Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• $Aramark(ARMK-W)$ (NYSE:ARMK) achieved record global FSS revenue for any quarter in its history, indicating strong top-line growth.
• The company reported double-digit AOI and adjusted EPS growth in the first quarter, showcasing profitability improvements.
• Aramark (NYSE:ARMK) successfully initiated an oversubscribed debt refinancing to extend maturities, enhancing financial flexibility.
• The company experienced significant international organic revenue growth, particularly in the UK, Canada, Chile, and Ireland.
• Aramark (NYSE:ARMK) expanded its global supply chain footprint with the acquisition of Quantum Cost Consultancy Group, increasing purchasing scale.

Negative Points

• The facilities exit had about a 2% negative impact on the company's top-line results.
• Inflation remains a concern, with global inflation levels expected to be in the 2% to 3% range.
• The international segment faced a 20 basis points headwind due to severe flooding in the Valencia region of Spain.
• The company anticipates a potential 30 basis point increase in food costs due to tariffs, although mitigation strategies are in place.
• Aramark (NYSE:ARMK) experienced a cash outflow in the first quarter due to the natural seasonality of the business, particularly in collegiate hospitality.

Q & A Highlights

• Warning! GuruFocus has detected 9 Warning Sign with ARMK.

Q: Can you provide more details about the athletics business at Nebraska and its significance? A: John Zillmer, CEO: While it's not ours to announce yet, we're excited about the opportunity and expect confirmation soon. The NCAA athletics business is growing rapidly for us, with Arizona State recently awarding us their athletics business as well.

Q: How much of a drag did the facility exits have on the top line, and how are you preparing for inflation and tariffs? A: James Tarangelo, CFO: The facility exits impacted results by about 2%. Inflation is running at 2% to 3%, and tariffs could increase costs by roughly 30 basis points. However, 85% of our products are sourced locally, minimizing the impact.

Q: Could you elaborate on the expected acceleration to double-digit growth in the second half of the year? A: James Tarangelo, CFO: The acceleration will be driven by lapping facility exits, onboarding new business, and the 53rd week, which contributes about 2% to annual growth. We have good visibility into these factors for the second half.

Q: How is the outsourcing trend progressing, and do you expect it to continue? A: John Zillmer, CEO: The level of outsourcing remains similar to last year, with strong activity across various industries and geographies. We see it as a continued tailwind for this year and into 2026.

Q: Can you discuss the impact of the Quantum acquisition on revenue and profits? A: James Tarangelo, CFO: The Quantum acquisition will not significantly impact revenue in the first year due to the nature of GPOs. However, it will be accretive to earnings and improve margins after the first year by enhancing our purchasing scale.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.