaction through begins levels business to Because satisfaction and solid and a quality, consumer meeting continued improvements consumer our product dimensions; health, the on and remain of are personalization. in we of excellence. with needs growth. consumer-centric ends consumer, the convenience leading our obsession across laser-focused key

encouraging further consumer prospects. bolster that Today's future are growth our results confidence in demanding is these So, also innovation. our increasingly

that to our to on-trend appetites. menus consumer ever-evolving So, deliver appeal we updating their continually options are

we're sustainably-sourced we to with pizza. Pizza. quarter, Oath the also today, a with for cult partnership great following crave pizzas And ingredients. has relationships like announcing expanded Oath products. FarmLogix signature that our This its and our increase basics feature exclusive Consumers a ethically-sourced local

to introduce are across brand our We this to consumers delighted portfolio.

both Of and technology new creating improve core our solutions course, of while offerings, extends We're innovation far also brand speed service. menus. premium in our enhancing strategy also that beyond

I'm In with that launch on wellness, health of the in miss enhanced discussing look our field. and to Apple We Chat fans won't With innovative a (sic) of action technology minute and Day Philadelphia at our That ballpark, to December. from report solutions forward our proud Citizens Bank strategy brand Phillies. to so the fact, Investor to home regards Business they we allows improve order partnered to the support campaign at their and CVS in to commitments the and and Cause to Honor Heritage K-XX North development Healthy Social schools also for academic Highest for outcomes. engagement. We've student Wellness consumer and Hispanic our Health joined health Corporate American Association menu that Initiatives awarded centers above America's target continues the with Life of and for and XX SMART Student Foundation Health levels was Marketing, track Heart by XX seats

momentum, pipeline. strong Looking and business ahead, our new with our solid retention growth mid-XXs I'm broad-based pleased rates

margins points points technology in With strong this sales second regards constant As driven X.X%. productivity, This operating legacy I the a and our basis, by approximately points. objective, leveraging capabilities. our our XXXX basis to currency to increased to momentum productivity mentioned, reinvestment on by we're activating in for year base increase XX of full adjusted our of outlook XX XX basis offset was quarter basis business

Looking ahead we that fourth our to to remain inflation productivity basis confident point on and ability quarter, enhancements XXX margin our delivering to offset in deliver the AOI target.

to businesses. business across functions. significant are begun plants turning with This and Turning overhead our that perfect to once of achieving second rationalize with AmeriPride third score Aramark all of integration strides objective, And we're best in progress the the again made the our talent, expenses, and to already capabilities reduced recent a almost class a Aramark for fourth of our year to portfolio purchasing supports of efforts with attracting and and class as for leaders on And Leadership operations. we've that is drive our results. our our Aramark both objective, we college XX% recently acquisitions. Avendra row. redundant to our new we've pleased combined diverse finally legacy optimization, our diverse, leveraging have part procurement best inclusion, grads named which Accelerate a Program. We locations. also we've the was Uniform one And to We've in quickly combining to work Avendra's disability to report warehouse develop proud our I'm places welcomed

original we detailed All efforts are have confirmed for that we achieve which confident synergy on our both deals will schedule. targets planning of our

Before world. all closing, our of members, our around common to I excellence in XXX,XXX share purpose day want to every the who team service thank customers delivering our

prospects, and future also growth reiterate Aramark's confidence confidence. that for there in my me Let reasons several are

AOI as by results EPS strong strong as first is The well double-digit our and expansion. across evidenced the bottom that that momentum growth, as top quarter margin have we and businesses delivered broad-based solid business established in geographies and line

framework. proven The our XXXX record second line will year of X.X% top be our track a growth within approximately reason with is record. long-term

our target a to a at EPS clear this year fifth that have line established one XXX-basis-point achieving of double-digit only Day, making companies margin that us hold of our of we few will in growth, adjusted the XXX and Fortune consecutive to sight distinction. be very I XXXX We

Third synergy will unlock we on-track forward. financially scale acquisitions two our with competitive add compelling position strategic is capture have improve integration going value that and and well, that and that progressing

given our flexibility. proven as the are growing to established large continuing with business right market as outsourcing resilient enhance verticals, future potential to strong and bright well our solid industry and in our financial a win of Finally, model across the position

with So, to let call Steve. over that, me turn the

Stephen P. Bramlage Jr.

good Thanks, morning, Eric, and everyone.

our basis currency X%. due with tailwinds broadly the by remaining GAAP begin on to of the year-over-year of weakening of and of XX% This currencies from the QX $XXX billion in the composed represents roughly This was basket X%. X% the roughly acquisitions an with legacy $XX quarter. Sales sales quarter were the currency a million, against growth reconciliation. me or grew or of $X was dollar our a Let million relates increase that on Constant U.S. increase basis. to business. with in AmeriPride, generated the sales majority X% during This

We to from basis positive indicated, operating a do a basis, for XX% X.X%. million and points basis. quarter currency currency AOI the the constant of quarter was company. on expect to XX-basis-point Adjusted be had as the benefit constant on us did and a income results currency not fourth the $XXX total that XX timing holiday increase Our favorable had Easter the rose as we a impact that's in roughly the quarter. in on in margins

prior in-unit on also overhead natural the for further expansion should in also where the remain favorable strong all As productivity quite focused due sets very mentioned, we year. labor driving and up and in well expenses the been us Eric lowering comparability this food we fourth successful quarter, to of our disasters We've improvements. have margin in

a impact events consolidated quarter impact in and reminder, This business. of on in margins the negative XXXX. fourth a disproportionately AOI AOI a negative was As $XX equated million those XX-basis-point that our to concentrated had Uniforms about on

XX% pricing strong XXXX, AOI average what's years lower mentioned, very the reconciling maturity XX%, higher achieving the accounts facility I the a increased from than impact reflected Eric on waterfall. the dilutive our The negative by approximately a cost of that benefit items we a a from from financial impact facility, path and the net higher clear receivable our to our deals we the further increased EPS the also decreasing extended is two already want several in finance. was across per share. also on flexibility. of EPS We while adjusted quarter, during the the already of to tax $X.XX enhancing more to lowest as have or from to of benefit mention our size offset constant in Adjusted $X.XX, This expense. target results. the AOI rate versus currency As quarter improvement AmeriPride XXX-basis-point XXXX and interest Avendra another margin our very XX% basis,

In interest exposure This further increases. over company $X lowered very on the addition, term to billion the minimize rate will our future of help pricing pricing low loans. lower already

we Now the expect turning revenue full business our outlook, to X.X%. legacy now growth year approximate to XXXX in

level, acquisitions. will the at We a course, percentage actually increase to the of report larger due company

affirming EPS consecutive also million. Eric our $X.XX. mentioned, annual Furthermore, represents growth. greater $X.XX midpoint flow increase as $XXX approximately And The adjusted we're free affirming are the adjusted fifth than a double-digit XXXX. cash We of that our XXXX outlook $X.XX of of year outlook of versus EPS to XX% be would

dollar-for-dollar factors $XXX should pay Now, as negatively expenses to we our Taking free XXXX what year obligations EPS seller variety range, be believe of in year and in flow one-time of million annually. exchange by quarter, account, XX% this operating into consistent our purchase a which we business would related of is that be midpoint the merger flow these cash is for cash with our one-time agreed cash least able price. I last generate reductions to mentioned conversion of this full approximately at impacted

flow leverage to due year. we end full reported year the at X.X as estimates still could of ratio our of scenario, acquired the current cash cash expectation, by impact continue while acquired, modestly below of in we're positively, businesses working a working on to expect our more capital consolidating we to of comment flow evaluating the possible capital the than sheets times fiscal the the time. the Under combination changes the last one impacted and companies negatively, it's of the Finally, more result free be or drive the end any first multiple that seasonality free balance in year for

tax interest reform changes unchanged. Our previously communicated assumptions to no of regarding impact assumptions remain the Also, are legacy M&A expense the our business our around tax and or spending. capital there rate,

to a Day. we of the and of competitive forward overall strong XXXX driven different our as years company, company three partially earnings very to vendor spite variety our the financial sustainably financial than in will third we the what acquisitions the cash quarter will closure focus, of of started a years recent very we're for Avendra XXXX and organization profitability tremendous the deliver own but marketplace have next have our a momentum Not continue value shareholder I our sustainable of of because that substantially will through progress in double-digit in improved only We as flexibility This compelling the our product our exceptional synergy flow And be we the an to of environment from when closing our represent retain consider to we is our discussing productivity also growth of over ongoing fact but performance a we market of significant next XXXX. an set going over deleveraging, innovation we years. consistent and portfolio Day our challenges. existed Now, value are this adjusted our fully still will higher. as to our also in close AmeriPride financial And as AmeriPride. in of drive when year. also significant expect and commitments legacy ago, and looking continue three a consumer-centric we year to deliver the strategically tax I December several generate do the stellar we're course, Investor Investor integrate company With generation improvements business, capture financial capabilities and strive we I further strong opportunities while for constructive in sustainable be how to than Aramark. more years. us much past the because forward the to our the over to on turn benefit like prospects reform Eric. that, drive of going that be next of And shareholder our several XX enable I'll at over to strategy targets will back on call looking and

Eric J. Foss

line think And be I with Steve. to Thanks, up Christine, open any to questions. happy and take we'd that, the

Operator

you. Thank

Hamzah Hamzah of Mazari Capital Mazari Research. Macquarie morning. first Good from Our is question - ahead. (USA), Macquarie Please go Inc.

The of number impact just, I shutdown of wildfires that was per or and first quarter from had walk if could through impact any hoping question you of Yosemite in you terms years any there. is know I sort a it's ago the of a of revenue flagged disruption sort $XX million contract.

there So any be helpful. color would

Eric J. Foss

morning. Good jump let Eric. Hamzah. as Sure, I'll add start and well. and Steve in It's thoughts his

First California everybody all, are the fires by been with our obviously thoughts start just let in there. impacted me that's with of out

monitor with it the National able were to continue Services of current one the is we operations, to to Relative is to anytime our this, we get deal the day Department. we anything us news safety the Park really for and As out our with number the good priority to of guests, safety it out situation, like employees applies and safely. everybody our day

the for the in us, You absorb with around a strong our our lines think, I kind applies good want projections to and really, say that And, following of same the and we to do I a everybody you while on is business know impact very distract track And, be. and business. guidance quarter-to-quarter this what Aramark, they're have we for business time these it's of performance would any get just today able me across be sectors, that lumpiness mind, we here I about yourself really note we that the today, you types from sit referenced. of types might would happening of kind trapped I EPS good of Don't lot what relative record just know I these bigger again, become think gave from the I that the this I hear think thing unfortunate, important keep events. of anything? would of add for to analysis not to geographies, Yosemite. we disasters, impact from talk Steve, or Steve to natural from really to accustomed do to into situations. events. have insurance dealing these what's what of a where And let picture broad-based mean

Stephen P. Bramlage Jr.

us. Yeah. I ultimate – prescient just know we're don't would I so not be financially mean, clearly, for exactly the we will impact what

would the stand to that's for that standpoint. number what we fiscal I but is Inc. Hamzah California other we think, just the hurricanes, we else prior in of know from an actually the range you at for are. seasonality. because park. can situation points guidance to bigger reflect gets there, you - we can of probably out QX you believe nudged year else the think revenue maybe about any with best range of uncertainty relative I point the sort the whether Steve, fires data I comfortable the earnings on on felt now, know the I Capital know around to it's what up Macquarie Very of severity And much little synergies, the touch But, just question to productivity light a Mazari ramp? for have historical pat the based and our we where firmly the second helpful. you (USA), ramp earnings anything margin with that bit spoke anything sort

Eric J. Foss

thoughts I'll let start, add and Steve Eric, It's again. Hamzah. his Yeah.

the knew to quarter I going lap think first of all, was much we look fourth like. very what

points year, last the that fourth I'm that impacted the XX look math the the you is at made, to quarter. So, if points, in you XX about basis hurricanes by – point sorry, one-offs QX

if really quarter works his in above quarter. talked every unit about what's base solid Steve had obsession you think as That's and SG&A. comments as happened at of and every the the we've way each all around performance very food, so, And our in the look I year unit long, is well labor each productivity math things some around

the second so, lapping planned offset first quarter, of in third were I we so think And quarter, the fourth first difference and investment as quarter, in see that combination that. investment. out That and – as that the it's the off second And particularly the you in some price quarter to year, the the for lessen. of of half capability also of spending get start-ups, and end spending the flow-through was flow-through, quarter. into by of investments saw we saw in is you indicative later that was year, at you'll play uniform we quarter third the fell The get the fact investments, between investment those typical

think what broadly XX we to want I basis take I a in then consider lessening weather if points That's delivered, gives So, of and our quarter again, the give a credit. of And of confidence. you lot lot overlap fourth us investments slightly. what team

at several really been an get not has productivity to last year improvement, the our that. this in has record just been If unmatched for years, full but I they make want track Steve? you sure on margin and industry, credit look so the

Stephen P. Bramlage Jr.

in this reality looking back think it's is that looking improvement I improvement make last the had the area is of the already add, the Yeah. you're in focus because and an Eric over of you in math. really very experienced And folks, margin once I know of made a around margin just fourth we reiterate the mean, quarter. years. a the AUS quite experienced for quarter. points very maybe a the would similar that for couple I we would of level the We experience XXX-basis-point fourth keen I stepping and know level we've quarter you're adjustments the for And the that third pricing, similar weather at obviously

we So, not feel very year, to the be. I we our I done across performance already the this the required And with have underlying exactly consistent feel Thank prospects what is message anything - in and expect to it Inc. already and journey (USA), tried terms experienced. Macquarie good Great. deliver I think Mazari differently where there, certainly to of very are margin we getting because of line. those we've good numbers you. Capital about so Hamzah it

Eric J. Foss

Thank you.

Operator

you. Thank

Please is go question of next Stanley. Kaplan ahead. from Our Toni Morgan

Toni M. Kaplan

Hi. Good morning.

Eric J. Foss

Toni. Hi,

Toni M. Kaplan

across thought this color in quarter. I Support the particularly which And on been was competitive verticals a and of wins. strong? wondering growth could And any you – I International food us result geographies, and if give I you might strong know said of broad-based number Food a (sic) Services have service was Thanks. but was that growth some very was

Eric J. Foss

revenue as X% we Canada. solid mentioned, pleased was very I geographies. mean Sure. you It good Toni, I we Well, growth growth. the mean growth across were with saw in

we think another good And about I saw base again, and broad-based growth. quarter other half China, had both our high-single-digit business and We Europe quarter the Germany, so, footprint. in a in markets, really half was strong across was in emerging fairly growth new that business wins. international of

Toni M. Kaplan

would be Okay, on I International the was margins, I great. bit higher just because timing. of margins little And thinking a Easter think

So, an a wins were if meaningful give seeing like, the on and profitability? us of us could and higher maybe you. quarter? you to you terms in food in you're And the labor update they're what on U.S., just there give any start-up if Thank impact having if the similarly, inflation of in some cost sense related costs could

Eric J. Foss

and first Sure. I'll to on on the Steve ask with question. start comment latter your the –

we uptick of think kind inflation. think seen have I relative to labor I inflation, in an

it I we very is, and with were very able saw year. deal upfront coming the in that proactively we're is think we very, the good news and that to proactive

based environments power, well fairly the with So, a of to approach productivity. as as we again, pricing development comprehensive deal a comfortable to ability variety with on inflationary feel our

Uniform your look will across on mean North I business, growth America So, see at across margin, as across year our question our margin business. and International we we to our the International, full business

have each inflationary to more deal labor just feel of been So, not the able sectors with we total, environment. in good but a how about

Stephen P. Bramlage Jr.

Yeah.

over my our basis And would mean I numbers our were was margins AOI math, XX%. XX almost International year-over-year. benefit deal I in by up Toni, International and X.X%, no almost think, points in the there's add, I up

that's deliver a what of good in quarter. of has segment. And performance our the coming we think it certainly thought expectations I met that darn out it should

Toni M. Kaplan

you. Thank

Operator

Thank you.

next Our go ahead. Please Barclays. Manav question of Patnaik is from

Gregory Bardi

is I Greg just to in. in of and calling your to weaker you've on baseball This Yosemite side like actually about the wanted growth ask Hi. at the confidence with attendance getting seems organic it stadiums. some the X.X% had

So, of can just that and maybe have you year far the you're kind about talk about some of in how the been thinking so surprises areas upside that?

Eric J. Foss

me of couple let Well, comments. Sure. a make

think I continue a do raise there's to to our year related to us of allow executionally to growth, series X.X%. strategically growth referenced as Greg done about revenue we've full to things you and

you've offering, some us available, do really of customer lot overall we and first the particular, and deliver we've to to better were, the foremost, I against and healthy, their satisfaction conveniently quality the increasingly centers a heavy how done of food for encouraging fresh, and growth you. heard leading in go talk think indicators branding personalized on lifting consumer about around and a what that experience needs

let of more to But that all obviously think Day we so, the good has really again, on base Related baseball, performance almost get of couple December. of work business. solid make points share We'll lines to and a strong work. to really that a when up, a of every front business results has there. good set retention me business branding across and led the And us year, I about feel our for the we lot one really just Investor in new

the as year. is this happens and sports growing First driver grow to team really of the anything our that of all is all, by going on attendance baseball, applies it front to is And business real driven performance.

ballpark on at right almost in. side, in baseball to look per now, it's across our business metric. cap to important caps broadly And do what attendance every per seeing performance the happens baseball in very the fan addition our we're up you we If watch

if bigger are have that so, based think overall digit, baseball the on about and look to have the or total, based across just year, portfolio say driven our focus about seeing kind other the line deal down growth low-single happened right team dynamics, momentum from our that again, And what's across don't of is over the I let team are take we up of I at if would you by distract declines picture most of I'd XX% the year ability in you here, XX% just teams business go revenue now. again, to the which performance, performance. And momentum in we and attendance broad-based with sector, back of of on geography, diversity across growth teams,

Gregory Bardi

some kiosks increased the things consumer-facing that? then And like inflation, helpful. well maybe potential technologies the and investments labor and as on if how That's the just on – on experience hitting of self-help consumer as wondering that changes you about think

Eric J. Foss

I the of think that, of sets all really use marketplace it with the consumer table. the our like to end the we saying decisions – Well, and and again kind start

activities how really Apple do that here sports that testing that. us about the in drive Phillies with certainly something we the you that just but to that that increased we're I orientation as either referenced of think get product the available to way can those increased and service, on the product around speed out So, I with think, think in the Philadelphia particular, take And side. solutions convenience, portability, them do we of in not are anything things or does allow about the consumers' technology portfolio, to

Gregory Bardi

you. Thank Okay.

Operator

Thank you.

Our go of next question Steinerman Andrew from ahead. Please JPMorgan. is

Andrew Charles Steinerman

Hi there. I wanted to ask the specificity of that three-year goal.

AmeriPride. to operating margin and goal the I considering Avendra for reach is Aramark wanted X.XX% year make sure this without So on-track to fiscal

Stephen P. Bramlage Jr.

Yeah.

me Let is start. The answer yes.

measure our which We exclude that business that the success end will the deals. the portfolio two we would of had absolutely at obviously metric with XXXX against

to people two the included deals best So, see them. in will clearly ensure without comparison apples-to-apples do we our an

Andrew Charles Steinerman

a Okay. And for kind guide. your implies is a you keeping EPS, the the full range EPS my I year quarter just on follow-up on there range specific. just Thank more were fourth for EPS you. one range, big Can full which on year philosophy lot ask of it's guide, where about kind of broad the the By reiterating quarter? a revenue

Stephen P. Bramlage Jr.

Listen, sure. said what I on totally Yosemite. we won't Yeah, regurgitate

we would think either raised of side. its obviously, communicated we call last to for are. to likely bit, that most believe the somewhere So, had have best take, has it our where otherwise give just $X.XX don't felt narrowed little around or I I going it be outcome middle and and range, we that stay changed. was a that

the we of to around be sit right the now. fully somewhere here So, us range I middle expect as

Andrew Charles Steinerman

Makes sense. you. Thank

Operator

Thank you.

question next Our go of from El Berenberg. Najet Kassir Please ahead. is

Najet El Kassir

you Good the please quantify Avendra Could morning, and your from Ameripride EBIT? on impact everyone.

Stephen P. Bramlage Jr.

This The is is answer No. Steve.

we those what will what estimate, we disclosure. deals about and for dilutive And quantified we the included $X.XX the million, been that's in impact a So, our we've in the the or in $XXX in be EPS our revenue actually quarter. impact two about be. will year. They've is share do It's far so communicating quantify,

the quarter. good think a I for pretty that's fourth rate run

falls for to Avendra dollar, take and And Avendra because where fence ultimately of together of the so businesses $X.XX the fine-tune quickly, would already Kate's going and I somewhere gray. you level these very, our and we're that for nature will transaction middle and come be transaction of of particular of I the the business. just to in $X.XX accretive by historical in their us to becoming of time exactly AmeriPride probably dilutive, in what side we're as back as think profile to an it very because is et of said comments, very, we're very then merging is opening on cetera, impact, that, a ability just relates synergy we So, – is margin finished. between their about us the dilutive profitability, the

So, we will EPS a – making of we sense continuing will with is. people revenue understand sure stick to what the and get impact

Najet El Kassir

quick X% that quantify growth Thank Could wins was respectively? please your you follow-up just in growth. you. QX? those strong Can with have and regarding top I which you base had mentioned line organic You a pretty

Eric J. Foss

Yeah.

and components the saw that good across way you be by of if X% the base by half growth business was at in business. the strong about of driven would QX, our new wins we growth driven half think I parse was that about look of momentum growth to growth

Najet El Kassir

much. you very Thank

Eric J. Foss

Sure.

Operator

you. Thank

question Dan ahead. next from Dolev Our Nomura. of go is Please

Dan Dolev

two my got Thanks for taking I've so much question. questions.

the one that? quarter the increased add-back quarter. stock both has follow-up. dramatically first have is, in elaborate you second on increased comp saw I the a in the Then maybe you also I first did – has that but versus what The Can – year-over-year,

Stephen P. Bramlage Jr.

reports. Dan, the compensation presuming, change a it the unclear I'm referencing that bit you're in company Yeah. was stock-based that little

Dan Dolev

Sure.

Stephen P. Bramlage Jr.

Yeah.

Okay.

broad large as quarter and strong equity alignment component to compensation shares. performance our are long-term part part and performance-based no our somewhere What performance and Half our been good in a shares. of performance-based related governance, broadly granting our unchanged. We has is of in million, we each year, there generally $XX in pattern the grant across organization. million commitment plan did a stock incentive value the that change grants to of So, $XX the neighborhood of grants have of

grants XXXX the were And with that XXXX made in EPS have those. associated metrics and so,

on per And grants performance are a at because they share out we levels higher run I growth performance. earnings thought so, will share of would expect currently than stellar we based those had pay forecasting, originally we've where

share that's And the that. years' is in comp worth to stock-based exclusively due so, several the quarter, did we payout accruals of true-up in what performance and change

have granting our no of change our again, because So, with up. in alignment those payout in trued equity plan, performance-based and we

Dan Dolev

business. expressed the reconsideration making know Uniform then, But on before for target, you. commitment Thanks some the you on-track to be great. And is seem for elaboration. that to spin-off. Obviously, to the you've really the Okay, follow-up business? Uniform. is now a I my parts in very here compelling any that that margin tax-free be on you of is your or Thank not need whether there to the

Eric J. Foss

No.

into side. us scale stay. just in business. footprint this right? to Uniform profitability. did that it's of it's very, and is it's think, a competitive to – be see. I defend the we've price business we our ton out excited business, the But, really the We've definitely love margins, with We're up strong it's can love, more adds it geographic we very mean, work about gives has and a we this position. be cash here our It very AmeriPride both why the until made feel the that we capital our talented And business growth of we we that extends is which about had performance It XXXX I put Canada on got talked more we a investment to of people. scale. a when reason attractive what couldn't terms to strong And we AmeriPride with that we business business We is It love creative deal. pleased flow. Dan, we declared a

Dan Dolev

congrats And you. Thank Great. again.

Eric J. Foss

Thank you.

Operator

Thank you.

question is of next Rosenbaum Shlomo Our go ahead. Stifel. from Please

Shlomo H. Rosenbaum

that give then, one follow-up on you it's the touched on for other from well. business. hand, saying you pointing the questions the I The improvement to margins becoming being as morning. Good something for the Analyst XXX-basis-point taking Thank the you that you're Andrew that talked – Hi. hand, increasingly on you're base on – Day, the to about to from my hard at acquisitions. on. And to separate want

And be clear, kind are are below factor-in expecting going this X.XX% to above the that all-in way are acquisitions? after of we – in on to basis you that you what's present or how Just is, going you come to to out show the a that an year on?

Eric J. Foss

base on about presented it is Well, it talked the reported all on way along I think the we've it and and business.

every and about specific the we've that example, very that quarter, to base And business. our talk this improvement our each of is a every that we good quarter margin basis when talk So, points quarter right, about on talked our performance. and business and each been have about we accounting base math XX and being

related since nothing in been base or we of than earlier, in any won't business, has Therefore, and in deals the anything other gave mixing the we there of two XXXX So, matching be be Steve's business. when between the to no there there. to anything won't impact There guidance XXXX, point fourth quarter. the be bought right. There'll

Stephen P. Bramlage Jr.

Yeah.

we're of that margin significant various a deals anyways. the like this, think of the going reported cetera amortization to because timing and reality goes the think have from that the practical on impact don't things the I et I against just transactions

little currencies So, kind should starting that The existed pretty thing at to good bit very out point. that only the we'll reported should be I impact. same comparison impact, guidance, of the it put the would true could be a have time. obviously but the We to currency, close currency a numbers up, The right. to get think be you'll vis-à-vis to the that move the

Eric J. Foss

And higher take up just to a us maybe to back of kind level.

the think go and I to since not XXXX back when we XXXX just did it's XXXX really you could IPO. certainly to

back significance to of from think the go this in closing sure it strategic us I to has get doesn't is pretty industry-leading been that to really gap shuffle has significant what see almost a make competitive basically entirely. just really lost taken here, that the margin to and gap improvement

And since And went And others, is game game excellent a very business that have strategically, so, talk and of as us us. and and the financially, bright public look now future it. us momentum. you same We've strategically just that's us got I organization to we're in think I this have And at commended. one position. fact think and of it why was an think two results. very we integrating. the of something be as to the We've the go I will talk we this heard certainly reiterate strategically I the a the about very And play, financially we achieve got Steve different We've heard repositioned we the wasn't very got a trying heard things but about business, strong certainly important accretive have we game were priority we for today puts but in record track acquisitions really that you've midst it as forward. just that necessarily have is,

today detail just That's about that margin, it is as why make But same. So, called think, the does every be be sure was to and day want organization and three we've to it's really than out we margin need much I I how doing stronger the a it each and have or the talk it years I ago. the repositioned this right. Steve years and five ago obsess business – about business, to

Shlomo H. Rosenbaum

for Thank color. you Great. the

we're ask than obligations little Why creating should $XXX give about million, greater you I some the the of detail million variability to And, jump. the supposed it's more but what's a close implication you the cash about bit Just how that. $XXX just assumed a – went us $XX variability? follow-up why is big about thinking a was want a to free that bit giving the commentary of little million flow, million? the be on just you reiterating more around $XXX cash more quarter a million that flow to The to $XXX free and that? have Could

going color your If calculation? bit you into a just little give more on could us what's

Stephen P. Bramlage Jr.

couple is big third that. start about ended of doubt no sure. There's where a there. we Yeah, from me indeed A jump It the timing-related just quarter. things, let

of The to three we year, quarter. ahead are foremost, is the about $XXX having spent a capital that. That in not door, a first out of the year year. spent have so fourth those already of purpose. to a than spending, payments our you're We merger-related going on of have quarters and tried more timing terms equitably are all First and in million the $XXX in lot million more the last last through this fourth distribute we

quarter will us end the for of quarter specifically the the going end challenging little calendar calendar a the third the bit whereby, weekend. a second working-capital actually in and we quarter, the same have amount So, has year-over-year of out month. door. The not been of on not the capital is our From month third standpoint, the falls spending

where give would And to cash going to more how we becomes we I particular that really, and in difficult seeing on file a from it the start significant the like the timing do be. make is little payments improvement standpoint a reform returns, fourth in make it finally, bump benefits so, to a then DSO And just quarter. a well. spending as the we and is flow coming us tax-related our lower the of metric really management will, of tax significant sure we estimated through quarter, expect

function acquired it's new mid-year But acknowledge, certainly So, strong capital, sheets And purely on than around fourth seasonality we uncertainty a working I had of where of two I to confidence need that's we what balance have performance. previously. we question some giving the that different ultimately the them we've significant land. will have us think that's the that what's a we quarter then

to our sure feel just through. $XXX to the us. around these I physical about balances. it I time of balances working the will But as we working first prints all combination going the through think wider and margin for outcome very million. greater first capital delivering the be the time make so, want And a It just acknowledge that, I capital than good be is little of

Shlomo H. Rosenbaum

Thank you. Okay.

Operator

you. Thank

Our ahead. Bisbee Gary last is America Lynch. Please question go of from Bank of Merrill

Gary Bisbee

of you as that work charges longer about, you one. term that et costs I'll there into Is XX% that of think any that guys. is, more Hey, flow or capital, that approximate working of year, there still we through on earlier? And will improve likely that, the think as it room yardstick that as conversion cetera? integration we you think in and and whatever terms is the a time part should to mentioned, up should last discussed over start whatnot significant that cash following that to merger-related or tail just next

Stephen P. Bramlage Jr.

they of I But, a what currently think, number, least million repeat. yardstick should XXXX. the we purchase we at phenomenon not adjustments price really will the the and on those kind in of the that that. And XX% those as can XXXX are I personally and in won't business expectation a have structured the $XXX view the way aspect, one-time to we able generate. Those deals, happen because certainly happen the right, on fourth won't should of minimum quarter as yes, an then, a be improve of

little those It happens million combine $XXX Year-to-date, to have spending amount, We've those talked we'll or years two the of have right? integration-related investments. a Aramark. number. deals, the combine next continue of two the million investment. it's into talked integration-related to We've investments but be $XXX closer million $XX about the continue to also different to We to to same over have the make deals though, three been kind so. We'll

the which So, the it million but repeat will nor just a deal, fourth $XXX how release, continue, we those not in referenced is XXXX. press will quarter, function in of we that that the the in structure repeat will

Gary Bisbee

does strategically stack I day of strategic mean margins today? Okay, up run does So, you're stressed ago. Thank mean the you you're a much competing stronger to this What the and day? of implications business, you. versus today the importantly, practically or able against few new that then both the business when guess how more stronger to years of the business for And great. or you company in position better in are position a Compass someone, what terms is of how

Eric J. Foss

it's Eric. Gary, Well,

compete, things, we say to a think I different when we think, we're maybe that more indicative it and it a a therefore, of profitable margin allows to I a I structure have I way and, stronger business certainly I variety position, mean, in historically. than have right? mean relative is in us it's the

innovative, offering, I to brands far products think the a and we're affords addition, much though, the of quality, our a in higher the stronger healthier. ability portfolio stronger it position is invest. position, Certainly, much us relative that to more

next a talk think about I and I, you chapter looking that but Steve looks chapter forward that the tell very and it's to on when my very were Investor in the we was important at us Day the December, we get improving prioritize that it I margin for time is to structure. based that would I more like, lot we'll our think holding And pursuing. to So, point hand what are much organization a

we're now. I think put up momentum that by results that have it's is indicative and our we strategy business we right working just the given excited the

Gary Bisbee

Thank Great. you.

Operator

remarks. to now Eric closing call back over Thank turn you. I for will Foss the

Eric J. Foss

to We you. interest in at quarter talking to forward Day our end of your look time December. thanks much and for hopefully you everybody Thank and fourth Christine seeing Aramark. Thanks, to in of many very Investor and the you at

Operator

participating. gentlemen. thank Thank ladies Thank you. you This you, for concludes conference. And and today's

You disconnect. now may

Aramark (ARMK) 7 Aug 182018 Q3 Earnings call transcript