Aramark

Good morning and welcome to the Airmark's first quarter 2024 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 Felice Cassell, Senior Vice President, Investor Relations and Corporate Development. Ms. Cassell, please proceed.

Thank you, and welcome to Aramark's first quarter fiscal 2024 earnings conference call and webcast. This morning, we will be hearing from our Chief Executive Officer, John Zilmer, as well as our Chief Financial Officer, Jim Tarangelo, who started in this role in January. We at Aramark are excited for Jim's appointment. 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 and DNA and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in this morning's press release as well as on our website. With that, I'll now turn the call over to John.

Good morning, and thanks for joining us. Before we get started, I first want to acknowledge our team in Chile, as they are dealing with devastating wildfires near Santiago. Although our operations are not affected, Scores of our employees have been impacted. We're working with our leadership team on the ground to ensure everyone's safety, and we'll be coordinating a thorough response with the appropriate relief organizations. Now to the quarter. I am really pleased with our great start to the new fiscal year, generating broad-based revenue and AOI growth, a solid margin improvement across the business. The strong performance resulted in record revenue for both the FSS U.S. and international segments. along with record first quarter profit in international. Our growth-focused strategies are working, and we're seeing favorable margin trends driven by prior year's new contract maturities, scale efficiencies in our purchasing, and tight SG&A cost management, and which has been helped by moderating inflation. We're extremely encouraged by what we are seeing in the business, and Jim will be reviewing in greater detail shortly. We're excited to have Jim as Aramark's newly appointed CFO, As you know, Jim is a 20-year veteran of the company with a proven track record, and he's worked closely with Tom over the past four years. His depth of knowledge about the company across the board and across borders, having served as CFO for an international segment, is a tremendous asset in his new role. Tom is also joining us today as he continues to serve as a trusted partner and strategic advisor to help ensure a seamless transition over the next few months. Tom leaves a strong legacy that is both broad and deep, focused on accelerating net new business, optimizing supply chain economics, containing above-unit costs, and instilling a value-creating mindset throughout the organization. Our top-line momentum continued in the first quarter with year-over-year organic revenue growth of 13%, which was driven by especially strong basic business growth, net new business, and pricing. A combination of higher sales volume and pricing contributed to favorable trends that are positively driving the top line. The U.S. segment increased organic revenue 10% compared to the prior year, starting with collegiate hospitality, which experienced strong performance in residential dining, retail, and catering, as well as improved pricing with the start of the academic year. We're having early success with our recently launched Keep to Excel health and wellness program, which is focused on providing student athletes with a balanced nutrition regimen to support peak competitive performance, personalized to each athlete's training schedule, goals, and biometrics. The dietary recommendation is fully integrated with our collegiate hospitality dining program and is easily accessible through a digital app. Sports and entertainment demonstrated strong per capita spending and high attendance levels from the NFL at NCAA regular seasons, along with more concert events. Our culinary team had great success partnering with well-known NFL mom Donna Kelsey during the holidays at Lincoln Financial Field and Arrowhead Stadium, adding the famous cookies she makes for her sons in support of the Eagles Autism Foundation and Kansas City-based Operation Breakthrough, a win for everyone involved. I also want to congratulate the Kansas City Chiefs for reaching this weekend's Super Bowl. And workplace experience benefited from the startup of significant new client wins and strong base business growth. as our services provide a compelling solution for employers, with revenue in this business now fully recovered from pre-COVID levels. International organic revenues increased 21% year over year. Performance was driven by consistently strong net new business, combined with an active events calendar in Europe, particularly in the UK and Germany, continued strength in education in Canada, and greater mining activity in Chile. New business wins at this early stage in the fiscal year have been broad-based across the company. This includes adding Tulane University and Cleve Hospitality, expanding our services for the European Central Bank in Germany, and more locally, being awarded the Philadelphia Zoo, among others. We believe our new business pipeline is robust, and we continue to see high retention levels across the client portfolio. Now let me turn to global supply chains. Our overall focus continues to be growing and leveraging spend to generate value for the enterprise, while also providing quality product and services to clients and our customers. We've seen inflation moderating over the past quarter, and while some areas of the globe are slower to show this trend, overall inflation is running better than originally expected, and the first quarter benefited from this tailwind in improved product costs. We believe the current supply chain landscape presents enormous opportunities, and we are actively seeking to take further advantage of this potential, working closely with our manufacturing and distribution partners. Last week, we released our Be Well, Do Well progress report, highlighting our commitments on responsible business practices, specifically on people, which includes enabling equity and well-being for millions. on the planet, including promoting planetary health on our path to net zero, and on governance by assuring robust ethics and compliance in everything we do. We're proud of our efforts in these areas and encourage you to review this in-depth update. Before turning the call over to Jim, I'd also like to welcome Brian DelGaudio as our newest member of Aramark's Board of Directors following our annual meeting last week. Brian is currently Executive Vice President and Chief Financial Officer of Republic Services, a company I know well from my time at Allied Waste. Brian's extensive executive experiences will provide valued perspectives, particularly in strategic planning and M&A. I want to also thank Art Winkleblack for his immense contributions to our board. Art announced his retirement and did not stand for reelection. On behalf of all of us at Aramark, we're extremely grateful for Art's service to the company. Jim?