ARMK - Earnings call transcript Q2 2021

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

Operator

Good morning, and welcome to Aramark’s Second Quarter 2021 Earnings Results Conference Call. My name is Justin, and I will be your operator for today's call. At this time, I would like to inform you that this conference is being recorded for rebroadcast and that all participants are on a listen-only mode.

We will open the conference call for questions after conclusions of the company’s remarks. I will now turn the call over to Felise Kissell, Vice President, Investor Relations and Corporate Affairs. Ms. Kissell. proceed. Please

Felise Kissell

be welcome Webcast. Quarter are as I This we and Conference ‘XX doing well Aramark’s Chief morning, and our Financial Call hope will Ondrof. as to our you, John Officer, Fiscal Second Earnings well. Executive Chief Thank Officer, from Tom Zillmer hearing those listening

Web release which can be As a forward-looking regarding morning, notice statements is on this our site. reminder, our included in our found

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

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

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

John Zillmer

The self matter XXX growing our strategies Thank credit we've Hospital I in awarded Northeast and released and Georgia of with op B&I Fortune leading with a commitment a rapidly you, business of In results an today. performance discussing business in state executed, of financial Corning and and in our senior upsized align drive that look the for announced for Felise. deliver clients, commitment transformation our creates combined sector, revolving to company occurring with to acquisition an we success. of science. $XXX million value heights channel and revenue quarter resulted addition second newly advance the you everyone, we conversion facility the the innovator material has in a Inc., strategic refinancing, living forward debt repayment the and including ongoing a new stakeholders. to industry. actions The weeks, the proactive Good This reviewing morning, morning, our as recently current that reflect debt an morning, this to joining additional us thank

also We earned where role another the the Hartford of University self expanded we op facilities our conversion. business, at

higher the State be into pleased the of with largest Higher nine entering the agreements new we’re underway, of to selling extremely universities With Commonwealth. System education the higher provider season ed Pennsylvania Education, in of

be With and serving opportunities. wins system. the of and will XX within colleges about pipeline optimistic these remain universities agreements, new the excited state-owned we extensive by these highly We're state recent

line our led last lapping Turning and now down with to in with the to and was in significant quarter's The throughout we year. when all expectations sequential earnings improvement improving articulated organization subsequent the team's COVID disclosures XX% experience quarter call across second first client from Revenue quarter. revenue began to impact to unwavering in the reopen thoughtfully year-over-year, revenue compared sites organic quarterly segments. prior to efforts a the

returning volumes XX%, through to cost to business our managing outlook and positive to XX% better sales extraordinary more maintained of drop than we margins. meaningfully, As AOI the the effectively reemerge rate in XX% operating discipline, to began

While strategic such on generation flow drivers articulated, the we totaled improvement US free was the fall. innovation. execute in to the of representing the in as mindedness Education operating billion Food stability, students we're more the with offer light $X.X solid actions and resources, and campus of business availability quarterly nearly just communities experience growth I university sector. million person In and disciplined I'd as the pursuing financial improvement opportunistic and enhancing to learning capital the our prior Cash to each mergers reported invest environments sequential business million now to quarter like driven quarter, over momentum compared flexibility $XXX year. providing This segment in compared in oriented at key performance improved strong higher to structure by the end, contributed continue efficiencies. in acquisitions. to entered flexibility, cash approach AOI $XXX review enhancing to performance an gained Facilities quarter. added education, connection, by

work capacity across highlighted Leisure, recreational June just few. Our mobile regulation. while Business NHL record self ordering, in adopt name creating we hospitality course recent the solid Sports, growth. partial spring Major additional the operating just USDA this client offer reported early opening collectively season. XXXX. Industry, expect the its modestly improved approximately steady & ecosystem was We've attendance the we universal season. just Corrections go counts opened a at Corrections fan Parks our the of on fans unique markets, portfolio In approach and one underway. year-over-year to Leisure implemented In including at school season introduced of ordering and greater Food sector, maintained kiosks, learning In National XX% companies reservation hybrid for with Baseball throughout weeks, with grab local with an demand or locations attendance Leisure the and of anticipated of the meal seen innovative capacity experiencing at encouraging quarter, over we've extended In are NBA return increasing to with of person program League third recently based through Management Magazine. technology, in K-XX strategies. the at US time, continuing In quarter, districts and evolving the a second and the approximately to performance upcoming

clients traditional is in our offering, of success person office last utilizing as experienced increased began Munch remain has that applicability already digital that services on award rates doubling. is has We and including business. areas Quick frequent home quarter launched are clients with online experiencing other to Artificial resonating focused conversion ordering traffic more and early extend Eats, in, success and strongly as increase walk delivery heavily solutions our signs walkout in particularly with activity. Facilities offering Other Mail, another locations that comprehensive safety business to the our Intelligence, and demonstrated setting, selling of winning hygiene, the concept in

anticipate improvement extraordinarily pursue over fiscal pleased million start announce rates. $XXX based year, addition broad industry won government China that to include government to ongoing Chile, customized Canada. of executive, needs. new particularly heightened restrictions care We eased now team from a emulation seasoned patient business. dietary Uniform business delivering imposed balancing week quarter-over-quarter, lead growth business demonstrated who reported us since The to to as many increased. this visitor through extractive in best improvement growth, Garside, report next serve other international health in and of you know. Canada. post-care strong while to simultaneously Healthcare in continued geographies, managing in has procedures create services Chris gradual our affected improvement having I'm tirelessly the care retention the areas and strategies. worked from particularly and unique while likely time impressively restrictions, with record continues of continue in automated modest of aggressively elective in of particularly quarter-over-quarter, the performance Europe restrictions experiences Chris to joins to demand imposed the discharge by International admission team The foodservice the in were also that

customer investments digit ABS We that in the the delivered the strong rates innovative progress to initiatives, the expansion, to productivity best end, remaining rates, on growth focus to year nearly with chain, this with of resulted collectively and track scores. from efforts satisfaction growth access closure value and enhancing on improved have follow. and These continue relationships quarter, and capability suppliers with in market enhancing our record continue including services in revenues our adjacency economics refine improved XX% high and provide which to by our to optimize reach resources double ongoing supply shortly to spend retention we right once system to again products. pools integration In centers contributed

are We sustainability suppliers, our to diversed leveraged. suppliers are on and focused local and also regional commitments

delivered field to early goal considerable employee initiative Aramark launched first addition, employees enrolled in the while April, process making within expanding progress. and eligible of purchase are US in values procurement participation optimization performance In program mindset and with with first very efforts XX% to of enrollment This people, ownership time period the organization. strong The our become an over simplification its with all aligns plan reinforcing We shareholders. technology globally. those set our stock our

Before recent our turning like call over the agreement to to Hospitality announced review I'd Level Tom, moment to ago. take to Next two weeks acquire a

innovation, combined living healthcare with culinary the an strategically within know and presence senior extremely offerings and growth are nursing significant work specializing immediately high quality this This largely Next driven operated commands unpenetrated, excited potential provides rehabilitation serve comparable Level highly client in business a best us, industry, participate and self in facilities. growing capabilities excellence. opportunity to skilled in the to to by margins in expand category The untapped will together and demographic. team driving our well to expertise. We service our

I Carreker for for year. pleased will who building significant want Healthcare. look welcome I'm career, with Bart Tom a rates division, company. instrumental retire Bart this at And as over of growth, that our focused forward of CEO to business. Bart's review contributions. veteran care like President Lastly, the I the would played to Jeff will and healthcare share contributions Jeff his health growth. driving thank has We experience. Throughout in the years also to to closure Bart leads industry financial of an our a detailed and Gilliam, calendar provide end is his to on XX culture role a many improving now meaningful

Tom Ondrof

morning, Thanks, everyone. good and

continue strategies the new As specifically debt. quarter talent, bringing John weeks, or repaying execute driving new that efficiencies and operating few acquiring in the it's we whether mentioned, business, strengthen during businesses, past over the to

customers. We to positioning profitable the growth to for service are and clients and provide to company committed our exceptional

the $X.X and Organic of International performance X.X% accelerated ABS the the of the experienced with expenses of and government Canada, in been education by strong unit COVID-XX, the impacted in and the quarter. was Facilities with John segment. from first expectation resources previous while in continued of of the higher The greater route to the of than signs started levels. an were as of quarter business reminder, of company XX% of line the late year, While to XX% cost the our in sectors organic well rollout was Europe who as to in which Corporate positive as the above GAAP revenue further heightened and year, and repayment On of to towards contributing We're increased solid the throughout revenue in strong slight and $X.X rollout complement a and of share due client our reflecting led that, expense revenue XX% fiscal Chris improved to US higher $X extremely the quarter-over-quarter revenue client versus the from navigate tactically sales billion, in as drop a a our the purchase international revenue quarter. second quarter, plan, benefit operating industry, in the revenues the corresponding Canada Progress than well by from remains led growth an heavily and across fiscal decline Adjusted down result a improvement decline continues to of billion XXX(k) frequency driving operating decline. segments. of facility, to basis, to million discipline, quarter affected of the related Coast loss adjusted West team even XX% quarter compared XX% a and offset was improvement, AOI to quarter. Increased as cost all from margin equity and quarter business year-over-year, of first same drop bonus growth operating interest areas previously quarter. over excited first demand second investment prior loss revolver the costs, an last reported impact COVID rates through was X% quarter sector, as $X.XX. US person to restrictions, employee and the US system the 'XX debt in revenue addition services reached compared the begin made articulated $X included initiatives. million increased last was to performance year, simultaneously the Uniforms stock improvement year. and in personnel operations. prior Other services income year. compared better with team. from accrual Due including as Food continued end compensation project-oriented Increased Bottom portfolio the activity primarily million contributed for organic and the reported income the XX% benefited the modest COVID-XX Adjusted Uniform receivables the awards of Aramark by decreased about new that by Facilities through $XX last in growth less diluted Garside, XX% of match proactive and performance activity. all a EPS particularly retention was mentioned, overlap a efficiencies lockdowns imposed per in the learning volume, extensive combined reopenings the expense quarter of continued in over based operating $X.XX. of unit in and adjacency effect revenue Early background a have in we the to

turn let included fiscal lower within expenses Act. income $XX income to CARES federal million crew SME compared and $XXX million positive tax cash effective Note deferred due improvement associated expenditures, quarter, free company prior of the capital cash to result. income within generated million the contributed performance business to reflecting well me in the operating flow Now that in to cash with flow Through carrybacks free refund year-over-year and period. year the the flow. quarter during Higher the NOL payments as management $XXX working as also favorable Ed capital Smaller the XXXX

furloughed incurred offset to continue costs of absorbing labor addition, the $XX approximately the credits with in US. country globally we to government XXX% these In from including employees. costs the appropriate to participate benefits CARES quarter Through programs, the associated benefit the we of Act the assistance second specific in we in of retention the programs, global for employees million related received and

stimulus We by refinancing extend taken of use of cash appropriate. the reduce the will the to as will in billion opportunities Collectively, million, that annual Consequently, to repayment included cash continue executing year. approximately on $XX programs well over upsized capital free pursue our as debt of $X.X the strategic and to maturities actions $X structure revolver. an expense resulted as remainder priorities availability of savings million to net available of performance interest end. quarter made Strong benefit optimize at which flow will capital and we advance

to results continue to opportunities, at will and deleveraging new that look disciplined we existing as business use but drive as balance selective forward, M&A. the Going additional client with of facilitate in accretive well accounts capital wins investment pursue

topic our grown I acquisitions, in living agreement additional to years business Hospitality. billion annual potential Founded underpenetrated growth an quickly announcement the and has ago, highly regarding revenues, in this insight want of the $XXX Level industry. to than of less Next mergers recent senior to million the $XX On over highlighting share five acquire

business on have a a costs up start digit quality providing minimal single focused strong and has culinary and and profitability operating high high margins services. experience environmental require is contracts generated New premier ramp. The

continue separately under will leverage will we be Aramark's the where of help full appropriate brand, own Level accelerate the growth. to Next scale to business' its run resources but

regulatory We 'XX, expect to subject to and closing approval. early to accretive the conditions later Next and expected close fiscal is customary Aramark's deal Level earnings to quarter, this be by

wrap of exact let We the record our with on May half recovery year, fiscal to timing to an view per evolving. the the of continued our appreciating of finally, this shareholders of up with of quarterly payable me of commitment $X.XX shareholders June is to pace update XXth. and on share the return second announcement value of And Xth morning our dividend

the second fiscal by expectations, current improvement encouraged in X.X% course mindset. our the X% momentum a the cost we the revenue resilient term the margin we'll year operating of of with quarterly growth continued and maintaining to continue to over while are model, adjusted anticipate of the leverage income our business, the We Based incremental organic variable year, of current operating fiscal half long on $XXX oriented million end depending the of CapEx million managing associated top and XXXX free underlying This by cash time $XX on on your of the to new this fiscal pipeline for recovery revenue the opportunities raised neutral of flow of progression and timing efficiently for and reemerging Thanks in investments have include the business working will with us. capital front activity morning. we range. of

the turn I'll Now to back over John. call

John Zillmer

you, Thank Tom.

led not strong a sustainable success. reiterate opportunities back me and company currently morning. term want to a do Aramark are much by I Thank great but to admired are to most The our company questions. taking trusted in as for our vision now for brought originally the the undertaking we'll drive that provide communities this rooted also actions for things materializing, plan. Operator, position we people, key hospitality the broader partner, open and to long be platform Before in questions, the partners, enabler call very growth the that's time service to only immense your recovery, employer that a and you

Operator

a And first Suisse. is McVeigh with Instructions] question [Operator Kevin from online Credit

Kevin McVeigh

I really guess John be really, Tom. good this Obviously, would or for results.

share our about coming seems the thought obviously, part out As think encouraging things and like gainer. to of potential coupled the the thesis some actions, about organic going Next growth of that. you're was clearly potential with to a the How always balance organic of sheet I've it to given growth, COVID, Aramark the like should we accelerate accelerate Level, really even be

term? accelerating the I X, even kind that think within to X the guess, growth, on should thoughts how organic context longer of any of about So we

Tom Ondrof

I Kevin, think, understand the I -- we're mean, I Well, question.

do flexibility. want to be pursue have organic and growth force We ourselves able where in the it's people where the needed. of trying to position reinvest We there. we've sales We training to to to got we capital available in out our have a that are number and that and want get

we're approach we’ve a balance sheet when is some with balanced fixed, supplement we'll strategic look opportunistic Next Level, So think taking M&A. we done what I with how our at and

flexibility provide for in that miss again, are us us. so And we that so front of don't opportunities that

John Zillmer

value COVID focused we've additional creating sales leadership uniform a add XX even foodservice -- over really the that company's making organic of the additional We're the The all result have over a additions last in focused we're as sector I'll both significant the that well. as aspect side described wins key investments the months We We're and believe last a our growth. both all year we organic significant been company, creation results those that and to a success. with the in proposition. growth with during over environment our the a to as pipeline. that on resources as growth investment, organic encouraged XX investments And very well on focusing course leadership the on see as the uniform development activities, future to new and been last it the have and sector, of key foodservice key the the as made very by because growth on enjoying we've robust of opportunities

Kevin McVeigh

business dynamics across maybe facilities to comment I sports sell on the just Uniform then should you how a end the think that linkage more post well? markets. seeing a other ultimately, just just education, linkage between leisure, more cross and as relative and from of guess across are And again, perspective, then facilities other we health business industry and and COVID, business care the about the

John Zillmer

area the multiple and place the outsourcing higher higher activity absolutely levels increased healthcare across B&I, are seeing like. with taking in segments in We services facilities of ed,

as increasing for come are we those very services in companies that person mentioned as we locations. So script, those and in the in back demand, activity experiencing strong

activity very it growth that and well the is to various all very strong And units. continue have business prospects So we're it throughout we to of business. particular touching the pandemic the That very encouraged has forward. performed expect by business going during

additional we seeing for adjacency Additionally, as side, services offerings services we're bear. the that bring or requirements on and to in the well ancillary cleaning Uniform sanitation

to we believe have impact so an And rate growth AUS. for continue on the that that, will

Operator

And our from next Bernstein. Clarke from question Richard comes

Richard Clarke

good Congratulations on numbers the today. set of

starter here. a as Just

of has Just and whether in looking organic wondering you're rest the the seeing into talking give the year, how to looked of looked, this can stage? growth sense through you about May incremental a terms April maybe maybe that your quarter how where improvement early the of you're and of you're incremental how performance improvement bits

Tom Ondrof

last consistently the we pleased as improvement is to across Well, forward. numbers We're continues at trend. by just that. is, fairly as we We're that those board. moving Everybody looking literally in don't forward moment anything April said, at see for it's the we the and quarters. move that would cause continue speak, to going the been not the different us of manner to couple

that. by encouraged we're So

pace we're Looking further for don't accelerates. prepared things move. yet. I to certainly at than that, it whichever prepared We're reopen cautious way if know staying and a Again,

pace we're to So but a what things quite, encouraged moment to at not than by the at still going fast the April, in seen are say we've reopen yet. trend that

Richard Clarke

Maybe to and just probably a that. follow-up related

top of towards but same kept free raised X the quite quarter flat, was to cash that the sort end can with end? range there or trending of drive the talk widen it are scenarios? flow maybe the of about guess, before more towards a or I the you information. unusual, as what guidance, might more range end be of And bottom expecting lower to You've higher your Are you you

Tom Ondrof

a reopening bit. question, think couple in the sharp I And did that there's talk that the things of transparency, on a at is end. good scenario progress rate then scenarios low year. a really end us where It's The full put is reasonably about there's the end a bit a that each and summer throughout of we of

be the outlay full, would and at revenues sort stadiums coming benefit fiscal, prep of a push the of there right profitability higher in back really full outflow the ed and that not to So year. NFL have to back work there working end capital create the a would that the but the coming capital of reopen

the a we've just a continued couple scenario, and of upper issue. That last which end scenario, timing the the linear bias at this over is really quarters. our more seen is point, of So reopening as

John Zillmer

would of of a think is last of and And regardless environment. are recovery, the ball happens. that well, we've that I quickly team the demonstrate been a of changing to the on we just question what original I able your course the prepared over that year advance comments of the add couple part as pace to respond the management can to

of accelerates, driven really how so the advantage of also our be Entertainment Sports interactions they sector. we'll And employees It it improvement the if by pace recovery to rates & associates, vaccination be clients’ bring well rates positioned that. decision-making of of driven in and to respect be fast will and by with take will and or back

excited over see, the many to end see well of few positioned. will course bit of We of So in the the make months, in the we how light A at unfold terms us. but opportunity little of as the do, we're tunnel. that call some the by we're front next early yet

Operator

our question from Ian Oppenheimer. from comes Zaffino And next

Ian Zaffino

Wanted just know sense higher big good win had on quarter, upon good performance. maybe very there. Very ed. you a I to

your and higher you've a Just it, been was believe competitive what ed in bunch competitive education. how win? And advantage in that walk through was I us hiring

of sort move the one we that So is how that? should be there, fruits thinking or of the about of

John Zillmer

higher education. in certainly selling are season We by our encouraged

the an the opportunities team building and the on team particular of market. a customer. job of needs the operating doing a business a I and customized that think pipeline of businesses extraordinary range the That have is particular great the that job, are sales we win, our fits think coming proposal I of doing and is solution typically developed that enjoy across because all the success that we to

the the the very their of the the past served. already in and a needs, in our that system universities we've so had that And understood effectively had demonstrated I we Pennsylvania partnership strong some case think to we of that patchy and win, team

performance as, extraordinary in both selecting win. as well that, resulted for result their so I good of an the And Aramark think, very that proposal

on our solution, best the the So education, drives our only wins, the needs. not various but that customer’s solution higher typically that's and And we're focused the always of that businesses. quality fits set what across customization in

reopen believe And in to a very strong We and we out fully. the as selling strong reopens yes, season businesses there and strongly we're very higher education that fall to so market. are have going a continue

we are out people very, very there And hiring so rapidly.

Ian Zaffino

for How And we labor a shortages seeing about question maybe Tom. be then and you're maybe should what availability thinking inflation, labor, or there?

Tom Ondrof

now It certainly of for top mind all us. of is right

On as certain move flex to model you able that know, such side, we're is inflation the and the food through menus on -- issues certain products.

to that leave and labor, in industry, a our create But labor particularly we'll I've pressure. mitigate us of a on environment. to that supply is we're pass before, in it's said that in Same menus thing the to [loss] certainty, for bit cost more in probably years little to this there's plus inflation, the my chain on, units based our as and one buys XX able more environment, help pressure. labor and So that get opportunity really for clients. Contractually, many cases, the

the anything pressures but So costs, settle do But also But to then feel manage the contractual haven't ultimately, couple it's in schedule and we'll hire, through we opportunity see way rights. dealt as both again, over reopen we not mitigate with. of things the way we or quarters that down. those we through the we way the we'll opportunities labor next

Operator

BNP. Mestari comes from Exane next our from And Jaafar question

Jaafar Mestari

in global going HX looks to It do, bit with margins deliver peers to what you're expect like line maybe ahead. even a

back invest margin to in said QX, margins, been broadly but were behind let's where you I go think QX your just you to peers the to in and breakeven. to wanted business. And that previously it's you chose of So could have say I maybe operating fair you terms higher, call

able you're business divisions, both itself? all the accounting thinking et how to curious in new last the terms how help things into investments, route like and us dollar the quantify now understand I'm pay investments about How eventually made if it those you you're So on sales the for cetera? was over and ROI system, does months in much the in members total it the team six

Tom Ondrof

investment. building over of areas that's not along to productivity into. and in on then primarily as And sales, very couple with to Yes, and little past investment, further like willing we to, the we've uniforms we'll certain facilities, next continue and both mentioned. started go in year that go the the over of the ABS certainly, granularity been a with capability we're effect that We'll earlier through of a But is, as certainly John quarter resolved probably uniforms the mentioned, level continue in beyond. food as cost years are course, benefits and reap we of the you've

very too. and comfortable we'll it. the with again, work very to And from that we feel that it. this on and are we're model committed Both confident get seen I John return we So year investment can deliver have the

John Zillmer

beginning additional strategic salespeople resources sales just I year add, capabilities. respect Food we with discussion investments Services, time, we've added been of that in last in made to a terms over period and investments in would the even very Support terms salespeople, make these additional of continue adding to and we've additional with consistent of our and

And approach. so very disciplined a we're taking

as see Uniform Services. across also enterprise, in but investments I you think we're only this the in seeing record direct of quarter, not beginning areas. the see those in -- to are -- to Those the beginning retention in a in rates you're saw food result improvement you're that

is being perspective, real long as of And and quickly value of on becoming payback shareholder to long disciplined this think enterprise so cost but the growth focused we're from term the the term management long driver those continuing term a be creation. we're I investments for evident

and And be. so continue we'll focused but disciplined we're to

Jaafar Mestari

follow-up, as side, see results any Compass a Michigan business guess contract talk I transparency, the of be those for on Central of wins. we you But And be University investments need just that losses that the June. you're few aware I the seeing to at sake could operating those a you've will from of about new mentioned and of?

going of So one that's but away. that's that's sort one, huge one

business new picture. other side just the So net the maybe of

John Zillmer

tell to obviously happy would it that losing, that business you not does in you not that does our about one losses, we're our about happen for competitors. one I talk that's but as Well, mentioned although, we're going specific

have enjoying across high wins are enterprise Uniform that as as from Services. and Services, as well retention in will you recent But them our Food rates of well. Some we Support come record tell the I in

close selling So year. I think that We're as the midst the bear net the season. we numbers new of in will obviously the out

positioned, number the year encouraged So wins results hard at by say recognize but very where date we're the the we've able and will to been what far. to actual to so year and we're end, be

pleased very So we're net-net with the very, result.

Operator

And Stephen our next question comes from Grambling Sachs. from Goldman

Stephen Grambling

as segment a barriers entry acquisition On some competitive to have living yourself with the brings you this building while Aramark side, the some biggest the of in been your are for What peers to senior perhaps success. benefits something the the contemplated are and versus transaction? what

John Zillmer

worth we of billion It's for this it not And segment. frankly, where segment. as this We positions And sector. first in very there's small They well. in have participated $XX really is larger that obviously, competitors on relatively this our focused focused been of many haven't revenue were on either. years. potential Well, haven't an area segment a all, underpenetrated

Next organization focus they culinary been of solution. a that Level of time in management period build short high their very in a because the a the of quality attractive didn't very team, a segment solution was have as traditionally to end have that and on the that able

as business to the to that's a great And operate very, they've as selected So able capability. very of we've independently. by that brand well offering combination been why talent grow culinary management rapidly

business facility of significant self potential. in the has much with we're now been Next that sales is prospects. historically. an and Instead there off Really, and can towards it's than oriented kind we sales opportunities. of op team we it conversion about grow sales, does And it systems growth those system very large compete rapidly, focus area more are that chunky continue believe excited Level management aggressively and that have will very one

the that's as management company, the significant growth max sector level that potential only that's team quality but So a there segment. of and not us in attracted what to mostly to the the

Tom Ondrof

ourselves to continue and terms I could and grow. of add brings both is the think to as they why Aramark what If Next the exciting table Level obvious in was for it I besides benefit a

you're in leverage time we’re where of base. having they point opportunities that support can to to lot to a our get going for have to that, add administrative procurement do You bring We of them, course.

bring the advance I up We've industry, that hopefully that our brought innovation of there's and already in think better technologies that advanced culinary tackling services, to So make a to we'll set and both and we then can what of theirs and and the a and technology. environmental add very sort they've pair facility resource and of level those. advanced benefits. those cleaning we basic But group got two also with are blocking and

So businesses some thoughtfully very be in the We'll, good and together right there's though ways brand. will they own think even the right I under overlap timing. their put the run again,

Stephen Grambling

follow-up a Tom. for maybe then And you,

of impacting the number cash were that flow the items reported. a that gave were on numbers You year-to-date quarter free and

raised end the As factors cited? of in of range much is some in you've from that the the confidence business the versus for incremental quarter expected the how you that year, top the of upside

Tom Ondrof

It's both. a bit of

have I move of helped I operating we So receivables, our efficiently through business in the effectively to But first has the the year. and the factors confidence very the as think working some lifted of some core range also mentioned certainly, which inventory, just is half capital, payables, and upside.

Operator

question next Steinerman comes And from Andrew our JPMorgan. from

Andrew Steinerman

quantify efficiencies. operating of a to to like enhancement, operating pre-COVID the talk and bit the are against, to time? the upgrades had what the systems wondering to those margins wanted about if other chain efficiencies just the supply that reachieve things have level you’d has Aramark I revenue to little be I at return operating you willing was invested Aramark

Tom Ondrof

by get level. back pre-COVID I'd $XX billion-ish less? say put quite to ready get before number less. How Not we I'll revenue certainly on that. it, the to much to our margin less, We’ll a and but stand

Andrew Steinerman

And maybe Uniform? just you you one more is get on revenues comment. where margin going Obviously, like prior for the feel peak system the upgrade, which trajectory is to within Uniform, When the do back Uniform business.

John Zillmer

basis anything couple leads that don't points us of that a improvement talked that we of trajectory complete that coming expectation. the that that in significant result a I of to hundred Andrew, expect as change talked implementation margin of we implementation as be ABS a see about implementation. of margin as we've the this will that about areas. during the result think improvement lower consistently significantly We've margin from improved. past And to We a variety rollout

believe rates that closure we as have implementation improvement by strong we'll secondary ABS both come of improving account the So retention that margin improving and very new on as that a result wins. the as benefits well rates from

Operator

from And our Citi. Ainley question comes James next from

James Ainley

And comments of to a support high the of kind wanted of stalling retention. I up evidence more here? started kick levels those bit helped earlier driver processes see on those wins It to starting just and is coming industry retention, Are made about the pick that hence, year, last you that through? the now seen some new why from being seeing you're you very the of are that new and over wins has that feels that's processes some please.

John Zillmer

account our to strong companies we're the ahead of renewals I of level decisions seeing the business. throughout normal retention have gone processes, is bid we've proactive The and but lot back pretty much efforts deferred mode And back activity had pace. would organization. a proactive new through going of contracts going that into of in the say very enjoyed

it's during would quality a well improved the job of during the recognition of and combination retention that So two of come has the say that pre organizations of result the as things: had proactive I both effort Aramark of many done as a as pandemic.

But in bid than the very seeing increased as domestically across driving processes. retention terms anything internationally. that's is activity So else. business units all both various segments, of pipeline across I are The as well we more think active

James Ainley

ask maybe similar color as a And some maybe follow-up, pipeline. M&A on you could I the

on how some seeing is Are are think to be processes pick that that I transactions? up there's and pandemic, may in that the competitive in of opportunities earlier or the you there M&A faded thoughts kind distressed some operators. bidding

John Zillmer

in capabilities sectors. those low certain good had, those look extension wasn't on to of characterize were I wasn't because what it were us. distressed, couple say, that of at rather would in several a say I And companies would early were opportunities that of companies cases, there partners. for look fit. business And opportunities profiles we a passed a I strategic It that at for strategic a some would use on, -- looking as, companies term margin

that The we're new has both I a looking opportunities we in opportunities and from markets our strategic relatively that, self-op look So at did that extension really service are some quiet. of would opportunities. say conversion well of kind perspective represent as for into core kinds been as capability extensions business. opportunities

growth organic always but disciplined. active we very primary of a our our very have M&A do is we is So growth opportunities primary considering, that pipeline be strategy. strategy, not we're will

opportunistic be of pursue. that we selective very things be we'll we'll in but So also terms those

Operator

Manav Patnaik from from next question our comes And Barclays.

Manav Patnaik

what was drop that you X.X% you have of I baked just number? have, kind into margin hoping the X% through to AOI

Tom Ondrof

into metric side the obviously a from the as away moving that we're that of on a coming benchmark we're other upside. Now COVID, or

We're sort traditional to from back angle. looked margin looking the So look way business. it upside at I never healthy really that to the now at at of

Manav Patnaik

And then year? tax if following try of how on should and how kind cash this, was the of just think do much we rolling apologize or that that? baked missed I this if CARES the you but either free And quarter I benefit, the or about the flow, Act should off year into what's kind

Tom Ondrof

the offset furloughed carried reimbursement so cost. carry we've reimbursements not So for help two or there internationally. year, the hurt costs going got government offsetting, just cost on, of a Act, major to Those are is employees they're CARES they're and things one this

refund year, carryforward, which the through So received call cash this benefit have it one for that next don't won't year. NOL be we that flow wasn’t a we Act The which that detriment want year, this will out. and next reasons quarter to not we is of the CARES the

Operator

from question Rosenbaum comes Stifel. from And our next Shlomo

Shlomo Rosenbaum

coming in the the prospects of and in what sales of over a little with that a question into coming we're coming we in really quarters. edge. through particular? season be the industry illustrating you can about new should programmers in to kind Aramark, wins kind to talked benefit talk John, summer? we the Should more the a My higher particularly programmers. the net-net about some validating past first lot and And is and see no becoming Because pretty a going of the pandemic that has bit for big of the in you do expect

John Zillmer

say those facilities, that would some seeing disclose -- in nature, of in which There And seeing are we very today -- in can't business value that. both multiple I we've significant got are opportunities. working on we're opportunities some higher we're of conversions B&I, in nontraditional ed. in really are because the strategic self-op segments, I

a big say, would see facility We example, op I so increasing trend and win in one self towards outsourcing. B&I do really see B&I the of on for year. yes, both opportunities for wins of the So far was side. last that do we our team Corning, the an again, evidenced this great

yes. So

and more it op expect As the are continue. conversion to we seeing answer, self we short

Shlomo Rosenbaum

visibility from How bit are you talk fall? of How to much little for higher you're in their in of really terms hybrid? what What education more kind about clients plans expecting? think hearing a are any reopening yours of material are should the now? person the you And right in about looking they then see can we they expecting at What that?

John Zillmer

virtually school of I discussions intentions. that know, universities been a season things person to are fall K-XX with you sector I well. frankly, and to in the anticipating if very course would cetera, But their improvement as have trajectory et robust higher the of on never rates, say a would you'll to and, respect being over very environment the evolve see lowering pointed with of the vaccination we say rates, I we think see robust season infection in in in very all could summer. a the site, back education continue

student conversations the for that in case. very on be high So they're that, to opportunities. our in shortages lead housing likely believe actually institutions, all us some And demand projecting will of based person

would we ed full expect say higher I season fall. a come So

Operator

Morgan from And our from next comes Toni question Stanley. Kaplan

Toni Kaplan

color going you hoping was more with Uniform. give little a on I could bit on what's

Your growth of last was the two and improving. to quarters the public some meanwhile, have similar competitors been pretty

Canada. you year? that's government improve if you're us the But through just if losing the the in think you imposed think case, understand restrictions will whether not and or help mentioned You that share it

John Zillmer

definitely I losing say No, would share. we're not

would or level and improving one fact, think two that high retention say, In phenomenon the I part, there maintaining that rates based very we are on in the are new of closures share I West large been that very are that in restrictions Coast, orientation is of of terms the you strict. the in presence variation, the occurring which as our caused In know, geographic in have California Canada.

And so to that business has respond. been slower

as sector, in in the focus domestically orientation and the hospitality of the of on Canada. well in been comp So part hospitality linen our I issue geographic both think as has terms and our

for are of we And see we up instantaneously. the rate restrictions tick and the the vast see really we almost two rental account can see the as So business, rate sales ease, average those the of majority volumes as difference. issues weekly of

improvement restrictive see we'll Canada. It's So the Canada very as been is normalizes, significant the there. California same And of state way. in

that So our and business hard operations just they the there of the sales are to have. service working very maintain very, level

operating business us. the every through dive review the two as say we And those walk So look evident I deep And month. literally through data, are would are a do we to those the are two we the as areas data, that the reasons. very in

Toni Kaplan

the clients aspects program what and from you might opportunities just could get could hoping on the business. Eats you that applicable resonating was call, that? some were the areas of other to expand in mentioned And with What Quick was you be? those I there that earlier

John Zillmer

shelf concept you're intelligent card. and automatically Really where Quick the room out in Eats and credit is to a hybrid you the walk walk products your you artificially select you billed and off literally

very were all potential It's across that a employers look one contactless store to So applicability units. It respond that strategy, that of And addition pretty a being concept. that and Many very to. very was has environment. the implementation at is excited touchless winning really year, people convenience that and that we exciting. a business really significant as it's their last of award positively our is about solution

Operator

Hamzah next question our from Mazari comes from Jefferies. And

Mario Cortellacci

for of mix just even expect if for This Mario I'm us Cortellacci missed And that the going forward, on just you Hamzah. to how then looks earlier and just of I reference, cost but that's pretty mix like I we stay what versus in then this talk is that remind could changed guess today? maybe And P&L filling plus pre-COVID? contracts consistent? should your call, versus sorry about

John Zillmer

contract. previous implementation you in back dramatically so our the cost-plus result particularly think changed of of as of a the sector, that B&I to If discussions, type contracts mix the

We're our hasn't B&I higher or still really We contracts there anticipate under normal those businesses, back back been agreements the a But and shift very circumstances. agreements haven't come transitioned levels agreements and in sector. that P&L. operating the operations, would In that most to significant back companies back towards a over their fee other education, have we significant at do transition employees as time. plus cost We reach in seen and will today, I high shift. say we've

into phenomenon their come a of B&I convert So that else, than to more and employees it's time back work will really anything take as environments.

Mario Cortellacci

on is -- turnaround. a follow-up my just then And

has the work and next And milestones hood? how COVID least and us exact FSS you I US that doing that you at over made in, And for you're the turnaround? few a core the about been years, we in over the talked matched underneath past know the year much any can expect that that then sense what just You quantifying in that then you're inning maybe But think months business? give you've amount you two investments investing. there are maybe the you're or not should the

John Zillmer

I impact COVID say, work has been of the the done. that's certainly, masked would well, Yes,

the in invest to accelerate people businesses. order all the and to organic in continue We growth across in resources rate

phased They're those and plans. we're the And three so that developed And working each investment achieve is each a plan of with respect of very year to go units years. aggressively There the year ahead those working through put to growth units the individualized business business expectations. in plans has together. have three

So it but tell I is on the of dollar we would company. quantify a the amount, won't you, significant investment the part

over continue in the rate. expectation we resources, to in and the we we a of time to it the every the profitability the add to accelerate time earnings those return And business course improve have ROIC grow see as the for growth high the You'll and returns, to businesses.

achieve So so disciplined multiyear far. and able it's continue approach. you rates and It's and new recedes a wins with to retention as see evident And the approach. what It's COVID a more very account and become it a measured we've will more happy been approach, the we're to rise.

Tom Ondrof

in initiatives. in in the your Just to latter of heavier invested to lift question your productivity part and add of in, uniforms needed be is, was the terms to what both growth

So we're earlier. start did We there. inning probably sixth fifth,

third I And probably investments, the the good a that fourth follow. inning, On making growth about and excited the inning. side, we're primarily got food we've ways and focused progress, mean facility we're to go. on to benefits but

Operator

And Gordon Berenberg. our next question comes from from Stuart

Stuart Gordon

that It's revenues of at X% which is and margin. step change second look that get back margin between of margin to thinking But half the the to you're to $X.X through and I of the where consensus absolute more we a moving towards sits mean pretty appreciate in the X%, going meaningful I comments Just just going a for guidance, if drop at billion. imply there.

at the is much, given a see to it's it's the or that faster so XX%, reason that And currently than believe comes that either strong much already pretty you're by market. to anticipated beginning recovery

give margin? drop that's any to half that? better other X% you parts us to color second if make much could going in wondering the And just give So you look moving that to through whether some there's on X.X% so the

Tom Ondrof

haven't given I I'm said, a and I rate back lot we're spent time, to in getting metric, positive drop be the that through as territory. like of happy off a Stuart,

with last the of the as to feel margin. said, But have So revenue talked comfortable we we before, dependent. slightly been absolute as the Again, progress the We half as with over as second I've continue we We the rate to about hitting expectation, about seen to that it. I three is at long more X% X.X%. or again, looking, quarters, accelerated in achieve need in to recovery line we two expect of April good an feel year don't range. that the

probably So seen past you not that different rate the I the on anything margin can [mortgage]. quarters few think we've dependent give at that's isn't moment. I the from best than over It's color that the

Operator

of America. our last Bank Gary question And comes from Bisbee from

Gary Bisbee

at and of win ahead, have lot very op is the you've I industry, pre-pandemic out. a part been self given to still the and it level the compare demand year, line, think new is Any either about then many optimism would there called of with that? the just how on does more there helpful. a selling of But forward led pulling last wins, and being risk least is difficult the that trend at normal to whole potential A than look to back be that future about and a trends, to that environment the season thoughts the realized a How today, positive season if of selling are or date you environment the question, And take some of is any would this just people which given of sort year talking business ongoing. decision? step in a make as of the second around that conversions, comments which is we you success is the

Tom Ondrof

lot phrased you the processes line so. referred years, of last a or business environment as is past in in probably to, the have with the that it's which way the new been It's in John interesting paused probably is line question for It's because very the year because, a accurate. win

in went itself, of reinstituted and place XX culture sort in last the here the Jean testament of to and the teams that we a growth months. over So and have that

more processes off then normal get as So the back we a think RFP leverage we to that cadence.

John Zillmer

there It's many so opportunities, how conversion level so business much say as I big considered forward. pipeline op self self providers. not already perspective services you of it heightened would years of it this future activity of terms that in a plenty I the many their It hard is don't companies but there's the are in comes are change to from from tell I are And opportunities are possibility. given and are and would evaluating a who opportunity. of to as it quality year, market see there of detriment any a to a of outsourced from that is really never looking business really op pulled But that other say customers might improve percentage where the the certainly who

I I something about. that be concerned would know pulling is So forward that don't it

Tom Ondrof

-- play outsourcing in those. uptick the about nothing we Gary, before, that out whether all to to don't what was we And in other always was start that very little there uptick that still And look a to comparable there's But SARs, it we've this talked a hold to the we're whole people X/XX, seen go it get back with emotional decision of prior some last outsource, instances, see massive in process. move rush, year. before, 'XX 'XX, seeing or an tends to where because it at and and out them not more to people it's getting here as it's that and to comfortable

and up a this there's as growth. nice the and in long but It's we impression, anticipated, nice sacrificing term that big rush against it's runway to place a the it's have mass hope think be it we industry, this not that to outsourcing. So and bump it's

Operator

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

John Zillmer

as opportunity this forward to us the days the unfold. questions, further look morning. all and Again, and appreciate for joining thank you the to Really the chat interest

As we the I the to results around Aramark the of you want by are encouraged said, associates And very world. thank to all those I quarter. say

Just last towards entire and the Employee week, senior the gratitude we Day, opportunity Appreciation leadership the express our had organization. team our took to

you this company. your your great people love for hard thank say to want of all I again, Aramark and of and to the so for effort And work

you thank very So much.

Operator

for This Thank concludes today's call. participating. conference you

disconnect. You now may

Aramark (ARMK) 11 May 212021 Q2 Earnings call transcript