ARMK

• Overall Company Performance:

  • Total company organic revenue grew 9% to $5 billion, and would have grown an additional 2% without an unfavorable calendar shift.
  • Industry-leading client retention hit a record ~98%, reflecting strong client relationships and service execution quality.
  • Fiscal year-to-date new client wins total more than $1.6 billion, 51% higher than the prior year comparable period, driven by strong demand for Aramark's hospitality capabilities and a robust sales pipeline.
  • Operating income grew 18% to $216 million year-over-year; adjusted EPS grew 30% to $0.52 (would have been ~45% growth excluding the calendar shift).
  • Net operating cash flow grew $41 million and free cash flow grew $42 million year-over-year; $100 million in term loans were repaid after quarter end, with the company on track to hit a leverage ratio below 3x by fiscal year end.

• Aramark Nexus Growth:

  • Operations launched for the first hyperscaler site in Q3, and the total scope of work across the first two contracted hyperscaler sites has increased ~40% from original estimates, with additional sites expected to be added as the client expands.
  • A new multi-year engagement was signed with a leading AI data center co-location provider to deliver hospitality services across multiple U.S. locations, with the first site scheduled to mobilize in H1 of fiscal 2027.
  • Nexus offers differentiated premium hospitality amenities to help data center operators attract and retain skilled workers in remote locations, with contracts structured to deliver above-company average margins.

• Core Business Highlights:

  • Collegiate hospitality has seen increased residential meal plan enrollment, record retention, and the strongest selling season in recent history, with multiple new university client wins in the quarter.
  • U.S. Sports & Entertainment delivered strong double-digit year-over-year growth, driven by the ongoing MLB season, expanded portfolio including MLS and collegiate athletics, and major events including 15 2026 FIFA World Cup matches during the quarter.
  • Healthcare continued to successfully ramp up large new client wins including Penn Medicine and RWJBarnabas Health, with ongoing strong demand from self-op conversions.
  • Workplace experience and refreshments has achieved double-digit compounded growth for 19 consecutive quarters.
  • Global supply chain and group purchasing organization (GPO) business has secured more than $1.1 billion in annualized new spend fiscal year to date, with Avendra International positioned as a leading global procurement solution for multinational hospitality clients.
  • Inflation trends have been slightly more favorable than original management expectations across all regions.

• Management raised Aramark's fiscal 2026 organic revenue growth guidance to 9% to 10%, up from prior estimates, reflecting broad-based momentum across the portfolio and early revenue contribution from the first Aramark Nexus hyperscaler site.
• Management reaffirmed prior guidance for 12% to 17% adjusted operating income (AOI) growth and 20% to 25% adjusted EPS growth for fiscal 2026, aligned with consensus analyst estimates.
• Management expects accelerated AOI growth and margin expansion in the fourth quarter of fiscal 2026, driven by operating leverage and early Nexus contribution, with calendar shift-related headwinds from Q3 expected to be fully recaptured in Q4.
• The company expects medium-term organic growth to operate above the prior 5% to 8% medium-term algorithm established at investor day, with core business expected to deliver 30 to 40 basis points of annual margin accretion independent of Nexus growth.
• Nexus revenue from the three most advanced contracted sites is expected to ramp to $400 million to $500 million annualized over fiscal 2027 and 2028, adding incremental above-company average margin accretion.

1. Food, Hospitality, and Facilities Services (FSS) US: Organic revenue grew 8% to $3.5 billion (would have been over 10% growth excluding the calendar shift); contributed 70% of total company organic revenue. Adjusted Operating Income (AOI) grew 11% with AOI margins expanding more than 20 basis points (excluding the calendar shift, AOI growth would have been ~22% with margins gaining almost 65 basis points). Profit growth was driven by higher base and new business volume, supply chain efficiencies, and cost management productivity gains.
2. International: Organic revenue grew 11% to $1.5 billion; contributed 30% of total company organic revenue. AOI grew 24% with margins expanding nearly 60 basis points on a constant currency basis. Growth was driven by higher base business volume, net new business wins, and strengthened supply chain economics. Performance was broad-based across all geographies, led by Spain, Canada, the UK, and Germany.
3. Aramark Nexus (new data center workforce hospitality segment): The first Texas site for a top global hyperscaler began contributing modest revenue and profitability late in Q3, with the second site currently being mobilized.

• Actual future results may differ materially from forward-looking statements due to a variety of uncertain risks and factors, which are detailed in the company's SEC filings including Form 10-K.
• The pace of Nexus revenue ramp is dependent on client hiring and construction timelines for new data centers, which are outside of Aramark's control and may shift timelines for revenue realization.
• Regulatory changes related to data center development in Texas (including recent development audits/moratoriums) could delay or defer some planned Nexus projects, though this risk is primarily borne by Aramark's clients rather than Aramark itself for active projects.
• The data center hospitality market is expected to become increasingly competitive as larger competitors enter the space, which could pressure future win rates and margins.
• Mobilization of record levels of new core business in the fourth quarter creates near-term mobilization costs that pressure near-term margins before those businesses ramp up to full profitability in fiscal 2027.

Q: What is the updated size of the initial Aramark Nexus hyperscaler contract, and is 9-10% organic growth sustainable looking ahead? / A: The first hyperscaler site is now expected to generate ~$140 million per year (up from an original $100 million annual estimate) with a 4-5 year contract term, and the second mobilizing site is expected to be slightly larger at ~$160 million per year. Management notes that new business wins are at record levels, client retention is exceptional, and underlying organic growth (excluding the Q3 calendar shift) is already 10-11% so the 9-10% range is sustainable exiting 2026 into 2027.

Q: What is Aramark's competitive differentiation for Nexus, and what drove the 40% scope increase on the initial hyperscaler contract? / A: Scope increases are driven by higher projected on-site employee counts (measured by residential beds) as clients expand their planned facility size; the first site was originally planned for 3,500 beds, the second for 4,000, and the first co-location site for 4,500. Aramark's key differentiation is its hospitality-focused, retail-oriented amenity offering (rather than the basic cafeteria-style service provided by smaller construction-focused competitors), which helps clients attract and retain skilled workers in remote locations, leveraging Aramark's existing experience serving remote workforces like mining operations.

Q: What is the margin profile for Nexus, and how does the margin ramp compare to traditional core business contracts? / A: Most Nexus contracts are structured as cost-reimbursable, low-capital intensity agreements, with margins that are higher than both smaller competitors and Aramark's core business average. There is only a moderate ramp period with minimal upfront startup costs, unlike many large core business contracts that have significant initial dilution before margins ramp up. Nexus will add incremental margin accretion on top of the 30-40 basis points of annual margin expansion expected from the core business.

Q: Why did you raise organic revenue guidance but reaffirm AOI and EPS guidance for fiscal 2026? / A: The upward revision to organic revenue guidance reflects broad-based favorable core business trends and the addition of early Nexus revenue in Q4. The reaffirmation of AOI/EPS guidance reflects expected near-term mobilization costs from the record level of new business rolling out in Q4 (including higher education accounts, large healthcare ramps, and new destination business), which will generate margin growth that primarily will be realized in fiscal 2027.