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Jun 30, 2023
Aramark Q3 2023 Earnings Report
Aramark's third quarter results reflected continued focus on profitable growth across the organization.
Key Takeaways
Aramark's third quarter fiscal 2023 results showed a 15% increase in revenue, driven by net new business, pricing actions, and base business growth. The company raised its full-year performance expectations for fiscal 2023.
Revenue increased by 15%, with organic revenue up 14%, driven by net new business, pricing actions, and base business growth across all reportable segments.
Operating Income increased by 38%, and Adjusted Operating Income (AOI) grew by 34%, reflecting margin expansion due to operating leverage, improved supply chain economics, and disciplined cost management.
EPS increased by 706% to $1.29, and Adjusted EPS increased by 48% to $0.36, driven by a consistent focus on profitable growth.
The company continued to strengthen its balance sheet and financial flexibility by refinancing debt and repaying approximately $630 million of debt, with over $1.0 billion in cash availability at quarter-end.
Forward Guidance
Aramark raised its full-year performance expectations for fiscal 2023.
Positive Outlook
- Organic Revenue Growth ~15% (from >13%), comprised of...Global FSS ~17% (from ~15%)
- Uniform Services~5.5%
- Adjusted Operating Income Growth ~33% (from ~32%), comprised of...Global FSS ~46% (from ~45%)
- Uniform Services~8% (from ~7%)
- Free Cash Flow ~$475 million
Challenges Ahead
- Deferred payroll taxes related to CARES Act$64 million
- Spin-off and restructuring related costs$100-$120 million
- After these items, Free Cash Flow ~$300 million
- Leverage Ratio less than 4.0x
- Outlook does not reflect any incremental public company costs associated with the spin transaction.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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