Company Delivers on 2024 Financial
Outlook Board Approves New $500 Million Share Repurchase
Program in Early November
FISCAL 2024 YEAR-OVER-YEAR SUMMARY
- Revenue +8%; Organic Revenue +10%
- Represented highest annual revenue in Global FSS history
- Driven by base business volume, pricing, and net new
business
- Operating Income +13%1; Adjusted Operating Income (AOI)
+20%2
- Record AOI in both FSS U.S. and International segments for any
fiscal year
- Operating Income Margin +20 bps; AOI margin +50 bps2
- GAAP EPS (42)%1 to $0.99; Adjusted EPS +35%2 to $1.55
- Results reflected execution on profitable growth strategies
across organization
- GAAP EPS in the prior year included a gain from the sale of
noncontrolling interest in AIM Services
- Strong Cash Flow Contributed to +50 bps Improvement in
Leverage Ratio
- Net cash from operations +42%1; Free Cash Flow +121%; Over $2.6
billion of cash availability
- Sold remaining portion of ownership stake in San Antonio Spurs
NBA franchise
Q4 YEAR-OVER-YEAR SUMMARY
- Revenue +5%; Organic Revenue +7%
- Record revenue in a fourth quarter for both FSS U.S. and
International segments
- Operating Income +2%1; Adjusted Operating Income (AOI)
+8%2
- Increased profitability from revenue growth, cost discipline,
and supply chain efficiencies
- GAAP EPS +12%1 to $0.46; Adjusted EPS +14%2 to
$0.54
FOLLOWING FISCAL 2024 YEAR-END
- Authorized $500 Million Share Repurchase Program; Raised
Quarterly Dividend by 11%
- Demonstrates strong confidence in the business and the
significant growth opportunities ahead
Aramark (NYSE: ARMK) today reported results for the full year of
fiscal 2024.
“We reached new highs in our financial performance every quarter
during fiscal 2024, ultimately achieving record revenue and AOI
profitability for any year in Global FSS history,” said John
Zillmer, Aramark’s Chief Executive Officer. “Aramark’s results are
a testament to what our teams are capable of—continuously raising
the bar and challenging ourselves across the organization to
deliver for our stakeholders.”
“As part of this commitment, our Board has approved a new $500
million share repurchase program, reflecting our strong capital
structure capabilities, which include 1) strategically investing to
drive growth; 2) ongoing debt repayment; 3) issuing quarterly
dividends; and 4) now utilizing excess cash generation to
repurchase Aramark shares. I’m proud of what we’ve accomplished
this past year at the Company and believe we have tremendous runway
in the business.”
1
Operating Income, Operating
Income Margin, GAAP EPS, and Net cash provided by operating
activities reported on a continuing operations basis
2
On 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
FISCAL 2024 SUMMARY
Consolidated revenue was $17.4 billion, an increase of 8%
year-over-year, as a result of record base business volume,
pricing, and net new business growth. The effect of currency
translation reduced revenue by $275 million.
Organic revenue grew 10% compared to the prior year period.
Revenue
FY24
FY23
Change (%)
Organic Revenue
Change (%)
FSS United States
$12,577M
$11,721M
7%
7%
FSS International
$4,824M
$4,362M
11%
17%
Total Company
$17,401M
$16,083M
8%
10%
Difference between Change (%) and
Organic Revenue Change (%) reflects the effect of currency
translation
May not total due to rounding
Operating income increased 13% year-over-year to $707 million
and AOI grew 20%2 to $882 million, which represented an operating
margin increase of 20 basis points and AOI margin expansion of 50
basis points2 year-over-year. Profitability growth was from higher
base business volume and net new business, operational cost
discipline across the portfolio, supply chain optimization, and
favorable inflation trends. The effect of currency translation
reduced operating income by $11 million.
Operating Income
Adjusted Operating Income
(AOI)
FY24
FY23
Change (%)
FY24
FY23
Change (%)
Constant
Currency
Change (%)
FSS United States
$660M
$650M
2%
$774M
$682M
13%
14%
FSS International
$187M
$114M
64%
$219M
$176M
24%
30%
Corporate
($141M)
($139M)
(1)%
($111M)
($115M)
4%
4%
Total Company
$707M
$625M
13%
$882M
$743M
19%
20%
May not total due to rounding
The Company's earnings per share in fiscal 2024 was $0.99,
compared to $1.71 in fiscal 2023. Prior year earnings per share
included a gain from the sale of Aramark's noncontrolling interest
in AIM Services. Adjusted earnings per share increased 35%2 to
$1.55, led by the ongoing focus and execution of the Company's
profitable growth strategies across the organization.
FOURTH QUARTER RESULTS
Consolidated revenue was $4.4 billion in the fourth quarter, a 5%
increase year-over-year, largely driven by strong base business
from volume across both segments with pricing normalizing from
favorable inflation trends, particularly in Education. The effect
of currency translation reduced revenue by $72 million.
Organic revenue grew 7% year-over-year.
Revenue
Q4 '24
Q4 '23
Change (%)
Organic Revenue
Change (%)
FSS United States
$3,176M
$3,067M
4%
4%
FSS International
$1,241M
$1,134M
9%
16%
Total Company
$4,417M
$4,200M
5%
7%
Difference between Change (%) and
Organic Revenue Change (%) reflects the effect of currency
translation
May not total due to rounding
- FSS United States revenue growth was led by 1) Sports &
Entertainment from higher per capita spending and strong fan
attendance levels in stadiums; 2) Business & Industry as a
result of increased participation rates and new client wins; and 3)
retail expansion in Corrections, including micro-markets—which more
than offset the exit of some lower margin accounts within
Facilities.
- FSS International revenue growth was broad-based across
geographies, particularly in the U.K., Germany, Canada, and South
America. Top performing industries included Business &
Industry, Sports & Entertainment, and Extractive Services.
Revenue on a GAAP basis reflected the effect of currency
translation as referenced above.
In the fourth quarter, operating income increased 2%
year-over-year to $219 million, and AOI grew 8%2 to $271 million.
Increased profitability was primarily due to higher revenue levels,
cost discipline, and supply chain efficiencies. The prior year
quarter included $17 million of income from proceeds associated
with possessory interest at a Destinations site. The effect of
currency translation reduced operating income by $3 million.
Operating Income
Adjusted Operating Income
(AOI)
Q4 '24
Q4 '23
Change (%)
Q4 '24
Q4 '23
Change (%)
Constant
Currency
Change (%)
FSS United States
$201M
$217M
(7)%
$241M
$229M
5%
5%
FSS International
$46M
$41M
12%
$58M
$52M
10%
16%
Corporate
($28M)
($43M)
34%
($27M)
($28M)
4%
4%
Total Company
$219M
$215M
2%
$271M
$253M
7%
8%
May not total due to rounding
Year-over-year profitability resulted from the following segment
performance:
- FSS United States was driven by higher base business volume,
operational cost management, and supply chain productivity
initiatives across the sectors, which more than offset prior year
income at a Destinations site referenced above. Excluding this
item, FSS United States would have experienced double-digit AOI
growth. Operating income in the current year also reflected a
non-cash inventory adjustment based on expected usage for certain
products within the Corrections business.
- FSS International benefited from increased revenue, disciplined
management of operating costs, and supply chain efficiencies,
partially offset from higher incentive-based compensation.
- Corporate expenses were lower from tight control of above-unit
overhead costs.
CASH FLOW AND CAPITAL
STRUCTURE Net cash provided by operating activities
increased 42% to $727 million in fiscal 2024, and Free Cash Flow
was higher by 121% to $323 million. The year-over-year improvement
was led by higher cash from operations and favorable working
capital.
In the fourth quarter, the Company had a significant source of
cash driven by the Collegiate Hospitality business, consistent with
Aramark's historical seasonality.
Net cash from investing activities in the current year included
proceeds from the sale of the Company's remaining portion of its
ownership stake in the San Antonio Spurs NBA franchise.
As a result of the cash flow performance, higher earnings, and
over $1.6 billion of net debt reduction versus prior year-end,
Aramark's leverage ratio improved 50 basis points year-over-year to
3.4x at the end of September 2024.
At fiscal year-end, the Company had over $2.6 billion in cash
availability.
DIVIDEND DECLARATION
Aramark's Board of Directors approved an 11% increase to the
quarterly dividend. The dividend of $0.105 cents per share of
common stock will be payable on December 12, 2024, to stockholders
of record at the close of business on December 2, 2024.
BUSINESS UPDATE AND SHARE REPURCHASE
PROGRAM During fiscal 2024, the Company drove strong
financial performance through double-digit organic revenue growth,
higher profitability, and margin expansion, as well as a
strengthened balance sheet with considerable financial
flexibility.
Aramark experienced significant annualized gross new business
wins totaling more than $1.4 billion, representing 9% of prior year
revenue—the best year ever for Global FSS. Facilities recently
exited some lower margin accounts within FSS United States, which
contributed to an overall retention level of 93.2%. Aramark's core
Foodservice business in both the United States and International
achieved retention of 95.2% in the fiscal year.
The Company's new business pipeline across the organization
remains substantial, including in first-time outsourcing. Aramark
remains confident in the ability to achieve its Net New target of
4% to 5% of prior year revenue—with retention levels above 95%—in
fiscal 2025 and beyond.
Share Repurchase Program As a result of Aramark’s
growing, predictable cash flow and enhanced financial flexibility,
including significant progress in reducing the Company's leverage
ratio, Aramark's Board of Directors approved a newly created share
repurchase program. The Company is authorized to repurchase up to
$500 million of its outstanding common stock—demonstrating strong
confidence in the business and the significant growth opportunities
ahead. The share repurchase program does not have a fixed
expiration date, providing Aramark with the flexibility to
repurchase shares at opportune times.
Under the share repurchase program, repurchases can be made from
time to time using a variety of methods, including open market
purchases, privately negotiated transactions, accelerated share
repurchases and Rule 10b5-1 trading plans. The size and timing of
any repurchases will depend on a number of factors, including share
price, general business and market conditions and other
factors.
OUTLOOK The Company provides
its expectations for organic revenue growth, Adjusted Operating
Income growth (constant currency), Adjusted Earnings per Share
growth (constant currency) and Net Debt to Covenant Adjusted EBITDA
("Leverage Ratio") on a non-GAAP basis, and does not provide a
reconciliation of such forward-looking non-GAAP measures to GAAP
due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliations,
including adjustments that could be made for the effect of currency
translation. The fiscal 2025 outlook reflects management's current
assumptions regarding numerous evolving factors that are difficult
to accurately predict, including those discussed in the Risk
Factors set forth in the Company's filings with the United States
Securities and Exchange Commission.
Aramark currently anticipates its full-year financial
performance for fiscal 2025 as follows:
($ in millions, except EPS)
FY24
FY25* Outlook
Reference Point
Year-over-year
Growth1
Organic Revenue
$17,401
+7.5%
—
+9.5%
Adjusted Operating
Income
$882
+15%
—
+18%
Adjusted EPS
$1.55
+23%
—
+28%
Leverage Ratio
3.4x
~3.0x
Adjusted EPS Outlook does not
include benefit from potential share repurchases
* 53 week year
1Constant Currency, except
Leverage Ratio
“As we enter fiscal 2025, we continue to take the steps
necessary to reach and surpass new levels of financial
performance,” Zillmer added. “Our teams have laid the groundwork to
create significant new business and value-creating opportunities,
and we are confident in our ability to deliver on them.”
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 16 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,”
The Civic 50 by Points of Light 2024, Fair360’s “Top 50 Companies
for Diversity” and “Top Companies for Black Executives,” 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; gain on sale
of equity investments, net; the effect of debt repayments,
repricings and other 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 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 provided by (used in) 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 provided by (used in) operating activities of
continuing operations, 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 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 ($6.8 million for the fourth quarter of 2024, $13.0 million
for fiscal 2024, $3.8 million for the fourth quarter of 2023 and
$32.8 million for fiscal 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 fiscal 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 non-cash adjustments to
inventory based on expected usage ($18.2 million for both the
fourth quarter and fiscal 2024), the reversal of contingent
consideration liabilities related to acquisition earn outs, net of
expense ($8.7 million for the fourth quarter of 2024, $8.2 million
for fiscal 2024, $13.4 million for the fourth quarter of 2023 and
$85.7 million for fiscal 2023), charges related to a ruling on a
foreign tax matter ($6.8 million for both the fourth quarter and
fiscal 2024), charges related to hyperinflation in Argentina ($0.2
million for the fourth quarter of 2024, $5.4 million for fiscal
2024, $3.7 million for the fourth quarter of 2023 and $10.4 million
for fiscal 2023), non-cash charges related to the impairment of
trade names ($3.3 million for fiscal 2024 and $2.3 million for both
the fourth quarter and fiscal 2023), legal fees ($1.1 million for
both the fourth quarter and fiscal 2024), non-cash charges for the
impairment of operating lease right-of-use assets and property and
equipment ($21.7 million for fiscal 2023), non-cash charges related
to information technology assets ($2.1 million for the fourth
quarter of 2023 and $8.2 million for fiscal 2023), pension
withdrawal charges ($2.0 million for the fourth quarter of 2023 and
$6.7 million for fiscal 2023), non-cash charges for the impairment
of certain assets related to a business that was sold ($5.2 million
for fiscal 2023), charges related to the retirement of the
Company's former Executive Vice President of Human Resources ($2.6
million for fiscal 2023), cash termination fees and moving costs
related to exiting a real estate property ($1.3 million for fiscal
2023) and other miscellaneous charges.
Gain on Sale of Equity Investments,
net - adjustments to eliminate the impact from the sale
of the Company's equity investment in the San Antonio Spurs NBA
franchise ($25.1 million gain for both the fourth quarter and
fiscal 2024 and $1.1 million loss for fiscal 2023) and the gain
from the sale of the Company's equity method investment in AIM
Services, Co., Ltd. ($377.1 million for fiscal 2023).
Effect of Debt Repayments, Repricings
and Other on Interest Expense, net - adjustments to
eliminate expenses associated with the repayment of borrowings,
including the Senior Notes due 2025, and refinancings by the
Company in the applicable period such as charges related to the
payment of a call premium ($23.9 million for fiscal 2024), non-cash
charges for the write-off of unamortized debt issuance costs ($1.1
million for the fourth quarter of 2024, $9.0 million for fiscal
2024 and $2.5 million for fiscal 2023) and the payment of third
party costs ($0.2 million for both the fourth quarter and fiscal
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 fiscal 2024) and the payment of third party costs ($0.4
million for fiscal 2024). Additionally, the adjustment eliminates
the impact on interest related to a ruling on a foreign tax matter
($3.9 million for both the fourth quarter and fiscal 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 ($1.3 million
benefit for the fourth quarter of 2024 and $5.8 million charge for
fiscal 2024), disallowed transaction costs ($1.5 million benefit
for the fourth quarter of 2024 and $1.1 million charge for fiscal
2024) and the restatement of the Company's deferred tax position
($2.1 million charge for the fourth quarter of 2024 and $0.2
million charge for fiscal 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 fourth quarter and fiscal
2024 and $3.8 million for fiscal 2023) and eliminates the impact
related to international tax restructuring initiatives ($29.1
million for both the fourth quarter and fiscal 2023), including the
utilization of capital losses to offset the tax gain related to the
Company's sale of AIM Services, Co., Ltd. and from the reversal of
valuation allowances based on the Company's ability to utilize
deferred tax assets based on future taxable income.
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 ongoing
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)
Fiscal Year Ended
September 27, 2024
September 29, 2023
Revenue
$
17,400,701
$
16,083,212
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
15,975,017
14,774,664
Depreciation and amortization
435,547
409,857
Selling and general corporate expenses
283,627
273,663
16,694,191
15,458,184
Operating income
706,510
625,028
Gain on Sale of Equity Investments,
net
(25,071
)
(375,972
)
Interest Expense, net
366,716
437,476
Income from Continuing Operations Before
Income Taxes
364,865
563,524
Provision for Income Taxes from Continuing
Operations
102,972
116,426
Net income from Continuing Operations
261,893
447,098
Less: Net loss attributable to
noncontrolling interests
(629
)
(578
)
Net income from Continuing Operations
attributable to Aramark stockholders
262,522
447,676
Income from Discontinued Operations, net
of tax
—
226,432
Net income attributable to Aramark
stockholders
$
262,522
$
674,108
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
1.00
$
1.72
Income from Discontinued Operations
$
—
$
0.87
Basic earnings per share attributable to
Aramark stockholders
$
1.00
$
2.59
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.99
$
1.71
Income from Discontinued Operations
$
—
$
0.86
Diluted earnings per share attributable to
Aramark stockholders
$
0.99
$
2.57
Weighted Average Shares Outstanding:
Basic
263,045
260,592
Diluted
266,200
262,594
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share
Amounts)
Three Months Ended
September 27, 2024
September 29, 2023
Revenue
$
4,416,947
$
4,200,286
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
4,019,921
3,806,909
Depreciation and amortization
112,753
102,774
Selling and general corporate expenses
65,478
75,129
4,198,152
3,984,812
Operating income
218,795
215,474
Gain on Sale of Equity Investments,
net
(25,071
)
—
Interest Expense, net
84,299
110,686
Income from Continuing Operations Before
Income Taxes
159,567
104,788
Provision (Benefit) for Income Taxes from
Continuing Operations
37,314
(3,545
)
Net income from Continuing Operations
122,253
108,333
Less: Net (loss) income attributable to
noncontrolling interests
(158
)
10
Net income from Continuing Operations
attributable to Aramark stockholders
122,411
108,323
Income from Discontinued Operations, net
of tax
—
97,109
Net income attributable to Aramark
stockholders
$
122,411
$
205,432
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.46
$
0.42
Income from Discontinued Operations
$
—
$
0.37
Basic earnings per share attributable to
Aramark stockholders
$
0.46
$
0.79
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.46
$
0.41
Income from Discontinued Operations
$
—
$
0.37
Diluted earnings per share attributable to
Aramark stockholders
$
0.46
$
0.78
Weighted Average Shares Outstanding:
Basic
263,894
261,319
Diluted
267,912
263,454
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In Thousands)
September 27, 2024
September 29, 2023
Assets
Current Assets:
Cash and cash equivalents
$
672,483
$
1,927,088
Receivables
2,096,928
1,970,782
Inventories
387,601
403,707
Prepayments and other current assets
249,550
297,519
Current assets of discontinued
operations
—
620,931
Total current assets
3,406,562
5,220,027
Property and Equipment, net
1,573,193
1,425,973
Goodwill
4,677,201
4,615,986
Other Intangible Assets
1,804,602
1,804,473
Operating Lease Right-of-use Assets
638,659
572,268
Other Assets
574,154
728,678
Noncurrent Assets of Discontinued
Operations
—
2,503,836
$
12,674,371
$
16,871,241
Liabilities and Stockholders'
Equity
Current Liabilities:
Current maturities of long-term
borrowings
$
964,286
$
1,543,032
Current operating lease liabilities
54,163
51,271
Accounts payable
1,394,007
1,271,859
Accrued expenses and other current
liabilities
1,801,754
1,768,281
Current liabilities of discontinued
operations
—
395,524
Total current liabilities
4,214,210
5,029,967
Long-Term Borrowings
4,307,171
5,098,662
Noncurrent Operating Lease Liabilities
241,012
245,871
Deferred Income Taxes and Other Noncurrent
Liabilities
865,510
914,064
Noncurrent Liabilities of Discontinued
Operations
—
1,861,735
Commitments and Contingencies
Redeemable Noncontrolling Interest
7,494
8,224
Total Stockholders' Equity
3,038,974
3,712,718
$
12,674,371
$
16,871,241
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Fiscal Year Ended
September 27, 2024
September 29, 2023
Cash flows from operating activities of
Continuing Operations:
Net income from Continuing Operations
$
261,893
$
447,098
Adjustments to reconcile Net income from
Continuing Operations to Net cash provided by operating activities
of Continuing Operations:
Depreciation and amortization
435,547
409,857
Asset write-downs
18,186
29,865
Reduction of contingent consideration
liability
(8,710
)
(97,336
)
Gain on sale of equity investments,
net
(25,071
)
(375,972
)
Deferred income taxes
(7,323
)
100,158
Share-based compensation expense
62,552
76,337
Changes in operating assets and
liabilities
14,014
(19,915
)
Payments made to clients on contracts
(139,003
)
(119,217
)
Other operating activities
114,429
60,772
Net cash provided by operating activities
of Continuing Operations
726,514
511,647
Cash flows from investing activities of
Continuing Operations:
Net purchases of property and equipment
and other
(403,480
)
(365,476
)
Proceeds from sale of equity
investments
101,198
633,179
Acquisitions, divestitures and other
investing activities
(113,580
)
(44,045
)
Net cash (used in) provided by investing
activities of Continuing Operations
(415,862
)
223,658
Cash flows from financing activities of
Continuing Operations:
Net proceeds/payments of long-term
borrowings
(1,432,278
)
(615,719
)
Net change in funding under the
Receivables Facility
—
(104,935
)
Payments of dividends
(99,901
)
(114,614
)
Distribution from Vestis
—
1,456,701
Proceeds from issuance of common stock
36,573
45,602
Other financing activities
(65,590
)
(7,408
)
Net cash (used in) provided by financing
activities of Continuing Operations
(1,561,196
)
659,627
Discontinued Operations:
Net cash provided by operating
activities
—
254,782
Net cash used in investing activities
—
(14,746
)
Net cash provided by financing
activities
—
3,322
Net cash provided by Discontinued
Operations
—
243,358
Effect of foreign exchange rates on cash
and cash equivalents and restricted cash
10,790
4,697
(Decrease) increase in cash and cash
equivalents and restricted cash
(1,239,754
)
1,642,987
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
$
732,613
$
2,008,418
Balance Sheet classification
(in thousands)
September 27, 2024
September 29, 2023
Cash and cash equivalents
$
672,483
$
1,927,088
Restricted cash in Prepayments and other
current assets
60,130
45,279
Cash and cash equivalents in Current
assets of discontinued operations
—
36,051
Total cash and cash equivalents and
restricted cash
$
732,613
$
2,008,418
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Fiscal Year Ended
September 27, 2024
FSS United States
FSS International
Corporate
Aramark and
Subsidiaries
Revenue (as reported)
$
12,576,737
$
4,823,964
$
17,400,701
Operating Income (as reported)
$
659,907
$
187,341
$
(140,738
)
$
706,510
Operating Income Margin (as reported)
5.2
%
3.9
%
4.1
%
Revenue (as reported)
$
12,576,737
$
4,823,964
$
17,400,701
Effect of Currency Translation
1,189
274,017
275,206
Adjusted Revenue (Organic)
$
12,577,926
$
5,097,981
$
17,675,907
Revenue Growth (as reported)
7.3
%
10.6
%
8.2
%
Adjusted Revenue Growth (Organic)
7.3
%
16.9
%
9.9
%
Operating Income (as reported)
$
659,907
$
187,341
$
(140,738
)
$
706,510
Amortization of Acquisition-Related
Intangible Assets
91,358
15,706
—
107,064
Severance and Other Charges
12,868
—
92
12,960
Spin-off Related Charges
—
—
29,037
29,037
Gains, Losses and Settlements impacting
comparability
10,044
15,528
1,075
26,647
Adjusted Operating Income
$
774,177
$
218,575
$
(110,534
)
$
882,218
Effect of Currency Translation
436
10,342
—
10,778
Adjusted Operating Income (Constant
Currency)
$
774,613
$
228,917
$
(110,534
)
$
892,996
Operating Income Growth (as reported)
1.5
%
63.6
%
(0.9
)%
13.0
%
Adjusted Operating Income Growth
13.5
%
24.2
%
4.2
%
18.8
%
Adjusted Operating Income Growth (Constant
Currency)
13.5
%
30.1
%
4.2
%
20.2
%
Adjusted Operating Income Margin
6.2
%
4.5
%
5.1
%
Adjusted Operating Income Margin (Constant
Currency)
6.2
%
4.5
%
5.1
%
Fiscal Year Ended
September 29, 2023
FSS United States
FSS International
Corporate
Aramark and
Subsidiaries
Revenue (as reported)
$
11,721,368
$
4,361,844
$
16,083,212
Operating Income (as reported)
$
649,982
$
114,480
$
(139,434
)
$
625,028
Amortization of Acquisition-Related
Intangible Assets
76,798
12,664
—
89,462
Severance and Other Charges
2,310
29,951
552
32,813
Spin-off Related Charges
—
—
19,922
19,922
Gains, Losses and Settlements impacting
comparability
(46,869
)
18,915
3,633
(24,321
)
Adjusted Operating Income
$
682,221
$
176,010
$
(115,327
)
$
742,904
Operating Income Margin (as reported)
5.5
%
2.6
%
3.9
%
Adjusted Operating Income Margin
5.8
%
4.0
%
4.6
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Three Months Ended
September 27, 2024
FSS United States
FSS International
Corporate
Aramark and
Subsidiaries
Revenue (as reported)
$
3,176,066
$
1,240,881
$
4,416,947
Operating Income (as reported)
$
200,715
$
46,214
$
(28,134
)
$
218,795
Operating Income Margin (as reported)
6.3
%
3.7
%
5.0
%
Revenue (as reported)
$
3,176,066
$
1,240,881
$
4,416,947
Effect of Currency Translation
515
71,863
72,378
Adjusted Revenue (Organic)
$
3,176,581
$
1,312,744
$
4,489,325
Revenue Growth (as reported)
3.6
%
9.4
%
5.2
%
Adjusted Revenue Growth (Organic)
3.6
%
15.8
%
6.9
%
Operating Income (as reported)
$
200,715
$
46,214
$
(28,134
)
$
218,795
Amortization of Acquisition-Related
Intangible Assets
23,724
4,527
—
28,251
Severance and Other Charges
6,719
—
—
6,719
Gains, Losses and Settlements impacting
comparability
9,476
7,055
1,075
17,606
Adjusted Operating Income
$
240,634
$
57,796
$
(27,059
)
$
271,371
Effect of Currency Translation
170
2,713
—
2,883
Adjusted Operating Income (Constant
Currency)
$
240,804
$
60,509
$
(27,059
)
$
274,254
Operating Income Growth (as reported)
(7.4
)%
12.1
%
33.9
%
1.5
%
Adjusted Operating Income Growth
5.1
%
10.3
%
4.5
%
7.2
%
Adjusted Operating Income Growth (Constant
Currency)
5.1
%
15.5
%
4.5
%
8.4
%
Adjusted Operating Income Margin
7.6
%
4.7
%
6.1
%
Adjusted Operating Income Margin (Constant
Currency)
7.6
%
4.6
%
6.1
%
Three Months Ended
September 29, 2023
FSS United States
FSS International
Corporate
Aramark and
Subsidiaries
Revenue (as reported)
$
3,066,543
$
1,133,743
$
4,200,286
Operating Income (as reported)
$
216,778
$
41,227
$
(42,531
)
$
215,474
Amortization of Acquisition-Related
Intangible Assets
19,268
3,540
—
22,808
Severance and Other Charges
—
3,861
—
3,861
Spin-off Related Charges
—
—
12,962
12,962
Gains, Losses and Settlements impacting
comparability
(6,990
)
3,758
1,245
(1,987
)
Adjusted Operating Income
$
229,056
$
52,386
$
(28,324
)
$
253,118
Operating Income Margin (as reported)
7.1
%
3.6
%
5.1
%
Adjusted Operating Income Margin
7.5
%
4.6
%
6.0
%
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
Fiscal Year Ended
September 27,
2024
September 29,
2023
September 27,
2024
September 29,
2023
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
122,411
$
108,323
$
262,522
$
447,676
Adjustment:
Amortization of Acquisition-Related
Intangible Assets
28,251
22,808
107,064
89,462
Severance and Other Charges
6,719
3,861
12,960
32,813
Spin-off Related Charges
—
12,962
29,037
19,922
Gains, Losses and Settlements impacting
comparability
17,606
(1,987
)
26,647
(24,321
)
Gain on Sale of Equity Investments,
net
(25,071
)
—
(25,071
)
(375,972
)
Effect of Debt Repayments, Repricings and
Other on Interest Expense, net
5,282
—
38,634
2,522
Tax Impact of Adjustments to Adjusted Net
Income
(11,663
)
(40,169
)
(39,956
)
37,809
Adjusted Net Income
$
143,535
$
105,798
$
411,837
$
229,911
Effect of Currency Translation, net of
Tax
161
—
4,295
—
Effect of Repayment of the Senior Notes
due 2025, net
—
18,556
—
74,137
Adjusted Net Income (Constant
Currency), Net of Interest Adjustment
$
143,696
$
124,354
$
416,132
$
304,048
Earnings Per Share (as
reported)
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
122,411
$
108,323
$
262,522
$
447,676
Diluted Weighted Average Shares
Outstanding
267,912
263,454
266,200
262,594
$
0.46
$
0.41
$
0.99
$
1.71
Earnings Per Share Growth (as reported)
%
12.2
%
(42.1
)%
Adjusted Earnings Per Share
Adjusted Net Income
$
143,535
$
105,798
$
411,837
$
229,911
Diluted Weighted Average Shares
Outstanding
267,912
263,454
266,200
262,594
$
0.54
$
0.40
$
1.55
$
0.88
Adjusted Earnings Per Share Growth %
32.5
%
76.1
%
Adjusted Earnings Per Share (Constant
Currency)
Adjusted Net Income (Constant Currency),
Net of Interest Adjustment
$
143,696
$
124,354
$
416,132
$
304,048
Diluted Weighted Average Shares
Outstanding
267,912
263,454
266,200
262,594
$
0.54
$
0.47
$
1.56
$
1.16
Adjusted Earnings Per Share Growth
(Constant Currency) %
13.6
%
35.0
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
NET DEBT TO COVENANT ADJUSTED
EBITDA
(Unaudited)
(In thousands)
Twelve Months Ended
September 27, 2024
September 29, 2023
Net income Attributable to Aramark
Stockholders (as reported)
$
262,522
$
674,108
Interest Expense, net
366,716
439,585
Provision for Income Taxes
102,972
177,614
Depreciation and Amortization
435,547
546,362
Share-based compensation expense(1)
62,552
86,938
Unusual or non-recurring (gains) and
losses(2)
(22,752
)
(422,596
)
Pro forma EBITDA for certain
transactions(3)
840
4,033
Other(4)(5)
126,581
100,681
Covenant Adjusted EBITDA
$
1,334,978
$
1,606,725
Net Debt to Covenant Adjusted
EBITDA
Total Long-Term Borrowings(6)
$
5,271,457
$
6,763,514
Less: Cash and cash equivalents and
short-term marketable securities(6)(7)
714,825
573,853
Net Debt
$
4,556,632
$
6,189,661
Covenant Adjusted EBITDA
$
1,334,978
$
1,606,725
Net Debt/Covenant Adjusted EBITDA(8)
3.4
3.9
(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
September 27, 2024 represents the fiscal 2024 gain from the sale of
the Company's remaining equity investment in the San Antonio Spurs
NBA franchise ($25.1 million) and the fiscal 2024 non-cash charge
for the impairment of certain assets related to a business that was
sold ($2.3 million). The twelve months ended September 29, 2023
represents the fiscal 2023 gain from the sale of the Company's
equity method investment in AIM Services, Co., Ltd. ($377.1
million), the fiscal 2023 gain from the sale of the Company's
equity investment in a foreign company ($51.8 million), the fiscal
2023 non-cash charge for the impairment of certain assets related
to a business that was sold ($5.2 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).
(3) Represents the annualizing of
net EBITDA from certain acquisitions and divestitures made during
the period.
(4) "Other" for the twelve months
ended September 27, 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 ($52.2 million), charges related to the Company's
spin-off of the Uniform segment ($29.0 million), non-cash
adjustments to inventory based on expected usage ($21.7 million),
severance charges ($13.0 million), the reversal of contingent
consideration liabilities related to acquisition earn outs, net of
expense ($8.1 million), charges related to a ruling on a foreign
tax matter ($6.8 million), the impact of hyperinflation in
Argentina ($5.4 million), non-cash charges related to the
impairment of a trade name ($3.3 million), income related to
non-United States governmental wage subsidies ($1.1 million) and
other miscellaneous expenses.
(5) "Other" for the twelve months
ended September 29, 2023 includes the reversal of contingent
consideration liabilities related to acquisition earn outs, net of
expense ($85.7 million), charges related to the Company's spin-off
of the Uniform segment ($51.1 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 ($47.5 million), net severance charges
($37.5 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), income related to
non-United States governmental wage subsidies ($12.5 million), the
impact of hyperinflation in Argentina ($10.4 million), non-cash
charges related to information technology assets ($8.2 million),
the gain from the sale of land ($6.8 million), net multiemployer
pension plan withdrawal charges ($5.9 million), labor charges and
other expenses associated with closed or partially closed locations
from adverse weather ($5.4 million), legal settlement charges ($2.7
million), non-cash charges for inventory write-downs ($2.6
million), the gain from the change in fair value related to certain
gasoline and diesel agreements ($1.9 million) and other
miscellaneous expenses.
(6) "Total Long-Term Borrowings"
and "Cash and cash equivalents and short term marketable
securities" for the twelve months ended September 29, 2023 excludes
both the outstanding liability and the related cash proceeds
resulting from the $1.5 billion of new term loans borrowed by the
Uniform Services business in anticipation of the spin-off which
occurred on September 30, 2023.
(7) 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 Consolidated Balance Sheets.
(8) The twelve months ended
September 29, 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 September 27, 2024
excludes the results of the Uniform segment for the entire
period.
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
FREE CASH FLOW
(Unaudited)
(In thousands)
Fiscal Year Ended
Nine Months Ended
Three Months Ended
September 27, 2024
June 28, 2024
September 27, 2024
Net cash provided by (used in)
operating activities of Continuing Operations
$
726,514
$
(295,101
)
$
1,021,615
Net purchases of property and
equipment and other
(403,480
)
(270,912
)
(132,568
)
Free Cash Flow
$
323,034
$
(566,013
)
$
889,047
Fiscal Year Ended
Nine Months Ended
Three Months Ended
September 29, 2023
June 30, 2023
September 29, 2023
Net cash provided by (used in)
operating activities of Continuing Operations
$
511,647
$
(415,007
)
$
926,654
Net purchases of property and
equipment and other
(365,476
)
(245,629
)
(119,847
)
Free Cash Flow
$
146,171
$
(660,636
)
$
806,807
Fiscal Year Ended
Nine Months Ended
Three Months Ended
Change
Change
Change
Net cash provided by operating
activities of Continuing Operations
$
214,867
$
119,906
$
94,961
Net purchases of property and
equipment and other
(38,004
)
(25,283
)
(12,721
)
Free Cash Flow
$
176,863
$
94,623
$
82,240
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241110221756/en/
Inquiries: Felise Glantz Kissell (215) 409-7287
Kissell-Felise@aramark.com
Gene Cleary (215) 409-7945 Cleary-Gene@aramark.com
Aramark (NYSE:ARMK)
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From Oct 2024 to Nov 2024
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