Aramark(US:ARMK)2022-08-09 20:22Financial Performance - Revenue for the three months ended July 1, 2022, was $4,127,378, a 38.3% increase from $2,981,220 for the same period in 2021[9]. - Operating income for the nine months ended July 1, 2022, was $430,124, compared to $59,125 for the same period in 2021, representing a significant improvement[10]. - Net income attributable to Aramark stockholders for the three months ended July 1, 2022, was $40,329, up from $32,557 in the same period last year, reflecting a 23.3% increase[9]. - Earnings per share attributable to Aramark stockholders for the nine months ended July 1, 2022, was $0.46, compared to a loss of $0.50 for the same period in 2021[10]. - The company reported a net income of $118,733 for the nine months ended July 1, 2022, compared to a net loss of $126,481 for the same period in 2021[10]. - Aramark reported a net income of $40.481 million for the three months ended July 1, 2022, compared to $32.562 million for the same period in 2021, reflecting a year-over-year increase[28]. - For the nine months ended July 1, 2022, Aramark's net income was $118.733 million, a significant recovery from a net loss of $126.481 million in the same period of 2021[28]. - The company anticipates continued growth and improvement in financial performance, driven by strategic initiatives and market expansion efforts[6]. Cash Flow and Investments - Operating cash flow showed a net cash used of $141.993 million, compared to a net cash provided of $233.793 million in the previous year[16]. - Total cash and cash equivalents at the end of the period were $438.868 million, down from $483.429 million a year earlier[16]. - The company reported a net cash used in investing activities of $641.444 million, an increase from $503.191 million in the prior year[16]. - Proceeds from long-term borrowings amounted to $328.326 million, a decrease from $898.443 million in the previous year[16]. - The company made acquisitions of certain businesses totaling $342.633 million, up from $264.393 million in the previous year[16]. - The Company completed the acquisition of Union Supply Group for $202.6 million on June 2, 2022, with a contingent consideration liability of $40.2 million recorded[41]. - The acquisition of Union Supply resulted in approximately $21.1 million in revenues for the three and nine months ended July 1, 2022, with net income being immaterial[47]. - The Company acquired Next Level Hospitality for $226.1 million on June 4, 2021, with contingent consideration of $78.4 million recorded[49]. Segment Performance - Total FSS United States revenue for the three months ended July 1, 2022, was $2,481.5 million, a 50.4% increase from $1,649.6 million in the prior year[76]. - Total FSS International revenue for the three months ended July 1, 2022, was $977.7 million, a 34.2% increase from $728.5 million in the same period of 2021[76]. - The company operates in three reportable segments: FSS United States, FSS International, and Uniform, with approximately 71% of global revenue derived from food services[93]. - FSS United States segment revenue for the nine months ended July 1, 2022, reached $7,245.2 million, up from $4,646.4 million in 2021, reflecting a growth of approximately 55.5%[96]. - The company’s FSS International segment revenue for the nine months ended July 1, 2022, was $2,721.8 million, an increase from $2,100.7 million in 2021, representing a growth of approximately 29.5%[96]. Cost and Expenses - The cost of services provided for the nine months ended July 1, 2022, was $10,810,111, an increase from $7,814,008 in the same period of 2021[10]. - Share-based compensation expense increased to $71.799 million from $52.638 million year-over-year[16]. - Personnel costs as a percentage of total cost of services provided decreased to 47.5% and 48.4% during the three and nine month periods ended July 1, 2022, respectively[125]. - Corporate expenses increased by approximately $10.7 million and $20.0 million during the three and nine month periods of fiscal 2022, mainly due to higher share-based compensation[132]. Tax and Regulatory Matters - The effective tax rate for the three and nine month periods of fiscal 2022 was recorded at 28.3% and 23.9%, respectively[127]. - The Company recorded a tax benefit of approximately $8.5 million due to the reversal of a valuation allowance at a subsidiary in the FSS International segment[80]. - The proposed spin-off of Aramark Uniform Services is expected to create additional value for stockholders, although risks and uncertainties remain regarding its execution[6]. - The company plans to spin off its Uniform segment into an independent publicly traded company by the end of fiscal 2023, pending regulatory approvals[112]. Market Conditions and Strategic Initiatives - The ongoing conflict between Russia and Ukraine has impacted supply chains and increased inflation in food and labor costs, affecting the company's operational performance[108]. - The company has implemented enhanced pricing strategies across various sectors, including Education and Sports, to manage inflation and supply chain disruptions[110]. - The company continues to focus on safety and well-being while adapting its business model to the current environment, including managing labor shortages and supply chain challenges[108]. - COVID-19 disruptions negatively impacted the Company's financial results from Q2 FY2020 to H1 FY2021, with improvements noted in the second half of FY2021 and the first nine months of FY2022[40]. Debt and Financing - As of July 1, 2022, total borrowings amounted to $8.16 billion, an increase from $7.45 billion on October 1, 2021, representing an increase of approximately 9.6%[59]. - The company has approximately $873.7 million in outstanding foreign currency borrowings and $848.2 million available under the senior secured revolving credit facility as of July 1, 2022[60]. - The Receivables Facility limit was increased from $400 million to $500 million on June 17, 2022, enhancing capacity by $100 million during the seasonal period from October to March[61]. - The company entered into $700 million notional amount of forward starting interest rate swap agreements to hedge cash flow risks related to variable rate borrowings during the nine months ended July 1, 2022[63]. - The company reported a net of tax gain expected to be reclassified from "Accumulated other comprehensive loss" into earnings over the next twelve months of approximately $18.6 million[70].