YEAR-OVER-YEAR
SUMMARY
- Revenue +7%; Organic Revenue +9%
- Growth from strong base business volume, pricing actions, and
net new business
- Record revenue in a second quarter for both the FSS U.S. and
International segments
- Operating Income +27%1; Adjusted Operating Income (AOI)
+29%2
- Operating Income Margin +59 bps; AOI Margin +69 bps2
- Increased profitability from revenue growth, supply chain
strategies, and cost discipline
- GAAP EPS +271%1 to $0.20; Adjusted EPS +79%2 to
$0.29
- Results reflected ongoing commitment to profitable growth
across organization
- GAAP EPS benefited from lower interest expense associated with
repayment of 2025 Senior Notes
- Opportunistically Enhanced Capital Structure in the Second
Quarter
- Favorably repriced 2028 and 2030 Term Loans by 50 bps; expected
interest expense savings
- Over $1.1 billion in cash availability at quarter-end
Aramark (NYSE: ARMK) today reported second quarter fiscal 2024
results.
“The Company’s strong momentum continued across the business,
generating record revenue for any second quarter in our history in
both the FSS US and International segments, as well as record
second quarter profit in International,” said John Zillmer,
Aramark’s Chief Executive Officer. “Our revenue performance
reflected our ability to execute on our strategic priorities,
including driving volume growth and net new business. The vast
majority of our profitability improvement in the second quarter was
from leveraging higher revenue, accelerating our supply chain
objectives, and ensuring a disciplined control of costs—while also
benefiting from inflation trends.”
1Operating Income and GAAP EPS reported on
a continuing operations basis
2On a constant-currency basis; Adjusted
EPS excludes the interest expense, net of tax, recorded during
fiscal 2023 on the $1.5 billion Senior Notes due 2025 that were
repaid in the current year
SECOND QUARTER RESULTS
Consolidated revenue was $4.2 billion in the second quarter, a 7%
increase year-over-year, driven by strong base business volume,
pricing actions, and net new business growth. The effect of
currency translation reduced revenue by $84 million.
Organic revenue, which adjusts for the effect of currency
translation, grew 9% compared to the prior year period.
Revenue
Q2 '24
Q2 '23
Change (%)
Organic Revenue
Change (%)
FSS United States
$3,044M
$2,843M
7%
7%
FSS International
1,156
1,073
8%
16%
Total Company
$4,200M
$3,916M
7%
9%
Difference between Change (%) and Organic
Revenue Change (%) reflects the impact of currency translation May
not total due to rounding
- FSS United States revenue growth was led by 1) Education,
particularly in Collegiate Hospitality, primarily from the increase
in student meal plan participation, as well as pricing initiatives
from the start of the academic year; 2) higher per capita spending
and attendance levels at stadiums and arenas in the Sports &
Entertainment business; and 3) from significant new client wins and
strong base business growth in the Business & Industry
sector.
- FSS International revenue growth was broad based, largely from
mining services in Latin America, increased business dining volume
in the United Kingdom, and continued strength in Education
throughout Canada. Revenue on a U.S. GAAP basis also reflected the
effect of currency translation as referenced above.
Operating Income increased 27% year-over-year to $159 million,
and AOI grew 29%2 to $187 million, which represented an operating
income margin increase of 59 basis points and an AOI margin
increase of 69 basis points2 year-over-year. Increased
profitability continued to be driven by the Company’s ability to
leverage higher revenue levels, supply chain strategies, and
disciplined control of costs, as well as improving inflation
trends. The impact of currency translation reduced operating income
by $3 million.
Operating Income
Adjusted Operating Income
(AOI)
Q2 '24
Q2 '23
Change (%)
Q2 '24
Q2 '23
Change (%)
Constant Currency Change
(%)
FSS United States
$144M
$151M
(4)%
$168M
$139M
21%
21%
FSS International*
43
7
***
47
39
21%
29%
Corporate
(28)
(33)
15%
(28)
(30)
8%
8%
Total Company
$159M
$125M
27%
$187M
$147M
27%
29%
May not total due to rounding *FSS
International Q2 '23 results included the contribution of the
Company's noncontrolling interest in AIM Services, which was sold
in the third quarter of fiscal 2023 *** Not meaningful
Year-over-year profitability improvement resulted from the
following segment performance:
- FSS United States benefited from higher base business volume,
the maturity of new business, operating cost management across the
portfolio, and supply chain efficiencies. Operating Income in the
prior year also included non-cash income associated with the
reversal of contingent consideration from certain
acquisitions.
- FSS International achieved higher base business and net new
business, along with stronger supply chain economics. The segment
reported record second quarter profitability, despite not having
the contribution of AIM Services following the Company's sale of
its noncontrolling interest in the third quarter of fiscal 2023.
Operating Income in the prior year also included severance charges
related to organizational restructuring initiatives.
- Corporate expenses were lower primarily from tight control of
above-unit overhead costs.
CASH FLOW AND CAPITAL
STRUCTURE The second quarter generated a cash inflow
associated with Aramark's normal seasonal business cadence. Net
cash provided by operating activities during the second quarter was
$221 million, and Free Cash Flow was $140 million. Additionally,
the Company paid approximately $25 million in the quarter for the
remaining fees associated with the completion of the spin
transaction, which occurred on September 30, 2023.
In the second quarter, Aramark proactively repriced its 2028
Term Loan B of $730 million and 2030 Term Loan B of $1.1 billion at
lower interest rates. The Company expects the repricing action to
result in interest expense savings of approximately $10 million
annually. At quarter-end, Aramark had over $1.1 billion in cash
availability.
DIVIDEND DECLARATION The
Company's Board of Directors approved a quarterly dividend of 9.5
cents per share of common stock, as announced on April 29, 2024.
The dividend will be payable on May 28, 2024, to stockholders of
record at the close of business on May 13, 2024.
BUSINESS UPDATE Aramark's
ongoing commitment to profitable growth across the Company resulted
in another strong quarter in both the top- and bottom-line. The
Company continues to benefit from increased base business volume,
pricing actions, and net new business. Aramark believes it is
differentiating itself by creating food and facility service
offerings focused on innovation around customer experiences.
The Company expects to increasingly scale its higher revenue
through supply chain efficiencies—including enhanced data
harmonization and analytics—and disciplined cost management, as
well as improving inflation trends.
Aramark believes its hospitality focused culture continues to
create significant opportunities for the Company.
OUTLOOK The Company provides
its expectations for organic revenue growth, Adjusted Operating
Income growth, Adjusted Earnings per Share growth, and Net Debt to
Covenant Adjusted EBITDA ("Leverage Ratio") on a non-GAAP basis,
and does not provide a reconciliation of such forward-looking
non-GAAP measures to GAAP due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliations, including adjustments that could be made for
the effect of currency translation. The fiscal 2024 outlook
reflects management's current assumptions regarding numerous
evolving factors that are difficult to accurately predict,
including those discussed in the Risk Factors set forth in the
Company's filings with the United States Securities and Exchange
Commission.
As a result of Aramark's strong performance in the first half of
fiscal 2024, the Company raised its full-year Outlook for Organic
Revenue growth, after indicating AOI growth and adjusted EPS growth
would be toward the higher end of the range last quarter.
Aramark currently anticipates the following full-year
performance for fiscal 2024:
Organic
Revenue
Growth
AOI
Growth
Adjusted EPS
Growth
Leverage
~ +9%
+17% to +20%
+30% to +35%
~ 3.5x
(previously +7% to +9%)
Constant Currency, except Leverage
Ratio
“Our updated Outlook represents the confidence we have in our
global teams whose efforts and passion define our success,” Zillmer
continued. “The Company is at an exciting inflection point as we
execute on our strategies—all with a focus to create significant
value for our stakeholders.”
CONFERENCE CALL SCHEDULED
The Company has scheduled a conference call at 8:30 a.m. ET today
to discuss its earnings and outlook. This call and related
materials can be heard and reviewed, either live or on a delayed
basis, on the Company's website, www.aramark.com, on the investor relations
page.
About Aramark Aramark (NYSE:
ARMK) proudly serves the world’s leading educational institutions,
Fortune 500 companies, world champion sports teams, prominent
healthcare providers, iconic destinations and cultural attractions,
and numerous municipalities in 15 countries around the world with
food and facilities management. Because of our hospitality culture,
our employees strive to do great things for each other, our
partners, our communities, and the planet. Aramark has been
recognized on FORTUNE’s list of “World’s Most Admired Companies,”
Fair360’s “Top 50 Companies for Diversity” and “Top Companies for
Supplier Diversity,” Newsweek’s list of “America’s Most Responsible
Companies 2024,” the HRC’s “Best Places to Work for LGBTQ
Equality,” and earned a score of 100 on the Disability Equality
Index. Learn more at www.aramark.com and connect with us on
LinkedIn, Facebook, X, and Instagram.
Selected Operational
and Financial Metrics
Adjusted Revenue (Organic)
Adjusted Revenue (Organic) represents revenue, adjusted to
eliminate the impact of currency translation.
Adjusted Operating Income
Adjusted Operating Income represents operating income adjusted to
eliminate the change in amortization of acquisition-related
intangible assets; severance and other charges; spin-off related
charges and other items impacting comparability.
Adjusted Operating Income (Constant
Currency) Adjusted Operating Income (Constant Currency)
represents Adjusted Operating Income adjusted to eliminate the
impact of currency translation.
Adjusted Net Income Adjusted
Net Income represents net income from continuing operations
attributable to Aramark stockholders adjusted to eliminate the
change in amortization of acquisition-related intangible assets;
severance and other charges; spin-off related charges; the effect
of debt repayments and repricings on interest expense, net, and
other items impacting comparability, less the tax impact of these
adjustments. The tax effect for Adjusted Net Income for our United
States earnings is calculated using a blended United States federal
and state tax rate. The tax effect for Adjusted Net Income in
jurisdictions outside the United States is calculated at the local
country tax rate.
Adjusted Net Income (Constant
Currency), Net of Interest Adjustment Adjusted Net
Income (Constant Currency), Net of Interest Adjustment represents
Adjusted Net Income adjusted to eliminate the impact of currency
translation and interest expense, net of tax, recorded during
fiscal 2023 on the $1.5 billion Senior Notes due 2025 that were
repaid in the current year.
Adjusted EPS Adjusted EPS
represents Adjusted Net Income divided by diluted weighted average
shares outstanding.
Adjusted EPS (Constant
Currency) Adjusted EPS (Constant Currency) represents
Adjusted EPS adjusted to eliminate the impact of currency
translation and interest expense, net of tax, recorded during
fiscal 2023 on the $1.5 billion Senior Notes due 2025 that were
repaid in the current year.
Covenant Adjusted EBITDA
Covenant Adjusted EBITDA represents net income from continuing
operations attributable to Aramark stockholders adjusted for
interest expense, net; provision for income taxes; depreciation and
amortization and certain other items as defined in our debt
agreements required in calculating covenant ratios and debt
compliance. We also use Net Debt for our ratio to Covenant Adjusted
EBITDA, which is calculated as total long-term borrowings less cash
and cash equivalents and short-term marketable securities.
Free Cash Flow Free Cash
Flow represents net cash (used in) provided by operating activities
of continuing operations less net purchases of property and
equipment and other. Management believes that the presentation of
free cash flow provides useful information to investors because it
represents a measure of cash flow available for distribution among
all the security holders of the Company.
We use Adjusted Revenue (Organic), Adjusted Operating Income
(including on a constant currency basis), Adjusted Net Income
(including on a constant currency basis, net of interest
adjustment), Adjusted EPS (including on a constant currency basis),
Covenant Adjusted EBITDA and Free Cash Flow as supplemental
measures of our operating profitability and to control our cash
operating costs. We believe these financial measures are useful to
investors because they enable better comparisons of our historical
results and allow our investors to evaluate our performance based
on the same metrics that we use to evaluate our performance and
trends in our results. These financial metrics are not measurements
of financial performance under generally accepted accounting
principles, or GAAP. Our presentation of these metrics has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. You should not consider these measures as
alternatives to revenue, operating income, net income, earnings per
share or net cash (used in) provided by operating activities,
determined in accordance with GAAP. Adjusted Revenue (Organic),
Adjusted Operating Income, Adjusted Net Income, Adjusted EPS,
Covenant Adjusted EBITDA and Free Cash Flow as presented by us may
not be comparable to other similarly titled measures of other
companies because not all companies use identical calculations.
Explanatory Notes to the Non-GAAP
Schedules
Spin-off of Uniform Services
- as previously announced, the Company completed the spin-off of
the Uniform segment into an independent publicly traded company,
Vestis Corporation, on September 30, 2023. As a result, the Uniform
segment historical results and assets and liabilities included in
the spin-off are reported as discontinued operations in the
Company's condensed consolidated financial statements for all
periods prior to the separation and distribution as reflected
below.
Amortization of Acquisition-Related
Intangible Assets - adjustments to eliminate the change
in amortization expense recognized on acquisition-related
intangible assets.
Severance and Other Charges
- adjustments to eliminate severance expenses in the applicable
period ($6.2 million for year-to-date 2024 and $29.0 million for
both the second quarter and year-to-date 2023).
Spin-off Related Charges -
adjustments to eliminate charges related to the Company's spin-off
of the Uniform segment, including accounting and legal related
expenses, third party advisory costs and other costs. Adjustment
also eliminates charitable contribution expense for the
contribution of Vestis shares to a donor advised fund in order to
fund charitable contributions ($8.8 million for year-to-date
2024).
Gains, Losses and Settlements impacting
comparability - adjustments to eliminate certain
transactions that are not indicative of the Company's ongoing
operational performance, primarily for charges related to
hyperinflation in Argentina ($0.9 million for the second quarter of
2024, $4.8 million for year-to-date 2024, $2.8 million for the
second quarter of 2023 and $3.9 million for year-to-date 2023),
expense for contingent consideration liabilities related to
acquisition earn outs, net of reversals ($0.5 million expense for
year-to-date 2024, $48.2 million net reversal for the second
quarter of 2023 and $73.9 million net reversal for year-to-date
2023), non-cash charges for the impairment of operating lease
right-of-use assets and property and equipment ($3.4 million for
the second quarter of 2023 and $21.7 million for year-to-date
2023), non-cash charges related to information technology assets
($6.1 million for both the second quarter and year-to-date 2023),
non-cash charges for the impairment of certain assets related to a
business held-for-sale ($5.2 million for year-to-date 2023),
pension withdrawal charges ($4.7 million for both the second
quarter and year-to-date 2023), charges related to the retirement
of the Company's former Executive Vice President of Human Resources
($2.6 million for year-to-date 2023), cash termination fees and
moving costs related to exiting a real estate property ($1.3
million for year-to-date 2023) and other miscellaneous charges.
Effect of Debt Repayments and
Repricings on Interest Expense, net - adjustments to
eliminate expenses associated with the repayment of the Senior
Notes due 2025 by the Company in the applicable period such as
charges related to the payment of a call premium ($23.9 million for
year-to-date 2024) and non-cash charges for the write-off of
unamortized debt issuance costs ($7.9 million for year-to-date
2024). Adjustment also eliminates expenses associated with the
repricing of the United States Term B-5 Loans due 2028 and United
States Term B-6 Loans due 2030 such as non-cash charges for the
write-off of unamortized debt issuance costs and discount ($1.2
million for both the second quarter of 2024 and year-to-date 2024)
and the payment of third party costs ($0.4 million for both the
second quarter of 2024 and year-to-date 2024).
Tax Impact of Adjustments to Adjusted
Net Income - adjustments to eliminate the net tax impact
of the adjustments to Adjusted Net Income calculated based on a
blended United States federal and state tax rate for United States
adjustments and the local country tax rate for adjustments in
jurisdictions outside the United States. Adjustment also eliminates
the tax related impact of the Company's spin-off of the Uniform
segment, including a valuation allowance recorded based on the
Company's ability to utilize foreign tax credits ($7.1 million
charge for year-to-date 2024), disallowed transaction costs ($2.6
million charge for year-to-date 2024) and the restatement of the
Company's deferred tax position ($1.9 million benefit for
year-to-date 2024). Additionally, the adjustment reverses valuation
allowances recorded against deferred tax assets in a foreign
subsidiary that were previously deemed to be not realizable ($3.8
million for both the second quarter and year-to-date 2023).
Effect of Currency
Translation - adjustments to eliminate the impact that
fluctuations in currency translation rates had on the comparative
results by presenting the periods on a constant currency basis.
Assumes constant foreign currency exchange rates based on the rates
in effect for the prior year period being used in translation for
the comparable current year period.
Effect of Repayment of the Senior Notes
due 2025, net - adjustments to eliminate the interest
expense, net of tax, recorded during 2023 on the $1.5 billion
Senior Notes due 2025 that were repaid in 2024.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements reflect our current expectations as to
future events based on certain assumptions and include any
statement that does not directly relate to any historical or
current fact. These statements include, but are not limited to,
statements under the heading "Outlook" and those related to our
expectations regarding the performance of our business, our
financial results, our operations, our liquidity and capital
resources, the conditions in our industry and our growth strategy.
In some cases, forward-looking statements can be identified by
words such as "outlook," "aim," "anticipate," "have confidence,"
"estimate," "expect," "will be," "will continue," "will likely
result," "project," "intend," "plan," "believe," "see," "look to"
and other words and terms of similar meaning or the negative
versions of such words. These forward-looking statements are
subject to risks and uncertainties that may change at any time, and
actual results or outcomes may differ materially from those that we
expected.
Some of the factors that we believe could affect or continue to
affect our results include without limitation: unfavorable economic
conditions; natural disasters, global calamities, climate change,
pandemics, energy shortages, sports strikes and other adverse
incidents; geopolitical events including, but not limited to, the
ongoing conflict between Russia and Ukraine and the growing
conflict in the Middle East, global supply chain disruptions,
inflation, volatility and disruption of global financial markets;
the failure to retain current clients, renew existing client
contracts and obtain new client contracts; a determination by
clients to reduce their outsourcing or use of preferred vendors;
competition in our industries; increased operating costs and
obstacles to cost recovery due to the pricing and cancellation
terms of our food and support services contracts; currency risks
and other risks associated with international operations, including
compliance with a broad range of laws and regulations, including
the United States Foreign Corrupt Practices Act; risks associated
with suppliers from whom our products are sourced; disruptions to
our relationship with our distribution partners; the contract
intensive nature of our business, which may lead to client
disputes; the inability to hire and retain key or sufficient
qualified personnel or increases in labor costs; our expansion
strategy and our ability to successfully integrate the businesses
we acquire and costs and timing related thereto; risks associated
with the completed spin-off of Aramark Uniform and Career Apparel
("Uniform") as an independent publicly traded company to our
stockholders; continued or further unionization of our workforce;
liability resulting from our participation in multiemployer defined
benefit pension plans; laws and governmental regulations including
those relating to food and beverages, the environment, wage and
hour and government contracting; liability associated with
noncompliance with applicable law or other governmental
regulations; new interpretations of or changes in the enforcement
of the government regulatory framework; increases or changes in
income tax rates or tax-related laws; potential liabilities,
increased costs, reputational harm, and other adverse effects based
on our commitments and stakeholder expectations relating to
environmental, social and governance considerations; the failure to
maintain food safety throughout our supply chain, food-borne
illness concerns and claims of illness or injury; a cybersecurity
incident or other disruptions in the availability of our computer
systems or privacy breaches; our leverage; variable rate
indebtedness that subjects us to interest rate risk; the inability
to generate sufficient cash to service all of our indebtedness;
debt agreements that limit our flexibility in operating our
business; and other factors set forth under the headings "Part I,
Item 1A Risk Factors," "Part I, Item 3 Legal Proceedings" and "Part
II, Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations" and other sections of our
Annual Report on Form 10-K, filed with the Securities and Exchange
Commission (the "SEC") on November 21, 2023 as such factors may be
updated from time to time in our other periodic filings with the
SEC, which are accessible on the SEC's website at www.sec.gov and
which may be obtained by contacting Aramark's investor relations
department via its website at www.aramark.com. These factors should
not be construed as exhaustive and should be read in conjunction
with the other cautionary statements that are included herein and
in our other filings with the SEC. As a result of these risks and
uncertainties, readers are cautioned not to place undue reliance on
any forward-looking statements included herein or that may be made
elsewhere from time to time by, or on behalf of, us.
Forward-looking statements speak only as of the date made. We
undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments, changes in our expectations, or otherwise,
except as required by law.
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share
Amounts)
Three Months Ended
March 29, 2024
March 31, 2023
Revenue
$
4,199,913
$
3,916,156
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
3,869,152
3,621,405
Depreciation and amortization
109,118
103,169
Selling and general corporate expenses
62,557
66,225
4,040,827
3,790,799
Operating income
159,086
125,357
Interest Expense, net
86,377
113,604
Income from Continuing Operations Before
Income Taxes
72,709
11,753
Provision (Benefit) for Income Taxes from
Continuing Operations
19,707
(2,337
)
Net income from Continuing Operations
53,002
14,090
Less: Net loss attributable to
noncontrolling interests
(447
)
(159
)
Net income from Continuing Operations
attributable to Aramark stockholders
53,449
14,249
Income from Discontinued Operations, net
of tax
—
41,792
Net income attributable to Aramark
stockholders
$
53,449
$
56,041
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.20
$
0.05
Income from Discontinued Operations
—
0.16
Basic earnings per share attributable to
Aramark stockholders
$
0.20
$
0.21
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.20
$
0.05
Income from Discontinued Operations
—
0.16
Diluted earnings per share attributable to
Aramark stockholders
$
0.20
$
0.21
Weighted Average Shares Outstanding:
Basic
262,841
260,673
Diluted
265,282
262,537
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share
Amounts)
Six Months Ended
March 29, 2024
March 31, 2023
Revenue
$
8,607,678
$
7,829,876
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
7,914,230
7,213,207
Depreciation and amortization
214,662
205,766
Selling and general corporate expenses
152,750
133,861
8,281,642
7,552,834
Operating income
326,036
277,042
Interest Expense, net
200,939
214,555
Income from Continuing Operations Before
Income Taxes
125,097
62,487
Provision for Income Taxes from Continuing
Operations
43,578
10,399
Net income from Continuing Operations
81,519
52,088
Less: Net loss attributable to
noncontrolling interests
(466
)
(659
)
Net income from Continuing Operations
attributable to Aramark stockholders
81,985
52,747
Income from Discontinued Operations, net
of tax
—
77,445
Net income attributable to Aramark
stockholders
$
81,985
$
130,192
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.31
$
0.20
Income from Discontinued Operations
—
0.30
Basic earnings per share attributable to
Aramark stockholders
$
0.31
$
0.50
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.31
$
0.20
Income from Discontinued Operations
—
0.30
Diluted earnings per share attributable to
Aramark stockholders
$
0.31
$
0.50
Weighted Average Shares Outstanding:
Basic
262,447
260,063
Diluted
264,775
261,993
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In Thousands)
March 29, 2024
September 29, 2023
Assets
Current Assets:
Cash and cash equivalents
$
356,605
$
1,927,088
Receivables
2,220,634
1,970,782
Inventories
388,279
403,707
Prepayments and other current assets
362,903
297,519
Current assets of discontinued
operations
—
620,931
Total current assets
3,328,421
5,220,027
Property and Equipment, net
1,490,772
1,425,973
Goodwill
4,635,450
4,615,986
Other Intangible Assets
1,820,644
1,804,473
Operating Lease Right-of-use Assets
632,079
572,268
Other Assets
653,534
728,678
Noncurrent Assets of Discontinued
Operations
—
2,503,836
$
12,560,900
$
16,871,241
Liabilities and Stockholders'
Equity
Current Liabilities:
Current maturities of long-term
borrowings
$
42,399
$
1,543,032
Current operating lease liabilities
50,108
51,271
Accounts payable
1,096,634
1,271,859
Accrued expenses and other current
liabilities
1,468,961
1,768,281
Current liabilities of discontinued
operations
—
395,524
Total current liabilities
2,658,102
5,029,967
Long-Term Borrowings
5,879,086
5,098,662
Noncurrent Operating Lease Liabilities
241,055
245,871
Deferred Income Taxes and Other Noncurrent
Liabilities
883,790
914,064
Noncurrent Liabilities of Discontinued
Operations
—
1,861,735
Commitments and Contingencies
Redeemable Noncontrolling Interests
7,727
8,224
Total Stockholders' Equity
2,891,140
3,712,718
$
12,560,900
$
16,871,241
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Six Months Ended
March 29, 2024
March 31, 2023
Cash flows from operating activities of
Continuing Operations:
Net income from Continuing Operations
$
81,519
$
52,088
Adjustments to reconcile Net income from
Continuing Operations to Net cash used in operating activities of
Continuing Operations:
Depreciation and amortization
214,662
205,766
Asset write-downs
—
27,781
Reduction of contingent consideration
liability
—
(73,891
)
Deferred income taxes
(7,810
)
18,821
Share-based compensation expense
29,444
39,123
Changes in operating assets and
liabilities
(737,802
)
(578,947
)
Payments made to clients on contracts
(99,002
)
(85,335
)
Other operating activities
83,192
32,156
Net cash used in operating activities of
Continuing Operations
(435,797
)
(362,438
)
Cash flows from investing activities of
Continuing Operations:
Net purchases of property and equipment
and other
(192,243
)
(162,595
)
Acquisitions, divestitures and other
investing activities
(97,578
)
(41,569
)
Net cash used in investing activities of
Continuing Operations
(289,821
)
(204,164
)
Cash flows from financing activities of
Continuing Operations:
Net proceeds/payments of long-term
borrowings
(1,349,204
)
136,703
Net change in funding under the
Receivables Facility
600,000
395,065
Payments of dividends
(49,862
)
(57,225
)
Proceeds from issuance of common stock
15,583
32,681
Other financing activities
(49,529
)
(21,107
)
Net cash (used in) provided by financing
activities of Continuing Operations
(833,012
)
486,117
Discontinued Operations:
Net cash provided by operating
activities
—
69,716
Net cash used in investing activities
—
(21,693
)
Net cash used in financing activities
—
(12,480
)
Net cash provided by Discontinued
Operations
—
35,543
Effect of foreign exchange rates on cash
and cash equivalents and restricted cash
404
14,492
Decrease in cash and cash equivalents and
restricted cash
(1,558,226
)
(30,450
)
Cash and cash equivalents and restricted
cash, beginning of period
1,972,367
365,431
Cash and cash equivalents and restricted
cash, end of period
$
414,141
$
334,981
Balance Sheet classification
(in thousands)
March 29, 2024
March 31, 2023
Cash and cash equivalents
$
356,605
$
292,199
Restricted cash in Prepayments and other
current assets
57,536
32,289
Cash and cash equivalents in Current
assets of discontinued operations
—
10,493
Total cash and cash equivalents and
restricted cash
$
414,141
$
334,981
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Three Months Ended
March 29, 2024
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
3,043,504
$
1,156,409
$
4,199,913
Operating Income (as reported)
$
144,365
$
42,576
$
(27,855
)
$
159,086
Operating Income Margin (as reported)
4.74
%
3.68
%
3.79
%
Revenue (as reported)
$
3,043,504
$
1,156,409
$
4,199,913
Effect of Currency Translation
(101
)
83,673
83,572
Adjusted Revenue (Organic)
$
3,043,403
$
1,240,082
$
4,283,485
Revenue Growth (as reported)
7.05
%
7.77
%
7.25
%
Adjusted Revenue Growth (Organic)
7.04
%
15.57
%
9.38
%
Operating Income (as reported)
$
144,365
$
42,576
$
(27,855
)
$
159,086
Amortization of Acquisition-Related
Intangible Assets
23,624
3,751
—
27,375
Gains, Losses and Settlements impacting
comparability
—
965
—
965
Adjusted Operating Income
$
167,989
$
47,292
$
(27,855
)
$
187,426
Effect of Currency Translation
(23
)
3,048
—
3,025
Adjusted Operating Income (Constant
Currency)
$
167,966
$
50,340
$
(27,855
)
$
190,451
Operating Income Growth (as reported)
(4.48
)%
***
14.71
%
26.91
%
Adjusted Operating Income Growth
21.21
%
21.43
%
7.56
%
27.15
%
Adjusted Operating Income Growth (Constant
Currency)
21.20
%
29.26
%
7.56
%
29.21
%
Adjusted Operating Income Margin
5.52
%
4.09
%
4.46
%
Adjusted Operating Income Margin (Constant
Currency)
5.52
%
4.06
%
4.45
%
Three Months Ended
March 31, 2023
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
2,843,149
$
1,073,007
$
3,916,156
Operating Income (as reported)
$
151,129
$
6,887
$
(32,659
)
$
125,357
Amortization of Acquisition-Related
Intangible Assets
19,213
3,200
—
22,413
Severance and Other Charges
2,310
26,090
552
28,952
Spin-off Related Charges
—
—
1,941
1,941
Gains, Losses and Settlements impacting
comparability
(34,061
)
2,768
32
(31,261
)
Adjusted Operating Income
$
138,591
$
38,945
$
(30,134
)
$
147,402
Operating Income Margin (as reported)
5.32
%
0.64
%
3.20
%
Adjusted Operating Income Margin
4.87
%
3.63
%
3.76
%
*** Not meaningful
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Six Months Ended
March 29, 2024
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
6,256,236
$
2,351,442
$
8,607,678
Operating Income (as reported)
$
319,130
$
88,819
$
(81,913
)
$
326,036
Operating Income Margin (as reported)
5.10
%
3.78
%
3.79
%
Revenue (as reported)
$
6,256,236
$
2,351,442
$
8,607,678
Effect of Currency Translation
64
86,271
86,335
Adjusted Revenue (Organic)
$
6,256,300
$
2,437,713
$
8,694,013
Revenue Growth (as reported)
8.54
%
13.83
%
9.93
%
Adjusted Revenue Growth (Organic)
8.54
%
18.01
%
11.04
%
Operating Income (as reported)
$
319,130
$
88,819
$
(81,913
)
$
326,036
Amortization of Acquisition-Related
Intangible Assets
44,041
7,238
—
51,279
Severance and Other Charges
6,149
—
92
6,241
Spin-off Related Charges
—
—
29,037
29,037
Gains, Losses and Settlements impacting
comparability
568
4,844
—
5,412
Adjusted Operating Income
$
369,888
$
100,901
$
(52,784
)
$
418,005
Effect of Currency Translation
72
2,525
—
2,597
Adjusted Operating Income (Constant
Currency)
$
369,960
$
103,426
$
(52,784
)
$
420,602
Operating Income Growth (as reported)
3.04
%
163.98
%
(23.52
)%
17.68
%
Adjusted Operating Income Growth
19.74
%
30.09
%
11.81
%
27.98
%
Adjusted Operating Income Growth (Constant
Currency)
19.77
%
33.34
%
11.81
%
28.78
%
Adjusted Operating Income Margin
5.91
%
4.29
%
4.86
%
Adjusted Operating Income Margin (Constant
Currency)
5.91
%
4.24
%
4.84
%
Six Months Ended
March 31, 2023
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
5,764,186
$
2,065,690
$
7,829,876
Operating Income (as reported)
$
309,711
$
33,646
$
(66,315
)
$
277,042
Amortization of Acquisition-Related
Intangible Assets
38,334
5,762
—
44,096
Severance and Other Charges
2,310
26,090
552
28,952
Spin-off Related Charges
—
—
3,431
3,431
Gains, Losses and Settlements impacting
comparability
(41,458
)
12,067
2,481
(26,910
)
Adjusted Operating Income
$
308,897
$
77,565
$
(59,851
)
$
326,611
Operating Income Margin (as reported)
5.37
%
1.63
%
3.54
%
Adjusted Operating Income Margin
5.36
%
3.75
%
4.17
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED NET INCOME &
ADJUSTED EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended
Six Months Ended
March 29, 2024
March 31, 2023
March 29, 2024
March 31, 2023
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
53,449
$
14,249
$
81,985
$
52,747
Adjustment:
Amortization of Acquisition-Related
Intangible Assets
27,375
22,413
51,279
44,096
Severance and Other Charges
—
28,952
6,241
28,952
Spin-off Related Charges
—
1,941
29,037
3,431
Gains, Losses and Settlements impacting
comparability
965
(31,261
)
5,412
(26,910
)
Effect of Debt Repayments and Repricings
on Interest Expense, net
1,595
—
33,352
—
Tax Impact of Adjustments to Adjusted Net
Income
(6,785
)
(10,522
)
(21,905
)
(15,616
)
Adjusted Net Income
$
76,599
$
25,772
$
185,401
$
86,700
Effect of Currency Translation, net of
Tax
3,699
—
1,317
—
Effect of Repayment of the Senior Notes
due 2025, net
—
18,527
—
37,040
Adjusted Net Income (Constant
Currency), Net of Interest Adjustment
$
80,298
$
44,299
$
186,718
$
123,740
Earnings Per Share (as
reported)
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
53,449
$
14,249
$
81,985
$
52,747
Diluted Weighted Average Shares
Outstanding
265,282
262,537
264,775
261,993
$
0.20
$
0.05
$
0.31
$
0.20
Earnings Per Share Growth (as reported)
%
271
%
54
%
Adjusted Earnings Per Share
Adjusted Net Income
$
76,599
$
25,772
$
185,401
$
86,700
Diluted Weighted Average Shares
Outstanding
265,282
262,537
264,775
261,993
$
0.29
$
0.10
$
0.70
$
0.33
Adjusted Earnings Per Share Growth %
194
%
112
%
Adjusted Earnings Per Share (Constant
Currency)
Adjusted Net Income (Constant Currency),
Net of Interest Adjustment
$
80,298
$
44,299
$
186,718
$
123,740
Diluted Weighted Average Shares
Outstanding
265,282
262,537
264,775
261,993
$
0.30
$
0.17
$
0.71
$
0.47
Adjusted Earnings Per Share Growth
(Constant Currency) %
79
%
49
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
NET DEBT TO COVENANT ADJUSTED
EBITDA
(Unaudited)
(In thousands)
Twelve Months Ended
March 29, 2024
March 31, 2023
Net Income Attributable to Aramark
Stockholders (as reported)
$
625,901
$
246,317
Less: Income from Discontinued Operations,
net of tax
(148,987
)
—
Net Income from Continuing Operations
Attributable to Aramark Stockholders
$
476,914
$
246,317
Interest Expense, net
423,859
405,391
Provision for Income Taxes
149,605
76,907
Depreciation and Amortization
418,753
537,797
Share-based compensation expense(1)
66,658
92,651
Unusual or non-recurring (gains) and
losses(2)
(373,653
)
5,207
Pro forma EBITDA for certain
transactions(3)
5,834
7,551
Other(4)(5)
116,975
91,829
Covenant Adjusted EBITDA
$
1,284,945
$
1,463,650
Net Debt to Covenant Adjusted
EBITDA
Total Long-Term Borrowings
$
5,921,485
$
8,017,097
Less: Cash and cash equivalents and
short-term marketable securities(6)
469,435
411,707
Net Debt
$
5,452,050
$
7,605,390
Covenant Adjusted EBITDA
$
1,284,945
$
1,463,650
Net Debt/Covenant Adjusted EBITDA(7)
4.2
5.2
(1) Represents share-based compensation
expense resulting from the application of accounting for stock
options, restricted stock units, performance stock units, deferred
stock unit awards and employee stock purchases.
(2) The twelve months ended March 29, 2024
represents the fiscal 2024 non-cash charge for the impairment of
certain assets related to a business held-for-sale ($2.3 million),
the fiscal 2023 gain from the sale of the Company's equity method
investment in AIM Services, Co., Ltd. ($377.1 million) and the
fiscal 2023 loss from the sale of a portion of the Company's equity
investment in the San Antonio Spurs NBA franchise ($1.1 million).
The twelve months ended March 31, 2023 represents the fiscal 2023
non-cash charge for the impairment of certain assets related to a
business that was sold ($5.2 million).
(3) Represents the annualizing of net
EBITDA from certain acquisitions and divestitures made during the
period.
(4) "Other" for the twelve months ended
March 29, 2024 includes adjustments to remove the impact
attributable to the adoption of certain accounting standards that
are made to the calculation in accordance with the Credit Agreement
and indentures ($51.8 million), charges related to the Company's
spin-off of the Uniform segment ($45.5 million), income related to
non-United States governmental wage subsidies ($13.6 million), the
impact of hyperinflation in Argentina ($11.4 million), the reversal
of contingent consideration liabilities related to acquisition earn
outs, net of expense ($11.3 million), net severance charges ($10.1
million), non-cash charges for inventory write-downs ($6.1
million), labor charges and other expenses associated with closed
or partially closed locations from adverse weather ($5.4 million),
non-cash charges related to information technology assets ($2.1
million), multiemployer pension plan withdrawal charges ($2.0
million) and other miscellaneous expenses.
(5) "Other" for the twelve months ended
March 31, 2023 includes the reversal of contingent consideration
liabilities related to acquisition earn outs, net of expense ($89.0
million), severance charges ($54.0 million), adjustments to remove
the impact attributable to the adoption of certain accounting
standards that are made to the calculation in accordance with the
Credit Agreement and indentures ($38.7 million), non-cash charges
for the impairment of operating lease right-of-use assets and
property and equipment related to certain real estate properties
($29.3 million), non-cash charges for inventory write-downs to net
realizable value and fixed asset write-offs related to personal
protective equipment ($20.5 million), charges related to the
Company's intention to spin-off the Uniform segment ($19.7
million), the loss from the change in fair value related to certain
gasoline and diesel agreements ($7.2 million), favorable
adjustments for the EBITDA impact attributable to equity
investments that are permitted in the calculation in accordance
with the Credit Agreement and indentures, primarily from the
Company's previous ownership interest in AIM Services Co., Ltd.
($6.9 million), the gain from the sale of land ($6.8 million), the
gain from a funding agreement related to a legal matter ($6.5
million), the impact of hyperinflation in Argentina ($6.4 million),
non-cash charges related to information technology assets ($6.1
million), pension withdrawal charges ($4.7 million), the favorable
impact related to a client contract dispute ($4.0 million), legal
settlement charges ($2.7 million) and other miscellaneous
expenses.
(6) Short-term marketable securities
represent held-to-maturity debt securities with original maturities
greater than three months, which are maturing within one year and
will convert back to cash. Short-term marketable securities are
included in "Prepayments and other current assets" on the Condensed
Consolidated Balance Sheets.
(7) The twelve months ended March 31, 2023
reflects reported net debt to covenant adjusted EBITDA, which
includes the reported results of the Uniform segment prior to the
spin-off. The twelve months ended March 29, 2024 has been restated
to exclude the results of the Uniform segment for the entire
period, including quarters prior to the spin-off.
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
FREE CASH FLOW
(Unaudited)
(In thousands)
Six Months Ended
Three Months Ended
Three Months Ended
March 29, 2024
December 29, 2023
March 29, 2024
Net cash (used in) provided by operating
activities of Continuing Operations
$
(435,797
)
$
(657,077
)
$
221,280
Net purchases of property and equipment
and other
(192,243
)
(111,201
)
(81,042
)
Free Cash Flow
$
(628,040
)
$
(768,278
)
$
140,238
Six Months Ended
Three Months Ended
Three Months Ended
March 31, 2023
December 30, 2022
March 31, 2023
Net cash (used in) provided by operating
activities of Continuing Operations
$
(362,438
)
$
(615,748
)
$
253,310
Net purchases of property and equipment
and other
(162,595
)
(85,557
)
(77,038
)
Free Cash Flow
$
(525,033
)
$
(701,305
)
$
176,272
Six Months Ended
Three Months Ended
Three Months Ended
Change
Change
Change
Net cash used in operating activities of
Continuing Operations
$
(73,359
)
$
(41,329
)
$
(32,030
)
Net purchases of property and equipment
and other
(29,648
)
(25,644
)
(4,004
)
Free Cash Flow
$
(103,007
)
$
(66,973
)
$
(36,034
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240506171946/en/
Inquiries: Felise Glantz Kissell (215) 409-7287
Kissell-Felise@aramark.com
Gene Cleary (215) 409-7945 Cleary-Gene@aramark.com
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