Aramark Q1 2026 Earnings Report

Aramark EPS Results

• Actual EPS: $0.51
• Consensus EPS: $0.50
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.51

Aramark Revenue Results

• Actual Revenue: $4.83 billion
• Expected Revenue: $4.76 billion
• Beat/Miss: Beat by +$75.69 million
• YoY Revenue Growth: +6.10%

Aramark Announcement Details

• Quarter: Q1 2026
• Date: 2/10/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, February 10, 2026
• Conference Call Time: 8:30AM ET

Aramark (NYSE:ARMK) (NYSE: ARMK) is a global provider of food services and facilities management solutions. The company serves organizations across education, healthcare, business and industry, sports and leisure, corrections, and other institutional markets.

Its food services include dining operations, catering, concessions, hospitality, and culinary programs. Aramark also provides facilities services such as housekeeping, plant operations, maintenance, workplace services, and related support programs designed to help clients manage their physical environments.

Headquartered in Philadelphia, Aramark serves customers in the United States and internationally. The company traces its origins to 1936, when Davre Davidson established a vending business that later expanded into food and facilities services. Aramark has developed its business through organic growth and acquisitions and operates through a workforce serving institutions, businesses, and venues worldwide.

Aramark Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Aramark reported strong top-line momentum — Q1 organic revenue rose 5% to $4.8B (would be roughly +8% excluding the 53rd‑week calendar shift) and International organic revenue grew ~13%, supporting confidence in the 4%–5% net‑new target.
• Positive Sentiment: Management highlighted unusually high client retention and several large enterprise wins — including Penn Medicine, RWJBarnabas Health, Alabama DOC, university wins and mining/sports contracts — that should accelerate onboarding and revenue ramp.
• Positive Sentiment: Profitability and guidance remain solid — adjusted operating income was $263M (up 1% cc; ≈+11% ex-calendar shift), GAAP EPS $0.36 / adjusted EPS $0.51, and the company reaffirmed full‑year targets of 7%–9% organic revenue growth, AOI +12%–17%, adj EPS +20%–25%, and leverage below 3x.
• Neutral Sentiment: Cash and capital were mixed — a seasonal Q1 cash outflow and higher working capital/CapEx tied to new wins increased cash use, while the company bought back $30M of shares and repriced $2.4B of 2030 term loans to lower interest costs.
• Negative Sentiment: A timing headwind from the 53rd‑week calendar shift reduced Q1 revenue by about $125M (~3%) and AOI by ~$25M; inflation (food ~3%, with beef pressure) and mobilization/startup costs on some new international contracts remain risks.

Presentation

[Operator]

Good morning, and welcome to Aramark's Q1 Fiscal 2026 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 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 Felise Kissell, Senior Vice President, Investor Relations and Corporate Development. Ms. Kissell, please proceed.

[Felise Kissell, SVP of Investor Relations and Corporate Development at Aramark]

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.

[Felise Kissell, SVP of Investor Relations and Corporate Development at Aramark]

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 U.S. GAAP can be found in our press release and IR website. With that, I will now turn the call over to John.

[John Zillmer, CEO at Aramark]

Good morning, everyone, and welcome to our fiscal Q1 earnings call. Thank you for joining us. We're very pleased with the strong results delivered in the quarter, even when considering the calendar shift referenced in the earnings release. The company has significant business momentum, which Jim and I will share in greater detail. We believe we're well positioned to record record-breaking financial performance, driven by our growth mindset, operational discipline, and unwavering commitment to service. We're seeing multiple positive growth trends throughout the organization, including extraordinary client retention in both FSS U.S. and International, levels we've never seen before achieved at this point in the fiscal calendar, combined with significant new client wins already awarded to us early in the fiscal year, particularly in healthcare, education, and corrections within the U.S., and in sports, mining, and energy within international.

[John Zillmer, CEO at Aramark]

With substantial new business opportunities immediately upon us, giving us great confidence in reaching our net new target of 4%-5% in fiscal 2026. And lastly, adding new purchasing spend in our global supply chain GPO network within hospitality areas such as theme parks, hotels, and now cruise lines, in addition to benefiting from increased volume and scale occurring more broadly at the company. In the Q1, organic revenue for Aramark grew 5% to $4.8 billion and would have increased approximately 8% if not for the calendar shift. Growth resulted from both strong base business and net new business. We expect performance acceleration to occur as we successfully onboard a record level of new account wins, combined with maintaining the unprecedented retention levels I just mentioned.

[John Zillmer, CEO at Aramark]

Notably, this doesn't factor in sizable new client wins, which would drive our business momentum even further, and we're expecting those to begin this fiscal year. Moving to the business segments. FSS U.S. organic revenue increased to $3.4 billion or 2%. It's worth highlighting that the segment would have grown approximately 5% if not for the calendar shift, which primarily affected education. Of course, this growth will simply be recaptured in the Q2 as part of our results, ultimately having no impact on the full year. Top-line revenue growth drivers in the quarter were led by Workplace Experience, which delivered a 17th consecutive quarter of double-digit growth from launching significant new business wins, in addition to strong holiday catering activity. Refreshments mobilized new accounts at an accelerated rate and identifying additional growth opportunities from an integrated enterprise-wide strategy.

[John Zillmer, CEO at Aramark]

Healthcare experienced strong base business, specifically from vertical sales success and the expansion of multi-service offerings. Sports & Entertainment expanded our college football portfolio by providing a pro-level hospitality experience, where alcohol unit sales are now becoming comparable to NFL stadiums. Corrections continued to add statewide systems as our IN2WORK program is nationally recognized for the ability to provide pathways for education, career development, and rehabilitation. Just last week, we successfully launched operations at Penn Medicine, the largest contract win ever in the U.S., as you recall. As the fiscal year progresses, we'll continue to roll out services across Penn Medicine's nearly 4,000-bed, seven-hospital system, including patient and retail food service, environmental services, patient transportation, and an integrated call center to support operations.

[John Zillmer, CEO at Aramark]

I'm extremely excited to announce that our success in demonstrating Aramark's enterprise-wide capabilities and collaboration resulted in our newest healthcare win, RWJBarnabas Health, the largest, most comprehensive academic health system in New Jersey, covering eight counties, serving over five million people. RWJBarnabas Health has 18 primary locations with 5,700 beds. Anticipated to launch this summer, we will support their patients in retail dining, environmental services, and patient transport.

[John Zillmer, CEO at Aramark]

This represents one of the largest contracts awarded in healthcare in recent history. Other clients added to the portfolio include the University at Albany, where we began operations this semester to redefine the student dining experience through innovation, inclusivity, and community engagement, as well as a new statewide relationship with the Alabama Department of Corrections to deliver food services, integrating our proprietary AI platforms for menu planning and operational efficiency across 27 facilities.

[John Zillmer, CEO at Aramark]

As you can see, we're already off to a great start for the fiscal year in new account wins. We anticipate the U.S. growth trajectory to continue from strong new business, high retention rates, and increased volume growth. Once again, International delivered outstanding results, with revenue reaching $1.5 billion in the Q1, an increase of over 13% year-over-year on an organic revenue basis, with international revenue results largely unaffected by the calendar shift. International reported a 19th consecutive quarter of double-digit growth, maintained an exceptional client retention level, and every country contributed to revenue growth in the quarter, with the U.K., Spain, Germany, and Chile leading the way. New business in the Q1 within International included the Welsh Rugby Union, highlighted on the last earnings call.

[John Zillmer, CEO at Aramark]

In just a few days, we'll be serving 74,000 fans at Principality Stadium, the largest stadium in Wales and the fourth largest in the U.K., and the location for the upcoming highly attended Six Nations Rugby Championships. We were also awarded copper mining and state-owned giant Codelco and other meaningful mining contracts in Latin America. The international team achieved well over 100 core account wins in the Q1, providing us with the ability to establish additional business development and operational scale in the countries we serve. Now, for an update on global supply chain. Performance was strong in the quarter as the team is focused on growing and optimizing spend and offering superior products, services, economics, analytical insights, and sourcing solutions for our clients.

[John Zillmer, CEO at Aramark]

Inflation continues to actualize in the range we anticipated, with all global regions in line or favorable to our assumptions. We remain highly committed to GPO growth and are actively pursuing meaningful opportunities. Double-digit growth propelled well over $20 billion worth of contracted spend as we expand business in international regions, increase penetration in adjacent hospitality areas, and further scale through select and strategic acquisitions. AI-driven technology continues to differentiate our supply chain and GPO capabilities, delivering back-end efficiencies and actionable business insights. Tools such as mobile AI chatbots and AI-enhanced analytics provide GPO clients real-time visibility into their business. In our own internal supply chain operations, AI systems are accelerating back-end efficiency and productivity gains.

[John Zillmer, CEO at Aramark]

Before handing over the call to Jim, I want to reiterate our confidence in realizing the numerous growth opportunities ahead for the business this fiscal year, driven by the strategic and operational actions underway at the company. Our success comes from the teams throughout the organization and around the globe who show up every day with purpose, serving with integrity, solving problems with ingenuity, and delivering consistent excellence. Jim?

[Jim Tarangelo, CFO at Aramark]

Thanks, John, and good morning, everyone. We're off to a great start to fiscal 2026. The unprecedented levels of success with our annualized gross new wins and client retention last year have built the foundation for our strong outlook, and we believe we're well on track to deliver on our financial targets for 2026. More importantly, this momentum in the business has continued, and we are extremely excited about our growth prospects going forward. I'll now provide some insights into our Q1 financial performance before reviewing our expectations for the Q2, as well as for the overall fiscal year. Just to level set regarding the calendar shift, as a reminder, our Q4 fiscal 2025 had a 53rd or extra week. While this has no impact on our full year 2026 results, it does affect the cadence of quarterly comparisons.

[Jim Tarangelo, CFO at Aramark]

Due to the 53rd week in 2025, each quarter in 2026 starts and ends a week later than the comparable quarter last year, shifting strong activity and low activity weeks between reporting periods. With that context, as John mentioned, organic revenue growth in the Q1 was up 5%, on track with what we anticipated. As we discussed on our previous earnings calls, we expected the calendar shift to have a 3%-4% unfavorable impact on growth in the Q1, and that's exactly what occurred, as the estimated impact of this shift was approximately $125 million, or about 3% on revenue. Excluding the impact from the calendar shift, organic revenue growth in the quarter would have been up approximately 8%, at the high end of our long-term growth algorithm.

[Jim Tarangelo, CFO at Aramark]

Now, for the Q2, we have the opposite occurrence, and that a low activity week falls out of Q2 and is replaced with a strong activity week. We estimate the positive effect of this shift to be a benefit and a similar contribution of about 3% on revenue. Turning to profitability in the quarter, operating income was $218 million, up slightly versus the prior year. Adjusted Operating Income was $263 million, up 1% on a constant currency basis compared to the same period last year. The calendar shift reduced AOI by an estimated $25 million. AOI growth would have been approximately 11% without the calendar shift. The quarter benefited from higher revenue levels, the leveraging of technology capabilities, particularly in supply chain, and disciplined organizational cost management. Now to the business segments.

[Jim Tarangelo, CFO at Aramark]

The U.S. AOI had a 1% decline compared to the same period last year, with a calendar shift impacting growth by an estimated 10%. The U.S. AOI growth would have been approximately 9% without the calendar shift. The Workplace Experience group, refreshments and corrections, had strong performance in the quarter, driven by revenue drop-through, enhanced technology, driving efficiencies and supply chain productivity, and above unit cost management. The international segment had year-over-year AOI growth of 12% on a constant currency basis. Profitability growth was led by strong results in the U.K., Spain, and Chile, which was partially offset by some mobilization costs in a couple of countries from new business within sports and entertainment and higher ed, as well as a slight impact from the calendar shift.

[Jim Tarangelo, CFO at Aramark]

Moving to the remainder of the income statement, interest expense was $81 million, and the adjusted tax rate was approximately 25%. Our quarterly performance resulted in GAAP EPS of $0.36 and adjusted EPS of $0.51, with a calendar shift impacting adjusted EPS growth by approximately 13%. Regarding cash flow, as expected and consistent with our typical Q1 cadence, we saw a cash outflow that reflects the natural seasonality of the business. This increased compared to the prior year due to greater working capital use, driven by strong growth in the business. Capital expenditures were higher from the timing of commitments associated with sizable new business wins and certain client renewals. We continue to advance our capital allocation priorities by repurchasing another 30 million of Aramark shares as part of our share repurchase program.

[Jim Tarangelo, CFO at Aramark]

We also took steps to optimize our financial flexibility by proactively repricing $2.4 billion of 2030 term loans at lower interest rates. The repricing resulted in interest expense savings of 25 basis points. We will continue to pursue opportunities to further enhance our capital structure with a focus on shareholder value creation. At quarter end, the company had approximately $1.4 billion in cash availability. Turning to the outlook, our Q2 is progressing well and in line with our expectations. We believe revenue growth will continue to be strong as we onboard and roll out new business, including those recently commencing operations: DePaul University and the University at Albany in Collegiate Hospitality, and the University of Pennsylvania Health System, as John mentioned.

[Jim Tarangelo, CFO at Aramark]

Regarding profitability, we also expect AOI to benefit from our key operating levers, driven by strong supply chain efficiencies, effective cost discipline, and of course, higher revenue levels. With all that said, we anticipate performance in the Q2 to be right in line with current Wall Street expectations. We're also well on track and highly confident in achieving our full year guidance, particularly given the phenomenal trends we are seeing in the business.

[Jim Tarangelo, CFO at Aramark]

As a reminder, our full year outlook for fiscal 2026 is as follows: organic revenue growth of 7%-9%, AOI increasing 12%-17%, adjusted EPS growth of 20%-25%, and a leverage ratio below 3x. In summary, we are off to a strong start to the year as we continue to advance our growth strategies, fueled by extensive new business wins and outstanding client retention. We are energized about the opportunities ahead and remain highly focused on delivering exceptional top and bottom line performance. Thank you for your time this morning. John?

[John Zillmer, CEO at Aramark]

I want to personally thank our teams for maintaining virtually flawless client retention to date while continuing to drive exciting new business opportunities. Our efforts are centered on our ability to create a consistently strong and sustainable business focused on providing valued hospitality services to our clients. We expect to build upon our growth momentum throughout this fiscal year and beyond. I'm extremely excited about what's next to come. Operator, we'll now open the call for questions.

[Operator]

Thank you. We will now begin the question and answer session. If you have a question, please press star, then one, one on your touch tone phone. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. In order to accommodate participants in the question queue, please limit yourself to one question and one follow-up. To remove yourself from the queue, please press star one, one again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Ian Zaffino with Oppenheimer. Your line is open.

[Ian Zaffino, Managing Director and Senior Equity Research Analyst at Oppenheimer]

Hi. Great. Thank you very much. You know, it seems like you guys are winning a lot of, call it competitive business here, and you know, some larger competitors are included in that mix. Is this a trend we should expect here? And then maybe what do you kind of attribute the success to? Thanks.

[John Zillmer, CEO at Aramark]

Yeah, I would say we have enjoyed significant success, certainly over the course of the last year and going into 2026, in competitive new account wins. Some of those wins are very complex, large organizations that are part self-op and part served by our competitors. And we've been lucky enough to win two very large opportunities in Penn and RWJ, RWJBarnabas, that represent very significant both competitive wins and self-op conversions. So we see that trend continuing. We're positioned extraordinarily well to win in these situations. The capabilities that our teams have built, the systems that we can bring to bear that serve our clients well and can demonstrate to them in these sales processes are significant.

[John Zillmer, CEO at Aramark]

Each of these decisions is independent. All of these clients make judgments based on what's best for their needs, and we've been able to demonstrate a very unique capability and have been lucky enough to be selected in those opportunities. We're very pleased with the performance to date and lots of wind in our sails, if you will.

[Ian Zaffino, Managing Director and Senior Equity Research Analyst at Oppenheimer]

Okay, thanks. And then, you know, just as a follow-up, kind of like a multi-parter here. What I wanted to see is, or find out, are there any other large bidding opportunities upcoming or also rebidding that's happening? Any, any larger ones that are coming in? And that would be dovetailing into, you know, just retention in general. Like, what are you guys doing here that you've just continued to improve retention and seeing it at these exceptional levels? Thanks.

[John Zillmer, CEO at Aramark]

Yeah, thank you. Good question, and absolutely, we are focused every day on retention, and it is the number one driver of our ultimate success, when we can retain the clients that we serve, it's very important. And so the first part of the question with respect to new bidding opportunities, I'm not gonna comment on other large pursuits that we have ongoing at the present time, because they are competitive in nature, and I don't wanna signal our strategy to our competitors. There are a number of large opportunities that we are pursuing. I would say for the bidding cycle this season, we have a kind of a normalized bidding cycle. As you know, it's the time of year where K-12 and higher ed are going through their bid processes.

[John Zillmer, CEO at Aramark]

But we are achieving record high retention at a time in the fiscal year when normally we would have lost a little bit of business by now. So we're very pleased with the results to date. We're hyper-focused on it. It's a very important part of our compensation systems. People are very aware of how seriously we all take this as an organization. So, we're pleased, we're driving for success, and we wanna get better every day.

[Ian Zaffino, Managing Director and Senior Equity Research Analyst at Oppenheimer]

Okay, thank you very much. Great quarter.

[Operator]

Our next question comes from Neil Tyler with Rothschild & Co Redburn. Your line is open.

[Neil Tyler, Equity Research Analyst at Rothschild & Co Redburn]

Yeah, good morning. Thank you. Good morning, John, Jim. I just wanted to zoom in on a couple of the subsegments that you called out and ask for some help in sort of in framing their materiality. Specifically, within sports and leisure, the sort of the absolute relative scale of the college athletics sort of revenues, where they've sort of got to. If you can give us any help on how to think about those, 'cause that's something you've been sort of talking very enthusiastically about for a little while now. And similarly, in business and industry, the refreshment component seems to be sort of outpacing everything else.

[Neil Tyler, Equity Research Analyst at Rothschild & Co Redburn]

So just, you know, are these sort of, you know, stand out sufficient to drive the levels of growth on their own, or is there, you know, there's a lot going on elsewhere, presumably as well? So I wonder if you could help us there, then I've got a sort of just a quick follow-up on margins, if that's okay.

[John Zillmer, CEO at Aramark]

Sure. The revenue growth is very broad-based and wide-ranging across the lines of business and geography. So we're seeing, you know, very good, strong net new business performance, both in FSS US and in international. And it's not really driven by one group or another. When we highlight these, they're, you know, it's because they've had outstanding performance, but the other businesses are all performing well, as well. So, we feel very good about both the broad-based nature of it, and, you know, the success of the entire organization as we pursue these growth opportunities. With respect to the sports and entertainment business, we haven't really disclosed the breakdown between collegiate sports and our pro teams, and we don't intend to disclose that at this point.

[John Zillmer, CEO at Aramark]

I will say that, you know, when you think about the scale and the size of opportunities in collegiate athletics, it's very significant. We're certainly the largest player in that segment to date, and continue to pursue significant opportunities going forward. We may, at some point in the future, make the decision to disclose that information separately, but at present, we have not.

[Jim Tarangelo, CFO at Aramark]

Yeah, I'll just add, you asked about refreshments within, and that, that's a significant piece of our business and industry segment. And as we mentioned, that segment has grown double digits 17 quarters in a row, and it's both our B&I, underlying B&I business and our refreshment service business that is benefiting from very high retention levels, really strong new business. So they both are growing double digit and contributing to the success that we're seeing in that segment.

[Neil Tyler, Equity Research Analyst at Rothschild & Co Redburn]

Got it. Thank you. And then just if I can follow up on margins. Jim, I wonder if you could just sort of remind us or help sort of handhold a little bit on the puts and takes in the adjusted operating margin this quarter compared to what we should expect over the remainder of the year. Just to sort of make the major items, if that's okay. Thank you.

[Jim Tarangelo, CFO at Aramark]

... Yeah, sure. I think, you know, the first call, and as I mentioned in the script, was, you know, we have about $25 million of sort of costs associated with the fifty-third week in the Q1 that will unwind. So if you adjust for the impact, margins will be up about 20 basis points in Q1. We do have the last quarter relapsing the impact. We mentioned the GLP-1s and elevated medical costs during the last earnings call. We revamped that program, so that will no longer be a factor starting January. So those are two of the items I would point to in Q1, but it's primarily the fifty-third week impact that will unwind in the Q2. So when you look at the first half, it will be more normalized.

[Jim Tarangelo, CFO at Aramark]

Then for the full year, you know, on track for the 30-40 basis points that we've consistently delivered and talked about and embedded in the guidance that we provided in the beginning of the year. So, margins are falling in line with our expectations.

[Neil Tyler, Equity Research Analyst at Rothschild & Co Redburn]

That's perfect. Thank you very much. Very helpful.

[Operator]

Our next question comes from Leo Carrington with Citi. Your line is open.

[Leo Carrington, Equity Research Analyst at Citi]

Good morning. Thank you very much for taking my questions. If I could follow up, perhaps, on this net new growth you've been experiencing, what's your expectations in terms of the duration that this could persist, especially as it's driven more by very strong retention rather than acceleration in gross wins, as I understand it? I mean, at what point in the year do you have the confidence to perhaps exceed the target? And then secondly, can I ask the two questions on AI? I mean, firstly, how do you perceive the risks or opportunities around your revenues? For instance, what's your blue chip office clients reporting in terms of the importance of catering in the context of hiring and investing in the office environment?

[Leo Carrington, Equity Research Analyst at Citi]

Is there an opportunity in data centers for you? And then secondly, on the cost side, you referenced the back-end efficiencies and supply chain productivity. To what extent are your AI initiatives here paying off already? Thank you.

[John Zillmer, CEO at Aramark]

Yeah, that's a lot. So let's break it down into chunks and talk about AI first. And that is, let me break that into a couple different pieces. First of all, in terms of the back-office productivity and the impact on our costs, we're already seeing the impact of AI, particularly on supply chain, as we use it to both accelerate the data capture process as well as the negotiating process, if you will, for the services and the products that we buy. So it's already had a significant impact. And it's important to note that our investment in AI is really relatively small. It is part of our normal IT operating budget. We don't have any significant program investment or significant capital investment targeted towards AI implementation.

[John Zillmer, CEO at Aramark]

We're able to do this as part of our ongoing IT spend and driving significant performance improvement already through it. So we feel very confident in the use of AI, both in as it relates to our organization as well as the improved profitability. With respect to the business opportunity, you know, we see the evolution of jobs in the United States as one that will be productive for us. As you can tell from our revenue growth that's occurring in B&I and in Refreshment Services, we have lots of runway to grow the business. We serve customers in all kinds of locations, whether it's manufacturing, office, mining, remote camps, all of those kinds of the national parks.

[John Zillmer, CEO at Aramark]

The vast majority of our businesses will probably see an opportunity coming from the application of AI in their respective segments. And so we don't see it as a threat to the business. We see it as an opportunity, an opportunity for further growth. Obviously, if data centers are under construction, we would certainly have an opportunity to pursue and to bid on those kinds of opportunities. It's very analogous to our remote camps and mining businesses, if you will. So we see it as a long-term opportunity for the company, not a threat to our organization. And I think I'm old enough to probably be able to say this, and I remember the days when everybody thought robotics was gonna replace everybody in a plant, in an automotive plant.

[John Zillmer, CEO at Aramark]

Workforces adjust, processes adjust, companies adjust. We see it as a long-term opportunity, with a changing marketplace, and the jobs may change, but people will still be employed. So anyway, we see it as a long-term opportunity. Jim, do you want to take the other half of the question?

[Jim Tarangelo, CFO at Aramark]

Yeah, the other you talked about. I think you started with the run rate and opportunity and pipeline. So we're certainly running ahead of where we expect it to be in terms of net new, you know, well on track to deliver and perhaps exceed on the 4%-5%. So we're in a really strong position in terms of retention, as John mentioned earlier, just not the size and scale of retention risk that we may have at this point in the year. That coupled with a number of the large wins we talked about, and then on top of that, you know, very robust pipeline of opportunities, many active discussions and many of those pretty close to finalizing.

[Jim Tarangelo, CFO at Aramark]

We've kicked off the year in a very good spot, and we'll keep you posted over the next couple of months here.

[John Zillmer, CEO at Aramark]

... Yeah, and I'll just add one last comment on that. You know, we see the long-term growth algorithm in this company, you know, continuing to improve. As a result of our operational discipline, we're getting better and better every day with respect to both elements of the business, which is selling these new accounts and these new opportunities by applying great systems and processes to these client, these client organizations, as well as continued operational improvement, which leads to higher client retention. And so both elements are important. Our gross new wins last year were the highest we've ever had, and we continue to see very strong success in both new business wins and retention.

[Leo Carrington, Equity Research Analyst at Citi]

Thank you, John. Thank you, Kent.

[John Zillmer, CEO at Aramark]

Thank you.

[Operator]

Our next question comes from Jaafar Mestari with BNP Paribas. Your line is open.

[Jaafar Mestari, Equity Research Analyst at BNP Paribas]

Hi, good morning. First question, please, on just pricing and volumes. Curious if you could quantify the contribution to organic growth in the quarter, and maybe update your views for where like-like pricing and like-like volumes land for the full year, please.

[Jim Tarangelo, CFO at Aramark]

Sure. Yeah, so for Q1, you know, pricing essentially about 3%, you know, in line with inflation, in line with our expectations. Yeah, that's offset essentially by a 3%, as we talked about for the Fifty-third week, and the remainder of the growth coming from growth and volume for Q1. For the full year, I think we're still on track. We still anticipate pricing being about 3%. Volumes are 0.5%-1%, and then, you know, at this point, just at the middle of the range and perhaps better for net new would be about 4.5%.

[Jim Tarangelo, CFO at Aramark]

That would put you right in the middle of the guidance, and as we talked about, on track. We're encouraged by the trends we're seeing in net new and opportunities to exceed that.

[Jaafar Mestari, Equity Research Analyst at BNP Paribas]

Super. Thank you. And just a follow-up on cash flow. It's a normal cash burn quarter, but that normal seasonal outflow was $200 million more than last year. Can you perhaps detail some of the moving parts there? It looks like CapEx in the narrow sense, you buying facilities and building stuff was actually exactly in line, but then payments to clients were $14 million higher. And if that's correct, then is the balance of $160 million all a working capital outflow? Does it stay there? Does it revert?

[Jim Tarangelo, CFO at Aramark]

Yeah, if we, the payments to clients, we essentially view as, you know, capital investment in our clients. It's more of an accounting-

[Jaafar Mestari, Equity Research Analyst at BNP Paribas]

Sure.

[Jim Tarangelo, CFO at Aramark]

Distinction. So but yeah, for the Q1, CapEx was about 4.5% of revenues. So that is elevated, right? And that's a result of the success we've seen with our new business and a little weighted toward sports and higher education, which, as you know, that does require a higher percentage of capital. Some of the business, a higher proportion of the business we rolled out in Q1 was from those sectors. We do expect that to normalize. Historically, if you look, we're running about 3.5% capital spending as a percentage of revenue. By the end of the year, we should be back in that range. So Q1 was a little skewed with the capital.

[Jim Tarangelo, CFO at Aramark]

Then in terms of working capital, you know, as this business grows, right, we do have a use of working capital, seasonal use that was a little bit higher than the prior year. As growth accelerates, additional working capital goes in. So it's in line with our expectations and how we planned it out.

[Jaafar Mestari, Equity Research Analyst at BNP Paribas]

Thank you.

[Operator]

Our next question comes from Andrew Steinerman with JPMorgan. Your line is open.

[Andrew Steinerman, Managing Director and Senior Equity Research Analyst at JPMorgan]

Hi, it's Andrew. I just wanted to make sure I heard you correctly about the assumption for client retention in the fiscal 2026 guide. I think you said you're counting on maintaining the same high client retention percentage that you experienced in fiscal 2025. I just wanted to make sure that I heard that correctly. And then also the second question is, is there anything else that you want to add directionally about trends in the start of this current Q2, you know, outside of the calendar shift and the Penn Hospital start?

[Jim Tarangelo, CFO at Aramark]

Yeah, in terms of retention, as we said, Andrew, we're actually at a better spot in terms of retention this year than prior year. And as you know, last year was a record retention for the organization. So, it's in early days, but I think we're on track to be consistent or even better than what we delivered in fiscal 2025. And sorry, your question on trends?

[John Zillmer, CEO at Aramark]

Yeah. Nothing other than what we've already modeled, I think is probably fair, Andrew. Nothing different. We, you know, obviously have startup of new accounts, but nothing that's really impacting the Q2 differently than we've already disclosed.

[Andrew Steinerman, Managing Director and Senior Equity Research Analyst at JPMorgan]

Okay. Thank you.

[Operator]

Next question comes from Andrew Wittmann with Baird. Your line is open.

[Andrew Wittmann, Managing Director and Senior Research Analyst at Baird]

Okay. So there was a comment in your prepared remarks about inflation. I think you guys said that, it was running, kind of in line or maybe slightly better than you'd anticipated. John, maybe I thought you could elaborate on that a little bit more, maybe to, decompose it into maybe food and supplies prices versus the, the labor, that you're seeing out there. And, if it is running better, I was just wondering if it's, if it's just kind of immaterially better or if there's an offset somewhere else in the P&L, that, you know, kind of keeps the, the profit guidance where it is.

[John Zillmer, CEO at Aramark]

Yeah, I would, thanks, Andrew. I would say it's, you know, it's roughly 3% on a food basis, and that cuts across multiple geographies, a little higher in one and a little lower in another. So it's in the aggregate, it's right in that range of what we anticipated. We still see some elevated risk on certain commodities, but everything else, you know, kind of coming in line. Obviously, you know, the big commodity in the U.S. is beef, which continues to, demand continues to outstrip supply, so pricing is fairly high. But, we're able to mitigate that, you know, through the menu design and the like. So we think that inflation number is very consistent with what we expected and what we're seeing unfold.

[John Zillmer, CEO at Aramark]

From a labor cost perspective, I would say it's still, probably in that range as well. You know, different, you know, different across geographies in various countries, but in the aggregate, again, in that range. So we expect the overall impact of inflation to be about 3%, to offset it through appropriate pricing strategies in market and various other changes. So really nothing, extraordinary in the inflation environment for us at this stage.

[Andrew Wittmann, Managing Director and Senior Research Analyst at Baird]

Okay, cool. That's my only question. Thank you very much.

[John Zillmer, CEO at Aramark]

Thanks, Andrew.

[Operator]

Our next question comes from Joshua Chan with UBS. Your line is open.

[Joshua Chan, Equity Research Analyst at UBS]

Hi, good morning, John and Jim. I guess you mentioned the unprecedented retention trend, so I'm just wondering what is changing or improving this year, and how does the retention pipeline, if you will, or the defense pipeline kind of look for the rest of the year?

[John Zillmer, CEO at Aramark]

Yeah, it's, you know, I would say, again, that, you know, we, we are just extraordinarily focused, on retention as being a key driver of our success, and so we continue to get better and better at it, at it. We continue to have very high expectations for our teams, and frankly, their performance has been, has been extraordinary. And, so it's, it's a combination of a lot of different things, but mostly it's about performance, and it's about delivering the services that our clients expect, and, and meeting their expectations. So, you know, with respect to the pipeline, we have a fairly normalized year, nothing, you know, nothing very large on the horizon in terms of retention risks. I would say, you know, it's just a, it's a fairly normal year.

[Joshua Chan, Equity Research Analyst at UBS]

Okay, great. Thanks for the color there. And, are you seeing any change in terms of customer spend, you know, in average spend per transaction? Is that trend continuing to move up, or kind of what you're seeing there?

[John Zillmer, CEO at Aramark]

Yeah, we continue to see broad consumer support, you know, particularly if you break down the consumer transactions in sports and entertainment, we're seeing very good per capita spending, very good attendance levels in the various leagues, obviously somewhat driven by team performance, but overall attendance in the NBA and NHL at good levels. And you know, so I think we feel very good about the trends that exist within the business. We're not seeing any consumer pushback or any strong concern with respect to the economic environment. Overall, I'd say it's steady as she goes.

[Joshua Chan, Equity Research Analyst at UBS]

Great. That's good to hear. Thanks for the color.

[John Zillmer, CEO at Aramark]

Thank you.

[Operator]

Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open.

[Yehuda Silverman, Equity Research Analyst at Morgan Stanley]

Hi, good morning. This is Yehuda Silverman on for Toni. Just had a quick question or two on the sports segment. So we wanted to talk a little bit about the, the World Cup and, and if there's any update on how this contract might work. We've heard that could be one contract for all the games spread across the country. We're wondering if, A, there's been an update in the selection process and how that's gone, and, and B, if it really is one contract across the many different stadiums, how that might play out in terms of the stadiums that are operated by different providers at the moment.

[John Zillmer, CEO at Aramark]

Yeah, that's not. I'm not sure where you're getting that, but we have the contract to operate the games in the stadiums we operate, and that's true of the other, our competitors as well. So, we will have the games at Lincoln Financial Field, at NRG Stadium in Houston and in Kansas City, we'll have the games there. So there isn't one single contract. There isn't one operator. The services are being provided by the company that's under contract to operate that stadium. So, you know, we anticipate having positive revenue trends from the World Cup, but also keep in mind that those stadiums, while they're being used by the World Cup, can't be used for concert activity and other events.

[John Zillmer, CEO at Aramark]

All in all, we see it as being relatively revenue and profit neutral to us, not a significant upside or downside, to our projected financial results for the year.

[Yehuda Silverman, Equity Research Analyst at Morgan Stanley]

Got it. Thank you for clarifying. And then just one quick follow-up also on the sports segment. Similarly, I guess, coming up in Q2, there's potential this tailwind from March Madness being held in a couple of stadiums that weren't held previously. Curious if it's a similar scenario where it might be neutral to, as they can't have other entertainment or, like, sports events at the stadium at the same time? And alternatively, is there an expected headwind from the NFL playoffs seeing less home games this year than last, or minor, just like the MLB?

[John Zillmer, CEO at Aramark]

Yeah, no, I would, I would say, first of all, anything that's scheduled in our stadiums has been on the calendar for quite some time. So if the NCAA Final Four or Sweet Sixteen or whatever is in one of our stadiums, we'll have the opportunity to serve those events, and that would have already been baked into our expectations and into our planning process, because we know that those things are scheduled well in advance. So, it doesn't represent a real change to us in terms of our overall planning process.

[John Zillmer, CEO at Aramark]

And, you know, we were lucky enough to have some teams in the NFL playoffs, and it was a good playoff season, and we're very pleased to say that our clients in Seattle, the Seattle Seahawks, won the Super Bowl. We served their facilities needs there in the stadium in Seattle, and we're very proud to be of service to them. But I would say overall, our expectations for the sports year are pretty consistent with our plans, and really no expectations for either windfalls or downside.

[Jim Tarangelo, CFO at Aramark]

Yeah, I'll just add, in terms of, you know, Q1, we did have less nine or so Major League MLB games, right? We had the Phillies in the prior year. So that had some headwinds in Q1, and we returned to a more normalized growth rate in Q2, as John just mentioned.

[Yehuda Silverman, Equity Research Analyst at Morgan Stanley]

Great. Thank you.

[Operator]

Our next question comes from Jasper Bibb with Truist Securities. Your line is open.

[Jasper Bibb, VP and Senior Equity Research Analyst at Truist Securities]

Hey, good morning, everyone. A couple from me on the RWJBarnabas contract. I guess, should we think about this as comparable in size to the Penn Medicine win? And I think I heard launching this summer. How should we think about the timeline for that hitting a mature run rate? Is that gonna be more of a fiscal 2027 driver, or is the annual contribution for 2026 gonna be material, too?

[John Zillmer, CEO at Aramark]

Yeah, I think it will be a staged opening that will begin this summer. I think we're still working to finalize the actual opening schedules, if you will. So there will be significant impact in 2026. We anticipate beginning to serve them in June, and then throughout the balance of the summer, should be transitioning. But that schedule is still yet to be determined. Yeah, we're very proud to have been selected to operate RWJBarnabas Health. It's a terrific win. And as you know, the system is actually larger than Penn Medicine's, and ultimately, the potential revenues are likely to be as strong as Penn.

[John Zillmer, CEO at Aramark]

So, you know, feel very good about it, and there will be impact in 2026, and we'll know more here over the next few weeks as we develop the implementation schedule.

[Jasper Bibb, VP and Senior Equity Research Analyst at Truist Securities]

Great. Thanks for that. And then the Europe growth is really strong again this quarter. It's been a really nice couple of years for that business. Just hoping we could step back and talk about, the drivers of your growth in Europe, you know, where you see more opportunity there, and, what the pipeline looks like for that business over the balance of the year.

[John Zillmer, CEO at Aramark]

Yeah, I can't say I can't be enthusiastic. I'm sitting here looking for superlatives because they've just done an extraordinary job of building that business over the last several years. They've been hyper-focused on growth, and frankly, it's been a result of improving performance and demonstrating to our clients that we're the company that can deliver to them across a range of countries and a range of geographies. We've been committed to that growth. We've invested in sales, resources, processes and systems, and frankly, in leadership. So we've got great teams on the ground really focused on building their organizations and enterprises, and they've been able to demonstrate it here now over several years running, and we have very high expectations for them this year as well. So, I can't say enough about them.

[John Zillmer, CEO at Aramark]

I think, you know, really, really excited by the work that they've done and their performance to date, and we believe that success will continue.

[Jasper Bibb, VP and Senior Equity Research Analyst at Truist Securities]

Great. Thank you for taking the question.

[Operator]

Our last question comes from Stephanie Moore with Jefferies. Your line is open.

[Stephanie Moore, SVP and Senior Equity Research Analyst at Jefferies]

Hi, good morning. Thank you. Actually, my first question is just a follow-up to maybe the prior question and the prior discussion here. Could you talk a little bit about some of these larger platform wins? Is this a change in strategy, a change in go-to-market strategy, or is it just timing of some of these wins? But it does seem like you're seeing some larger wins, unless I'm missing something here. So just wanted to understand if there's a strategic shift happening behind the scenes, and I have a follow-up as well.

[John Zillmer, CEO at Aramark]

Sure. Well, first of all, I would say, yes, there is a strategic shift, and it's really on the part of our clients as they begin to recognize the need to both systemize their operations in order to take advantage of cost synergies and operating synergies. And you know, a great example of that is Penn Medicine. Obviously, they've, they had multiple service providers, and they were also self-operating a lot of their, a lot of their business. Their CEO made a very strategic decision to go ahead and consolidate and systemize, so that they could capture the cost savings and the synergies, and ultimately to reduce costs to patients and to control expenses for the medical institution. So you're seeing more and more of that in healthcare systems.

[John Zillmer, CEO at Aramark]

Obviously, we are very proud of the services we provide to Baylor Scott & White in Texas, who are really one of the first organizations to apply the systematic approach or the system-wide approach to this. Very proud to be selected to serve Robert Wood Johnson Barnabas as they apply that same strategy. You know, my guess is, and my belief is that that more and more organizations, particularly in healthcare, will continue to pursue that as they recognize the need for cost containment and control. In a world of declining reimbursements from the federal government, they need to, they need to operate more efficiently. And we've got the tools and processes and systems in place to enable them to do that in a consolidated way. So I think there is a strategy shift.

[John Zillmer, CEO at Aramark]

It's really on the part of our clients and customers, and their philosophical change. We've had great success, and we believe we'll continue to enjoy outsized results as a result of our ability to go ahead and apply those systems and processes to that strategy.

[Stephanie Moore, SVP and Senior Equity Research Analyst at Jefferies]

And then just as a follow-up, I wanted to touch on your, your timing to contract profitability or, or breakevenness, however you wanna kind of speak to it. Has there been any change in terms of the timing that new contracts are able to kinda start contributing at a faster pace, just based on some of the operational improvements and investments, as you just noted, specifically? Any changes, especially as we think about maybe some of these larger contracts as well? Thank you.

[Jim Tarangelo, CFO at Aramark]

Yeah, some of the larger contract wins this year, as John just mentioned, within healthcare, they're just typically less capital. While they're large and complex, unlike a large sports and entertainment opening, there's just less capital required. And the contractual structure in healthcare is often significantly more geared toward cost-plus or cost-reimbursable, which helps mitigate some of the large startup costs. So, I think you're right. This year, with some of those large contracts rolling out, the startup costs may be... The ramp-up to profitability is a little faster, and that was embedded in the plan and the guidance that we set out at the beginning of the year.

[Stephanie Moore, SVP and Senior Equity Research Analyst at Jefferies]

Thank you, everyone.

[John Zillmer, CEO at Aramark]

Thank you.

[Operator]

I will now turn the call back over to Mr. Zillmer for closing remarks.

[John Zillmer, CEO at Aramark]

Terrific. Thank you very much. And thank you, all of you, for your support of the company and your questions. Always happy to, you know, to provide as much information as we possibly can. We like to be as transparent as possible and make this easy. I wanna thank the Aramark team for their extraordinary devotion and commitment to customer service. These financial results that we're enjoying now and that we'll enjoy in the future are a direct result of your efforts. Aramark team, thank you, and we look forward to talking to you again soon. Take care.

[Operator]

Thank you for participating. This concludes today's conference. You may now disconnect and have a wonderful day.

Participants

Executives

• Felise Kissell, SVP of Investor Relations and Corporate Development
• John Zillmer, CEO
• Jim Tarangelo, CFO

Analysts

• Ian Zaffino, Managing Director and Senior Equity Research Analyst at Oppenheimer
• Neil Tyler, Equity Research Analyst at Rothschild & Co Redburn
• Leo Carrington, Equity Research Analyst at Citi
• Jaafar Mestari, Equity Research Analyst at BNP Paribas
• Andrew Steinerman, Managing Director and Senior Equity Research Analyst at JPMorgan
• Andrew Wittmann, Managing Director and Senior Research Analyst at Baird
• Joshua Chan, Equity Research Analyst at UBS
• Yehuda Silverman, Equity Research Analyst at Morgan Stanley
• Jasper Bibb, VP and Senior Equity Research Analyst at Truist Securities
• Stephanie Moore, SVP and Senior Equity Research Analyst at Jefferies