Aramark Reports First Quarter Earnings

Sample article from our Foodservice Industry

February 6, 2024 (press release) –

YEAR-OVER-YEAR SUMMARY

PHILADELPHIA--(BUSINESS WIRE)--Feb. 6, 2024-- 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.

  • 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:

“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

(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

(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

(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

(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

(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

(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

(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

(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 reflects reported net debt to covenant adjusted EBITDA, which includes the reported results of the Uniform segment prior to the spin-off.

Source: Aramark

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