Aramark

Good morning and welcome to Aramark's first quarter fiscal 2023 earnings results conference call. My name is Norma and I'll be your operator for today's call. At this time, I would like to inform you that 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 Felice Cassell, Vice President, Investor Relations and Corporate Development. Ms. Cassell, please proceed.

Thank you and welcome to Aramark's first quarter fiscal 2023 earnings conference call and webcast. Hope you all are doing well. This morning we will be hearing from our Chief Executive Officer, John Zilmer, as well as our Chief Financial Officer, Tom Androff. As a reminder, our notice regarding forward-looking statements is included in our press release this morning, which can be found on our website. 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 our other FCC filings. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to US GAAP can be found in this morning's press release as well as on our website. So with that, I will now turn the call over to John.

Thanks, Felice. Thank you all for joining us today and I hope your year is off to a great start. I'm pleased to share that Aramark began fiscal 23 with strong performance driven by a continued commitment to provide exceptional service to clients. I am incredibly proud of our teams across the globe who demonstrate each and every day what makes Aramark so remarkable. This morning, Tom and I will review our fiscal first quarter results as well as the key initiatives currently underway that we believe will drive continued success. As announced just last week, we reached an agreement to sell our non-controlling 50% equity stake in AIM Services for $535 million. The proceeds are intended to be used for accelerated debt repayment, and we expect that monetizing this interest will further enhance operating focus, strengthen our balance sheet, and be accretive to EPS. The sale to Mitsui, our partner in the joint venture since it was established decades ago to provide food services in Japan, is expected to close at the beginning of our fiscal third quarter, subject to customary closing conditions and approvals. We will continue to identify these types of opportunities, specifically in areas where we have a non-controlling interest to enhance our ongoing focus on delivering profitable growth and shareholder value. Operationally, we remain focused on managing our cost structure and maximizing unit efficiencies, coupled with pricing to counter persistent inflation. We continue to work closely with clients to tailor solutions that meet their needs and leveraging our extensive supply chain network and are constantly monitoring evolving market conditions for opportunities to benefit from improving pricing and product availability trends. Our results in the quarter built on both the top and bottom line momentum we've established over the past couple of years. Organic revenue grew 18% and adjusted operating income increased 47% on a constant currency basis, resulting in more than 100 basis points of improvement to AOI margin. Within the US food and facilities segment, organic revenue also increased 18% compared to the first quarter last year, driven by strong performance from all sectors. Education experienced increased student enrollments and improved presence of staff and more events on campuses and collegiate hospitality, partially offset by the end of universal government sponsored programs in K through 12 student nutrition. Sports, leisure, and corrections continued its strong growth trajectory again this quarter, primarily from increased event pricing and per capita spending, as well as a more robust event calendar. Corrections particularly benefited from a significant level of new business growth. Workplace experience group growth levels led the way with a year-over-year increase of more than 40%, driven by client pricing, higher meal participation rates, and greater in-person activity, in addition to solid new business openings. Healthcare Plus continued its exceptional performance driven by ongoing base business growth from vertical sales and greater visitor presence that was complemented by a substantial step up in net new business compared to historical levels. And facilities and other grew as a result of expanded services and frequency, particularly from large client accounts, along with a strong level of new business startups. International organic revenue is higher by 28% year-over-year, driven by consistent net new business performance, pricing, and ongoing base business volume recovery, particularly within the BNI portfolio, where we experienced greater lunchtime participation rates and a return of catering activity for special events, including holiday celebrations and networking gatherings. Organic revenue in our uniformed services segment increased 7% compared to the first quarter last year, due to solid new business sales and retention rates, as well as the implementation of additional pricing strategies. Our U.S. and Canadian operations experience strong recurring rentals and double-digit growth in adjacency services. We continue to make progress on the uniform spin and still expect completion in the second half of this fiscal year. Within the last few weeks, Kim added the final pieces to her executive team, complementing the leaders already in place, including a chief technology officer. We have identified the individuals who we expect to serve as the Board of Directors for Uniformed Services after the SPIN is complete and who will be available to act in an advisory capacity throughout the separation process. We are extremely pleased with the skill set and industry expertise that we believe will make a significant strategic impact on the business. Last week, we released a comprehensive update on our ESG platform. The Be Well, Do Well progress report is the latest chapter documenting our ESG journey, and in it, we highlight our ongoing commitment to diversity initiatives, community building, climate-related actions, food and worker safety, and the progress we've made in responsible sourcing and waste reduction. MSCI recently gave us an A rating, and Newsweek recognized us as one of America's most responsible companies. We continue to drive the importance of ESG metrics reflected by the inclusion of an ESG scorecard in our fiscal 23 annual incentive plan for our senior leadership team. I'm proud of the significant measures we've taken to make a positive impact on people and the planet and the efforts underway focused on making a lasting impact. Before turning it over to Tom, I would like to highlight the recent election of Kevin Wills to Aramark's Board of Directors at our annual meeting on Friday. Kevin's impressive background and accomplishments are an excellent addition to our board and align with the company in strategic vision. I also want to thank board member Dan Heinrich for his numerous contributions and partnership. It is our intent that Dan will move over to serve on the board of directors for uniformed services upon the spin. I will now pass it over to Tom for a detailed financial review of the business.