Aramark Q1 FY2026 earnings call

Management Statement and Operational Highlights

• Business Momentum: Aramark's organic revenue grew 5% to $4.8 billion in Q1, would have increased ~8% without calendar shift. Driven by strong base and net new business. Expect performance acceleration with new account onboarding and high retention levels.
• New Business Wins: Significant new client wins in Q1, including Penn Medicine (largest contract win ever in US), RWJBarnabas Health (largest academic health system in New Jersey), University at Albany, and Alabama Department of Corrections. Substantial new business opportunities ahead for net new target of 4%-5% in fiscal 2026.
• Operational Success: Extraordinary client retention in FSS US and International. Supply chain GPO network growth in hospitality areas. AI-driven technology differentiating supply chain and GPO capabilities, delivering back-end efficiencies.

Segment Performance

• FSS US: Organic revenue increased to $3.4 billion, or 2%. Would have grown approximately 5% if not for the calendar shift, primarily affecting education. Drivers include workplace experience (seventeenth consecutive quarter of double-digit growth), refreshments (mobilizing new accounts at accelerated rate), healthcare (strong base business and multi-service expansion), sports and entertainment (expansion of college football portfolio), and corrections (adding statewide systems).
• International: Revenue reached $1.5 billion in the first quarter, an increase of over 13% year over year on an organic revenue basis. Nineteenth consecutive quarter of double-digit growth, with every country contributing to revenue growth, led by the UK, Spain, Germany, and Chile. New business in Q1 included contracts with the Welsh Rugby Union and copper mining in Latin America.
• Global Supply Chain: Performance was strong, with double-digit growth in contracted spend. Leveraged AI for back-end efficiencies and actionable business insights, including mobile AI chatbots and AI-enhanced analytics.

Guidance

• Organic Revenue Growth: Fiscal 2026 organic revenue growth expected to be 7% to 9%.
• AOI Growth: AOI increasing 12% to 17%.
• Adjusted EPS Growth: Adjusted EPS growth of 20% to 25%.
• Leverage Ratio: Leverage ratio below three times.
• Second Quarter Outlook: Second quarter progressing well, revenue growth continuing with new business onboarding, and AOI benefiting from supply chain efficiencies and higher revenue levels.

Risks

• Calendar Shift Impact: Affects quarterly comparisons, shifting strong and low activity weeks between reporting periods.
• Inflation Risks: Elevated risk on certain commodities, though overall inflation running in line with expectations.
• Competitive Bidding: Competitive nature of new business pursuits, potential impact on results due to confidentiality of ongoing large bidding opportunities.

Question and Answer

Q: It seems like you guys are winning a lot of competitive business here, and some larger competitors are included in that mix. Is this a trend we should expect here, and then maybe what do you attribute the success to?

A: I would say we have enjoyed significant success over the last, certainly over the course of the last year and going into 2026, in competitive new account wins. Some of those wins are very complex, large organizations that are part self-op and part served by our competitors, and we have been lucky enough to win two very large opportunities in Penn and RWJBarnabas that represent very significant both competitive wins and self-op conversions. So we see that trend continuing. We are positioned extraordinarily well to win these situations. The capabilities that our teams have built, the systems that we can bring to bear that serve our clients well and can demonstrate to them in these sales processes are significant.

Q: It seems like you guys are winning a lot of, call it, competitive business here, and some larger competitors are included in that mix. Is this a trend we should expect here, and then maybe what do you attribute the success to?

A: I would say we have enjoyed significant success over the last, certainly over the course of the last year and going into 2026, in competitive new account wins. Some of those wins are very complex, large organizations that are part self-op and part served by our competitors, and we have been lucky enough to win two very large opportunities in Penn and RWJBarnabas that represent very significant both competitive wins and self-op conversions. So we see that trend continuing. We are positioned extraordinarily well to win these situations. The capabilities that our teams have built, the systems that we can bring to bear that serve our clients well and can demonstrate to them in these sales processes are significant.

Q: Just wanted to zoom in on a couple of the subsegments that you called out and ask for some help in framing their materiality. Specifically, within Sports and Leisure, the absolute relative scale of the college athletics revenues, where they have got to, if you can give us any help on how to think about those because that is something you have been talking very enthusiastically about for a little while now. And similarly, in Business and Industry, the refreshment component seems to be outpacing everything else. So are these stand-out sufficient to drive the levels of growth on their own, or is there a lot going on elsewhere presumably as well?

A: The revenue growth is very broad-based and wide-ranging across the lines of business and geographies. So we are seeing very good strong net new business performance both in FSS US and in International, and it is not really driven by one group or another. When we highlight these, it is because they have had outstanding performance, but the other businesses are all performing well as well. So we feel very good about both the broad-based nature of it and the success of the entire organization as we pursue these growth opportunities. With respect to the Sports and Entertainment business, we have not really disclosed the breakdown between collegiate sports and our pro teams, and we do not intend to disclose that at this point. I will say that when you think about the scale and the size of opportunities in collegiate athletics, it is very significant. We are certainly the largest player in that segment to date and continue to pursue significant opportunities going forward. Yeah, and I will just add, you asked about refreshments. That is a significant piece of our Business and Industry segment, and as we mentioned, that segment has grown double-digit 17 quarters in a row. It is both our underlying B&I business and our Refreshment Services business that is benefiting from very high retention levels and really strong new business. So they both are growing double-digit and contributing to the success that we are seeing in that segment.