YEAR-OVER-YEAR
SUMMARY
- Revenue +17%; Organic Revenue +18%
- Performance driven by net new business, pricing, and base
business growth
- Growth contribution from every reportable segment
- Operating Income +42%; Adjusted Operating Income (AOI)
+47%1
- Operating Income Margin +79 bps; AOI Margin +104 bps1
- Increased profitability from leveraging higher revenue levels,
pricing, and operational cost management
- EPS +65% to $0.28; Adjusted EPS +91%1 to $0.441
- Effect of currency translation impacted EPS by $0.02 and
Adjusted EPS by $0.03
- Announced sale of non-controlling interest in AIM Services
for $535 million subsequent to quarter-end
- Proceeds intended for accelerated debt repayment
- Transaction expected to enhance operating focus, strengthen
balance sheet, and be accretive to EPS
Aramark (NYSE: ARMK) today reported first quarter fiscal 2023
results.
"We began the year as we ended the last one, focused on our
principal strategic objective: to drive profitable growth," said
John Zillmer, Aramark's Chief Executive Officer. "Our performance
in the quarter reflected continued financial and operational
momentum in the business despite a challenging macro-environment,
which is a testament to the commitment of our talent across the
globe to provide exceptional service to clients. I couldn't be more
proud of our team members, who go out every day and show what makes
Aramark so remarkable."
Notes:
– Supplemental business review slides
available on Aramark's Investor Relations website
– 1On a constant-currency basis
FIRST QUARTER RESULTS
Consolidated revenue was $4.6 billion in the first quarter, an
increase of 17% year-over-year, driven by net new business,
pricing, and base business growth. A stronger dollar in the period
impacted revenue results by $129 million, partially offset by the
$72 million contribution of Union Supply Group, which was acquired
in June 2022.
Organic revenue, which adjusts for the effect of currency
translation and certain acquisitions, grew 18% year-over-year
compared to the prior year period.
Revenue
Q1 '23
Q1 '22
Change (%)
Organic Revenue Change
(%)
FSS United States
$2,921M
$2,425M
20%
18%
FSS International
993
873
14%
28%
Uniform & Career
Apparel
687
650
6%
7%
Total Company
$4,601M
$3,948M
17%
18%
Difference between Change (%) and Organic
Revenue Change (%) reflects the effect of certain acquisitions and
the elimination of currency translation. May not total due to
rounding.
- FSS United States revenue growth was driven by all sectors,
primarily due to:
Sector
Q1 Revenue Activity
Education
Increased student enrollments, and
improved presence of staff and more events on campuses in Higher
Education, partially offset by the end of universal
government-sponsored programs in K-12.
Sports, Leisure &
Corrections
Increased event pricing and per capita
spending, as well as a robust event calendar in Sports &
Leisure. Corrections benefited from a significant level of new
business growth.
Business & Industry
Substantial year-over-year growth driven
by client pricing, higher meal participation rates, and in-person
activities, as well as solid new business openings.
Healthcare
Ongoing base business growth from vertical
sales and greater visitor presence combined with the contribution
from new business start-ups.
Facilities & Other
Increase in base business driven by
expanded services and frequency, particularly from large client
accounts, along with a strong level of new business start-ups.
- FSS International grew revenue primarily from consistent net
new business performance, pricing, and ongoing base business volume
recovery, particularly within the business & industry
portfolio.
- Uniform & Career Apparel revenue increased due to client
pricing and solid net new account performance in both the U.S. and
Canada, driven by recurring rentals and adjacency services.
Operating Income grew 42% year-over-year to $200 million and AOI
improved 47%1 to $242 million, representing an operating income
margin increase of 79 basis points and an AOI margin increase of
104 basis points1. Improvement was from leveraging higher revenue
levels, pricing, and effective cost management that more than
offset the impact of inflation and start-up costs from
significantly higher levels of new business. The effect of currency
translation impacted results by $6.2 million.
Operating Income
Adjusted Operating
Income
Q1 '23
Q1 '22
Change (%)
Q1 '23
Q1 '22
Change (%)1
FSS United States
$163M
$99M
65%
$172M
$119M
45%
FSS International
27
23
18%
39
25
73%
Uniform & Career
Apparel
47
59
(21)%
64
62
4%
Corporate
(37)
(40)
9%
(33)
(37)
11%
Total Company
$200M
$140M
42%
$242M
$169M
47%
May not total due to rounding.
Year-over-year improvement in profitability was a result of the
following segment performance:
- FSS United States increased due to base business volume
recovery, primarily within the Business & Industry sector and
Sports & Entertainment business, pricing, as well as leverage
from operational and administrative cost management across
wide-ranging revenue growth that more than offset higher food and
labor costs associated with inflation and start-up costs from new
client account openings.
- FSS International also improved primarily from base business
volume recovery within business & industry, pricing, and
leverage from administrative cost management across strong revenue
growth, in addition to operating efficiency initiatives,
particularly within Continental Europe.
- Uniform & Career Apparel performance was driven by improved
operating efficiencies with increased revenue levels and pricing,
partially offset by higher merchandise amortization expense.
Operating income included non-cash charges for the impairment of
operating lease right-of-use assets and other costs related to
certain real estate properties, as well as personnel and other
expenses associated with the Uniform Services spin-off.
- Corporate expenses improved as overhead costs were tightly
managed even as revenue increased.
CASH FLOW AND CAPITAL
STRUCTURE
As expected, the first quarter experienced a cash outflow
associated with Aramark's normal seasonal business cadence,
specifically in Higher Education, and higher working capital due to
strong revenue growth. In December, the Company made a scheduled
deferred FICA payment of $64.2 million as previously disclosed. In
the quarter, Net cash used in operating activities was $607 million
and Free Cash Flow was a use of $706 million.
At quarter-end, Aramark had approximately $1.1 billion in cash
availability.
DIVIDEND DECLARATION
The Company's Board of Directors approved a quarterly dividend
of 11 cents per share of common stock. The dividend will be payable
on March 8, 2023, to stockholders of record at the close of
business on February 22, 2023.
BUSINESS UPDATE
Aramark began fiscal 2023 with an ongoing commitment to provide
exceptional service to clients, which led to strong business
performance on both the top- and bottom-line. The Company remained
resolute in its focus to drive profitable growth that is expected
to drive significant value creation.
As announced on February 2, 2023, Aramark reached an agreement
to sell its 50% equity stake in AIM Services to Mitsui & Co.,
Ltd. for $535 million with the proceeds intended to be used for
accelerated debt repayment. AIM Services was established as a joint
venture between Aramark and Mitsui Group companies in 1976 to
provide food services to clients across a variety of business
sectors in Japan.
As a non-controlling interest, AIM Services was not historically
included in Aramark's consolidated revenue results. Aramark's 50%
ownership stake contributed approximately $30 million to pre-COVID
Operating Income and AOI in fiscal 2019, weighted toward the back
half of the year.
The monetization of this non-controlling interest is expected to
enhance operating focus, strengthen the balance sheet, and be
accretive to EPS. The transaction is anticipated to close at the
beginning of Aramark's fiscal third quarter, subject to customary
closing conditions and approvals.
UNIFORM SERVICES
SPIN-OFF
Since its announcement in May, Aramark has made continued
progress in anticipation of the separation of the Uniform Services
business, including hiring key executives to complement the
existing Uniform leadership team. The Company has identified the
individuals who are expected to serve as the Board of Directors for
the Uniform Services business after the spin is complete and will
be available to act in an advisory capacity throughout the
separation process. The transaction, which is intended to be
tax-free to Aramark and its stockholders, remains on track to occur
in the second half of fiscal 2023.
OUTLOOK
The Company provides its expectations for organic revenue
growth, Adjusted Operating Income, and Free Cash Flow 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 impact of the change in fair value related to
certain gasoline and diesel agreements and other charges and the
effect of currency translation. The fiscal 2023 outlook reflects
management's current assumptions regarding numerous evolving
factors that are difficult to accurately predict, including those
discussed in the Risk Factors set forth in the Company's filings
with the United States Securities and Exchange Commission.
Aramark currently expects the following full-year total Company
performance for fiscal 2023:
Maintained
- Organic revenue growth between +11% and +13%
- Free Cash Flow in a range of $475 million to $525 million,
before the payment of deferred payroll taxes associated with the
CARES Act as well as spin-off and restructuring related costs
- After these items, Free Cash Flow in a range of $300 million to
$350 million
Updated to reflect AIM
Services Transaction
- Adjusted Operating Income (AOI) growth of +32% to +37%;
previously +34% to 39%
- Transaction expected to be accretive to EPS
- Leverage ratio at approximately 4.0x by the end of fiscal 2023;
previously 4.0x to 4.5x
Note: Leverage ratio is defined as Net Debt to Covenant Adjusted
EBITDA
"Looking ahead, we have a strong pipeline of attractive new
business opportunities, a highly motivated team, and an organic
growth engine that is continuing to strengthen," Zillmer added. "We
remain focused on managing our cost structure, maximizing unit
efficiencies coupled with client pricing to counter persistent
inflation, and taking actions to further strengthen our balance
sheet. We believe these combined efforts will drive significant
shareholder return."
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 19
countries around the world with food, facilities, and uniform
services. Because our culture is rooted in service, our employees
strive to do great things for each other, our partners, our
communities, and our planet. Aramark has been recognized on
FORTUNE's list of "World’s Most Admired Companies," DiversityInc’s
“Top 50 Companies for Diversity” and "Top Companies for Employee
Resource Groups," Newsweek's list of "America's Most Responsible
Companies 2023," the HRC's "Best Places to Work for LGBTQ
Equality," and scored 100% on the Disability Equality Index. Learn
more at www.aramark.com and connect with us on Facebook, Twitter
and LinkedIn.
Selected Operational
and Financial Metrics
Adjusted Revenue
(Organic)
Adjusted Revenue (Organic) represents revenue growth, adjusted
to eliminate the effect of certain material acquisitions and 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; the impact of the change in fair value related
to certain gasoline and diesel agreements; the effect of certain
material acquisitions; 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 attributable to
Aramark stockholders adjusted to eliminate the change in
amortization of acquisition-related intangible assets; the impact
of changes in the fair value related to certain gasoline and diesel
agreements; the effect of certain material acquisitions; spin-off
related charges; loss on defined benefit pension plan termination;
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)
Adjusted Net Income (Constant Currency) represents Adjusted Net
Income adjusted to eliminate the impact of currency
translation.
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.
Covenant Adjusted EBITDA
Covenant Adjusted EBITDA represents net income attributable to
Aramark stockholders adjusted for interest and other financing
costs, 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.
Net New Business
Net New Business is an internal statistical metric used to
evaluate our new sales and retention performance. The calculation
is defined as the annualized value of gross new business less the
annualized value of lost business.
We use Adjusted Revenue (Organic), Adjusted Operating Income
(including on a constant currency basis), Adjusted Net Income
(including on a constant currency basis), 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
Amortization of Acquisition-Related
Intangible Assets - adjustments to eliminate the change
in amortization expense resulting from the purchase accounting
applied to the January 26, 2007 going-private transaction and
amortization expense recognized on other acquisition-related
intangible assets.
Effect of Certain
Acquisitions - adjustments to eliminate the operating
results of certain material acquisitions that are not comparable to
the prior year periods.
Spin-off Related Charges -
adjustments to eliminate charges related to the Company's intention
to spin-off the Uniform segment, including salaries and benefits,
recruiting and relocation costs, accounting and legal related
expenses, branding and other costs.
Gains, Losses and Settlements impacting
comparability - adjustments to eliminate certain
transactions that are not indicative of our ongoing operational
performance, primarily for the reversal of a contingent
consideration liability related to an acquisition earn out ($29.9
million 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 ($23.4 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), compensation expense related to an
acquisition earn out contingent on employees staying until the earn
out period ends ($4.2 million for the first quarter of 2023), legal
settlement charges ($2.7 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 or 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), charges related to hyperinflation in Argentina ($1.1
million for the first quarter of 2023), the impact of the change in
fair value related to certain gasoline and diesel agreements ($0.4
million gain for the first quarter of 2023 and $3.2 million loss
for the first quarter of 2022), the gain from insurance proceeds
received related to property damage from a tornado in Nashville
($3.1 million for the first quarter of 2022) and other
miscellaneous charges.
Loss on Defined Benefit Pension Plan
Termination - adjustment to eliminate the impact of a
non-cash loss in the prior year from the termination of certain
single-employer defined benefit pension plans.
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 reverses a
valuation allowance recorded against deferred tax assets in a
foreign subsidiary that were previously deemed to be not realizable
(approximately $8.5 million for the first quarter of 2022).
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.
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," "are or remain or
continue to be confident," "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, 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, including the ongoing COVID-19 pandemic, energy
shortages, sports strikes and other adverse incidents; geopolitical
events including, but not limited to, the ongoing conflict between
Russia and Ukraine and its effects on global supply chains,
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; our expansion strategy and our ability to successfully
integrate the businesses we acquire and costs and timing related
thereto; continued or further unionization of our workforce;
liability resulting from our participation in multiemployer defined
benefit pension plans; the inability to hire and retain key or
sufficient qualified personnel or increases in labor costs; 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; environmental regulations; 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; risks associated with the impact, timing or terms of the
proposed spin-off of Aramark Uniform Services (our Uniform segment)
as an independent publicly traded company to our stockholders (the
"proposed spin-off'"); risks associated with the expected benefits
and costs of the proposed spin-off, including the risk that the
expected benefits of the proposed spin-off will not be realized
within the expected time frame, in full or at all, and the risk
that conditions to the proposed spin-off will not be satisfied
and/or that the proposed spin-off will not be completed within the
expected time frame, on the expected terms or at all; the expected
qualification of the proposed spin-off as a tax-free transaction
for United States federal income tax purposes, including whether or
not an Internal Revenue Service ruling will be sought or obtained;
the risk that any consents or approvals required in connection with
the proposed spin-off will not be received or obtained within the
expected time frame, on the expected terms or at all; risks
associated with expected financing transactions undertaken in
connection with the proposed spin-off and risks associated with
indebtedness incurred in connection with the proposed spin-off; the
risk of increased costs from lost synergies, costs of restructuring
transactions and other costs incurred in connection with the
proposed spin-off; retention of existing management team members as
a result of the proposed spin-off; reaction of customers, our
employees and other parties to the proposed spin-off; and the
impact of the proposed spin-off on our business and the risk that
the proposed spin-off may be more difficult, time-consuming or
costly than expected, including the impact on our resources,
systems, procedures and controls, diversion of management’s
attention and the impact on relationships with customers,
suppliers, employees and other business counterparties; 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 22, 2022 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 30, 2022
December 31, 2021
Revenue
$
4,600,998
$
3,948,260
Costs and Expenses:
Cost of services provided (exclusive of
depreciation and amortization)
4,162,084
3,571,045
Depreciation and amortization
136,484
135,518
Selling and general corporate expenses
102,784
101,450
4,401,352
3,808,013
Operating income
199,646
140,247
Interest and Other Financing Costs,
net
101,345
93,017
Income Before Income Taxes
98,301
47,230
Provision for Income Taxes
24,650
4,523
Net income
73,651
42,707
Less: Net (loss) income attributable to
noncontrolling interests
(500
)
96
Net income attributable to Aramark
stockholders
$
74,151
$
42,611
Earnings per share attributable to Aramark
stockholders:
Basic
$
0.29
$
0.17
Diluted
$
0.28
$
0.17
Weighted Average Shares Outstanding:
Basic
259,454
256,470
Diluted
261,414
258,045
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(In Thousands)
December 30, 2022
September 30, 2022
Assets
Current Assets:
Cash and cash equivalents
$
305,050
$
329,452
Receivables
2,299,810
2,147,957
Inventories
569,815
552,386
Prepayments and other current assets
260,467
262,195
Total current assets
3,435,142
3,291,990
Property and Equipment, net
2,032,035
2,032,045
Goodwill
5,554,019
5,515,124
Other Intangible Assets
2,090,250
2,113,726
Operating Lease Right-of-use Assets
612,897
592,145
Other Assets
1,566,199
1,537,406
$
15,290,542
$
15,082,436
Liabilities and Stockholders'
Equity
Current Liabilities:
Current maturities of long-term
borrowings
$
102,712
$
65,047
Current operating lease liabilities
68,550
68,858
Accounts payable
1,092,642
1,322,936
Accrued expenses and other current
liabilities
1,420,314
1,829,045
Total current liabilities
2,684,218
3,285,886
Long-Term Borrowings
8,056,256
7,345,860
Noncurrent Operating Lease Liabilities
301,961
305,623
Deferred Income Taxes and Other Noncurrent
Liabilities
1,096,563
1,106,587
Commitments and Contingencies
Redeemable Noncontrolling Interests
8,281
8,840
Total Stockholders' Equity
3,143,263
3,029,640
$
15,290,542
$
15,082,436
ARAMARK AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
Three Months Ended
December 30, 2022
December 31, 2021
Cash flows from operating activities:
Net income
$
73,651
$
42,707
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation and amortization
136,484
135,518
Asset write-downs
23,436
—
Reduction of contingent consideration
liability
(29,941
)
—
Deferred income taxes
13,532
(73
)
Share-based compensation expense
24,043
24,651
Changes in operating assets and
liabilities
(819,103
)
(698,480
)
Payments made to clients on contracts
(33,868
)
(8,353
)
Other operating activities
4,561
643
Net cash used in operating activities
(607,205
)
(503,387
)
Cash flows from investing activities:
Net purchases of property and equipment
and other
(98,493
)
(65,643
)
Acquisitions, divestitures and other
investing activities
14,369
(112,008
)
Net cash used in investing activities
(84,124
)
(177,651
)
Cash flows from financing activities:
Net proceeds/payments of long-term
borrowings
275,486
88,449
Net change in funding under the
Receivables Facility
395,065
500,000
Payments of dividends
(28,566
)
(28,209
)
Proceeds from issuance of common stock
29,611
11,710
Other financing activities
(16,330
)
(6,993
)
Net cash provided by financing
activities
655,266
564,957
Effect of foreign exchange rates on cash
and cash equivalents
11,661
(1,043
)
Decrease in cash and cash equivalents
(24,402
)
(117,124
)
Cash and cash equivalents, beginning of
period
329,452
532,591
Cash and cash equivalents, end of
period
$
305,050
$
415,467
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
ADJUSTED CONSOLIDATED
OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Three Months Ended
December 30, 2022
FSS United States
FSS International
Uniform
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
2,921,037
$
992,683
$
687,278
$
4,600,998
Operating Income (as reported)
$
163,239
$
26,759
$
46,540
$
(36,892
)
$
199,646
Operating Income Margin (as reported)
5.59
%
2.70
%
6.77
%
4.34
%
Revenue (as reported)
$
2,921,037
$
992,683
$
687,278
$
4,600,998
Effect of Certain Acquisitions
(72,283
)
—
—
(72,283
)
Effect of Currency Translation
2,870
121,165
4,953
128,988
Adjusted Revenue (Organic)
$
2,851,624
$
1,113,848
$
692,231
$
4,657,703
Revenue Growth (as reported)
20.44
%
13.69
%
5.78
%
16.53
%
Adjusted Revenue Growth (Organic)
17.57
%
27.56
%
6.55
%
17.97
%
Operating Income (as reported)
$
163,239
$
26,759
$
46,540
$
(36,892
)
$
199,646
Amortization of Acquisition-Related
Intangible Assets
19,121
2,562
6,501
—
28,184
Effect of Certain Acquisitions
(2,615
)
—
—
—
(2,615
)
Spin-off Related Charges
—
—
3,516
1,490
5,006
Gains, Losses and Settlements impacting
comparability
(7,397
)
9,299
7,802
2,216
11,920
Adjusted Operating Income
$
172,348
$
38,620
$
64,359
$
(33,186
)
$
242,141
Effect of Currency Translation
671
5,215
299
—
6,185
Adjusted Operating Income (Constant
Currency)
$
173,019
$
43,835
$
64,658
$
(33,186
)
$
248,326
Operating Income Growth (as reported)
64.79
%
17.84
%
(20.99
)%
8.73
%
42.35
%
Adjusted Operating Income Growth
44.77
%
52.61
%
3.57
%
10.78
%
43.02
%
Adjusted Operating Income Growth (Constant
Currency)
45.33
%
73.22
%
4.05
%
10.78
%
46.68
%
Adjusted Operating Income Margin (Constant
Currency)
6.07
%
3.94
%
9.34
%
5.33
%
Three Months Ended
December 31, 2021
FSS United States
FSS International
Uniform
Corporate
Aramark and Subsidiaries
Revenue (as reported)
$
2,425,379
$
873,184
$
649,697
$
3,948,260
Operating Income (as reported)
$
99,057
$
22,707
$
58,905
$
(40,422
)
$
140,247
Amortization of Acquisition-Related
Intangible Assets
19,993
2,599
6,348
—
28,940
Gains, Losses and Settlements impacting
comparability
—
—
(3,113
)
3,228
115
Adjusted Operating Income
$
119,050
$
25,306
$
62,140
$
(37,194
)
$
169,302
Operating Income Margin (as reported)
4.08
%
2.60
%
9.07
%
3.55
%
Adjusted Operating Income Margin
4.91
%
2.90
%
9.56
%
4.29
%
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 30, 2022
December 31, 2021
Net Income Attributable to Aramark
Stockholders (as reported)
$
74,151
$
42,611
Adjustment:
Amortization of Acquisition-Related
Intangible Assets
28,184
28,940
Effect of Certain Acquisitions
(2,615
)
—
Spin-off Related Charges
5,006
—
Gains, Losses and Settlements impacting
comparability
11,920
115
Loss on Defined Benefit Pension Plan
Termination
—
3,644
Tax Impact of Adjustments to Adjusted Net
Income
(8,905
)
(16,645
)
Adjusted Net Income
$
107,741
$
58,665
Effect of Currency Translation, net of
Tax
7,009
—
Adjusted Net Income (Constant
Currency)
$
114,750
$
58,665
Earnings Per Share (as
reported)
Net Income Attributable to Aramark
Stockholders (as reported)
$
74,151
$
42,611
Diluted Weighted Average Shares
Outstanding
261,414
258,045
$
0.28
$
0.17
Earnings Per Share Growth (as reported)
$
$
0.11
Earnings Per Share Growth (as reported)
%
65
%
Adjusted Earnings Per Share
Adjusted Net Income
$
107,741
$
58,665
Diluted Weighted Average Shares
Outstanding
261,414
258,045
$
0.41
$
0.23
Adjusted Earnings Per Share Growth $
$
0.18
Adjusted Earnings Per Share Growth %
78
%
Adjusted Earnings Per Share (Constant
Currency)
Adjusted Net Income (Constant
Currency)
$
114,750
$
58,665
Diluted Weighted Average Shares
Outstanding
261,414
258,045
$
0.44
$
0.23
Adjusted Earnings Per Share Growth
(Constant Currency) $
$
0.21
Adjusted Earnings Per Share Growth
(Constant Currency) %
91
%
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
NET DEBT TO COVENANT ADJUSTED
EBITDA
(Unaudited)
(In thousands)
Twelve Months Ended
December 30, 2022
December 31, 2021
Net Income Attributable to Aramark
Stockholders (as reported)
$ 226,024
$ 33,021
Interest and Other Financing Costs,
net
381,055
393,974
Provision for Income Taxes
81,588
3,386
Depreciation and Amortization
533,293
547,636
Share-based compensation expense(1)
94,879
77,392
Unusual or non-recurring (gains) and
losses(2)(3)
5,207
(77,070)
Pro forma EBITDA for equity method
investees(4)
8,342
9,719
Pro forma EBITDA for certain
transactions(5)
7,083
7,385
Other(6)(7)
56,623
47,354
Covenant Adjusted EBITDA
$ 1,394,094
$ 1,042,797
Net Debt to Covenant Adjusted
EBITDA
Total Long-Term Borrowings
$ 8,158,968
$ 8,034,444
Less: Cash and cash equivalents and
short-term marketable securities(8)
384,151
415,467
Net Debt
$ 7,774,817
$ 7,618,977
Covenant Adjusted EBITDA
$ 1,394,094
$ 1,042,797
Net Debt/Covenant Adjusted EBITDA
5.6
7.3
(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) For the twelve months ended December
30, 2022 represents the fiscal 2023 non-cash charge for the
impairment of certain assets related to a business held-for-sale
($5.2 million).
(3) For the twelve months ended December
31, 2021 represents the fiscal 2021 non-cash gain from an
observable price change on an equity investment ($137.9 million)
and the fiscal 2021 non-cash loss from the termination of certain
defined benefit pension plans ($60.9 million).
(4) Represents the Company's estimated
share of EBITDA, primarily from the Company's AIM Services Co.,
Ltd. equity method investment, not already reflected in the
Company's Net Income Attributable to Aramark stockholders. EBITDA
for this equity method investee is calculated in a manner
consistent with Covenant Adjusted EBITDA but does not represent
cash distributions received from this investee.
(5) Represents the annualizing of net
EBITDA from certain acquisitions made during the period.
(6) "Other" for the twelve months ended
December 30, 2022 includes the reversal of a contingent
consideration liability related to an acquisition earn out ($50.7
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 intention to spin-off the Uniform segment ($14.3
million), compensation expense related to an acquisition earn out
contingent on employees staying until the performance period ends
($9.9 million), the favorable impact related to a client contract
dispute ($9.6 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.
(7) "Other" for the twelve months ended
December 31, 2021 includes non-cash charges for inventory
write-downs to net realizable value and for excess inventory
related to personal protective equipment ($31.0 million),
adjustments to remove the impact attributable to the adoption of
certain accounting standards that are made to the calculation in
accordance with the Credit Agreement and indentures ($26.9
million), expenses related to merger and integration related
charges ($19.2 million), United States and non-United States
governmental labor related tax credits resulting from the COVID-19
pandemic, net of labor charges, incremental expenses and other
expenses associated with closed or partially closed client
locations ($16.2 million), reversal of severance charges ($12.4
million), the gain from a funding agreement related to a legal
matter ($10.0 million), a favorable settlement of a legal matter
($4.7 million), the gain from insurance proceeds received related
to property damage from a tornado in Nashville ($3.1 million),
expenses related to the impact of the ice storm in Texas ($2.5
million), a non-cash charge related to an environmental matter
($2.5 million), non-cash charges related to information technology
assets ($2.2 million), the impact of hyperinflation in Argentina
($1.8 million) and other miscellaneous expenses.
(8) 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.
ARAMARK AND
SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
FREE CASH FLOW
(Unaudited)
(In thousands)
Three Months Ended
December 30, 2022
Net cash used in operating activities
$
(607,205
)
Net purchases of property and equipment
and other
(98,493
)
Free Cash Flow
$
(705,698
)
Three Months Ended
December 31, 2021
Net cash used in operating activities
$
(503,387
)
Net purchases of property and equipment
and other
(65,643
)
Free Cash Flow
$
(569,030
)
Three Months Ended
Change
Net cash used in operating activities
$
(103,818
)
Net purchases of property and equipment
and other
(32,850
)
Free Cash Flow
$
(136,668
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230206005691/en/
Inquiries: Felise Glantz Kissell (215) 409-7287
Kissell-Felise@aramark.com Scott Sullivan (215) 238-3953
Sullivan-Scott1@aramark.com
Aramark (NYSE:ARMK)
Historical Stock Chart
From May 2023 to Jun 2023
Aramark (NYSE:ARMK)
Historical Stock Chart
From Jun 2022 to Jun 2023