Aramark Q1 FY2025 earnings call

• Achieved record global FSS revenue for any quarter. Global FSS also reached record AOI profitability. - Initiated oversubscribed debt refinancing to extend maturities and started $500 million share repurchase program. - FSS US organic revenue 3% to $3.3B, foodservice up 5%. International organic revenue up 10% to $1.3B. - Acquired Quantum Cost Consultancy Group in first quarter, expanding global supply chain footprint. - Welcomed Rick Dreiling back to the Board, bringing retail industry experience.

FSS US: Organic revenue grew 3% to $3.3 billion in the first quarter. Foodservic e business increased 5% driven by higher participation rates, meal plan optimization, micro-market/vending services, and new business wins. International: Organic revenue grew 10% year-over-year to $1.3 billion, with all geographic regions contributing, led by UK, Canada, Chile, and Ireland. The UK colleagues collaborated with Aramark Korea for defense sector growth.

• Organic revenue growth between 7.5% and 9.5%. - AOI growth between 15% and 18%. - Adjusted EPS growth between 23% and 28%. - Leverage ratio of approximately 3x by end of fiscal year. - Anticipate revenue growth to accelerate in second half of fiscal year, with double-digit growth expected in second half.

• Impact of tariffs on food costs, with an anticipated 30 basis point margin impact. - Potential effects of inflation, though expecting levels in 2% to 3% range. - Impact of events like wildfires in Los Angeles area, though Aramark's operations were not largely affected, but supporting relief efforts. - Severe flooding in Valencia region of Spain temporarily affecting client locations in International segment.

Q: Talk about the athletics business at Nebraska and details on new wins.

A: John Zillmer says it's not for them to announce yet, but NCAA athletics business is growing rapidly, with Arizona State awarded and retaining business.

Q: How much of a drag the facility exits were to top line and thoughts on inflation/tariffs?

A: Jim Tarangelo says facilities exit had about 2% impact. John Zillmer says tariffs impact is de minimis, with over 85% of products sourced locally.

Q: Double-digit revenue growth in second half of fiscal year, cadence?

A: Jim Tarangelo says 53rd week and lapping facilities exits drive growth, with fourth quarter having more impact.

Q: Base revenue growth in first quarter and drivers?

A: Jim Tarangelo says about 2%-3% growth from price, remainder from volume and net new.

Q: Outsourcing trend, acceleration?

A: John Zillmer says outsourcing is similar to prior year, continuing as a tailwind.

Q: Education business growth, outlook?

A: Jim Tarangelo says growth will accelerate in K-12 and collegiate hospitality. John Zillmer mentions Arizona State retaining business and new opportunities.

Q: Quantum acquisition, revenue run rate, profit impact?

A: Jim Tarangelo says revenue impact is low, first year not significant for profitability. John Zillmer says long-term value is accretive to earnings.

Q: Margins, contributors, international margin progress?

A: Jim Tarangelo says margin sources consistent, international had 20 basis point headwind from flooding.

Q: Tariffs impact, including suspended tariffs?

A: John Zillmer says 30 basis point impact on food costs, mostly de minimis.

Q: B&I in U.S., return to office impact?

A: John Zillmer says return to work is tailwind, driving participation rates and new sales.

Q: M&A strategy, Quantum and GPO?

A: John Zillmer says will look at M&A in GPO and other lines, Quantum adds value.

Q: H2 momentum, retention, Arizona State University?

A: Jim Tarangelo says second quarter similar to first, retention activity lower than last year, ASU retained and expanded services.