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Mar 31, 2023
Aramark Q2 2023 Earnings Report
Aramark's Q2 2023 earnings were marked by strong revenue and profitability growth, driven by net new business, pricing, and base business growth across all segments.
Key Takeaways
Aramark reported strong second-quarter results, with revenue up 19% and organic revenue also up 19%. The company saw improvements in operating income and adjusted operating income, driven by operating leverage and disciplined cost management. Aramark is also progressing with the Uniforms Services spin-off and balance sheet optimization.
Revenue increased by 19%, with organic revenue also up by 19%, driven by net new business, pricing, and base business growth.
Operating Income increased by 28%, and Adjusted Operating Income (AOI) increased by 30%, with margin expansion due to operating leverage and cost management.
EPS increased by 50% to $0.21, and Adjusted EPS increased by 38% to $0.28.
The company continued to strengthen its balance sheet, repaying approximately $530 million in total debt after the quarter ended.
Aramark
Aramark
Forward Guidance
Aramark is providing full year performance expectations that now include its outlook for Global FSS and Uniform Services:
Positive Outlook
- Revenue performance in the second half of the fiscal year is expected to be driven by continued strength in net new business.
- Revenue performance in the second half of the fiscal year is expected to be driven by pricing actions.
- Revenue performance in the second half of the fiscal year is expected to be driven by ongoing base business growth.
- Improved profitability through ongoing supply chain normalization and optimization
- Profitability ramp of record new business in FY21 and FY22 through operational maturity and efficiencies
Challenges Ahead
- The Company anticipates improved profitability through pricing, assuming some moderation of inflation.
- The Company anticipates improved profitability most notably within FSS U.S.' Collegiate Hospitality, Student Nutrition, and Corrections businesses
- The Company anticipates improved profitability through benefit of previously completed organizational restructuring initiatives in FSS International and Uniform Services
- The Company anticipates improved profitability through tight control and leverage of above-unit overhead across higher revenue
- The Company believes that the typical seasonality of the business will also drive Net cash provided by operating activities and Free Cash Flow that historically delivers a large cash inflow in the fourth quarter, primarily from Collegiate Hospitality.