Great. Good morning, everyone. I'm Curtis Nagle. I'm the Senior Business and Information Services Analyst here at BofA. Session right now is Aramark. Very pleased to have Chief Executive Officer John Zillmer. We'll structure this as a fireside, and then, you know, if there's time at the end, we'll, you know, field any questions. Welcome, John. Thank you very much for joining. Great to be here. I think maybe starting from the top, so exiting last year in a record gross new business, record wins going to 2026, right? Some very large contracts, Penn, and then RWJBarnabas. In terms of, you know, perhaps any structural changes in your go-to-market or, you know, anything else, you know, what's been driving this, you know, really impressive increase in win rate? You know, is it more on the client end? You know, what's driving I guess them to choose Aramark over, you know, whoever? Yeah. First of all, I would say strategically, it's really a result of a focus on the growth of the enterprise over the last several years. We've invested significant resources and leadership. Yep. And sales management, and we've created a new growth culture in the organization that is just hyper-focused on results. We've aligned compensation structures in a way that really incent the entire team, to focus on growth, not only new accounts, but the net new. Yeah. Retention of the business. Culturally, we've really shifted the organization dramatically over the last several years, and that's led to these multiple years of record results that we're so excited about and that we continue to be, you know, very focused on. You know, from a client perspective, I think there is a recognition that we have some unique capabilities in certain verticals that really align well with the needs of organizations today, and particularly the two you mentioned. You know, as healthcare institutions need to find a way to effectively manage in today's healthcare environment with lower reimbursements, higher cost containment requirements, they look to organizations like ours to go ahead and bring value. We have a unique set of capabilities that we can bring to bear to systemize large– Mm-hmm. –operations, and that we've demonstrated that in large client institutions, and that led Penn and RWJBarnabas to go ahead and make the decision to select Aramark as well. That unique capability in that particular vertical was very important. Could we maybe dig a little bit more into that, you know, specifically? I mean, scale would be one, operational prowess would be another, but you know, whether you wanna use examples within health and, you know, I understand that you're taking over very large systems and that that's very complex. You know, more specific, you know, competitive, I'd say assets that you have that, you know, are really driving that. Yeah. I think, you know, it's different by vertical and in different both domestically and internationally. We've spent a lot of time building some unique capabilities from both a leadership perspective as well as a technical perspective that we can bring to bear against a range of different opportunities. You know, whether those are AI-based tools like Culinary Co-Pilot and others that give us unique operating capabilities and focused capabilities that the clients recognize can really bring value to them. That cuts across verticals. Those kinds of opportunities exist in literally every industry, and we're uniquely positioned to be able to take advantage of them. Okay. We've touched a bit on this just a little bit, but just digging a little bit more into health and Penn. You know, again, you know, largest, I think, win in your history. You know, I guess how does that, you know, maybe change, you know, again, the go-to-market, the blueprint, right? Or maybe the opportunity set within healthcare? Yeah, it's more and more systems are going to be faced with this decision of trying to find a way to systemize their operations. Many have already outsourced components of their business. Some have multiple providers. But there is a unique value that's created by having one provider, by having o ne organization provide patient transport, you know, food retail, food/ dietary, integrated call systems or call center operations. Having one organization to work with helps to drive cost out of the system, drives consistency throughout the system, so that a system like Penn that had was being served by multiple providers and was self-operating, was doing it five different ways throughout the system. They recognized that by consolidating, systemizing, and taking one approach, that it could significantly change t heir operating structure. More and more healthcare institutions are considering that. RWJ followed on very quickly. They made the same decision. I think you'll see that applied across the country as more and more systems decide to take that approach. Was there a specific catalyst? 'Cause I think, you know, perhaps it's just the burden of cost is getting bigger and bigger, right? I think, you know, most of these issues are relatively long-standing and consolidation and multiple operators so. Yeah. I think it is the catalyst is the ever-changing higher, you know, higher level of pressure in terms of cost containment, the increasing need to reduce cost in the healthcare arena, if you will. Government reimbursements continuing to contract and making it more and more difficult for companies or for healthcare institutions to survive. Frankly, just, you know, I think part of it is leadership as well. Institutions are modifying their approaches to leadership. You have much more progressive leadership. These CEOs of these healthcare systems are looking at this as a business opportunity and a cost containment opportunity where before it was more of a philosophical decision. This is more of a business-oriented, we need to get this done kind of a decision. Understood. Okay. Maybe this is, you know, sort of staying on the subject of health, but just even more broadly talking about, I guess, contract uptake, no capacity issues at this point. More, it's just the sequencing of when deals come on and... Right. Right. Yeah. Right. Okay. That's good. I guess just thinking about, we you know have seen some of this in the numbers, you know, this year and to some degree last year. What is the, you know, from like a profitability standpoint, the arc, right, of I guess scaling and, you know, I don't know if you want to give the example of, you know, from year one to year three, right? Just how does the sequencing of the margins from these larger contracts, you know, evolve over, you know, certain period? Yeah. Definitely. When you sell a new complex contract, there is a learning curve associated with taking on that new business, opening and operating it. It's different by the line of business or the vertical. Healthcare tends to be cost reimbursable contracts or management fee, if you will. The ramp-up is shorter to full profitability, so you can be earning your normal margin much more quickly than, say, in a complex P&L environment in sports or the national parks or something like that. That might take a little bit longer to scale up on the learning curve. I will say, I believe our learning curve is actually accelerating because of the tools we've been able to provide the field organization. When you think about the management tools that we've put in people's hands, like Culinary Co-Pilot, like Labor IQ, and like a number of the other tools, we've been able to accelerate that learning curve activity and ramp up to full profitability more rapidly because managers have the tools to go ahead and get the job done more quickly. Jobs that used to take multiple iterations of menu cycles, for example, to determine what their optimal cost structure should look like, they can now do with AI in a matter of hours, and sometimes in a matter of minutes. There's really broad application to those tools. Sure. It helps accelerate that learning curve. Yeah. Good, good for the client, good for you. Absolutely. Fair enough. Okay. Yeah, I guess just, you know, going back to, you know, thinking about the revenue arc for this year, right? You're outpacing your earn rate to hit the, you know, 4%-5% full year target. In terms of, you know, again, just somewhat going back to the questions we've talked about, kind of where are these wins coming from? To some degree, it sounds like it's just moving off some self-serve, you know, how much of it is, you know, coming away from competitors? Then maybe just talk about, you know, again, this theme of outsourcing more broadly, you know, across your verticals, and then I'll follow up on that. Yeah, certainly. This year, historically, we would sell about 1/3 of new outsourcing, 1/3 from the major competitors, and 1/3 from the smaller regional competitors. For the last several years since COVID, the amount of first time outsourcing has been accelerated. This year, we're somewhere north of 40% of our new business is coming from self-operated, first-time outsourcing. Now, some of it's combination because, for instance, Penn was served by our competitors before, as well as had significant components that were self-operated. It was really a kind of a combination win. It was a competitive win as well as a self-op conversion that's the same for RWJBarnabas Health. You know, we are seeing first-time outsourcing at an accelerated level, or an elevated level, I guess I would characterize it as north of 40% this year. We think that that's likely to continue for a period of time. There's still a lot of first-time outsourcing runway available to us. Just thinking about, you know, how you lay out the guidance you're running ahead of it. I guess confidence level at kind of staying that rate and what are the puts and takes in terms of either staying above or, you know, what could, you know, at the margin or probably not below, but just how to think about again the puts and takes. Yeah. We have a very strong pipeline of opportunity that we are working on. You know, I would say we got off to a very strong start from both a new account sales as well as retention perspective. We see very strong indications in the second quarter of continuing good results. I'd say it's a little early to make the call on the full year, but we're very confident in the trajectory that we've outlined, the guidance we've provided, and I would say the indications are very positive. Okay. Very good. Right. Talking about new wins a bit, on retention, again, you know, terrific numbers, you know, above 95%, which is, you know, a fantastic number. In terms of that stickiness, maybe we could disaggregate a little bit just, you know, how much of that is due to, again, the enhanced execution, right? You know, your company's had over the past five years and incentivization versus, I guess, what you would call, you know, stickiness and kind of complexity of integration with you and your clients. Right. You know, I would say, first of all, it the predominant reason for the lift in retention is execution and focus. It's discipline. It's you know, a combination of both the incentives that we put in place on net new, which is a measurement of both new sales and retention, which is 40% of the comp of not only the executive team but t he leadership team throughout the organization is focused on those two elements. That's a very important part of it. It's also this consistent, relentless focus that we as an organization have placed on it. You know, last year, you know, almost 97% retention, trending very high this year, just extraordinary numbers. We have a review process. We call them operating reviews. A sexy name. You know, every month we get together with leadership teams of all the businesses and talk about the financial results, not only for that month, but their pipeline of opportunities that are available to them, the new account sales that they're focused on, and the retention opportunities that they're working on as well. We spend about 10 minutes on the financials. Right. We spend about an hour and a half on new sales and retention. It's literally deliberate, relentless focus on the execution of those two areas that have kinda led us to this place. Culturally, that's who Aramark has always been. We kinda lost our way in the, you know, call it 2012-2019, but we've focused the organization, re-energized the culture, and really recommitted to the growth of the enterprise as the way to grow earnings for the company. Sure. Which ultimately, that's what shareholders get rewarded by. Cleaner business too, right? Absolutely. Which is, you know, I think very, very important and a theme, right, sort of across the sector. I wanna go back to that point you made about the operating reviews. That's kind of an interesting point. I guess, you know, could you give examples of, let's just say, best practice, right? Information sharing, right? Best practices, you know, where one, you know, may have been picked up in a particular segment and then spread through the organization and just, you know, I guess that flywheel has. Yeah. The great thing is these operating reviews are not done in a vacuum. They're done with the entire team. Right. Everybody participates in these processes. The entire US domestic leadership team is in the room hearing about the results from the individual businesses. The presidents of each of those businesses there, the sales executives are there. They're all describing those results. They're all describing the circumstances. Everybody's learning from each other. Yeah. In that operating review environment. It's not just me and the group president or the COO listening to that single business. It's everybody as a leadership team together in the room, both functional leadership as well as the operating leadership. Right. It does facilitate the exchange of great ideas and best practices throughout the organization. It's just part of the way we operate. Okay. Any specific examples of, you know, where a best practice was, you know, in one segment then, you know, was deployed elsewhere? Sure. You know, some of the AI initiatives, for example, w ere initially focused on individual businesses. Culinary Co-Pilot, for example, was originally focused on the corrections business where y ou have a very high level of predictability with respect to the number of customers. Hmm. You have a very specific menu demand that led to very significant operating improvement results. We then applied that discipline and learning to the K-12 business, which has regulatory requirements that are different by school district, by state, and the USDA. Applying that model to that enterprise quickly had an impact on their results as well. Hmm. That's a very specific example. It was very timely. Yeah It's obviously AI, oriented. Yeah. It's a way that we've been able to take advantage of that cross-learning, if you will. Okay. Good example. I guess next thing I wanna discuss is, you know, thinking about wallet share with, you know, existing customers. Cross-selling, I think has been, you know, pretty important driver. I think particularly, I think education's like a good example. Campus and sports, you know, vice versa. But yeah, in terms of, I guess the one, like how much growth that, you know, is that driving now? Two, in terms of maybe in innings, right? And then maybe more specifically across the organization, you know, I don't wanna call it like a new muscle, but maybe, you know. Yeah A stronger muscle and, you know, how's that contributing? Yeah. Interestingly, it's something that we've always done, but I think the discipline and the focus on it, as we've built an enterprise leadership team and enterprise sales team focused on looking for those kinds of opportunities, you know, has really b rought it to a new level. Hmm. You know, there is a lot of runway in terms of the opportunity, particularly you think about the normal ones between business and industry and, say, refreshment services. Right. Those businesses have been linked together for many, many years, and there is good synergistic growth between the two, particularly as customers evolve their, their needs. Those two organizations all have always had a high level of cross-selling between them. Yep. Another opportunity is the facilities business and healthcare because the u nique needs of facilities in the healthcare environment can draw upon the resources of our highly skilled engineering team in our facilities organization. When they need a solution, they can draw on that team to go ahead and help them learn how to solve the problem and begin to operate it. There is a significant amount of cross-selling there. Frankly, there is significant cross-selling opportunity between our existing clients and supplier partners in the various business units. You know, many of our suppliers are also large customers of Aramark in multiple ways. There is the cross-selling opportunity that comes out of supply chain as well. Sure. Really, the opportunity is significant, and it's one we're definitely hyper-focused on. Okay. Well, good. Speaking of education, collegiate sports, I think very, very topical and one where you're executing well. You know, so I think, you know, some high-level themes, right? Professionalization, right, new sources of income for institutions for a variety of reasons. Maybe John, you know, sizing this opportunity again, I'll just ask the question in terms of early innings, you know, bid process, and the importance of that if I'm thinking about the whole sort of pie for Aramark. Sure. It is a significant opportunity, and you're right, it is a change in the industry as NIL has created a significant need for funding in higher education, particularly in NCAA football and other programs. Yeah. We have a unique set of capabilities that we can bring to bear to help them both accelerate their you know their revenue generation and profit through improved concessions operations, but also by applying the discipline around alcohol sales. You know, many universities didn't allow alcohol in their football stadiums for many, many years and they're adopting very rapidly the opportunity to sell alcohol. You need professional systems and processes in place. You need to understand not only the economics, but you need to understand the legality- Yep the functional requirements that are necessary for that. We have a very strong position and a very unique position in that regard. This last year, we've been successful selling several major new universities. Arizona State's a great example. We had served them for years as a dietary or a food service customer. They put that business out to bid after 20 years because it was necessary. They were required by the state to do it. We retained the food service program. We also picked up the athletics, which was operated by one of our competitors. Yep. We also picked up some B&I operations that were operated outside of that contract in a conference center in addition to it, as well as some other additional food service operations. You know, having the ability to do both is extraordinarily important, and we're seeing success as we sell. We are the largest operator in college football in the country, and we believe we have significant runway to grow it, as more and more stadiums consider, consider outsourcing. Sure. Clean multi-year opportunities. Yes. Okay. No doubt about it. Very good. Okay. Turning quickly to international. So FSS International, 19 quarters, hopefully 20 DD growth. In terms of maybe just a basic question of, you know, which regions or maybe specific segments are leading this, and then, you know, the margin opportunity there, right? I don't wanna maybe call it a catch-up, but just in terms of increased leverage ability, right? Mm-hmm. On very strong momentum. You know, I would imagine stronger execution. You know, what does the margin opportunity set look like, you know, as a secondary question? Yeah. First of all, we're very excited by the performance of the international group. They've had extraordinary results for, as you said, 19 quarters going on 20. It's been very broad-based. It cuts across geographies. Literally every country is contributing to that growth. They've had extraordinary results and great success cutting across multiple verticals in each of those individual countries. We continue to see long-term growth opportunity in that segment, not only as a result of growing in the core businesses, but also expanding into other verticals in those markets where we have significant runway. You know, consider Germany, for example. We're the number one B&I operator in Germany and the number one sports operator in the Bundesliga, but we had very little business in healthcare. Right W hich is a market that was ripe, and we've just, in the last couple of years, sold healthcare in that country. We've got both vertical expansion opportunity and we're very excited about the geographies we operate in. I don't need to go plant new flags. I just– That was my next question. Yep. Yep. Need to be bigger in the individual countries where I already operate, and they've been able to do that very successfully. You know, with respect to margins, that business, as it continues to grow in scale, will naturally have margin accretion. The SG&A, we continue to grow at a much slower pace than the revenue growth, less than half of our revenue growth. You'll see natural margin accretion and the profitability will continue to ramp up in that business. Okay. Maybe I'll turn to the U.S., you know, for margins. We've been covering you guys for a few weeks now, but a common question I've gotten is, you know, what prevents you getting back to 19? I understand, you know, very clearly different organization, different leadership, reinvestment was needed, right? Just given all the things we've talked about in terms of business momentum, operating prowess, AI, you know, whatever it might be, why couldn't you get to 2019 levels or better? Oh, we certainly can. Yeah. Okay. Our expectation is that we'll get to those levels and beyond them, over the course of the next couple of years. You know, we won't specify the actual timing yet. Sure. We see, you know, continued margin expansion. We've been able to consistently deliver, call it 40 basis points a year. We continue to see a runway or a pathway to improve upon that. We have multiple levers, multiple tools in order to help us achieve that. One of them is that SG&A leverage that we also have in international. The other is continuing growth in the supply chain, and continued growth in the national volume discounts that we earn as a result of the growth in that spend. Growth is the catalyst. That's why we're so hyper-focused on it. We believe that the best way to grow earnings in the organization is by disciplined management, by growing the business steadily, and by taking advantage of those levers, supply chain, SG&A, and then we manage the middle of the P&L by using those tools so effectively that we've talked about. Okay. We're still 30-40, maybe closer to 40, maybe better, but probably not changing the framework for conservatism, but, you know, maybe. Well, I think it's. Think a little more optimistic. I think we've been consistent in terms o f the messaging around margins. Yeah. I think we believe that expansion opportunity will consist, but that's part of the algorithm, that we have this growth rate that we've talked about. We believe we're gonna be traded at the higher end of that growth rate. That should lead to trading at the higher end of the margin improvement scale as well over time. Okay. Fair enough, and consistent. Yep. That's right. Okay. The GPO business, wanna spend, Avendra, I wanna spend a couple minutes there. It's growing, I think, double digits at the moment. That's right. $20 billion in terms of procurement. I guess just basic question, why is this an attractive market? Why a focus for investment? I think historically it's pretty competitive, but you're obviously doing well. You know, in terms of, again, just the attractiveness and I guess maybe the value you bring to your consumers by scaling that network. Yeah, absolutely. It is very attractive for us. It is a source of significant earnings accretion, and opportunity. It is growing double digits. We continue to be focused on it both domestically as well as internationally. We continue to look for bolt-on acquisitions as well in that space. They come at high value, and they're generally accretive immediately, as long as you're disciplined in the purchase price, and we feel very strongly that, you know, we can maintain that discipline. The value proposition for the GPO customer is that they get the opportunity to take advantage of the supply chain of a much larger organization. Mm-hmm Get and get advantaged pricing and significant services. Our GPO, Avendra, is not only known for delivering great value in terms of pricing, but it's also known for delivering extraordinary service to our customer, to our end user. The hotel owner or that supply partner, you know, looks at Avendra as a great service organization, which is different than some of the other GPOs that are just cost-focused. We've always had that service differential that's been recognized by many organizations over time. We'll continue to deliver a combination of great value and great pricing. Every time we do market baskets against, excuse me, against our competitors, we end up having the best market basket of pricing for the customer. Mm-hmm. And we provide a range of services and a level of service that's unmatched by anybody in the industry. I would imagine scale begets scale there? Absolutely. Yeah. I know more recently you talked about, I think, theme parks, cruise ships as maybe near-term, you know, attractive. Anywhere else that you know looks, you know, would be attractive either for entry or scaling, I suppose? Yeah. You know, I think there are other verticals that we can look at that we believe represent significant opportunity for us, remote camps in particular. Hmm. You know, when you think about the construction of data centers in the United States. Right The opportunity to serve those potential needs, supply chain is an important component of that, particularly since you're building generally in locations that don't have significant infrastructure. The GPO can be a significant component of that. We also have other parts of our business that are uniquely positioned and capable, in that space as well. There are a number of verticals that I think we can expand. Mm-hmm In that way. The growth opportunity is dramatic. We believe we're well positioned to take advantage of it. Okay. Maybe it's specific on the data center point, I would imagine, in terms of your expertise and presence in, you know, material extraction, right, resources, that's probably– Yeah, yeah. When you think about r emote camps, mines, tar sands, oil derricks in the middle of the Gulf of Mexico or in the North Sea, mining operations in Chile, we have some very unique capabilities that you can bring to bear. You know, I think that will serve us well. Yeah, data centers should be a, you know, walk in the park. Mm-hmm. Fair enough. A couple ones on AI. One, just kind of very high level one, and again, you know, I get somewhat frequently, white collar exposure within B&I. Yeah. It's really de minimis. You know, if you really think about it, I think we've kind of, you know, when you apply the math, it gets down to about a 3% potential impact in terms of the white collar workforce that would be potentially susceptible to what the AI trade is focused on. That's just the pool, not the, you know, if it were to go away, if it– Yeah, that's the pool. Yeah. You know, my belief is that jobs will evolve, that today there are very few AI engineers inside of organizations. 10 years from now, there'll be a lot. Yep. The jobs will evolve. I don't believe that the jobs will go away, that entry-level jobs will be modified, changed, people will be refocused. Frankly, jobs may become more revenue producing in orientation as opposed to back office, fundamental administrative. You know, I would always make the trade-off. I'd take another salesperson over an administrative position anytime. Having the ability by reducing costs through the application of AI, having the ability to focus resources on growth, I think that's a great trade-off, and would do that every day. Okay. You know, maybe sticking on AI and you know, sort of cost benefits. We've talked about a little bit hospitality and Culinary IQ seem like pretty important initiatives. In terms of, you know, I guess adoption, in terms of, you know, how it's impacting the cost structure for your clients, menu profitability, stuff like that, could you touch on that a little bit, John? Sure. Absolutely. They are very important tools, and we are constantly looking at ways to expand the application of them across the businesses. Culinary IQ, Labor IQ, Culinary Co-Pilot, you know, a number of these tools have the opportunity to help us manage the business much more effectively, not only for our own operations, but in particular for our clients as well. Keep in mind that a number of our operations are management fee, client cost focused. Anytime you can apply these tools and help to reduce the cost to the end user, whether it be a, you know, a B&I customer or a healthcare customer or enhance your operations in literally any business. It's a great application. The terrific thing is we've been able to build these tools internally using existing resources and our existing IT budget. We don't have some significant technology stack cost requirement that we're trying to overcome. We have a normal operating budget, and we have the ability to develop these tools within it. We're not making any extraordinary investment. We're just applying the resources that we have a little bit differently. The results so far have been very dramatic. Kind of an interesting point, you know, quick deployment, cost efficient, you know, leading to better outcomes. You know, I guess, maybe two questions, one maybe benchmarking t hose capabilities versus competitors, and then, you know, does that theoretically kind of open the door a little bit in terms of, you know, their ability to scale up, you know, sort of similar tools or no? Yeah. You know, I'm certain that they're all working on the same kinds of tools. I would expect that they– I would hope they would, yeah. Yeah, I would expect that they will. You know, our business is very stable, consistent. You've got large competitors that are well capitalized and understand the business, and I'm sure that they have tools that they're bringing to bear as well. I can only tell you that we're getting much more efficient day in and day out by the application of these tools. Right. We're able to demonstrate to our clients, when they hire us, they get the opportunity to take advantage of that, and we're winning at an elevated rate. Sure Because we're demonstrating things that our competitors haven't been able to demonstrate so far. Okay, so a leading edge. Yeah. Yeah. Okay. Capital allocation. Leverage, getting into a comfortable spot, you know, below 3 or close to it, you know, by the end of the year. Cash flow conversion is getting better, all good things. Maybe just the balance in terms of, you know, bolt-on M&A, and then maybe more near term, I mean, you start to buy back a little bit of stock. Mm You know, how to think about, you know, the, you know, potential for shareholder returns through buybacks? Yeah, you know, I think certainly below 3x by the end of the year, we'll get to that level and probably keep it in that range. You know, that's a very comfortable range for us to be operating in. We have the capital to deploy to do bolt-on M&A. You know, we'll continue to be able to do that. You know, we'll accelerate share repurchases when we're below 3x. We'll continue to maintain a focus on raising the dividend as well because we have a large shareholder base that's you know that are dividend-oriented funds that love the company, they're long-term holders, and we'll continue to be able to serve the needs of both sets of shareholders. You know, ultimately, we're very comfortable operating at this level of indebtedness. We'll continue to pay down debt slowly. Yeah. You know, through the operating leverage, we'll continue to get the ratio down below 3 and it's our intent to keep it there. Okay. Lightning round, word association to end it? Sure. If that's okay with you. AI? The first word that comes to mind is awesome. Awesome. Okay, I like it. Healthcare? Challenged. Challenged, which is good for you. Yeah Unfortunately. Margins? Going up. Buybacks? Yes. Going up. Yes. I love it. M&A? Some. Some. Big Ten football. I'm a fan of all football and. Oh, you're a Northwestern grad, but yeah. I am a Northwestern grad, and my daughter went to Wisconsin, and actually she went to Columbia as well. I don't have a college football favorite 'cause I serve too many customers. I need to be loyal to all of them. Very polite answer. All right, John, thanks so much. Really appreciate it. Perfect. Yeah. Perfect. Yeah. You know, thank you for the time. Thank you. Very informative. Appreciate it. Yeah.