Aramark: Reports Record Third Quarter Results

Philadelphia / PA. (arm) Aramark, the 15 billion USD, Fortune 200 global leader in food, facilities management and uniforms, reported third quarter fiscal 2018 results. «We reported record performance driven by broad-based results across the globe. Our focus on delivering an enhanced customer experience drove strong revenue growth. Our productivity initiatives are working well, which led to solid margin expansion, along with double-digit operating income and EPS growth,» said Eric J. Foss, Chairman, President and CEO. «We affirm our full-year Adjusted EPS outlook of USD 2.20 to USD 2.30, and we are now expecting approximately 3.5 percent revenue growth in our legacy operations.» Foss added: «Aramark benefits from a proven, resilient business model and robust financial flexibility. Looking beyond 2018, we are confident in our ability to continue generating sustainable shareholder value by executing against our clear and focused strategy.»

Third Quarter Results

Consolidated sales were USD 4.0 billion in the quarter, an increase of 9 percent on a constant-currency basis over the prior-year period, composed of a 5 percent increase in revenue related to the Avendra and AmeriPride acquisitions and 4 percent of growth related to the legacy business. Legacy business growth was positively impacted in the United States and International by the timing of the Easter holiday. The Company continues to deliver productivity improvements across all segments. In addition, uniform income benefited from the inclusion of a full quarter of AmeriPride results.

Third Quarter Summary

On a GAAP basis, sales were USD 4.0 billion, operating income was USD 188 million, net income attributable to Aramark stockholders was USD 73 million and diluted earnings per share were USD 0.29. This compares to the third quarter of 2017 where, on a GAAP basis, sales were USD 3.6 billion, operating income was USD 155 million, net income attributable to Aramark stockholders was USD 65 million and diluted earnings per share were USD 0.26. Third quarter GAAP diluted earnings per share increased 12 percent year-over-year. Adjusted net income was USD 120 million or USD 0.48 per share, versus adjusted net income of USD 100 million or USD 0.40 per share in the third quarter of 2017. A weaker U.S. dollar increased sales by approximately USD 52 million, and increased operating income by USD 3 million and provided a one-cent benefit to adjusted earnings per share.

Capital Structure + Liquidity

Total trailing 12-month net debt to covenant adjusted Ebitda was 4.6x at the end of the quarter, a 10 basis point decrease versus the end of the second quarter of 2018. At quarter-end the company had approximately USD 1.1 billion in cash and availability on its revolving credit facility.

2018 Outlook

The Company provides its expectations for full-year adjusted EPS and full-year free cash flow on a non-GAAP basis, and does not provide a reconciliation of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for the impact of the change in fair value related to certain gasoline and diesel agreements, severance and other charges and the effect of currency translation.

The Company is reaffirming its 2018 adjusted EPS outlook of USD 2.20 to USD 2.30 per share, which includes 2 cents of currency benefit. The Company is affirming its full-year free cash flow outlook of greater than USD 400 million. This outlook reflects an expectation of approximately USD 100 million benefit due to tax reform and the results of the acquisitions, offset by approximately USD 135 million in deal-related costs and certain assumed obligations related to the acquisitions. The Company expects its leverage ratio to be below 4.5x by the end of the fiscal year.