ARMK - Earnings call transcript Q3 2019

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Operator

Good morning, and welcome to Aramark’s Third Quarter 2019 Earnings Results Conference Call. My name is Hilda, 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 remarks.

I will now turn the call over to Felise Kissell, Vice President, Investor Relations and Corporate Affairs. Ms. proceed. may you Kissell,

Felise Kissell

welcome and third webcast. and earnings fiscal conference call to you, quarter Aramark��s XXXX Thank

Bramlage, President Here our Chief Steve Chairman, me President Executive with today and Executive are, Officer; Officer. Chief Financial and Eric Foss, our Vice and

notice can As which slide is included this found deck. our earnings on our forward-looking in a regarding statements press our reminder, release in our be morning, website and

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

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

turn as Before both Also to as the slide of reflect utilize are over income, to results materials I Eric, our the by our the rule I anniversary that lapped have the mention detailed AmeriPride accounting acquisitions. call to fully adjusted Please affected we Avendra well and in and one-year adjusted we wanted changes, the net in operating which quarter. first reconciliations. in the began changes appendix those refer results to income now definitions of of for earnings

to will Eric. With the over that, I now call turn

Eric Foss

the which months driving in to morning, the performance everyone. first fundamentals our And good third through business, we of quarter focused Thanks, the contributed and nine the year. the Felise. quarter, remain of the In on strong

ability strategies engage to also consumers millions directly While to every with day. innovative capitalize on of growth our implementing

EPS in of Our constant legacy growth basis. currency revenue adjusted growth purposeful XX% on actions a of and X.X% resulted

with EPS cash in the a of combined through flow reference, currency constant approximately $XXX of X% an adjusted basis, with the increase legacy free prior was of point XXXX three first of additional an XX% million over gains revenue growth quarters nearly As on generation year.

synonymous is growth stability, notable shareholder aspiration XX% revenue up value over the we We the as are From sectors prior international demonstrated to relentlessly progress gains sustainability The in all and X%. with to uniforms flexibility, business of U.S. that legacy the third a building pursue across nearly in business year. creation. quarter

had And our fortitude to the in our resuming there virtually park I after team especially struck want all with our weather the to back in resulted rebuilding that business significant in and running now and leisure unprecedented contend it comment operations. getting Yosemite, up presence facilities was that’s

themes foundation There that business and are which four clear provide really to upon us build. strong underscore the for a

structure, to strategy. margin balanced really pursue fuels clear, disciplined our which improving a and our First, ability

billion Avendra. heading billion to $X leverage procurement scale. have more purchasing power from Second we than and $XX integrate our We doubled now as

Third, that balance a frictionless portfolio. advancing experience master cash flexibility. sheet free convenience brand And flow consumer strong and our our our From finally, multi-tier that financial product enhances one brand and driving customers. bolsters Aramark technology, for curation and our into combines

these but of only success third drove advances the in that also strategic each me Now, quarter, position imperatives competitive review let forward. our not going significantly our

offerings. efficiencies powered journey manage we labor operational been Our as optimize and margin has improvement base prudently menu by

offset Somewhat this higher businesses. quarter in by incentive-based compensation total the

on XX majority basis third action quarter, the overall under incremental in currently accretive is points reflecting intentional margin expected are in capturing be segment. approximately with the This impact margin our In exits performance. completed. company’s the These the to to you accounts custodial International certain opportunities, of strategically once FSS margin took of pursuit further as non-core exit know, way we initiative

year. across With $XX in the we’re route strengthens business marketplace. with pleased our position least our benefits million continue the realizing the density. synergies to Avendra, optimizing from we’re strategic our of integration acquisitions very as recognizing AmeriPride, expect we meaningfully this synergies With the at to which progress also increased We’re production from scale, the of optimizing on capacity combined purchasing

and culinary And and our to our within methodically offer product out includes we brand experiences. authentic restaurants house up That food of strategy. expanding on local trend portfolio rolling are with teaming brands

. Our and Culinary have and retention enhanced LifeWorks our a Spoon, new offerings of Table strong increase complement Aramark brands Harvest pipeline Kitchen to rates identity Collective, and Simple contribute of Group core clients

deliver addition campuses. in the and delivery team off for evolving business Uncle latest to look fall, a top by Uncle that an business app spots equipped convenient utilizes quality is meals of with healthy welcome to food Our early forward vehicles Good delivery an popular innovative a the to most Good personalized commissary the options, fleet based portfolio to the and platform exceptional this provides Uncle We college to Launching created regional and chefs. Good ovens Aramark. brand offerings on-demand and on

an increased sheet, remains of by million, no with we until free our due Turning for cash it meaningful and adds the Through free the financial flow area purposeful as quarter, balance the XXXX, third focus $XXX to maturities nearly possess strong, we all compared to company. flow generation it’s while disciplined advantage a continued the flexibility, significant cash with assets. prior remaining year,

of well debt putting on us in we our to repayments leverage to times nearly XXXX goal of achieve make by $XXX X.X Just million, track expect year-end.

the we’re Board program to through announce we’re has to flexibility, $XXX enhanced testament share repurchase pleased XXXX. million progress that financial a As our to making a authorized drive

our who across turning Before call our to Steve, collectively comment the over I’d like globe the the to associates quarter. drove in performance of all

that were in hourly employees committed for our our degrees very our role United college success. we the announcement States. excited our tuition associates recognizing a important full know, provide wage for and for on recent invest expanding And benefit we play to including targeted our coverage eligible across and increases, scholarships programs earlier training and year, their development this in children, associates, employees to As you how

and able State in will Arizona from Beginning notable to apply college degrees their including universities October, our associates University. earn be

One top in the country. of ranked degree the online programs

want We’re And our proud business our the a infuse dedication to pursue life-changing I’m boardroom diverse continues recognition. members to dreams ongoing garner team to that to education. to who their pathway talent frontline pleased of also with from front-line the free provide this to debt the dedicated

were those disabilities, Diversity, again retaining recently top disability to We veterans. recognized LGBT Boards for were Best of recognized employer by Place once Board as our on committed as and comprised having women. also to a and work with women minorities and a XX% inclusion by Inc. of promoting Women hiring, for We named

the future. are creating to to will our foundation prospects we closing, realize enable and In benefits scale accelerate operational The strong sales growth, optimistic we us our leverage are the optimize extremely about and business. to deliberate for investments

the on a capitalize the I’m executing and in part drive on clear, balanced opportunities areas sustainable right business We’re we confident and taking continue And to all maximize strategy. that a as review business. performance. to of growth we’re to and of disciplined build marketplace effort, critically actions the

With outlook. on quarter our that, go deeper now business will Steve third Steve? results and

Steve Bramlage

Thanks, Eric.

X.X%, results, accounts overall we value our optimal expense quarter on impressive included we improvement segment. solid We’re our with performance International third growth, Europe, preceded compensation the continuing allocated The segments, FSS non-core led higher by while the facilities and creation. custodial focused exit the exhibited operating growth as performance strength has Yosemite, the business. in at to with as AOI consistent revenue quarter year-to-date we in takeaways of which key resource well increasing across management legacy allocation, rebuilt in proud of incentive consistent is as X% our throughout

continue and from contributions grew lower Most statement. in prior XX% basis, lowering by deleveraging net improvement notably, operations, a versus entire with the EPS quarter. we And expense year. Adjusted on half debt the to make leverage constant to with due progress a on of the lower balance ongoing turn the the result currency as a interest of tax stronger $XXX a ratio income million rate sheet,

year-over-year and fully basis We as in a financials step are also our in underlying AmeriPride forward took a comparative quarter’s on Avendra the now results. reflected small simplifying

X.X%, legacy revenue. growth reflected which revenue now of business X.X%. The Moving to grew adjusted

in As in began ultimately and commenced and new within performance actions countries transition over mining continues particularly for quarter increased X.X% retention prior exit contributing all by gains to billion legacy reporting these in driven the $X with to seamless mentioned, quarter. bit in the We deliberate of our later America certain year. nearly were a of growth, although wins, underperforming business our rates Europe, the a ensure clients. international have South revenue excellent over Results accounts

by proactive within U.S. legacy implementing ultimately, business as year, solid sporting increased having gains activities catering and our earlier they sports, well performance in grew at business we consumer in FSS leisure This business corrections higher events, on and volumes and offset spending in as partially industry was resulted dining. captured capitalized X.X%, facilities as renewal contracts. with longer-term the

leisure to due lower the modestly at start as results well delayed winter from aforementioned Yosemite the storms. As up

we pursue integrate into and our in accounting X.X%. and between with primarily launch grew difference WearGuard X.X% patented Eco represent the consistent uniforms including portfolio, growth legacy as continue a that’s apparel as on In revenue legacy As Collection of the additional well changes revenue the growth adjusted AmeriPride to leveraging recognition uniforms. the of opportunities, general, from impact lines, quarter revenue

were to included million given X% in that total lower due of costs $XX and performance, all the $X increased in Higher of exits net in international, especially corporate third than allocated segments million compensation timing which across increased quarter, exit quite with bit a less expected incentive AOI currency quarter compensation. compensation. with reflecting in Constant strong results operational the these approximately the share-based was the approximately cash

which seasonably share approximately on our balance the currency to the ratio improved cash quarter, flow compared basis. XXXX in though growth Through progress make continue quarter constant per flow, we $X.XX to sheet cash ongoing come. to it’s half million free and prior was a deleveraging the year, compared Year-to-date earnings our management, prior turn as with disciplined strongest still in XX% improved leverage for Adjusted purposeful $XXX to year. yet a negative, was

as Our our to of leverage of achieve is deliberate The consistent of EBITDA becoming by firmly of cash leverage renewal the expectation capital share balanced use times to with repurchase we committed in continues and more remaining allocation long-term target fiscal three decline. time are strategy XXXX. debt approaching end to unchanged gradually over and authorization of our our is the

select XX year anticipate $XX X% of in the pace performance Our exit of and the synergies the this in to from AmeriPride. considering and revenue capture points basis of million year recognition of the be least headwind changes, to accounting we Avendra after remain from the approximately continue in unchanged, impact revenue margin legacy incremental expansion on Europe. of at XXXX considers another purposeful expectations accounts that full growth with we strong as year facilities growth AOI non-core approximately for integration

earnings the $XXX resulting Adjusted a basis. $X.XX, per the million reported And $XX high represent of year-over-year million generating Avendra cash free currency about of single-digit share HCT that will $XXX million landing and expectations midpoint before with approximately $XX reclass at of and and cash of to the on of $X.XX in range million growth flow. in about approximately AmeriPride integration spending, of spending constant

We end fiscal to the to of over of we of a call be of progress I’m ratio the turn strengthen year. the end to times going continue leverage now Eric at on updating to in And at Q&A. to X.X look you financial front the forward back continue year, flexibility. expect to We as the our by the

Eric Foss

we’re Well, Steve. Great. pleased with our progress. Thanks,

quarter, And marketplace to us. see be for solid consider opportunities as business robust momentum look by opportunity that are strong and forward we reiterating, encouraged to growth a on Just ahead lies we continue multiple now. growth right we what the

it Hilda up and turn that, Q&A. over open with So with to it

Operator

question-and-answer Goldman We’ll now session. We Grambling begin you. Stephen Instructions] have Thank Sachs. the [Operator from

Stephen Grambling

Thanks. Good morning.

company the quarter ways strategic the you those the from you how on or on of private to as a realize, transaction, any manage of would considering value think were but public in consortium had an you company? you if think can’t a a So create through comment business change versus news I acquisition you how some actions, about basis business. fundamental

Eric Foss

Well, Stephen. question. Thanks for the

indicative, is, company have year-to-date, in how does see I of it I how business as strategy private. is good performing, this is you public is both about quarter, history And think I me think, our and being the this the is, and think starting in quarter the evolving. for news the both a point

across cash and business disciplined again, so, been value. well think drive we’ve balanced look you if clear, revenue, And I at as that’s and to long-term growth flow. you a earnings AOI, know, over performance in time, consistent the margin, pursuing resulted of strategy pretty And the

booster And And sure progress balance scale, structure, that. improve increase to our balance have expand all and to again, sheet, strategy our focus brand we’ve really we of think make portfolio has we I to our margin procurement that more flexibility. been of to so our against financial made the

you And at the then, create look understanding of portfolio in through different the how value can company if history you actions.

both U.S. technology now mentioned, process, business, uniforms, facilities debt If months, along fact non-core food each us we’ve acquisitions you attractive XX I that look reduce and with of position, compelling business, non-core exiting and last strategically us we’re company’s the in in the healthcare completed which largest exited business history, a helped in financially to as our we’ve is the which Europe. think the the at the two that competitive improves the in we of

create on taking right sustainable and business actions growth, drive can to shareholder focused drive continue the You us to value. remain really a to expect

And for game we continue strategy was CEO how the drive think private. can company company – how good and I, as playing business that’s we so, a both as positioned think get when we look that’s And and here summary the the and the growth approach we exited unlock Steve both the company – we’ve really to really pretty value. think I play and we got public as and CFO, Right? of I of game I we been the to to

to been really needed ramp us the technology, heard we importance in have needed our lot about, working up really we And investments brand. you’ve ramp talk we a to of up –

both portfolio side saw that and the competition those the uniform the food M&A on side offering. days through You was private, acquisitions to company moves and their during make brand position

and four the strategy. we And we so, the really and the to those brand felt is procurement, margins, balance intended dimensions of imperatives this across is an followed of going of that really the sheet position growth the forward company strategy kind for centerpiece

Stephen Grambling

where remarks quick a Fair us to then acquisitions think, And opening the mentioned, maybe also synergies. you enough. Can about as initial synergies contribute I think contributor as left integrate, remind alluded a your key and as could are, about follow-up, just rate expectations? to the businesses how you what’s and in estimated the to maybe to we these to run And continue compared results? ramp

Eric Foss

Yeah.

you Let through the me numbers. start Steve and have specific then take I’ll

I about think gone and has of both cultures I the leadership of together Stephen, mean, organizations these, integration brought quickly. we think very, as teams the and you integration the the extremely well. very

be the AmeriPride I through both think, of we’re largely what of I would phase the and the acquisition. to most Avendra consider integration

and get you I think what you through to and identify we’ve math, take to work continue when are to if on Steve it there we’re to more capture certainly any track and the comes let Steve, want into... synergies, again, opportunities. I’ll identified

Steve Bramlage

Yeah. Hi, Stephen. good morning,

about Avendra to AmeriPride. two million from of continue of transaction from We at million to would be and $XX $XXX synergies the expect the a million $XX combination least deals realize in synergies from that

a should that over we’re post bit Avendra we expected transaction. three $XX million first would realize the that think maybe ahead where deal. to years have be, We little closing the right of I the

least it’s footprint. the network the fully $XX again, a to manufacturing rerouting the the year up expect incremental get to four and On year. full get of $XX at just due ramp complexity this primarily But existing existing AmeriPride million, of to synergies the transaction, we touching to million

get to synergy some started we recall, may You year. last benefit

out. years by little fully in year. think we’re out, we AmeriPride next by Avendra think not, well if a we three I fully positioned And I comparable to or fiscal something bit realize four to better get will will that earlier. And years realize the

Stephen Grambling

queue. in Thanks the back jump I’ll much. so helpful. Super

Eric Foss

Thank you.

Operator

question Morgan. Andrew Steinerman comes J.P. from next from The

Andrew Steinerman

handicapped growth to had you the morning, Andrew. the you any Good legacy was X.X% this the the growth exits if unusually ask third quarter wanted included What there a about just growth? this I the quarter, segment last International strong excellent It’s all. driving growth? I the international going And back acquisitions X.X%. look division, revenue revenue but over in this was is And for level of little history, in of years. bit know by quarter strong international quarter. a during are at quarter,

Eric Foss

It’s Eric. Hi, Andrew.

business, Europe look seen by driven just the strong top China in very, been one growing line over include from associated extremely at growth based. numbers XX% been America South which really years, last not think year-to-date, it’s have mean, I with quarter, that number which that Canada across broad International couple we’ve both broad you good our the very seeing that. been it’s double-digit to any revenue If are business. you to of M&A kind geography, not high if momentum It’s the about and of And based, does very single-digit

good, and And with if really of of about business coupled you good good performance well. components like-for-like new kind seen really the growth, we’ve think retention as performance really, solid base

across come has of all growth. components of of the it So dimensions three

Andrew Steinerman

Well you. done. Thank

Operator

Bernstein Martin line Harry on question. is with a from

Harry Martin

Yes. Hi.

if gaining I that stay share, is think of X.X% I can. mentioned. International we on you most to markets those in I think, going be

you And those who in-house winning mostly wins? of players you the give color which getting you the offer is on, it part any is share think small can So you’re from, caterers? then larger or that

Eric Foss

Yes.

on if to – you basis. think really a look it country-by-country – is about I it you think have almost at

in in within if So growth, it’s it we’re to really growth comes those Germany, more way tend see the think, would a country really I the growth predominantly UK, to we each break Europe, about the you little probably Spain, but broadly. seeing think again, across good tough countries, down. of But good it

regional XX% benchmark good those I see see numbers some each the every to contribute XX%, internationally. contribute conversions Phonetic from XX% smaller XX% players. pretty are to you growth and through without You you’ll think trying tend larger take you And to country and to see players then self-opp will

Harry Martin

then, I Sure. I follow-up. just guess, if And can

X% the about through on inflation guidance, much year full as any the of you total a you within any give growth? inflation, talk higher boost Could of the to year. pass For sort higher in sense organic of organic – this how your

Steve Bramlage

Harry. Yeah. Hi, good is This Steve. morning,

or me year-over-year start inflation with full expectations. the Our let

food or I and labor, to total X% the be X.X%. call X% related for expect so so for about We inflation

is we That experience that radically in than the the inflation prior not year. different had

know, that contracts, is an you element as there So cost-plus. of are our

through a on pass will that they of passing amount radically inflation. So portion the different. the is percentage inflation and we’re year-over-year But basis, that a large of through not

are don’t I differences the to fair. be of think inflation So delta really year-over-year contributing any to

Harry Martin

clear. Very Thank you.

Eric Foss

Thank you.

Operator

We have Kevin from question. McVeigh with a Suisse Credit online

Kevin McVeigh

Great. Hey, Thank you. and Steve. Eric

procurement if the billion, billion can as spending you a not, kind synergies the the And is up already the leverage increase from be of $X from organization of step in terms In to perspective? incremental Avendra? factored into $XX that synergies across what the

Eric Foss

Yeah.

way business vehicle of now big your other lot you strategic billion, is, the that of purchasing comes negotiating think the to margin I synergy and we’ve we Avendra. it, think $XX through not we with serves a just did which about about that but as couple And leverage, along new scale a that compression opportunities. you if primarily begin billion plan. to to think taken only from acquisitions unlock, value will of So, smaller as pursue the prior increase is, strategic you to scale go also is brought had a absorb the $X it unlock that that power can to if tuck-in really business The the Kevin, procurement a the Avendra acquiring

years, to if really subscale moving that pretty a mean, position. our a procurement getting improves us, for billion side much that leverage the and position. scale from position, on dial strategically billion so we were now $X really competitive $XX you back competitive and in few improving I Right? And

economics. how where about with And negotiate going overlap Aramark think then better we $XX the capture, to in and as addition you forward, in suppliers got synergy Avendra, between million we’ve

extending of this participated going the part is You is to past. of model then our forward that in Avendra have channels phase the next kind new of not

at strategic you’d to that. the of kind like Does your is context, will. me to you anything question that that Steve get if or to add it So

Steve Bramlage

No.

think I that’s accurate.

Kevin McVeigh

does. frame it kind be quarter businesses is the what versus way quick, real of does, to was in normal? It from then any at back And just it contribution out the would And kind Yosemite that full of to what scale?

Steve Bramlage

as things. clients cost serving year, usual. opportunity will business is think to very not the but it’s us as obviously back of in There And thought. quickly an I that we the we don’t on simply didn’t primarily high reopen couple side, essentially is revenue big a the of Yosemite for as significant they start for are scheme

starting And So, sure up of cost for somewhere less the a things start-up couple incurred than in million of probably in on cost $XX side. we revenue terms opportunity million of dollars the related quarter. of

Kevin McVeigh

you. Thank

Eric Foss

you. Thank

Operator

Bisbee Bank is Merrill of question. a Lynch Gary from with online America

Gary Bisbee

my facilities perception point food, creation? uniforms Are whole between what creation. shareholder more considering to of relentless willing guys. at massive that is rental the the Good businesses is, And synergy the just trades you lot morning, the I some value question talk you I’ve a businesses. guess, Eric, from of where Uniform with line valuation the pursue separation in about disparity relentlessly openly Hi, pursuit your given between of opened peers? value in a that around shareholder pretty got guys and not Aramark

Eric Foss

Yeah.

to margins, it’s at service characteristics to value. model, that good not of it’s Steve of think, great business But potential, growth well looking I business, if flow have we as we thoughts. the us know characteristics. business In a similar you its again, think does portfolio bottom think, Gary, his to been lot terms ways Right? like, uniform said have I’ll open and add line, a But all create have it. about the cash along, all – a it in you never but let I a has we’ve

construct and planning past, that. are shareholder create to we do as did how the see, might and the do we there what value. every we’ve And of opportunities year I think as we before said to so, in mean, part we process each that as certainly strategic and went we options about have public, look might And have we

play, never standpoint. AmeriPride So, or on from why scale it acquisition relies that we a dogmatic again, – a scale. That’s is is for believe this to plays lot do that been we’ve a continues a about business role us made what sense business the

have of We, be plants create that a the across to whether by a the lot and my value we’ve shareholder that looking way density obviously, and prepared or optimized, SG&A mentioned capturing and synergies warehouses merchandising in it through route acquisition, at infrastructure identified cost optimization, as I comments.

do we And and that’s are certainly value so, remain going as create But value. open I options Steve? available we we to mind shareholder the an lot creating us. to a that, that think to of various have relative have what

Steve Bramlage

Yes, have including would. very Those them sacred with etc. Listen, to businesses, We to all fully any the parts us and there Gary, to available implications, understand associated that, in clear paths tried that of about We’ve on uniforms. of I the are be and terms portfolio. pros multiple of are cows. applies paths cons there tax

Some of paths, control, paths, those of cannot. we we some can those

assess the right that our the shareholders. in we term outcome so and business And constantly for for what’s long

We to will do continue so.

and bigger more and and we very do capture focused no thing the doing. close the in longer-term just structural value point, Eric’s on that’s is continue the there it to make in reiterate best profitable margin make it maximize and in are doubt that can synergies we that here for regardless near-term shareholder business, what the would I is AmeriPride gap of And to outcome business

Gary Bisbee

Okay. appreciate you. Thank I it.

Operator

Capital RBC from Weber Seth is online with a Markets question.

Seth Weber

to wanted Good I acquisition. about ask morning. good Hey, Uncle

targeting the transaction? University on a give the maybe that meal around to more into I you of thoughts but kind Thanks. eventually Are How in plans fold model? on start think, of bit it’s Eric, or you any integrating more extending thoughts color little just ramping opportunities the kind of mentioned, into us transaction? to that fall, there you see the kind

Eric Foss

the Sure, of strategic me with again, Seth. bit Thank a Well, rationale. let little start you.

really consumer the if one marketplace of about are drivers the and that across really their kind business at to to to personalize looked and you products we four pursue kind continue looking we are quality there of things And think are things consumers a healthier the High offered of increasingly then of conveniently is, our with orientation about that As them, real talk for. what needs. them, satisfaction.

and to the convenience. I think take points tend gets the that about create that the orders, And of the what the satisfaction It delivered. some if to the around way areas. of centers consumer dimension friction and convenience The pays product really consumer barrier way so way drives she three

if really it for three so those. business model, provides at solution Uncle’s look you all Good And a of

then is So the app of menu, the variety food in place way there options prepared and you and campus. preps a vehicle at the can of up pick foods the health high-quality, those personalized the the delivery are go model on works route created students drops a chef and wellness, is, then have those and then order on proprietary it kind a through system commissary, actually browse focused basically through a and a points

business. have mentioned the So, solid education complements the you already position again, this that obviously in we

to we very nicely. with what we it it’s But business we we’re complement it operate will excited we’ll we And think for the has as think fit that. some and will it our But looking independent it nice and get put kind you come. get might will got a for student an pilot, of is into from we learnings and some about to as think this pretty company. more expect experience so, It unique we culture, it, continue a

Seth Weber

little it Okay. Thanks. And then maybe just a follow-up on light. bit was the the quarter, a uniform margin for

on math based looks think, down like year-over-year. our it I was it

that in called uniform in margins think are you How opportunity here year-over-year investments years that think business, about or just for should flip you ongoing in investments. positive – there some Thanks. do think, that next that is out for the I is we few the to business? that –

Steve Bramlage

Yes. going Hey, on Yeah. In margins in obviously Seth. Good morning. . uniform uniform a This is the there’s Steve. lot

classing right foremost, the obviously, have year-over-year up the is accounting So of which will compress stuff first margins. impact and we top, which change,

incorporation of at was We’re a level by half that legacy that of margin also the AmeriPride just was business of kind business. the base of our

the dilutive So the expense. be rest that of incentive the well. absorbed similar in some will business, to And compensation as then, incremental quarter year-over-year uniform

and So the that business think, of from it you’ve in progress, and making margin. productivity But productivity got what clearly terms synergies continue. that and items think depressing that And they facie be base other the we thought the those but I are to. driving synergy The we’re capturing where it in the exactly got reporting and you’ve business do that’s would capture I expect of will the drive mix. realize deal, would all that to are forward we way prima in continues

Seth Weber

you next mean, But, anniversary ramp, of you it margins to synergies is Okay. as these to the fair and be expect year uniform? I up some do items think in

Steve Bramlage

Yes.

Eric Foss

we the I that when margins, that think out XX just with you’re Steve to if see that of base highlighted, margins It points going noise through its you’ll Seth, this things business XX of expand basis all Steve covered the business year. come year, to the kind even that this take of referenced. kind see year, even you some gets

Seth Weber

Sure.

it. much very you guys. Thank appreciate Okay. I

Operator

Barclays from Patnaik question. is a Manav online with

Manav Patnaik

morning. Good you. Thank

disruption on comment? threat really space a the from this some just maybe on interesting. the follow-up to I were or, in on to obviously, just technology, was level, maybe delivery I thoughts curious Uncle that think, mean, seems you and but some that response obviously was it acquisition. Good maybe it’s seeing Just I broader

Eric Foss

would quality, I personalization. Well, that, it’s I and to we think the convenience, obsess continued it, pretty about – much have Manav, healthy characterize way is

complimenting in to a it saw our business way. team, the big we we As talk began Uncle saw Good with big, and

it options three all that delivery, of one I order available one. addresses was and So pay the think, really few in

And closest, so, you again, if quality about the innovative certainly think part, for the it and have some if think providing a a disruptors, high because most we’re largely solution we we’re market. captive about of the

those our personalization, we’re convenience And doing So standpoint, we standpoint a some should. lot from and of us. on value job from a going we for if versus certainly disruptors, have a healthy quality,

help address us did points pay complimented the this for just our of friction again, order so, And business, and but deliver. us,

Manav Patnaik

that on it. quarter in side, Steve, mentioned plan. you think last I quarter the had you And exits got later international of than about Okay, the talked the some happened you then,

was the should in in quarter? hoping, we I of color next terms give impact some on what us of growth you So maybe the expect just can

Steve Bramlage

Sure. we ended is later good no both for the custodial business that or we Yes. non-core majority thought the of we the business doubt actually quarter ran than of of quarter. in non-custodial There up the the exiting chunk

we and that there a would of wasn’t thought headwind quarter, the much in So there revenue be. from exit

by the out are accounts of large fourth the We completely those of as quarter. of and beginning

So, I full growth do fourth expect the the absence a market reduction revenue. year-over-year for of we will absorb in in that rate quarter, because the international

quarter. So they feel year-to-date the to fourth in performance will definitely the that relative

Manav Patnaik

Thank right. you. All

Operator

online Kaplan with Toni Morgan from Stanley is a question.

Toni Kaplan

Thank you. I a follow-up food ask morning. wanted Good to on delivery.

delivery area piloting Uncle with you’re other that ask attractive first Just to acquisitions? local are or the doing? are sort you partners an there food for where Good wanted a examples do of you fits of to is that’s further And

Eric Foss

Well, where I you for But concepts it’s a we’ve the We front, think what a on side, done of our first partnerships, product look unique from with with venue think as local foray Toni. we’re standpoint, But the lot brand delivery doing. will we is first partner have and about the and Good our do companies. delivery those and into into Uncle. actual bring culinary delivery on I this think

Toni Kaplan

you’ve your And tell metrics you remind $XX employee making it’s be or recurring. with just this changes been satisfaction? year, question on, us retention to is one-time them are that Okay. And in million just of seeing investments on investment how employees, the any to you then given any much And just you versus sometimes also there? but expected could early the have hard so to regard

since recurring little you. one-time? maybe more Thank a Just tuition sounds know I than the program bit

Eric Foss

Sure.

comments. Let a me make couple of

if think reinvestment, that you $XX think one-time. million about most was the of I again,

$XX that million million other investment the Toni, only. of $XX I million, was about the think you wages, what we than consider said should as one-time other $XX in which was,

then and the about And as well, you recently obviously. tuition our will associates, so, frontline that be if announced program that think ongoing investment hourly for

of frontline of this core think first. has I one our it company and relative – meant, values So again, what is to

around and So I we’ve done really, wages think what received. scholarships really education done through recognition, what we’ve frontline is well then

our fact, turnover. a look if at you As of matter

turnover which have challenging at pretty a look year, key is at positions, has to think some can talent. indicative line, frontline hiring leadership great all I front – the we wanted this our of You field programs environment improved the that worked in for have as

for its Again, space. will in hourly we out unique this That and of associates. of – roll is kind October for – kind stride. in a announced this in partnership a that So first this then program

very so, to we’re energy our among associates might excited And and And imagine. lot there’s excitement certainly frontline forward and as look again, it. a about it you of

Toni Kaplan

Thank you.

Operator

is Baird from . Whitman with a online question Andy

Andy Whitman

Great. just wanted foods bit little into trends to the Thanks. U.S. segment I a core dig revenue more.

remarks, think, catering, consumer as I as in increase you think talked at business your and well better I prepared an a stadiums. cited, in spending

the those wanted other some two think I recurring is. hire. said things, about events I me that wrong, kind where correct know how have you like catering, of in don’t how if that’s in think, things. but that at to locations may just business You overall of particular. I’m But know context to I

that stuff out your year? the entertainment How how of of a net is And that us stadium of can business playing a trending business reflection new how are additive do to give see the of you just is your and you in just then sense for teams. that, And to overall there? the kind wins growth that your rate related balance

Eric Foss

Steve as jump is then questions in Andrew, there. and let well. series let Well, start, There of a Sure. I’ll me

So we to let sure to me try all. get them make

to growth think about get X% way if your roughly question at I think business you the about to our to see right – you’re components new the is, to with uptick business. new business the then probably base XX% retention that’s be about is really of and rest XX% performance, that would the good a slight you’re in and split look of to growth see going year-to-date, remaining going

did at each over our in results the years, to business, As new we’ve is couple of of pretty we’ve be right last couple last seen grow, of with and And growth saw to healthcare we then growth out growth, years. saw kind we growth sports see good in industry, new of education. business the of terms leisure in now business consistent what of looked plan of corrections we question and and the

Steve, in quarter. really So growth fairly broad-based any... the

Steve Bramlage

I consumption the – on at think, just People spending is Right? higher Andy, the on at on is are basis. would to the two year-over-year to a specific trying I per we’re points What capita events the sports. reference more event. the add

on based which calendar than games had in we a last is the the Just of fewer quarter year, we third of schedules. function year had total in actually this again

evens out That’s consumption trying then base exclusively over our se. special per business of time, capita line in basis. a And So the it’s higher. a to were dining, obviously was not higher but that we’re on it, reference event volumes of volume, catering that year-over-year per part base but on so business

Andy Whitman

helpful. That’s you. Okay. Thank

Operator

from Rosenbaum online is question. Stifel Shlomo with a

Shlomo Rosenbaum

very Thank Hi. much. you

the just little I focus a question, bit more on first organic want to for – Just growth.

year-to-date, Just toward X%. the X% approximately you’re guidance far tracking so is

then that you last managed has going about? expecting to So whole the were to exits talking it – growth understand, like in is continue – I’d as the is that after And difference the are And uniform I’m the follow-up quarter to trying you still just forward? done really that.

Eric Foss

uniform we the I’ll is – let is, And Europe that the But believe, show good of the second I question. most we’ve Steve do uniform discussed. question Yes, to I’ll in uniform the business exits continue absolutely, to The take growth. question. it take expect

Steve Bramlage

Yes. there. would Shlomo, that confirm I

the closer number clearly that X% the annual that relative fourth number. the contributor guide to international we’ve We been. will largest us on be see to a revenue what slowdown sharp quarter And in will to getting

Shlomo Rosenbaum

Good then you cool there just the a than, thing? or kind any Okay, talk about the it’s great. else is guidance? acquisition, on talk anything multiples you Uncle to could – new impact Can real other of And

Eric Foss

education is of This acquisition in small a had penetration small, really higher a that couple small, accounts.

you to And fall. again, new will, handful Uncle obviously, we of as meaningful nothing in come think as we back will update disclose. take, thing, look the real I locations on in so But one in is progress. discuss that it’s to the to application, already that experience it’s we experience has your right we the there interest think the and forward and both that our we to use in terms, a pilot will And a has of in And it fall. or it cool think Good getting students

Operator

to call Foss. now back will turn the Mr. I

Eric Foss

has to again, I closing, very after forward next you talking day. a your thank look much. in for your And Well, interest everybody in hope Great. you great Thanks to time, Aramark. quarter. we

Operator

This for for you concludes Thank today’s participating. you participating. Thank conference.

You may now disconnect.

Aramark (ARMK) 6 Aug 192019 Q3 Earnings call transcript