Aramark(US:ARMK)2026-02-10 21:11Financial Performance - Revenue for the three months ended January 2, 2026, was $4,831,549, an increase of 6.1% compared to $4,552,086 for the same period in 2024[16] - Operating income for the same period was $217,549, slightly up from $217,264 in the previous year[16] - Net income attributable to Aramark stockholders was $96,161, down from $105,619, representing a decrease of 8.2%[16] - Earnings per share attributable to Aramark stockholders decreased to $0.37 from $0.40, a decline of 7.5%[16] - The company reported comprehensive income of $113,436 for the three months ended January 2, 2026, compared to $76,699 in the prior year, an increase of 48.0%[19] - Net income attributable to Aramark stockholders for the three months ended January 2, 2026, was $96,161 thousand, compared to $105,619 thousand for the three months ended December 27, 2024, representing a decrease of approximately 9.2%[24] - Comprehensive income attributable to Aramark stockholders for the three months ended January 2, 2026, was $113,436 thousand, an increase from $76,699 thousand for the three months ended December 27, 2024, reflecting a growth of approximately 48.0%[36] - Adjusted operating income for the three months ended January 2, 2026, was $217.5 million, a slight increase of 0.1% compared to $217.3 million in the prior year[106] - Net income for the three months ended January 2, 2026, was $96.5 million, a decrease of 8.7% from $105.7 million in the prior year[106] Assets and Liabilities - Total current assets increased to $3,633,646 from $3,522,891, reflecting a growth of 3.2%[14] - Total current liabilities decreased to $2,855,588 from $3,546,722, a reduction of 19.5%[14] - Cash and cash equivalents at the end of the period were $439,633, down from $639,095, a decrease of 31.2%[14] - The company had long-term borrowings of $6,210,899, an increase from $5,374,394, reflecting a rise of 15.5%[14] - The balance of total stockholders' equity increased to $3,208,109 thousand as of January 2, 2026, up from $3,148,059 thousand as of October 3, 2025, indicating a growth of approximately 1.9%[24] - Cash and cash equivalents at the captive insurance subsidiary were $144.5 million as of January 2, 2026, compared to $133.5 million as of October 3, 2025, reflecting an increase of approximately 8.0%[38] - The carrying amount of investments in 50% or less owned entities accounted for under the equity method was $63.7 million as of January 2, 2026, down from $70.6 million as of October 3, 2025, representing a decrease of approximately 9.8%[40] Cash Flow - Net cash used in operating activities was $(782,200), compared to $(587,152) in the previous year, indicating a higher cash outflow[21] - Cash used in operating activities increased by $195.0 million to $782.2 million, primarily due to changes in operating assets and liabilities[128] - Cash used in investing activities decreased by $77.1 million to $153.7 million, mainly due to lower acquisitions of certain businesses[130] - Cash provided by financing activities in fiscal 2026 was $625.0 million from borrowings under the Receivables Facility and $229.1 million from the revolving credit facility[131] - Cash provided by financing activities in fiscal 2025 was $525.0 million from borrowings under the Receivables Facility and $178.4 million from the revolving credit facility[132] Revenue Segments - FSS United States revenue reached $3,362.1 million, up from $3,301.0 million, while FSS International revenue increased to $1,469.4 million from $1,251.1 million, reflecting growth rates of 1.8% and 17.5% respectively[64] - Revenue is recognized upon the transfer of control of the promised product or service to customers, reflecting the consideration expected to be received[62] - The company recognized $229.0 million of revenue from deferred income during the three months ended January 2, 2026[67] - Deferred income decreased to $188.8 million as of January 2, 2026, from $364.0 million as of October 3, 2025, indicating a reduction of 48.2%[67] - Foreign currency translation positively impacted revenue by 1.1% during the three months ended January 2, 2026[107] - The company experienced an estimated impact of approximately 3% from the reduced number of operational service days due to the calendar shift related to the fifty-third week in fiscal 2025[107] Costs and Expenses - The cost of services provided (exclusive of depreciation and amortization) increased to $4,415.4 million, up 6.4% or $264.2 million from $4,151.2 million in the prior year[106] - Personnel costs rose by $170.5 million to $2,029.7 million, reflecting business expansion and higher medical claims[109] - Interest expense for the three months ended January 2, 2026, was $81.9 million, an increase of 8.1% from $75.8 million in the prior year[106] - Cost of services provided increased by $264.2 million to $4,415.4 million in fiscal 2026, driven by higher food and support service costs and personnel costs[109] Shareholder Actions - The company declared dividends of $0.12 per share, totaling $33,601 thousand for the period, compared to $0.105 per share totaling $29,858 thousand in the previous period, marking an increase of approximately 12.3%[24] - The Board of Directors declared a dividend of $0.12 per share, payable on March 4, 2026, to stockholders of record as of February 18, 2026[71] - The company intends to continue paying cash dividends, subject to compliance with applicable laws and financial conditions[133] - Share repurchase activity included the purchase of 792,445 shares at an average price of $36.92 during the period from November 1, 2025, to November 28, 2025[159] - The total number of shares that may yet be purchased under the repurchase program is 330,590[159] - The company has a share repurchase program authorized for up to $500 million of outstanding common stock, with no fixed expiration date[159] Debt and Financing - The company completed a debt transaction, refinancing $2.4 billion of U.S. Term B-8 Loans with new U.S. Term B-10 Loans due June 2030[151] - As of January 2, 2026, there was $936.2 million of availability under the senior secured revolving credit facility[50] - The actual Consolidated Secured Debt Ratio was 2.94x, well below the maximum requirement of 5.125x[142] - The Interest Coverage Ratio was 4.24x, exceeding the minimum requirement of 2.000x[142] - Covenant Adjusted EBITDA for the twelve months ended January 2, 2026, was $1,482.0 million[141] - The company is exposed to interest rate changes and manages this risk through variable-rate and fixed-rate debt[151] Legal and Regulatory Matters - As of January 2, 2026, the company does not believe that ongoing legal proceedings will materially affect its financial condition or results of operations[155] - The company is engaged in informal settlement discussions regarding allegations of environmental law violations, which are not expected to have a material adverse effect on financial results as of January 2, 2026[156] - The company has established reserves and resources to address potential legal actions, indicating a proactive approach to risk management[155] - The company is subject to various federal, state, and local laws governing the handling and disposal of water wastes and other substances[156] - There have been no material changes to the risk factors disclosed in the Annual Report for the fiscal year ended October 3, 2025[158] Accounting and Reporting - The company is currently assessing the impact of new accounting standards on its financial statement disclosures, including those related to income tax disclosures and internal-use software[30][32] - The financial statements include condensed consolidated balance sheets and statements of income for the three months ended January 2, 2026[170] - The effective tax rate increased to 28.8% in fiscal 2026, resulting in a provision for income taxes increase of $3.3 million[115]