YEAR-OVER-YEAR
SUMMARY
- Revenue +8%; Organic Revenue +11%
- Record revenue in a third quarter for FSS U.S. and for any
quarter in FSS International
- Continued strong growth from base business volume, pricing, and
net new business
- Operating Income +22%1; Adjusted Operating Income (AOI)
+21%2
- Record profitability in a third quarter for FSS U.S. and for
any quarter in FSS International
- Increased profitability from revenue growth, operational cost
discipline, and supply chain efficiencies
- GAAP EPS (80)%1 to $0.22; Adjusted EPS +51%2 to $0.31
- Results reflected consistent execution of driving profitable
growth across organization
- GAAP EPS in the prior year included a net gain from sale of
noncontrolling equity investments
- Actions After Quarter-End Further Strengthened Balance Sheet
and Financial Flexibility
- Closed 5-year extension on Revolving Credit Facility and Term A
Loans to 2029
- Upsized Revolving Credit Facility to $1.4 billion, increasing
cash availability by over $200 million
- Raised Full-Year Fiscal 2024 Outlook Due to Strong
Performance
Aramark (NYSE: ARMK) today reported third quarter fiscal 2024
results.
“We continued our record-breaking performance in the third
quarter, setting new highs in revenue and income for the Company,”
said John Zillmer, Aramark’s Chief Executive Officer. “Third
quarter organic revenue growth was broad-based, coming from
virtually all lines of business and every country in the portfolio.
Our multiple operating levers drove profitability as we scaled
higher sales volume, managed costs effectively, and achieved supply
chain efficiencies—all while benefiting from an inflation tailwind.
Our performance is a testament to the extraordinary talent within
our organization, which allows us to provide world-class
hospitality services to clients while we focus on our ambitious
path forward.”
1
Operating Income and GAAP EPS 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
THIRD QUARTER RESULTS
Consolidated revenue was $4.4 billion in the third quarter, an 8%
increase year-over-year, driven by strong base business volume,
pricing, and net new business growth. The effect of currency
translation reduced revenue by $116 million.
Organic revenue, which adjusts for the effect of currency
translation, grew 11% compared to the prior year period.
Revenue
Q3 '24
Q3 '23
Change (%)
Organic Revenue
Change (%)
FSS United States
$3,144M
$2,891M
9%
9%
FSS International
1,232
1,162
6%
16%
Total Company
$4,376M
$4,053M
8%
11%
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) Sports &
Entertainment from higher per capita spending and greater
attendance levels in stadiums; 2) Business & Industry as a
result of significant new client wins; 3) Education, particularly
in Collegiate Hospitality, primarily from meal plan initiatives;
and 4) enhanced commissary offerings within Corrections.
- FSS International revenue growth was broad-based, largely from
ongoing base business growth and consistent net new business
performance across geographies—particularly in the U.K., Canada,
and Spain. Revenue on a GAAP basis reflected the effect of currency
translation as referenced above.
Operating Income increased 22% year-over-year to $162 million,
and AOI grew 21%2 to $193 million, which represented an operating
income margin increase of 42 basis points and an AOI margin
increase of 38 basis points2 year-over-year. Increased
profitability continued to be driven by the Company’s ability to
leverage higher revenue levels, disciplined control of operational
costs, and supply chain efficiencies, as well as ongoing
improvement of inflation trends. The impact of currency translation
reduced operating income by $5 million.
Operating Income
Adjusted Operating Income
(AOI)
Q3 '24
Q3 '23
Change (%)
Q3 '24
Q3 '23
Change (%)
Constant Currency Change
(%)
FSS United States
$140M
$123M
13%
$164M
$144M
13%
14%
FSS International
52
40
32%
60
46
30%
41%
Corporate
(31)
(31)
—%
(31)
(27)
(13)%
(13)%
Total Company
$162M
$133M
22%
$193M
$163M
18%
21%
May not total due to rounding
Year-over-year profitability 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, which more than offset
the favorability in the prior year period associated with insurance
related costs.
- FSS International achieved higher base business volume and net
new business, along with effective control of operating costs and
stronger supply chain economics.
- Corporate experienced higher employee incentive expenses.
CASH FLOW AND CAPITAL
STRUCTURE Consistent with the historical seasonality of
the business, net cash provided by operating activities increased
$193 million in the third quarter to $141 million, and Free Cash
Flow increased $198 million to a source of cash of $62 million. The
$198 million year-over-year improvement in Free Cash Flow was
driven by higher cash from operations and favorable working
capital. At quarter-end, Aramark had over $1.1 billion in cash
availability.
After quarter-end, Aramark proactively extended maturities and
strengthened financial flexibility by closing a 5-year extension on
its Revolving Credit Facility and Term A Loans, now due in August
2029. The Company also upsized its Revolving Credit Facility to
$1.4 billion, increasing Aramark's cash availability by over $200
million.
DIVIDEND DECLARATION The
Company's Board of Directors approved a quarterly dividend of 9.5
cents per share of common stock, as announced on August 2, 2024.
The dividend will be payable on September 3, 2024, to stockholders
of record at the close of business on August 19, 2024.
BUSINESS UPDATE Aramark
continued its top- and bottom-line momentum by delivering another
quarter of strong financial results. Revenue growth was led by
increased base business volume, pricing, and net new business.
Profitability was driven by effective operational cost management,
supply chain efficiencies, and the maturity of new business, along
with improved inflation trends.
Aramark remains committed to strong organic revenue growth,
margin expansion, adjusted EPS growth, and capital structure
enhancement. Due to the significant revenue growth potential across
the portfolio, combined with the Company's multiple operating
levers, Aramark expects to achieve both its near-term outlook and
longer-term financial targets.
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 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 outperformance throughout fiscal 2024,
the Company anticipates its full-year Outlook to be the
following:
Organic Revenue Growth At ~
+10%
AOI Growth At ~ +20%
Adjusted EPS Growth At ~ +35%
Leverage At ~ 3.5x
Outlook in Q2 2024 Earnings Release:
Organic Revenue ~ 9%, AOI +17% to +20%, and Adjusted EPS growth
+30% to +35%
Constant Currency, except Leverage
Ratio
“We are successfully executing on our strategic vision, enabling
us to continue delivering for our clients, employees, partners, and
shareholders,” Zillmer continued. “Given the substantial growth
opportunities ahead, and our proven ability to capitalize on
them—we are confident in our business momentum this fiscal year and
beyond.”
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,”
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 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 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 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
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 ($0.4 million for the third quarter of
2024, $5.2 million for year-to-date 2024, $2.8 million for the
third quarter of 2023 and $6.7 million for year-to-date 2023),
non-cash charges related to the impairment of a trade name ($3.3
million for both the third quarter and year-to-date 2024), expense
for contingent consideration liabilities related to acquisition
earn outs, net of reversals ($0.5 million expense for year-to-date
2024, $1.6 million expense for the third quarter of 2023 and $72.3
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 ($21.7 million for year-to-date 2023), non-cash
charges related to information technology assets ($6.1 million for
year-to-date 2023), non-cash charges for the impairment of certain
assets related to a business that was sold ($5.2 million for
year-to-date 2023), pension withdrawal charges ($4.7 million for
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.
Gain on Sale of Equity Investments,
net - adjustment to eliminate the impact of the gain
from the sale of the Company's equity method investment in AIM
Services, Co., Ltd. ($377.1 million for both the third quarter and
year-to-date 2023) and the loss from the sale of a portion of the
Company's equity investment in the San Antonio Spurs NBA franchise
($1.1 million for both the third quarter and year-to-date
2023).
Effect of Debt Repayments and
Repricings on Interest Expense, net - adjustments to
eliminate expenses associated with the repayment of borrowings,
including 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 and $2.5 million for both the third quarter
and year-to-date 2023). 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 year-to-date 2024) and the payment of
third party costs ($0.4 million for 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 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 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)
Three Months Ended
June 28, 2024
June 30, 2023
Revenue
$
4,376,076
$
4,053,050
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
4,040,866
3,754,548
Depreciation and amortization
108,132
101,317
Selling and general corporate expenses
65,399
64,673
4,214,397
3,920,538
Operating income
161,679
132,512
Gain on Sale of Equity Investments,
net
—
(375,972
)
Interest Expense, net
81,478
112,235
Income from Continuing Operations Before
Income Taxes
80,201
396,249
Provision for Income Taxes from Continuing
Operations
22,080
109,572
Net income from Continuing Operations
58,121
286,677
Less: Net (loss) income attributable to
noncontrolling interests
(5
)
71
Net income from Continuing Operations
attributable to Aramark stockholders
58,126
286,606
Income from Discontinued Operations, net
of tax
—
51,878
Net income attributable to Aramark
stockholders
$
58,126
$
338,484
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.22
$
1.10
Income from Discontinued Operations
—
0.20
Basic earnings per share attributable to
Aramark stockholders
$
0.22
$
1.30
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.22
$
1.09
Income from Discontinued Operations
—
0.20
Diluted earnings per share attributable to
Aramark stockholders
$
0.22
$
1.29
Weighted Average Shares Outstanding:
Basic
263,390
260,922
Diluted
266,577
262,747
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share
Amounts)
Nine Months Ended
June 28, 2024
June 30, 2023
Revenue
$
12,983,754
$
11,882,926
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
11,955,096
10,967,755
Depreciation and amortization
322,794
307,083
Selling and general corporate expenses
218,149
198,534
12,496,039
11,473,372
Operating income
487,715
409,554
Gain on Sale of Equity Investments,
net
—
(375,972
)
Interest Expense, net
282,417
326,790
Income from Continuing Operations Before
Income Taxes
205,298
458,736
Provision for Income Taxes from Continuing
Operations
65,658
119,971
Net income from Continuing Operations
139,640
338,765
Less: Net loss attributable to
noncontrolling interests
(471
)
(588
)
Net income from Continuing Operations
attributable to Aramark stockholders
140,111
339,353
Income from Discontinued Operations, net
of tax
—
129,323
Net income attributable to Aramark
stockholders
$
140,111
$
468,676
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.53
$
1.30
Income from Discontinued Operations
—
0.50
Basic earnings per share attributable to
Aramark stockholders
$
0.53
$
1.80
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.53
$
1.29
Income from Discontinued Operations
—
0.50
Diluted earnings per share attributable to
Aramark stockholders
$
0.53
$
1.79
Weighted Average Shares Outstanding:
Basic
262,761
260,349
Diluted
265,387
262,267
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In Thousands)
June 28, 2024
September 29, 2023
Assets
Current Assets:
Cash and cash equivalents
$
436,075
$
1,927,088
Receivables
2,199,876
1,970,782
Inventories
370,423
403,707
Prepayments and other current assets
323,992
297,519
Current assets of discontinued
operations
—
620,931
Total current assets
3,330,366
5,220,027
Property and Equipment, net
1,493,778
1,425,973
Goodwill
4,641,245
4,615,986
Other Intangible Assets
1,802,176
1,804,473
Operating Lease Right-of-use Assets
628,561
572,268
Other Assets
652,585
728,678
Noncurrent Assets of Discontinued
Operations
—
2,503,836
$
12,548,711
$
16,871,241
Liabilities and Stockholders'
Equity
Current Liabilities:
Current maturities of long-term
borrowings
$
943,279
$
1,543,032
Current operating lease liabilities
50,944
51,271
Accounts payable
1,041,756
1,271,859
Accrued expenses and other current
liabilities
1,416,987
1,768,281
Current liabilities of discontinued
operations
—
395,524
Total current liabilities
3,452,966
5,029,967
Long-Term Borrowings
5,034,327
5,098,662
Noncurrent Operating Lease Liabilities
243,235
245,871
Deferred Income Taxes and Other Noncurrent
Liabilities
866,522
914,064
Noncurrent Liabilities of Discontinued
Operations
—
1,861,735
Commitments and Contingencies
Redeemable Noncontrolling Interests
7,737
8,224
Total Stockholders' Equity
2,943,924
3,712,718
$
12,548,711
$
16,871,241
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Nine Months Ended
June 28, 2024
June 30, 2023
Cash flows from operating activities of
Continuing Operations:
Net income from Continuing Operations
$
139,640
$
338,765
Adjustments to reconcile Net income from
Continuing Operations to Net cash used in operating activities of
Continuing Operations:
Depreciation and amortization
322,794
307,083
Asset write-downs
—
27,781
Reduction of contingent consideration
liability
—
(73,891
)
Gain on sale of equity investments,
net
—
(375,972
)
Deferred income taxes
(11,948
)
89,760
Share-based compensation expense
46,895
56,872
Changes in operating assets and
liabilities
(790,247
)
(724,270
)
Payments made to clients on contracts
(108,262
)
(103,798
)
Other operating activities
106,027
42,663
Net cash used in operating activities of
Continuing Operations
(295,101
)
(415,007
)
Cash flows from investing activities of
Continuing Operations:
Net purchases of property and equipment
and other
(270,912
)
(245,629
)
Proceeds from sale of equity
investments
—
633,179
Acquisitions, divestitures and other
investing activities
(108,492
)
(64,046
)
Net cash (used in) provided by investing
activities of Continuing Operations
(379,404
)
323,504
Cash flows from financing activities of
Continuing Operations:
Net proceeds/payments of long-term
borrowings
(1,293,577
)
(256,766
)
Net change in funding under the
Receivables Facility
599,000
395,065
Payments of dividends
(74,853
)
(85,898
)
Proceeds from issuance of common stock
24,872
42,343
Other financing activities
(56,006
)
(18,578
)
Net cash (used in) provided by financing
activities of Continuing Operations
(800,564
)
76,166
Discontinued Operations:
Net cash provided by operating
activities
—
144,914
Net cash used in investing activities
—
(41,598
)
Net cash used in financing activities
—
(19,431
)
Net cash provided by Discontinued
Operations
—
83,885
Effect of foreign exchange rates on cash
and cash equivalents and restricted cash
(1,769
)
13,268
(Decrease) Increase in cash and cash
equivalents and restricted cash
(1,476,838
)
81,816
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
$
495,529
$
447,247
Balance Sheet classification
(in thousands)
June 28, 2024
June 30, 2023
Cash and cash equivalents
$
436,075
$
388,166
Restricted cash in Prepayments and other
current assets
59,454
44,833
Cash and cash equivalents in Current
assets of discontinued operations
—
14,248
Total cash and cash equivalents and
restricted cash
$
495,529
$
447,247
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Three Months Ended
June 28, 2024
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
3,144,435
$
1,231,641
$
4,376,076
Operating Income (as reported)
$
140,062
$
52,308
$
(30,691
)
$
161,679
Operating Income Margin (as reported)
4.45
%
4.25
%
3.69
%
Revenue (as reported)
$
3,144,435
$
1,231,641
$
4,376,076
Effect of Currency Translation
610
115,883
116,493
Adjusted Revenue (Organic)
$
3,145,045
$
1,347,524
$
4,492,569
Revenue Growth (as reported)
8.78
%
5.96
%
7.97
%
Adjusted Revenue Growth (Organic)
8.80
%
15.92
%
10.84
%
Operating Income (as reported)
$
140,062
$
52,308
$
(30,691
)
$
161,679
Amortization of Acquisition-Related
Intangible Assets
23,593
3,941
—
27,534
Gains, Losses and Settlements impacting
comparability
—
3,629
—
3,629
Adjusted Operating Income
$
163,655
$
59,878
$
(30,691
)
$
192,842
Effect of Currency Translation
194
5,104
—
5,298
Adjusted Operating Income (Constant
Currency)
$
163,849
$
64,982
$
(30,691
)
$
198,140
Operating Income Growth (as reported)
13.42
%
32.07
%
(0.34
)%
22.01
%
Adjusted Operating Income Growth
13.44
%
30.00
%
(13.03
)%
18.18
%
Adjusted Operating Income Growth (Constant
Currency)
13.57
%
41.08
%
(13.03
)%
21.43
%
Adjusted Operating Income Margin
5.20
%
4.86
%
4.41
%
Adjusted Operating Income Margin (Constant
Currency)
5.21
%
4.82
%
4.41
%
Three Months Ended
June 30, 2023
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
2,890,639
$
1,162,411
$
4,053,050
Operating Income (as reported)
$
123,493
$
39,607
$
(30,588
)
$
132,512
Amortization of Acquisition-Related
Intangible Assets
19,196
3,362
—
22,558
Spin-off Related Charges
—
—
3,529
3,529
Gains, Losses and Settlements impacting
comparability
1,579
3,090
(93
)
4,576
Adjusted Operating Income
$
144,268
$
46,059
$
(27,152
)
$
163,175
Operating Income Margin (as reported)
4.27
%
3.41
%
3.27
%
Adjusted Operating Income Margin
4.99
%
3.96
%
4.03
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Nine Months Ended
June 28, 2024
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
9,400,671
$
3,583,083
$
12,983,754
Operating Income (as reported)
$
459,192
$
141,127
$
(112,604
)
$
487,715
Operating Income Margin (as reported)
4.88
%
3.94
%
3.76
%
Revenue (as reported)
$
9,400,671
$
3,583,083
$
12,983,754
Effect of Currency Translation
674
202,154
202,828
Adjusted Revenue (Organic)
$
9,401,345
$
3,785,237
$
13,186,582
Revenue Growth (as reported)
8.62
%
11.00
%
9.26
%
Adjusted Revenue Growth (Organic)
8.63
%
17.26
%
10.97
%
Operating Income (as reported)
$
459,192
$
141,127
$
(112,604
)
$
487,715
Amortization of Acquisition-Related
Intangible Assets
67,634
11,179
—
78,813
Severance and Other Charges
6,149
—
92
6,241
Spin-off Related Charges
—
—
29,037
29,037
Gains, Losses and Settlements impacting
comparability
568
8,473
—
9,041
Adjusted Operating Income
$
533,543
$
160,779
$
(83,475
)
$
610,847
Effect of Currency Translation
266
7,629
—
7,895
Adjusted Operating Income (Constant
Currency)
$
533,809
$
168,408
$
(83,475
)
$
618,742
Operating Income Growth (as reported)
6.00
%
92.66
%
(16.20
)%
19.08
%
Adjusted Operating Income Growth
17.74
%
30.05
%
4.06
%
24.72
%
Adjusted Operating Income Growth (Constant
Currency)
17.80
%
36.23
%
4.06
%
26.33
%
Adjusted Operating Income Margin
5.68
%
4.49
%
4.70
%
Adjusted Operating Income Margin (Constant
Currency)
5.68
%
4.45
%
4.69
%
Nine Months Ended
June 30, 2023
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
8,654,825
$
3,228,101
$
11,882,926
Operating Income (as reported)
$
433,204
$
73,253
$
(96,903
)
$
409,554
Amortization of Acquisition-Related
Intangible Assets
57,530
9,124
—
66,654
Severance and Other Charges
2,310
26,090
552
28,952
Spin-off Related Charges
—
—
6,960
6,960
Gains, Losses and Settlements impacting
comparability
(39,879
)
15,157
2,388
(22,334
)
Adjusted Operating Income
$
453,165
$
123,624
$
(87,003
)
$
489,786
Operating Income Margin (as reported)
5.01
%
2.27
%
3.45
%
Adjusted Operating Income Margin
5.24
%
3.83
%
4.12
%
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
Nine Months Ended
June 28, 2024
June 30, 2023
June 28, 2024
June 30, 2023
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
58,126
$
286,606
$
140,111
$
339,353
Adjustment:
Amortization of Acquisition-Related
Intangible Assets
27,534
22,558
78,813
66,654
Severance and Other Charges
—
—
6,241
28,952
Spin-off Related Charges
—
3,529
29,037
6,960
Gains, Losses and Settlements impacting
comparability
3,629
4,576
9,041
(22,334
)
Gain on Sale of Equity Investments,
net
—
(375,972
)
—
(375,972
)
Effect of Debt Repayments and Repricings
on Interest Expense, net
—
2,522
33,352
2,522
Tax Impact of Adjustments to Adjusted Net
Income
(6,388
)
93,594
(28,293
)
77,978
Adjusted Net Income
$
82,901
$
37,413
$
268,302
$
124,113
Effect of Currency Translation, net of
Tax
2,817
—
4,134
—
Effect of Repayment of the Senior Notes
due 2025, net
—
18,541
—
55,581
Adjusted Net Income (Constant
Currency), Net of Interest Adjustment
$
85,718
$
55,954
$
272,436
$
179,694
Earnings Per Share (as
reported)
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
58,126
$
286,606
$
140,111
$
339,353
Diluted Weighted Average Shares
Outstanding
266,577
262,747
265,387
262,267
$
0.22
$
1.09
$
0.53
$
1.29
Earnings Per Share Growth (as reported)
%
(80
)%
(59
)%
Adjusted Earnings Per Share
Adjusted Net Income
$
82,901
$
37,413
$
268,302
$
124,113
Diluted Weighted Average Shares
Outstanding
266,577
262,747
265,387
262,267
$
0.31
$
0.14
$
1.01
$
0.47
Adjusted Earnings Per Share Growth %
118
%
114
%
Adjusted Earnings Per Share (Constant
Currency)
Adjusted Net Income (Constant Currency),
Net of Interest Adjustment
$
85,718
$
55,954
$
272,436
$
179,694
Diluted Weighted Average Shares
Outstanding
266,577
262,747
265,387
262,267
$
0.32
$
0.21
$
1.03
$
0.69
Adjusted Earnings Per Share Growth
(Constant Currency) %
51
%
50
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
NET DEBT TO COVENANT ADJUSTED
EBITDA
(Unaudited)
(In thousands)
Twelve Months Ended
June 28, 2024
June 30, 2023
Net Income Attributable to Aramark
Stockholders (as reported)
$
345,543
$
544,472
Less: Income from Discontinued Operations,
net of tax
(97,109
)
—
Net Income from Continuing Operations
Attributable to Aramark Stockholders
$
248,434
$
544,472
Interest Expense, net
393,103
426,672
Provision for Income Taxes
62,113
189,020
Depreciation and Amortization
425,568
540,344
Share-based compensation expense(1)
66,360
89,309
Unusual or non-recurring (gains) and
losses(2)
2,319
(370,765
)
Pro forma EBITDA for certain
transactions(3)
2,417
4,166
Other(4)(5)
106,749
101,376
Covenant Adjusted EBITDA
$
1,307,063
$
1,524,594
Net Debt to Covenant Adjusted
EBITDA
Total Long-Term Borrowings
$
5,977,606
$
7,646,352
Less: Cash and cash equivalents and
short-term marketable securities(6)
550,361
512,244
Net Debt
$
5,427,245
$
7,134,108
Covenant Adjusted EBITDA
$
1,307,063
$
1,524,594
Net Debt/Covenant Adjusted EBITDA(7)
4.2
4.7
(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 June 28, 2024
represents 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 June 30, 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 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
June 28, 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 ($42.0 million), income related to
non-United States governmental wage subsidies ($13.6 million), the
reversal of contingent consideration liabilities related to
acquisition earn outs, net of expense ($12.8 million), net
severance charges ($10.1 million), the impact of hyperinflation in
Argentina ($8.9 million), non-cash charges for inventory
write-downs ($6.1 million), non-cash charges related to the
impairment of a trade name ($3.3 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
June 30, 2023 includes the reversal of contingent consideration
liabilities related to acquisition earn outs, net of expense ($88.8
million), net severance charges ($53.2 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 ($43.0 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), charges related to the Company's
spin-off of the Uniform segment ($25.8 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), the impact of hyperinflation in Argentina ($8.0 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),
non-cash charges related to information technology assets ($6.1
million), the loss from the change in fair value related to certain
gasoline and diesel agreements ($6.0 million), labor charges and
other expenses associated with closed or partially closed locations
from adverse weather ($5.4 million), the favorable impact related
to a client contract dispute ($4.0 million), net multiemployer
pension plan withdrawal charges ($3.9 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 June 30, 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 June 28, 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)
Nine Months Ended
Six Months Ended
Three Months Ended
June 28, 2024
March 29, 2024
June 28, 2024
Net cash (used in) provided by operating
activities of Continuing Operations
$
(295,101
)
$
(435,797
)
$
140,696
Net purchases of property and equipment
and other
(270,912
)
(192,243
)
(78,669
)
Free Cash Flow
$
(566,013
)
$
(628,040
)
$
62,027
Nine Months Ended
Six Months Ended
Three Months Ended
June 30, 2023
March 31, 2023
June 30, 2023
Net cash used in operating activities of
Continuing Operations
$
(415,007
)
$
(362,438
)
$
(52,569
)
Net purchases of property and equipment
and other
(245,629
)
(162,595
)
(83,034
)
Free Cash Flow
$
(660,636
)
$
(525,033
)
$
(135,603
)
Nine Months Ended
Six Months Ended
Three Months Ended
Change
Change
Change
Net cash provided by (used in) operating
activities of Continuing Operations
$
119,906
$
(73,359
)
$
193,265
Net purchases of property and equipment
and other
(25,283
)
(29,648
)
4,365
Free Cash Flow
$
94,623
$
(103,007
)
$
197,630
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240805451981/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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De Jul 2024 a Ago 2024
Aramark (NYSE:ARMK)
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