Aramark Reports First Quarter Earnings

Core Viewpoint - Aramark reported strong first quarter fiscal 2024 results, achieving record revenue and profit, driven by effective growth strategies and moderating inflation [1][11][13]. Financial Performance - Consolidated revenue reached $4.4 billion, a 13% increase year-over-year, attributed to strong base business volume, pricing actions, and net new business growth [1][4]. - Organic revenue also grew by 13% compared to the prior year [2]. - Operating income increased by 10% year-over-year to $167 million, with Adjusted Operating Income (AOI) growing by 28% to $231 million [4][7]. Segment Performance - FSS United States revenue grew due to strong performance in Education, Sports & Entertainment, and new client wins in Business & Industry [3][4]. - FSS International revenue increased across all geographies, particularly in the U.K., Canada, and Germany, driven by consistent net new business performance [4][7]. Profitability Metrics - Operating income margin was slightly lower than the previous year due to higher expenses related to the Uniform Services spin-off, while AOI margin improved by 64 basis points year-over-year [4][7]. - Increased profitability was supported by effective cost management and favorable inflation trends [11]. Cash Flow and Capital Structure - The company experienced a cash outflow in the first quarter, primarily due to seasonal factors and higher working capital needs [9]. - Aramark reduced its net debt by over $2.2 billion compared to the prior year, redeeming $1.5 billion of Senior Notes due 2025 [9]. Dividend Declaration - The Board of Directors approved a quarterly dividend of 9.5 cents per share, reflecting the company's strengthening financial profile [10]. Business Outlook - The company anticipates continued profitable growth and margin expansion, supported by operational maturity of new business and ongoing supply chain initiatives [11][13]. - Updated fiscal 2024 outlook includes expectations for organic revenue growth of 7%, Adjusted Operating Income growth of 17%, and Adjusted EPS growth of 30% [13].