Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to Aramark's Second Quarter Fiscal 2023 Earnings Results Conference Call. My name is Kevin, and I'll be your operator for today's call. At this time, I would like to inform you this conference is being recorded for rebroadcast. And that all participants’ are in a listen-only mode.

We will open the conference for questions at the conclusion of the company's remarks.

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

Felise Kissell

Thank quarter fiscal Chief Financial webcast. to John Zillmer; Aramark's conference Executive Tom as our welcome will and our well from we This you, call morning, Ondrof. Officer, hearing Chief Officer, as ‘XX and earnings be second

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

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

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

the I turn will now call to over John.

John Zillmer

all for to thanks and of today. Felise, joining you Thanks, us

Now optimization. business of detailed halfway which one, full-year success; share fiscal in: I three, Tom morning, update on make the line as an opening before each to sheet and outlook balance the these additional resulted well This have as the strategic priorities, continue strong on and we our will two, a for services progress spin-off priorities, questions. positioning for Uniform for through performance; year, the

the teams acknowledge to around But embody our want day. who culture first, Aramark's I globe, service every

time, in for communities. example with impact performance one expertise on of over around our in and employees Community is that promise. they our teams, during and week people, that areas commitment Just to work. our projects which we've Aramark's clients we Building and deliver our the the X,XXXs ago, of with to our and starts their the volunteered where over across Day powerful service just reach world live partnership held proud created remarkable as I'm continue to Aramark our we of This XXX company a energy

pace comment Now remains After on and robust. last combined above remain performance. XX% let second us ‘XX growth business or revenue that to and new ‘XX. is in the of on creating business line This, year, into annualized fiscal last rates pipeline keep more of momentum our fiscal with business deliver strong, quarter net retention is X.X% results me solid top and going record new year's

U.S. Missouri Chicago care, with proactive facilities, State segment new Net example. Hospitality retention the driven DOC was in the University health Collegiate well extension of and in new as wins an Medical corrections Center, expanded and the results of strong recent an as that University reflect the business in as relationship by broad-based, Mississippi including Boeing,

numerous pipeline. momentum underway, season With with the well continued anticipate for selling already we in the Education opportunities

segment experienced winning Ireland The and the ongoing America. in International butter across U.K., Canada, bread and accounts success particularly the portfolio, South

The and to funnel sales Our forward all to busy upcoming we're across strong. now continues the is looking in geographies complete and rollout remains phased of retention locations, season. all Merlin grow

business. the experience. veterans, business 'XX marketplace, in it Many and the we we for new new to on we're nearly business reputation being plan sign thrilled next the expect solid, recently pipeline him a last have compared increased the as generated joined the to into of growth and strategic under business remains sales Services Uniform has of industry for year, AUS, move Andy's accelerate who The board this you fiscal sales that executed. is phase leadership and Panos, know of to Andy of XX-years and

last compared to year, revenue the same contributing company's the pricing organic approximately quarter, In with XX%, period the grew X%.

in activity per contributed segment, within sectors capita by as of strong & Entertainment business, our in XX%, as continued Hospitality revenue return-to-work U.S. & Business growth increase led a Retail & concert quarter-over-quarter to well organic the of all spending practices Sports Collegiate our Catering scheduling Within business, and Industry.

by International and the growth grew solid all new base net driven organic continued & quarter in-person XX%, U.S., Industry by demonstrate second geographies. strength, & business levels. business, to revenue and last pricing initiatives year, across compared Sports Like greater to the Business driven Entertainment activity

concert a Our teams up ahead. for are season gearing also summer busy and event

double-digits in in Uniform relatively portion currently a solid with the point AUS. increased for Adjacency business performance Organic growth services a segment to the and mix revenue both the X% small focal year-over-year within of grew revenue and Canada. U.S. continues be Services while

Uniform progress for excited the for to the company. an Uniform standalone independent continued significant transaction spinoff, to make as the opportunities ahead are respect with On we've and services

of monitor an eye as is to order all momentum, the the macroeconomic regulatory and as be a the on well while and the in capital in by end continue position market diligent with remaining conditions, year, complete the business' logistics business the to separation for to in to doing fiscal right shareholders. Aramark and completing operational, We what be able financial

In equity Services to we million. $XXX for sale in balance of completed stake the early Lastly, our AIM sheet. continue our we strengthen April, noncontrolling XX%

franchise recently also signed the for approximately Antonio in portion We of San agreement ownership Spurs an our a $XXX sell to stake NBA million.

we'll to as future. continue the the valued imminently, that deal closing subject work a documentation, Spurs will to in client closely with that, expect and We certain close

it Leaders HBCU to we partners. trusted and the most We on and over for students career College Tom, one turning as new employers historically the with focused be Before highlight Colleges of and partnered our strive Universities. to development would the professional Marshall exploration at partnerships to Emerging program, hospitality Black launch admired I Aramark some to like Thurgood of Fund also

their BBB from Hospitality businesses. impact people challenges a formed want to bring value to Group Group, empower to Experience an clients, in leader avenues alliance communities and Workplace their more with also hospitality our equitable to We human-centric overcome minority drive and of new who to equitable labor

Inc. by work last of proud as the And a as to a supplier unified for up that named drive for Tom? selected significant and time, Aramark a making week, community impact even again and also inclusion. rankings as in the the once were just first hard diversity. XX extremely company is we I'm moving top top Diversity, employer

Tom Ondrof

John, good everyone. and Thanks, morning,

performance Our by delivering profitable second growth, in quarter strengthened success. momentum continued that in business current the position driven reflected the and have actions for the of future the state company

to operating total mentioned, currency second company a million John higher adjusted quarter revenue basis, of grew increased AOI billion last constant for points $XXX in total the quarter. XX by compared XX% XX% to and As margin on year. company of $X.X the organic year-over-year was income X.X% the basis

fiscal than on AOI to currency margin constant of improved basis the to X%. the the year, year, up more basis the Through last company total was points XX AOI first-half first-half and a compared XX%,

growth to new the U.S. maturity & increased driven management, AOI year's sector of year, the above-unit activity tight as prior per purchasing B&I and cost last spending by within base cap within higher a supply In well from compliance on as business. Entertainment off return constant XX% Sports currency segment, leverage quarter and work business operating the the second chain compared basis, the business, to

of the sector inflation the quarter, higher client Specific client actions business and but fiscal year. Corrections take in within lag during labor The levels, headwind approved than as a agency Education second-half to gradually lessen is our Collegiate that use pricing of historic effect but Hospitality, the remains to pricing we expect improving. the remained

in the constant basis. International increased currency year-over-year segment a AOI X% on

quarter As previously the million $XX reimbursement second disclosed, included government in last year payments.

constant its and year's on Excluding grew expanded the a XXX% AOI in segment basis points each by last this quarter, AOI the basis. benefit currency second by XXX to margin period,

Year-over-year chain impact which from activity China a end costs was business clients, purchasing maturity, reimbursement and compliance business January return segment, prior base to programs. and work on growth across the driven of in and the International operating lockdowns within volumes industry the offset constant across currency off contract a generated leverage more AOI business during initiative above-unit higher basis COVID the supply of government than year's by reduced new restructuring through

related of currency the grew AOI on off improvement as that primarily than X.X% leverage constant quarter. second operating Uniform's an and by The driven last including in more year-over-year initiatives, X.X% quarter tight savings versus the net in was new efficiency AOI costs business, early as labor merchandise controlled operating restructuring a well organization administrative higher basis, offset year. in an margin expenses, resulting to X%

this AOI its of for to the expect second-half public company in We progression the margin establishing continue the foundation debut. year,

Across chain driver remains the AOI integral performance. portfolio, supply to an

levels. rates, are deals. which improvement have pre-COVID fully approaching to here now current seen negotiated leverage We allows Progress our us supplier in fill an

pressures. buys inventories of Additionally, providing to as return we cost the supplier chain another are to seeing rebuild, opportunity avenue within supply continue offset

trend as of well in running in are to is this set including time pricing sequential agreed of they to continues, product be pricing are the related one over as this planned cost half back tailwind the actions, than currently higher experience the While have we year. basis clients years from the to and at the implemented, the than started business than points consistent If pricing with a to year, and fiscal already were expected two of moderation recovery implemented inflation. see costs and beginning we ago XXX universally rate higher more

Net approximately interest rate adjusted expense was was the and XX%. $XXX million, tax

quarter $X.XX quarter, basis, the adjusted compared $X.XX constant to the quarter led the currency adjusted a second EPS to $X.XX. of increase year, last reflecting year-over-year XX%. performance in of in Our On was a EPS in

On was of operating was per quarter the million a $XXX and million revenue income second year. GAAP diluted consolidated the $X.XX $XXX quarter. $X.XX last of share and income in for earnings Comparatively, basis, billion, $X.X diluted was operating revenue earnings Aramark reported billion, share $X.X of consolidated per

revenue capital and offset availability. operations to same by a was cash higher at quarter historic in of million, generated the of was an operating and consistent turning which with the was net At quarter capital the Aramark quarter, flow free business. activities cash $X.X than higher Cash average. provided sourced flow. inflow better expenditures, use cash below billion X.X% last end, the $XXX In in working slightly from seasonality $XXX historical cash year, approximately was million still Now by

we repaid Since leverage have $XXX committed debt quarter to in lowering our remain million total and end, ratio.

evaluate for our sheet balance repayment We opportunistic strengthen debt stay ways through refinancings. looking will continue in conditions to strategic and to capital market and broader

company total includes current outlook for additional and expectations, let So insight global some conclude as with as me on that Uniforms. well ‘XX, fiscal our FSS our

segments. For the short, reflects efficiencies. include segment capture Corporate Services here Uniform for and company incremental FSS FSS everything U.S., that Services outlook Uniform The public and not additional clarity, includes segment. of International any In global the does except FSS Reportable costs or reportable

growth AOI fiscal the XX% XX%, we Organic of year comprised over around XX% just be anticipate global to to around year, Uniform of to and approximately approximately ‘XX. that, raised at be for With Uniform FSS and last comprised full-year Services growth currently X.X%. services approximately year-over-year FSS -- revenue X%. XX% at global compared

$XXX cash the million $XX and fees Free spin-off. cash of quarter payment associated payment of charges approximately FICA million $XXX with the related restructuring last of transaction million completed approximately flow to million flow $XXX impact the before and anticipated to Uniform

After plans times remain by fiscal to expect ratio to approximately these million spin the specific balanced either the structure capital we leverage free less a of reported to company. with improve year-end. cash our time no We be to flow X our and committed to approach items, overburden on at $XXX than

the strong and opportunities, us in the confident of ongoing organization A business Services pipeline to the long-term sustainable initiatives in the fiscal half effective, taken sequentially in both to continues We first-half that foundation and and beyond. year Uniform profitable second confidence global set inflation, as the effect are make of and of pricing against chain give actions supply new a the moderating we benefits positive and FSS more efficient the deliver into head of build the growth. for 'XX stabilizing and momentum to

Thanks time John? morning. this your for

John Zillmer

you, Tom. Thank

for As into half of into second what this year we build as about fiscal lays move year, the excited ‘XX. and I'm Aramark the ahead we finish

business base driven strong, net growth, solid mentioned, new and Tom is growth. by pricing business client and the revenue continued recovery growth ongoing As continued

in continue global all the efficiencies. and and two within wins AOI new in supply ongoing Collegiate the year, in chain increase student next maturity nutrition profit to and pricing facilities operational from record XX% anticipate by normalization momentum corrections. expected through this optimization, notably The profitability recovery of through Hospitality, and ramp an Following we fiscal year, food past continued business driven most years segments,

density a previously focused completed initiatives cross-selling route on across portfolio. Uniform above The FSS benefit investments increasing announced in and across well optimization control and implemented the of new successful already remains Uniforms and International services from and and and restructuring higher revenues. route strategic with agenda leverage tight unit organizational wins of overhead business as as

as and team leadership business. creation. operate to of identified incremental stand-alone is has a for opportunities start related the as Additionally, company adding the of organization restructuring value prepares experienced just with the it history the come what's This to a to talent

The for set teams our bar to I the work incredible our easy. a day ahead and performance deliver is very each business continued hard and feel and globe of momentum not we're beyond. to this of level for believe in deeply We've ourselves, to every ability Tom across day working reach stakeholders. and our the the well around high

questions. open line the now we'll for Operator,

Operator

you. Thank

comes will Toni question-and-answer We now the first Kaplan question begin from Morgan [Operator Stanley. Instructions] with Our session.

Your line open. is

Toni Kaplan

growth to could was regard about new color the driving what's and guidance. trends? organic through business growth, be helpful. so Thanks any you Anything more your top see and talk the you additional trajectory nice line particularly on much. with raised Thanks. like would the on you trends, year how business that I and new hoping quarter Very acceleration outsourcing

John Zillmer

Sure. for the Toni. Thanks question,

momentum very pipeline. strong a strong business First we very and of all, have new

activity pleased very would year. a balance very excited and we're So the say of for about the and lot I of prospects the

As Education. for in it's you selling early season know, the

decisions we opportunities and half that are this of back of about So front us. have year in anticipate very the a through we still lot excited the of

this running, year, to last say the positioned a well and and that excited a advantage performance see had continued that those similar very trend prospects. for overall the would business two record the We forward take very about we trajectory for I outsourcing will of as on support company opportunities. we're a years is the believe going

momentum as base well. seeing return year. to respect the business and With we And trend business an only are accelerated we domestically, is that, expect recovery not which in create through this and activity will continue helping work, the internationally industry, in momentum business, of and to that the to balance but

Toni Kaplan

was did to what of, March. for the similar but AOI Great. looks at providing margin want I clarification in sort that little in lower XQ, had the It ask maybe. terms in expectation similar conferences year. And than then bit this it of I for about to follow-up, a you March you to know what a expected just a were like margins, like, sounds

you talk about the And And margin guide of can so upside sort up? just have stabilized that here? maybe to and Thanks. either go

Tom Ondrof

for on the We're really progression Yes. talking year, concentrating the the with about the we both top and mid-Xs, as bottom I forward balance. the think, line on move

variable as getting I strong think pricing. very just of to the be continues We're pricing, mentioned, persistent John the inflation.

set We already second-half. have a lot in of to be pricing client implemented the agreed

of, as sort the So seeing that's that that, we're into obviously countering this we second-half year. persistence get

short, to But the very is the we're running fiscal and a there's balance planning Toni, of continue Time to change sure, certainly, we the doing that a new business through on lot move things, to for of the not is pricing the I'm a we ‘XX. upside we'll that. including downside, think staying be aggressive lot it. lot year. and the that I appropriate going as little it that see and fourth offset bit. upside by to We real might mitigation in get can the help but the And ‘XX. bit on be we're a any large, of of But don't little would a focused quarter, towards if of already

Toni Kaplan

Perfect. Thank you.

Operator

from with of Balsky America. comes question next Our Bank Heather

is line Your open.

Heather Balsky

bit about business. talk thank I you you. could hoping the a Hi, was little Uniforms

team, the talked sales of organic the -- about the new you slowing I'm I right the two of in business the But looks adding about guidance. value they've kind think business time, Thanks. into going at they're parts. curious the ahead? hit back on what's on half it -- focused little like of to now the you see opportunities same that creation. members a talked You One, year your and in

John Zillmer

I'll Yes, that. take

in we see it continued are and and last in third fourth business of terms the growth net year's of we have in fees, momentum fuel been quarters. First the all, would new recovery sales anniversarying

So are on our actual running consistent expectations. activity year-over-year, a of at the comparative is but has with slowing, appearance sales that we think it basis the levels

highly we're to as there. built team in place in on company we're that's the And very it. we've confident So that confident environment, leadership create public team the the a in focused have we

respect in that we think we're going marketing to I new So business Kim's have we'll Andy perspective the to organization. implementation. very industry, pleased new and as strong established greater has leadership lead implement with forward strategies from heights very the business to even some and join of He targeted a

our on the the balance the business will its that I of plan year. based are So perform expectations continue think to for

Heather Balsky

weakened And to monitoring the about you're know environment if fully there opportunistic timing to Great. the I capital the spin? don't that share, -- the of you can any you you the be to Is a talked the bit but macro little much markets Or environment, you're that the the committed thought might around how regards environment with spin. of year? back half look more

John Zillmer

and that going we either that will the organization. the said, those Well. and spin. the committed are monitoring, We're the co rate but and as to very you to macroeconomic lever want to what Board's the is be make a comes Tom of and indicated, side new for kind with conditions. at as Obviously, something want we be markets equipped decision business fully sure capital plan to of we cost appropriate leverage will don't cognizant a timing in that, The conditions that's forward, over of be -- the

the looking right going opportunity timing. about be just and conditions for monitoring the very and to we're So diligent

Heather Balsky

color. you. the Thank Appreciate Great.

John Zillmer

you. Thank

Operator

Zaffino comes from question Ian Oppenheimer. with Next

Ian Zaffino

kind What the driving there. out as here, top some better also [Stacy] You on growth food business comps thing of culture, the than far as is well. process, know, on of same really as that impressive line global AOI (ph) teams

So outpacing of that's kind also comps.

So differently that you're can or Thanks. you tell us doing giving what you edge? kind of maybe what's

John Zillmer

realizing that's new those seeing that. accounts come accounts and you'll line as improvement those acceleration improvement the as as AOI think up to Well, then of continued mature, And net ramp last to see profitability and of margin those and continued mature, and business come I Top those couple the growth we're maturity. the the come significantly on accounts revenues. contributing you're the realization years, over

factors driving results highlighted. those think you've so both those of are And that I

I culture excitement focused on really is of think the there's the systems. incentive We've alignment We've -- the organization there's fully of built about future the the the just lot a of company. built now organization throughout and the growth.

I on year. And strong elements. so see that performance contributor that's, those of through think, continued both a improvement coming this very we And

running the we'll the So years’ It approach new that and two And performance to new wasn't going forward. success I business. last culture the drive to anomaly. an was the think continue

Ian Zaffino

Okay. of as say, two price then with going you to there Is Thank down. there get just a coming And are talk your ability food about thinking costs kind moderating still let's falling, those recovery. I'm price How periods point of a coming give of are dynamics in back? Thanks. we kind business you. the is food up? to can are food down works about costs, prices be curious, are coming then how been have costs maybe a because the follow-up, and where your

John Zillmer

Yes, absolutely.

cost both element an of you price inflation. inflation, recovery as as know, labor As well food is

impact coming seeing over are hopefully total put where we and lower But and in prices have So from longer operation, the there costs. the that some inflation recover rate, the with to have total because having you we've a profitability respect cost. And on food of tailwind back food pricing commodities products, when food a improved the not we be breakdown the on point cost time the will which structures in some will place some term as operations. the pricing deceleration and pricing, cost for down have price cross to an up don't generally give in in food end just those come you

-- are several I would but inflation, it's say lower that early. still last We at than have the still quarters. those

still beginning it's So moderate, there to it's but still and persistent.

So costs. of bit price to as pricing to you're a due lag will diligent about continue have a that slope, will. be we'll those if you we recover some had requirements. about right, those tailwind be in to that, contractual We'll point, a And crossing to result continuing over have of businesses that diligent at putting

Tom Ondrof

comment, The contracts, Ian, in environment one technical declining cost-plus cost customer or we to would is exception I'd pass-through drop. add a see the food John's with to

essence, would environment, we that the a those as tailwind costs to typically a to pass-through came a margin. in So and bit the down, our revenue help as into fees deflationary dropped margin revenue That's our move going would but fall. be are fixed because

Ian Zaffino

thank Okay, you.

Operator

Tyler next question with Neil from Redburn. Our comes

line is open. Your

Neil Tyler

Yes, Tom. please. Good questions, morning, thank John, you. Two

lead growth or business. Firstly, altered you Could all months mind wins, different to you shape the that's insight six ago, year bear different continued industries, a the the about in talked into the or or size momentum compared or please? at of whether in in share changes origin any of some perhaps times in new

John Zillmer

much we the are this new larger of normally last significant couple year's international win I what a described whale. of was say that of not of than Merlin, a of account lot bread account I obviously, sell would the as of wins include This for given Those broad-based sales a would year. constructed but as the wins enterprise. across a whale less, accounts, a segment. in it across new large don't or are we Sure. million accounts lot results activity. would enterprise, characterize the and year's dollars butter lot results a so result very year that any

thing. actually good that's very a So

business year be results across happen to for on opportunity, that's expecting across full another our able portfolio. terrific, organization achieve And to of the the we are the new large around lot if to the hit we but selling by world and a

Neil Tyler

or your comments ongoing regard with of around or mentioned changes with wonder other Tom, recovering, to price actions. then, in actions And And Have either great. to structural sort catching future? cost the cope of the to I in in a but with costs. be think been of business volatility regard up, changes set or just the of you that it suggest there to recovering the contracts sort you I because seem might case the any cost sort timing better of of structure That's permanent renegotiations, up wasn't

Tom Ondrof

that Well, year of is I word two clients the to pricing would been good that past I and second-half, is year the volatility proactive set as One news. pricing think to, get so of our just is things the more given that. the it experienced some with we've more on already off-cycle our referred diligent, become over best in working for as in course going that is which and with guess, and approaching clients, with is place, is I off-cycle the the

We had on became many open in so the written indices We've way I focused the them and such couple of for in a low decades able I a be the more environment. forward caps on years, we're think with indices renegotiate fairly contracts But contracts. more based routine and they also with whatnot. that were inflationary keeping environment our think new moving been to variability to as

have proactive those business or forward. so continuing volatile be being get the of And to new anticipating either this into much going as environment not sort continuing constraints more we to

positioned today. over our are based the we're we coming on think better contracts way the structuring So years I

Neil Tyler

much. helpful. That’s very you Thank very

Operator

Steinerman JPMorgan. Andrew comes from next with Our question

line is Your open.

Andrew Steinerman

started company the you you perhaps a feel stronger feel the together like some Hey, do growth with constrain if reporting readily Like, stronger revenue wanted question of here. just extent? could the juncture revenue I more concepts entered revenue to strong there's will healthy is, at do a pull where margin has margin kind growth a quarters, to you few do going a Aramark maybe still through? you balance time? few sometimes margins as like flow growth Or to feel My expansion next example, the for same over be company like

John Zillmer

I Yes, would that, Andrew. take

of margin is one post which higher in adding a continued which supply economics the agreements. as you think supply dynamics, should chain sustained And growth will, continues a puts a on going to those different of of spend us economics, I levels company post levels, in expansion and we at a result existing also revenue sustained deals, our position basis. really to couple earning chain of additional forward improvement on if at it's growth, a

many you agreements to And as spend tied or grow case manufacturers get counts. you know, As returns. with of those are accelerated either business, total the or suppliers you

then of We're cost possible. SG&A the as as respect also flat to phenomenon just with there's increased diligent as leverage the focused And the structure. as and and keeping very and about the organization efficient

our the to continuing model And adding by line middle in that up way of P&L, profitable expansion both contributing of business with on focused incentives to constructed the managing have will. so and business growth then growth it's the dynamics in and top those if you we end that's aligned margin a environment, and stimulate new the the way you we've

Tom Ondrof

we're the the business. of strategy of that add, and have the it's ‘XX, about John point now, I'll I and one And It's of ‘XX, really because first-half trajectory growth years half growth we're about, of journey changing that back talking excited of the and really underlying this been two it's great ‘XX fundamental a all question. on in

supply and infrastructure. But we're got as forward. there. will balanced works growth. the line unit the chain continue leverage line, the to in follow virtuous that overall to And said, and circle getting leverage top get resolved to of We've sort move growth So we bottom to and then really margin we this John stay like above

Andrew Steinerman

you much. so Thank sense. Makes

Operator

Stifel. with Rosenbaum Shlomo from comes question next Our

Your line is open.

Shlomo Rosenbaum

piggyback this little Hi, thank you. more I question just on here. bit Andrew's I questions over a have to morning. want two

guidance, we really to quarter. of quarter, the the -- pointed the margin had you be revenue you're not might and strong last with but and guidance conferences lower that what very or with in consistent end you're Just you doing you the in growth what raising said

margin? Are elaborate follow-up that of I what that's you that. offsetting? the there Could Because is If costs? you And out puts Are one better? more the you revenue have within can to kind that? takes seeing turning about then talk more inflation are start-up and on

Tom Ondrof

Yes.

biggest the think point inflation. I is

If back year the out go The for the between $XX difference AOI of lower when midpoint the adjusted same $XX you AIM. to the of and to the guidance put beginning November million, growth roughly back million, end to the we end. XX% high XX% is last

in then not we second-half, if a been And that get with move the pricing we was we consistent in slightly to relief second-half. decreasing AOI. before what be of at year, and tailwind and beginning some back been through the longer assumed that really a more tweak so going rate has just well the than on stayed that's inflation and of -- by persistent the get bit the the the early It's the driven coming would into thought

the rise and end line strong, as both wins is to the continued assumed top the top that which net remain new to the revenue. to the pricing we Conversely, been have than has of stronger counter growth account

of dynamic it's just inflation assumption, primarily of little the there of a bit So start-up a the in year for in growth a costs. net bit based and on

John Zillmer

to particular, activity of in already that mentioned Tom corrections we his very add approved second-half going business. contractually into year Yes. agreed -- And we're affect would with pricing I will in and it that's of pleased the we're level script, the have the as the

anniversary dates on state many federal calendars. in which Xst of contracts, are based goes on pricing that know, local and of you July As

July that profile. that lead significant into so pricing comes to system will that improvement And in in margin the

into Collegiate the board have then in agreed goes Hospitality for the And you pricing plan that year. September already effect for new team

to us got we've start strong this higher-than-expected, rate that's a lead running for will and offset that that into little confident we're a of So ‘XX. the inflation

Shlomo Rosenbaum

trying you. else Spurs. my is to you you Or I feel what kind with pay debt? And of upside Thank the Great. question down at all own to it do ownership -- anything you think San relationship Why delve get to And then sale order are straight of, the part commercial bit Do later to of some money like it? need you your, on to of the instead like second of part part just just there that you of price? is getting of and for is should we on It wanted the in you're of seems a million going Are depreciation it. $XXX more about? selling it little Antonio them? retain down

John Zillmer

Sure. I'll take that.

is was First you that's buyer, of It there who buyer and to that sold wanted with all, of the no, position, not to ownership ownership, our relationship. what commercial market in to the no if to work our of in because chunk balance establish and and a partnership ownership, part that to that we of the interest, on intention our other with ahead ownership continue will. to team to working respect our hold we'll requirement an go structure the half ownership team there's buy of was with approximately

stake. the recently an the just agreement forward, Spurs condition extension we of sale that fact, was with of part In of signed the moving which

use similar of anticipate that market will that debt. amount We sell to a we'll And we we the So terms the half. continue pay that, when probably generate other in would proceeds. the to proceeds down

Tom Ondrof

couple the I focused, with get just and purpose too in simplify [slow] and took here a Spurs (ph) business want the and for we is we the the The it. to to really have, minority interest JV do been really that that's here with AIM, driver action of add other it. just

focus look to on again, simplifying So at we some these the the really assets look of at trying business. balance and sheet, just

Shlomo Rosenbaum

you. Thank

John Zillmer

creates of to. for down. pool these it leverage. And committed we'd leverage we leverage at And opportunity like capital down of accelerate historically access to ultimately, sheet to growth future I think we're for in creating opportunity that the investment. very about have leverage the And have because right And And that help a Yes. open it's getting looked take Aramark, that and level invest other all felt balance actions effort. that's recognize and to that that, level us our they the couldn't the to and organizations for the

Shlomo Rosenbaum

Thank you.

Operator

Our Mestari question BNP comes Paribas next from with Jaafar Exane.

open. is line Your

Jaafar Mestari

heard how And everyone. in wanted of just please? XX% pricing But first I the contributing And question, to the business only organic like-for-like contribute? did down quarter, X% other missed back X% if organic growth? QX. growth. the morning, pricing good come break much plus is So Could the contribute plus did I plus you I if and Hi, in new much maybe components. mention Apologies you on volumes whole how

Tom Ondrof

be But from to continues little to a tends angst than going COVID that and away does in it tend shy because more the base recovery we're Yes, it a mid-XXs. to Jaafar, bit, the just bounce should. quarter-to-quarter to create around

negligible activity. think component math were you And year get where to that's we I easy the base. on there's then acquisition So that last from

So realized net growth. the the balance be would

strong. So pricing of on all top base and being and that X% net three growth business components the tracking at

Jaafar Mestari

Okay. that. I And thanks understand

I'm the of I you more the a company. I of wins last guess the and two the at ‘XX than on sure said business, years. full-year. similar share new of separately so were better you'll And trajectory maybe. And new far, ‘XX the you details so full forward-looking And the on appreciate history to much each year-to-date was

similar. tempting business billion signed it's to new So you $X.X $X.X from just say, signed billion. you ’XX, XXXX, perspective, of and But our

So billion? as it you guess be different. somewhere you bit you stage just Do best maintained you you think Do a up end specific. billion? can see if wanted maintain think between? is could at quite $X.X is can to in more Or $X.X your this I And you

John Zillmer

respect we We to that better the to net think, Yes. that. of to our I in a dialogue as or X.X% give I don't number new. with expect going think say, specific year's prior did revenues we're maintain

very decision difficult to performance, frames. another And time the strong actually it's so expecting call and we're

not know, in of decision you we're control timing. the As

time close may that may these decision into based year of some client's on well So on working and frame. now next by of some opportunities end the leak year we're

So I we commitments not clients performance would of already what just yet terms say, have from another to-date year-over-year. based had in contracted, based on strong we on what that very verbal expect sold we've

Jaafar Mestari

is you. for very Education Super. big

today, a at that, further signed second-half? May, of of have year, much How to illustrate normal all maybe in how just would So as your please? the you signings early not much in come

John Zillmer

signed say the selling half. off business from component in season than in of international in and domestic, have -- fourth. domestic of with and the I the tend it the about coming higher year But back they our significant quarter would second-half and to we XX% an and of the K-XX then education has and Yes. to fall tends fourth third a third earlier have it's more in results

just variability. annual opposed as quarter-over-quarter, why So much And an report that's we time again, not basis in frame. there's to -- we're the it's just too of on control decision

Jaafar Mestari

you Thank Understood. very much.

Operator

Our from Harry next Bernstein. Martin comes question with

is open. line Your

Harry Martin

ramp-up Hi, on wins the good morning, the the [Indiscernible]. a new I thought last three I ask question of years. could from

operational, nice You as of this expect year expected? in-year so we the a is is mentioned now and in wins annualized the that slightly the benefit ramp And revenue next revenue then be year before year, Overall, contribution could for up? the should the that of of because year fully than have and in-year higher the level Merlin signed, ramp-up from happening new second-half. should last

Tom Ondrof

won I The we on of and couple of follow the the ramp, script. quite didn't through in starting question, back getting -- are the last a my We are the ‘XX maturity half fiscal mentioned times as of in contracts again that but of second-half year.

those, to, become of years others three couple shorter Merlin time two, of, take a Some fully efficient, sort much like frame.

basis points, seeing to year-to-date, XX expect that continue so continue the ‘XX put And then the place ‘XX we've and as their that helping that ramp. drive So of we in helping XX points far margin basis improvement. that's into we underneath contracts are drive

Harry Martin

I'd Okay, million lumpy, looks cash a first-half, on the bit specifically it question year. it thanks. very guidance, a it contract ask be but the $XX like I free be a client probably high in payments line. the I could And thought know can on flow at

there is capital and the demand of one be contracts here structural, on just that high? Or aware two So from we unexpectedly is kind where to clients? intensity need anything of payments or are

Tom Ondrof

us vary or still nothing ‘XX. ed ordinary in we'll that's below historical Merlin I as that businesses. that norm gross the as can potentially of, or what through of for look this on to year I There either average. the quarter-by-quarter, fiscal those don't take with off, see But we mention forward, It what what we're particular. anything came think into at going even spend invest investment did was Yes. that's some starting higher running X.X% we're to out look that winning sort to I historical it's

Harry Martin

you. Great. Thank

Operator

Carrington Leo Citi. from comes with question next Our

is line open. Your

Leo Carrington

on wonder comments around dynamics, behavior morning. your pricing could at clients. previous consumers' Good if you. Thank you the on I your build specifically

comments or you your these the I seeing consumers? about Thank but through of you. changed of were at are mix of mechanisms signs your price to rates terms think pricing probably of any as to begin face clear, they in in participation rises filter some behavior

John Zillmer

would is the programs seeing say work a But pre-COVID Yes. that I particularly seen change we're B&I were participation which terrific. full for and from pricing. the consumer changed would say I return they paying subsidy And their environment, by behavior we consumer meals. that as we running companies than behavior evolving have to in driven their modified to rates back haven't customer in changes are the higher actually really see do

still or per three some are so that's limited fact working days think function We the week. that a calendars, people of on four

use tend and go the So not facilities more they to often out.

So we're consumer going very Industry change the Business otherwise, not in actually and dynamics pricing inside on to seeing encouraged & related by overall rate behavior participation a strategy.

Tom Ondrof

there's been environment, value environment, perception increased high a an of environment so have there's from I even the escalated think that there. contract bit within fast benefit street, main equation the that a street a prices retail the

sees issue so an the and I And us school environment or what doing the the or escalation perception terms do of again, fast has client not consumer for outside retail very think workplace And or what so high. when So the whatnot. it's in we're and retail consumer the mindful perception. is the been of we really pricing pricing of

Leo Carrington

That's your clear, brief stand Okay, do you still you. comments think that In renegotiation and a Education, interval? follow-up. even thank with the as

John Zillmer

students the designing we're a ways. to the environment. different of of them to when I some in opportunities board what we dollars those designed would in to board value pricing those plans total the those the opportunity to And based required bunch do try recovery to plans those continues use in flexibility Yes. say environments. cost create provide to for for We plans retail elevate is on give

So drive consumer student that great and satisfaction. trying we're drive acceptance always cognizant plans to of

well. So price, it's about not as always it's the behaviors about driving just

a recover we'll So expect year going well consumer have perspective. customer food perspective, from we the cost But to and as a pricing new that to in board have the high elevated acceptability. continue we'll within increases labor into both that to as plans continue a range certainly,

Leo Carrington

John. Thanks, Okay, Thanks, you. Tom. thank

John Zillmer

Thank you.

Operator

comes Deutsche Faiza Alwy next with Bank. from question Our

line open. Your is

Faiza Alwy

thank morning. Good Hey, you.

you the whether wanted like I pricing, that's know this, it and been six on pleasant on to I it's three last sounds relative So surprise to to of the touched more follow-up area months. where a

where relates you've you curious, is been had there as mentioned areas it where area other is most the the it the pricing? I'm more are I know you -- Or correction, that positive business So across surprise? to successful

John Zillmer

corrections both across chunks But environment. were businesses at about that the comes overall in pricing I able that in enterprise, pricing And achieve lag pricing we -- talking that anniversary this big to pricing in in the successful domestically We've first to was the was really and broad impact across recovery. was respect second with with the X% through contract been internationally. dates. all quarter based and when And corrections referencing activity the

the businesses it. business. we So It's to all and are on parcel part the focused the way operate

And our created cost. as mitigate data, chain the the supports and sure to to service process managers request with to we've and and/or pricing data process are raise the detailed increases to decision-making customer recover they inflation make cost negotiation significant changes that detailed very that give we them supply or very front-line able discipline price

it's very So broad based. been

Faiza Alwy

picture a Understood. big And question. then just

feel do do you relates to whether you look it's whether it's spend. ahead Or whether confident inflation, you next sort As whether business, most the least uniform confident where uncertainty? it new where of quarters. to more pricing, feel to as the there's three Like it's it's four versus

about some of about? that the things So thinking talk what holistically you're are

Tom Ondrof

But referenced, think is really this as John forward. I much I Yes, confidence at going a uncertainty it's over we've don't as if it and in year would the point, biggest built what's inflation. just as I past know be mean, just maybe uncertainty the what off part information and to inflation. and with block or But for and Confidence instilled whatnot. need the we of laid a little pricing our years X.X ago, become that has with operators reacting pricing think I a do. that's year, been about

going about where post-COVID, blip said culture, path. So pipeline as on tailwind? times, I issue. to it -- we're uncertain, the will persistent I to or have either to change but keep a back continue may we trend, think seen we've trajectory, happen, and that's what's believe we the growth going settles of just we confidence after but structurally and not a down, if we're outsourcing are don't live, -- we that's be there. net strong continue it lack is and good the Otherwise, it -- or going and we The it to will to Or the just very we long a -- become the it become many we've or it. mean feel it very

as the see to don't a at It's lot can't environment. that we point we this beyond. into move just having handle So react and we to ‘XX

John Zillmer

of on and and in focus And the evaluating concerns may that's taking very we're strategy in and place. problem organization, say would change focus the to the any the satisfaction, that the focus of hospitality organization the ahead and discipline confident taken very I in confident Yes. go growth, customer that's overall on cultural into on built mitigate the been actions the terms solving arise. we're

So ability macroeconomic conditions that's engaged. We're fully occur we or have may in team very occur. events confident dynamic exogenous a of regardless what what execute very to their may

and respond discipline operating built the the team have We to the potential to those and challenges. resources

established along execute in confident we our we're met the investors, in that that particularly out to confident that Investor the very with a are very we think we're laid trajectory we when strategy. and we we're good we Day, on position and our that So in path, very

Operator

Andrew, your is line open.

question. ask can your You

Andrew Steinerman

Thanks. great. Oh,

wanting you've of was on Spurs moving got as are AIM transactions, Fed. expense including to the up guess, some interest -- the have forthcoming And rates as these I capital transaction, So given that well sale. the ask, closed been I from already

just us So for comment help you're first, level set thinking what the Tom, Spurs maybe proceeds you timing on maybe the of, sale? kind could the for

all quarters, be establish year a basis. And pieces, helpful second-half a for frankly, even rate just of interest could think just help go-forward line the but on that run to kind just moving expense established not I if of us for two on given would maybe the you these us the here the help

Tom Ondrof

in Sure. think the third I mean in the expect I quarter the quarter. proceeds, we

will be here. So that

total of in In which a quarter. second-half, expect interest, rate exit about million we but [X, the the the about little $XXX the run second for first-half terms the falling off Probably was X.XX] of same ran for we interest, year as (ph) bit.

quarter, So third sort to equivalent. should ramped probably first-half, of decrease first in second-half to fourth. second total, should be about But

Andrew Steinerman

than the trying Got kind revenue it. people bit understand is little here And updated, to then outlook better of, expected. just a

there? attribute through like just pretty to upside pricing Sounds hasn't like just drove it you do pricing new bit outlook? better-than-expected the the I'm your sounds some performance? benefit Is revenue good. guess really FX the what of coming trying a Was understand to changed. that's in really It little I what there is from to revenue outlook net slightly

Tom Ondrof

a I it's little across think, the bit better board.

to then to slightly or we as we other slightly certainly but maybe mentioned, maybe year. than on continues inflation have the we've expect up stayed to but range, of better balance strong the to -- a those the think stay year. the we pricing thought or the as net of a a the But historical are might pricing as continue for on little basis. better, the bit three, be strong even be of two the it work growth, So with beginning and I to anticipated return persistent to the stay had we at better equal driver continues to The well. to And equal is than in

Operator

Stephanie comes with question from Jefferies. Moore next Our

Your open. line is

Stephanie Moore

Thank Hi, good you. morning.

John Zillmer

Good morning.

Stephanie Moore

through to Q&A. maybe lot and don't beat the a a going dead I'm on horse but answers of this that only of here -- I to Maybe out question and out come kind round I ask to of pricing, mean have another kind want

about ‘XX. fiscal As opportunity the in we think really

as So what of first-half color on be in ahead what a of look ‘XX, you could you standpoint in on a we negotiated fiscal the bit locked provide really was from at will as look your maybe ‘XX, based ‘XX? to pricing fiscal

Just with be the pretty moderate. there to idea inflation lag continues think if that could price I a cost meaningful

sense get levels be a on will of to maybe what So of just Thanks. pricing XXXX. based of still your percentage business trying

Tom Ondrof

Well, cost-plus it, I expect is we said on to back. any to revert cost. except John of The give all think be a only of because don't where pass-throughs exception generally, as technical earlier, contracts it based our there or

margin to as fixed. drop our plus boost costs drop. so But And associated that input fees contracts with those revenues our would are would a cost be as again,

supply So into all I excited those up, and of place in ‘XX, the implemented us thing as and net we're carry move or put your about earlier in I'll Andrew's leveraging in place, pricing and moves things that's growth for forward everything into question, the what place that's as back And impact of being maturity above-unit exciting to point, forward, that. with consistent think continued to you compliance bundle ‘XX. contracts, overheads, the chain second-half this it will, part into is

John Zillmer

similar of next maybe have remains rates. key about pricing talked back if contributing at pricing basically that just on inflationary half -- we consistent in probably for other effect that year the it's X% then little a higher pricing the they average, as of of year-over-year, businesses as had over, bit throughout basis time pricing would a I I that the should talked to about, lag. And that negotiated a about, into couple be Yes. similar say goes But businesses environment the on that carry obviously, add now, we the year year-over-year would see expect with -- we a right have would we will I year. in couple the

a So to -- the we're macro respond environment. we'll perspective from pricing going to

costs And costs. and we'll labor if to the recover as we to other in pricing labor see from continue and see price for a strength need continued that significant we've perspective, those to market the incurred recover we press continued deflation, order for in

think business. the So percentage it's will need be, what and ahead but the the ahead go go against to ability to and to hard manage we say execute exactly we we have what

Operator

you. Thank

Paige Our last question comes from with David RBC.

is line Your open.

David Paige

wins. for Sabadra. just Ashish business Are question X.X% I mentioned actually be quantify had new the for year-to-date business I you a would you I'm on the wins? new believe around it quick on able year. to

Tom Ondrof

we a become don't useful had not Last No, so Merlin reported, and complicated and have they comparison. typically we year, just because it just becomes lumpy. would very

basis. really to on we just So report appropriate it's it annual think most an

John Zillmer

gross wins higher running X.X% business significantly new, that revenue. at net not a And to the new wins, as new than relates gross percentage the of business

business to higher I terms or year's the last based specifically -- it's revenues. in on really said of X.X% I net X.X% So new think contribution

David Paige

Thanks.

Operator

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

John Zillmer

our the the the those prospects results morning. with excited and for growing confident for committed AUS excited Day, company about We're remain organization in Investor very business. as the Terrific. future quarter. Thanks profitably to our about we've ourselves joining the execution in in again, this strategy achieving for independent the organization an and it. the and and established our second everybody behind We're confident in for approach targets the feel the and Really strategy again, our pleased in to facing public us opportunities

and for joining all talking soon. care. you forward much you us, Take So to very thank look to

Operator

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

You may now disconnect.

Aramark (ARMK) 9 May 232023 Q2 Earnings call transcript