ARMK - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to Aramark’s Fourth Quarter and Full-Year 2019 Earnings Results Conference Call. My name is John, and I’ll 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.

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

Felise Kissell

Executive welcome Chief XXXX and we fourth and Executive new quarter the as as Thank Bramlage, Officer. Steve conference to call fiscal our Chief our from earnings of President morning, John and full-year Zillmer; pleasure well and you, Vice hearing Aramark’s Officer, Financial webcast. have This

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

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

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

Our for by accounting income as refer appendix earnings definitions income, to quarter. changes, results utilize the are changes which materials first and of operating net adjusted the in and slide Please affected began well detailed the to adjusted reconciliations. to as we the rule

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

John Zillmer

going to Thank as well as joining us areas you, our our you forward. of and key thanks Felise, results, focus full-year today of fourth and for all to quarter discuss strategic Aramark,

I ahead returned be a over elevating Today, forward economic earlier my I potential with company career. would is nearly for path I team on know, in of growth combined and the as the spending company nowhere the for as the XX focused is given you As the after unlocking business. the days many revenue the rather that truly promising accelerating passion and there culture, to opportunities with business, offer Aramark XX ago years CEO my

be future. and and unwavering increasingly areas progress positioning strong unfolds, in evident as these of our year will value-creating reflecting an three the a goal expect commitment I for Aramark

spent Before like field is that of and with customers Steve are the and weeks the faces. I and few past the observations, for many time people in immersion specific I’ve clients our year-end company of our you we and our initial provide for as clear who right to the committed whom I working a employees. insights would over it the familiar are with talented a for lot thing have doing employees, fellow drivers clients, continue reviews performance, my to

do there sharper field This organizational and from to is opportunity translates service. clients’ our providing customized hospitality our benefits while ever-changing and differentiated empowering needs realizing by ample I sizable serve experiences, believe frontline reinvigorate leaders focus our a into to scale. customer with on

strong manage to pleased and the service who complementing experience suppliers, and partners, after field distributors company. decades Recognizing to respected how highly supply one team client industry John balance, a very impressive an this John has with appoint already returned priorities I’m relationships prior expert with of chain is effectively deep place. is leader in Aramark global group important we purchasing. my to and our has first have of teams, it OroBono that the was in

I tripling the both sheet for cash growth, our quality our strengthen chain initiatives. supply commend we evolve organization the our productivity Together, procurement growing scale, to portfolio and frontline to product closely advancing enhance flow will financial flexibility. balance with and and partner leaders driving company’s strategy, the senior free the

holistically we is growth associates. of can business. time a financial frontline confident the while appropriately Board, more clients’ I’m drivers is our serving The needs and the empowering believe firmly revenue pursue the and accelerated objectives, inspiring important balancing our and I that leadership while that now strategy, team, other achieve to our –

we appropriate, and business sales all capabilities reinforce expand field as of solutions, client and and clients fuel our customize talent, opportunities. acquisitions mergers our retention which and resources increase pursue will revenue deliberately new Where activity, select and and will as well

like call review for I to over would turn now Steve results. financial the our to of a

my Following questions. before Steve’s key to remarks, Steve? I’ll having provide the opportunity takeaways, take your

Steve Bramlage

organization, of Aramark. And John. welcome on Thanks, behalf the to entire back

have together. here opportunities the We’re forward look excited you ahead to pursuing to and

that’s segments, capture as concludes, Key takeaways synergy of solid XXXX the X% a revenue performance with higher that all employees a in significantly resulting business adjusted company, incentive the for overall constant operating going decline organization, the the we’re As prior business, serve on platform offset year from fourth operational the for the across encouraged and reportable legacy future. included across compared up growth compensation to by X% our the across good to was income throughout operational basis. a in by currency performance quarter

the year higher constant a currency benefiting by prior basis, compensation, also versus impacted again, Adjusted expense. while lower from interest incentive EPS X% on was up

Technologies By through year-end, to from million we our prior sale debt cash flow, free using in X.XX generating and ratio well versus $XXX million improved the year This as $XXX times. as the net reduced our had business. proceeds leverage of by was Healthcare accomplished

good led our spending X%. stadiums leisure growth parks. was baseball attendance business capita ASC to in and which legacy revenue X% change both almost to up an grew league by corrections, and impact. sports, related by revenue Turning $XX Revenue FSS approximately Adjusted rule growth national and legacy a X.X%, was quarter in revenue of was major X.X% increase business consumer capturing million the driven revenue via reflects in XXX. currency accounting U.S. of per revenue X%, Adjusted up growth the and higher quarter.

retention solid the impact with the ongoing Industry of wins, from Suisse. excluding & Healthcare, increased while Dell divestiture notable growth, Business including business grew record benefit and high from Credit HCT base X% rates and recent X%

X% new renewal sales, business the activities to that we from drive noted that some review Segment we’re performance related selling implementing in to earlier season proactive down X% net was initiatives the close, and a Education decline offset primarily in disappointing going Education was of as will came the forward. the by to a had John facilities, year.

revenue International new exceed performance and as Europe, including my that last region. strategic business it again strong growth X%, was non-core our quarter’s FSS of due and continued accounts to all the The high custodial retention in expectations. geographies, legacy very increased business almost to in quarter in with despite exit

as price from Uniforms’ and AmeriPride X%, had business offset revenue by served competitors attrition driven contracts expired. grew previously some legacy by business FSS volume, our those major legacy that nearly

year, is compensation, which for The higher down is that incentive AOI In good retirement really around $XX company, of currency the the a the U.S. $X our outcome with constant quarter, here impact segment. stock-based a the was million. particularly of and million us quarter bonuses, expected, FSS employees. than X%, but and significant net was for a This it’s had in we the higher fourth was compensation, especially than or a bit prior story higher for contributions

item, to of across of prior Overall, the really this underlying continued most well from Avendra in to synergies business increased business compared and both and accounts of profitability realize AmeriPride. Outside year. lines executed we

U.S. the in and the the Europe. significantly less in in margin of led from contributions was our fourth of custodial contracts was FSS. by from in a there exit negative International year, in primarily Japan non-core finally, quarter weather improvement impact joint of accounts this And negative venture

a Uniforms. around affects the framework changes, does numbers accounting and margin a prior impacted was that decline. up The basis constant related interest I currency factors Driven margin on lower adjusted $X.XX recognition as rate, by printed per for well from the show quarter, just revenue basis. narrative the as outlined expense Those primarily earnings which XX the from follows AOI, the which modestly is benefiting the tax points for are a year approximately reduced share while to X% by

our operating income to costs the impacted the In were non-recurring items release included net and fourth legal several and retirement matters. including variety former further press our results from in advisory settlements; fees of our adjusted of CEO: GAAP by the are results, a in Eric to and income operating materials. items Foss, these addition our notable quarter, to related shareholder Board-related Reconciliations GAAP of

financial across basis, than respectively. operating initial revenue full-year, and a better our Uniforms and the a it’s balanced to business little key grew legacy finished Moving U.S. X.X%, a FSS progress on we improvement expectations. saw Legacy metrics. X% up multiple and X%

new Clearly, the account revenue international deliberate here legacy was stellar business exits in and X% rates, by had a result high wins mentioned international story our very we business included outstanding that performance with from driven teams. growth was the that earlier. International retention Europe and

quite was wrap also across and realized million means Constant first-half of company of the up million the of from currency finished for AOI good, deal and AmeriPride. year. million $XX for incremental higher combined inclusive the Avendra X%, performance operational That year of $XX from of lines with the about incentive-based businesses compensation expense $XX in over synergies the

AOI impact accounting the a revenue which XX constant by currency of margin from points higher for is basis. after X.XX% to on margins change, year please was a basis But that the note again, comparable this reclassified the down compressed amount.

somewhat on in the for tax as as AOI, constant growth and and M&A effective slightly for well good offset currency higher year represents driven expense higher EPS and wrap lower X% This the synergy growth basis. and first by base of the count, the share was that a was business primarily Adjusted $X.XX rate by year, part performance, interest year. a

first million As and related costs wrap higher of to AmeriPride. over a the $XX interest was Avendra reminder, financing quarter expense from

for for of our Avendra LBO and quarter quarter, the the U.S. were business we earlier, workforce investments into from Our discussed impacted Healthcare fourth via domestic tax net in combinations, GAAP the gain proceeds merger to our items and reform. Technologies and AmeriPride, operating the the that addition of integration income and amortization intangibles and received the most sale one-time results under costs full-year, income first the notably in on by

guidance. Please equipment pleased relating performance that flow to appears that $XX reflects note included closing with spending million on our does agencies cash governmental approximately and costs costs. elsewhere integration free property on from flow proceeds the one-time related million include printing in cash HCT not $XX statements, that this million. to divestiture was of our and also but of the $XXX It We’re

proceeds from reduced XX year, to led flow we a $XXX debt $XXX a an ratio that’s the million the business, sale improvement million Healthcare from approximately X.XX fiscal net of in by year. free that combination of and of basis of points cash leverage from prior times, Technologies the and the For

year the with flexibility no end We a XXXX. significant until and maturities due financial noteworthy

warrant. remain lowering the our conditions of balance extending as market cost opportunistic about will maturities financing We sheet and

helps a Overall, build our the stronger future. performance XXXX in platform for

of front as grow us to the accelerate cognizant longer-term growth, work ahead accelerate we debt. that cash capital, are still about road the to remaining on revenue of returns encouraged free in profitability, opportunities increase improve flow reduce We earnings, are while and

our businesses, long-term constantly value the We invest current to be as and portfolio create and of realize will structure, good propriety our as of capital to most importantly, capital have decisions and we allocation will assess shareholders. reticent we the for opportunities when not well

a let consideration to Now, items XXXX. specific for with me begin few

revenue, revenue the Avendra next quarter, to we financials on terminology of no additionally, and First, growth another acquisitions have we forward organic impacted using year-over-year be AmeriPride. that simplifying on now step our the return completely revenue in and Starting will from the ASC longer take growth accounting a XXX, change lapped will by of will we basis.

or results quarter results. a Second, prior the fourth XXXX and will XXrd extra week to contain period when fiscal an compared year

the weeks Our adjusted full-year based of earnings-per-share measures. is identified the and financial growth revenue, adjusted year-over-year the The in have reconciliations comparability metrics. Prior benefit of of for X% on adjustment, income, XXrd for these XX guidance to on will week income the organic a net extra metrics approximately non-GAAP be week purposes. operating for to expected provided and company’s each is adjusted adjusted

minimize negative year. payments, commissions However, be cash the flow, the as and to additional client over will negative free collections, week tax payroll offset diligently of from work will and of course for XXrd very week, extra the impact outflows full-year, this not and the interest moderately we an

revenue XXXX the progresses. initial change approximately significant organic for consistently expected expect Finally, outlook of improve our that that’s of growth we macroeconomic conditions. to excludes as With and to the current any year X% all set said, currently

of value and a for as the the will that shareholder determined Adjusted these The latter creation. longer-term the investments lower significant by approximately saw months Avendra integrations, XXXX, to of amount to which productivity EPS growth well and and pace expense, be further and ahead. we and AmeriPride the in is continued going million interest from and will reinvested John of scale Board from U.S. improvements propel pursue capture opportunities growth synergy part operating as the business in the momentum $XX benefit be

million EBITDA to cash Free optimistic X.X by generation $XXX future to least of about the opportunities should Aramark’s net times our to prospects debt the X.X outsourcing remain flow create of long-term extremely between We industry’s be end and at times covenant fiscal value. adjusted and year.

over call questions. take takeaways your With to John his that, before I’ll the we key back turn John? for

John Zillmer

Steve. Thanks,

that to While still early, a My me is our of hospitality employees and that solidifies the the priority shareholders. all strategies. foundation to business our significant entrepreneurial it immediate is spirit in for accelerated culture nurture unlocks for a there drive our clear that forward runway is growth our meaningful value way with to

dining, admirable, to business we education, well as notably, reviewed just Steve as that our and support sports further an international, performance overall the other opportunity businesses. have was immediate While most

center of our client to areas and and improves offerings support sales resources needs. service while our value-added efforts field-based and servicing appeal will enhancing on that placing appropriately retention, new productivity, technology to clients’ additional focus that account broader innovation Our product and audiences

to be we time production working other where teams to streamlines effectively and clients cloud-based platform and for proprietary our example, will trademark student more spend an enable that our food preferences. our utilize As our with allowing customer solving process, appropriate

will affords as approach, plans flexibility to our propelling while progress go. and activate business. our we on portfolio us that diverse Our you drive update this confident I’m future the success the we simultaneously will target to continue

we take Thank to we write service all meeting our want for company. forward around partners. as to next dedicated for I thank this XXX,XXX our you. their to the client look the the employees company work questions, Before iconic and world chapter I of together to you

Operator

you. Thank

our McVeigh Now first Kevin the from question-and-answer is from Instructions] we Suisse. [Operator And begin will session. question Credit

Kevin McVeigh

you if of John, elevate drive opportunities forward congratulations. aboard. business of greatest value? in John, just and initial kind like shareholder given much, welcome immediate I see so some kind could observations your Thanks with the where hospitality create Great. just share to wonder priorities you then the us sounds going and it the

John Zillmer

you very our field about spent very, They really this of think that that DNA very weeks. about a love People cultural The time I exists organization bit the do. They several intact in over And and the exciting DNA clients. I’ve me healthy. Yes, is and – or is rapidly. customers And very a much. cultural what in what’s they love organization. will quite thank really to I last the as serving most the love come the organization. very result, think cultural enhancement reengagement is

the excited really again, about marketplace. about People competing in are winning

of I’m where isn’t all we compete quality field. across we have think, for the one businesses team win, our leadership I the range growth There operate. extraordinary of the that a single we opportunities can’t in excited and by and very

Kevin McVeigh

quick. you – of as think what ultimately, to then Steve, key I and hold kind want to just kind Got accountable Steve what yourself XXXX the and you longer-term, then about organization? real are the measures turning And it. to guess, of

Steve Bramlage

improve longer-term cetera. invest If creation continue with lot have opportunities and talked the because us But Hey, to perspective. start have good think to us over financial a shareholder metrics you cash, we’re to for We where certainly balanced it makes about, we the Kevin. financial us right? morning, revenue, going across to invest for the of still first, from value invest one leverage, on continue long-term expect we’ve opportunity to pursue profitability, sense a I to you of we et should – across statements know should expect metrics, our multiple I plenty improvement to the results

operational the Specifically on track moving have you enter year of with parts, momentum. a XXXX, here I keep the I’d we definitely think of is, lot

We’re incentive fourth compensation of well where pretty in incremental print we the came expense. day-to-day running for and through the lot business quarter that a offset sure,

effort last Those so has continue and labor to clearly AmeriPride million initiatives place picking will synergies Avendra. planned of there years improving of around in about productivity good or And up spending, know, you those the this of As a direct over I from lot we $XX food, benefit been feel and very company. think remain in couple the us. around extra

to a doubt There side. XXXX of us revenue is for the no on is be year going reinvestment

I we side. and about, so had And think from to course lot benefit interest that will a synergy over as of continue the we’ll of to growth forward get the the on year reinvested revenue the propel expense deleveraging business for sure talked help

the that dealing which look in around we’ve of first some all we’re been And some things strikes clients some some the of have so has out has high-profile business, There put when had with right together uncertainty some Chile, exogenous our gate, the impacted quarter. and you unrest at you here of in tariffs.

the in move don’t long-term opportunities at together. to and to the front shareholders. either for think end long-term I us in value very to margins all importantly, drive that into going continue probably investment fiscal most right But the when we’re you of are the put XXXX going decisions invest very we’re make day, much to that of aggressively way

Kevin McVeigh

much. so Thanks

Operator

Oppenheimer. question next Ian Zaffino from from Our is

Ian Zaffino

kind Hi, past. forward. your strategy of you’ve type you. I kind kind going delve CEO great. customer-first want just I to John, of welcome been of into in Thank of know relatively aboard. customer-facing, the

say, little has you [ph] maybe of us Thanks. a there? retention, translated, are you How into cetera, wins, them that to been client give just helping going basis your color how new sort take more clients that approach So would succeed? et

John Zillmer

be customer-facing. to Thanks, company do you in believe, I Absolutely, particularly Ian.. hospitality have that Sure. the

if very in to of more resources customer the from back closer field be one create the to think or customer, of and closer to we’ll center business of marketplace will. I aligned the organization Repositioning contact. the realign that the to and line resources some the organization of to the you is take intimacy quickly steps

We of drive that business specific drive has of. This think knowledge new when can always line business that team that, a you we they effective very against most been it will retention intimate think really opportunities have business account and sales. positioned the have

do we’ll so that. And

making will the field investment next do as course positioned we’ll resources the in be that organization to the be of of year that. just Some the over

Ian Zaffino

a investment, needs this follow-up Is of need? investments Okay, business off one-year see, of thing, I great. multi-year? about do the investment kind of How And then earnings the just talking about horizon? and kind think an Thanks. you’re do of many acceleration would you you How understand you rolling one is the start and then growth. be, like you years It investment. think

John Zillmer

Yes.

this investments each in believe I kind that investment think and we’ll making are of the opportunities Board targeted about committed rate. has sufficient that the the take of itself, to of discussed. year the and as forms growth year accelerate individual of us We’ll for to we’ve they’ll investments be the We as this our appropriate. help consider a and level year follow-on over investments believe we course is different and those – number the making where returns

is focused team on really on new any in year look that opportunities preconceived additional in getting our for decisions we XXXX. as this and it. in It I investment have the growth business opportunities, focused at make we’ll point years, rate getting marketplace strategic accelerated think don’t I and or on really XXXX the future plan time. new the at

I that think now. for our would So plan be

Operator

And from from Gary our Lynch. Merrill America Bisbee next question Bank of is

Gary Bisbee

a got to And venue. John, minutes. morning. welcome for good I Hi, few dropped this

you’re business. guess, you several you. are you places, wondered see to where in Thank So to apologies focused be can the merchandising, initially improving new from performance specific retention, going growth top better opportunity year pricing, be on the planning accelerating do more But will forms you covered And line a improving already exactly this. take? most I drive what growth? for where and obviously this I little if you’ve come if investments could most

John Zillmer

Gary. Thanks, Yes.

sell grow of fact, be fastest the our existing that of is matter accounts a and think As range full way retain to new on to sell the to we’ll customers. We new business business, focused opportunities.

improving organization. So those we’ll on inside focused be the of both metrics

resources we businesses. that opportunities the better rates additional of targeted to and adding sales be where Part sense, in can we field-based it most those investment can adding are will to retention businesses, resources organization, so makes where operational resources additional serve so key customer prioritized, improve adding the additional retention

Last did two significantly year, year. to is continued opportunity more levers ability business There the retention improve rapidly impact most that there. grow are growth. prior new the and believe retention our over I

that’s focused we’ll be what So on.

Gary Bisbee

you. Thank Okay.

Operator

from question from next Stanley. Toni is Kaplan Our Morgan

Toni Kaplan

in past, to X% of long-term Thank X% for next again you. of year. you’re the company the given X% expecting John, has sort and guidance

focused You’re and behind on it. focused very growth now, investment putting

do growth you Thanks. Just think really guess, your it just long-term, does get on I get? can to what I growth? guess, take how How high thoughts there? long are long-term

John Zillmer

Toni. think frankly leading the marketplace. Thanks, we and this I in be Yes. organization can accelerate performance

can growth is think we that achieve revenue competitors. consistent our I with major

basis of We competing the on relationship. the and be the basis of in and capability will and marketplace performance winning

And so, us reward I the that will that. marketplace for believe

We work and a X% as And the there. slower take retention, way and season the matures. will year, little of the increase a sales of we’ll it time. towards that our year result up improved then wins next projecting over We’ll for new start end are additional as we’ll from bit selling

is at least I into competitors. be, the believe the growth very hesitate what and next drive result, I new company but believe going an accelerate can do I I beat the and we year. to be numbers to outcompete very of people can we a our think revenue would and strong. of And do quality very, significantly business the quality we’ll predict have of the the – quality as and able opportunity we’ll the wins

Toni Kaplan

one growth, investment incentive a bit that was drive of higher the to Should in what should or little think and as then – we business Thank a bit better a And view recurring it we’re a we this one-time expecting. of the it. is you. little retention more help than we comp quarter as Got of thing? this quarter, more

Steve Bramlage

Toni. Steve. that. Yes. Hey, morning. is This I’ll address Good

full-year incentive we and stock-based the annual the is that comp payment and compensation. program normal part the the quarter to really of the So grants for course talked bonus in about then

I items. are those say So would cadence annual

more for what prior in total, the the in were In they obviously, than the year. significantly year, are payouts, aggregate,

the cash for think any bonus the kind I they pool be payout to from is a company connected But compensation or year not this took, in actually five cash that last to had the we’ve years standpoint. are so largest going the of one-time action right?

one-time targeted We in reform incentive in design clearly here reinvestments made the we’ve that quarter been earnings some about normal would stuff compensation fourth but and earlier year, tax versus talking the program outcomes. be the course

Operator

next Our Weber Seth Markets. Capital RBC is from question from

Seth Weber

Steve, the be you on variability back margins, could made way. segments, good Is you there just or don’t comment wanted that three think a across move just circle a Hey, do some morning. lot consistent to either categories? three earlier, think across you I the Thanks. pretty

Steve Bramlage

radically to I obviously, synergies the continue going fall would don’t modest on Uniform in to expect, improvement because of just it’s I space, think, that majority line item. will Seth, will the be different. see probably the AmeriPride you

expect be would positive. will I that So

will at least business. probably the out in the oriented we of because positive. the just the of improving I initially got U.S. here A be growth earlier that reinvestment will we’ve momentum FSS referenced they they of, of the having the to think, be losses lot and have international, in lack also that businesses

of see that margin not the up improvement, will probably they show I in much spending so will that And segment. bulk because think

Seth Weber

just higher Okay, or the incentive are the picture towards on retention change try that to that’s anything of doing the – change Thanks. push program rates and Thanks. super – into sales behavior? And higher anything maybe helpful. then to implementing towards you sales sort you’re changing

John Zillmer

John. Seth. Yes. This Thanks. is

of to operating both we We sales perspective place, major evaluated all the it. in the we certainly, sales very have a incentive program organization, as inside well. that as to well the a incentive make organization, sales as that being sure then changes entire do retention is process need of organization. as job resource changes kinds as are firmly well think perspective. And good is we We And believe from a not the considering sales

there So incentive we to if And are currently operate. business, enhance we refocus results. we will that comp to incented do retain further that customers think but can our people is our will programs the any tweaking the they to we the reap and adequately – reevaluate see

Seth Weber

you Thank Perfect. very much.

Operator

next is question Patnaik Our Manav from Barclays. from

Manav Patnaik

Thank add Good welcome sounds was well. there the and the John revenue morning, to you. as about of culture. talk my lot to me high a like reinvigorating let it level, growth, a accelerate On

a was want today And so far I that of I there you’ve be? said issue, far think, hoping where thus little of the enough not that only culture I was you more hiring new the you focus a versus for on sales, bit lot to it repositioning that seen sales, guess, the customer? was just

John Zillmer

the and organization operating frankly, this focus People strong customer the units say, of hospitality have organization would healthy. very is a I inside the very Yes, culture inside focus.

for ways, as well. costs, the we the of on enhancing resources achieving reducing many last resources of company the profit as the some of years margins cut march and think, barrier went operating we we I because sales results, a in better cut resources profitability, a created frankly at several result, field to to expense enhancing degree. in a And

some did of of the couple – I as away we But over go taking we up think, helpful organization the of and those we a that the extraordinarily some were last from Some organization forward. better will us make muscle, end initiated programs years.

operating in continue that we’ll in to to the we’ll marketing, focus on, So and the form form organization of now muscle the that selling of comes our field resources in and strategy add it as mind people, well, expertise an as on. area that investment resources to back is culinary form the focus of to

just multiple add the it really to do we’ll and to need the that understand the business hospitality it and they We vast make to know they it this this. how elements in majority love because to resources But employees So tools please right. them the business, happen. of company – give chose this

Manav Patnaik

quick then, That’s for side. got Aramark the just same thoughts of on I apply hoping to was that right, well? tenure as business business it. All Uniforms going FSS quick views kind guess, the to I need and prior you mainly I on to get your to guess, And And your a helpful. it the some strategy of within if was – the state on

John Zillmer

working solid you as both the experience was distribution Support experience prior as waste well and with both Aramark industry, my years as Uniform Food on organizations had similar Yes, that the distribution to models know, But my Services. in Services. – I focused very several chemical industry, spend did

have businesses. So, ways optimize do in and I those to of experience background kinds

there think improve we’ll to spent significant be doing Uniform the significant not and time a my soon. significant a and with Services I portion have of so runway his I and yet business. there Brad opportunity team is

So in not we’ve I good to in for us in company, I’m we ready gap think it are what the are Services. a to segment. got and I terms and there long-term between that of improve believe it pronouncements the people competitors and do our make run But implications opportunities Uniform great close

Manav Patnaik

you. All right. Thank

Operator

from Grambling is next Sachs. Goldman Our question Stephen from

Stephen Grambling

I Welcome. Thanks questions. on questions. for some guess, earlier John. taking two follow-ups the

above this way. target free of $XXX The is maybe flat bunch math you line think that I top flow, through with earlier X% margins your behind cash Gary’s guess, I on And it it’s million synergies. And you call, for was another the in asked of $XXX in million before even considering said first, one-time, items Steve. a the kind about of growth walking think, question I year-over-year. $XX million get

missing or some So am other around CapEx, reinvestment significant thought is I that Thanks. component there guidance? in in any

Steve Bramlage

our don’t I you don’t not you’re to there Stephen. anything, million. a to No, $XXX on million, million year-over-year missing mean, I think I million, you is think of $XX that more get than be back – was different the about stuff, $XXX $XX complicated some meant add the printed was and line, math we there the non-recurring

very will XXXX doubt starting us operational the an conservative partially seems synergy like $XXX least pieces. of that the us. for is offset I safe $XXX benefit to is point have reinvestment level of million at million a it feel But So in for some There starting and point very good at there. no of the least appropriately

Stephen Grambling

to either CapEx acquisition guess in part invest line? more the drive accelerate the top costs of any to I is question but that or – specifically, And more to ask contract need as there

Steve Bramlage

Ultimately, if value. invest spend where we you to capital longer-term we’ll and of drive spend think yes, lines will of grow where for in us business, sense shareholder makes to it capital certain

X.X% different going somewhere outcome have more spending of that the XXXX, you and of the I that’s XXXX. just I spend fiscal think it are when to that as out, schools and relates seasonality to and cap don’t out than when as seasons a think cadence in it think think I on when But how radically occurs the again around a pipeline of for and revenue determined we’re it. opposed of to terms you of pipeline number are when us seasonably putting

would I not certainly we on spend it. than trying are now. We’re just put don’t we a given more that to much where think right realistically cap

Stephen Grambling

how from a could in food business synergies Thank for joining that guess, maybe second I follow-up together to or Uniform’s benefits the about think broader then with as segment John. you about and service think do place that be the And side? Great. the you.

John Zillmer

you. Thank Yes.

clients which there by not those serve in and realized been their we synergies I all, the of having to business historic that of that the have the are uniform think is aligned, the least organizations across enterprise. the two opportunity have thousands First needs of

not the to opportunities that focus there sales-based on while advantage we’ll So synergies certainly prevalent, take continue and marketing and as are be operational of. may

the for for is has wouldn’t some significant forward. considering evaluate core margins this the the always we portfolio. future to higher significantly as and value-creating prescriptive the produced that service of opportunities that not we I’m and as a said, that but in that be the over opportunities mean I going make business the But decision ready company are different in and improvement in at be the organization. a there today, we’ll food it our years necessarily something certainly the see it’s As Board part point best doesn’t will business

we we businesses all have people make that that will disciplined the requirement investment to investment – comment, want of understand Adding with very make to a respect I operate the a for in. will strategy, just we a very sure return

does and So out We’ll capital our around go intention of throw this do not relationship not compete will and go imply deployment. on and capability. with investment or be selling to way, that it’s we’ll in growth way. competence disciplined we We’ll our on and price on price that capital accelerate clients, customers growth. to lower ahead be We’ll a and the basis it selling very and be on in selling

Stephen Grambling

color. That Thanks and super helpful of is much so luck. best

John Zillmer

you. Thank

Operator

JPMorgan. And Steinerman from we have from a Andrew question

Andrew Steinerman

Welcome, very refreshing. that John. All sounds

retention. the company was they’ve had pillars client mid-XXs up I retention. you consistently the of believe One client said has improving stood just

could confirm And improve past So wanted company that. is, really I mid-XXs? a the just to question realistically my

John Zillmer

believe can. it Yes. Thanks, Andrew. I

certain significantly I to to has desire would be at mid-XXs, its and higher in history continue our think company points in had businesses incrementally. various and than improve the certainly the rates it retention it

there here think move to an is it. I opportunity

think I was stated year, around XX%. Last number our

think, it to at XX%. XX%, I point percentage possible it’s maybe improve to certainly least by a

of can’t we’re cause. reason for customers, We why short-term continue our if operate retention. businesses, can improve or without think contracts cancellable job is no be I on most there to these the that them we very doing with

over going but the all performance the And contract what us improved structure, so time. that’s lead on to the of to driving and significantly basis higher with stay on retention should the in be clients of which towards to we’re choose basis performance of businesses, not

Andrew Steinerman

Right.

Steve Bramlage

add basis this you the would experience I on had hundred points just And retention revenue or was clearly year in used of of couple maybe this fiscal retention year in been saw And, we the being than side. the Andrew, results I mean, a terms had international XXXX, right, their just it the higher historically.

real-life fiscal whole in is it necessarily international business the happening the here not So in a of there example it’s easy possible, entity, across but XXXX.

Andrew Steinerman

Thanks for taking the time.

John Zillmer

Thank you.

Operator

Our Baird. next question is from Andrew from Wittmann

Andrew Wittmann

you run you to of and well the $XX as about just that acquisition enter the a just get I realized update the maybe kind us on Steve, million on thanks. Great, for here hoping kind that detail little synergies more integration, million you an quarter, to I year? could like $XX track. year us give target as the things actually as to it wanted cost give this sounds how are of rate has was bit that XXXX, and the update effectuated synergy you just on think been stand versus

Steve Bramlage

Yes.

Andrew, morning. – we think I good

picked we of I million think think realized $XX how we good is up number we XXXX, I realized – in fiscal terms a much in got.

relatively And Avendra so you probably ratable. picked up is

Avendra, million $XX or is piece that million $XX would be the of So AmeriPride. remaining

won’t again, $XX I number would least lot. XXXX, the in at Avendra we’ll a million expect get fiscal change

that’s million increasing synergy $XX on the things of incremental handling $XX and facility million So the or of – probably continue move piece. amount get of you optimization some AmeriPride route as and like into to we

anyways. four-year kind we And then run because that was from I synergy into the realization to rate us of full-year a go, a would for we expect of still transaction move as XXXX, have AmeriPride

in planned of of here and to at synergies. fiscal that And and XXXX, incremental so least million still kind $XX be two a then on full-year go of both realized should AmeriPride as years

Andrew Wittmann

I been And have Europe, portfolio and then, I kind janitorial XXXX, just by things you even to the guess, what Thank for mean, HCT just business. of sale, I there subtraction that. the addition John, in Okay. the mean, you the has here, talking were in that about exits

segment. uniform mind kind observations doing is so from weighing that the Is I would returns that are the today? that as maybe your if margins, the you’re least is like there of at through, lower-margin just like more you’re be at that businesses national lending And low-margin realizing. today, any some things mean, of what you’re even clearly of anything to company going consideration of your looking is some come or the wondering Things on or else account my I’m business rental that, there under in that,

John Zillmer

to them, fix to Yes, food Andrew, serve either say, the looking There not customers And for just Services, would I across all, to – process ways thank asking. service Uniform the of additive repair businesses. them, exit we or includes – not in always of there are terms you fix portfolio are that and in for for the company. that are businesses, value across review we’re the looking to them. contributors all of that low-margin always today but the

has where it point. this Uniform plans certainly don’t those to to money prune and the the team at And today so it those a shareholders’ business that the but as evaluate we on discuss, and kinds we’ll sense, specific for that look are the makes business focus from of from to will degree a going leadership always portfolio continue operations that opportunities is for and reevaluate high side of any have well. forward Board opportunities the costing I

Operator

And I Aramark’s will to CEO, now turn the over John call back Zillmer.

John Zillmer

and the our effort call. We time investors. its love possibilities very our and future feel into – and its employees, this you, I about stakeholders, you of shareholders, everybody. put the that appreciate We the our our for strongly the organization. that all Thank exist

doing things and all to constituents, very you future you the forward of and I talking serving individually. look committed to right you absolutely for are Thank We to our to much. the in

Operator

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

now may You disconnect.

Aramark (ARMK) 20 Nov 192019 Q4 Earnings call transcript