YEAR-OVER-YEAR
SUMMARY
- Revenue +13%; Organic Revenue +13%
- FSS United States +10%; FSS International +21%1
- Record revenue performance due to stronger sales volume,
pricing, and net new business
- Operating Income +10%2; Adjusted Operating Income (AOI)
+28%1
- Operating Income Margin (9) bps2; AOI Margin +64 bps1
- Growth driven by scale efficiencies from higher revenue, supply
chain initiatives, and cost management
- GAAP EPS (27)%2 to $0.11; Adjusted EPS +33%1 to $0.41
- Results reflected consistent execution on profitable growth
strategies across organization
- GAAP EPS included expenses associated with the completion of
Uniform Services spin-off
- Reduced Net Debt Position by More Than $2.2 Billion versus
Prior Year Period
Aramark (NYSE: ARMK) today reported first quarter fiscal 2024
results.
"Aramark is off to a great start in this new fiscal year,
achieving record revenue across both our FSS U.S. and International
segments, along with record first quarter profit in International,”
said John Zillmer, Aramark's Chief Executive Officer. “Our teams
around the globe are successfully executing on our growth
strategies, which are driving top- and bottom- line performance.
We’ve seen inflation continue to moderate, which provided a
tailwind to profitability during the quarter. We believe the
current market landscape presents tremendous opportunities, and
both our growth leaders and our supply chain organization are hard
at work implementing strategies to further unlock this
potential.”
1
On a constant-currency basis
2
Operating Income, Operating Income Margin,
and GAAP EPS included expenses associated with the completion of
Uniform Services spin-off.
Operating Income and GAAP EPS reported on
a continuing operations basis
FIRST QUARTER RESULTS
Consolidated revenue was $4.4 billion in the first quarter, a 13%
increase year-over-year, due to a strong increase in base business
volume, pricing actions, and net new business growth. The effect of
currency translation reduced revenue by $3 million.
Organic revenue, which adjusts for the effect of currency
translation, also grew 13% compared to the prior year period.
Revenue
Q1 '24
Q1 '23
Change (%)
Organic Revenue
Change (%)
FSS United States
$3,213M
$2,921M
10%
10%
FSS International
1,195
993
20%
21%
Total Company
$4,408M
$3,914M
13%
13%
Difference between Change (%) and Organic
Revenue Change (%) reflects the impact of currency translation
May not total due to rounding
- FSS United States revenue growth was led by 1) Education,
particularly in Collegiate Hospitality with strong performance in
residential dining, retail and catering, as well as contract price
increases with the start of the academic year; 2) higher per capita
spending and attendance levels at stadiums, along with increased
concert activity, in the Sports & Entertainment business; and
3) the start up of significant new client wins and strong base
business growth in the Business & Industry sector.
- FSS International revenue grew across all geographies from
consistent net new business performance and ongoing base business
growth—particularly in the U.K., Canada, and Germany, as well as
throughout Latin America.
Operating Income increased 10% year-over-year to $167 million,
and AOI grew 28%1 to $231 million. Operating income margin was 9
basis points less than the prior year from higher expenses
associated with the completion of the Uniform Services spin-off.
AOI margin improved by 64 basis points1 year-over-year. Increased
profitability was driven by effective cost management across
significantly higher revenue levels and the early benefits from
favorable inflation trends. Currency translation had a negligible
effect on operating income.
Operating Income
Adjusted Operating Income
(AOI)
Q1 '24
Q1 '23
Change (%)
Q1 '24
Q1 '23
Change (%)
Constant Currency Change
(%)
FSS United States
$175M
$159M
10%
$202M
$170M
19%
19%
FSS International*
46
27
73%
54
39
39%
37%
Corporate
(54)
(34)
(61)%
(25)
(30)
16%
16%
Total Company
$167M
$152M
10%
$231M
$179M
29%
28%
May not total due to rounding
*FSS International Q1 '23 results included
the contribution of the Company's noncontrolling interest in AIM
Services, which was sold in the third quarter of fiscal 2023
Year-over-year profitability growth resulted from the following
segment performance:
- FSS United States drove effective cost management across higher
base business volume and benefited from improved supply chain
economics related to product sourcing and purchasing
initiatives.
- FSS International effectively scaled significant growth in base
business and net new business, along with stronger supply chain
economics. The segment had record first quarter profitability,
despite not having the contribution of AIM Services following the
Company's sale of its noncontrolling interest in the third quarter
of fiscal 2023.
- Corporate expenses benefited primarily from tightly managed
above-unit overhead costs, in addition to lower share-based
compensation expense. GAAP results reflected higher spin-off
related expenses in the current period.
CASH FLOW AND CAPITAL
STRUCTURE Consistent with the typical quarterly
seasonality of the business, Aramark experienced a cash outflow in
the first quarter, particularly in Collegiate Hospitality and
Sports & Entertainment, as well as a higher use of working
capital to support the Company's strong revenue growth.
Additionally, Aramark had higher income tax payments in the current
year mainly from the prior year sale of AIM Services and paid
transaction fees in the quarter related to the completion of the
Uniform Services spin-off.
Aramark reduced its net debt position by more than $2.2 billion
compared to the prior year period. In the first quarter, the
Company redeemed the entire $1.5 billion aggregate principal amount
of its 6.375% Senior Notes due 2025 from the proceeds received in
conjunction with the Uniform Services spin-off. At quarter-end,
Aramark had over $1.0 billion in cash availability.
DIVIDEND DECLARATION The
Company's Board of Directors approved a quarterly dividend of 9.5
cents per share of common stock, as announced on January 31, 2024.
The dividend will be payable on February 28, 2024, to stockholders
of record at the close of business on February 14, 2024. As
previously communicated, this dividend amount continues to
represent an increase to Aramark's portion of the pre-spin
quarterly dividend due to the Company's strengthening financial
profile.
BUSINESS UPDATE Aramark is
off to a strong start in fiscal 2024, reflecting the Company's
commitment to its strategic and financial goals. Top-line
performance demonstrated the growth mindset firmly in place across
the organization, which contributed to increased volume, revenue
from net new business, and pricing actions. Improved bottom-line
results were primarily due to effective cost management and supply
chain strategies, combined with favorable inflation trends. The
Company anticipates continued profitable growth and margin
expansion through the operational maturing of new business, ongoing
supply chain initiatives, front-line contribution from leveraging a
flexible operating model and cost control measures. Aramark
continues to expect its typical "U-shaped" margin seasonality.
OUTLOOK The Company provides
its expectations for organic revenue growth, Adjusted Operating
Income growth, Adjusted Earnings per Share growth, and Net Debt to
Covenant Adjusted EBITDA ("Leverage Ratio") on a non-GAAP basis,
and does not provide a reconciliation of such forward-looking
non-GAAP measures to GAAP due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliations, including adjustments that could be made for
the effect of currency translation. The fiscal 2024 outlook
reflects management's current assumptions regarding numerous
evolving factors that are difficult to accurately predict,
including those discussed in the Risk Factors set forth in the
Company's filings with the United States Securities and Exchange
Commission.
Aramark is highly encouraged by the favorable trends in the
business. As a result, the Company updated its fiscal 2024 outlook
for both AOI and Adjusted EPS growth and reaffirmed expectations
for Organic Revenue growth and Leverage Ratio.
Aramark currently anticipates the following full-year
performance for fiscal 2024:
($ in millions except EPS)
FY23
FY24 Outlook
Post-Spin
Reference Point
Year-over-year Growth1
Organic Revenue
$16,083
+7%
—
+9%
Adjusted Operating Income
$743
+17%
—
+20%
Adjusted EPS
$1.16
+30%
—
+35%
Leverage Ratio
3.9x2
~3.5x
Note: Previous Outlook for AOI and
Adjusted EPS growth was +15% to +20% and +25% to +35%,
respectively
1Constant currency, except Leverage
Ratio
2Leverage ratio represents total Company
including Uniform Services at year-end
“I am really pleased by our financial performance in the first
quarter with the business strengthening as the quarter progressed,”
Zillmer continued. “The work we’ve done has centered on building a
consistent and sustainable business focused on providing valued
services to our clients. We believe the foundation is set for
continued success, and we expect our momentum to carry through this
year and beyond. I couldn’t be more excited about what’s to
come.”
CONFERENCE CALL SCHEDULED
The Company has scheduled a conference call at 8:30 a.m. ET today
to discuss its earnings and outlook. This call and related
materials can be heard and reviewed, either live or on a delayed
basis, on the Company's website, www.aramark.com, on the investor relations
page.
About Aramark Aramark (NYSE:
ARMK) proudly serves the world’s leading educational institutions,
Fortune 500 companies, world champion sports teams, prominent
healthcare providers, iconic destinations and cultural attractions,
and numerous municipalities in 15 countries around the world with
food and facilities management. Because of our hospitality culture,
our employees strive to do great things for each other, our
partners, our communities, and the planet. Aramark has been
recognized on FORTUNE’s list of “World’s Most Admired Companies,”
Fair360’s “Top 50 Companies for Diversity” and “Top Companies for
Supplier Diversity,” Newsweek’s list of “America’s Most Responsible
Companies 2024,” the HRC’s “Best Places to Work for LGBTQ
Equality,” and earned a score of 100 on the Disability Equality
Index. Learn more at www.aramark.com and connect with us on
LinkedIn, Facebook, X, and Instagram.
Selected Operational
and Financial Metrics
Adjusted Revenue (Organic)
Adjusted Revenue (Organic) represents revenue, adjusted to
eliminate the impact of currency translation.
Adjusted Operating Income
Adjusted Operating Income represents operating income adjusted to
eliminate the change in amortization of acquisition-related
intangible assets; severance and other charges; spin-off related
charges and other items impacting comparability.
Adjusted Operating Income (Constant
Currency) Adjusted Operating Income (Constant Currency)
represents Adjusted Operating Income adjusted to eliminate the
impact of currency translation.
Adjusted Net Income Adjusted
Net Income represents Net income from Continuing Operations
attributable to Aramark stockholders adjusted to eliminate the
change in amortization of acquisition-related intangible assets;
severance and other charges; spin-off related charges; the effect
of debt repayments 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 the effect of the current year repayment of the
Senior Notes due 2025 on interest expense, net of tax, recorded
during fiscal 2023.
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 operating activities 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.
Items to Rebase Items to
Rebase represents the elimination of balances related to the
Company's Uniform segment, along with other adjustments related to
the spin-off of the Uniform segment, and the elimination of
adjustments related to the effect of certain acquisitions.
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 operating activities, determined in
accordance with GAAP. Adjusted Revenue (Organic), Adjusted
Operating Income, Adjusted Net Income, Adjusted EPS, Covenant
Adjusted EBITDA and Free Cash Flow as presented by us may not be
comparable to other similarly titled measures of other companies
because not all companies use identical calculations.
Explanatory Notes to the Non-GAAP
Schedules
Spin-off of Uniform Services
- As previously announced, the Company completed the spin-off of
Uniform Services into an independent publicly traded company,
Vestis Corporation, on September 30, 2023. As a result, the Uniform
Services 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 the first quarter of 2024).
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 $8.8 million of charitable contribution expense for
the contribution of Vestis shares to a donor advised fund in order
to fund charitable contributions.
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 ($3.9 million for the first quarter of
2024 and $1.1 million for the first quarter of 2023), expense for
contingent consideration liabilities related to acquisition earn
outs, net of reversals ($0.5 million expense for the first quarter
of 2024 and $25.7 million net reversal for the first quarter of
2023), non-cash charges for the impairment of operating lease
right-of-use assets and property and equipment related to certain
real estate properties ($18.3 million for the first quarter of
2023), non-cash charges for the impairment of certain assets
related to a business held-for-sale ($5.2 million for the first
quarter of 2023), charges related to the retirement of the
Company's former Executive Vice President of Human Resources ($2.6
million for the first quarter of 2023), cash termination fees and
moving costs related to exiting a real estate property ($1.3
million for the first quarter of 2023) and other miscellaneous
charges.
Effect of Debt Repayment on Interest
Expense, net - adjustments to eliminate expenses
associated with the repayment of the Senior Notes due 2025 by the
Company in the applicable period such as charges related to the
payment of a call premium ($23.9 million for the first quarter of
2024) and non-cash charges for the write-off of unamortized debt
issuance costs ($7.9 million for the first quarter of 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 the first quarter of 2024), disallowed transaction costs
($2.6 million charge for the first quarter of 2024) and the
restatement of the Company's deferred tax position ($1.9 million
benefit for the first quarter of 2024).
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 fiscal 2023 on the $1.5
billion Senior Notes due 2025 that were repaid in the current
year.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements reflect our current expectations as to
future events based on certain assumptions and include any
statement that does not directly relate to any historical or
current fact. These statements include, but are not limited to,
statements under the heading "Outlook" and those related to our
expectations regarding the performance of our business, our
financial results, our operations, our liquidity and capital
resources, the conditions in our industry and our growth strategy.
In some cases, forward-looking statements can be identified by
words such as "outlook," "aim," "anticipate," "have confidence,"
"estimate," "expect," "will be," "will continue," "will likely
result," "project," "intend," "plan," "believe," "see," "look to"
and other words and terms of similar meaning or the negative
versions of such words. These forward-looking statements are
subject to risks and uncertainties that may change at any time, and
actual results or outcomes may differ materially from those that we
expected.
Some of the factors that we believe could affect or continue to
affect our results include without limitation: unfavorable economic
conditions; natural disasters, global calamities, climate change,
pandemics, energy shortages, sports strikes and other adverse
incidents; geopolitical events including, but not limited to, the
ongoing conflict between Russia and Ukraine and the growing
conflict in the Middle East, global supply chain disruptions,
inflation, volatility and disruption of global financial markets;
the failure to retain current clients, renew existing client
contracts and obtain new client contracts; a determination by
clients to reduce their outsourcing or use of preferred vendors;
competition in our industries; increased operating costs and
obstacles to cost recovery due to the pricing and cancellation
terms of our food and support services contracts; currency risks
and other risks associated with international operations, including
compliance with a broad range of laws and regulations, including
the United States Foreign Corrupt Practices Act; risks associated
with suppliers from whom our products are sourced; disruptions to
our relationship with our distribution partners; the contract
intensive nature of our business, which may lead to client
disputes; the inability to hire and retain key or sufficient
qualified personnel or increases in labor costs; our expansion
strategy and our ability to successfully integrate the businesses
we acquire and costs and timing related thereto; risks associated
with the recently 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
December 29, 2023
December 30, 2022
Revenue
$
4,407,765
$
3,913,720
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
4,045,078
3,591,802
Depreciation and amortization
105,544
102,597
Selling and general corporate expenses
90,193
67,636
4,240,815
3,762,035
Operating income
166,950
151,685
Interest Expense, net
114,562
100,951
Income from Continuing Operations Before
Income Taxes
52,388
50,734
Provision for Income Taxes from Continuing
Operations
23,871
12,736
Net income from Continuing Operations
28,517
37,998
Less: Net loss attributable to
noncontrolling interests
(19
)
(500
)
Net income from Continuing Operations
attributable to Aramark stockholders
28,536
38,498
Income from Discontinued Operations, net
of tax
—
35,653
Net income attributable to Aramark
stockholders
$
28,536
$
74,151
Basic earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.11
$
0.15
Income from Discontinued Operations
$
—
$
0.14
Basic earnings per share attributable to
Aramark stockholders
$
0.11
$
0.29
Diluted earnings per share attributable to
Aramark stockholders:
Income from Continuing Operations
$
0.11
$
0.15
Income from Discontinued Operations
$
—
$
0.13
Diluted earnings per share attributable to
Aramark stockholders
$
0.11
$
0.28
Weighted Average Shares Outstanding:
Basic
262,053
259,454
Diluted
264,287
261,414
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In Thousands)
December 29, 2023
September 29, 2023
Assets
Current Assets:
Cash and cash equivalents
$
295,597
$
1,927,088
Receivables
2,198,781
1,970,782
Inventories
367,614
403,707
Prepayments and other current assets
305,428
297,519
Current assets of discontinued
operations
—
620,931
Total current assets
3,167,420
5,220,027
Property and Equipment, net
1,490,475
1,425,973
Goodwill
4,661,018
4,615,986
Other Intangible Assets
1,824,457
1,804,473
Operating Lease Right-of-use Assets
597,965
572,268
Other Assets
678,114
728,678
Noncurrent Assets of Discontinued
Operations
—
2,503,836
$
12,419,449
$
16,871,241
Liabilities and Stockholders'
Equity
Current Liabilities:
Current maturities of long-term
borrowings
$
41,513
$
1,543,032
Current operating lease liabilities
50,178
51,271
Accounts payable
1,096,193
1,271,859
Accrued expenses and other current
liabilities
1,301,530
1,768,281
Current liabilities of discontinued
operations
—
395,524
Total current liabilities
2,489,414
5,029,967
Long-Term Borrowings
5,930,220
5,098,662
Noncurrent Operating Lease Liabilities
244,420
245,871
Deferred Income Taxes and Other Noncurrent
Liabilities
900,629
914,064
Noncurrent Liabilities of Discontinued
Operations
—
1,861,735
Commitments and Contingencies
Redeemable Noncontrolling Interests
8,132
8,224
Total Stockholders' Equity
2,846,634
3,712,718
$
12,419,449
$
16,871,241
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
December 29, 2023
December 30, 2022
Cash flows from operating activities of
Continuing Operations:
Net income from Continuing Operations
$
28,517
$
37,998
Adjustments to reconcile Net income from
Continuing Operations to Net cash used in operating activities of
Continuing Operations:
Depreciation and amortization
105,544
102,597
Asset write-downs
—
18,316
Reduction of contingent consideration
liability
—
(29,941
)
Deferred income taxes
1,175
12,806
Share-based compensation expense
13,654
20,574
Changes in operating assets and
liabilities
(825,112
)
(758,587
)
Payments made to clients on contracts
(45,075
)
(33,868
)
Other operating activities
64,220
14,357
Net cash used in operating activities of
Continuing Operations
(657,077
)
(615,748
)
Cash flows from investing activities of
Continuing Operations:
Net purchases of property and equipment
and other
(111,201
)
(85,557
)
Acquisitions, divestitures and other
investing activities
(86,767
)
14,369
Net cash used in investing activities of
Continuing Operations
(197,968
)
(71,188
)
Cash flows from financing activities of
Continuing Operations:
Net proceeds/payments of long-term
borrowings
(1,310,776
)
282,375
Net change in funding under the
Receivables Facility
600,000
395,065
Payments of dividends
(24,915
)
(28,566
)
Proceeds from issuance of common stock
4,496
28,198
Other financing activities
(47,808
)
(14,538
)
Net cash (used in) provided by financing
activities of Continuing Operations
(779,003
)
662,534
Discontinued Operations:
Net cash provided by operating
activities
—
8,543
Net cash used in investing activities
—
(12,936
)
Net cash used in financing activities
—
(5,476
)
Net cash used in Discontinued
Operations
—
(9,869
)
Effect of foreign exchange rates on cash
and cash equivalents and restricted cash
5,334
11,661
Decrease in cash and cash equivalents and
restricted cash
(1,628,714
)
(22,610
)
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
$
343,653
$
342,821
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Three Months Ended
December 29, 2023
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
3,212,732
$
1,195,033
$
4,407,765
Operating Income (as reported)
$
174,765
$
46,243
$
(54,058
)
$
166,950
Operating Income Margin (as reported)
5.44
%
3.87
%
3.79
%
Revenue (as reported)
$
3,212,732
$
1,195,033
$
4,407,765
Effect of Currency Translation
165
2,598
2,763
Adjusted Revenue (Organic)
$
3,212,897
$
1,197,631
$
4,410,528
Revenue Growth (as reported)
9.99
%
20.38
%
12.62
%
Adjusted Revenue Growth (Organic)
9.99
%
20.65
%
12.69
%
Operating Income (as reported)
$
174,765
$
46,243
$
(54,058
)
$
166,950
Amortization of Acquisition-Related
Intangible Assets
20,417
3,487
—
23,904
Severance and Other Charges
6,149
—
92
6,241
Spin-off Related Charges
—
—
29,037
29,037
Gains, Losses and Settlements impacting
comparability
568
3,879
—
4,447
Adjusted Operating Income
$
201,899
$
53,609
$
(24,929
)
$
230,579
Effect of Currency Translation
95
(523
)
—
(428
)
Adjusted Operating Income (Constant
Currency)
$
201,994
$
53,086
$
(24,929
)
$
230,151
Operating Income Growth (as reported)
10.20
%
72.81
%
(60.62
)%
10.06
%
Adjusted Operating Income Growth
18.55
%
38.81
%
16.11
%
28.66
%
Adjusted Operating Income Growth (Constant
Currency)
18.61
%
37.46
%
16.11
%
28.43
%
Adjusted Operating Income Margin
6.28
%
4.49
%
5.23
%
Adjusted Operating Income Margin (Constant
Currency)
6.29
%
4.43
%
5.22
%
Three Months Ended
December 30, 2022
FSS United States
FSS International
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
2,921,037
$
992,683
$
3,913,720
Operating Income (as reported)
$
158,582
$
26,759
$
(33,656
)
$
151,685
Amortization of Acquisition-Related
Intangible Assets
19,121
2,562
—
21,683
Spin-off Related Charges
—
—
1,490
1,490
Gains, Losses and Settlements impacting
comparability
(7,397
)
9,299
2,449
4,351
Adjusted Operating Income
$
170,306
$
38,620
$
(29,717
)
$
179,209
Operating Income Margin (as reported)
5.43
%
2.70
%
3.88
%
Adjusted Operating Income Margin
5.83
%
3.89
%
4.58
%
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
December 29, 2023
December 30, 2022
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
28,536
$
38,498
Adjustment:
Amortization of Acquisition-Related
Intangible Assets
23,904
21,683
Severance and Other Charges
6,241
—
Spin-off Related Charges
29,037
1,490
Gains, Losses and Settlements impacting
comparability
4,447
4,351
Effect of Debt Repayment on Interest
Expense, net
31,757
—
Tax Impact of Adjustments to Adjusted Net
Income
(15,120
)
(5,094
)
Adjusted Net Income
$
108,802
$
60,928
Effect of Currency Translation, net of
Tax
(2,382
)
—
Effect of Repayment of the Senior Notes
due 2025, net
—
18,513
Adjusted Net Income (Constant
Currency), Net of Interest Adjustment
$
106,420
$
79,441
Earnings Per Share (as
reported)
Net Income from Continuing Operations
Attributable to Aramark Stockholders (as reported)
$
28,536
$
38,498
Diluted Weighted Average Shares
Outstanding
264,287
261,414
$
0.11
$
0.15
Earnings Per Share Growth (as reported)
%
(27
)%
Adjusted Earnings Per Share
Adjusted Net Income
$
108,802
$
60,928
Diluted Weighted Average Shares
Outstanding
264,287
261,414
$
0.41
$
0.23
Adjusted Earnings Per Share Growth %
77
%
Adjusted Earnings Per Share (Constant
Currency)
Adjusted Net Income (Constant Currency),
Net of Interest Adjustment
$
106,420
$
79,441
Diluted Weighted Average Shares
Outstanding
264,287
261,414
$
0.40
$
0.30
Adjusted Earnings Per Share Growth
(Constant Currency) %
33
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
NET DEBT TO COVENANT ADJUSTED
EBITDA
(Unaudited)
(In thousands)
Twelve Months Ended
December 29, 2023
December 30, 2022
Net Income Attributable to Aramark
Stockholders (as reported)
$
628,493
$
226,024
Less: Income from Discontinued Operations,
net of tax
(190,779
)
—
Net Income from Continuing Operations
Attributable to Aramark Stockholders
$
437,714
$
226,024
Interest Expense, net
451,087
381,055
Provision for Income Taxes
127,561
81,588
Depreciation and Amortization
412,803
533,293
Share-based compensation expense(1)
69,417
94,879
Unusual or non-recurring (gains) and
losses(2)
(375,972
)
5,207
Pro forma EBITDA for certain
transactions(3)
6,406
7,083
Other(4)(5)
113,763
64,965
Covenant Adjusted EBITDA
$
1,242,779
$
1,394,094
Net Debt to Covenant Adjusted
EBITDA
Total Long-Term Borrowings
$
5,971,733
$
8,158,968
Less: Cash and cash equivalents and
short-term marketable securities(6)
407,300
384,151
Net Debt
$
5,564,433
$
7,774,817
Covenant Adjusted EBITDA
$
1,242,779
$
1,394,094
Net Debt/Covenant Adjusted EBITDA(7)
4.5
5.6
(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 December 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) and the fiscal 2023 loss from the sale of a portion of the
Company's equity investment in the San Antonio Spurs NBA franchise
($1.1 million). The twelve months ended December 30, 2022
represents the fiscal 2023 non-cash charge for the impairment of
certain assets related to a business that was sold ($5.2
million).
(3) Represents the annualizing of net
EBITDA from certain acquisitions and divestitures made during the
period.
(4) "Other" for the twelve months ended
December 29, 2023 includes the reversal of contingent consideration
liabilities related to acquisition earn outs, net of expense ($59.4
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
($50.3 million), charges related to the Company's spin-off of the
Uniform segment ($47.5 million), net severance charges ($39.1
million), the impact of hyperinflation in Argentina ($13.2
million), income related to non-United States governmental wage
subsidies ($12.5 million), non-cash charges related to information
technology assets ($8.2 million), net multiemployer pension plan
withdrawal charges ($6.7 million), non-cash charges for inventory
write-downs ($6.1 million), labor charges and other expenses
associated with closed or partially closed locations from adverse
weather ($5.4 million), non-cash charges for the impairment of
operating lease right-of-use assets and property and equipment
related to certain real estate properties ($3.3 million) and other
miscellaneous expenses.
(5) "Other" for the twelve months ended
December 30, 2022 includes the reversal of contingent consideration
liabilities related to acquisition earn outs, net of expense ($40.8
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
($37.2 million), non-cash charges for the impairment of operating
lease right-of-use assets and property and equipment related to
certain real estate properties ($23.4 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), severance charges ($19.6 million), United States and
non-United States governmental labor related tax credits resulting
from the COVID-19 pandemic ($16.1 million), charges related to the
Company's spin-off of the Uniform segment ($14.3 million), the
favorable impact related to a client contract dispute ($9.6
million), favorable adjustments for the EBITDA impact attributable
to equity investments that are permitted in the calculation in
accordance with the Credit Agreement and indentures, primarily from
the Company's previous ownership interest in AIM Services Co., Ltd.
($8.3 million), the gain from a funding agreement related to a
legal matter ($6.5 million), the impact of hyperinflation in
Argentina ($4.6 million), the loss from the change in fair value
related to certain gasoline and diesel agreements ($2.7 million),
legal settlement charges ($2.7 million), due diligence charges
related to acquisitions ($2.1 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 December 30,
2022 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 December 29, 2023 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)
Three Months Ended
December 29, 2023
Net cash used in operating activities of
Continuing Operations
$
(657,077
)
Net purchases of property and equipment
and other
(111,201
)
Free Cash Flow
$
(768,278
)
Three Months Ended
December 30, 2022
Net cash used in operating activities of
Continuing Operations
$
(615,748
)
Net purchases of property and equipment
and other
(85,557
)
Free Cash Flow
$
(701,305
)
Three Months Ended
Change
Net cash used in operating activities of
Continuing Operations
$
(41,329
)
Net purchases of property and equipment
and other
(25,644
)
Free Cash Flow
$
(66,973
)
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
REBASED TOTAL ARAMARK ADJUSTED
CONSOLIDATED OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Fiscal Year Ended
September 29, 2023
FSS United States
FSS International
Corporate
Total Aramark
Items to Rebase
Rebased Total Aramark
Revenue (as reported)
$
11,721,368
$
4,361,844
$
16,083,212
$
16,083,212
Operating Income (as reported)
$
669,570
$
114,480
$
(148,396
)
$
635,654
$
635,654
Operating Income Margin (as reported)
5.71
%
2.62
%
3.95
%
3.95
%
Revenue (as reported)
$
11,721,368
$
4,361,844
$
16,083,212
$
—
$
16,083,212
Effect of Certain Acquisitions
(186,463
)
—
(186,463
)
186,463
—
Effect of Currency Translation
9,516
183,410
192,926
(192,926
)
—
Adjusted Revenue (Organic)
$
11,544,421
$
4,545,254
$
16,089,675
$
(6,463
)
$
16,083,212
Operating Income (as reported)
$
669,570
$
114,480
$
(148,396
)
$
635,654
$
(10,626
)
$
625,028
Amortization of Acquisition-Related
Intangible Assets
76,798
12,664
—
89,462
—
89,462
Severance and Other Charges
2,310
29,951
552
32,813
—
32,813
Effect of Certain Acquisitions
(8,631
)
—
—
(8,631
)
8,631
—
Spin-off Related Charges
—
—
19,922
19,922
—
19,922
Gains, Losses and Settlements impacting
comparability
(46,869
)
18,915
1,994
(25,960
)
1,639
(24,321
)
Adjusted Operating Income
$
693,178
$
176,010
$
(125,928
)
$
743,260
$
(356
)
$
742,904
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
REBASED TOTAL ARAMARK ADJUSTED
NET INCOME & ADJUSTED EARNINGS PER SHARE
(Unaudited)
(In thousands)
Fiscal Year Ended
September 29, 2023
Aramark and Subsidiaries
Items to Rebase
Rebased Total Aramark
Net Income Attributable to Aramark
Stockholders
$
674,108
$
(226,432
)
$
447,676
Adjustment:
Amortization of Acquisition-Related
Intangible Assets
115,469
(26,007
)
89,462
Severance and Other Charges
37,485
(4,672
)
32,813
Effect of Certain Acquisitions
(8,631
)
8,631
—
Spin-off Related Charges
51,104
(31,182
)
19,922
Gains, Losses and Settlements impacting
comparability
(23,550
)
(771
)
(24,321
)
Gain on Sale of Equity Investments,
net
(427,803
)
51,831
(375,972
)
Effect of Debt Repayments and Refinancings
on Interest and Other Financing Costs, net
2,522
—
2,522
Tax Impact of Adjustments to Adjusted Net
Income
25,390
12,419
37,809
Adjusted Net Income
$
446,094
$
(216,183
)
$
229,911
Effect of Repayment of the Senior Notes
due 2025, net
74,137
Adjusted Net Income, Net of Interest
Adjustment
$
304,048
Earnings Per Share
Net Income Attributable to Aramark
Stockholders
$
447,676
Diluted Weighted Average Shares
Outstanding
262,594
$
1.70
Adjusted Earnings Per Share
Adjusted Net Income
$
229,911
Diluted Weighted Average Shares
Outstanding
262,594
$
0.88
Adjusted Earnings Per Share Net of
Interest Adjustment
Adjusted Net Income Net of Interest
Adjustment
$
304,048
Diluted Weighted Average Shares
Outstanding
262,594
$
1.16
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
NET DEBT TO COVENANT ADJUSTED
EBITDA
(Unaudited)
(In thousands)
Twelve Months Ended
September 29, 2023
Net Income Attributable to Aramark
Stockholders (as reported)
$
674,108
Interest Expense, net
439,585
Provision for Income Taxes
177,614
Depreciation and Amortization
546,362
Share-based compensation expense(1)
86,938
Unusual or non-recurring (gains) and
losses(2)
(422,596
)
Pro forma EBITDA for certain
transactions(3)
4,033
Other(4)
100,681
Covenant Adjusted EBITDA
$
1,606,725
Net Debt to Covenant Adjusted
EBITDA
Total Long-Term Borrowings(5)
$
6,763,514
Less: Cash and cash equivalents and
short-term marketable securities(6)
573,853
Net Debt
$
6,189,661
Covenant Adjusted EBITDA
$
1,606,725
Net Debt/Covenant Adjusted EBITDA(7)
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 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 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.
(5) "Total Long-Term Borrowings" and "Cash
and cash equivalents and short term marketable securities" 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.
(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 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240205954337/en/
Inquiries: Felise Glantz Kissell (215) 409-7287
Kissell-Felise@aramark.com
Gene Cleary (215) 409-7945 Cleary-Gene@aramark.com
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