Aramark(ARMK)

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Aramark(ARMK) - 2021 Q3 - Earnings Call Presentation
2021-08-10 13:34
Q3 Summary - Increased business activity led to client reopenings[5] - Sequential quarterly improvement across all business segments[5] - Higher profitability resulted from rebounding sales and cost management[5] - Aramark repaid $500 million in debt and extended maturities on $2.6 billion of borrowings[5] - Increased revolver capacity by over $200 million[5] - Cash availability of approximately $1.9 billion at quarter-end[5, 9] Organic Revenue Trends - Q3 organic revenue reached 73% of pre-COVID levels[6] - FSS United States segment was led by Leisure and Sports & Entertainment businesses[6] - FSS International balanced strong healthcare performance in China and mining in Chile[6] - Uniform & Career Apparel adjacency services delivered double-digit growth[6, 24] Fiscal 2021 Outlook - Continued organic revenue improvement, reaching 80% to 85% of 2019 levels[28] - Adjusted Operating Income (AOI) margin is expected to be in the range of 4.5% to 5.0%[28] - Free Cash Flow outlook raised to generating $150 million to $250 million for fiscal 2021[28]
Aramark(ARMK) - 2021 Q2 - Quarterly Report
2021-05-11 20:38
PART I - Financial Information [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited financial statements for April 2, 2021, show substantial revenue declines and net losses due to COVID-19 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$14.49 billion** by April 2, 2021, primarily due to reduced cash and debt repayments Condensed Consolidated Balance Sheet Highlights (in millions) | Account | April 2, 2021 | October 2, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $1400.0 | $2509.2 | | Total current assets | $3506.5 | $4675.8 | | Total Assets | $14487.7 | $15712.7 | | **Liabilities & Equity** | | | | Total current liabilities | $2397.2 | $2347.5 | | Long-Term Borrowings | $8105.6 | $9178.5 | | Total stockholders' equity | $2623.5 | $2736.0 | [Condensed Consolidated Statements of Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss) Revenue for Q2 FY21 decreased **24.4%** to **$2.82 billion**, resulting in a **$77.6 million** net loss Three Months Ended Financial Performance (in millions, except per share data) | Metric | April 2, 2021 | March 27, 2020 | | :--- | :--- | :--- | | Revenue | $2819.7 | $3731.6 | | Operating income (loss) | $5.3 | $(97.7) | | Net loss attributable to Aramark stockholders | $(77.6) | $(202.3) | | Diluted Loss per share | $(0.30) | $(0.80) | Six Months Ended Financial Performance (in millions, except per share data) | Metric | April 2, 2021 | March 27, 2020 | | :--- | :--- | :--- | | Revenue | $5563.5 | $7985.2 | | Operating (loss) income | $(15.1) | $156.6 | | Net loss attributable to Aramark stockholders | $(158.8) | $(56.5) | | Diluted Loss per share | $(0.63) | $(0.23) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations improved to **$221.9 million** for the six months ended April 2, 2021, driven by working capital changes Six Months Ended Cash Flow Summary (in millions) | Cash Flow Activity | April 2, 2021 | March 27, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $221.9 | $(91.6) | | Net cash used in investing activities | $(175.7) | $(196.6) | | Net cash (used in) provided by financing activities | $(1163.6) | $1245.3 | | (Decrease) increase in cash and cash equivalents | $(1109.2) | $956.3 | - Financing activities in the first six months of fiscal 2021 were dominated by debt repayments, including **$871.7 million** of long-term borrowings and a net change of **$(315.6) million** in the **Receivables Facility**[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes provide details on accounting policies, COVID-19 impact, segment performance, government relief, and debt status - The company operates in three reportable segments: **Food and Support Services United States** (**FSS United States**), **Food and Support Services International** (**FSS International**), and **Uniform and Career Apparel** (**Uniform**)[25](index=25&type=chunk) - Due to the **COVID-19** pandemic, the company has taken advantage of government relief programs, recording **$74.0 million** in foreign labor-related tax credits and **$3.1 million** from the **CARES Employee Retention credit**[38](index=38&type=chunk)[39](index=39&type=chunk) - On April 28, 2021, the company signed an agreement to acquire **Next Level Hospitality**, a provider of culinary and environmental services in the senior living industry[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses **COVID-19's** material impact on all segments, leading to revenue declines and losses, and details liquidity and debt management [Impact of COVID-19 on our Business](index=27&type=section&id=Impact%20of%20COVID-19%20on%20our%20Business) **COVID-19** significantly disrupted fiscal 2021 business, causing revenue deterioration, with the company responding via cost reductions - The impact of **COVID-19** was more significant during the three and six-month periods of fiscal 2021 than in fiscal 2020, as the pandemic did not materially affect operations until late in the second quarter of fiscal 2020[93](index=93&type=chunk) - In response to the pandemic, the company has focused on cost reduction efforts, contractual negotiations, and taking advantage of relief provisions like the **CARES Act** and other governmental programs[93](index=93&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Consolidated revenue for Q2 FY21 decreased **24.4%** to **$2.8 billion**, with operating income improving to **$5.4 million** Consolidated Results - Three Months Ended (in millions) | Metric | April 2, 2021 | March 27, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $2819.7 | $3731.6 | (24.4)% | | Operating income (loss) | $5.4 | $(97.7) | (105.5)% | | Net loss | $(77.6) | $(202.0) | (61.6)% | Consolidated Results - Six Months Ended (in millions) | Metric | April 2, 2021 | March 27, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $5563.5 | $7985.2 | (30.3)% | | Operating (loss) income | $(15.1) | $156.6 | (109.7)% | | Net loss | $(159.0) | $(56.1) | 183.3% | [Segment Results](index=33&type=section&id=Segment%20Results) All segments experienced revenue declines due to **COVID-19**, with **FSS United States** revenue falling **30.5%** Revenue by Segment - Three Months Ended (in millions) | Segment | April 2, 2021 | March 27, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | FSS United States | $1551.0 | $2231.1 | (30.5)% | | FSS International | $677.7 | $853.5 | (20.6)% | | Uniform | $591.0 | $647.0 | (8.7)% | Operating Income (Loss) by Segment - Three Months Ended (in millions) | Segment | April 2, 2021 | March 27, 2020 | Change (%) | | :--- | :--- | :--- | :--- | | FSS United States | $0.9 | $65.8 | (98.7)% | | FSS International | $12.3 | $(191.2) | (106.4)% | | Uniform | $21.7 | $46.8 | (53.6)% | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of April 2, 2021, the company maintained strong liquidity with **$1.4 billion** cash and available credit, having repaid significant debt - As of April 2, 2021, the company had **$1.4 billion** of cash and cash equivalents, approximately **$819.6 million** of availability under its senior secured revolving credit facility, and approximately **$389.7 million** of availability under its **Receivables Facility**[116](index=116&type=chunk) - During the first six months of fiscal 2021, the company repaid **$780.0 million** of outstanding borrowings under its U.S. revolving credit facility and **$315.6 million** under its **Receivables Facility**[116](index=116&type=chunk) - On April 6, 2021, the company amended its **Credit Agreement**, which increased availability on the revolving credit facility by **$200.0 million** and extended the maturity dates on a portion of its debt[116](index=116&type=chunk) [Covenant Compliance](index=39&type=section&id=Covenant%20Compliance) As of April 2, 2021, the company was in compliance with debt covenants, with a waiver for the **Consolidated Secured Debt Ratio** Covenant Adjusted EBITDA Reconciliation (Twelve Months Ended April 2, 2021, in millions) | Line Item | Amount | | :--- | :--- | | Net loss attributable to ASI stockholder | $(563.8) | | Interest and other financing costs, net | $400.1 | | Benefit for income taxes | $(272.4) | | Depreciation and amortization | $575.2 | | Other Adjustments | $573.0 | | **Covenant Adjusted EBITDA** | **$712.1** | - The company's **Interest Coverage Ratio** was **1.79x**, below the **2.000x** requirement, which is an incurrence-based covenant[125](index=125&type=chunk)[126](index=126&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company manages interest rate risk with mixed debt and swaps, with no material changes in market risk since FY2020 - The company's market risk associated with debt obligations has not materially changed from October 2, 2020[131](index=131&type=chunk) - The company plans to repay the entire **$500.0 million** principal amount of its **4.750% Senior Notes due 2026** on June 2, 2021[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were functioning effectively as of the end of the reporting period[133](index=133&type=chunk) - There were no changes in internal control over financial reporting during the second quarter of fiscal 2021 that materially affected, or are reasonably likely to materially affect, internal controls[133](index=133&type=chunk) PART II - Other Information [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management does not expect a material adverse effect on its financial condition - The company is involved in various legal proceedings but does not expect them to have a material impact on its business or financial condition[135](index=135&type=chunk) - A reserve of approximately **$19.7 million** has been accrued for a specific dispute with a client as of April 2, 2021[79](index=79&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None[136](index=136&type=chunk)
Aramark(ARMK) - 2021 Q2 - Earnings Call Transcript
2021-05-11 18:15
Financial Data and Key Metrics Changes - Revenue for the quarter reached $2.8 billion, with an organic revenue decline of 26% year-over-year, showing improvement compared to the first quarter's 45% decline [8][17] - Adjusted operating income was $30 million, resulting in a positive adjusted operating margin of 1.1%, better than the expected drop-through of 18% to 22% [19][20] - Free cash flow generation was nearly $260 million, reflecting an improvement of over $150 million compared to the prior year [8][21] - Cash availability totaled $2.6 billion at quarter end, providing financial flexibility for strategic actions [8][22] Business Segment Performance Changes - US Food and Facilities reported an organic revenue decline of 31%, an improvement from the first quarter [17][18] - The education sector gained momentum with increased in-person learning, contributing to improved performance [9][18] - International organic revenue was down 26%, reflecting modest improvement from the previous quarter, with strong performance in healthcare in China [12][18] - Uniforms experienced a 9% decline in organic revenue, slightly better than the first quarter, impacted by government restrictions in Canada [18][13] Market Data and Key Metrics Changes - The K-12 sector saw approximately 70% of school districts offering greater in-person or hybrid learning [9] - Sports, Leisure, and Corrections reported modest improvements, with increased attendance in venues like the NBA and NHL [10] - The healthcare segment reported gradual improvement as visitor restrictions eased and elective procedures increased [11] Company Strategy and Industry Competition - The company announced a proactive $500 million debt repayment and an acquisition of Next Level Hospitality to expand its presence in the senior living industry [5][15] - The focus remains on organic growth, with investments in sales resources and leadership development to enhance growth potential [29][39] - The company is experiencing increased outsourcing demand across multiple segments, indicating a competitive advantage in facilities services [31][69] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current momentum of the business and anticipated continued organic revenue improvement [24][36] - The company expects adjusted operating income margins of 4% to 4.5% in the second half of the fiscal year, with incremental quarterly progression [24] - Management remains cautious but prepared for varying recovery scenarios, emphasizing flexibility in operations [36] Other Important Information - The company launched an employee stock purchase plan with strong participation, aligning employee interests with company performance [14] - The acquisition of Next Level Hospitality is expected to be accretive to earnings by early fiscal '22 [23] Q&A Session Summary Question: Thoughts on accelerating organic growth post-COVID - Management is focused on pursuing organic growth and has made investments to enhance sales capabilities, expecting to capitalize on opportunities [27][29] Question: Dynamics of facilities and other business across markets - There is increased activity in facilities services across multiple segments, with strong demand for services as companies return to in-person operations [30][31] Question: Incremental performance improvement expectations - April trends are encouraging, with consistent improvement across all segments, although management remains cautious about future developments [32][33] Question: Free cash flow guidance and potential scenarios - The top end of free cash flow guidance was raised due to improved business performance, while the lower end reflects potential working capital outlays for reopening [34][35] Question: Competitive advantages in higher education wins - The company has successfully customized solutions for clients, leading to significant wins in the higher education sector [38][39] Question: Labor availability and inflation concerns - Labor inflation is a concern, but the company is prepared to manage costs through flexible menu options and contractual rights [40][41] Question: M&A pipeline and competitive bidding processes - The company is focused on strategic extensions rather than distressed acquisitions, maintaining a disciplined approach to M&A [62][63]
Aramark(ARMK) - 2020 Q4 - Annual Report
2020-11-24 21:43
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ___________________________________________ For the fiscal year ended October 2, 2020 Commission File Number: 001-36223 | --- | --- | --- | |-----------------------------------------------------|-----------------------------------------------------|---------------------------------------------| | | | ...
Aramark(ARMK) - 2020 Q4 - Earnings Call Transcript
2020-11-17 19:09
Aramark (NYSE:ARMK) Q4 2020 Earnings Conference Call November 17, 2020 8:30 AM ET Company Participants Felise Kissell - Vice President, Investor Relations & Corporate Affairs John Zillmer - Chief Executive Officer Tom Ondrof - Chief Financial Officer Conference Call Participants Kevin McVeigh - Credit Suisse Stephen Grambling - Goldman Sachs Ian Zaffino - Oppenheimer James Ainley - Citi Andrew Steinerman - JPMorgan Shlomo Rosenbaum - Stifel Greg Bardi - Barclays Andrew Wittmann - Baird Toni Kaplan - Morgan ...
Aramark(ARMK) - 2020 Q4 - Earnings Call Presentation
2020-11-17 12:35
Aramark Business Review November 2020 Forward-Looking Statements This presentation 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. For example, statements regarding the potential future impact of the COVID-19 pandemic on our business, financial performance ...