Aramark (NYSE:ARMK) Q4 2022 Earnings Call Transcript

Andrew Wittmann: Great. Good morning. Thanks for taking my questions, everyone. I guess question on the capital structure, you mentioned that you’ve got the flexibility and you don’t have to do anything that what you choose to do. Just hoping you could explain a little bit more about what that means. I guess, with the uniform business representing probably just over $40 million of EBITDA the company’s leverage being at the end of the year around four times. So it feels like there’s at least a billion and a half of new debt, that’s going to have to get reformulated somewhere. Do you have the ability to pay off your existing series of debt and partially without having to redeem them in fall or anytime you could just give us a little bit more detail as to how you planned to effectuate the new capital structure over there at least?

Thomas Ondrof: Yes, still prefer not to give out or go into too much detail at this point. Because the markets move we’re continuing to evaluate what’s best. I think the key point is that there’s really nothing we’re in our hands being forced to do with the transaction, Andrew it’s going to put us in a position that we really don’t want to be in. So how we ultimately finalize the details, what we pay off, what we refinance, is all being determined and will again, give you more details on that as we move forward and get a little closer in the transaction.

Andrew Wittmann: Okay, we’ll stay tuned for that. I guess my follow up question. I wanted to ask about the international segment a little bit more. And I was hoping you could just comment on the margins in that business in particular, obviously, this business has got a lot more of a dynamic economy. Certainly that’s happening there. And I want to understand how that’s affecting your profit margins in that segment specifically and how much more you have on variable costs to potentially manage those margins, if needed, recognizing that you’re coming out of COVID where you actually probably did a lot of those activities already. Maybe if you could just kind of boil it down to help us understand what the margins could be in 2023 for that swing, it would be helpful. Thank you.

John Zillmer: Yes, margins international have moved forward quite nicely, actually. They have a model that’s been more stable. We talked about that before. Their sales growth has been more consistent. So it really is a bit of a proof source as to what’s happening in the U.S. as we rebuild the growth engine, and margin through scale model, the U.S., sorry, the international business has really been doing that for a number of years. So they were able to move the margin north of 4% I think, this year, and then we’ll continue and reach pre-COVID levels, I think in ’23, or very close to that. So they’ve got the same levers as the U.S. in terms of accounts from an account basis, in terms of what they do to drive margin. But again, they’ve been able to scale through their growth, both benefiting from the supply chain, and managing the unit overheads quite nicely, this past year, and we’re expecting the same as ’23.

And then from an inflation standpoint, they just have, it’s part of the DNA for them in many of their countries. So their ability to price was part of the mix for them. And part of what they face the challenge they face, again, in many parts of the international business for some time.

Operator: Thank you. One moment for next question. Our next question in queue coming from the line of Faiza Alwy from Deutsche Bank.

Faiza Alwy: Yes, hi, good morning. I was hoping to get an update on the labor environment?