ARAMARK 2026 Q3 Earnings Call

Ms. Kissell, please proceed. 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.

I will now turn the call over to John.

Good morning, everyone, and welcome to our fiscal third quarter earnings call. Thank you for joining us. Jim and I are pleased to be here with you to review our financial results, provide an update on the business, and discuss our strategic growth agenda, which continues to drive strong, sustained performance. We are heading into the fourth quarter with significant momentum across the portfolio, including industry-leading client retention at record levels of approximately 98%, underscoring the strength of our client relationships and the excellence of our service and execution. Accelerating organic revenue growth in every U.S. sector, absent the calendar shift in education and across all regions within international. New client wins totaling more than $1.6 billion fiscal year to date, 51% higher than the comparable prior year period, reflecting strong demand for our hospitality capabilities and the depth of our sales pipeline.

The launch of operations just weeks ago under our recently awarded multi-year engagement with a top global hyperscaler, alongside the continued expansion of Aramark Nexus, which now includes providing premium hospitality services to workforce communities for an AI data center colocation leader. In the third quarter, organic revenue for the company grew 9% to $5 billion and would have increased another approximately 2% if not for the calendar shift. Once again, our strong revenue performance was driven by broad-based net new business and base business growth across sectors and geographies. These results are a testament to the dedication of our teams, whose commitment to serving our clients, delivering exceptional hospitality experiences, and performing at a high level every day, has been instrumental in our success. Moving to the business segments.

FSS US organic revenue grew 8% to $3.5 billion, and would have increased more than 10% excluding the calendar shift. Education would have achieved more than 7% growth absent the shift, which is expected to be fully recaptured in the fourth quarter. Collegiate hospitality is benefiting from increased residential meal plan enrollment, record retention, and the strongest selling season in recent history. U.S. revenue growth in the quarter was further driven by Sports, Leisure & Corrections' strong year-over-year performance, which reflected higher revenue from the ongoing Major League Baseball season, along with an expanded client portfolio, including in Major League Soccer and collegiate athletics. We demonstrated the strength of our capabilities during the 15 FIFA World Cup matches hosted at the stadiums we serve, delivering premium fan experiences amid unprecedented attendance and record per capita spending, with an additional four matches held after quarter end.

We also proudly supported our NHL and NBA clients throughout the playoffs and extend our congratulations to the San Antonio Spurs on reaching the NBA Finals. Our S&E team was hard at work last month during the MLB All-Star Game here in Philadelphia, providing hospitality services throughout the three-day series of events with merchandise revenue a particular highlight. Healthcare+ built upon the successful launch of Penn Medicine, with our team actively mobilizing multiple lines of service across RWJBarnabas Health's 18 locations while continuing to deliver strong base business performance. Workplace Experience and Refreshments achieved double-digit compounded growth for the 19th consecutive quarter, reflecting the contribution from new business, exceptional client retention, and continued base business performance across the portfolio. Now turning to Aramark Nexus.

We began operations at our first Texas-based site supporting a top global hyperscaler, which contributed to revenue and profitability late in the third quarter as we started scaling our service offerings. We are currently mobilizing a second site for this client, and the scope of work across both locations is now expected to increase by approximately 40% from original estimates. In addition, the client has indicated we should anticipate supporting additional sites as new locations come online. We remain in active dialogue with other leading hyperscalers as well, reflecting the strong demand for our integrated suite of capabilities. We continue to expand the reach of Aramark Nexus, recently announcing a significant multi-year engagement with a leading AI data center colocation provider to deliver premium hospitality services to workforce communities across multiple locations, including in Wyoming and Texas.

The initial site is scheduled to mobilize in the first half of our new fiscal year. Data center colocators develop, own, and operate facilities that supply the power, cooling, and infrastructure relied upon by technology companies. As these projects increase in scale and geographic reach, we believe that Nexus is uniquely positioned to help clients attract and retain skilled labor through differentiated hospitality solutions and premium amenities that enhance the employee experience and support project success. During the quarter, FSS US continued to build on its strong momentum as we were awarded several additional client wins, including our first collaboration within the University of Colorado system at Colorado Springs, Grand Canyon University, Ohio Wesleyan University, and Texas State University in collegiate hospitality.

Texas State and Florida State University athletics and sports, the Camden City School District in student nutrition, and Paul, Weiss in Workplace Experience as we expand our hospitality services into top-tier law firms. The international segment continued its strong growth trajectory, delivering another quarter of impressive results, with organic revenue increasing 11% to $1.5 billion. Performance was broad-based across geographies and sectors led by Spain, Canada, the U.K., and Germany. Concert and festival activity was especially strong, with many of our venues further benefiting from major touring artists adding performances across Europe. We also successfully served more than 300,000 fans during the multi-day Formula One Grand Prix in Barcelona, leveraging nearly 100 food and beverage locations across several event areas. Every country within the international portfolio delivered strong new business performance, underscoring the breadth of our service offerings and focus on excellence.

International was awarded nearly 200 client location accounts during the quarter, including continued expansion in the mining industry, providing remote hospitality services for Discovery Silver Mine in Canada, as well as Codelco's Chuquicamata and Antofagasta's Los Pelambres copper mines in Chile. We also concluded our Aramark International Chefs' Cup in Dublin, celebrating the very best of Aramark's culinary talent from around the world, following a year of in-country competitions. It was especially meaningful to see our host chefs from Ireland take top honors this year. On to global supply chain. Our global supply chain and GPO business maintained strong momentum, delivering more than $1.1 billion of annualized new spend globally fiscal year to date. This performance reflects the differentiation of our value proposition, market-leading procurement capabilities, and disciplined execution.

We believe Avendra International is well-positioned as a premier global hospitality procurement solution, with multinational clients increasingly consolidating spend with us across regions and continents, leveraging our scale, local expertise, and extensive global supply network. We're also seeing inflation trends that remain slightly more favorable than our original expectations across regions. Lastly, I would like to welcome Tony Spring as the newest member of Aramark's board of directors. As Chairman and CEO of Macy's, Tony brings deep executive leadership expertise and valuable strategic insights, particularly in integrating AI to enhance consumer experiences and leading a large, diverse workforce. Before handing the call over to Jim, I want to reiterate that we are extremely confident in our ability to continue building on our strong results.

We believe that the opportunities before us, from the outperformance of our core business to the expansion of Aramark Nexus and our global supply chain platform, position us well to capitalize on the substantial value-creating actions underway at the company. Once again, I would like to thank our teams around the globe for embodying our culture and values, which remain the foundation of who we are as a company. With that, Jim, I will turn the call over to you.