ARMK - Earnings call transcript Q1 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to Aramark’s First Quarter 2020 Earnings Results Conference Call. My name is [Paulette], 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.

Rich Kotzker Associate Vice President, Capital Markets and Investor Relations will kick off today's call. for who in the unfortunately standing weather. is Felise is Kissell under He Mr. please Kotzker, proceed.

Rich Kotzker

welcome four first Chief to will at to earnings and as are new you, Thank Aramark’s excited John Officer, Tom weeks and of from just Zillmer; This Aramark Ondrof Chief pleasure we Executive conference as quarter us webcast. morning, Officer the have we new ago. join have well hearing about our Financial call XXXX fiscal who

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

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

will impact in these measures, Additionally, morning’s business in we non-GAAP of of press results the unusual on healthcare well the U.S. organizational first reconciliation well the can last that's GAAP miscellaneous of of as including A items. technologies completed as quarter to financial found the GAAP as year-over-year as divestiture year items be be discussing certain release the this our website.

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

John Zillmer

share on everyone. and of morning update company good business. with forward to growth accelerate the to today look making revenue economic and unlock I Rich, you, Thank potential progress an to we across the time you the the are spending

about am partners leaders operations our more with client visits my DNA. continue encouraged ever than strong I I Aramark's As and

and by our forward the as and is all amplified service, company for passion mindset confidence our This and we in unified innovation powerful path is the commitment of long create value dynamic me gives quality term of of our There team. that stakeholders. integrity

about four as the weeks pleased appointed new Tom ago. Ondrof Aramark's very CFO welcome to to am team I

We Tom, a service veteran our to financial along officer few former priorities. valued have his strategy a not and season with expert developer from In officer. only fortunate also financial a hospitality provides our Tom observations share highway initial is results will chief as chief and are extremely his but food immediate who minutes insights

want transition with numerous the to this Aramark also during I to opportunity best. and Steve for thanks expertise period. for take Steve as wish providing well year We five all during Bramlage his this tenure as guidance his his contributions

our we reflects performance. revenue financial Turing actions to revenue drive of there and for all growth opportunities materialized segments, early ahead expected to is our reinvestment growth accelerated ample additional performance, as the the where quarter saw organic across

culture finance As in support marketing, our of field resources we to organization areas drive who future have growth company's resources and more the elevate work we specifically business, our human end and realigned customers. the clients the and sales, retention, client to across hospitality serve directly

Food years teams and and to the hired in Marc am Aramark Aramark been ability inspire promoted U.S. someone ranks originally Operating Chief rising is confident has respected to with has after in his market Facilities XX leader the company Bruno, the a drive through Officer, very been as who performance. who I

prior as addition, of as more with President a Dining, serving two including President leader with Gary has and to than Dining hospitality. healthcare returned Crompton Aramark experience highly is industry Business In of respected of Gary Aramark Business decades

teams favorable with business. oversee supply purchasing to of in believe our include our call the a I already Orobono earnings catalysts recent the our last place I group to and also John organization firmly that create chain that global mentioned changes combined leadership talented appointment for on

clients for actively leveraging our forms we as influence already refining pools, including are our traditional product supply touch conducting recognize beyond differentiated team to spend initiatives. implement the have on our our extending broadline of strategies experiences innovative product chain quality categories, comprehensive productivity distribution complement begun customized they and John scale and targeted points. enhancement John's We reviews our our global procurement the strengthening in and programs and and

$XX We our commenced funded and by the reinvestment the business have in capture Avendra AmeriPride and integrations. for further synergy approximately million the

that new field based our needs. well clients to date pursue to establishing spent business resources further as client Our efforts sales includes retention adjacent account more resources as for opportunities actively and serve

We realign the for to necessary we're balance positioned resources quarter in the of second year well opportunities where ahead. to anticipate throughout and ensure the continuing the add particularly

unique portfolio, of hospitality reignite our expanded with part pleased customized actively partners’ progress very approach of I'm meet this creating already and clients’ new early relationships. to experiences needs our the we the has resulted and As that the work mindset dining in preferences. are that several across

mobilized to and be plan focused of I by components to short economic is several leaders. continue adopted we've long prospects. our operations confident In company's unlock This few of in months term just sales the our potential business. key a being approach the quickly the

few the sales the energy participated runway The enthusiasm of commitment fact ago meeting. I a and excitement, extensive the my team in In weeks in global we have reinforced our ahead.

our Virus. some the given you seeing are Corona Tom to China all over it turn us in have what about of business I of with unfold Before asked

of and employees healthcare total ensuring in the First presence our company business the of Wuhan speaking in about our focused represents serve. are X% safety with minimal region. we on primarily clients Broadly foremost the China and we

monitoring are contact We Chinese situation daily and team. we're constant in the with our leadership

to over turn the his and financial on to like initial I'd share Now performance. company's call observations insights Tom to the

Tom Ondrof

growth to and already within be future capital of our partnering with best you. part added here deal structure to short I've Thank position great been only I'm time a to a teams have clients, work revenue board and Well, excited company genuine I business serve and a to the the to clear organization financial the a to strengthen of you resources our for prospects for enthusiasm of there's for the our John. the John, forward Aramark. talent that flexibility. look discipline chance drive with it's and

offset John mentioned in year in healthcare ahead business net growth reflects and and commitment corrections across facilities point organic first grew backed in culture and negative to leisure increase As and to new revenue compared segments. opportunity future is early business education. the hospitality top-line In prior drive all the quarter by quarter reinvest materialized organic and earlier the to Reiterating revenue actions with and the X.X% U.S. delivered X.X% the as support in growth. expected posted food a a solid by based increases year the in partially ample revenue John's sports there performance.

custodial revenue unfavorable balance organic despite year. -- counts performance and in revenue pricing healthy X.X% organic in a also Chile. exit increases grew showed also in revenue in South adjacency the delivered from the unrest strategic Europe opportunities. increasing With Uniform quarter of the America last remaining while the late International notable of X.X% overcoming non-core additional volume on for resource focused growing social services impact

prior actions an and in and to from of adjusted operating a year. education growth, claim the currency In cost insurance prior increase new medical to year. versus to accelerate constant Facilities U.S. and was XX% X% and in down primarily income as currency possessory compared on a AOI Turning constant negative AOI basis lower the result quarter net declined business Food income. the interest

AOI to of well currency strategic incentive facilities group as in compensation exit International due in the the accounts of constant XX% prior Europe non-core the the timing as based year.

salesforce operations improvements constant over partially prior in AOI and the and productivity resources year as the by investment Uniforms from in AmeriPride will by training. X% currency anticipated synergies increased offset

$X.XX slight rate currency flat prior effective lower offset I Adjusted of decrease interest basis. in expense result constant adjusted quarter. the to AOI and was just EPS a which outlined, the quarter currency for the a was the constant year of a was in by tax This benefit the reduced on

negative expenditures. million to business. slightly year. cash same free free the payments reminder historically in to seasonality lower this quarter-over-quarter special timing to quarter incentive [$XX] the based plans to year capital the is prior retirement period partially were flow offset less negative These last first year the that was outflows due compensation contributions by of of compared of A primarily million employee cash than the the And and due $XXX flow

focus in the million structure and remained strengthen an capital to company $XXX is ratio and at leverage continues The opportunity. reduced by of the and area The quarter debt position net times. X.X its

expected earnings call finally first on during as behind unchanged. And fiscal an with a last for the outlook basis the XX-week XXXX remains quarter provided us

asked me to priorities. Earlier share immediate John my

the So with up let that back to call me before wrap turning him. over

lean on rates implement to reinforce Over closed five lines on will areas. previous the I resources to support reporting experience across on and tools business business. process accountability focus to my quarters to and few one the I growth. increase Number and all drive sales investment new plan increase sales next the help my time

Number two, retention. to with retention. marketing and of John and to I and operating and improve implement opportunities teams field continue the identify appropriate ownership level training, unit to to merchandising in senior culinary and promote level managers client programs invest the by resources, hospitality, work help account decentralization ownership

with clients I to bringing grow value to Number and forward ways savings customers. his to Orobono Avendra working GPO procurement. to the Aramark's John identify look and and business three, team

to can't our work greatness cut with businesses while in G&A, to a corporate best four, teams fit to dollars right purpose Number the will are and ensure that and for we field G&A associates that clients. company places and I invested are the believe its I way support

look to disciplined financial execute program. opportunities improve to working initiatives flow, support cash And investment tested flow. and strategic and capital a client series debt I to lastly, to implement free us flexibility M&A of a enable free and will cash review provide reduce

and for While with we time appreciating will excellence. coming service you to the to Aramark confident over am that on in time work of provide ahead forward our of vision look immediate to position John? John's spending us customers many execute the I great months. sustained I

John Zillmer

Thanks company insightful we expertise financial your and Tom. to I industry be forward. the as invaluable your asset us that know an perspective will and appreciate propel

also your like the your Chiefs across I questions their on have questions. customers the take and on a to Bowl congratulations our globe our the our Sunday. business Before go we take City serving their thank for my and ahead opportunity great season the associates to customer for we'd focus want Super offer and extraordinary Kansas to to and And now to win growing

Operator

you. Thank

We begin Instructions] question-and-answer the [Operator now will session.

Zaffino from Our first from question ahead. Oppenheimer. go Ian Please comes

Ian Zaffino

could Great. you you maybe just may Aramark to about you maybe some [indiscernible] of bring thanks. acknowledging experiences much. had very conversation you'll be Thank best broaden practices the [indiscernible] also talk the to

John Zillmer

sorry. are We very

you out it? cut question repeating several mind Would Your times.

Ian Zaffino

Yes.

kind you'll Sorry. you The experiences into just on how five practices can that talk about areas you doing those of you maybe could Aramark had to what those about the the question and was about area lead your some talk maybe at you're bring or touch focus table. for Tom. best U.S. that you focused Tom five Thanks. maybe shops, on

Tom Ondrof

I hey in persuasive it's has great the experience laying here. his to great mean guy it's, be John be no so, a tough business. He's bring I industry sort in very of me. to it’s to in to a such history. the to and great years of Aramark was out vision XX to say back

running help have was really that I of I approach out don't and vision lay priorities did I John's those. take to balanced by to business. reset a so the wanted and its more repeat I the So priorities company to chance the sort excited the

they that mention would in specific I think listed priority. were a I

going to first. is Growth come

few focused his there. think We that from very everything and sort priority has initial been I in there falls months of John's are on else

practice be got of So to the best you've business. to able in terms grow

the from of way have then and P&L top momentum create to got its down. to the work You've

lose, culture some cost will disciplines, it's put business. certainly forward-looking So that think but to good won't things we priority I have in balance to here, and again place I back be execution good just really trying some the been the think the bring the good of

Ian Zaffino

need may do maybe question add Aramark lineup just Thanks. how you happy and or have might about add broadly what some you are for with Thanks. John more what then to Okay. your speaking of need just And has? brand to or feel you or areas you what you that kind in what you a have

John Zillmer

as don't as Yes. Well the concepts our particular brand the that develop of each and and technology customers branded organization all compete a very in the capability, for an Aramark I'm individual that we and to first have Thank needs we will implement customer. that we confident want where our one the ability appropriately one you. serves have

any of the services industry. don't in solution any solution customized for the had a of clients our are this solutions needs belief set an I I've always and customer that so firm and best customers part that have out-of-the-box our

we have have higher we education Table. in think I Harvest

We bear premium LifeWorks, and clients a have against serves can the and of Simple we we when majority clients. Aramark number B&I, have brands vast customers compete that the also have we Spoon can we and a end interests as the bring to of our one

I also interests. with concepts, to that partner operators, new we our necessary partner organizations prospective with a branded will is partner win restaurant serves believe to whatever we'll will we we best clients and aggressively way compete with do business will that in

Operator

question McVeigh Credit from go Suisse. next from ahead. Kevin our And comes Please

Kevin McVeigh

kind can kind to of much may What just kind like of organic type it first on helpful. are any close ultimately from hard that two can is give and how initiative Great. but thoughts Thank the growth retention it you. versus two that be of longer mean second two a a trajectories X% Can rate term kind looks X% the perspective? and what cost margin that is the revenue of super because of are Tom and longer growth the and Hey organic sense John just term? you it become us current

Tom Ondrof

not I to the think higher now initial the is -- right match be

Kevin McVeigh

Right get it. and I

Tom Ondrof

Yes. really to It's the say moment. hard at

the industry the across overall sort geographies market opportunity. you've a through of business the ton There's Aramark the of serves. think opportunity I global I all that looked know the lines, structure,

the probably time. mid-single rate course goal can the be is be think So of What I over growth the should higher. it digits

will and that's make put think tomorrow sales talked it and and but and to there to don't time there's there. impact in I Right doable work expect be to an now about people I we're we fit do done for you quite I them purpose it. today but think will can't yet get take

that available market to just are impact have has growth. the we in this other over been market years out it as times each of industry the that there be that terms Again margin about we'll enough In disciplined great opportunities there's up. enough and many said don't the beat

the will our a doing be not and our with should disciplined strike we'll bottom I So job. the the thoughtful we growing think be goal. think approach and that top balanced so progress I growth really and line If and margin the that we're can't then

John Zillmer

add would just Kevin. Yes comments and I couple

and business. want growth to sell three to grow improve said want customers want I the grow elements are service the to as there, well and level to help historically as improve think we business that to for and our of grow we new we base rates base we have our retention to we trajectory opportunities all the as accounts important and

we increased that So [indiscernible] the we already have serve. accounts share in

right level that So further increased company and now of check have averages rates the opportunity participation think to which it. to and believe kind leads We the we growth. we at historic increased improve retention are we inside of

to that points the the and trajectory and sell to we account. forward of improve opportunity rates we business have business going Tom would think basis closure dramatically a XXX said adding we as retention in the as So alter new

So against levers. we've three them. all three working of got We're

Kevin McVeigh

Yes. Awesome.

Thank Okay. so hop back I'll much. in. you

John Zillmer

Thank you.

Operator

Our next ahead. Andrew JPMorgan. Steinerman from from Please comes question go

Andrew Steinerman

Hi, second know should progress year it's particularly revenue throughout if to Andrew. I about quarter. organic thinking growth the want

in was deck the the it sense into a sort I give graph had doesn't to cadence. that aligned of up little of last As that X that quarterly at slide you have look slide right

Tom Ondrof

throughout about to talked into quarter-by-quarter historically sort We year. hate I of it detail. progressing get the Andrew think

still finish feel about to to confident that we think so I start if speak.

to fourth we solid quarters progression. a within but good expect the fully we into third, momentum to fiscal see second, ‘XX So going have

John Zillmer

Yes.

Andrew Steinerman

John, Go just ahead. go ahead

John Zillmer

seasonality you just occurring of I to in business. the the going Sorry. was add have kind

You and have that third and sports on up sports quarter the business second, the fourth the parks ramp quarter third in entertainment of national especially and the occurs the side.

to hard it's quarter-over-quarter delineate the growth. really So kind of

tends education spring. and selling season the As you be know in the higher to

So will hit make what be the call the sales what be. rate it's rate too and will on early to closure a

have here So numbers probably quarter. very visibility to working aggressively the we'll and we those and better move are next

Andrew Steinerman

in the as from numbers now purging the And quarter fully Europe first contracts and the of drag custodial right? is

John Zillmer

Yes, that's correct.

Andrew Steinerman

you. Thank Okay.

Operator

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

Toni Kaplan

Thank you. This for is Tom.

help up I doing one you I will that accelerate guess just think closer initial follow just question to at between first asked noticeable what's prior organizations Aramark to of given Aramark's the think on food but competitors any Just experience services and historically? growth two competitors was on your are thoughts on main the what that curious differences

Tom Ondrof

great a] has Aramark business. is a business. [Compass Well Yes. great

comparison. as What companies. similar between I'll there's close to know but structural get no as They're probably I difference a the that's different. So is

I that of same the of other service business [Compass’] think Aramark work geographies lines not XX% way. of roughly the or is and sort in in

people's a goal our the but and different on a progress be going can we and really rate. I the the we and deliver little understand cash sounds I So comparisons to are that accelerated best cliché to the or but focus grow want desire but increases. be to know free flow benchmarks the we want and like need want being is our the margin for to We top-line

to going does. competition we're what that of deliver do of any we shareholders for our regardless it our If

in I up really sort that's look that serving clients putting shareholders and day a our see team management that serving with and place solid John we of We're have has that's way We'll experiences after we're our after. So in John's in and our only a but the one doing are not and focus. really-really that's and and comparison where place. what

Toni Kaplan

any policy? any just current about focus? capital And buyback helpful. how changes anticipate my or less to then guess allocation and you authorization and capital follow-up I M&A more be thoughts helpful a the around you are allocation would thinking Is the do of That's as company's

Tom Ondrof

Sure our in free given debt general on priority to basis would strategic but flow to the to that M&A on business and and with definitively be second do opportunities a take a course. reinvest disciplined a bit and we growth tough support early first opine to I can of cash sort of going reducing the in sort it be of sense know is the then

I give would of as deeper So year. for once go cash things we the on at but the and sort priorities a three certainly we into get that options the set then little get I'll review evaluated other as those are look a clear into

Toni Kaplan

Thank you.

Operator

Our Bank Gary Please comes from next question ahead. Bisbee America. from of go

Unidentified Analyst

is Jay Hey am guys Gary I that plan? M&A the actually internal going this focus the What's wondering on the in GPO longer-term an to roadmap just for today. guess quickly there I or be longer-term growth? what's

John Zillmer

Yes.

this our you purchase grow and hit continue spend our work to I We're very to those to business. hard in that think by going relationship is selling think to I John, expand third partners the services with elements. parties both to

We'll definitely organic GPO look space spend are and there there's pool bolt-on there. various opportunity do an So to opportunities that our that. in will also to increase acquisitions

We well. needs the both purchase of the well as as as our and mark of of the our that serving end spend business existing spend will synergies focused combination primarily GPO quarter on be and out getting really

improvement opportunity sides. we of So still plenty earnings on have both

Unidentified Analyst

year? then going the QX cadence million to you primarily to Okay. like was of for that say did for that or XX occur hear incremental in XX the the million spin remainder this what's Great. year, I And

John Zillmer

Yes.

investing. we growth made because services those base great existing additional opportunities, the and first restroom on potential over and the you represents services year we've will businesses already and on business best probably salespeople sell have our opportunities has people that adjacent managers best margin significant on focus opportunities. like bring and hires know characteristics bringing basically, Uniform the sales businesses the aid, significant first continue throughout targeted our have primarily customers. We've those the new begun to hiring and already to of we begun have believe We course those on of against in customers a

be that some recruit, balance but the and So year at are we'll quality the various during up able the belief that continue will those develop that the We've to the availability of the of really the point begun year. ramp be it quality on amount really cadence we'll that and by determined our in by spending and of resources. growth spend to spending hire It's we that people candidates. we've depends we'll organizations resources already entire the through added

Tom Ondrof

And just add lines on I and cycles those of a growth so of has different sales know sort different might add we've across cycles. have all business expectation tried and tried John sales side I sales and the to, different to the that

for to instance for shorter sort of B&I speak. refreshment whole load So services, so contracts have of cycles sales

and they And hires. sooner so, felt the could entertainment little a cycles. multi-year long a Healthcare be of impact certainly from sales have those education part sports

if the the But never don’t today, relationships the doing start you'll business. doing work, grow you

more there's in investments So, some near term, others the that payoffs. pay-off will multi-year be that will

Unidentified Analyst

That sense, you. makes thank

Operator

Our from ahead. comes Please Barclays. Patnaik from next go question Manav

Unidentified Analyst

business is in actually want calling the Hi, on bit a to Manav. just this Uniform Greg for I on more. dig

thinking quarter positioning color may on. already get you thinking it how talk there been about some hoping think maybe the some just to about give indication investments, of on commentary you're business going to forward. and competitive I Aramark’s little but about some a last and have it that are How about early opportunity

John Zillmer

is Yes, John. This sure.

spent team you of course and operating I that impressed the of out of First by amount Been they've for all, the four will the I last Uniform extraordinarily the the organization. over time tell business our laid strategies inside significant months.

front have the they in of improving opportunities improving growth terms margin. and in rate The of them

business that looking our last that is investment primary call, said Uniform opportunities to of inside the the focus at and ways I going have we on strategic operating be results my improve As looking to the at in in services.

margin got it. great business with any I'm a team I and running in respect against to term. a anticipate and strategic very operates and the taken at doing not near up has don’t board The we've alternatives the focused improving core good discussion really that on

to realize route ability worked and AmeriPride They significant think with to I undergoing synergies on the respect will which business. with and the have of our respect implementations operate report system very impacts strategic the to dramatic hard accountability have to our

And was they're on right with tell I on that really extraordinary and think focused spent that things. the Burbank efforts now. and so, the really I really you like the business right But focused those will time team the

Unidentified Analyst

helpful. Very And maybe services on then side. food the

curious, because Just that the perspective a of facilities also guess to among that players your active big side kind different get that's catering the and I how on has views piece of in space. to be

just facilities get with So, to services hoping food your on Thanks. core sits the view how offering.

John Zillmer

bet. Yes, you

have of facilities businesses. First all we three different

that side, the total the is the the integrated it's healthcare integrated On needs of healthcare healthcare in is focused operations customer. and with because truly sale so service serving facilities very that and food organization aligned an on the business system and along our system business

We higher And have we education then, the business working both our businesses, to and in stood that in business, margins, wide good a timing. got other of facilities a operates the business. strong range up standalone providing team services against customers at as like business very

strong We to some we've to see portfolio as capabilities and customers. strong continue got an of very it grow, very existing opportunity a technical

a that specific have business are, there very it We segment. segment very on large focused have we growing and opportunities significant is a also unit

to we going focused shy doing and it that like not business. the we're have really on from it people and things right we away in So,

Operator

Capital RBC ahead. from Weber Please Seth go from comes question Markets. next our And

Seth Weber

turn educational more a are what know just of the morning. education, plan the the can Maybe in that but question thanks. seeing positive that happen the thinking talk about kind headwinds about is you business, long could cycle and to there on some business turn you good when how Hey, but it's business, more and kind of you're that you

John Zillmer

have Yes, guess, and think that's to very one in a that you win. business all focused we long selling right and now first very cycle as on selling a season of think that is we right absolutely we're number we true. a would we position have that strong and It certainly business; we are

think affected centralize the over business resources I to was that years decisions last the by to two and cut resources.

developing that appropriately unique resources have more solutions the really and the serves on customers effectively. business of be those serving marketplace to moved focused education we into So, portfolio back a higher

good them those marketplace accelerate So, leaders aggressive operating of I team all think the a companies down that higher We've and that And change. will in leadership. of period got struggle lower will of streaming into issues are I the like of over fundamental education if inside sales a resources, you of education help universities. think higher of there enrollments in couple a repositioning will time and to very with certain that a

that And work we'll that's to a headwind need through.

initiatives We have meal impact the of marketing and on number re-adoption take as focused freshmen go to to a plans customized upperclassmen by developed plan ahead new well. and up programs improve meal the of by have an on that

with significant that impact kind is a And approaching It solution think we'll business multiple the very solutions. very near the single term a in place I of market that unit. not it's we're, change. So on have

Seth Weber

Okay.

'XX? the turn So, could a see by you could think that end fiscal positive we -- of

John Zillmer

Absolutely.

this in number whether that we the to can one, growth will retention an think immediately rates, turn I positive you sell fall. acquisition a it year question, in account new in in open sales new translate our opening topline fiscal rate, see account, our absolutely when a you're is

So, of in implemented have fiscal this year. new period one business you'll

not in next into success until a So, but you'll get the improvement turn the an year. in necessarily we numbers see

Seth Weber

going business you And framework. think In is help term takes of be to doing margin a used there your lot prepared Okay. it John. to understand I understand Thanks. kind get if clarification, in business. mean, the kind just after lever but you initiatives use new I pricing that are in that could aggressively going after where comes I go thing. to your I whatever of of then a to a remarks I pricing want just

John Zillmer

will it very to and provide answer accounts. and we We're a a the are price going fit this that sell basis. way. on customers use disciplined new margins it expectations is we're to our lever a business grow to will We're I to to going and do appropriately as well basis their going to that and compete balanced designed to on and on accretive to No, services basis a not needs

are lower We our to new to going not accounts. financial sell expectations

Seth Weber

Perfect, okay. Thank much. very you,

Operator

Our Jefferies. go Mazari Please Hamzah from next question comes ahead. from

Hamzah Mazari

you. first organic around business, thinking part I thank years And on lot new how growth, as you morning, a know good three about five are you My people. turnaround years. is just timeframe about it question the is for of net is sales it that, talked retention, Hi, adding

comfortable heavy structural you standardization, technology, nothing lifting investments your product management or that from there and in you of prior etc. that undo sort have is teams, are to But any

John Zillmer

Yes, answer that ahead. Tom, you we'll both go question.

Tom Ondrof

as think Again, anything a selling business approach structural. I new business don’t an it's of to the resource before, making priority. selling retention an it there's sort making mentioned priority, a execution, new I into It's

That's But for culture, hospitality in believe or in the on category clients serving customer that terms the any to I CapEx within of the client and additional either offer, take grow. there. the client. all focus satisfying business and just the going don’t to it's

pace lifecycle grow at but then and a or on This businesses the letting sales reinvestment mentioned as feet be all the I cycle. a is different they'll just about in a before the based prioritization on those street and

less So than quarter. and can more one but be to answer your years questions probably five than

John Zillmer

and It's would. be one I than it's more quarter. than five point, going well to less Yes, a very years

the improving and term. a what towards definitely would I medium significantly organic have characterize growth think rate we I the pathway trajectory strong

will resources it this We and next the will them year that education. cycle in of improve these really productive businesses investments we that higher continue be an to new of to the longer some improve year then rate begin have year sales in and and to growth particularly made strategic as we've and expectations have impact selling expect XXXX the many to this

see that business -- multi-year don't operate don’t We need resources we I strategic I see this requirement. and we've So, this -- investment that is a the can investment this that that a believe these made as forward we the we year. multi-year effort, have it to also make we'll going

of account three business if and growth will those an impact sales. the but can new And business retention we growth, really these resources and paradigms all on have add you across base

the that continue into strategy year So, we as a this year well. end as see next going we'll and will of accelerate this into going

Hamzah Mazari

follow-up and you the question stage about around. at turning talked Uniform, adjacencies that business and same investing no options very sort you My in time helpful. about That's this and on at strategic talked of it

all, food service of the business. First there maybe about and talk any in synergy Uniform is

turnaround And I company guess a the business is you owns the are that Uniform then Uniform asset. a only too. two,

little turnarounds the Uniform just bit? So, two are Aid in is investing First you on or a executing separate business

John Zillmer

that structure the competitors not business business. the business working the I say would by is in that very well AmeriPride both of that some are and characterize through us it Yes, the it's a our a performs in technology organization the and turnaround we're the implementations acquisition. there would differences business marketplace operates scaling close I to Uniform between in of through

pay significant The very acquisition System dividends. area believe Route Accounting where is we will that one

that a as as a given resources operate potential business. it not turnaround and have. the effectively that business very have see they that the assets has significant They they So, given I improvement

in investment in strategic managers sales very all very like at Uniforms First very we investments already adjacency accretive is built and significantly very really returns Adding about and business. the time. short in business a the very period It of creating So, drive that will runway. think so margins, additional that significant good comes it's Aid, we've services

don’t it I I So, see as as potential. a again see turnaround, it improvement significant

Tom Ondrof

very sort that, business, have I've the to it add I'd it very BXB it the in business a definition and with to from familiar food traditional business the while or relationship similarly the It's side me. overlap very feels my of it's and service a contract think of side standpoint not exposed operates been a doesn’t walking it I retention. to a other synergy in familiar. and from career standpoint, business

are things familiar. All those very

a And I as very I, it's said, excited an it excellent got business bit think into for I'm got John get so, both and So, not good operating matrix management team. John manage. a It's financial difficult it's and to more. to

Operator

from Please go from Wittmann question next our And comes Andrew Baird. ahead.

Andrew Wittmann

my little you to Thank a on Great. for I'm bit going going questions. keep Uniforms here. taking

their either of seen guidance. markets competitors be from own weakness about pockets guys wondering a softness held on in some back any the end notable. optimistic or bit that them I their cited by would some more have end have geographically little have of a was concerns market that Some few

John Zillmer

customers at see see do the I I sector. don't in We I I weakness. geographies all look significant we serve, any general they as are have that don't would tell think in automotive you the the segment business I and across good experiencing particular growth

clients significant wide customers We and of have such across it. customers variety a in

for and or somewhat we're we're you you the I perspective this But specific year. confident think the softness. in both downturn will customer trajectory tell from insulated geographic I would that business any industries if from a perspective

Andrew Wittmann

just follow-up a operating Great I the company dollars range ago want margins of a up in G&K less by on and was get for the try here. years sense got I to your was goals few to XX% profile. of just billion taken mean a then called margin generating Services before revenue. question than that they a Cintas

You guys Is than context as or you capable the the XX of margin potential to beyond is about are you business or obviously the plan? that way of to that. is your size what in move for can how the saturate us put more your right twice think

John Zillmer

Yes.

adjacencies. I real time margin we to specification of think think built fact fact attainable up The by Cintas way as aspire scale that is we The that and to the built been the building got we're historically we they've over it as between the of the unionized opposed plants that it's and the business level and that has acquisition is which attainment that us I a not. they're company. period difference certainly by to was particularly

have slightly of capabilities, headroom accounting we of on. terms adding and lower the so improvement structure margin the of So a the gives us the improvement footprint, plant potential services it us different services, route that build-out but significant focused in gives adjacency of a different the again system, profile the margin that's what we're

significant mentioned businesses. a call I potential inside margin the ability multiple spent time Uniform that distribution have the in our I’ve I've business. impact in and very As last company confident on on run to our I'm significant

Andrew Wittmann

Thanks. Great.

Operator

Rosenbaum from next Shlomo from ahead. go Stifel. Please comes question Our

Shlomo Rosenbaum

talking ask taking cycle you, now Hi, things I'm and it you John good and on is Hey, become those of on. into noted number you're that Are but that you for apparent are goes noticing but you on more it's impact want in are going just business other as motion hiring the that then don't impact one and you to of really, things as Uniforms. that the right should business there that morning. numbers questions. a routing are that time? time positively of it The can't a my Thank impact kind see system about ones going are put over already highlight to long you ones the people immediately I want more changes the that

John Zillmer

Yes.

that significant think. I to had them been excellence focus on and potential into the been the re-resource streaming to-date long-term have to the that serve. a a growth action that actions of the focused we've the really and most by question down center taken been centralized businesses I on creating opportunity. back businesses That's organizations has great and markets taken they think date we've all multiple taking that Probably into

resources of they given taken the to education. back that into out them given We center them put given know people business the to dining, we've love. higher them and healthcare, So to businesses

can intimate those deep markets deep that individual impact understanding they a focus and on businesses. have those on and in really So

to a customers And period and with have a much that I those sales time a in re-engage opportunity the more leaders result way. intimate as will of over those significant think leaders have

culture Gary leadership elements I those the So group, of all the very promotion Crompton contributing customer I and of much behind into that dining, the sales on are and terrific strengthening the period business and a of focus the scenes also over will think time. Marc's of the think significant the in new have relationships reintroduction impact to growth company longer account a

Shlomo Rosenbaum

are Great there stuff obviously on B&I weakness and that should little that of? talked a then, on noticing that well they in macro something to a going on anything this besides guys as China sector people aware Europe. bit Is in or out that [Compass’] call you call you is be want in perspective about call that a

John Zillmer

we don't, seeing I are Yes. that. not

we're European it Our segment international don't country very We seeing are softness but results. actually the down not obviously strong. that and results by by break in

Shlomo Rosenbaum

you Thank Great. so much. Okay.

John Zillmer

you. Thank

Operator

Our from next Grambling comes Please Sachs. question from Stephen Goldman ahead. go

Stephen Grambling

quick a have follow-ups. just Good morning. I couple

the then benefits the and the going on forward? just perhaps Maybe quarter. synergy in integration You of to as magnitude cost two elaborate you what's be about and acquisitions may to talked talk AmeriPride the think expected left Avendra you capture? the that capture Can

John Zillmer

Certainly.

don't acquisitions. in First of to the that see that any the between significant materializing synergies the for real approximately as progress see seeing two and all the total we’ve integration, Avendra either either AmeriPride. be in organization expected. gaps on million year $XX and projected two between I We realization

route accounting benefit Aramark calculate the really as benefit and a can very beginning and really system couple AmeriPride of and of and testing not in did the it implementation the a value really see to we've or as and with that the that it We seeing. adopted we're synergy with acquisition across happy the part associated in yet quantified facilities we're former the the but be of tangible haven't are significant piloting it that our results satisfied enterprise

get positive already But those So that further by we'll it. implementation. in as able tests quantify to theoretical benefit very impacts we from along be that seeing we're

Stephen Grambling

of start making peers to most investments of P&L focused great investing Can this period. your like CapEx sales just That's going year the typical up. a seen of prior are sounds spend? versus than contracts talk much it we've in more And folks bit some you to but on that to the trajectory be then maybe another that CapEx, side you're and the inch up client the and quarter lower flow and follow looked the lower than cash

contract you opportunities? client you evaluating any those think versus Thanks. if other around So thoughts how investment have about and

Thomas Ondrof

for given acceptable cash so be and of than different more great we The two don't out, be business business bit will investment capital look install a particularly we a win continue contracts, looking returns It's secure of contracts any based to for are Sure. the on that categories quarter CapEx a fourth would if and cash of can Hopefully then and education requirement that likely. CapEx in it's gain quarter we'll opportunities. to new you to we differentiate. and at lumpy

So I got. of in moment at to looking sort at year-on-year the that year, it's we've look at we're best progression the pipeline and terms of think the full

then optimistic into opportunities historical that again will as are year there next We CapEx and are norms towards the trend the well.

Stephen Grambling

year. That's much. helpful. Thank you Best this luck so of

John Zillmer

Thank you.

Operator

now turn Zillmer Mr. call closing will to remarks. back over the I for

John Zillmer

the just forward everybody conversations thanks We with pleased looking pleased of very the we morning. state quarter. We're through forward the a forward result as look to to this organization end side to balance for of Again next joining the my of move and here us very Tom at Terrific. have sitting great the year. and by I'm

you So much. very thank

Operator

participating and you and may this Ladies gentlemen you. Thank conference. Thank now today's for you disconnect. concludes

Aramark (ARMK) 4 Feb 202020 Q1 Earnings call transcript