Aramark(US:ARMK)2021-08-10 20:16Financial 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]