Aramark Q1 2026 Aramark Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Aramark Earnings Call
Operator: Good morning, and welcome to Aramark's Q1 fiscal 2026 earnings results conference call. My name is Kevin, and I'll be your operator for today's call. At this time, I'd 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 call for questions at the conclusion of the company's remarks. I will now turn the call over to Felise Kissell, Senior Vice President, Investor Relations, and Corporate Development. Ms. Kissell, please proceed.
Speaker #1: morning and welcome Good Aramark . S first quarter fiscal 2026 Earnings Results call . conference My Kevin , and I'll today's name is call .
Felise Kissell: Thank you, and welcome to Aramark's earnings conference call and webcast. This morning, we will be hearing from our CEO, John Zillmer, as well as our CFO, Jim Tarangelo. As always, there are accompanying slides for this call that can be viewed through the webcast and are also available on the IR website for easy access. Our notice regarding forward-looking statements is included in our press release. During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the Risk Factors, MD&A, and other sections of our annual report on Form 10-K and SEC filings. We will be discussing certain non-GAAP financial measures. A reconciliation of these items to US GAAP can be found in our press release and IR website.
Felise Kissell: Thank you, and welcome to Aramark's earnings conference call and webcast. This morning, we will be hearing from our CEO, John Zillmer, as well as our CFO, Jim Tarangelo. As always, there are accompanying slides for this call that can be viewed through the webcast and are also available on the IR website for easy access. Our notice regarding forward-looking statements is included in our press release.
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Speaker #2: website on the easy access . Our notice slides for statements is included in our release . During this looking call , we will comments Thank that are press differ Actual may materially from looking .
Felise Kissell: During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the Risk Factors, MD&A, and other sections of our annual report on Form 10-K and SEC filings. We will be discussing certain non-GAAP financial measures. A reconciliation of these items to US GAAP can be found in our press release and IR website. With that, I will now turn the call over to John.
Speaker #2: a result of IR implied as uncertainties and be factors various , including forward discussed in results making mDNA and can be factors sections the Risk Report Form those 10-K and annual the will be filings .
Speaker #2: important discussing certain non-GAAP financial on of our items to us , GAAP can be measures , our found in and and are our release website .
Felise Kissell: With that, I will now turn the call over to John.
John Zillmer: Good morning, everyone, and welcome to our Fiscal First Quarter Earnings Call. Thank you for joining us. We're very pleased with the strong results delivered in the quarter, even when considering the calendar shift referenced in the earnings release. The company has significant business momentum, which Jim and I will share in greater detail. We believe we're well positioned to record record-breaking financial performance, driven by our growth mindset, operational discipline, and unwavering commitment to service. We're seeing multiple positive growth trends throughout the organization, including extraordinary client retention in both FSS US and International, levels we've never seen before achieved at this point in the fiscal calendar.
John Zillmer: Good morning, everyone, and welcome to our Fiscal First Quarter Earnings Call. Thank you for joining us. We're very pleased with the strong results delivered in the quarter, even when considering the calendar shift referenced in the earnings release. The company has significant business momentum, which Jim and I will share in greater detail. We believe we're well positioned to record record-breaking financial performance, driven by our growth mindset, operational discipline, and unwavering commitment to service. We're seeing multiple positive growth trends throughout the organization, including extraordinary client retention in both FSS US and International, levels we've never seen before achieved at this point in the fiscal calendar.
Speaker #2: I will now With that , turn the call over to John .
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Speaker #3: Thank you for company has business the Jim and I will share momentum , which in greater press believe we're well positioned to We to record breaking financial performance detail .
Speaker #3: . call . first quarter strong We're very results delivered in the Even when quarter . calendar considering the shift referenced in earnings release .
Speaker #3: mindset , operational and unwavering discipline to service . positive throughout the trends organization , including extraordinary client retention We're and levels . We've never seen seeing at this multiple point in the fiscal calendar , combined with significant new client wins already awarded to us early in the fiscal year , particularly in US international and before , in sports , mining energy within and growth substantial business opportunities upon us corrections giving us immediately in and , with international target 4 to 5% in of within the confidence great , education fiscal 26 .
John Zillmer: Combined with significant new client wins already awarded to us early in the fiscal year, particularly in healthcare, education, and corrections within the US, and in sports, mining, and energy within international, with substantial new business opportunities immediately upon us, giving us great confidence in reaching our net new target of 4 to 5% in fiscal 2026. Lastly, adding new purchasing spend in our global supply chain GPO network within hospitality areas such as theme parks, hotels, and now cruise lines, in addition to benefiting from increased volume and scale occurring more broadly at the company. In Q1, organic revenue for Aramark grew 5% to $4.8 billion and would have increased approximately 8% if not for the calendar shift. Growth resulted from both strong base business and net new business.
John Zillmer: Combined with significant new client wins already awarded to us early in the fiscal year, particularly in healthcare, education, and corrections within the US, and in sports, mining, and energy within international, with substantial new business opportunities immediately upon us, giving us great confidence in reaching our net new target of 4 to 5% in fiscal 2026. Lastly, adding new purchasing spend in our global supply chain GPO network within hospitality areas such as theme parks, hotels, and now cruise lines, in addition to benefiting from increased volume and scale occurring more broadly at the company. In Q1, organic revenue for Aramark grew 5% to $4.8 billion and would have increased approximately 8% if not for the calendar shift. Growth resulted from both strong base business and net new business.
Speaker #3: And lastly , adding new global net new . supply GPO within hospitality areas such as network hotels purchasing addition to benefiting from lines volume and US scale occurring more parks , broadly at the in the first quarter , organic revenue for Aramark grew new 5% company to 4.8 billion and would have .
John Zillmer: We expect performance acceleration to occur as we successfully onboard a record level of new account wins, combined with maintaining the unprecedented retention levels I just mentioned. Notably, this doesn't factor in sizable new client wins, which would drive our business momentum even further, and we're expecting those to begin this fiscal year. Moving to the business segments. FSS US organic revenue increased to $3.4 billion or 2%. It's worth highlighting that the segment would have grown approximately 5% if not for the calendar shift, which primarily affected education. Of course, this growth will simply be recaptured in Q2 as part of our results, ultimately having no impact on the full year.
John Zillmer: We expect performance acceleration to occur as we successfully onboard a record level of new account wins, combined with maintaining the unprecedented retention levels I just mentioned. Notably, this doesn't factor in sizable new client wins, which would drive our business momentum even further, and we're expecting those to begin this fiscal year. Moving to the business segments. FSS US organic revenue increased to $3.4 billion or 2%. It's worth highlighting that the segment would have grown approximately 5% if not for the calendar shift, which primarily affected education. Of course, this growth will simply be recaptured in Q2 as part of our results, ultimately having no impact on the full year.
Speaker #3: Shift growth resulted from both strong base business and new business. We expect spend in our performance acceleration to occur as we successfully onboard increased wins with record levels, combined with maintaining account approximately the same levels.
Speaker #3: we we're And expecting begin this year Moving to the business segments fiscal . , US organic revenue increased 3.4 billion , highlighting that the It's worth segment grown approximately would have 5% if not for the or 2% .
Speaker #3: retention I just mentioned . Notably , this doesn't unprecedented factor in sizable new client wins , which would drive our business momentum even further .
Speaker #3: primarily affected education . Of course , growth will simply this those to recaptured in the second quarter as part of our be which results .
John Zillmer: Top-line revenue growth drivers in the quarter were led by workplace experience, which delivered a 17th consecutive quarter of double-digit growth from launching significant new business wins, in addition to strong holiday catering activity. Refreshments mobilized new accounts at an accelerated rate and identifying additional growth opportunities from an integrated enterprise-wide strategy. Healthcare experienced strong base business, specifically from vertical sales success and the expansion of multi-service offerings. Sports and entertainment expanded our college football portfolio by providing a pro-level hospitality experience, where alcohol unit sales are now becoming comparable to NFL stadiums. Corrections continued to add statewide systems as our IN2WORK program is nationally recognized for the ability to provide pathways for education, career development, and rehabilitation. Just last week, we successfully launched operations at Penn Medicine, the largest contract win ever in the US, as you recall.
John Zillmer: Top-line revenue growth drivers in the quarter were led by workplace experience, which delivered a 17th consecutive quarter of double-digit growth from launching significant new business wins, in addition to strong holiday catering activity. Refreshments mobilized new accounts at an accelerated rate and identifying additional growth opportunities from an integrated enterprise-wide strategy.
Speaker #3: having no the full , FSS year top impact on . Drivers in the quarter line by workplace which delivered a experience , 17 17th consecutive of double digit quarter growth from revenue business wins significant .
Speaker #3: In strong launching catering activity new accelerated and identifying additional growth opportunities integrated , enterprise from an strategy . Healthcare strong base , business accounts and an based business , specifically vertical from sales success and the expansion of experienced multi-service , mobilized offerings .
John Zillmer: Healthcare experienced strong base business, specifically from vertical sales success and the expansion of multi-service offerings. Sports and entertainment expanded our college football portfolio by providing a pro-level hospitality experience, where alcohol unit sales are now becoming comparable to NFL stadiums. Corrections continued to add statewide systems as our IN2WORK program is nationally recognized for the ability to provide pathways for education, career development, and rehabilitation. Just last week, we successfully launched operations at Penn Medicine, the largest contract win ever in the US, as you recall.
Speaker #3: Sports and entertainment expanded our college portfolio by providing a hospitality wide experience where alcohol unit football sales are now rate to NFL stadiums and continued to holiday add statewide corrections systems as becoming end to work program recognized for ability to provide the comparable pathways for , refreshments education , career nationally development , and pro-level Just last week , we .
John Zillmer: As the fiscal year progresses, we'll continue to roll out services across Penn Medicine's nearly 4,000-bed, 7-hospital system, including patient and retail food service, environmental services, patient transportation, and an integrated call center to support operations. I'm extremely excited to announce that our success in demonstrating Aramark's enterprise-wide capabilities and collaboration resulted in our newest healthcare win, RWJBarnabas Health, the largest, most comprehensive academic health system in New Jersey, covering 8 counties, serving over 5 million people. RWJBarnabas Health has 18 primary locations with 5,700 beds. Anticipated to launch this summer, we will support their patients in retail dining, environmental services, and patient transport. This represents one of the largest contracts awarded in healthcare in recent history.
John Zillmer: As the fiscal year progresses, we'll continue to roll out services across Penn Medicine's nearly 4,000-bed, 7-hospital system, including patient and retail food service, environmental services, patient transportation, and an integrated call center to support operations. I'm extremely excited to announce that our success in demonstrating Aramark's enterprise-wide capabilities and collaboration resulted in our newest healthcare win, RWJBarnabas Health, the largest, most comprehensive academic health system in New Jersey, covering 8 counties, serving over 5 million people. RWJBarnabas Health has 18 primary locations with 5,700 beds. Anticipated to launch this summer, we will support their patients in retail dining, environmental services, and patient transport. This represents one of the largest contracts awarded in healthcare in recent history.
Speaker #3: successfully operations at Penn rehabilitation the largest contract ever in the US . Medicine , recall , as the fiscal progresses , win we'll year continue to roll out As you Penn nearly 4000 bed across seven hospital including Medicine's food service , environmental services , launched transportation patient integrated call to center support , operations .
Speaker #3: I'm extremely excited to announce that our system , success in demonstrating Aramark's wide capabilities and enterprise collaboration resulted in our newest healthcare win , RJ health , largest , most comprehensive academic health system in new Jersey the covering eight serving over 5 million people .
Speaker #3: Rwjbarnabas health 18 primary has locations with 5700 beds anticipated to launch summer . this support their We will retail dining patient and , environmental services and patient transport .
John Zillmer: Other clients added to the portfolio include the University at Albany, where we began operations this semester to redefine the student dining experience through innovation, inclusivity, and community engagement, as well as a new statewide relationship with the Alabama Department of Corrections to deliver food services, integrating our proprietary AI platforms for menu planning and operational efficiency across 27 facilities. As you can see, we're already off to a great start for the fiscal year in new account wins. We anticipate the US growth trajectory to continue from strong new business, high retention rates, and increased volume growth. Once again, International delivered outstanding results, with revenue reaching $1.5 billion in Q1, an increase of over 13% year-over-year on an organic revenue basis, with international revenue results largely unaffected by the calendar shift.
John Zillmer: Other clients added to the portfolio include the University at Albany, where we began operations this semester to redefine the student dining experience through innovation, inclusivity, and community engagement, as well as a new statewide relationship with the Alabama Department of Corrections to deliver food services, integrating our proprietary AI platforms for menu planning and operational efficiency across 27 facilities. As you can see, we're already off to a great start for the fiscal year in new account wins. We anticipate the US growth trajectory to continue from strong new business, high retention rates, and increased volume growth. Once again, International delivered outstanding results, with revenue reaching $1.5 billion in Q1, an increase of over 13% year-over-year on an organic revenue basis, with international revenue results largely unaffected by the calendar shift.
Speaker #3: This represents one of the largest contracts awarded in healthcare in history recent . clients portfolio include the Albany , where University of the operations this we began semester , to redefine student dining experience through innovation community engagement , as , inclusivity and new statewide relationship with Alabama Corrections to the deliver food of services proprietary AI .
Speaker #3: platforms for menu planning and operational efficiency across you can the Integrating our off to a great start Department for the fiscal year in new account already anticipate the US growth trajectory to from strong see , business , high retention rates and 27 facilities .
Speaker #3: increased continue once growth volume again . delivered International , we results with outstanding As an 1.5 billion first quarter , increase over 13% year over organic basis international revenue results largely of shift .
John Zillmer: International reported a 19th consecutive quarter of double-digit growth, maintained an exceptional client retention level, and every country contributed to revenue growth in the quarter, with the UK, Spain, Germany, and Chile leading the way. New business in the first quarter within International included the Welsh Rugby Union, highlighted on the last earnings call. In just a few days, we'll be serving 74,000 fans at Principality Stadium, the largest stadium in Wales and the fourth largest in the UK, and the location for the upcoming highly attended Six Nations Rugby Championships. We were also awarded copper mining and state-owned giant Codelco and other meaningful mining contracts in Latin America. The international team achieved well over 100 core account wins in the first quarter, providing us with the ability to establish additional business development and operational scale in the countries we serve.
John Zillmer: International reported a 19th consecutive quarter of double-digit growth, maintained an exceptional client retention level, and every country contributed to revenue growth in the quarter, with the UK, Spain, Germany, and Chile leading the way. New business in the first quarter within International included the Welsh Rugby Union, highlighted on the last earnings call. In just a few days, we'll be serving 74,000 fans at Principality Stadium, the largest stadium in Wales and the fourth largest in the UK, and the location for the upcoming highly attended Six Nations Rugby Championships. We were also awarded copper mining and state-owned giant Codelco and other meaningful mining contracts in Latin America. The international team achieved well over 100 core account wins in the first quarter, providing us with the ability to establish additional business development and operational scale in the countries we serve.
Speaker #3: reported International a 19th consecutive quarter reaching digit revenue , maintained an client exceptional retention level , country , contributed to by the the quarter , with the growth in UK , Spain , Germany , with and Chile revenue New business in the leading the way international included the Welsh Union , highlighted on the last .
Speaker #3: serving we'll be 74,000 fans at Stadium , the stadium in Wales and the fourth largest unaffected in the Principality largest UK , and the location for the highly in every attended Six Nations Rugby year .
Speaker #3: copper mining and state were also owned Codelco and other meaningful contracts in Latin few days , On an America awarded giant We team .
Speaker #3: The international team achieved well wins over first quarter , providing us . additional business mining operational The in the countries we scale in the .
John Zillmer: Now, for an update on global supply chain. Performance was strong in the quarter as the team is focused on growing and optimizing spend, and offering superior products, services, economics, analytical insights, and sourcing solutions for our clients. Inflation continues to actualize in the range we anticipated, with all global regions in line or favorable to our assumptions. We remain highly committed to GPO growth and are actively pursuing meaningful opportunities. Double-digit growth propelled well over $20 billion worth of contracted spend as we expand business in international regions, increase penetration in adjacent hospitality areas, and further scale through select and strategic acquisitions. AI-driven technology continues to differentiate our supply chain and GPO capabilities, delivering back-end efficiencies and actionable business insights. Tools such as mobile AI chatbots and AI-enhanced analytics provide GPO clients real-time visibility into their business.
John Zillmer: Now, for an update on global supply chain. Performance was strong in the quarter as the team is focused on growing and optimizing spend, and offering superior products, services, economics, analytical insights, and sourcing solutions for our clients. Inflation continues to actualize in the range we anticipated, with all global regions in line or favorable to our assumptions.
Speaker #3: development and . Double digit growth performance was propelled well $20 billion worth of meaningful expand business in international regions . Increased penetration in adjacent hospitality or areas further through and strategic acquisitions , AI continues to chain driven technology and capabilities back end actionable business insights supply .
Speaker #3: on supply an update strong in the Now for is with the optimizing in global offering account spend products , superior services , economics , analytical sourcing solutions for our insights .
John Zillmer: We remain highly committed to GPO growth and are actively pursuing meaningful opportunities. Double-digit growth propelled well over $20 billion worth of contracted spend as we expand business in international regions, increase penetration in adjacent hospitality areas, and further scale through select and strategic acquisitions. AI-driven technology continues to differentiate our supply chain and GPO capabilities, delivering back-end efficiencies and actionable business insights. Tools such as mobile AI chatbots and AI-enhanced analytics provide GPO clients real-time visibility into their business.
Speaker #3: Tools as such and AI efficiencies and analytics enhanced GPO clients real time business in internal supply chain systems are operations . end AI gains productivity before handing over the call to to reiterate our Jim , I want realizing the numerous efficiency and visibility opportunities accelerating back ahead for the business .
John Zillmer: In our own internal supply chain operations, AI systems are accelerating back-end efficiency and productivity gains. Before handing over the call to Jim, I want to reiterate our confidence in realizing the numerous growth opportunities ahead for the business this fiscal year, driven by the strategic and operational actions underway at the company. Our success comes from the teams throughout the organization and around the globe, who show up every day with purpose, serving with integrity, solving problems with ingenuity, and delivering consistent excellence. Jim?
John Zillmer: In our own internal supply chain operations, AI systems are accelerating back-end efficiency and productivity gains. Before handing over the call to Jim, I want to reiterate our confidence in realizing the numerous growth opportunities ahead for the business this fiscal year, driven by the strategic and operational actions underway at the company. Our success comes from the teams throughout the organization and around the globe, who show up every day with purpose, serving with integrity, solving problems with ingenuity, and delivering consistent excellence. Jim?
Speaker #3: our own fiscal year , driven by operational into their underway and company . comes from the success the throughout the Our confidence in around the globe who show up every day with purpose growth , serving with integrity , solving problems This ingenuity , and consistent excellence .
Jim Tarangelo: Thanks, John, and good morning, everyone. We're off to a great start to fiscal 2026. The unprecedented levels of success with our annualized grocery wins and client retention last year have built the foundation for our strong outlook, and we believe we're well on track to deliver on our financial targets for 2026. More importantly, this momentum in the business has continued, and we are extremely excited about our growth prospects going forward. I'll now provide some insights into our Q1 financial performance before reviewing our expectations for the Q2, as well as for the overall fiscal year. Just to level set regarding the calendar shift, as a reminder, our Q4 fiscal 2025 had a 53rd or extra week. While this has no impact on our full year 2026 results, it does affect the cadence of quarterly comparisons.
Jim Tarangelo: Thanks, John, and good morning, everyone. We're off to a great start to fiscal 2026. The unprecedented levels of success with our annualized grocery wins and client retention last year have built the foundation for our strong outlook, and we believe we're well on track to deliver on our financial targets for 2026. More importantly, this momentum in the business has continued, and we are extremely excited about our growth prospects going forward. I'll now provide some insights into our Q1 financial performance before reviewing our expectations for the Q2, as well as for the overall fiscal year. Just to level set regarding the calendar shift, as a reminder, our Q4 fiscal 2025 had a 53rd or extra week. While this has no impact on our full year 2026 results, it does affect the cadence of quarterly comparisons.
Speaker #3: Jim
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Speaker #4: Financial continued, before performance reviewing our expectations, prospects, as well as overall for the fiscal level set. Regarding, more importantly, just the shift.
Speaker #4: As a to fourth quarter fiscal had a our week 25 . While this has no on our full year year results , it does affect the impact quarterly the 53rd week as 25 .
Jim Tarangelo: Due to the 53rd week in 2025, each quarter in 2026 starts and ends a week later than the comparable quarter last year, shifting strong activity and low activity weeks between reporting periods. With that context, as John mentioned, organic revenue growth in Q1 was up 5%, on track with what we anticipated. As we discussed on our previous earnings calls, we expected the calendar shift to have a 3% to 4% unfavorable impact on growth in Q1, and that's exactly what occurred, as the estimated impact of this shift was approximately $125 million, or about 3% on revenue. Excluding the impact from the calendar shift, organic revenue growth in the quarter would have been up approximately 8%, at the high end of our long-term growth algorithm.
Jim Tarangelo: Due to the 53rd week in 2025, each quarter in 2026 starts and ends a week later than the comparable quarter last year, shifting strong activity and low activity weeks between reporting periods. With that context, as John mentioned, organic revenue growth in Q1 was up 5%, on track with what we anticipated. As we discussed on our previous earnings calls, we expected the calendar shift to have a 3% to 4% unfavorable impact on growth in Q1, and that's exactly what occurred, as the estimated impact of this shift was approximately $125 million, or about 3% on revenue. Excluding the impact from the calendar shift, organic revenue growth in the quarter would have been up approximately 8%, at the high end of our long-term growth algorithm.
Speaker #4: Each due to quarter in 26 starts and ends week a later comparisons cadence than the quarter second quarter , year Shifting strong activity and .
Speaker #4: Weeks between reporting, of context, that mentioned, as John, low organic revenue last in growth was in the 5% on anticipated.
Speaker #4: As we discussed on our earnings previous calls what we up , we have a 3% to 4% unfavorable impact on in the first quarter .
Speaker #4: And that's exactly what occurred estimated impact of shift this was approximately calendar 125 million , shift to about or , excluding the impact from the shift , revenue revenue quarter calendar would have been up growth in 8% our long high end of term growth algorithm .
Jim Tarangelo: Now, for the second quarter, we have the opposite occurrence, and then a low activity week falls out of Q2 and is replaced with a strong activity week. We estimate the positive effect of this shift to be a benefit and a similar contribution of about 3% on revenue. Turning to profitability in the quarter, operating income was $218 million, up slightly versus the prior year. Adjusted operating income was $263 million, up 1% on a constant currency basis compared to the same period last year. The calendar shift reduced AOI by an estimated $25 million. AOI growth would have been approximately 11% without the calendar shift. The quarter benefited from higher revenue levels, the leveraging of technology capabilities, particularly in supply chain, and disciplined organizational cost management. Now to the business segments.
Jim Tarangelo: Now, for the second quarter, we have the opposite occurrence, and then a low activity week falls out of Q2 and is replaced with a strong activity week. We estimate the positive effect of this shift to be a benefit and a similar contribution of about 3% on revenue. Turning to profitability in the quarter, operating income was $218 million, up slightly versus the prior year. Adjusted operating income was $263 million, up 1% on a constant currency basis compared to the same period last year. The calendar shift reduced AOI by an estimated $25 million. AOI growth would have been approximately 11% without the calendar shift. The quarter benefited from higher revenue levels, the leveraging of technology capabilities, particularly in supply chain, and disciplined organizational cost management. Now to the business segments.
Speaker #4: at the Now , for the second quarter , the opposite we have occurrence low activity week and that a falls out of organic Q2 and is a strong replaced with estimate positive .
Speaker #4: shift to be effect of benefit in a similar of this We 3% on week revenue track with . Turning to profitability quarter , income operating contribution about up slightly was 218 million , prior year adjusted operating income was in the up 263 million , constant currency basis compared to as the the same last year .
Speaker #4: The calendar shift reduced A.Y. by an estimated 25 million A.Y. growth would have been approximately 11% without the calendar period The quarter benefited from higher levels technology capabilities , particularly in supply chain and cost management .
Jim Tarangelo: The US had AOI at a 1% decline compared to the same period last year, with a calendar shift impacting growth by an estimated 10%. The US AOI growth would have been approximately 9% without the calendar shift. The Workplace Experience group, Refreshments and Corrections, had strong performance in the quarter, driven by revenue drop through, enhanced technology, driving efficiencies and supply chain productivity, and above-unit cost management. The international segment had year-over-year AOI growth of 12% on a constant currency basis. Profitability growth was led by strong results in the UK, Spain, and Chile, which was partially offset by some mobilization costs in a couple of countries from new business within sports and entertainment and higher ed, as well as a slight impact from the calendar shift.
Jim Tarangelo: The US had AOI at a 1% decline compared to the same period last year, with a calendar shift impacting growth by an estimated 10%. The US AOI growth would have been approximately 9% without the calendar shift. The Workplace Experience group, Refreshments and Corrections, had strong performance in the quarter, driven by revenue drop through, enhanced technology, driving efficiencies and supply chain productivity, and above-unit cost management. The international segment had year-over-year AOI growth of 12% on a constant currency basis. Profitability growth was led by strong results in the UK, Spain, and Chile, which was partially offset by some mobilization costs in a couple of countries from new business within sports and entertainment and higher ed, as well as a slight impact from the calendar shift.
Speaker #4: Disciplined now to the business segments. A leveraging of 1% decline in revenue compared to the same calendar year last A.Y., with an estimated 10% organizational shift impacting.
Speaker #4: disciplined Now business to the . segments a leveraging of compared to the same 1% decline revenue last A.Y. year with calendar had impacting organizational a The US A.Y.
Speaker #4: growth 1% on a approximately 9% without the calendar shift . would have The workplace shift . Experience Group refreshments and corrections been performance in growth by an , driven by revenue drop through technology enhanced quarter driving had strong the efficiencies supply chain and and unit cost management .
Speaker #4: The international over year segment growth of 12% on a constant currency basis . Profitability by strong results in the UK , Spain and productivity , Chile , which was partially The US offset by some had year above costs .
Speaker #4: countries from new business within sports and entertainment , and higher ed , as well as a slight from the calendar impact shift the income remainder of the statement expense moving to mobilization .
Jim Tarangelo: Moving to the remainder of the income statement, interest expense was $81 million, and the adjusted tax rate was approximately 25%. Our quarterly performance resulted in GAAP EPS of $0.36 and adjusted EPS of $0.51, with a calendar shift impacting adjusted EPS growth by approximately 13%. Regarding cash flow, as expected and consistent with our typical first quarter cadence, we saw a cash outflow that reflects the natural seasonality of the business. This increased compared to the prior year due to greater working capital use, driven by strong growth in the business. Capital expenditures were higher from the timing of commitments associated with sizable new business wins and certain client renewals. We continue to advance our capital allocation priorities by repurchasing another $30 million of Aramark shares as part of our share repurchase program.
Jim Tarangelo: Moving to the remainder of the income statement, interest expense was $81 million, and the adjusted tax rate was approximately 25%. Our quarterly performance resulted in GAAP EPS of $0.36 and adjusted EPS of $0.51, with a calendar shift impacting adjusted EPS growth by approximately 13%. Regarding cash flow, as expected and consistent with our typical first quarter cadence, we saw a cash outflow that reflects the natural seasonality of the business. This increased compared to the prior year due to greater working capital use, driven by strong growth in the business. Capital expenditures were higher from the timing of commitments associated with sizable new business wins and certain client renewals. We continue to advance our capital allocation priorities by repurchasing another $30 million of Aramark shares as part of our share repurchase program.
Speaker #4: Adjusted was led tax rate was approximately interest quarterly. Our performance resulted in GAAP EPS of $0.36 and EPS of $0.51. With calendar shift impacting adjusted EPS growth by was approximately 13%.
Speaker #4: Regarding cash flow , as expected and a consistent with our 25% . typical first quarter cadence , we adjusted saw a reflects the outflow that the seasonality of business .
Speaker #4: increased This compared to the due to year capital use , driven by working greater the business expenditures were cash higher capital from the natural commitments associated timing of with sizable new business wins and client renewals We to capital allocation priorities .
Speaker #4: Certainly. Another repurchasing—Aramark continued repurchasing shares as part of our share repurchase program. We also took steps to optimize our financial flexibility by proactively repricing $2.4 billion of 2030 term loans at lower interest rates. The repricing resulted in expense savings of $30 million, or 25 basis points, as part of these steps.
Speaker #4: certain . another repurchasing Aramark continue shares of our program repurchase . We also took steps to share optimize our By financial flexibility by proactively repricing 2.4 billion of 2030 term loans lower interest rates repricing resulted in expense savings 30 million of 25 basis as part interest .
Jim Tarangelo: We also took steps to optimize our financial flexibility by proactively repricing $2.4 billion of 2030 term loans at lower interest rates. The repricing resulted in interest expense savings of 25 basis points. We will continue to pursue opportunities to further enhance our capital structure with a focus on shareholder value creation. At quarter end, the company had approximately $1.4 billion in cash availability. Turning to the outlook, our Q2 is progressing well and in line with our expectations. We believe revenue growth will continue to be strong as we onboard and roll out new business, including those recently commencing operations: DePaul University, the University at Albany in Collegiate Hospitality, and the University of Pennsylvania Health System, as John mentioned.
Jim Tarangelo: We also took steps to optimize our financial flexibility by proactively repricing $2.4 billion of 2030 term loans at lower interest rates. The repricing resulted in interest expense savings of 25 basis points. We will continue to pursue opportunities to further enhance our capital structure with a focus on shareholder value creation. At quarter end, the company had approximately $1.4 billion in cash availability. Turning to the outlook, our Q2 is progressing well and in line with our expectations. We believe revenue growth will continue to be strong as we onboard and roll out new business, including those recently commencing operations: DePaul University, the University at Albany in Collegiate Hospitality, and the University of Pennsylvania Health System, as John mentioned.
Speaker #4: pursue opportunities further enhance our at to structure with continue value shareholder capital creation to . At of the company had 1.4 billion in quarter end , cash availability .
Speaker #4: Turning to those recently commencing operations, our business is progressing and in line with our expectations. We expect this to be approximately as we onboard.
Speaker #4: strong outlook . University University of Albany and Collegiate to the Hospitality University of Pennsylvania Health Care System . As second quarter is , and the regarding , including profitability , we John to expect our key levers driven by strong and roll out supply chain new discipline and the , and of operating benefit from course , cost higher revenue levels , effective .
Jim Tarangelo: Regarding profitability, we also expect AOI to benefit from our key operating levers, driven by strong supply chain efficiencies, effective cost discipline, and, of course, higher revenue levels. With all that said, we anticipate performance in the second quarter to be right in line with current Wall Street expectations. We're also well on track and highly confident in achieving our full year guidance, particularly given the phenomenal trends we are seeing in the business. As a reminder, our full year outlook for fiscal 2026 is as follows: organic revenue growth of 7% to 9%, AOI increasing 12% to 17%, adjusted EPS growth of 20% to 25%, and a leverage ratio below three times. In summary, we are off to a strong start to the year as we continue to advance our growth strategies, fueled by extensive new business wins and outstanding client retention.
Jim Tarangelo: Regarding profitability, we also expect AOI to benefit from our key operating levers, driven by strong supply chain efficiencies, effective cost discipline, and, of course, higher revenue levels. With all that said, we anticipate performance in the second quarter to be right in line with current Wall Street expectations. We're also well on track and highly confident in achieving our full year guidance, particularly given the phenomenal trends we are seeing in the business.
Speaker #4: all that With performance also to be second quarter line with current Wall Street expectations . We're on also well track and highly confident achieving our in full year guidance , right in given the trends anticipate we are seeing in the business .
Jim Tarangelo: As a reminder, our full year outlook for fiscal 2026 is as follows: organic revenue growth of 7% to 9%, AOI increasing 12% to 17%, adjusted EPS growth of 20% to 25%, and a leverage ratio below three times. In summary, we are off to a strong start to the year as we continue to advance our growth strategies, fueled by extensive new business wins and outstanding client retention. We are energized about the opportunities ahead and remain highly focused on delivering exceptional top and bottom line performance. Thank you for your time this morning. John?
Speaker #4: As a reminder , our phenomenal full year outlook for fiscal 26 is as in the . revenue Organic of ROE , 12% to 17% .
Speaker #4: Adjusted EPs follows 20% and a ratio below three times growth . summary , we are off to a strong start as we continue to advance our growth strategies , fueled year In business wins and new outstanding client retention growth of , we are energized ahead and remain opportunities highly to 25% , focused on delivering exceptional about the performance .
Jim Tarangelo: We are energized about the opportunities ahead and remain highly focused on delivering exceptional top and bottom line performance. Thank you for your time this morning. John?
John Zillmer: I want to personally thank our teams for maintaining virtually flawless client retention to date, while continuing to drive exciting new business opportunities. Our efforts are centered on our ability to create a consistently strong and sustainable business focused on providing valued hospitality services to our clients. We expect to build upon our growth momentum throughout this fiscal year and beyond. I'm extremely excited about what's next to come. Operator, we'll now open the call for questions.
Jim Tarangelo: I want to personally thank our teams for maintaining virtually flawless client retention to date, while continuing to drive exciting new business opportunities. Our efforts are centered on our ability to create a consistently strong and sustainable business focused on providing valued hospitality services to our clients. We expect to build upon our growth momentum throughout this fiscal year and beyond. I'm extremely excited about what's next to come. Operator, we'll now open the call for questions.
Speaker #4: Thank you this John top and . morning ,
Speaker #3: I want to our personally thank maintaining teams for virtually flawless retention to date , while to drive exciting new
Speaker #3: are efforts continuing on our
Speaker #3: ability to strong consistently and sustainable focused on valued hospitality to our centered services clients . We expect to upon our growth business by momentum throughout providing this fiscal bottom line year and build beyond .
Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star, then one, one on your touch tone phone. If you're using the speaker phone, you may need to pick up the handset first before pressing the numbers. In order to accommodate participants in the question queue, please limit yourself to one question and one follow-up. To remove yourself from the queue, please press star one, one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Ian Zaffino with Oppenheimer. Your line is open.
Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star, then one, one on your touch tone phone. If you're using the speaker phone, you may need to pick up the handset first before pressing the numbers. In order to accommodate participants in the question queue, please limit yourself to one question and one follow-up. To remove yourself from the queue, please press star one, one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Ian Zaffino with Oppenheimer. Your line is open.
Speaker #3: extremely I'm excited about what's next to about come . what Operator . We'll now call for questions .
Speaker #1: you . now begin the question and
Speaker #1: you have session . If star . question , please Then tone phone . If you're answer speakerphone , you may need to pick up the handset before numbers in pressing accommodate question participants in the limit open the yourself from the yourself queue , queue .
Speaker #1: one one again . one one on your touch pause for a moment compile our a roster please press order to star We will Thank while we to remove Our .
Ian Zaffino: Hi, great. Thank you very much. It seems like you guys are winning a lot of, call it competitive business here, and you know, some larger competitors are included in that mix. Is this a trend we should expect here? And then maybe what do you kind of attribute the success to? Thanks.
Ian Zaffino: Hi, great. Thank you very much. It seems like you guys are winning a lot of, call it competitive business here, and you know, some larger competitors are included in that mix. Is this a trend we should expect here? And then maybe what do you kind of attribute the success to? Thanks.
Speaker #1: Zaffino with
Speaker #5: very much Thank you . It you guys seems like are of winning a lot it call business here
Speaker #5: . And Oppenheimer . know , some are included in competitive larger mix
Speaker #5: . Is this a trend great . we expect
Speaker #5: Should? And then your maybe success line is to... kind of...
Speaker #5: should ? And then Your maybe success line is to . kind of
John Zillmer: Yeah, 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've 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, we see that trend continuing. We're positioned extraordinarily well to win in 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.
John Zillmer: Yeah, 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've 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, we see that trend continuing. We're positioned extraordinarily well to win in 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.
Speaker #3: I would we have say I would enjoyed significant open success last over the over the course of the last year into certainly .
Speaker #3: 26 in Hi , account wins competitive those new wins are very , some of large organizations that are part self and going op and part served by our And we've been lucky enough complex , to win two very large competitors .
Speaker #3: Penn and RWA . that Barnabas represent Our significant , very both competitive wins and self op . So conversions we see that that trend opportunities We're continuing .
Speaker #3: positioned extraordinarily well we see win these situations . The capabilities our that that built , the have systems that we can bring to bear our , that serve demonstrate to them in sales our teams processes are And so each of these the independent .
John Zillmer: And so each of these decisions is independent. All of these clients make judgments based on what's best for their needs, and we've been able to demonstrate a very unique capability and have been lucky enough to be selected in those opportunities. So we're very pleased with the performance to date and lots of wind in our sails, if you will.
John Zillmer: And so each of these decisions is independent. All of these clients make judgments based on what's best for their needs, and we've been able to demonstrate a very unique capability and have been lucky enough to be selected in those opportunities. So we're very pleased with the performance to date and lots of wind in our sails, if you will.
Speaker #3: decisions is significant . All of these to well the based on on clients make best for their been able to And we've needs .
Speaker #3: demonstrate unique capability and lucky enough to be selected in what's have been opportunities . So we're very those the performance to date . And and lots of wind in our sails , if you
Ian Zaffino: Okay, thanks. And then, you know, just as a follow-up, kind of like a multi-parter here. What I wanted to see is, or find out, are there any other large bidding opportunities upcoming or also rebidding that's happening? Any, any larger ones that are coming in? That would be dovetailing into, you know, just retention in general. Like, what are you guys doing here that you just continue to improve retention and seeing it at these exceptional levels? Thanks.
Ian Zaffino: Okay, thanks. And then, you know, just as a follow-up, kind of like a multi-parter here. What I wanted to see is, or find out, are there any other large bidding opportunities upcoming or also rebidding that's happening? Any, any larger ones that are coming in? That would be dovetailing into, you know, just retention in general. Like, what are you guys doing here that you just continue to improve retention and seeing it at these exceptional levels? Thanks.
Speaker #5: thanks .
Speaker #5: And as a , what I wanted to see is find out , or any other are there . Okay , bidding you upcoming opportunities then , here will large that's happening ?
Speaker #5: know , just very
Speaker #5: Any rebidding are coming ? And that would be larger dovetailing general . what are you retention in guys just doing you to , to continue retention and seeing it these Like , here that Thanks exceptional , you know , just at .
Speaker #5: Any rebidding are coming ? And that would be larger dovetailing general . what are you retention in guys just doing you to , to continue retention and seeing it these Like , here that Thanks exceptional , you know , just at .
John Zillmer: Yeah, thank you. Good question, and absolutely, we are focused every day on number one driver of our ultimate success, when we can retain the clients that we serve, it's very important. And so the first part of the question with respect to new bidding opportunities, I'm not gonna comment on other large pursuits that we have ongoing at the present time, because they are competitive in nature, and I don't wanna signal our strategy to our competitors. There are a number of large opportunities that we are pursuing. I would say for the bidding cycle this season, we have a kind of a normalized bidding cycle. As you know, it's the time of year where K through twelve and higher ed are going through their bid processes.
John Zillmer: Yeah, thank you. Good question, and absolutely, we are focused every day on number one driver of our ultimate success, when we can retain the clients that we serve, it's very important. And so the first part of the question with respect to new bidding opportunities, I'm not gonna comment on other large pursuits that we have ongoing at the present time, because they are competitive in nature, and I don't wanna signal our strategy to our competitors. There are a number of large opportunities that we are pursuing. I would say for the bidding cycle this season, we have a kind of a normalized bidding cycle. As you know, it's the time of year where K through twelve and higher ed are going through their bid processes.
Speaker #3: Yeah . question . Thank Good you . are we are focused we And day on on retention . And it is the number ultimate
Speaker #3: Yeah . question . Thank Good you . are we are focused we And day on on retention . And it is the number ultimate
Speaker #3: our very every important . one driver of And serve It's with respect to new the I'm not going to opportunities , on other we into bidding we have retain the the present time because first part of the question clients that competitive in I don't want to signal our so our when competitors .
Speaker #3: There are a number of improve pursuing . I would say for the bidding pursuits that this season , we have a we have a normalized bidding cycle .
John Zillmer: But we are achieving record high retention at a time in the fiscal year when normally we would have lost a little bit of business by now. So we're very pleased with the results to date. We're hyper-focused on it. It's a very important part of our compensation systems. People are very aware of how seriously we all take this as an organization. So, we're pleased, we're driving for success, and we wanna get better every day.
Speaker #3: As you know, ongoing at it's the time of kind of a year where K-12 and higher ed, they are going through their bid processes through.
John Zillmer: But we are achieving record high retention at a time in the fiscal year when normally we would have lost a little bit of business by now. So we're very pleased with the results to date. We're hyper-focused on it. It's a very important part of our compensation systems. People are very aware of how seriously we all take this as an organization. So, we're pleased, we're driving for success, and we wanna get better every day.
Speaker #3: But we are we are high achieving time in the fiscal year when normally we would have we would have business by opportunities that now .
Speaker #3: But we are we are high achieving time in the fiscal year when normally we would have we would have business by opportunities that now . lost a So very pleased to record date .
Speaker #3: We're retention hyper results it . It's it's an it's a part of important our systems . People nature , and very cycle seriously we're with the take we all this as an compensation organization .
Speaker #3: on So we're a at a pleased . We're very driving for strategy to success and we want to we're get better every day
Leo Carrington: Okay, thank you very much. Great quarter.
Leo Carrington: Okay, thank you very much. Great quarter.
Operator: Our next question comes from Neil Tyler with Redburn Atlantic. Your line is open.
Operator: Our next question comes from Neil Tyler with Redburn Atlantic. Your line is open.
Speaker #5: Thank you very
Speaker #5: . Great quarter much .
Speaker #5: . Great quarter much
Neil Tyler: Yeah, good morning. Thank you. Good morning, John, Jim. I just wanted to zoom in on a couple of the subsegments that you called out and ask for some help in sort of in framing their materiality. Specifically, within sports and leisure, the sort of absolute relative scale of the college athletics sort of revenues, where they've sort of got to. If you can give us any help on how to think about those, 'cause that's something you've been sort of talking very enthusiastically about for a little while now. And similarly, in business and industry, the refreshment component seems to be sort of outpacing everything else.
Neil Tyler: Yeah, good morning. Thank you. Good morning, John, Jim. I just wanted to zoom in on a couple of the subsegments that you called out and ask for some help in sort of in framing their materiality. Specifically, within sports and leisure, the sort of absolute relative scale of the college athletics sort of revenues, where they've sort of got to. If you can give us any help on how to think about those, 'cause that's something you've been sort of talking very enthusiastically about for a little while now.
Speaker #1: Our next question .
Speaker #1: Neil
Speaker #1: Neil comes from with And Co., Rothschild, Redburn. Your line is open. Okay.
Speaker #6: Good
Speaker #6: Good you . morning . Thank . Yeah . Good morning Jim I how just wanted to zoom in on a couple the of are that you subsegments out called and , and ask sort help in of for some in there materiality framing within John the sort of the specifically and leisure , scale relative college absolute the of the of revenues where they've sort of sort of can give us got to if you any help on on how to about those , because that's you've been talking very something sort enthusiastically about little while for , for a similarly , business refreshment and the seems to be sort of now .
Speaker #6: Good you . morning . Thank . Yeah . Good morning Jim I how just wanted to zoom in on a couple the of are that you subsegments out called and , and ask sort help in of for some in there materiality framing within John the sort of the specifically and leisure , scale relative college absolute the of the of revenues where they've sort of sort of can give us got to if you any help on on how to about those , because that's you've been talking very something sort enthusiastically about little while for , for a similarly , business refreshment and the seems to be sort of now . component everything So just , you else .
Speaker #6: Good you . morning . Thank . Yeah . Good morning Jim I how just wanted to zoom in on a couple the of are that you subsegments out called and , and ask sort help in of for some in there materiality framing within John the sort of the specifically and leisure , scale relative college absolute the of the of revenues where they've sort of sort of can give us got to if you any help on on how to about those , because that's you've been talking very something sort enthusiastically about little while for , for a similarly , business refreshment and the seems to be sort of now . component everything So just , outpacing these sort know , stand And , you know , drive the of growth levels Or is there , there's lot going presumably as well .
Neil Tyler: And similarly, in business and industry, the refreshment component seems to be sort of outpacing everything else. So just, you know, are these sort of, you know, stand out, you know, sufficient to drive the levels of growth on their own, or is there, you know, there's a lot going on elsewhere, presumably as well? So I wonder if you could help us there, then I've got a sort of just a quick follow-up on margins, if that's okay.
Neil Tyler: So just, you know, are these sort of, you know, stand out, you know, sufficient to drive the levels of growth on their own, or is there, you know, there's a lot going on elsewhere, presumably as well? So I wonder if you could help us there, then I've got a sort of just a quick follow-up on margins, if that's okay.
Speaker #6: of , you
John Zillmer: Yeah, sure. The revenue growth is very broad-based and wide-ranging across the lines of business and geography. So we're seeing, you know, very good, strong net new business performance, both in FSS US and in international. And it's not really driven by one group or another. When we highlight these, they're, you know, it's because they've 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, you know, the success of the entire organization as we pursue these growth opportunities. With respect to the sports and entertainment business, we haven't really disclosed the breakdown between collegiate sports and our pro teams, and we don't intend to disclose that at this point.
John Zillmer: Yeah, sure. The revenue growth is very broad-based and wide-ranging across the lines of business and geography. So we're seeing, you know, very good, strong net new business performance, both in FSS US and in international. And it's not really driven by one group or another. When we highlight these, they're, you know, it's because they've 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, you know, the success of the entire organization as we pursue these growth opportunities. With respect to the sports and entertainment business, we haven't really disclosed the breakdown between collegiate sports and our pro teams, and we don't intend to disclose that at this point.
Speaker #6: So I wonder if you could help help us there then . I've got a sort of on , on follow up margins , if that's a
Speaker #3: revenue the elsewhere , very broad
Speaker #3: and business on geographies . So we're seeing
Speaker #3: very good strong growth is net net new business both lines of based and US and in performance international . And . it's not really Sure .
Speaker #3: very good strong growth is net net new business both lines of based and US and in performance international . And . it's not really
Speaker #3: driven by one group
Speaker #3: driven by one group
Speaker #3: highlight these they're
Speaker #3: they've had performance other businesses are all performing well to well . So and we feel very good about both the based broad nature of it FSS on their own ?
Speaker #3: . But the know , the the success of the organization ranging pursue these we as opportunities respect to the with and or another and really we haven't disclosed the breakdown between growth collegiate entire sports pro teams .
John Zillmer: I will say that, you know, when you think about the scale and the size of opportunities in collegiate athletics, it's very significant. We're certainly the largest player in that segment to date, and continue to pursue significant opportunities going forward. And we may, at some point in the future, make the decision to disclose that information separately, but at present, we have not.
John Zillmer: I will say that, you know, when you think about the scale and the size of opportunities in collegiate athletics, it's very significant. We're certainly the largest player in that segment to date, and continue to pursue significant opportunities going forward. And we may, at some point in the future, make the decision to disclose that information separately, but at present, we have not.
Speaker #3: And we don't we and disclose that at this don't sports I point . that , you know , think about the scale and the opportunities in , you collegiate it's very athletics , significant .
Speaker #3: And we don't we and disclose that at this don't sports I point . that , you know , think about the scale and the opportunities in , you collegiate it's very when you We're certainly the largest in that date segment to player .
Speaker #3: And and pursue significant opportunities going continue to forward . And we may point in at some , make the the to that disclose separately .
Jim Tarangelo: Yeah, and I'll just add, you asked about refreshments with Alan. That's a significant piece of our business and industry segment. As we mentioned, that segment has grown double-digit 17 quarters in a row, and it's both our B&I, underlying B&I business and our refreshment service business that is benefiting from very high retention levels, really strong new business. So they both are growing double-digit and contributing to the success that we're seeing in that segment.
Jim Tarangelo: Yeah, and I'll just add, you asked about refreshments with Alan. That's a significant piece of our business and industry segment. As we mentioned, that segment has grown double-digit 17 quarters in a row, and it's both our B&I, underlying B&I business and our refreshment service business that is benefiting from very high retention levels, really strong new business. So they both are growing double-digit and contributing to the success that we're seeing in that segment.
Speaker #3: But at present, not.
Speaker #4: And I'll just add you
Speaker #4: asked refreshments with and that's a our business .
Speaker #4: segment . And as we significant mentioned , that
Speaker #4: segment . And as we significant mentioned , that information segment has double digit grown 17 quarters in a row . decision it's both And piece of by underlying by business and our refreshment service business .
Speaker #4: That is benefiting from very high retention levels, really strong new business. So they both are growing double digit and contributing to the success that we're seeing in our segment.
Neil Tyler: Got it. Thank you. And then just if I can follow up on margins. Jim, I wonder if you could just sort of remind us or help sort of handhold a little bit on the puts and takes in the adjusted operating margin this quarter compared to what we should expect over the rest of the year. Just the sort of major items, if that's okay. Thank you.
Neil Tyler: Got it. Thank you. And then just if I can follow up on margins. Jim, I wonder if you could just sort of remind us or help sort of handhold a little bit on the puts and takes in the adjusted operating margin this quarter compared to what we should expect over the rest of the year. Just the sort of major items, if that's okay. Thank you.
Speaker #6: Got it . Thank And you . then just if I , can follow up on on margins , wonder if Jim , I you could just if I or sort of handhold a little bit on the puts and takes in the adjusted operating , in the this quarter compared to what we expect remainder of the year .
Jim Tarangelo: Yeah, sure. I think the first quarter, and as I mentioned in the script, was, you know, we have about $25 million of sort of costs associated with the 53rd week in Q1 that will unwind. So if you adjust for that impact, margins will be up about 20 basis points in Q1. We do have the last quarter relapsing the impact. We mentioned the GLP-1s and elevated medical costs during the last earnings call. We revamped that program, so that will no longer be a factor starting January. So those are two of the items I would point to in Q1, but it's primarily the 53rd week impact that will unwind in Q2. So when you look at the first half, it will be more normalized.
Jim Tarangelo: Yeah, sure. I think the first quarter, and as I mentioned in the script, was, you know, we have about $25 million of sort of costs associated with the 53rd week in Q1 that will unwind. So if you adjust for that impact, margins will be up about 20 basis points in Q1. We do have the last quarter relapsing the impact. We mentioned the GLP-1s and elevated medical costs during the last earnings call.
Speaker #6: Just to sort of make over the major items, if that's okay. Thank you.
Speaker #4: Yeah , sure . I think as I the first call , mentioned in the was script , have about 25 million of sort of cost associated with the in the first 53rd week quarter .
Speaker #4: That will if you for the , the unwind . that we margin would about points in , in Q1 . We do have the last quarter or lapping the impact .
Jim Tarangelo: We revamped that program, so that will no longer be a factor starting January. So those are two of the items I would point to in Q1, but it's primarily the 53rd week impact that will unwind in Q2. So when you look at the first half, it will be more normalized. Then for the full year, you know, on track for the 30 to 40 basis points that we've consistently delivered, talked about, and embedded in the guidance that we provided in the beginning of the year. Margins are falling in line with our expectations.
Speaker #4: We mentioned the GLP one and elevated be up 20 basis last costs during the earnings call . revamped that program so be a longer factor .
Speaker #4: Starting that will no January . those are two of the items I'd point So in it's Q1 , but primarily the 53rd week impact that will unwind in the second quarter .
Jim Tarangelo: Then for the full year, you know, on track for the 30 to 40 basis points that we've consistently delivered, talked about, and embedded in the guidance that we provided in the beginning of the year. Margins are falling in line with our expectations.
Speaker #4: So when at the first half , it will be be you look more And then normalized . for the full year , on you know , track to for the 30 to 40 basis consistently delivered and talked medical about and embedded in the guidance that we provided in the beginning of the year .
Neil Tyler: That's perfect. Thank you very much. Very helpful.
Neil Tyler: That's perfect. Thank you very much. Very helpful.
Operator: Our next question comes from Leo Carrington with Citi. Your line is open.
Operator: Our next question comes from Leo Carrington with Citi. Your line is open.
Speaker #4: So margins are falling in line with our expectations .
Speaker #6: perfect . That's Thank you very much . Very helpful .
Leo Carrington: Good morning. Thank you very much for taking my questions. If I could follow up, perhaps on this, net new growth you've been experiencing, what are your expectations in terms of the duration that this could persist, especially as it's driven more by, very strong retention rather than acceleration in gross wins, as I understand it? I mean, at what point in the year do you have the confidence to perhaps exceed the target? And then secondly, can I ask the two questions on AI? I mean, firstly, how do you perceive the risks or opportunities around your revenues? For instance, what's your blue chip office clients reporting in terms of, in terms of the importance of catering in the context of hiring and investing in the office environment?
Leo Carrington: Good morning. Thank you very much for taking my questions. If I could follow up, perhaps on this, net new growth you've been experiencing, what are your expectations in terms of the duration that this could persist, especially as it's driven more by, very strong retention rather than acceleration in gross wins, as I understand it? I mean, at what point in the year do you have the confidence to perhaps exceed the target?
Speaker #1: next Our question comes from Leo Carrington with Citi . Your line is open .
Speaker #7: Good morning . Thank you very
Speaker #7: taking my I . If follow up perhaps on this net new growth experiencing , what are We your you've been expectations in terms duration of the this could persist , especially as it's driven more by strong retention rather than gross in As I understand wins ?
Leo Carrington: And then secondly, can I ask the two questions on AI? I mean, firstly, how do you perceive the risks or opportunities around your revenues? For instance, what's your blue chip office clients reporting in terms of, in terms of the importance of catering in the context of hiring and investing in the office environment? Is there an opportunity in data centers, for you? And then secondly, on the cost side, you referenced the back-end efficiencies and supply chain productivity. To what extent are your AI initiatives here paying off already? Thank you.
Speaker #7: Is it? I mean, at what point in the year do you have the confidence to perhaps exceed the target? And then secondly, can I ask the two questions on AI?
Speaker #7: I mean , firstly , how do you the perceive or risks opportunities your around revenues ? For instance , blue chip what's your office clients reporting in terms of in terms of the business of catering and in the context of hiring and investing in the office environment ?
Leo Carrington: Is there an opportunity in data centers, for you? And then secondly, on the cost side, you referenced the back-end efficiencies and supply chain productivity. To what extent are your AI initiatives here paying off already? Thank you.
Speaker #7: Is there an opportunity in data centers for And then secondly , on the cost side , you referenced the back end efficiencies and supply chain productivity .
John Zillmer: Yeah, that's a lot. So let's break it down into chunks and talk about AI first. And that is, let me break that into a couple different pieces. First of all, in terms of the back office productivity and the impact on our costs, we're already seeing the impact of AI, particularly on supply chain, as we use it to both accelerate the data capture process as well as the negotiating process, if you will, for the services and the products that we buy. So it's already had a significant impact. And it's important to note that our investment in AI is really relatively small. It is part of our normal IT operating budget.
John Zillmer: Yeah, that's a lot. So let's break it down into chunks and talk about AI first. And that is, let me break that into a couple different pieces. First of all, in terms of the back office productivity and the impact on our costs, we're already seeing the impact of AI, particularly on supply chain, as we use it to both accelerate the data capture process as well as the negotiating process, if you will, for the services and the products that we buy. So it's already had a significant impact. And it's important to note that our investment in AI is really relatively small. It is part of our normal IT operating budget.
Speaker #7: To what extent are your AI initiatives here paying off already? Thank you.
Speaker #3: that's a Yeah , lot . So let's break it chunks into and down talk about AI And that first . is let me let me break that into a couple different pieces .
Speaker #3: First of all , in terms of the back office productivity and the on our costs , we're already seeing impact of the AI , particularly on supply chain , as we use it to to both accelerate the data capture process as well as the the negotiating process , if you will , for the for the services and the products that we buy .
Speaker #3: It's had a significant impact, and it's important to note that our investment in AI is really relatively small. It is part of our normal.
John Zillmer: We don't have any significant program investment or significant capital investment targeted towards AI implementation. We're able to do this as part of our ongoing IT spend and driving significant performance improvement already through it. So we feel very confident in the use of AI, both in as it relates to our organization as well as the improved profitability. With respect to the business opportunity, you know, we see the, we see the evolution of jobs in the United States as one that will be productive for us. As you can tell from our revenue growth that's occurring in B&I and in Refreshment Services, we have lots of runway to grow the business. We serve customers in all kinds of locations, whether it's manufacturing, office, mining, remote camps, all of those kinds of...
John Zillmer: We don't have any significant program investment or significant capital investment targeted towards AI implementation. We're able to do this as part of our ongoing IT spend and driving significant performance improvement already through it. So we feel very confident in the use of AI, both in as it relates to our organization as well as the improved profitability. With respect to the business opportunity, you know, we see the, we see the evolution of jobs in the United States as one that will be productive for us. As you can tell from our revenue growth that's occurring in B&I and in Refreshment Services, we have lots of runway to grow the business. We serve customers in all kinds of locations, whether it's manufacturing, office, mining, remote camps, all of those kinds of...
Speaker #3: IT operating budget . We don't have any significant program investment or significant capital investment targeted towards AI implementation . We're able to do this as part of our ongoing IT spend and and driving significant performance improvement .
Speaker #3: Already through it. So we feel very confident in the use of AI, both as it relates to our organization as well as the improved profitability with respect to the business opportunity.
Speaker #3: You know , we we see the we see the evolution of jobs in the United States as one that will be productive for us .
Speaker #3: can tell from As you revenue growth that's occurring in in BNI and in refreshment services , we have lots of runway to The business and we serve customers in all kinds of locations , whether it's manufacturing , office , mining , remote camps , all of those kinds of the national parks , the vast majority of our businesses will probably see an opportunity coming from the application of AI in their respective segments .
John Zillmer: The national parks. The vast majority of our businesses will probably see an opportunity coming from the application of AI in their respective segments. So we don't see it as a threat to the business. We see it as an opportunity, an opportunity for further growth. Obviously, if data centers are under construction, we would certainly have an opportunity to pursue and to bid on those kinds of opportunities. It's very analogous to our remote camps and mining businesses, if you will. So we see it as a long-term opportunity for the company, not a threat to our organization. And I think I'm old enough to probably be able to say this, and I remember the days when everybody thought robotics was gonna replace everybody in an automotive plant.
John Zillmer: The national parks. The vast majority of our businesses will probably see an opportunity coming from the application of AI in their respective segments. So we don't see it as a threat to the business. We see it as an opportunity, an opportunity for further growth. Obviously, if data centers are under construction, we would certainly have an opportunity to pursue and to bid on those kinds of opportunities. It's very analogous to our remote camps and mining businesses, if you will.
Speaker #3: And so we don't see it as a threat to the business. We see it as an opportunity—an opportunity for growth, further data under.
Speaker #3: construction , we Obviously , if certainly have an would opportunity to and to pursue bid on those kinds of opportunities . It's very analogous to our remote camps and mining businesses , if you will .
John Zillmer: So we see it as a long-term opportunity for the company, not a threat to our organization. And I think I'm old enough to probably be able to say this, and I remember the days when everybody thought robotics was gonna replace everybody in an automotive plant. And workforces adjust, processes adjust, companies adjust. We see it as a long-term opportunity, with a changing marketplace, and the jobs may change, but people will still be, will still be employed. And, so anyway, we see it as a long-term opportunity. Jim, do you want to take the other half of the question?
Speaker #3: So we see it as a long term opportunity for the company , not a threat to our organization . And I think I'm I'm old enough to probably be able to say , listen , I remember the days when everybody thought robotics was going to replace everybody in the , in a plant , and in an automotive plant , and workforce is a just processes adjust .
John Zillmer: And workforces adjust, processes adjust, companies adjust. We see it as a long-term opportunity, with a changing marketplace, and the jobs may change, but people will still be, will still be employed. And, so anyway, we see it as a long-term opportunity. Jim, do you want to take the other half of the question?
Speaker #3: Companies adjust . We see it as a long term opportunity with a changing marketplace , and the jobs may change , but people will still be will still be employed .
Jim Tarangelo: Yeah, the other talked about. I think you started with the run rate and opportunity and pipeline. So we're certainly running ahead of where we expect it to be in terms of net new, you know, well on track to deliver and perhaps exceed on the 4 to 5%. So we're in a really strong position in terms of retention, as John mentioned earlier, just not the size and scale of retention risk that we may have at this point in the year. That coupled with a number of the large wins we talked about, and then on top of that, you know, a very robust pipeline of opportunities, many active discussions, and many of those pretty close to finalizing.
Jim Tarangelo: Yeah, the other talked about. I think you started with the run rate and opportunity and pipeline. So we're certainly running ahead of where we expect it to be in terms of net new, you know, well on track to deliver and perhaps exceed on the 4 to 5%. So we're in a really strong position in terms of retention, as John mentioned earlier, just not the size and scale of retention risk that we may have at this point in the year.
Speaker #3: And so anyway , we see it as a long term opportunity . Jim , do you want to take the other half of the question ?
Speaker #4: Yeah , the other talked about I think you started with the the run rate in opportunity and pipeline . So we're certainly running ahead of where we terms of expect it to in of net new well on track to delete and perhaps and deliver perhaps exceed on So we're in a strong the 4 to 5% .
Speaker #4: Position in really terms of retention. As John mentioned earlier, it's not just the size and scale of retention risk that we may have at this point in the year.
Jim Tarangelo: That coupled with a number of the large wins we talked about, and then on top of that, you know, a very robust pipeline of opportunities, many active discussions, and many of those pretty close to finalizing. So we've kicked off the year in a very good spot, and we'll keep you posted over the next couple of months here.
Speaker #4: That , coupled with a number of the large wins we talked about , and then on top of that , you know , very robust pipeline of opportunities , many active discussions and many of those pretty close to to finalizing .
Jim Tarangelo: So we've kicked off the year in a very good spot, and we'll keep you posted over the next couple of months here.
John Zillmer: Yeah, and I'll just add one last comment on that. You know, we see the long-term growth algorithm in this company, you know, continuing to improve. As a result of our operational discipline, we're getting better and better every day, with respect to both elements of the business, which is selling these new accounts and these new opportunities by applying great systems and processes to these client organizations, as well as continued operational improvement, which leads to higher client retention. And so both elements are important. Our gross new wins last year were the highest we've ever had, and we continue to see very strong success in both new business wins and retention.
John Zillmer: Yeah, and I'll just add one last comment on that. You know, we see the long-term growth algorithm in this company, you know, continuing to improve. As a result of our operational discipline, we're getting better and better every day, with respect to both elements of the business, which is selling these new accounts and these new opportunities by applying great systems and processes to these client organizations, as well as continued operational improvement, which leads to higher client retention. And so both elements are important. Our gross new wins last year were the highest we've ever had, and we continue to see very strong success in both new business wins and retention.
Speaker #4: So we've kicked off the year very good in a spot . And we'll keep you posted over the next , next couple of months here .
Speaker #3: And I'll just add one last comment on that . You know , we see the long term growth algorithm company in this . You know , improve as a result of our operational discipline .
Speaker #3: getting better every day We're with better and to respect both continuing to elements business , which is of the selling these accounts new and these new opportunities .
Speaker #3: By applying and great systems processes these to , these client organizations , as well as operational continued improvement , which leads higher client to retention .
Speaker #3: And so elements are important . gross new Our wins last were , as year were the highest we've ever had . And we continue to to see very strong both in new wins and success business .
Leo Carrington: Thank you, John. Thank you, Jim.
Leo Carrington: Thank you, John. Thank you, Jim.
John Zillmer: Thank you.
John Zillmer: Thank you.
Operator: Our next question comes from Jaafar Mestari with BNP Paribas. Your line is open.
Operator: Our next question comes from Jaafar Mestari with BNP Paribas. Your line is open.
Speaker #3: retention
Speaker #7: John . Thank you Jim .
Speaker #7: Thank you
Jaafar Mestari: Hi, good morning. First question, please, on just pricing and volumes. Curious if you could quantify the contribution to organic growth in the quarter, and maybe update your views for where like-for-like pricing and like-for-like volumes land for the full year, please.
Jaafar Mestari: Hi, good morning. First question, please, on just pricing and volumes. Curious if you could quantify the contribution to organic growth in the quarter, and maybe update your views for where like-for-like pricing and like-for-like volumes land for the full year, please.
Speaker #3: you .
Speaker #1: Next question comes from Jafar Mestari with BNP Paribas. Your line is open.
Speaker #7: Hi . morning . Good First question on please , just pricing and Curious if volumes . you could quantify the contribution to growth in organic the and maybe your update quarter views for for like where like pricing and land like , like volumes full year .
Jim Tarangelo: Sure. Yeah, so for Q1, you know, pricing essentially about 3%, you know, in line with inflation, in line with our expectations. You know, that's offset essentially by a 3%, as we talked about for the 53rd week, and the remainder of the growth coming from growth and volume for Q1. For the full year, I think we're still on track. We still anticipate-
Jim Tarangelo: Sure. Yeah, so for Q1, you know, pricing essentially about 3%, you know, in line with inflation, in line with our expectations. You know, that's offset essentially by a 3%, as we talked about for the 53rd week, and the remainder of the growth coming from growth and volume for Q1. For the full year, I think we're still on track. We still anticipate-
Speaker #7: Please for the .
Speaker #4: for . Yeah . So Q1 Sure , essentially about 3% pricing in line with in inflation line with our expectations . Yeah , that's offset essentially by 3% .
Speaker #4: about for talked As we a the And 53rd week . the growth coming remainder of the from growth volume for and Q1 for the full year , I think we're still We still on track .
John Zillmer: ... pricing being about 3%. Volumes are 0.5% to 1%, and then, you know, at this point, just at the middle of the range and perhaps better for net new would be about 4.5%. That would put you right in the middle of the guidance, and as we talked about on track, we're encouraged by the trends we're seeing in net new and opportunities to exceed that.
John Zillmer: ... pricing being about 3%. Volumes are 0.5% to 1%, and then, you know, at this point, just at the middle of the range and perhaps better for net new would be about 4.5%. That would put you right in the middle of the guidance, and as we talked about on track, we're encouraged by the trends we're seeing in net new and opportunities to exceed that.
Speaker #4: anticipate pricing being volume , about sort of 3% half percent to to 1% . And point , then , you know , just at the at this range middle of the and perhaps better for net new would be about 4.5% .
Speaker #4: put you right in the That would middle , middle of the And as we guidance . talked about on track , we're encouraged by the trends we're seeing in net new opportunities to to and that exceed .
Jaafar Mestari: Super, thank you. And a follow-up on cash flow. It's a normal cash burn quarter, but that normal seasonal outflow was $200 million more than last year. Can you perhaps detail some of the moving parts there? It looks like CapEx in the narrow sense, you buying facilities and building stuff, was actually exactly in line, but then payments to clients were $14 million higher. And if that's correct, then is the balance of $160 million all a working capital outflow? Does it stay there? Does it revert?
Jaafar Mestari: Super, thank you. And a follow-up on cash flow. It's a normal cash burn quarter, but that normal seasonal outflow was $200 million more than last year. Can you perhaps detail some of the moving parts there? It looks like CapEx in the narrow sense, you buying facilities and building stuff, was actually exactly in line, but then payments to clients were $14 million higher. And if that's correct, then is the balance of $160 million all a working capital outflow? Does it stay there? Does it revert?
Speaker #7: And you . just follow a up Super . Thank on cash flow . It's a normal cash that burn normal quarter . But seasonal outflow was 200 million more last than year .
Speaker #7: Can you perhaps detail some of the parts there ? moving like It looks CapEx in the You buying sense . facilities and was building stuff exactly actually in line .
Speaker #7: But payments to then clients were 40 million higher . And correct , if that's then is the balance a of 160 million or working outflow .
John Zillmer: Yeah, if we—the payments to clients, we essentially view as, you know, capital investment in our clients. It's more of an accounting-
John Zillmer: Yeah, if we—the payments to clients, we essentially view as, you know, capital investment in our clients. It's more of an accounting-
Speaker #7: Does it Does it stay revert there ? ?
Jaafar Mestari: Sure.
Jaafar Mestari: Sure.
John Zillmer: Distinction. So but yeah, for the first quarter, CapEx was about 4.5% of revenues. So that is elevated, right? And that's a result of the success we've seen with our new business and, a little weighted toward, sports and higher education, which, as you know, that does require a higher percentage of capital. Some of the business, a higher proportion of the business we rolled out in Q1 was from those sectors. We do expect that to normalize. Historically, if you look, we're running about 3.5% capital spending as a percentage of revenue. By the end of the year, we should be back in that range. So Q1 was a little skewed with the capital.
Speaker #4: Yeah . If we the declines , we essentially payments view as capital investment as in our clients . That's more of an accounting .
John Zillmer: Distinction. So but yeah, for the first quarter, CapEx was about 4.5% of revenues. So that is elevated, right? And that's a result of the success we've seen with our new business and, a little weighted toward, sports and higher education, which, as you know, that does require a higher percentage of capital. Some of the business, a higher proportion of the business we rolled out in Q1 was from those sectors.
Speaker #4: Sure distinction . So for the first quarter about revenue . elevated . Right . And result of that's a the success new with our And business .
Speaker #4: a little weighted toward sports and higher education , which as you know , that does require a higher percentage of capital . Some of the business , a higher proportion of business we rolled out in Q1 was from those sectors .
John Zillmer: We do expect that to normalize. Historically, if you look, we're running about 3.5% capital spending as a percentage of revenue. By the end of the year, we should be back in that range. So Q1 was a little skewed with the capital. And then in terms of working capital, you know, as this business grows, right, we do have a use of of working capital, seasonal use that was a little bit higher than the prior year. As growth accelerates, additional working capital goes in. So it's in line with with our expectations and how we planned it out.
Speaker #4: We do expect that to to normalize historically . If you look , we're running about 3.5% capital spending as a percentage of revenue by the end of the year , we should be back in that Q1 was a range .
John Zillmer: And then in terms of working capital, you know, as this business grows, right, we do have a use of of working capital, seasonal use that was a little bit higher than the prior year. As growth accelerates, additional working capital goes in. So it's in line with with our expectations and how we planned it out.
Speaker #4: little So skewed capital . with the And then in terms of capital , you know , as this business grows , right , we do have a use of of working capital , seasonal use .
Speaker #4: a little That was bit higher than the prior year as growth accelerates , additional capital working goes in . So it's in line with with our expectations and how we out planned it .
Jaafar Mestari: Thank you.
Jaafar Mestari: Thank you.
Operator: Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open.
Operator: Our next question comes from Andrew Steinerman with J.P. Morgan. Your line is open.
Andrew Steinerman: Hi, it's Andrew. I just wanted to make sure I heard you correctly about the assumption for client retention in the fiscal 2026 guide. I think you said you're counting on maintaining the same high client retention percentage that you experienced in fiscal 2025. I just wanted to make sure that I heard that correctly. And then also the second question is, is there anything else that you want to add directionally about trends in the start of this current Q2, you know, outside of the calendar shift and the Penn Hospital start?
Andrew Steinerman: Hi, it's Andrew. I just wanted to make sure I heard you correctly about the assumption for client retention in the fiscal 2026 guide. I think you said you're counting on maintaining the same high client retention percentage that you experienced in fiscal 2025. I just wanted to make sure that I heard that correctly. And then also the second question is, is there anything else that you want to add directionally about trends in the start of this current Q2, you know, outside of the calendar shift and the Penn Hospital start?
Speaker #7: Thank you .
Speaker #1: Our next question comes from Andrew Steinmann with J.P. Morgan. Your line is open.
Speaker #8: Hi , it's Andrew . I just wanted to make sure I heard you correctly about the assumption for client retention in the fiscal 26 guide .
Speaker #8: I think you said you're counting on maintaining the same retention percentage that you experienced in fiscal '25. I just wanted to make sure I heard that correctly.
Speaker #8: And and then also the second question is , is there anything else that you want to add directionally about trends in the start of this current second quarter ?
John Zillmer: Yeah, in terms of retention, as we said, Andrew, we're actually at a better spot in terms of retention this year than prior year. And as you know, last year was a record retention for the organization. So, it's in early days, but I think we're on track to be consistent or even better than what we delivered in fiscal 25.
John Zillmer: Yeah, in terms of retention, as we said, Andrew, we're actually at a better spot in terms of retention this year than prior year. And as you know, last year was a record retention for the organization. So, it's in early days, but I think we're on track to be consistent or even better than what we delivered in fiscal 25.
Speaker #8: Outside of the shift and the calendar, did the Penn hospital start?
Speaker #4: terms of Yeah . In retention , as you said , Andrew , we're actually at a better spot in terms of retention . This this year than than prior year .
Speaker #4: And as you know , last year was a record retention for the organization . So it's in early days . think we're on But I track to be consistent or even than what we delivered in in fiscal 25 .
Jaafar Mestari: Sorry, your question on trends?
Jaafar Mestari: Sorry, your question on trends?
Andrew Steinerman: Yeah.
Andrew Steinerman: Yeah.
John Zillmer: Nothing, nothing. Yeah, nothing, nothing other than what we've already modeled, I think is probably fair, Andrew. Nothing different. We, you know, we obviously have startup of new accounts, but nothing that's really impacting the second quarter differently than we've already disclosed.
John Zillmer: Nothing, nothing. Yeah, nothing, nothing other than what we've already modeled, I think is probably fair, Andrew. Nothing different. We, you know, we obviously have startup of new accounts, but nothing that's really impacting the second quarter differently than we've already disclosed.
Speaker #4: Sorry , the question . Your question on trends .
Speaker #3: Yeah . Nothing , nothing . Yeah . Nothing . Nothing other than what we've already modeled , I think is probably fair . Nothing Andrew .
Speaker #3: different . We you know , we obviously have start up of new accounts , but nothing really impacting that's the second quarter differently than we've already disclosed .
Andrew Steinerman: Okay, thank you.
Andrew Steinerman: Okay, thank you.
Operator: The next question comes from Andrew Wittmann with Baird. Your line is open.
Operator: The next question comes from Andrew Wittmann with Baird. Your line is open.
Andrew Wittmann: Okay, there was a comment in your prepared remarks about inflation. I think you guys said that it was running kind of in line or maybe slightly better than you'd anticipated. John, maybe I thought you could elaborate on that a little bit more, maybe to decompose it into maybe food and supplies prices versus the labor that you're seeing out there. If it is running better, I was just wondering if it's just kind of immaterially better or if there's an offset somewhere else in the P&L, that you know kind of keeps the profit guidance where it is.
Andrew Wittmann: Okay, there was a comment in your prepared remarks about inflation. I think you guys said that it was running kind of in line or maybe slightly better than you'd anticipated. John, maybe I thought you could elaborate on that a little bit more, maybe to decompose it into maybe food and supplies prices versus the labor that you're seeing out there. If it is running better, I was just wondering if it's just kind of immaterially better or if there's an offset somewhere else in the P&L, that you know kind of keeps the profit guidance where it is.
Speaker #8: Okay . Thank you .
Speaker #1: question comes from Andrew Next Whitman with Baird . Your line is open .
Speaker #9: There's a comment in prepared your remarks Okay . about it was I think said inflation . running kind of in line or maybe slightly better than you'd John .
Speaker #9: There's a comment in prepared your remarks Okay . about it was I think said inflation . running kind of in line or maybe slightly better than you'd anticipated .
Speaker #9: Maybe I thought you could elaborate on that a little bit more . Maybe decompose it into maybe and prices versus the labor that you're seeing out there .
Speaker #9: And if it is running better , I'm just it's if it's just kind of wondering if materially better or if there's an offset somewhere else in the PNL that , you know , kind of keeps the profit guidance where it is .
John Zillmer: Yeah, I would. Thanks, Andrew. I would say it's, you know, it's roughly 3% on a, on a food basis, and that cuts across multiple geographies, a little higher in one, a little lower in another. So it's, in the aggregate, it's right in that range of what we anticipated. We still see some elevated risk on certain commodities, but everything else, you know, kind of coming in line. Obviously, you know, the big commodity in the US is beef, which continues to, demand continues to outstrip supply, so pricing is fairly high. But, we're able to mitigate that, you know, through the menu design and the like. So we think that inflation number is very consistent with what we expected and what we're seeing unfold.
John Zillmer: Yeah, I would. Thanks, Andrew. I would say it's, you know, it's roughly 3% on a, on a food basis, and that cuts across multiple geographies, a little higher in one, a little lower in another. So it's, in the aggregate, it's right in that range of what we anticipated. We still see some elevated risk on certain commodities, but everything else, you know, kind of coming in line. Obviously, you know, the big commodity in the US is beef, which continues to, demand continues to outstrip supply, so pricing is fairly high. But, we're able to mitigate that, you know, through the menu design and the like. So we think that inflation number is very consistent with what we expected and what we're seeing unfold.
Speaker #3: Yeah , I thanks , would . Andrew I it's would say , you know , it's 3% on the on a roughly food basis .
Speaker #3: And that cuts across geographies a little multiple higher one and a little lower in in another . it's So in the aggregate . It's right in that range of what we anticipated .
Speaker #3: We still see some risk on certain commodities . But everything know , kind else you of coming in line you know , obviously the the big commodity in the US is beef , which to continues demand to continues supply .
Speaker #3: Outstrip, so it is fairly pricing high, but we’re able to mitigate that, you know, through the menu design and the like.
John Zillmer: From a labor cost perspective, I would say it's still probably in that range as well. You know, different, you know, different across geographies in various countries, but in the aggregate, again, in that range. So we expect the overall impact of inflation to be about 3%, to offset it through appropriate pricing strategies in market and various other changes. So really nothing, yeah, extraordinary in the inflation environment for us at this stage.
John Zillmer: From a labor cost perspective, I would say it's still probably in that range as well. You know, different, you know, different across geographies in various countries, but in the aggregate, again, in that range. So we expect the overall impact of inflation to be about 3%, to offset it through appropriate pricing strategies in market and various other changes. So really nothing, yeah, extraordinary in the inflation environment for us at this stage.
Speaker #3: We think that number—that inflation—is very consistent with what we expected and what we're seeing unfold. From a labor and cost, I would say, perspective.
Speaker #3: it's still I range as probably in well . You know , different know , different you across geographies and various countries . But in the aggregate again in that range .
Speaker #3: we So expect the overall impact of inflation about to be 3% to offset it through appropriate pricing strategies in market and various other changes .
Andrew Wittmann: Okay, cool. That's my only question. Thank you very much.
Andrew Wittmann: Okay, cool. That's my only question. Thank you very much.
Speaker #3: So really nothing . You know , extraordinary in the inflation environment for us at this stage .
John Zillmer: Thanks, Andrew.
John Zillmer: Thanks, Andrew.
Operator: Our next question comes from Josh Shen with UBS. Your line is open.
Operator: Our next question comes from Josh Shen with UBS. Your line is open.
Speaker #9: Okay . Cool . That's the only question . Thank you very much .
Jaafar Mestari: Hi, good morning, John, Jim. I guess you mentioned the unprecedented retention trend, so I'm just wondering what is changing or improving this year, and how does the retention pipeline, if you will, or the defense pipeline kind of look for the rest of the year?
Josh Chan: Hi, good morning, John, Jim. I guess you mentioned the unprecedented retention trend, so I'm just wondering what is changing or improving this year, and how does the retention pipeline, if you will, or the defense pipeline kind of look for the rest of the year?
Speaker #3: Thanks , Andrew .
Speaker #1: Our next question comes from Josh Chan with UBS. Your line is open.
Speaker #10: Hi. Good morning, John. Jim, I guess I mentioned to you the retention unprecedented trend. So I'm just wondering what is changing or improving this year.
Speaker #10: And how does the the retention pipeline , if you will , or the defense pipeline kind of look for the rest of the year ?
John Zillmer: ... It's, you know, I would say, again, that, you know, we are just extraordinarily focused on retention as being a key driver of our success, and so we continue to get better and better at it. We continue to have very high expectations for our teams, and frankly, their performance has been extraordinary. And so it's a combination of a lot of different things, but mostly it's about performance, and it's about delivering the services that our clients expect, and meeting their expectations. So, you know, with respect to the pipeline, we have a fairly normalized year, nothing, you know, nothing very large on the horizon in terms of retention risks. I would say, you know, it's just a, it's a fairly normal year.
John Zillmer: ... It's, you know, I would say, again, that, you know, we are just extraordinarily focused on retention as being a key driver of our success, and so we continue to get better and better at it. We continue to have very high expectations for our teams, and frankly, their performance has been extraordinary. And so it's a combination of a lot of different things, but mostly it's about performance, and it's about delivering the services that our clients expect, and meeting their expectations. So, you know, with respect to the pipeline, we have a fairly normalized year, nothing, you know, nothing very large on the horizon in terms of retention risks. I would say, you know, it's just a, it's a fairly normal year.
Speaker #3: Yeah , it's you know , I would say again , that , you know , we we are just extraordinarily focused on retention as being a key driver of our success .
Speaker #3: And so we continue to get better and better at it . At it . We continue to have very high expectations for our teams .
Speaker #3: And frankly , their performance has been has been extraordinary . And so it's it's a combination of a lot of different things . But mostly it's about performance and it's about delivering the services that our clients expect and and meeting their expectations .
Speaker #3: So , you know , with respect to the pipeline , we have a fairly normalized year . Nothing large on the , you nothing very horizon in terms retention of risks .
Jasper Bibb: Okay, great. Thanks for the color there. And are you seeing any change in terms of customer spend, you know, in average spend per transaction? Is that trend continuing to move up, or kind of what you're seeing there?
Josh Chan: Okay, great. Thanks for the color there. And are you seeing any change in terms of customer spend, you know, in average spend per transaction? Is that trend continuing to move up, or kind of what you're seeing there?
Speaker #3: I would say , you know , it's just a it's a fairly normal year .
Speaker #10: Okay , great . the color Thanks for there . And are you seeing any change in terms of customer spend ? You know , in spend per average transaction .
John Zillmer: Yeah, we continue to see broad consumer support. You know, particularly if you break down the consumer transactions in sports and entertainment, we're seeing very good per capita spending, very good attendance levels in the various leagues, obviously somewhat driven by team performance, but overall attendance in the NBA and NHL at good levels. You know, so I think we feel very good about the trends that exist within the business. We're not seeing any consumer pushback or any strong concern with respect to the economic environment. Overall, I'd say it's steady as she goes.
John Zillmer: Yeah, we continue to see broad consumer support. You know, particularly if you break down the consumer transactions in sports and entertainment, we're seeing very good per capita spending, very good attendance levels in the various leagues, obviously somewhat driven by team performance, but overall attendance in the NBA and NHL at good levels. You know, so I think we feel very good about the trends that exist within the business. We're not seeing any consumer pushback or any strong concern with respect to the economic environment. Overall, I'd say it's steady as she goes.
Speaker #10: Is that trend to to to move up or kind of what you're seeing there .
Speaker #3: Yeah , we continue to see broad consumer support . You know , particularly if you go if you break down the consumer transactions in sports and entertainment , we're seeing very good per good spending , very attendance levels in the various leagues .
Speaker #3: driven Obviously somewhat by team performance . But overall attendance in the NBA and NHL at good . And , so you know , I think we're we feel very good about the trends that within the exist business .
Speaker #3: not seeing We're any consumer pushback or any strong concern with respect to the economic environment . Overall , say I'd it's it's steady as she goes .
Jasper Bibb: Great. That's good to hear. Thanks for the color.
Josh Chan: Great. That's good to hear. Thanks for the color.
John Zillmer: Thank you.
John Zillmer: Thank you.
Operator: Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.
Operator: Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.
Speaker #10: Great . That's good to hear . Thanks for the color .
Toni Kaplan: Hi, good morning. This is Yehuda Silverman on for Toni. Just had a quick question or two on the sports segment. So we wanted to talk a little bit about the World Cup and if there's any update on how this contract might work. We've heard that could be one contract for all the games spread across the country. We're wondering if, A, there's been an update in the selection process and how that's gone, and B, if it really is one contract across the many different stadiums, how that might play out in terms of the stadiums that are operated by different providers at the moment.
Toni Kaplan: Hi, good morning. This is Yehuda Silverman on for Toni. Just had a quick question or two on the sports segment. So we wanted to talk a little bit about the World Cup and if there's any update on how this contract might work. We've heard that could be one contract for all the games spread across the country. We're wondering if, A, there's been an update in the selection process and how that's gone, and B, if it really is one contract across the many different stadiums, how that might play out in terms of the stadiums that are operated by different providers at the moment.
Speaker #3: Thank you .
Speaker #1: Our next question Toni Kaplan with Morgan Stanley . Your line is open .
Speaker #11: Hi. Good morning. This is Yehuda Silverman on for Toni. Just had a quick question or two on the sports segment.
Speaker #11: So we to talk a wanted little bit about the World Cup . And if there's any update on how this contract might work .
Speaker #11: We've heard that could be one contract for all the games spread across the country . We're wondering if there's been an update in the selection process and how that's gone .
Speaker #11: And and b if it really is one contract across the many different stadiums , how would that might in terms play out of the stadiums that are operated different the moment providers at by ?
John Zillmer: Yeah, that's not – I'm not sure where you're getting that, but we have the contract to operate the games in the stadiums we operate, and that's true of our competitors as well. So, we will have the games at Lincoln Financial Field, at NRG Stadium in Houston and in Kansas, and in Kansas City, we'll have the games there. So there isn't one single contract, there isn't one operator. The services are being provided by the company that's under contract to operate that stadium. So, you know, we anticipate having positive revenue trends from the World Cup, but also keep in mind that those stadiums, while they're being used by the World Cup, can't be used for concert activity and other events.
John Zillmer: Yeah, that's not – I'm not sure where you're getting that, but we have the contract to operate the games in the stadiums we operate, and that's true of our competitors as well. So, we will have the games at Lincoln Financial Field, at NRG Stadium in Houston and in Kansas, and in Kansas City, we'll have the games there. So there isn't one single contract, there isn't one operator. The services are being provided by the company that's under contract to operate that stadium. So, you know, we anticipate having positive revenue trends from the World Cup, but also keep in mind that those stadiums, while they're being used by the World Cup, can't be used for concert activity and other events.
Speaker #3: that's Yeah , not I'm not sure where that , you're getting but we the we have the operate contract to the games in the stadiums .
Speaker #3: We other true of the that's operate . And our competitors as well . So we will have the games at Lincoln Financial Field at at NRG Stadium in Houston and in Kansas and in Kansas City .
Speaker #3: We'll have the games there . So there isn't one single contract . There isn't one operator there . The services are being provided by the the company that's under contract to operate that stadium .
Speaker #3: So the , you know , we we anticipate having positive revenue trends from the , from the World Cup , but also keep in mind that those stadiums , while they're being used by by the World Cup , can't be used for concert activity and other and other events .
John Zillmer: So all in all, we see it as being relatively revenue and profit neutral to us, not a significant upside or downside to our projected financial results for the year.
John Zillmer: So all in all, we see it as being relatively revenue and profit neutral to us, not a significant upside or downside to our projected financial results for the year.
Speaker #3: So all in all , we see it as being relatively revenue and profit neutral to us . Not a significant upside or downside to our to our projected financial results for the year .
Toni Kaplan: Got it. Thank you for clarifying. Then just one quick follow-up also on the sports segment. Similarly, I guess coming up in Q2, there's potential this tailwind from March Madness being held in a couple of stadiums that weren't held previously. Curious if it's a similar scenario where it might be neutral to, as they can't have other entertainment or, like, sports events at the stadium at the same time? Alternatively, is there an expected headwind from the NFL playoffs seeing less home games this year than last, or minor, just like the MLB?
Toni Kaplan: Got it. Thank you for clarifying. Then just one quick follow-up also on the sports segment. Similarly, I guess coming up in Q2, there's potential this tailwind from March Madness being held in a couple of stadiums that weren't held previously. Curious if it's a similar scenario where it might be neutral to, as they can't have other entertainment or, like, sports events at the stadium at the same time? Alternatively, is there an expected headwind from the NFL playoffs seeing less home games this year than last, or minor, just like the MLB?
Speaker #11: it . clarifying . And then Thank you for just one quick Got follow up . Also on the sports segment up coming . guess Similarly , I Q , there's potential from March Madness tailwind being held in a couple stadiums that weren't held previously Curious .
Speaker #11: if it's a similar scenario where it might be neutral to as they can't have other entertainment or sports events at the stadium at the same time .
Speaker #11: And is there alternatively , an expected headwind from the NFL playoffs seeing less home games this year than last or minor ? Just like the MLB ?
John Zillmer: Yeah, no, I would, I would say, first of all, that anything that's scheduled in our stadiums has been on the calendar for quite some time. So if the NCAA Final Four or Sweet Sixteen or whatever is in one of our stadiums, we'll have the opportunity to serve those events, and that would have already been baked into our expectations and into our planning process, because we know that those things are scheduled well in advance. So, it doesn't represent a real change to us in terms of our overall planning process.
John Zillmer: Yeah, no, I would, I would say, first of all, that anything that's scheduled in our stadiums has been on the calendar for quite some time. So if the NCAA Final Four or Sweet Sixteen or whatever is in one of our stadiums, we'll have the opportunity to serve those events, and that would have already been baked into our expectations and into our planning process, because we know that those things are scheduled well in advance. So, it doesn't represent a real change to us in terms of our overall planning process.
Speaker #3: Yeah , no , I would I would say , first of all , anything that's scheduled in our stadiums has been on the calendar for quite some time .
Speaker #3: So if the NCAA Final Four or Sweet 16 or whatever is in one of our stadiums , we'll have the opportunity to serve those events .
Speaker #3: And that would have already been baked into our expectations and into our planning process . Because we know that those things are scheduled well in advance .
Speaker #3: So doesn't represent a doesn't represent real a change to us in terms of our overall planning process . And , you know , we were lucky enough to have some the teams in , you know , in the NFL playoffs .
John Zillmer: And, you know, we were lucky enough to have some teams in the, you know, in the NFL playoffs, and it was a good playoff season, and we're very pleased to say that our clients in Seattle, the Seattle Seahawks, won the Super Bowl. We served their facilities needs there in the stadium in Seattle, and we're very proud to be of service to them. But I would say overall, our expectations for the sports year are pretty consistent with our plans, and really no expectations for either windfalls or downside.
John Zillmer: And, you know, we were lucky enough to have some teams in the, you know, in the NFL playoffs, and it was a good playoff season, and we're very pleased to say that our clients in Seattle, the Seattle Seahawks, won the Super Bowl. We served their facilities needs there in the stadium in Seattle, and we're very proud to be of service to them. But I would say overall, our expectations for the sports year are pretty consistent with our plans, and really no expectations for either windfalls or downside.
Speaker #3: And it was a it was a good playoff season . And we're very pleased to say that our that our clients in Seattle , the Seattle Seahawks won the Super Bowl .
Speaker #3: served We their facilities needs there in the stadium in in Seattle . And we're very proud to be of service to them . But I would say overall , our expectations for the sports year are pretty consistent with our plans .
Jim Tarangelo: Yeah, I'll just add in terms of, you know, Q1, we did have nine or so less major league MLB games, right? We had the Phillies in the prior year. So that had some headwinds in Q1, and we're returned to a more normalized growth rate in Q2, as John just mentioned.
Jim Tarangelo: Yeah, I'll just add in terms of, you know, Q1, we did have nine or so less major league MLB games, right? We had the Phillies in the prior year. So that had some headwinds in Q1, and we're returned to a more normalized growth rate in Q2, as John just mentioned.
Speaker #3: really , And no , you know , no expectations for either windfalls or downside .
Speaker #4: Yeah , I'll just note in terms of , you know , Q1 , we did have less nine or so less major league MLB games , right ?
Speaker #4: We had the Phillies in the prior year . So that had some headwinds in Q1 . And returned to a more normalized growth rate in Q2 .
Toni Kaplan: Great. Thank you.
Toni Kaplan: Great. Thank you.
Operator: Our next question comes from Jasper Bibb with Truist Securities. Your line is open.
Operator: Our next question comes from Jasper Bibb with Truist Securities. Your line is open.
Speaker #4: As John just mentioned .
Jasper Bibb: Hey, good morning, everyone. A couple from me on the RWJBarnabas contract. I guess, should we think about this as comparable in size to the Penn Medicine win? And I think I heard launching this summer. How should we think about the timeline for that hitting a mature run rate? Is that gonna be more of a fiscal 2027 driver, or is it in your contribution for 2026 gonna be material to?
Jasper Bibb: Hey, good morning, everyone. A couple from me on the RWJBarnabas contract. I guess, should we think about this as comparable in size to the Penn Medicine win? And I think I heard launching this summer. How should we think about the timeline for that hitting a mature run rate? Is that gonna be more of a fiscal 2027 driver, or is it in your contribution for 2026 gonna be material to?
Speaker #11: Great . Thank you .
Speaker #1: Our next question comes from Jasper Bibb with securities . Your line is open .
Speaker #12: Hey , good morning everyone . A couple for me on the Rwjbarnabas contract , I guess . Should we think about this comparable as to the in size Penn Medicine win ?
Speaker #12: And I think I heard launching this summer , how should we think about the timeline for that ? Hitting a rate ? Is mature run that going to be more of a fiscal 27 is that in driver , or your contribution ?
John Zillmer: Yeah, I think it will be a staged opening that will begin this summer. I think we're still working to finalize the actual opening schedules, if you will. So there will be significant impact in 2026. We anticipate beginning to serve them in June, and then throughout the balance of the summer should be transitioning. So, but that schedule is still yet to be determined. Yeah, we're very proud to have been selected to operate RWJBarnabas Health. It's a terrific win. And as you know, the system is actually larger than Penn Medicine's, and ultimately, the potential revenues are likely to be as strong as Penn.
John Zillmer: Yeah, I think it will be a staged opening that will begin this summer. I think we're still working to finalize the actual opening schedules, if you will. So there will be significant impact in 2026. We anticipate beginning to serve them in June, and then throughout the balance of the summer should be transitioning. So, but that schedule is still yet to be determined. Yeah, we're very proud to have been selected to operate RWJBarnabas Health. It's a terrific win. And as you know, the system is actually larger than Penn Medicine's, and ultimately, the potential revenues are likely to be as strong as Penn.
Speaker #12: 26 maybe material to .
Speaker #3: Yeah , I think the it will be a staged opening that will begin this summer . I think we're still working to finalize the actual opening schedules , if you will .
Speaker #3: So there will be significant impact in 26 . We we anticipate beginning to serve them in June and then throughout the summer balance of the transitioning .
Speaker #3: So but that schedule is still yet to be determined . And we're very proud to have been selected to operate . Robert Wood Johnson , Barnabas Health System .
Speaker #3: terrific It's a win . And as you know , the system is actually larger than Penn ultimately . And the potential revenues are are likely to be as as strong as Penn's .
John Zillmer: So, you know, feel very good about it, and there will be impact in 2026, and we'll know more here over the next few weeks as we develop the implementation schedule.
John Zillmer: So, you know, feel very good about it, and there will be impact in 2026, and we'll know more here over the next few weeks as we develop the implementation schedule.
Speaker #3: So , you know , feel very good about it . And there will be impact in 26 . And we'll know more here over the next few weeks as we develop the implementation schedule .
Jasper Bibb: Great. Thanks for that. And then the Europe growth is really strong again this quarter. It's been a really nice couple of years for that business. Just hoping we could step back and talk about the drivers of your growth in Europe, you know, where you see more opportunity there, and what the pipeline looks like for that business over the balance of the year.
Jasper Bibb: Great. Thanks for that. And then the Europe growth is really strong again this quarter. It's been a really nice couple of years for that business. Just hoping we could step back and talk about the drivers of your growth in Europe, you know, where you see more opportunity there, and what the pipeline looks like for that business over the balance of the year.
Speaker #12: Great . Thanks for that . And then the Europe Group is really strong . Again this It's been a really nice couple of years for that quarter .
Speaker #12: business . Just hoping we could and talk step back about the drivers of your in growth Europe . You know , where you see more opportunity there and what the pipeline looks like for that business over the balance of the year ?
John Zillmer: Yeah, it's. I can't say I can't be enthusiastic. I'm sitting here looking for superlatives because they've just done an extraordinary job of building that business over the last several years. They've been hyper-focused on growth, and frankly, it's been a result of improving performance and demonstrating to our clients that we're the company that can deliver to them across a range of countries and a range of geographies. We've been committed to that growth. We've invested in sales, resources, and processes and systems, and frankly, in leadership. So we've got great teams on the ground really focused on building their organizations and enterprises, and they've been able to demonstrate it here now over several years running. And we have very high expectations for them this year as well. So, I can't say enough about them.
John Zillmer: Yeah, it's. I can't say I can't be enthusiastic. I'm sitting here looking for superlatives because they've just done an extraordinary job of building that business over the last several years. They've been hyper-focused on growth, and frankly, it's been a result of improving performance and demonstrating to our clients that we're the company that can deliver to them across a range of countries and a range of geographies. We've been committed to that growth. We've invested in sales, resources, and processes and systems, and frankly, in leadership. So we've got great teams on the ground really focused on building their organizations and enterprises, and they've been able to demonstrate it here now over several years running. And we have very high expectations for them this year as well. So, I can't say enough about them.
Speaker #3: Yeah , I it's I can't say I can't be enthused . I'm sitting here for looking superlatives they've just because done an extraordinary of job building that business over the last several years .
Speaker #3: They've been hyper focused on growth and frankly , it's been a improving of performance and demonstrating result to our clients that that we're the company that can deliver to them across a range of countries and a range of geographies .
Speaker #3: And we've been committed to that growth . We've invested in sales resources and processes and systems . And frankly , in leadership . So we've great teams on the ground , really focused on building their organizations and enterprises , and they've been able to demonstrate it here .
Speaker #3: Now, over several years running, and we have very high expectations for them this year as well. So, yeah, I can't say enough about them.
John Zillmer: I think, you know, really, really excited by the work that they've done and their performance to date, and we believe that success will continue.
John Zillmer: I think, you know, really, really excited by the work that they've done and their performance to date, and we believe that success will continue.
Speaker #3: I think , you know , really , really excited by the work that they've done and their performance to date . And and we believe that that will success continue .
Jasper Bibb: Great. Thank you for taking the question.
Jasper Bibb: Great. Thank you for taking the question.
Operator: Our last question comes from Stephanie Moore with Jefferies. Your line is open.
Operator: Our last question comes from Stephanie Moore with Jefferies. Your line is open.
Speaker #12: Great . Thank you for taking the questions .
Stephanie Moore: Hi, good morning. Thank you. Actually, I... My first question is just a follow-up to maybe the prior question and the prior discussion here. Could you talk a little bit about some of these larger platform wins? Is this a change in strategy, a change in go-to-market strategy, or is it just timing of some of these wins? But it does seem like you're seeing some larger wins, unless I'm missing something here. So just wanted to understand if there's a strategic shift happening behind the scenes, and I have a follow-up as well.
Stephanie Moore: Hi, good morning. Thank you. Actually, I... My first question is just a follow-up to maybe the prior question and the prior discussion here. Could you talk a little bit about some of these larger platform wins? Is this a change in strategy, a change in go-to-market strategy, or is it just timing of some of these wins? But it does seem like you're seeing some larger wins, unless I'm missing something here. So just wanted to understand if there's a strategic shift happening behind the scenes, and I have a follow-up as well.
Speaker #1: Our last question comes from Stephanie Moore with Jefferies . Your line is open .
Speaker #13: Hi . Good morning . Thank you . Actually , my first question is just a follow maybe to the up prior question and the prior discussion here .
Speaker #13: Could you talk a little bit about some of these larger platform wins ? Is this a change in strategy , a change in go to market strategy , or is it just timing of some of these wins ?
Speaker #13: it does seem But like you're seeing some larger wins . Unless I'm missing something here . So just wanted to understand if there's a strategic shift happening behind behind the scenes .
John Zillmer: Sure. I would-- Well, first of all, I would say, yes, there is a strategic shift, and it's really on the part of our clients as they begin to recognize the need to both systemize their operations in order to take advantage of cost synergies and operating synergies. And, you know, a great example of that is Penn Medicine. Obviously, they've, they had multiple service providers, and they were also self-operating a lot of their business. Their CEO made a very strategic decision to go ahead and consolidate and systemize, so that they could capture the cost savings and the synergies, and ultimately to reduce costs to patients and to control expenses for the medical institution. So you're seeing more and more of that in healthcare systems.
John Zillmer: Sure. I would-- Well, first of all, I would say, yes, there is a strategic shift, and it's really on the part of our clients as they begin to recognize the need to both systemize their operations in order to take advantage of cost synergies and operating synergies. And, you know, a great example of that is Penn Medicine. Obviously, they've, they had multiple service providers, and they were also self-operating a lot of their business. Their CEO made a very strategic decision to go ahead and consolidate and systemize, so that they could capture the cost savings and the synergies, and ultimately to reduce costs to patients and to control expenses for the medical institution. So you're seeing more and more of that in healthcare systems.
Speaker #13: And I have a follow up as well .
Speaker #3: Sure . Well , first of all , I would say yes , there is a strategic shift and it's really on the part of our clients as they begin to recognize the need to both systemize their operations in order to take advantage of cost synergies and operating synergies know , a .
Speaker #3: You great example of that is Penn Medicine . they've they've Obviously , had multiple service providers , and they were also self operating a lot of their a lot of their business , their CEO made a very strategic decision to go ahead consolidate and and systemize .
Speaker #3: So that they could capture the cost savings in the synergies, and ultimately to reduce costs to patients and to control expenses for the medical institutions.
John Zillmer: Obviously, we are very proud of the services we provide to Baylor Scott & White in Texas, who are really one of the first organizations to apply the systematic approach or the system-wide approach to this. Very proud to be selected to serve Robert Wood Johnson Barnabas, as they apply that same strategy. And I, you know, my guess is, and my belief is that more and more organizations, particularly in healthcare, will continue to pursue that as they recognize the need for cost containment and control. In a world of declining reimbursements from the federal government, they need to operate more efficiently, and we've got the tools and processes and systems in place to enable them to do that, in a consolidated way. So I think there is a strategy shift.
John Zillmer: Obviously, we are very proud of the services we provide to Baylor Scott & White in Texas, who are really one of the first organizations to apply the systematic approach or the system-wide approach to this. Very proud to be selected to serve Robert Wood Johnson Barnabas, as they apply that same strategy. And I, you know, my guess is, and my belief is that more and more organizations, particularly in healthcare, will continue to pursue that as they recognize the need for cost containment and control. In a world of declining reimbursements from the federal government, they need to operate more efficiently, and we've got the tools and processes and systems in place to enable them to do that, in a consolidated way. So I think there is a strategy shift.
Speaker #3: So you're seeing more and more of that in healthcare systems . Obviously , we are very proud of the services we provide to Baylor Scott and White in Texas , who are really one of the first organizations to apply the approach or the systematic system wide approach to this .
Speaker #3: Very proud to be selected to serve . Robert Wood Johnson , Barnabas , as they apply that same strategy . And , you know , my guess is and my belief is that more and more organizations , particularly in healthcare , will continue to pursue that as they recognize the need for cost containment and control in a world of declining reimbursements from the federal government , they need to they need to operate more efficiently .
Speaker #3: processes and tools and got the And we've systems place enable them to in do in to a way . So I consolidated think there is a strategy shift .
John Zillmer: It's really on the part of our clients and customers, and their philosophical change. And we've had great success, and we believe we'll continue to enjoy outsized results as a result of our ability to go ahead and apply those systems and processes to that strategy.
John Zillmer: It's really on the part of our clients and customers, and their philosophical change. And we've had great success, and we believe we'll continue to enjoy outsized results as a result of our ability to go ahead and apply those systems and processes to that strategy.
Speaker #3: It's really on the part of our clients and customers and their philosophical change , and we've had we've had great success and we believe we'll continue to enjoy outsized results as a result of our ability to go ahead and apply those systems and processes to to the that strategy .
Stephanie Moore: And then just as a follow-up, I wanted to touch on your, your timing to contract profitability or, or breakevenness, however you want to kinda speak to it. Has there been any change in terms of the timing that new contracts are able to kinda start contributing at a faster pace, just based on some of the operational improvements and investments, as you just noted, specifically? Any changes, especially as we think about maybe some of these larger contracts as well? Thank you.
Stephanie Moore: And then just as a follow-up, I wanted to touch on your, your timing to contract profitability or, or breakevenness, however you want to kinda speak to it. Has there been any change in terms of the timing that new contracts are able to kinda start contributing at a faster pace, just based on some of the operational improvements and investments, as you just noted, specifically? Any changes, especially as we think about maybe some of these larger contracts as well? Thank you.
Speaker #13: And then just as a follow up , I wanted to touch on your timing to contract profitability or breakeven . If , however , you want to kind of speak to it , has there been any change in terms of the timing that new contracts are able to kind of start contributing at a faster pace , just based on some of the operational improvements and investments ?
Speaker #13: As you just noted ? Specifically , any changes , especially as we think about maybe some of these larger contracts as well . Thank you .
Jim Tarangelo: Yeah, some of the larger contract wins this year, as John just mentioned, within healthcare, they're just typically less capital. While they're large and complex, unlike a large sports and entertainment opening, there's just less capital required. And the contractual structure in healthcare is often significantly more geared toward cost plus or cost reimbursable, which helps mitigate some of the large startup costs. So, I think you're right, this year, with some of those large contracts rolling out, the startup costs may be the ramp-up to profitability is a little faster, and that was embedded in the plan and the guidance that we set out at the beginning of the year.
Jim Tarangelo: Yeah, some of the larger contract wins this year, as John just mentioned, within healthcare, they're just typically less capital. While they're large and complex, unlike a large sports and entertainment opening, there's just less capital required. And the contractual structure in healthcare is often significantly more geared toward cost plus or cost reimbursable, which helps mitigate some of the large startup costs. So, I think you're right, this year, with some of those large contracts rolling out, the startup costs may be the ramp-up to profitability is a little faster, and that was embedded in the plan and the guidance that we set out at the beginning of the year.
Speaker #4: of the Some the larger contract wins this year as John just mentioned , within healthcare , they're just typically less capital while they're and complex , unlike large a large sports and entertainment opening , there's just less capital required .
Speaker #4: And the contractual structure in healthcare is often a significantly more geared toward cost . Plus or cost reimbursable , which mitigate some of helps the large start up costs .
Speaker #4: So I think you're right . This year , with some of those large contractual announced , the start up costs may be the ramp up to is profitability a little faster .
Speaker #4: And that was embedded in the plan and the guidance that we set out at the beginning of the year .
Stephanie Moore: Thank you, everyone.
Stephanie Moore: Thank you, everyone.
Operator: I will now turn the call-
Operator: I will now turn the call-
John Zillmer: Thank you
John Zillmer: Thank you
Operator: ... back over to Mr. Zillmer for, for closing remarks.
Operator: ... back over to Mr. Zillmer for, for closing remarks.
Speaker #13: Thank you everyone .
John Zillmer: Terrific. Thank you very much. And thank you, all of you, for your support of the company and your questions. Always happy to, you know, to provide as much information as we possibly can. We like to be as transparent as possible and make this easy. I wanna thank the Aramark team for their extraordinary devotion and commitment to customer service. These financial results that we're enjoying now and that we'll enjoy in the future are a direct result of your efforts. So Aramark team, thank you, and we look forward to talking to you again soon. Take care.
John Zillmer: Terrific. Thank you very much. And thank you, all of you, for your support of the company and your questions. Always happy to, you know, to provide as much information as we possibly can. We like to be as transparent as possible and make this easy. I wanna thank the Aramark team for their extraordinary devotion and commitment to customer service. These financial results that we're enjoying now and that we'll enjoy in the future are a direct result of your efforts. So Aramark team, thank you, and we look forward to talking to you again soon. Take care.
Speaker #1: turn the I will now call back over to Mr. Zillmer for closing remarks .
Speaker #3: Terrific . Thank you very much . Thank you , all of you , for your support of the company and your questions . Always happy to , you know , to provide as much information possibly as we can .
Speaker #3: like to be We'd as transparent as possible this and make make this easy . I want to thank the Aramark team for their extraordinary devotion and commitment to customer service .
Speaker #3: These financial results that we're enjoying now and that will enjoy in the future , are a direct result of your efforts . So Aramark team , thank you and we'll look forward to talking to you again soon .
Operator: Thank you for participating. This concludes today's conference. You may now disconnect and have a wonderful day.
Operator: Thank you for participating. This concludes today's conference. You may now disconnect and have a wonderful day.
