Market Overview

Aramark Reports Record Third Quarter Results

Share:

KEY HIGHLIGHTS

Sales +11%; Constant Currency Sales +9%
Operating
Income +22%;
Adjusted Operating Income (AOI) +20%1
EPS
+12% to $0.29;
Adjusted EPS +18%1 to
$0.48

Operating Income Margin up 40 bps to 4.7%; AOI
Margin up 60 bps to 6.4%
1

Affirming
Full-Year 2018 Adjusted EPS Outlook

Aramark (NYSE:ARMK) today 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 $2.20 to $2.30, and we
are now expecting approximately 3.5% 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."

1 Constant Currency.

   

THIRD QUARTER RESULTS*

       
      Sales
      Q3 '18   Q3 '17   Change  

Constant
Currency
Change

FSS United States     $2,501M   $2,384M   5%   5%
FSS International     930   822   13%   7%
Uniform & Career Apparel    

541

 

388

  39%   39%
Total Company     $3,972M   $3,593M   11%   9%
     
               
      Operating Income AOI
      Q3 '18   Q3 '17   Change Q3 '18   Q3 '17   Change
FSS United States     $135M   $120M   12% $150M   $139M   8%
FSS International     46   26   76% 47   39   22%

Uniform & Career
Apparel

    57   45   27% 64   46   39%
Corporate    

(49)

 

(36)

  37%

(7)

 

(15)

  (52)%
Total Company     $188M   $155M   22% $254M   $209M   22%

Effect of Currency
Translation

        (3)      
Constant Currency AOI $251M 20%
 

* May not total due to rounding. A majority of our Canadian
operations were reclassified into the FSS International reportable
segment beginning in fiscal 2018. The prior-year period was restated to
conform to the current period presentation.

Consolidated sales were $4.0 billion in the quarter, an increase of 9%
on a constant-currency basis over the prior-year period, composed of a
5% increase in revenue related to the Avendra and AmeriPride
acquisitions and 4% 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 $4.0 billion, operating income was $188
million, net income attributable to Aramark stockholders was $73 million
and diluted earnings per share were $0.29. This compares to the third
quarter of 2017 where, on a GAAP basis, sales were $3.6 billion,
operating income was $155 million, net income attributable to Aramark
stockholders was $65 million and diluted earnings per share were $0.26.
Third quarter GAAP diluted earnings per share increased 12%
year-over-year.

Adjusted net income was $120 million or $0.48 per share, versus adjusted
net income of $100 million or $0.40 per share in the third quarter of
2017. A weaker U.S. dollar increased sales by approximately $52 million,
and increased operating income by $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 $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 $2.20 to
$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 $400
million. This outlook reflects an expectation of approximately $100
million benefit due to tax reform and the results of the acquisitions,
offset by approximately $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.

CONFERENCE CALL SCHEDULED

The Company has scheduled a conference call at 10 a.m. ET today to
discuss its earnings and outlook. This call and related materials can be
heard and reviewed, either live or on a delayed basis, on the Company's
web site, www.aramark.com
on the investor relations page.

About Aramark

Aramark (NYSE:ARMK) proudly serves Fortune 500 companies, world
champion sports teams, state-of-the-art healthcare providers, the
world's leading educational institutions, iconic destinations and
cultural attractions, and numerous municipalities in 19 countries around
the world. Our 270,000 team members deliver experiences that enrich and
nourish millions of lives every day through innovative services in food,
facilities management and uniforms. We operate our business with social
responsibility, focusing on initiatives that support our diverse
workforce, advance consumer health and wellness, protect our
environment, and strengthen our communities. Aramark is recognized as
one of the World's Most Admired Companies by FORTUNE, as well as an
employer of choice by the Human Rights Campaign and DiversityInc. Learn
more at www.aramark.com
or connect with us on Facebook and Twitter.

Selected Operational and Financial Metrics

Constant Currency Sales

Constant Currency Sales represents sales growth, adjusted to eliminate
the impact of currency translation.

Legacy Business Sales

Legacy Business Sales represents sales excluding the impact of currency
translation and the sales of AmeriPride and Avendra.

Adjusted Operating Income

Adjusted Operating Income represents operating income adjusted to
eliminate the change in amortization of acquisition-related customer
relationship intangible assets resulting from the going-private
transaction in 2007 (the "2007 LBO"); the impact of the change in fair
value related to certain gasoline and diesel agreements; severance and
other charges; share-based compensation; merger and integration related
charges and other items impacting comparability.

Adjusted Operating Income (Constant Currency)

Adjusted Operating Income (Constant Currency) represents Adjusted
Operating Income adjusted to eliminate the impact of currency
translation.

Adjusted Net Income

Adjusted Net Income represents net income attributable to Aramark
stockholders adjusted to eliminate the change in amortization of
acquisition-related customer relationship intangible assets resulting
from the 2007 LBO; the impact of changes in the fair value related to
certain gasoline and diesel agreements; severance and other charges;
share-based compensation; merger and integration related charges; the
effects of refinancings on interest and other financing costs, net; the
impact of tax reform and other items impacting comparability, less the
tax impact of these adjustments. The tax effect for adjusted net income
for our U.S. earnings is calculated using a blended U.S. federal and
state tax rate. The tax effect for adjusted net income in jurisdictions
outside the U.S. is calculated at the local country tax rate.

Adjusted Net Income (Constant Currency)

Adjusted Net Income (Constant Currency) represents Adjusted Net Income
adjusted to eliminate the impact of currency translation.

Adjusted EPS

Adjusted EPS represents Adjusted Net Income divided by diluted weighted
average shares outstanding.

Covenant Adjusted EBITDA

Covenant Adjusted EBITDA represents net income attributable to Aramark
stockholders adjusted for interest and other financing costs, net;
provision (benefit) for income taxes; depreciation and amortization; and
certain other items as defined in our debt agreements required in
calculating covenant ratios and debt compliance. The Company also uses
Net Debt for its ratio to Covenant Adjusted EBITDA, which is calculated
as total long-term borrowings less cash and cash equivalents.

Free Cash Flow

Free Cash Flow represents net cash provided by operating activities less
net purchases of property and equipment, client contract investments and
other. Management believes that the presentation of free cash flow
provides useful information to investors because it represents a measure
of cash flow available for distribution among all the security holders
of the Company.

We use Constant Currency Sales, Adjusted Operating Income (including on
a constant currency basis), Covenant Adjusted EBITDA, Adjusted Net
Income (including on a constant currency basis), Adjusted EPS (including
on a constant currency basis) and Free Cash Flow as supplemental
measures of our operating profitability and to control our cash
operating costs. We believe these financial measures are useful to
investors because they enable better comparisons of our historical
results and allow our investors to evaluate our performance based on the
same metrics that we use to evaluate our performance and trends in our
results. These financial metrics are not measurements of financial
performance under generally accepted accounting principles, or GAAP. Our
presentation of these metrics has limitations as an analytical tool, and
should not be considered in isolation or as a substitute for analysis of
our results as reported under GAAP. You should not consider these
measures as alternatives to sales, operating income, net income, or
earnings per share, determined in accordance with GAAP. Constant
Currency Sales, Adjusted Operating Income, Covenant Adjusted EBITDA,
Adjusted Net Income, Adjusted EPS and Free Cash Flow as presented by us,
may not be comparable to other similarly titled measures of other
companies because not all companies use identical calculations.

Explanatory Notes to the Non-GAAP Schedules

Amortization of acquisition-related customer
relationship intangible assets resulting from the 2007 Leveraged Buy-out

- adjustments to eliminate the change in amortization resulting from the
purchase accounting applied to the January 26, 2007 going-private
transaction executed with investment funds affiliated with GS Capital
Partners, CCMP Capital Advisors, LLC and J.P. Morgan Partners, LLC,
Thomas H. Lee Partners, L.P. and Warburg Pincus LLC as well as
approximately 250 senior management personnel.

Share-based compensation -
adjustments to eliminate compensation expense related to the Company's
issuances of share-based awards and the related employer payroll tax
expense incurred by the Company when employees exercise in the money
stock options or vest in restricted stock awards.

Severance and other charges -
adjustments to eliminate severance expenses and other costs incurred in
the applicable period such as consulting costs and severance related to
streamlining initiatives ($5.3 million and $0.1 million for the third
quarter of 2018, respectively, and $17.3 million and $39.7 million for
the year-to-date 2018, respectively, $0.5 million and $18.4 million for
the third quarter of 2017, respectively, and $0.5 million and $18.4
million for year-to-date 2017, respectively), incurring duplicate rent
charges to build out and ready the Company's new headquarters while
occupying its then-existing headquarters ($2.5 million for the third
quarter of 2018 and $4.9 million for the year-to-date 2018) and other
charges ($1.0 million for the third quarter of 2018 and $3.6 million for
year-to-date 2018 and $1.9 million for the third quarter and
year-to-date 2017).

Merger and Integration Related Charges
- adjustments to eliminate merger and integration charges related in
connection with the Avendra and AmeriPride acquisitions, including deal
costs, costs for transitional employees, other acquired employee related
costs, and integration related consulting costs ($9.7 million for the
third quarter of 2018 and $64.8 million for the year-to-date 2018) and
other deal costs.

Gains, losses and settlements impacting
comparability
- adjustments to eliminate certain transactions
that are not indicative of our ongoing operational performance,
primarily for income from prior years' loss experience that were
favorable under our casualty insurance program ($18.2 million gain for
the year-to-date 2018 and $6.5 million gain for the year-to-date 2017),
pension plan charges ($1.5 million for the third quarter of 2018 and
$4.7 million for the year-to-date 2018), charges related to a joint
venture liquidation and acquisition ($1.9 million for the third quarter
of 2018 and $7.5 million for the year-to-date 2018) the impact of the
change in fair value related to certain gasoline and diesel agreements
($0.2 million gain for the third quarter of 2018 and $0.5 million gain
for the year-to-date 2018 and $2.9 million loss for the third quarter of
2017 and $4.0 million loss for the year-to-date 2017).

Effect of currency translation -
adjustments to eliminate the impact that fluctuations in currency
translation rates had on the comparative results by presenting the
periods on a constant currency basis. Assumes constant foreign currency
exchange rates based on the rates in effect for the prior year period
being used in translation for the comparable current year period.

Effect of refinancing on interest and other
financing costs, net
- adjustments to eliminate expenses
associated with refinancing activities undertaken by the Company in the
applicable period such as financing commitment fees, and third party
costs and non-cash charges for the write-offs of debt issuance costs.

Effect of tax reform on provision for income
taxes
- adjustments to eliminate the impact of tax reform
that is not indicative of our ongoing tax position based on the new tax
policies and certain other adjustments.

Tax Impact of Adjustments to Adjusted Net Income
- adjustments to eliminate the net tax impact of the adjustments to
adjusted net income calculated based on a blended U.S. federal and state
tax rate for U.S. adjustments and the local country tax rate for
adjustments in jurisdictions outside the U.S.

Forward-Looking Statements

This press release includes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 that
reflect our current views as to future events and financial performance
with respect to, without limitation, conditions in our industry, our
operations, our economic performance and financial condition, including,
in particular, statements under the heading "2018 Outlook" and including
with respect to, without limitation, the benefits and costs of our
acquisitions of each of Avendra, LLC ("Avendra") and AmeriPride
Services, Inc. ("AmeriPride") and related financings, as well as
statements regarding these companies' services and products and
statements relating to our business and growth strategy. These
statements can be identified by the fact that they do not relate
strictly to historical or current facts. They use words such as
"outlook," "aim," "anticipate," "are or remain or continue to be
confident," "have confidence," "estimate," "expect," "will be," "will
continue," "will likely result," "project," "intend," "plan," "believe,"
"see," "look to" and other words and terms of similar meaning or the
negative versions of such words.

Forward-looking statements speak only as of the date made. All
statements we make relating to our estimated and projected earnings,
costs, expenditures, cash flows, growth rates, financial results and our
estimated benefits and costs of our acquisitions are forward-looking
statements. In addition, we, through our senior management, from time to
time make forward-looking public statements concerning our expected
future operations and performance and other developments. These
forward-looking statements are subject to risks and uncertainties that
may change at any time, and, therefore, our actual results may differ
materially from those that we expected. We derive many of our
forward-looking statements from our operating budgets and forecasts,
which are based upon many detailed assumptions. While we believe that
our assumptions are reasonable, we caution that it is very difficult to
predict the impact of known factors, and, of course, it is impossible
for us to anticipate all factors that could affect our actual results.
All subsequent written and oral forward-looking statements attributable
to us, or persons acting on our behalf, are expressly qualified in their
entirety by the cautionary statements. Some of the factors that we
believe could affect our results or the costs and benefits of the
acquisitions include without limitation: unfavorable economic
conditions; natural disasters, global calamities, sports strikes and
other adverse incidents; the failure to retain current clients, renew
existing client contracts and obtain new client contracts; a
determination by clients to reduce their outsourcing or use of preferred
vendors; competition in our industries; increased operating costs and
obstacles to cost recovery due to the pricing and cancellation terms of
our food and support services contracts; the inability to achieve cost
savings through our cost reduction efforts; our expansion strategy; the
failure to maintain food safety throughout our supply chain, food-borne
illness concerns and claims of illness or injury; governmental
regulations including those relating to food and beverages, the
environment, wage and hour and government contracting; liability
associated with noncompliance with applicable law or other governmental
regulations; new interpretations of or changes in the enforcement of the
government regulatory framework; currency risks and other risks
associated with international operations, including Foreign Corrupt
Practices Act, U.K. Bribery Act and other anti-corruption law
compliance; continued or further unionization of our workforce;
liability resulting from our participation in multiemployer defined
benefit pension plans; risks associated with suppliers from whom our
products are sourced; disruptions to our relationship with, or to the
business of, our primary distributor; the inability to hire and retain
sufficient qualified personnel or increases in labor costs; healthcare
reform legislation; the contract intensive nature of our business, which
may lead to client disputes; seasonality; disruptions in the
availability of our computer systems or privacy breaches; failure to
achieve and maintain effective internal controls; our leverage; the
inability to generate sufficient cash to service all of our
indebtedness; debt agreements that limit our flexibility in operating
our business; our ability to successfully integrate the businesses of
Avendra and AmeriPride and costs and timing related thereto, the risk of
unanticipated restructuring costs or assumption of undisclosed
liabilities, the risk that we are unable to achieve the anticipated
benefits (including tax benefits) and synergies of the acquisition of
AmeriPride and Avendra including whether the proposed transactions will
be accretive and within the expected timeframes, the availability of
sufficient cash to repay certain indebtedness and our decision to
utilize the cash for that purpose, the disruption of the transactions to
each of Avendra and AmeriPride and their respective managements; the
effect of the transactions on each of Avendra's and AmeriPride's ability
to retain and hire key personnel and maintain relationships with
customers, suppliers and other third parties, our ability to attract new
or maintain existing customer and supplier relationships at reasonable
cost, our ability to retain key personnel and other factors set forth
under the headings Item 1A "Risk Factors," Item 3 "Legal Proceedings"
and Item 7 "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and other sections of our Annual Report on
Form 10-K, filed with the SEC on November 22, 2017 as such factors may
be updated from time to time in our other periodic filings with the SEC,
which are accessible on the SEC's website at www.sec.gov
and which may be obtained by contacting Aramark's investor relations
department via its website www.aramark.com.
Accordingly, there are or will be important factors that could cause
actual outcomes or results to differ materially from those indicated in
these statements. These factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary statements
that are included in this press release and in our other filings with
the SEC. As a result of these risks and uncertainties, readers are
cautioned not to place undue reliance on any forward-looking statements
included herein or that may be made elsewhere from time to time by, or
on behalf of, us. We undertake no obligation to publicly update or
review any forward-looking statement, whether as a result of new
information, future developments, changes in our expectations, or
otherwise, except as required by law.

   

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Amounts)
 
Three Months Ended
June 29, 2018   June 30, 2017
Sales $ 3,971,606   $ 3,593,277
Costs and Expenses:
Cost of services provided 3,524,804 3,232,366
Depreciation and amortization 156,934 126,440
Selling and general corporate expenses 101,715   79,792
3,783,453   3,438,598
Operating income 188,153 154,679
Interest and Other Financing Costs, net 91,265   61,483
Income Before Income Taxes 96,888 93,196
Provision for Income Taxes 24,172   27,832
Net income 72,716 65,364
Less: Net income attributable to noncontrolling interest 139   69
Net income attributable to Aramark stockholders $ 72,577   $ 65,295
 
Earnings per share attributable to Aramark stockholders:
Basic $ 0.29 $ 0.27
Diluted $ 0.29 $ 0.26
Weighted Average Shares Outstanding:
Basic 246,028 244,266
Diluted 251,857 251,156
 
Nine Months Ended
June 29, 2018 June 30, 2017
Sales $ 11,876,035   $ 10,950,288
Costs and Expenses:
Cost of services provided 10,606,377 9,757,892
Depreciation and amortization 443,646 378,258
Selling and general corporate expenses 282,327   223,984
11,332,350   10,360,134
Operating income 543,685 590,154
Interest and Other Financing Costs, net 261,717   224,791
Income Before Income Taxes 281,968 365,363
(Benefit) Provision for Income Taxes (110,904 ) 104,334
Net income 392,872 261,029
Less: Net income attributable to noncontrolling interest 442   244
Net income attributable to Aramark stockholders $ 392,430   $ 260,785
 
Earnings per share attributable to Aramark stockholders:
Basic $ 1.60 $ 1.07
Diluted $ 1.56 $ 1.04
Weighted Average Shares Outstanding:
Basic 245,588 244,399
Diluted 252,231 251,548
 
 
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
     
June 29, 2018 September 29, 2017
Assets
 
Current Assets:
Cash and cash equivalents $ 165,968 $ 238,797
Receivables 1,851,928 1,615,993
Inventories 705,364 610,732
Prepayments and other current assets 186,806   187,617
Total current assets 2,910,066   2,653,139
Property and Equipment, net 1,321,366 1,042,031
Goodwill 5,606,234 4,715,511
Other Intangible Assets 2,170,608 1,120,824
Other Assets 1,657,266   1,474,724
$ 13,665,540   $ 11,006,229
 
Liabilities and Stockholders' Equity
 
Current Liabilities:
Current maturities of long-term borrowings $ 81,970 $ 78,157
Accounts payable 846,740 955,925
Accrued expenses and other current liabilities 1,213,904   1,334,013
Total current liabilities 2,142,614   2,368,095
Long-Term Borrowings 7,788,335 5,190,331
Deferred Income Taxes and Other Noncurrent Liabilities 878,771 978,944
Redeemable Noncontrolling Interest 10,045 9,798
Total Stockholders' Equity 2,845,775   2,459,061
$ 13,665,540   $ 11,006,229
 
 
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
     
 
Nine Months Ended
June 29, 2018 June 30, 2017
 
Cash flows from operating activities:
Net income $ 392,872 $ 261,029
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 443,646 378,258
Deferred income taxes (155,050 ) (21,094 )
Share-based compensation expense 68,318 50,318
Changes in operating assets and liabilities (597,182 ) (251,872 )
Other operating activities (11,182 ) 32,550  
Net cash provided by operating activities 141,422   449,189  
 
Cash flows from investing activities:
Net purchases of property and equipment, client contract investments
and other
(425,093 ) (325,377 )
Acquisitions, divestitures and other investing activities (2,247,086 ) (128,393 )
Net cash used in investing activities (2,672,179 ) (453,770 )
 
Cash flows from financing activities:
Net proceeds/payments of long-term borrowings 2,445,007 145,908
Net change in funding under the Receivables Facility 145,800 82,000
Payments of dividends (77,317 ) (75,543 )
Proceeds from issuance of common stock 15,961 23,048
Repurchase of stock (24,410 ) (100,000 )
Other financing activities (47,113 ) (68,738 )
Net cash provided by financing activities 2,457,928   6,675  
Increase (decrease) in cash and cash equivalents (72,829 ) 2,094
Cash and cash equivalents, beginning of period 238,797   152,580  
Cash and cash equivalents, end of period $ 165,968   $ 154,674  
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
           
Three Months Ended
June 29, 2018
FSS United States FSS International Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 2,501,000   $ 929,875   $ 540,731     $ 3,971,606  
Operating Income (as reported) $ 134,601   $ 45,851   $ 57,149   $ (49,448 ) $ 188,153  
Operating Income Margin (as reported) 5.38 % 4.93 % 10.57 % 4.74 %
 
Sales (as reported) $ 2,501,000 $ 929,875 $ 540,731 $ 3,971,606
Effect of Currency Translation (2,199 ) (47,591 ) (2,047 ) (51,837 )
Constant Currency Sales $ 2,498,801   $ 882,284   $ 538,684   $ 3,919,769  
Sales Growth (as reported) 4.92 % 13.16 % 39.43 % 10.53 %
Constant Currency Sales Growth 4.83 % 7.36 % 38.91 % 9.09 %
 
Operating Income (as reported) $ 134,601 $ 45,851 $ 57,149 $ (49,448 ) $ 188,153
Amortization of Acquisition-Related Customer Relationship Intangible
Assets Resulting from the 2007 LBO
8,158 (453 ) 7,705
Share-Based Compensation 96 26 27 34,814 34,963
Severance and Other Charges 3,595 149 5,313 9,057
Merger and Integration Related Charges 1,970 6,851 2,186 11,007
Gains, Losses and Settlements impacting comparability 1,492   1,926     (205 ) 3,213  
Adjusted Operating Income $ 149,912   $ 47,499   $ 64,027   $ (7,340 ) $ 254,098  
Effect of Currency Translation (543 ) (1,963 ) (174 )   (2,680 )
Adjusted Operating Income (Constant Currency) $ 149,369   $ 45,536   $ 63,853   $ (7,340 ) $ 251,418  
 
Operating Income Growth (as reported) 12.30 % 76.07 % 27.12 % 36.68 % 21.64 %
Adjusted Operating Income Growth 7.77 % 22.36 % 38.78 % (51.75 )% 21.66 %
Adjusted Operating Income Growth (Constant Currency) 7.37 % 17.30 % 38.41 % (51.75 )% 20.38 %
Adjusted Operating Income Margin (Constant Currency) 5.98 % 5.16 % 11.85 % 6.41 %
 
Three Months Ended
June 30, 2017
FSS United States FSS International Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 2,383,702   $ 821,771   $ 387,804     $ 3,593,277  
 
Operating Income (as reported) $ 119,857 $ 26,042 $ 44,957 $ (36,177 ) $ 154,679
Amortization of Acquisition-Related Customer Relationship Intangible
Assets and Depreciation of Property and Equipment Resulting from the
2007 LBO
14,127 (413 ) 13,714
Share-Based Compensation 150 98 79 15,771 16,098
Severance and Other Charges 4,716 13,370 1,098 1,690 20,874
Gains, Losses and Settlements impacting comparability 260   (277 )   3,503   3,486  
Adjusted Operating Income $ 139,110   $ 38,820   $ 46,134   $ (15,213 ) $ 208,851  
 
Operating Income Margin (as reported) 5.03 % 3.17 % 11.59 % 4.30 %
Adjusted Operating Income Margin 5.84 % 4.72 % 11.90 % 5.81 %
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
           
Nine Months Ended
June 29, 2018
FSS United States FSS International Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 7,656,979   $ 2,768,157   $ 1,450,899     $ 11,876,035  
Operating Income (as reported) $ 451,491   $ 107,943   $ 132,029   $ (147,778 ) $ 543,685  
Operating Income Margin (as reported) 5.90 % 3.90 % 9.10 % 4.58 %
 
Sales (as reported) $ 7,656,979 $ 2,768,157 $ 1,450,899 $ 11,876,035
Effect of Currency Translation (6,518 ) (184,985 ) (3,656 ) (195,159 )
Constant Currency Sales $ 7,650,461   $ 2,583,172   $ 1,447,243   $ 11,680,876  
Sales Growth (as reported) 4.30 % 13.55 % 23.91 % 8.45 %
Constant Currency Sales Growth 4.21 % 5.96 % 23.60 % 6.67 %
 
Operating Income (as reported) $ 451,491 $ 107,943 $ 132,029 $ (147,778 ) $ 543,685
Amortization of Acquisition-Related Customer Relationship Intangible
Assets Resulting from the 2007 LBO
31,323 (1,292 ) 30,031
Share-Based Compensation 546 150 172 68,513 69,381
Severance and Other Charges 21,909 23,549 1,571 18,504 65,533
Merger and Integration Related Charges 11,656 27,137 27,345 66,138
Gains, Losses and Settlements impacting comparability (11,725 ) 7,912   (1,746 ) (221 ) (5,780 )
Adjusted Operating Income $ 505,200   $ 138,262   $ 159,163   $ (33,637 ) $ 768,988  
Effect of Currency Translation (1,443 ) (5,753 ) (259 )   (7,455 )
Adjusted Operating Income (Constant Currency) $ 503,757   $ 132,509   $ 158,904   $ (33,637 ) $ 761,533  
 
Operating Income Growth (as reported) 3.16 % (0.24 )% (8.44 )% 47.92 % (7.87 )%
Adjusted Operating Income Growth 4.18 % 14.10 % 10.66 % (21.76 )% 8.77 %
Adjusted Operating Income Growth (Constant Currency) 3.88 % 9.35 % 10.48 % (21.76 )% 7.72 %
Adjusted Operating Income Margin (Constant Currency) 6.58 % 5.13 % 10.98 % 6.52 %
 
Nine Months Ended
June 30, 2017
FSS United States FSS International Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 7,341,558   $ 2,437,803   $ 1,170,927     $ 10,950,288  
 
Operating Income (as reported) $ 437,652 $ 108,201 $ 144,202 $ (99,901 ) $ 590,154
Amortization of Acquisition-Related Customer Relationship Intangible
Assets and Depreciation of Property and Equipment Resulting from the
2007 LBO
44,803 (549 ) (383 ) 43,871
Share-Based Compensation 491 434 246 50,895 52,066
Severance and Other Charges 4,716 13,370 1,098 1,690 20,874
Gains, Losses and Settlements impacting comparability (2,711 ) (277 ) (1,336 ) 4,322   (2 )
Adjusted Operating Income $ 484,951   $ 121,179   $ 143,827   $ (42,994 ) $ 706,963  
 
Operating Income Margin (as reported) 5.96 % 4.44 % 12.32 % 5.39 %
Adjusted Operating Income Margin 6.61 % 4.97 % 12.28 % 6.46 %
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED NET INCOME & ADJUSTED EPS
(Unaudited)
(In thousands, except per share amounts)
       
Three Months Ended Nine Months Ended
June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017
 
Net Income Attributable to Aramark Stockholders (as reported) $ 72,577 $ 65,295 $ 392,430 $ 260,785
Adjustment:
Amortization of Acquisition-Related Customer Relationship Intangible
Assets and Depreciation of Property and Equipment Resulting from the
2007 LBO
7,705 13,714 30,031 43,871
Share-Based Compensation 34,963 16,098 69,381 52,066
Severance and Other Charges 9,057 20,874 65,533 20,874
Merger and Integration Related Charges 11,007 66,138
Gains, Losses and Settlements impacting comparability 3,213 3,486 (5,780 ) (2 )
Effects of Refinancing on Interest and Other Financing Costs, net 17,773 29,968

Effect of Tax Reform on Provision for Income Taxes

(183,808 )
Tax Impact of Adjustments to Adjusted Net Income (18,719 ) (19,493 ) (61,238 ) (54,735 )
Adjusted Net Income $ 119,803 $ 99,974 $ 390,460 $ 352,827
Effect of Currency Translation, net of Tax (1,408 )   (4,705 )  
Adjusted Net Income (Constant Currency) $ 118,395   $ 99,974   $ 385,755   $ 352,827  
 
Earnings Per Share (as reported)
Net Income Attributable to Aramark Stockholders (as reported) $ 72,577 $ 65,295 $ 392,430 $ 260,785
Diluted Weighted Average Shares Outstanding 251,857   251,156   252,231   251,548  
$ 0.29   $ 0.26   $ 1.56   $ 1.04  
Earnings Per Share Growth (as reported) 11.54 % 50.00 %
 
Adjusted Earnings Per Share
Adjusted Net Income $ 119,803 $ 99,974 $ 390,460 $ 352,827
Diluted Weighted Average Shares Outstanding 251,857   251,156   252,231   251,548  
$ 0.48   $ 0.40   $ 1.55   $ 1.40  
Adjusted Earnings Per Share Growth 20.00 % 10.71 %
 
Adjusted Earnings Per Share (Constant Currency)
Adjusted Net Income (Constant Currency) $ 118,395 $ 99,974 $ 385,755 $ 352,827
Diluted Weighted Average Shares Outstanding 251,857   251,156   252,231   251,548  
$ 0.47   $ 0.40   $ 1.53   $ 1.40  

Adjusted Earnings Per Share Growth (Constant Currency)

17.50 % 9.29 %
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
NET DEBT TO COVENANT ADJUSTED EBITDA
(Unaudited)
(In thousands)
     
Twelve Months Ended
June 29, 2018 March 30, 2018
 
Net Income Attributable to Aramark Stockholders (as reported) $ 505,568 $ 498,286
Interest and Other Financing Costs, net 324,341 294,559
(Benefit) Provision for Income Taxes (68,783 ) (65,124 )
Depreciation and Amortization 573,601 543,107
Share-based compensation expense(1) 83,154 63,981
Pro forma EBITDA for equity method investees(2) 16,168 15,338
Pro forma EBITDA for certain transactions(3) 105,424 137,627
Other(4) 133,936   140,979  
Covenant Adjusted EBITDA $ 1,673,409   $ 1,628,753  
 
Net Debt to Covenant Adjusted EBITDA
Total Long-Term Borrowings $ 7,870,305 $ 7,822,007
Less: Cash and cash equivalents $ 165,968   $ 185,533  
Net Debt $ 7,704,337 $ 7,636,474
Covenant Adjusted EBITDA $ 1,673,409   $ 1,628,753  
Net Debt/Covenant Adjusted EBITDA 4.6   4.7  
 
 
(1) Represents compensation expense related to the Company's
issuances of share-based awards but does not include the related
employer payroll tax expense incurred by the Company when employees
exercise in the money stock options or vest in restricted stock
awards.
(2) Represents our estimated share of EBITDA primarily from our AIM
Services Co., Ltd. equity method investment, not already reflected
in our net income attributable to Aramark stockholders. EBITDA for
this equity method investee is calculated in a manner consistent
with Covenant Adjusted EBITDA but does not represent cash
distributions received from this investee.
(3) Represents the annualizing of net EBITDA from certain
acquisitions made during the period.

(4) Other for the twelve months ended June 29, 2018 and March 30,
2018, respectively, includes organizational streamlining
initiatives ($40.6 million costs and $58.9 million costs), the
impact of the change in fair value related to certain gasoline and
diesel agreements ($4.1 million gain and $0.9 million gain),
expenses related to merger and integration related charges ($66.9
million and $57.2 million) and other miscellaneous expenses. The
twelve months ended June 29, 2018 and March 30, 2018,
respectively, also include the estimated impact of natural
disasters, net of insurance proceeds ($13.3 million, of which $6.1
million related to asset write-downs, and $14.4 million, of which
$6.1 million related to asset write-downs), property and other
asset write-downs related to a joint venture liquidation and
acquisition ($7.5 million and $5.6 million) and duplicate rent
charges to build out and ready the Company's new headquarters
while occupying its then-existing headquarters ($4.9 million and
$2.4 million).

 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
LEGACY BUSINESS SALES
(Unaudited)
(In thousands)
   
Three Months Ended Nine Months Ended
June 29, 2018 June 29, 2018
 
Sales (as reported) $ 3,971,606 $ 11,876,035
Effect of Currency Translation (51,837 ) (195,159 )
Constant Currency Sales 3,919,769 11,680,876
Effect of AmeriPride and Avendra Acquisitions (184,666 ) (338,047 )
Legacy Business Sales $ 3,735,103   $ 11,342,829  
 
Three Months Ended Nine Months Ended
June 30, 2017 June 30, 2017
Sales (as reported) $ 3,593,277   $ 10,950,288  
 
Sales Growth (as reported) 10.53 % 8.45 %
Legacy Business Sales Growth 3.95 % 3.58 %
 

View Comments and Join the Discussion!