Aramark (NYSE:ARMK) executives highlighted strong first-quarter fiscal 2026 results and what they described as significant momentum from record client retention and large new contract wins, while reiterating full-year guidance and pointing to a normalization of quarterly comparisons as the impact of a prior-year calendar shift reverses in the second quarter.
Quarter results reflected calendar shift but showed underlying strength
Chief Executive Officer John Zillmer said the company was “very pleased with the strong results delivered in the quarter,” noting that a calendar shift affected the pace of year-over-year growth. Chief Financial Officer Jim Tarangelo explained that fiscal 2025 included a 53rd week in the fourth quarter, which shifted the start and end dates of fiscal 2026 quarters by one week versus last year, moving “strong activity and low activity weeks between reporting periods.”
Operating income was $218 million, up slightly from the prior year. Adjusted operating income (AOI) was $263 million, up 1% on a constant-currency basis, with Tarangelo estimating the calendar shift reduced AOI by about $25 million. Excluding the shift, AOI growth would have been about 11%, he said.
GAAP EPS was $0.36 and adjusted EPS was $0.51. Tarangelo said the calendar shift impacted adjusted EPS growth by approximately 13%.
Segment performance: U.S. impacted by shift; International extended double-digit streak
In Food and Support Services (FSS) United States, organic revenue rose 2% to $3.4 billion, which Zillmer said would have been about 5% without the calendar shift, primarily tied to education timing. He said the effect should be “recaptured” in the second quarter with no impact to the full year.
Zillmer cited growth drivers in the quarter across multiple U.S. lines of business, including:
- Workplace Experience, which posted a 17th consecutive quarter of double-digit growth, supported by new business launches and holiday catering activity.
- Healthcare, where management pointed to base business strength from vertical sales and expanded multi-service offerings.
- Sports & Entertainment, where the company expanded its college football portfolio and said alcohol unit sales were “now becoming comparable to NFL stadiums.”
- Corrections, which continued adding statewide systems and highlighted its IN2WORK program.
On profitability, Tarangelo said U.S. AOI declined 1% year over year, with a calendar shift impact he estimated at 10%. Excluding the shift, U.S. AOI would have grown about 9%, supported by “revenue drop-through,” technology-enabled efficiencies (particularly in supply chain), productivity, and cost controls.
International delivered organic revenue growth of more than 13% to $1.5 billion, which management said was largely unaffected by the calendar shift. Zillmer said the segment achieved its 19th consecutive quarter of double-digit growth, with every country contributing and the U.K., Spain, Germany, and Chile leading. Tarangelo reported International AOI rose 12% on a constant-currency basis, with strength in the U.K., Spain, and Chile partially offset by mobilization costs tied to new business in sports and entertainment and higher education.
Major contract wins and retention highlighted; healthcare platform deals in focus
Management repeatedly emphasized client retention, with Zillmer calling current levels “extraordinary” and saying the company is achieving record-high retention “at a time in the fiscal year when normally we would have lost a little bit of business by now.” He said retention is a major organizational focus and embedded in compensation systems.
Zillmer also detailed several large wins and launches. He said Aramark “successfully launched operations at Penn Medicine,” describing it as the largest contract win ever in the U.S., covering nearly 4,000 beds across a seven-hospital system and including patient and retail food service, environmental services, patient transportation, and an integrated call center.
He also announced a new healthcare win, RWJBarnabas Health, calling it “the largest, most comprehensive academic health system in New Jersey,” with 18 primary locations and 5,700 beds. Zillmer said the contract is anticipated to launch this summer and will include retail dining, environmental services, and patient transport. In Q&A, he said RWJBarnabas is larger than Penn Medicine’s system and that “the potential revenues are likely to be as strong as Penn.” He added that rollout is expected to be staged beginning in June, with further timing still being finalized, but that management expects “significant impact in 2026.”
Other new business mentioned included the University at Albany (operations began this semester), DePaul University (starting in the second quarter, per the CFO), and a statewide relationship with the Alabama Department of Corrections, which will integrate proprietary AI platforms for menu planning and operational efficiency across 27 facilities.
Asked about why Aramark has been winning competitive bids, Zillmer pointed to the company’s “capabilities,” “systems,” and ability to demonstrate enterprise-wide collaboration in complex situations, including “self-op conversions” and competitive takeaways. He declined to comment on other large pursuits currently in progress, citing competitive sensitivity, but said the company is pursuing “a number of large opportunities.”
Executives also suggested healthcare customers are increasingly seeking consolidation across multiple services. Zillmer described a “strategic shift” on the part of clients toward systemizing operations to capture cost and operating synergies. Tarangelo added that healthcare contracts often require less capital and may be more cost-reimbursable, which can lead to a faster ramp to profitability; he said those dynamics were embedded in the company’s plan and guidance.
Supply chain and AI: growth initiatives and efficiency gains
Aramark’s leadership described “strong” global supply chain performance and said inflation was tracking within assumptions. Zillmer said double-digit growth in the company’s GPO network supported “well over $20 billion worth of contracted spend,” with expansion into additional hospitality areas such as theme parks, hotels, and cruise lines. He also referenced pursuing growth through select and strategic acquisitions.
On technology, management highlighted AI-driven tools such as mobile AI chatbots and AI-enhanced analytics for clients, along with internal benefits in supply chain operations. Zillmer said AI is already improving back-office productivity, including data capture and negotiations, and characterized Aramark’s AI investment as relatively small and part of its normal IT operating budget rather than a major separate program.
In Q&A, Tarangelo said first-quarter margin performance included about $25 million of costs tied to the 53rd-week effect that will unwind, and he reiterated expectations for full-year adjusted operating margin expansion of roughly 30 to 40 basis points, consistent with prior commentary.
Cash flow, capital allocation, and outlook
Tarangelo said first-quarter cash flow reflected typical seasonality, with an outflow that was larger than the prior year due to higher working capital use driven by growth. Capital expenditures were elevated due to the timing of commitments associated with sizable new wins and certain renewals, particularly in sports and higher education. He said capex was about 4.5% of revenue in the quarter and is expected to normalize toward a historical level of about 3.5% by year-end.
On capital allocation, the company repurchased $30 million of shares during the quarter. Aramark also repriced $2.4 billion of 2030 term loans, lowering interest rates and generating 25 basis points of interest expense savings. At quarter-end, the company reported approximately $1.4 billion in cash availability.
Looking ahead, Tarangelo said the second quarter was progressing in line with expectations, with the calendar shift expected to reverse and provide a roughly 3% revenue benefit. He said the company anticipates second-quarter performance “right in line with current Wall Street expectations” and reiterated confidence in full-year guidance.
Aramark reaffirmed its fiscal 2026 outlook for:
- Organic revenue growth: 7% to 9%
- AOI growth: 12% to 17%
- Adjusted EPS growth: 20% to 25%
- Leverage ratio: below 3x
Management also provided building blocks for organic growth, with Tarangelo stating first-quarter pricing was about 3% and, for the full year, the company still anticipates about 3% pricing, 0.5% to 1% volume growth, and net new growth around the middle of the range at roughly 4.5%, while noting the company is encouraged by opportunities to exceed that level.
About Aramark (NYSE:ARMK)
Aramark (NYSE: ARMK) is a global provider of food services, facilities management and uniform solutions, serving clients across a wide array of industries including education, healthcare, business and government. The company operates through three primary segments: Food and Support Services, Uniform and Career Apparel, and Facility Services, delivering integrated solutions designed to enhance guest experiences, improve operational efficiencies and maintain safe, clean environments. Aramark’s offerings include corporate dining, patient and senior nutrition, campus dining, sports and entertainment concessions, custodial services, technical maintenance and industrial laundry.
Founded in 1959 and headquartered in Philadelphia, Pennsylvania, Aramark has expanded its footprint to more than 20 countries, with a strong presence in North America, Latin America, Europe and Asia.
