Aramark (ARMK) 17 Nov 202020 Q4 Earnings call transcript

Good morning and welcome to Aramark's Fourth Quarter and Full Year 2020 Earnings Results Conference Call. My name is Victor and I will 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 remarks. I will now turn the call over to Felise Kissell, Vice President, Investor Relations and Corporate Affairs. Ms. proceed. please Kissell,

This welcome well XXXX and those fourth and Tom Officer, around quarter are from be Thank Chief Ondrof. our our conference to Chief call year Executive you. those with earnings well, Zillmer; hope we and fiscal will doing hearing as you John along Aramark's morning, as webcast. listening Officer, I Financial

on in our reminder, notice can regarding our included press our is which release a As be statements found website. morning, this forward-looking

call, expressed this making of Form filings. XX-K that as our During risk important will we comments other the MD&A our differ and result in and factors, are be of may Annual results and factors, Report materially forward-looking. discussed sections SEC including various a or on Actual risks, uncertainties from those those implied other

as we A measures. release, can found non-GAAP in will this U.S. reconciliation of well our certain be press GAAP Additionally, items to be on financial morning's website. discussing these as

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companies & and as regulatory driven restrictions. well Business Industry client decisions with measured return-to-work as additional locations their opened corporate throughout by largely strategies local the While remain in culture need fourth quarter,

we As stated, recovery have to previously a longer B&I expect tailwind.

enhanced reopened. locations. solutions in resilience as We other as showed and comprehensive services higher as as have Facilities Performance to frequent clients rates and requested more capture capabilities locations drive our in developed that innovative offerings delivery include well

top pursuing extensive safety are hygienic We as area opportunities in cross-selling this is priority. a

of to and base increased began performance Healthcare restrictions with remains Our strengthening elective as business signs visitor stable ease. procedures

we significant healthcare systems business a self-op benefits evaluate anticipate forward, of Going new as pipeline the conversion.

government-imposed including strong including Europe shutdowns our months leveraging and efficient sales to in in The response XXX PP&E. multiple members sanitization; include we particularly XXX just manage We platform in and increasing several momentum sales already integrating continues as improvement across and sales Healthcare win growth. and the restrictions. invested new eased quarterly and further the and gradually by experiences to addition are implement again, experienced quarter, international through in capitalize as Rest add regions in growth. summer in services, in improving all to healthcare to new geography for of tenacity emerged added over sales China Uniforms has manufacturing team's that China and restrictions delivering our first high-demand at adjacency quarter, increased fiscal business expanding as year force The team remains in sales sequential in clients value-enhancing trends committed Operations an Korea client over the International opportunities accounting reported with another of safety currently capabilities the balanced, our resources. industry-specific stages to trends efficient remained undertaken. interest exhibited ahead. are system. plans continued with led government-imposed and with Rentals in sold as adjacency depending of ABS the various demonstrated services, past This Mexico. a route course yet Chile, diverse additional particularly a double-digit the on as we resolve. aligned revenue that by ability improving XXXX; fully led international mining reflected past well team in meaningful quarter World in million on strategies focus. these create $XX to the Over to opportunities resilience business the

reductions additional enhanced and we improved on converted Over quarter, capabilities. expect drive this by service analytics markets and year, efficiency. and largely productivity, to the efficiencies course strategies, pricing In operations creating the optimized to supply the through data to pools chain, later various leverage spend remaining we our of continue this platform be cost

strengthening ongoing collaboration, strategic to in supplier on most -- as deepening product just and consumer product satisfaction. and culinary not and partnerships is Our deliver areas to also improvements ensure productivity, targeted such focus but optimization program client our

unprecedented at remain State conversion just As to committed a we recently to period, through Such Higher most the to announced Sacramento is prominent highly building self-op outsource we manage progress that reflected Aramark. in growth intention Aramark's its Education effectively this paradigm. University, business

unique our our adapted offerings QuickEats with through we autonomous sector that driven a feedback options, just by robotic at also and capabilities, Sports strong be has or Technology grab Facilities, and advance utilizes pace In AIWX and cashless new Workplace launched place have & new real-time create innovation, Entertainment success. particularly, with clients, environment. food and building will been concept, deployed wireless delivery the platforms and serve digital payment inputs as experiences for opportunities our and performance. new that B&I in Aramark or to enhanced rapid ahead, taking serve business clients. from in such Intelligent particularly, leveraging contact-free operational occupant initial locations experiences that new we growth applications developed our to convenience go, safer Looking improve systems create in to to award-winning approaches building seamless Whether Experience environments technology Connect, sensors include

confidence focused in platform hygiene create of protocols. safety that We ongoing strict locations, proprietary client while maintaining our also applying reopening strategies on and are EverSafe and management

We reflect services our the scale to to these needs of appropriate ever-changing as expect clients.

in sales of Denise strength bench she where early O'Brien to and will enablement with businesses the continue to supporting strategies, and as that organizational in the roles. includes add previously to November spent also Corporate Aramark Aramark's with lead sales drive We support growth recently from to analytics. appointment partner talent, various most XX Operations account Sales large acquisition, priorities, Field years leadership capacities sales, Denise client as including well functional

to the and members I despite support the community acknowledge of COVID-XX. call over Tom, who continue to our challenges dedicated I turn want team efforts our to philanthropic Before

not donate grants and able teams public traditional day our to our to schools provided mobilized fall, and made and food of Aramark security for commitment our our Community I'm community to supplies this in we it partners projects. impact While health partnership this to communities the League. positive were that and Building in-person complements the hold pandemic local Urban relief, our extremely and with deepening other proud back-to-school

such In financial will business. Partners, through help careers active-duty with announced their commendable to one-on-one week call be find the national for nonprofit addition, of post-military I a mentoring, honor last detailed Corporate and review with collaboration over to American career we Tom online a now turn to spouses an veterans cause. networking affiliated It's a returning the the advice. and organization

Thanks good John and morning.

operations. want how dedication reminder, am to the of the of Their commitment service. a company's is begin, around continued say to a testament John's Aramark's XXrd to true included customers we also XXXX teams I fourth sentiment and a fiscal year of Before quarter as our clients our world. and echo Also proud I and week

comments to my purposes, are otherwise noted. based comparability XX-week on basis For a unless XX-week

fourth consistent subsequent with performance Our articulated the the was expectations call fireside chat on and we quarter earnings last webcast.

by obviously improvement COVID-XX, solid While the our quarter. results to compared third impacted showed remained revenue

million to continue and business paid the credit $XXX we during quarter. cash drop-through end, generating AOI while That subsequent -- quarter the reopening invest interest revenue in quarter flow rate leading addition cash at costs our compromising of without during we the disciplined Consequently cash XX% corresponding $X.X and growth-oriented cash the controlled will savings. company's an In growth-related facility. control free we of create healthy decline. could expense $XXX a quarter of end again future we availability revolving leaving of investments Strong resulted incur resources flow the to of billion the million to at expenses, down the management fourth certain in

revenue most on reopenings program company, again decrease of XX% prior an navigating in prior the for serving growth adjacency as and reflecting This quarter versus of heightened a year-over-year China long-term job notably well focused and operating offerings. quarter, Food reflecting from year-over-year compared company expense reward a versus once demand. in organic XX% previous a XX% taken as support versus in third had labor revenue prior trends in the the decline of universal government-sponsored compensation meal April field certain all Total with effectively lower was the well and fourth and prior as higher stages revenue by was actions resulting $X.XX loss revenue $X.X largely quarter above-unit activity to decreased other in mentioned, product, end-unit included income compared year by the loss segments client university improvement company the quarter the value organization challenging revolver organic K-XX. manage direct drop-through as to Adjusted compared adjusted education, as to the improving organic quarter. reopenings issuance and participation was compared rate in For to in the the prior as was incredibly down was demand compared well from equity-based the driven Facilities result leadership a results greater as end-unit based cost client decline to year, in International EPS business solid year to third expanded government-imposed higher & improvement quarter, expense done by AOI double-digit contributing in year noted, decline restrictions. X% associated third services. the somewhat the while an of revenue offset XX% led year John a as was growth quarter. year of million across remain various Organic and increased cash XX% Uniforms rental to the XX%. driven drawdown the operations, interest the billion was prior Performance quarter by to in and culinary U.S. teams in XX% the across activity Quarter-over-quarter corresponding related to an progress business HR in in the of and $XX shareholder decrease cost driven service operating quarter a with quarter deliberate of site-level decline was in of continued control in XX% total organic The the for creation. compared performance strengthening costs the the revenue down on March. segments. the all Corporate bond by with marketing, incent to the environment previously a

interest earlier, future As drive paydown revolver our expense recent quarters. expected the savings on in to I shared is

cash we $XXX offset Now cash results. operating than loss as from due of cash net the impact flow million and turning management to quarter, the of flow. cash on operations effective $XXX free generated in In million the to more COVID-XX

our announced With liquidity, paying that growth solid investing in the remain value morning. down cash shareholders debt and includes company's quarterly continued to performance expected strong opportunities, committed dividend returning just and this to we flow payment,

received U.S. retention $XX continue in with in and We payroll costs costs the these the million the the in benefits. $XX totaled worldwide, to XXX% related carry-back of specifically, from CARES we programs, country-specific income to Through including CARES the absorbing that the of approximately of NOL remittance offset for taxes to participate deferred government in million employees assistance Act benefits appropriate programs, credits also the benefit of here we incurred associated the Act approximately furloughed labor employees. tax federal and had Under modifications we quarter

optimize as to stimulus programs look to continue will the We appropriate. available

Let our me on results. now touch briefly GAAP

net expense, to while reflected to taxes resulting $X.XX realignment to estimated to per to on and operating week or loss was in a revenue loss, having share. prior loss the XXXX of contained $X.X Interest operating the contributed quarter. loss The initiated and $X.X million and an the week per million I that is week for XXrd share certain diluted numbers. fourth impact GAAP The in organizational related extra a just expense extra As the included an week income. fiscal previously that non-cash attributable impairment costs charges net mentioned, netted million operations estimated the a $XXX of XXrd GAAP negligible

the declined the to on and capital Organic flexibility proactive the Aramark's current was mentioned, John the to a the the use Now currency growth strategies reflecting XXXX was April. limited for renegotiation highlighted first constant with flow as in invest bond income, management end-unit as to the a thoughtfully COVID-XX, flow, compared thoughts continuing quickly of client COVID-XX year benefited reduction our And offset similarly positive the half including AOI strategies, of company operating with more general Adjusted fiscal growth-related revenue rate since million while year, XXXX XX% of $XXX during year let for of fiscal fortitude working on as XXXX. on by all in me free financial of in by and basis than fiscal impact year. to underlying reduced $XXX which drop-through combined throughout XX% operating effective also XXXX. touching actions contracts our the to remainder implemented year. the in full model. The conclude cost the These manage people corporate this well the million and on generated by cash affected half company in the performance of our second has of the resources. cash expenses free fiscal issuance

the will many year while of a are to on business current environment, second as to of higher with with continued ongoing transition evolving. drop-through as year, course XXXX, of revenue quarter's of We growth to line support timing disciplined anticipate semester half we the of to we leverage XXXX. range driving reflect margins initiatives. as commence firmly we stages XXXX expected anticipate anticipate in we managing the associated resilient million improve appreciating revenue of in the reopenings management, restart levels believe generating drop-through model result with operating throughout As ever-changing as over and recovery to to AOI flow continue pace Based positioned expectations, well margin fiscal progression the the in shift to the perspective. the use are course in we XX% largely we We fall first of a organic our early. be compared recovery to is timing continued reopening and in free client plans to timing of the when AOI gradually underlying long-term the growth. and exact first considering plan to of $XXX the a client million, investment rate a as of rate the cost half XX% And our half well in increase dependent fiscal the cash be fiscal universities expected to the the end the ed, first on last with quarter various $XXX pace navigate to to managing costs from a

primarily followed for the time Thanks year. Ed We quarter expect morning. over will Higher for cumulatively associated And the of John. your outflow the flow positive hand first remainder the now, with that seasonal back reflect this it cash I'll by to

Thank you, Tom.

in environment that value We execution are operating enhanced on an places expertise.

As Tom across actions and stated, also the the have impact may expect and they news year in we We're week and unlocked. as the reported the of progresses transformative COVID-XX performance this potential business business our monitoring closely on general. vaccines are improvement promising business last

the Our to trenches who is future. belief and in success exceptional globe with the in no have call with around in Aramark's in we'll commitment for I of Operator, an turn teams to doubt serve you our clients. focus that are over our unwavering now rooted It's passion promising the mind this questions.

Thank of come [Operator McVeigh you. will line from the Credit Our Kevin first question Instructions] from Suisse.

begin. may You

guess flow of environment. much, really, quarter? the John, just Great. of debt But post repay results Thanks million there. drove I Tom in what was on an cash wanted the and obviously I to start very kind impressive. congratulations decision the the so tough really $XXX obviously to the or

all Well it then, and the containment it bond have, And the really seems very long and prudent Since knew availability issue with do revolver healthy flow a to cash potential back feel is capital was capital drew to to caution. the at I we on drawdown but and we down could It's the where cash at the business thing management it it and course year-end we we measure of so of have since abundance a executed But was that an that that. take it need the sheet, savings. moment, ago, April hand. we out go produce resources found and cost believe now, right we've to the strong originally should at interest the we are and Kevin, Yes, I'll good at to result working tough time. take the and actions the execute John available call. and about with balance felt ourselves us short of healthy

-- two, Client really then uniform on on that things the real any as as nice driving of as trends around is any business? seeing And Other. as just of you clients uniform? holistic Just Facilities similar demand, quick just John to context it it side, other Super those Tom, is thoughts thoughts or think within opposed Facilities about expecting in out helpful. obviously well trends you're it there kind of and or the the

Sure. I'll take that.

of the customer a of all, in base and certainty of improvement of to terms First higher work see and nature continue employees more organizations as degree uniforms because their have return site. more to of on

the rental quarter see sales So throughout see requested that the the you you business quarter. were in also improving additional that and during trends PP&E

for as customers of to cleaning requirements high levels side, institutions an and the their we confidence saw enhanced to continuing and on only the a part focus on basis employers not and on reopen episodic and constituents. a safety of basis also but significant on very hygiene maintain Facilities On reopened,

improve as utilize those cross-selling opportunities businesses those in and demand to time to So markets over protocols continuing that our see we for see both and hygiene enhance significant safety we we of customers.

Thanks so much.

you. Thank

Goldman from line Our Sachs. from of next the come question Stephen Grambling will

begin. You may

the related myopic. Thanks. Two questions is a bit and first

on capital that details could range. the the other the can I some guidance the seen [ph] With that provide item then and assumptions the are end any flow a a across outcomes follow-up, of of wide embedding Any guess, And are high the of of range segments? some fairly just low you the embedded as range on line heard if you CapEx? behavior has in free there. vaccine have news what in elaborate and or cash related you end change Thanks.

hopeful you can an the have as I operations to it and respect availability many business the people vaccine With their impact obviously, on apparent. news, have wide becomes that think Sure.

operate I think of reopen in all and based and a varying businesses their needs restart plans specific would significantly on – degrees of have to the availability those. the impact we have varying vaccine

make uncertainty to early too it's of implementation, might A think vaccine respect lot call and it year. with on the I a like. to timing of the impact overall balance how rates the

So most I return-to-work think you on of the but do question business part most have leaders over the of on might Tom, of attitude deal a people still certainty take lack how that and hopeful a cash we the with to and want strategies. impact the flow? you timing

It's a of underlying Sure. recovery the on flow the opportunity, between balance bit really of a is. cash pace and range growth

the quicker the pace of reinvesting capital in be to we'll as recovery, units So the working stronger have reopen.

downward to a Similarly, flow get investment. business of free cash growth going good pressure put that if on that's to free CapEx cash we terms So underlying put continue new in pressure flow. little could on

be a the towards there us The end of move more new end of the range slower so aren't of stagnant probably might recovery and a range. the that working would demands capital upper things two little lower the those So business model. pace

range the recovery and still in business uncertainty that of underlying new pace performance. the the that's we the have So given

about correlated helpful. mean, we will that. think you've reinvestment the I profile, approach. working guess balanced about out That's the one follow-up revenue. talked a I there inversely be quick the know is Maybe If capital on that I further to assumption margin

and business And takes about adjusting comments out about learned margins business of you've how the down we in for where evaluate? you've made shake technology, could to the what are a ultimately be the through the overall the what recovery and Given puts thinking some ratcheting thinking longer term? should business,

guided believe pre-COVID we've think first the in in will expand that I into of recover reductions as continue Well, are operating way of margins to will. reopen. cost think model if there's business and We business still think model that improvement believers to firm engage we We in permanent moving such some that you all historically, got organization forward. we the We we the that lots can we engineered have built initiatives we've in a levels.

very make chain enhance We significant continue to supply capabilities. that to margin initiatives continue on progress

a as margin move we levels term, and the forward of long past return as all that And we we'll the think enhanced, pre-COVID the is result So profile these to beyond, business changes. pandemic. of

Our the line of Zaffino from next question Oppenheimer. will Ian come from

You may begin.

Can maybe give Hi, guys Tom pipeline business everybody. bit guys color looks just going and in you talk And Hey wins, pretty what's kind a too, of the actually Thanks. are on you of know like, some personally this? new I what on of you about involved. little John are us involved maybe you how the could there.

up I'm little it? you sorry that question broke a for me bit. Would mind repeating

give The on, was how us Thanks. Tom. with that participating you pipeline? new can the kind question some Also, color seeing the business you're how a of pipeline you the in can there? talk about, Sure. that along of little in integral you and these are out and wins wins some you're of new Maybe business

we beyond. through organization. growth in of various of talking this balance Certainly, sells leaders past the fact, businesses, just with week strategies matter that this corporate together XXXX and office have the for everybody of the And in a as philosophy were a we our

the And in involved process. strategy we're intimately so the customer and and the evaluation in proposal frankly both, in

actively we're as So and pursue engaged, participate, we opportunities. continuing basis to speak of prospective those kinds on a and clients

and And if part willing able that, so you and everybody be engage sells will. of to we're always mantra

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As I focused discussion, both throughout make COVID-XX. have on Tom and continued to the in said we growth investments

We reductions the impact haven't processes. of that to the process any sales or marketing areas made

And so on much that. we're focused very, very

And question come Citi. of Ainley James from the our line from will next

You may begin.

Yeah. morning everybody. Good

absorb bit context? even that players to competitive to the operators? following you these presenting that we to opportunities acquire about, in these or Thank smaller wins, of Is on up some land? like talk sounds then it secondly, might some the opportunities some big smaller maybe There's industry contracts When around of the about, new discussion And exciting opportunities. business answer struggling. Just some you. could expect kind some of of a

when outsource. because difficult ahead pipeline, they Particularly very of have companies through all of have to process Yeah. process. to philosophical work and I would clients it's to the work say, comes go conversion a to first through timing to decision, and predict it self-op

you're of into process and they analysis. working complete for get you a work time some client that that if period as to exclusively with the that And accelerate. through, to takes then can And organizations so a resolve potential,

to situation, If go through obviously as you're working bid in a time well. takes it that

that we competitive able sell I a as We With by pursue would to clients landing company anticipate if as you the those tell We've we at pipeline. basis. acquisition companies, sales to encouraged look to was very an opportunities perspective. that there financial be I out list year. do, stressed had smaller said And but the to as clients very some probably but a got spot that I we to their strong we're we a potential may and think on are client But robust from would see actively opportunities basis always opportunities there. opposed the what a a good to we're to a was companies be to their I hard respect are would to that complementary think there. So not was open when that occur, predict, there

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you. Thank clear. Very

you. Thank

JPMorgan. Our will Steinerman Andrew the from line next question of from come

may You begin.

Good morning.

-- questions. I First two have

overall surely think the talk three just recovery the about we and growth First, moderate on know as you does could June And a hopeful comment about question organic trajectory what quarter, third understood your year-over-year changes look know around growth vaccine like much you revenue about a you fiscal would segments to Could you when today? to you but to the pointing is, quarter October? uniform? vaccine for compared you're what quarter. return It the recovery my to now. secondly, about the October And in then firmer I disclaimers commenting to what on sound particularly you compare hopefulness we like about could

John, I'll first the take one.

to want comment growth you trajectory… If on the

Sure. ahead. Go

Andrew, the it, are in each very as look to looked very, simplest but much way That's the of numbers a to been …yeah. the three close QX. pause October the like bit very a numbers road of sectors. on to say probably we've QX's Again it. across October recovery calling

Okay.

in things rates the infection be the now, will I to continued additional higher a look trying might any say whether or I'm year. shutdowns what have there like be of like. impacts will be the little And looks projecting balance I understand political Yeah. to the throughout would shutdowns, we're a of what the honest right what state uncomfortable bit of environment

We all from a that business if expectations. can to continue of over I be evolve have the see there's of and think business an them ramp think the And impacted that way environment. political the right perspective, opportunity I the the you're we to year. business by up balance pandemic the But things expect

wait-and-see comment significant the might have too look have businesses uptake obviously, a public, the attitude And, to going vaccine we large fully vaccination by what rate would the we're a before of some significant American have consequences consequences. So high time on spring like. have the sports take what in control we and would that certainty. that of entertainment, predict very I can control any we significantly we flexible adapt. that do we benefit to degree a that would from with model and hard that like just Obviously we know so can can business

really effectively cost able perspective a aggressively great shown on We've the to last course focused that. flow cash and we've of very doing over this and perspective. got very manage from six an operating we've the As organization been months,

what and continue as control and can we'll as efficiently it control is business manage to we the So effectively possible.

will Stifel. question Rosenbaum of next come from from the Shlomo Our line

You begin. may

in more a Hey, discuss you of Hi, of last And saw increased question an increased interest Thank about this can are to with in Is last you. has quarter that of expansion any good something you whether John translated outsourcing then bit that? you a actually due that. you I'll seeing about comment after what interest RFPs? Can talked you change follow-up to there little And quarter? morning. any COVID-XX?

it I I are some hit think of a Higher various into we that get the next and There have from for been cycle. markets several typically seeing K-XX opportunities. say have months over course has selling And Education expansion here would interest. to an to the active into be call around traditional the sales translated we we'll more streets as what's that June of of dialogues. Yeah. continue more RFPs It season, particularly January the other

we season but of out early going be do So, in think to yet we're anticipate call higher level able really a to us selling what for the just to a bit look that I demand. is like, little

talking And last Great. Okay. quarter. about expectations to to Higher a trying to might to you sounded year's about going universities like be little in similar which the quarter? I'm all to the Education some more revenue. together. but that wasn't missed clear there's bit put -- be we're are of like, then kind revenue something, It sounded that's about closing, early boost can It I And apologize, coming talking I if going me. It talk this

Yes.

you're I -- I have on as universities and decided think Thanksgiving university you've generally probably which what's exams generally final aware between during many to shut the side period. happening think, are time that got down is Christmas,

have students until proactively back said, come the not So, first going the go once of to the after universities year. away for Thanksgiving, they're

And so has start-up their schedule changed.

does revenues. this effectively and working you for what be So yet. impact tell quarter an of would that in you how number that quarter still terms industry in much all will from number perspective, and very -- campus. might I'm to spring I back that how tell expectation the to in that. focused that through on have semester, a can't impact presidents the We're I students them philosophical on to to bring the they're hearing from the university increase those of how

You've got have a And saying, error completely virtual. opposite university in you have number may that made of view. going the they strategic have a presidents then some

decision -- understand But the really forward the we through since quarter planning and be of what season that early. obviously, for So, that we'll are -- by it's been have this the And adjusting December we've very close university will fluid. as And and but get the sector. school of better plans to started. for view going still the impacted a beginning

will our the And line question of Manav come from next Barclays. Patnaik from

begin. may You

on. this actually calling Hi, Greg is

get point on to the to get on back to back the Just pre-COVID margins. trajectory

you of the the little to on about and there to drive Maybe talked permanent opportunity bit savings. into other you cost more that supply are could think, dig any a those savings opportunities permanent some if where you cost buckets on highlight chain. see the like I

Sure.

six the with through out do to over how months, we've in course more less. found I think, as the we went organization the changes of last the

And we a have to do a sometimes position of sometimes, it you you and differently crisis learning been how when puts and -- adapt this, work through to we've to work in like that. as able

So, the operate we've moved in to fewer to going learn the I think modify able well. learned SG&A resources you'll see They've We've how people with organization been how adapt central and from to as as forward, field. to reductions permanent business. in

to likely SG&A very So those as in the a we'll period I reduction think we disciplined grow see permanent that's back for a very organization, forward. basis time. moving you'll last on a of probably long resources add And

benefit work to operations partners to our So, the continue as that Also, probably but for chain industry on our the supplier’s to in I our reality. with supply large-scale that's side, benefit only to think well. we a manufacturers, look ways them not

they're benefits will have for think basis with that very enhancing capabilities, we partnership much that contract contract for additional Sysco, As new That the have we a Aramark. long-standing on was focused a which enhanced some service us. and forward. this reinitiated on leadership, they you for provides new enhanced visibility. offering going their them very know, Under to bringing that And

see improvement real a that profit as we as So, potential well. source of

So lots of areas.

cashless range of payment average improvement. technology the run on the things in form help options effectively. as proven to either has or at of look more consumers invest some like as other their businesses base you use opportunities the think, don't the have as it cash. They pocket check continuing that card well for a we in. across to in range can businesses some have averages and payment continued credit we to operational use or enhances check reach and across payment And ID focus to enhance operations card that We're of options I touchless it their

So, avenues growth, improvement confident lots we're and there, multiple for of opportunity and in margin very that.

helpful. side. hiring Okay, then on the maybe very And salesforce

I the side. think hiring on uniform you talked continued about the

the or year hired them food hiring, services more you about and is side? sales is ramping it employees up continued last the on those taking there side On that

Yes, yes.

hired takes As new to you several service some months full side. in XX up to food sales we've time the particularly in ramp the last know XX area the We've projected the and to side. people on employees food on effectiveness it year

can accelerate ahead to we to level We the we very feet if adding go enhance that the well. more We by organization high-quality growth you will. put capabilities additional resource and to but continue feel for salespeople comfortable to and on to resources have there as today, with believe we street the that of look the add

organization we're to organization; of and sales those growth very very organization the you last selling if is So, we're significant pursue part that going I issues the of and think the several will. that years. skin tell the both We've pretty And is the in leadership completely. sales sales structure made I of the some most comfortable psychology that. of we've you would in process; improvements the to our part it really psychology But over sales the of addressed think and and importantly businesses individual I

next from from Andrew Wittmann question come of will Baird. line Our the

You may begin

guess for I Tom been of my you questions and I the did that have assistance. my And that curious most had I asked was answered, a but clarification was here. government question. have taking about Thanks it a comment Great. about

You said was there in quarter $XX million. the

-- that the in was $XX the think you experienced so the that payroll balance the credit. you And that on CARES quarter or deferral the recognized million that's on that tax Is then was was accrual I I an Act. based a said that sheet? you in think

the that balance effect expense sheet basically income what So other could Is is a And the the think a an effect $XX give the for contra one million? expectation statement you for is us will quarter? something? those you and or like that fourth be

right. that got you've Yes,

just in a we costs really carried net that the payroll other the reimbursed is million sheet effect. so balance $XX were And we tax to the expense the end. a for contra So, for zero

here In in abroad all the government and terms of both force. looking forward, programs remain

furloughed Our quarter quarter to furloughed of our today. considerably from level third -- have the diminished and employees fourth

and will local extended lot been have with to regulations. programs amounts And monitor continue dollar these the the comply then So a we'll of fall those proportional. but globally

should how they numbers don't not to but -- -- internationally, on out forward. have numbers fall will those as So, continue both move exact should we play

all I Okay, Thank that's had. you.

the Stanley. Morgan from Kaplan come will Toni from of Thank next you. The line question

begin. may You

how the in very structure Thanks about little structure want I understand prior the what for quarter triggers things return to better when the to a Like quarters lever back triggers volume that In upside there change? a your sort have to spoken get Higher contract terms to of about means cost-plus know or you that, much. structure level I that -- certain more the just normal. next to do ability and bit a we that? of contract it ability there the recent you've to B&I Is And that just recovery. Education. think is flip changing in

client Yes, those based needs on contracts structured individually and all locations. specific are

and would there contracts a a impact locations. location-by-location trigger customer, that single client So, as isn't their time. affect negotiation the really all specific It's decisions given with any the they at that make

management B&I, campus campus understanding again and world, that's – virtual. memos So – of triggers fee. have students on that Under where to and based needs, on we're off it's the operating under – primarily in in campus dining they with the universities various are respect

customer, individual type it simple, not. trigger. isn't based the variable location, location, it's but so there wish wish – that of single a I the highly it's the were So of I that the size it on and were

basis. the So decide renegotiate may one-to-one be it under would we'll type, will had employees return, like or every – every the contract terms, those the that's a to terms on But would we renegotiated was point. in we in if – that we students to and they based to at reach client. original pre-COVID the just generally, in go return, have former client be levels, it contract when formal new to of that back on choice location, renegotiate and fact it contract the the the will as keep The as we do a location back clients to that

but that sorry, give I've that's much, answer the got. really best doesn't So, you

from service to to about bit How you sales terms Okay. expect could Hoping quarter? also PP&E of – in a What from just cancellations you in wanted trends just seeing I are continue? that, helpful. expand Thanks. That's the do you little on that as ask that in uniform benefit the outright segment. benefit well. the or

Yeah.

and it very and spike the sales PP&E, obviously, very, uniform what the strong. additional It needs position those there than quarter. should normalized demand say, increasing But there of I level of our sales, translate going-forward initial was Fourth an the normalize the of equipment. PP&E lower a for as a thing well, as a we third on a will be in if is the PP&E to we quarter and the to that – use into in more as improvement quarter to basis, trend but were now weekly – shakes have rest out. in it how strong and The we third third the very to environments, we'll more particular to for that's ongoing was and and their seen great will Going we're as at see reduced more more happen the remains cases, slug I demand rental quarter businesses only continue business, demand in return a respect more continuing level in revenues that is that's employers company clients' throughout from products. return. kind With see not a would said, business, renewed serve how of comes to to

is of fact do operate the space. the business One impacts hospitality things in that the that, somewhat that we

have are capacity. that at ramped and in not we And terms limited demand, so of full as restaurants operations up they've

more level higher a customers capacity bring plateau until are from probably of a restaurant operations see a we'll to period back So on for time, those perspective. able a

investment, planned be others business. going We're selling our the plans another new to grow going of that there that to and those XXX in are first-day continue that overall, into So looking managers to forward. out the we're selling improving our also services, this adjacency and really have trends going reasons engaged customers for. focusing sanitization That's And and for built year, to we're on add services, to restaurant we sales obviously. clients one actively expect

as continue. across board we and I said, the that So to expect improving trends

question Our Bisbee Gary next America from will Bank of the line Securities. of come from

begin. may You

XXrd of U.S. morning. the Hey, virus impacting either pace seen times, are couple cases of year-to-year part as volumes just continue that you that the next commentary I last trend, current question, And direction? what seeing opposite any you've first the to Good said or in similar number the I a go that I QX guess, exactly coming re-openings Have referring alluded the to are expect a being how revenue guess, decline the quarter you'd the to were guys. of but when guess, excluding comment? on Ed, of back? to was surge specifically pace or Tom, to week you the you Europe across this and you wanted I organic clarify. Higher recent quarter,

Yeah. XX-week That's – a it’s it's a comparison. XX-week –

similar So the will October to we mentioned back year the to QX, similar QX, recovery. XX-week road And up pause be very in percentage bit comment. is a of I decline very a over a on QX to prior feel as just again as that

I on just recent surge cases. color add And Yes. would some the in

on coming basis. very this know, is are a volatile very dynamic on restrictions and As phenomenon globe you around the highly occurring that's coming and off a

to managing of restrictions all terms do areas, I a activities levied the much business them gathering places obviously And in have been focused in we're not in do of employer we environments. So with take poised you on kinds the look what respect think need those to of that new on as to activities. at most as are

change. of and So seen employees of in a at this but it operations, kind stage, we haven't not back seen company into of reversal plateau or terms coming we've buildings

think like people to waiting going see that how and they're are wave to to need I looks it. next what respond to So

all time. to occurring too I really this a tell, early it's as little real just think, So is of in

we're obfuscating. don't we avoid any So that know. be trying I to under what the circumstance. know don't not trying just not I don't to It's -- we mean don't -- question I'm

able on to being for just our controlling and diligent a business and respond hyper-focused basis in day-to-day are very the various demand our we operations what So managing operate. changes clients we being businesses in we the control on to and in literally

understood No, totally that. and Yes. appreciate

how does but the a improvement I similar a hopefully expect -- you've that reasonable of as why few guess against would quarters? to declines. half, period sharp comp last first next see future obviously margin I inflecting expect on think some in the be similar on to not high, flow-through as And was But and least guess I not? to to follow-up XX% the it commentary be similar downside seen guess incremental back so you that and spring/summer or in I these of when time? inflect to realize margins maybe incremental flow-through revenue the As back growth, you declines a if we the your long-term, at level should revenue for revenue won't starting

correct, would so at you You more absolutely how we'll that. we're looking should we as of that out clarity I guidance -- possibility may we're the at we move certainly be. -- theoretically that's half to more play mean year theoretically around where should the that provide as looking get that's and we But second and

Yes.

the absolutely we and As earnings know, long-term for the company. improvement reason along that to the generate profile to enhance growing one company. margin the you And the is long-term business improvement goals grow want of with the company margin is of

to of reopening get in that just return the flow-through a enhanced is to of in that see enterprise of business terms our margin. the growth we're the believe do should the existing normal improvement able and year-over-year from operations business in we So consequence reaccelerate as we

next Mazari question the our of Hamzah will And line from Jefferies. come from

may You begin.

is Thank question morning. My business. B&I just Good you. on Hi. the

hybrid, just you expected. recovers diversified about pre-COVID to you for business recovery impairment think Could you Do perspective thoughts do and timing permanent I from maybe business? longer that with John about to a -- flush pretty B&I some how tailwind talk think, mentioned, you're I foresee you any of work-from-home more? out but maybe a to know collar, it's that little given levels? white collar announcements companies? that any sort think a blue When

tell strategies implemented most in would engagement. business to of return-to-work with fulsome indicated that long-term, of the or terms most significant company's believe I've return-to-work of in fairly there's have that even I strategy you don't I Yes. people a in with seen best terms to that kind the a effectiveness, work-from-home even of that and terms interest studies is talked of I've in structure change innovation,

the So impacts margin, structure but long I of think dramatically I it there the business be will over the don't think, at that term. change,

continued working from see delivery customers clients to our you're -- I think to that the home. opportunity taken we've models have going develop new for of people and

B&I lower environment. and domestically internationally. mixed work-from-home the are center directly different and mix the food delivery a that got number Keeping program muted in the Aramark a of a the operations from B&I is mind us delivered a we supplies is different that less We're of of of to because where So the than number have very impact their shift significantly the of on of employee. total of predominantly country. for business, package B&I and Aramark looked that from We've various a somewhat employees both perspective. the some competitors, affected employer spend go to modified service innovative looked blue-collar which long-term operations of for at sector. significant We've a approaches to enhance We've the products can in of their our ahead of terms select at business capabilities

in So industry model itself, sector it as the terms we Aramark, there's don't we frankly, in long-term itself, B&I. muted And somewhat see the to long in term. the of even degradation impact to a the the think for

on follow-up could just client opportunity just but just, you. whether trending today, Thank touch they're we an lot question talked if retention call, and Okay. new my is business see you maybe on you Great. how rates And a there. about the net

significant improving over a the months, seen have industry. us, not Obviously, goal retention. Yes. for but We've strong improvement six only we client the for last very around

their with have and existing the clients to go contracts think renegotiate ahead decision I providers. made proactively

well. beneficial for I that us it as think think for I has and our phenomenon has competitors been very

rate approaching rates very-very So But forward. XX%. its, are self-op going as to there industry. there known you to for level probably retention I think that some high. processes. long-term XX% are to We are company call to will of industries the be those rebid And intention those our want move basis move to company industry think retention the know, the retention up the XX% on historic this conversions a to from of and some It's I require particularly in best it, be continue businesses,

going way don't want partner valued customers sector. we're to perform they be be very our so, a in make to And focused that change a perform to on continuing such and most to and for the in the

a and that's we're make of way So retention saying, it better, long-winded improving going sorry. is even to

Weber the And line will come from Seth our of question from next RBC.

begin. may You

Hi. Good on Gunnar for Seth. This morning, guys. Hansen is

I commentary. wonder, could if you questions, the John, the that I optimism. if sales today You've answered uniform recent side, or portends lot large hires, in there understand strategy a I the us hiring of a organization help the new detailed and change guess, with so on force appreciate how to is there the

that been the I hiring reasons larger recognition and for one is forces of we've and rates for difference and sales street. a significantly fact a sales growth on the number have a Well, really largest number in of recent our competitors of the has understaffed from perspective undermanned of that sector that the think, years the been that in feet that

a more rental for compete organization, more we on So The particularly, easy the sales in, ahead them to layered tougher. an by resources. adjacency brought to -- side part having effectively a ahead focused into that's resources need and and little business we manager we've is recognized learn. of the And the as go go for services,

it's we So to resourced to increase perspective organization sales significantly the to the be our competitive those those under more rental ranks. and through uniforms with really of we that a needed in competitors business were progressed we from people the time. change But more period on into that really growth order over a trajectory recognition a

that existing know increase tell net disclosed significant organization. you would that don't it's actually resources, I number the we've a the of So of staffing but I over levels the

And to it obviously guess helpful. on That's seemed just Okay. building I sales be there. pipeline, the

if or of remind wins? speak years? for the the maybe positive. margin remained you capital what are pricing Tom, or intensity it guys to profile Thanks. different Could new How can the needs similar You is maybe prior contract to us you the or pipeline? And

want do do you to want take me you John, part first or Sure. to?

Go ahead.

forward. margin those as of as we require pipeline changed contracts and always much those we at to at and as The capital returns with we requirement. the in capital look longer the they think and Ed bring that a haven't really I intensity on Sports profile as sector the look tending But equivalent those. course, bid on bids higher opportunities the Higher depends look to take

haven't So is really difference in the the the activity the again, margin noticed profile much moment changed. CapEx where And and we that. is and sector specific hasn't at that

than a of competition of state it is COVID the more it's -- think I competitive related.

eye that right solutions relationship about end are all an the So we understand the we'll having and and needs their to the and on different the the clients address keep with sure can it's connectivity that that those and in table. what we with making bring

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

had time in having devoted much. fact for us. this we looking you and near Thank opportunity your the much again Thank to the with forward. Terrific. that to in engaging you really All move everybody's to we And the upcoming we've you. and that investor outreach, to as and future. look Really forward time appreciate right. Thanks morning forward look I very participation dialogue those conversations conferences forward -- and the so our

Thank concludes participating. today's you for conference. This

now may You disconnect.