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Apr 01, 2022
Aramark Q2 2022 Earnings Report
Aramark's financial performance strengthened with double-digit organic revenue growth in each segment and record-breaking pace of new client wins.
Key Takeaways
Aramark reported a strong second quarter with revenue up 37% and organic revenue up 35%. The company saw double-digit growth across all segments, led by FSS U.S. and is positioned for a second consecutive year of record-breaking Net New Business.
Revenue increased by 37%, with organic revenue up by 35%.
Double-digit growth was achieved across all segments, led by FSS U.S.
Operating Income increased by $137 million, and Adjusted Operating Income (AOI) increased by $138 million.
EPS increased to $0.14, and Adjusted EPS increased to $0.22.
Aramark
Aramark
Forward Guidance
Aramark's full-year performance expectations for fiscal 2022 are as follows: Organic Revenue Growth at or very near 27%, Annualized Net New Business $650M - $750M, AOI Margin at or very near 5%, Free Cash Flow $300M - $350M.
Positive Outlook
- Higher pricing pass-through to clients to recover incremental costs due to inflation
- Stronger contributions from Net New Business
- Better-than-expected new account wins, while maintaining last year's improved retention rates
- Robust sales pipeline, with steadily increasing close rates
- Continued quarterly progression with Q4 exit near mid-6%
Challenges Ahead
- Start-up costs associated with better-than-expected new business wins
- Continued temporary reliance on off-program procurement related to supply chain complexities
- Percentage margin impacted near-term by higher pricing to recapture elevated cost inflation
- Slower conversion back from cost-plus contracts to profit & loss (P&L) contracts, primarily in Business Dining
- Working capital investment associated with slower conversion back to P&L contracts, primarily in Business Dining