Aramark(US:ARMK)2021-11-23 21:43Financial Performance - In fiscal 2021, Aramark generated $12.1 billion in revenue, with an operating income of $191.4 million and a net loss of $90.8 million attributable to stockholders[10]. - In fiscal 2021, the Uniform segment generated $2,420.5 million in revenue, accounting for 20% of total revenue[24]. - Approximately two-thirds of Food and Support Services revenue was derived from profit and loss contracts in fiscal 2021[20]. - In fiscal 2021, approximately one-third of Food and Support Services revenue was derived from client interest contracts[20]. - Approximately 24% of the company's revenue was generated outside of the United States during fiscal 2021[48]. - Approximately 15% of the company's revenue in fiscal 2021 was derived from government contracts, making it vulnerable to changes in government spending policies[59]. Business Segments - The Food and Support Services United States segment accounted for $6,809.3 million, or 56% of total revenue, while the Food and Support Services International segment contributed $2,866.2 million, or 24% of total revenue[14]. - The company serves over 1,460 educational institutions, providing a range of food-related managed service solutions[15]. - The company is positioned as a top 3 provider in North America for food and facilities services and holds the 2 position in uniform services[8]. - The company has a long-standing relationship with Sysco, which distributed approximately 50% of its food and non-food products in the US and Canada in fiscal 2021[17]. - The company operates a network of over 350 laundry plants and approximately 3,400 pick-up and delivery routes for its uniform rental business[26]. Workforce and Employment - The company employs approximately 248,300 individuals and serves millions of consumers across various sectors including education, healthcare, and sports[8]. - The company had approximately 248,300 employees as of October 1, 2021, an increase from approximately 247,900 employees in fiscal 2020[31]. - The company hired 59,000 new employees in fiscal 2021, a 25.5% increase from 47,000 in fiscal 2020, despite a 15% decrease in applicant flow[33]. - Approximately 42,000 employees in the United States and Canada were covered by about 650 collective bargaining agreements as of October 1, 2021[32]. - Approximately 42,000 employees in the United States and Canada are represented by unions, which may increase costs and affect operational flexibility[53]. COVID-19 Impact - The ongoing impact of COVID-19 has led to a deterioration in revenues and operating income, with the company focusing on cost discipline and liquidity management[13]. - The ongoing COVID-19 pandemic has materially impacted the company's operations, with expectations of continued adverse effects on business and financial condition[39]. - The company continues to adapt its business model in response to COVID-19, focusing on flexible operations and diversifying its service offerings[13]. - The company anticipates ongoing challenges related to supply chain disruptions and inflation impacting food supply and labor costs[13]. - The company has renegotiated client contracts during the COVID-19 pandemic to modify financial terms and increase profitability[46]. Competition and Market Challenges - The company faces significant competition from both large national firms and smaller local competitors in the Food and Support Services and Uniform segments[29]. - Economic downturns have historically reduced demand for the company's services, impacting revenue and profitability[41]. - The company may face increased competition from local and regional service providers, which could pressure pricing and profitability[45]. - The company has faced challenges in retaining clients and renewing contracts on favorable terms, which could adversely affect business operations[43]. Environmental and Safety Commitments - The company aims to reduce greenhouse gas emissions by 15% from its 2019 baseline by the end of 2025 in the United States[30]. - The company is committed to a "zero harm" culture, emphasizing employee safety through its global safety management system[33]. - Food safety is a top priority for the company, and any issues could adversely impact its reputation and revenue[62]. - The company is subject to numerous food safety regulations, and non-compliance could result in significant liabilities and reputational harm[57]. - The company may incur significant liabilities related to hazardous materials and environmental compliance, which could affect its financial condition[62]. Financial Risks and Liabilities - As of October 1, 2021, the company's outstanding indebtedness was $7,452.3 million, with additional availability of $1,091.6 million under revolving credit facilities and $400.0 million under the receivables facility[65]. - The company's leverage may expose it to increased interest rates, as certain borrowings are at variable rates, making it more difficult to make payments on its indebtedness[66]. - The company’s ability to raise additional capital may be limited due to its high leverage, affecting its operational flexibility[66]. - The company has pledged a significant portion of its assets as collateral under the senior secured credit agreement, which may affect its ability to repay borrowings if financial performance deteriorates[68]. - The company is exposed to interest rate changes and manages this risk through the use of variable-rate and fixed-rate debt, as well as interest rate swaps[144]. Governance and Diversity - As of October 1, 2021, 36% of the board of directors and 50% of the CEO's direct reports were female, with a focus on increasing diversity in leadership roles[33]. - The company has established internal controls to maintain compliance with various laws and regulations, including those related to health and safety, labor, and environmental protection[34]. - The company has 11 active employee resource groups supporting diverse communities, with 78 local hubs across the United States[33]. Strategic Initiatives - The company is evaluating acquisitions and joint ventures to enhance competitiveness, but faces risks related to integration and financing of these acquisitions[52]. - The Frontline Education Program provides eligible hourly associates with full tuition coverage for college degrees at leading universities in the United States[33]. - The company launched the Employee Stock Purchase Plan (ESPP) in 2021, allowing eligible employees to purchase discounted stock through payroll deductions[33].