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Sep 29, 2023
Aramark Q4 2023 Earnings Report
Aramark's financial performance improved with revenue and operating income increasing significantly.
Key Takeaways
Aramark reported a strong fourth quarter and full year fiscal 2023, marked by a 12% increase in revenue and a 40% increase in operating income. The company's focus on net new business, pricing actions, and base business growth drove the positive results. Additionally, the spin-off of the Uniform Services business was completed, allowing for enhanced focus and performance.
Revenue increased by 12%, with organic revenue up by 11%.
Operating Income rose by 40%, while Adjusted Operating Income (AOI) increased by 28%.
Earnings per share (EPS) saw a significant increase of 169% to $0.78, and Adjusted EPS increased by 34% to $0.64.
The company completed the spin-off of its Uniform Services business, now named Vestis.
Forward Guidance
Aramark expects to achieve organic revenue growth of 7% to 9% and Adjusted Operating Income growth of 15% to 20% for fiscal year 2024. The company also anticipates Adjusted EPS growth of 25% to 35% and aims to reduce its Leverage Ratio to approximately 3.5x.
Positive Outlook
- Profitability ramp of new business booked in prior years.
- Benefits from early trends related to the slow moderation of inflation, paired with progress in pricing.
- Run-rate of improved supply chain economics, as well as incremental optimization opportunities through purchasing, efficiencies from new deals, and benefits from greater scale.
- Continued rebound of front-line margins as food and labor costs normalize, combined with leveraging a flexible operating model.
- Disciplined control and containment of above-unit overhead costs, including leveraging existing resources to support the lines of business in additional ways post-spin.
Challenges Ahead
- Unfavorable economic conditions
- Natural disasters, global calamities, climate change, pandemics, energy shortages, sports strikes and other adverse incidents
Historical Earnings Impact
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Avg. Return Before/After Earnings
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