Aramark

Good morning and welcome to Aramark's third quarter fiscal 2025 earning 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 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 Gassel, Senior Vice President, Investor Relations and Corporate Development. Ms. Gassel, please proceed.

Thank you and welcome to Aramark's earnings conference call and webcast. This morning we will be hearing from our CEO, John Zomer, as well as 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 the 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. So with that, I will now turn the call over to John.

Thanks, Felice, and thanks to all of you for joining us today. This morning, Jim and I will review our third quarter performance, which reflected record revenue for any quarter in global FSS history, along with record profitability in the third quarter, resulting in adjusted EPS growth of nearly 30%. We will then turn to our expectations for the fiscal year, with just one quarter to go. Since our last earnings call, we've achieved a number of significant milestones for the company, including, first, we were recently awarded one of the largest new client wins ever in terms of revenue, specifically within sports and entertainment, in addition to winning several other high-profile accounts. Second, we maintained our unprecedented client retention rate, now exceeding 97% in both FSS US and international. And lastly, we continue to position ourselves to exit this fiscal year above our long-term revenue growth expectations. In the third quarter, Aramark's revenue grew to $4.6 billion, representing an increase of 6% with slight FX favorability. Organic revenue increased more than 5%, driven by base business growth and contribution from new client wins. Notably, this is the last quarter where the prior year facilities account exits affected revenue, as previously disclosed. Moving to the business segments. FSS-US organic revenue increased to $3.2 billion, or over 3% in the third quarter, led by strong performance and workplace experience and refreshments from higher participation rates, new client wins, and additional micro-market and vending services. Education, which benefited from additional volume in meal plans and a calendar shift within collegiate hospitality. Sports and entertainment, from higher per capita spending in Major League Baseball stadiums and sizable new business in corrections. This growth more than offset the facility's exits and less activity at arenas, primarily from the timing of concerts. Revenue growth would have been more than 2% higher if not for these factors. The U.S. segment is experiencing strong success from the team's strategic focus in driving vertical and cross-line of business opportunities. By leveraging the synergies across our diverse portfolio, we've unlocked additional revenue growth. A great example of this effort is the partnership between collegiate hospitality and sports and entertainment within collegiate sports. This upcoming college football season, we will be delivering exceptional food and beverage experiences now at 34 Division I stadiums, serving nearly 2 million fans during every home game weekend. Last week's announcement about our partnership with DAs as they moved to Las Vegas is very exciting, taking ballpark food service to the next level and represents one of the largest wins in the company's history. Our ability to have Will Goddara, the acclaimed restaurateur and author of Unreasonable Hospitality, on our team is groundbreaking. Aramark will be taking minority ownership interest in the A's franchise, deepening the relationship and underscoring a shared commitment to innovation, hospitality, and building an iconic fan destination in Las Vegas. Our new sales pipeline remains robust across the business. Most recently, we were selected by Howard University, a leader among historically black colleges and universities, to implement a transformative new campus vision called Howard University Hospitality. This collaboration marks a significant step in enhancing the campus experience through culinary innovation, cultural celebration, and community empowerment, and increases our growing HBCU presence as we now serve 15 of these historic academic institutions. Additional new business includes expanding our long-standing partnership with Citi in workplace experience, the Dorchester School District and Academy School District in student nutrition, as well as Marquette University in facilities. There is extraordinary momentum within FSS-US, and we expect to capitalize on the many opportunities ahead. Once again, international delivered double-digit organic revenue growth, increasing 10% in the third quarter to $1.4 billion. Every geography experienced growth, led by the UK, Chile, Canada, and Spain, driven by net new business and base business growth. Our team in the UK made health and safety history this quarter by becoming the first food service and hospitality company to win the prestigious Royal Society for the Prevention of Accidents, Sir George Earl Trophy, the society's highest honor, and a testament to our unwavering standards of excellence. Aramark UK also received the coveted Hotel and Catering Industry Sector Award, reflecting our strong leadership, innovative workforce, and a relentless focus on continuous improvement across client locations. We recently concluded our International Chef's Cup in Shanghai, China, which after a year of in-country competition, recognized our global culinary talent and celebrated the winning chefs from each country. Our Aramark chefs from Chile took top honors. In the third quarter, Aramark Chile also hosted its annual innovation summit, featuring some of the industry's most innovative solutions, providers, and thought leaders. Over 1,000 attendees across multiple industries experienced the latest innovation in hospitality within mining, healthcare, and facilities management, among others. More than 100 unique capabilities were presented this year, including nearly 50 technology-driven advancements focused on enhancing the client experience. Similar to the U.S., we continued our strong success and new business wins throughout the international portfolio, which included expanding our presence in Germany with the addition of West Falls Clinic and Healthcare, Samyuk Seoul Medical Center in Korea, and Valencia CF, a top football club in the Spanish La Liga League, with the team entering a new stadium, New Mistela, with capacity now exceeding 70,000 fans. Our seasoned international team has been a competitive advantage through aligning strategic priorities, partnering across borders, thoughtfully building scale and implementing best practices. Turning now to global supply chain. We're effectively managing the tariff environment and continue to believe our business model is well insulated from any heightened volatility. If there is a broader market change, we will implement sourcing alternatives where appropriate to benefit both our managed services business as well as GPO clients. Global inflation remains around 3% for us as we anticipated. We're focused on GPO expansion and are aggressively pursuing opportunities to build upon our double digit growth. This strategy includes investing in international geographies to increase our current footprint with multinational clients and others. We recently introduced additional AI driven technology in supply chain with expanded contract intelligence capabilities. Beyond client spend insights and back office efficiency tools, we now have automated agents that power next generation contract intelligence. These agents enable our sourcing team to instantly synthesize supplier requests, compare them to contract terms, assess compliance and opportunities, as well as generate responses within seconds, delivering unmanaged efficiency and visibility across our global spend and sourcing processes. Our supply chain optimization strategies have driven significant incremental value for our clients and the company. Lastly, we continue to advance our disciplined capital allocation strategies, which Jim will review in more detail, benefiting from a strong and flexible balance sheet designed to maximize shareholder returns. Our commitment remains focused on strategic investment in the business to drive and propel growth, ongoing debt repayment expecting to reach leverage around 3x by the end of this fiscal year and even lower thereafter, paying quarterly dividends, and utilizing excess cash generation to opportunistically repurchase Aramark shares. In summary, I'm proud of what we've achieved at the company and firmly believe there is tremendous value-creating potential in the business going forward. I'll now turn the call over to Jim.