Financial Performance - Revenue for the three months ended July 2, 2021, was $2,981,220, compared to $2,152,253 for the same period in 2020, representing a 38.4% increase[8] - Operating income for the three months ended July 2, 2021, was $74,246, a significant improvement from an operating loss of $327,597 in the same period of the previous year[8] - Net income attributable to Aramark stockholders for the three months ended July 2, 2021, was $32,557, compared to a net loss of $256,440 for the same period in 2020[8] - For the nine months ended July 2, 2021, revenue was $8,544,701, down from $10,137,409 in the same period in 2020, reflecting a decrease of 15.7%[9] - The company reported a net loss of $126,262 attributable to Aramark stockholders for the nine months ended July 2, 2021, compared to a net loss of $312,939 for the same period in 2020, indicating a 59.7% improvement[9] - Comprehensive income attributable to Aramark stockholders for the three months ended July 2, 2021, was $67,423, compared to a comprehensive loss of $260,354 in the same period of 2020[10] - Net income for the three months ended July 2, 2021, was $32,562 thousand, compared to a net loss of $(256,308) thousand for the same period in 2020[29] - Comprehensive income for the three months ended July 2, 2021, was $67,428 thousand, while comprehensive loss for the same period in 2020 was $(260,222) thousand[29] Cash Flow and Investments - Net cash provided by operating activities was $233.8 million, compared to a net cash used of $74.8 million in the prior year, indicating a positive turnaround[14] - Cash and cash equivalents at the end of the period were $483.4 million, down from $2.4 billion at the end of the previous year, reflecting a decrease of 80%[14] - Total cash used in investing activities was $503.2 million, an increase from $251.3 million in the prior year, highlighting increased investment activity[14] - Payments of long-term borrowings were $2.2 billion, significantly higher than $970.6 million in the prior year, reflecting a strategy to reduce debt[14] - The company made capital contributions from the issuance of common stock totaling $10.5 million during the period, reflecting ongoing capital raising efforts[18] - Cash provided by operating activities was $233.8 million during the nine month period of fiscal 2021, a $308.6 million increase compared to the prior year[135] - The net cash flows used in investing activities were higher during the nine month period of fiscal 2021 due to the acquisition of Next Level Hospitality for $226.2 million[137] Debt and Financing - Proceeds from long-term borrowings amounted to $898.4 million, a decrease from $3.2 billion in the previous year, indicating a reduction in reliance on debt financing[14] - The Company had total borrowings of $7.6 billion, with $103.6 million under the revolving credit facility and $483.4 million in cash and cash equivalents[54][56] - The Company repaid $780.0 million of outstanding borrowings under the U.S. revolving credit facility during the nine month period of fiscal 2021[132] - The Company redeemed $500.0 million of 4.750% Senior Notes due 2026, incurring $16.0 million in charges related to the redemption[60] - The Company entered into Amendment No. 11 to the Credit Agreement, extending the maturity date for various loans and increasing commitments under the 2018 Tranche Revolving Facility by approximately $200.0 million[61] Segment Performance - The FSS United States segment generated $1,649.6 million in revenue for the three months ended July 2, 2021, compared to $1,067.6 million in the same period of 2020, showing a 54.3% increase[79] - The Company’s revenue from the Education segment was $434.2 million for the three months ended July 2, 2021, compared to $207.1 million for the same period in 2020, reflecting a significant recovery[79] - The FSS International segment generated revenue of $728.5 million for the three months ended July 2, 2021, compared to $517.1 million in the same period of 2020, marking an increase of approximately 40.7%[96] - The FSS United States segment reported revenue of $1,649.6 million for the three months ended July 2, 2021, up from $1,067.6 million in the prior year, representing a growth of about 54.4%[96] - The FSS United States segment reported a revenue decline of 21.7% for the nine months ended July 2, 2021, totaling $4,646.4 million compared to $5,937.7 million in the previous year[117] Operational Efficiency and Strategy - The company has indicated a focus on improving operational efficiency and expanding market presence as part of its future growth strategy[8] - The company continues to implement cost mitigation plans while supporting clients, including headcount reductions recognized primarily in the third and fourth quarters of fiscal 2020[110] - The healthcare sector has shown recovery with new client wins in China, particularly in healthcare services, as restrictions ease globally[110] Tax and Regulatory Matters - The Company recorded a net benefit to the Provision for Income Taxes of approximately $3.8 million and $38.1 million during the three and nine month periods ended July 2, 2021, respectively, due to NOLs expected to be carried back to Pre-TCJA tax years at a 35.0% federal income tax rate[84] - The Company had an income tax receivable balance of approximately $3.0 million as of July 2, 2021, reflecting expected remaining proceeds to be refunded for NOLs generated in fiscal 2020[84] Acquisitions - The company completed the acquisition of Next Level Hospitality on June 4, 2021, enhancing its services in the senior living industry[40] - The cash consideration paid for the Next Level acquisition was $226.2 million, with an additional contingent consideration of $78.4 million based on future adjusted EBITDA performance[41] - The preliminary purchase price allocation for the Next Level acquisition includes total assets of $325.4 million and total liabilities of $99.3 million[43] - Revenue and net income from Next Level were not material for the three and nine months ended July 2, 2021, indicating limited immediate impact on overall financial performance[46] Shareholder Returns - The Company paid cash dividends of approximately $83.9 million and $83.1 million to its stockholders during the nine months ended July 2, 2021 and June 26, 2020, respectively[85] - The Company declared a $0.11 dividend per share of common stock on August 9, 2021, payable on September 8, 2021[85] - The Company repurchased 0.3 million shares of its common stock for $6.5 million during the second quarter of fiscal 2020 under the fiscal 2019 share repurchase program[86] Miscellaneous - The company operates in three reportable segments: FSS United States, FSS International, and Uniform[24] - The company has a global footprint in 18 countries, with the core market being the United States[24] - The company adopted new accounting standards related to income taxes and credit losses, which did not have a material impact on the financial statements[25][26] - The company is currently evaluating the impact of new accounting standards related to LIBOR discontinuation and equity securities[26]

Aramark (NYSE:ARMK) Q3 2021 Earnings Conference Call August 10, 2021 8:30 AM ET Company Participants Felise Kissell - Vice President, Investor Relations and Corporate Affairs John Zillmer - Chief Executive Officer Tom Ondrof - Chief Financial Officer Conference Call Participants Jaafar Mestari - Exane BNP Paribas Gary Bisbee - BofA Securities, Inc. Shlomo Rosenbaum - Stifel Ian Zaffino - Oppenheimer & Co. Jeffrey Goldstein - Morgan Stanley Andrew Steinerman - J.P. Morgan Andrew Wittmann - Robert W. Baird & ...

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]

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)

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 (NYSE:ARMK) Q1 2021 Earnings Conference Call February 9, 2021 8:30 AM ET Company Participants Felise Kissell - Investor Relations John Zillmer - Chief Executive Officer Tom Ondrof - Chief Financial Officer Conference Call Participants Ian Zaffino - Oppenheimer Richard Clarke - Bernstein Jaafar Mestari - Exane BNP Paribas Toni Kaplan - Morgan Stanley Andrew Steinerman - JPMorgan James Ainley - Citi Greg Bardi - Barclays Shlomo Rosenbaum - Stifel Stephen Grambling - Goldman Sachs Jay Hanna - Bank of A ...