Aramark Reports Fourth Quarter and Full Year 2019 Earnings

PHILADELPHIA–(BUSINESS WIRE)–Aramark (NYSE: ARMK) today reported fourth quarter and full-year fiscal 2019 results.

“Aramark is an iconic company with a promising future. I am incredibly inspired by the many talented field leaders and valued client partners I have met in just 45 days back with the Company,” said John Zillmer, Chief Executive Officer, Aramark. “My immediate priority is to elevate the Company’s hospitality culture and drive the business forward in a way that unlocks meaningful value for all stakeholders.”

FOURTH QUARTER RESULTS*

Consolidated revenue was $4.0 billion in the quarter, an increase of 1.0% over the prior year. Adjusted Revenue grew 4.9% compared to the prior year attributed to 3.0% growth in the legacy business and a 1.9% increase related to an accounting rule change. Legacy Revenue growth was driven by new business wins and base business growth across the segments:

  • FSS United States increased 1.9% led by continued strong performance in stadiums and arenas as well as growth in national parks and healthcare, partially offset by education.
  • FSS International grew 6.3% with continued strong performance in South America and China, as well as Europe despite the strategic exit of non-core custodial accounts in the region that occurred in the previous quarter.
  • Uniform & Career Apparel increased 2.7% from pricing and volume as the business focuses on expanding adjacency products and services.

 

Revenue

 

Q4 ’19

 

 

Q4 ’18

 

 

Change

 

 

Adjusted

Revenue

Change

 

 

Legacy

Revenue

Change

FSS United States1

$2,408M

 

 

$2,481M

 

 

(2.9)%

 

 

1.1%

 

 

1.9%

FSS International

898

 

 

888

 

 

1.2%

 

 

6.5%

 

 

6.3%

Uniform & Career Apparel

646

 

 

545

 

 

18.4%

 

 

18.5%

 

 

2.7%

Total Company

$3,951M

 

 

$3,914M

 

 

1.0%

 

 

4.9%

 

 

3.0%

Difference between GAAP Revenue and Adjusted Revenue reflects the elimination of currency translation and divestitures impact. Difference between Adjusted Revenue and Legacy Revenue reflects the accounting rule changes pursuant to ASC 606.

1 Q4 ’18 GAAP results include divested Healthcare Technologies revenue of $100 million. This has been excluded from the calculation of adjusted revenue change and legacy revenue change for comparison purposes.

Operating Income was $206 million and Adjusted Operating Income was $320 million in the fourth quarter. Operational results included higher total incentive-based compensation that had a particularly significant impact on the FSS United States segment compared to the prior year period. Excluding this consideration, the Company continued to benefit from overall operational improvements and acquisition synergies, as follows:

  • FSS United States exhibited overall operational efficiencies from greater purchasing scale and business productivity improvement, despite lower volume in education.
  • FSS International demonstrated broad-based growth with particular strength in Emerging Markets; the financial profile of the business in Europe has strengthened following the strategic exit of non-core custodial accounts.
  • Uniform & Career Apparel captured synergies related to the AmeriPride acquisition and additional efficiencies from operational performance.

Total incentive-based compensation, referenced above, included both share-based and cash incentives for employees. The Corporate segment reflected lower share-based compensation with the other segments affected by higher cash compensation.

 

 

Operating Income

 

 

 

 

Adjusted Operating Income

 

 

Q4 ’19

 

 

Q4 ’18

 

 

Change

 

 

 

 

Q4 ’19

 

 

Q4 ’18

 

 

Constant-

Currency

Change

 

FSS United States2

$156M

 

 

$229M

 

 

(32)%

 

 

 

 

$205M

 

 

$249M

 

 

(18)%

 

FSS International

49

 

 

41

 

 

21%

 

 

 

 

56

 

 

44

 

 

31%

 

Uniform & Career Apparel

47

 

 

50

 

 

(7)%

 

 

 

 

71

 

 

71

 

 

—%

 

Corporate

(46)

 

 

(40)

 

 

(15%)

 

 

 

 

(13)

 

 

(35)

 

 

64%

 

Total Company

$206M

 

 

$280M

 

 

(26)%

 

 

 

 

$320M

 

 

$330M

 

 

(2)%

2 Q4 ’18 GAAP results include divested Healthcare Technologies operating income of $8 million. This has been excluded from the calculation of Adjusted Operating Income constant-currency change for comparison purposes.

* May not total due to rounding.

FOURTH QUARTER GAAP SUMMARY

On a GAAP basis, revenue was $4.0 billion, operating income was $206 million, net income attributable to Aramark stockholders was $86 million and diluted earnings per share were $0.34. This compared to the fourth quarter of 2018 where, on a GAAP basis, revenue was $3.9 billion, operating income was $280 million, net income attributable to Aramark stockholders was $175 million and diluted earnings per share were $0.69. Fourth quarter 2019 GAAP diluted earnings per share decreased (50.7)% year-over-year. These results included the impact of costs associated with 1) higher incentive-based compensation; 2) legal settlements; 3) the retirement of the Company’s former Chief Executive Officer; and 4) Advisory Fees related to Shareholder Matters. EPS was further affected due to lapping the benefit from Effect of Tax Reform on Provision for Income Taxes in the prior year. A reconciliation of GAAP to Non-GAAP measures is included in the appendix. As of the end of the fourth quarter, net cash provided by operating activities was $984 million year-to-date compared to the prior year total of $1.1 billion.

FISCAL 2019 SUMMARY

On a GAAP basis, revenue was $16.2 billion, operating income was $891 million, net income attributable to Aramark stockholders was $449 million and diluted earnings per share were $1.78. This compared to fiscal 2018 where revenue was $15.8 billion, operating income was $818 million, net income attributable to Aramark stockholders was $568 million and diluted earnings per share were $2.24. Full-year 2019 GAAP diluted earnings per share decreased (20.5)% year-over-year, primarily as a result of employee reinvestments in fiscal 2019 and changes to the Provision (Benefit) for Income Taxes related to tax reform in fiscal 2018, offset by the gain from the sale of the Healthcare Technologies business in the current year.

Adjusted net income was $564 million, or $2.24 per share, versus adjusted net income of $534 million, or $2.11 per share, in fiscal 2018. A stronger U.S. dollar decreased revenue by approximately $275 million, Adjusted Operating Income by $12 million, and Adjusted Earnings Per Share by three cents.

CAPITAL STRUCTURE AND FREE CASH FLOW

The Company realized strong cash flow performance in fiscal 2019, generating $499 million of Free Cash Flow which included $36 million in integration spending associated with the AmeriPride and Avendra and $47 million in divestiture closing costs from the sale of the Healthcare Technologies business. Free Cash Flow does not include $23 million of proceeds from governmental agencies related to property and equipment. The total trailing 12-month net debt to covenant adjusted EBITDA improved by 21 basis points versus the end of the fourth quarter of 2018 to 3.86x driven by $593 million of net debt reductions over the course of the year and a continued disciplined focus on working capital management. At year-end, the Company had approximately $1.1 billion in cash and availability on its revolving credit facility.

DIVIDEND DECLARATION

The Company’s Board of Directors approved a quarterly dividend of 11 cents per share of common stock. The first quarter fiscal 2020 dividend will be payable on December 9, 2019, to stockholders of record at the close of business December 2, 2019.

BUSINESS UPDATE

Aramark has made extensive progress improving profitability, increasing procurement scale, evolving its portfolio, and driving free cash flow to strengthen the balance sheet and enhance financial flexibility. The Company is well-positioned to accelerate revenue growth that will include consideration of select investment opportunities while maintaining a long-term balanced focus on margin progression, Adjusted EPS growth, return on capital improvement and strong cash flow generation.

“I am confident that now is the time to pursue a more accelerated revenue growth strategy, while appropriately balancing other important financial drivers. We expect to initiate targeted investments that will support new account sales efforts and client retention; enhanced product and service offerings; and value-added innovation and technology,” Zillmer added. “Our diverse portfolio affords us the financial flexibility to activate this strategic approach while simultaneously propelling business performance. I look forward to working with the Board as we chart our dynamic path forward.”

2020 OUTLOOK

Aramark provides its expectations for organic revenue growth, 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.

Aramark’s 2020 Fiscal Year and fourth quarter results contain an extra, or 53rd, week, when compared to prior period results. The guidance provided below is based on 52 weeks for year-over-year comparability purposes.

  • Organic Revenue Growth of approximately 3% that is expected to consistently improve as the year progresses.
  • Adjusted EPS growth led by further synergy capture from the Avendra and AmeriPride integration; business operating improvements; and reduced interest expense, while considering select investment opportunities.
  • Free Cash Flow generation of at least $600M.
  • Net debt to covenant adjusted EBITDA approximately 3.5x to 3.6x by the end of the fiscal year.

Organic Revenue, Adjusted Operating Income, Adjusted Net Income and Adjusted Earnings Per Share Growth will be adjusted for the 53rd week. Prior to the adjustment, the 53rd week is expected to have a full year benefit of approximately 2% on these metrics. Due to certain outflows from the natural cadence of the business including interest and tax payments, employee and client payments and commissions, Free Cash Flow is expected to be modestly unfavorable in the 53rd week period, with the Company diligently managing offset opportunities over the course of the year.

CONFERENCE CALL SCHEDULED

The Company has scheduled a conference call at 8:30 a.m. ET today to discuss its earnings. 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 280,000 team members deliver experiences that enrich and nourish millions of lives every day through innovative services in food, facilities management and uniforms. We work to put our sustainability goals into action by focusing on initiatives that engage our employees, empower healthy living, preserve our planet and build local 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

Adjusted Revenue

Adjusted Revenue represents revenue growth, adjusted to eliminate the impact of currency translation and divestitures.

Adjusted Revenue (Organic)

Adjusted Revenue (Organic) represents revenue growth, adjusted to eliminate the effects of material acquisitions and divestitures and the impact of currency translation.

Legacy Business Revenue

Legacy Business Revenue represents Adjusted Revenue, adjusted to exclude the revenue of AmeriPride and Avendra that is not comparable to the prior year periods and the impact of the adoption of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

Adjusted Operating Income

Adjusted Operating Income represents operating income adjusted to eliminate the change in amortization of acquisition-related intangible assets; the impact of the change in fair value related to certain gasoline and diesel agreements; severance and other charges; the effect of divestitures (including the gain on the sale); merger and integration related charges; tax reform related employee reinvestments; advisory fees related to shareholder matters; 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 intangible assets; the impact of changes in the fair value related to certain gasoline and diesel agreements; severance and other charges; merger and integration related charges; the effect of divestitures (including the gain on the sale); the effects of refinancings on interest and other financing costs, net; the impact of tax reform; advisory fees related to shareholder matters 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.

Adjusted EPS (Constant Currency)

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

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 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 Adjusted Revenue, Legacy Business Revenue, 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 revenue, operating income, net income, or earnings per share, determined in accordance with GAAP. Adjusted Revenue, Legacy Business Revenue, 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 intangible assets – 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 ($7.7 million for the fourth quarter of 2019, $30.9 million for fiscal 2019, $7.8 million for the fourth quarter of 2018 and $37.8 million for fiscal 2018) and amortization expense recognized on other acquisition-related intangible assets ($21.6 million for the fourth quarter of 2019, $86.1 million for fiscal 2019, $21.0 million for the fourth quarter of 2018 and $70.0 million for fiscal 2018).

Severance and other charges – adjustments to eliminate severance expenses and other costs incurred in the applicable period related to streamlining initiatives ($1.1 million net expense reduction for the fourth quarter of 2019, $18.7 million for fiscal 2019, $3.1 million net expense reduction for the fourth quarter of 2018 and $36.6 million for fiscal 2018), adjustments to eliminate consulting costs incurred in the applicable period related to streamlining and general administrative initiatives ($1.5 million for the fourth quarter of 2019, $14.5 million for fiscal 2019, $2.9 million for the fourth quarter of fiscal 2018 and $20.2 million for fiscal 2018), adjustments to eliminate costs associated with the retirement of the Company’s former chief executive officer ($12.1 million for the fourth quarter and fiscal 2019, of which $10.4 million relates to cash compensation), incurring duplicate rent charges, moving costs, opening costs to build out and ready the Company’s new headquarters while occupying its then existing headquarters and closing costs ($8.2 million for fiscal 2019, $2.8 million for the fourth quarter of 2018 and $7.7 million for fiscal 2018), incurring charges related to information technology related initiatives ($1.2 million net expense reduction for the fourth quarter of 2019 and $5.0 million for fiscal 2019) and other charges ($0.3 million net expense reduction for the fourth quarter and fiscal 2019 and $3.1 million for fiscal 2018).

Effects of divestitures – adjustments to eliminate the impact that the Healthcare Technologies divestiture had on comparative periods.

Merger and Integration Related Charges – adjustments to eliminate merger and integration charges primarily related to the Avendra and AmeriPride acquisitions, including deal costs, costs for transitional employees and integration related consulting costs ($9.8 million for the fourth quarter of 2019, $36.1 million for fiscal 2019, $13.3 million for the fourth quarter of 2018 and $78.1 million for fiscal 2018)

Gain on sale of Healthcare Technologies – adjustment to eliminate the impact of the gain on sale of the Healthcare Technologies business.

Tax Reform Related Employee Reinvestments – adjustments to eliminate certain reinvestments associated with tax savings created by the Tax Cuts and Jobs Act of 2017, including employee training expenses, special recognition awards and retirement contributions ($4.4 million for the fourth quarter of 2019 and $74.9 million for fiscal 2019).

Advisory Fees Related to Shareholder Matters – adjustments to eliminate third party advisory, legal and other professional service fees incurred related to conversations initiated by Mantle Ridge LP in connection with the Company’s business, operations, strategies, governance and the composition of the Board of Directors ($7.7 million for the fourth quarter and fiscal 2019).

Gains, losses and settlements impacting comparability – adjustments to eliminate certain transactions that are not indicative of our ongoing operational performance, primarily for expenses related to legal settlements ($27.9 million for the fourth quarter and fiscal 2019), impairment charges related to various assets ($14.8 million for the fourth quarter and fiscal 2019), income/loss from prior years’ loss experience under our casualty insurance program ($2.1 million loss for the fourth quarter of 2019, $9.2 million gain for fiscal 2019, $3.3 million loss for the fourth quarter of 2018 and $14.9 million gain for fiscal 2018), banker fees and other charges related to the sale of Healthcare Technologies ($7.7 million for fiscal 2019), charges related to hyperinflation in Argentina ($4.9 million for the fourth quarter and fiscal 2019, $3.8 million for the fourth quarter and fiscal 2018), the impact of the change in fair value related to certain gasoline and diesel agreements ($0.8 million loss for the fourth quarter of 2019, $4.7 million loss for fiscal 2019, $0.3 million loss for the fourth quarter of 2018 and $0.2 million gain for fiscal 2018), settlement charges related to exiting a joint venture arrangement ($4.5 million for fiscal 2019), pension plan charges ($1.2 million loss for fiscal 2019, $0.4 million loss for the fourth quarter of 2018 and $2.9 million loss for fiscal 2018), charges related to a joint venture liquidation and acquisition ($7.5 million for fiscal 2018), certain environmental charges ($5.0 million for the fourth quarter and fiscal 2018), certain consulting costs ($0.7 million for the fourth quarter of 2018 and $1.0 million for fiscal 2018) and other charges ($1.1 million for the fourth quarter of 2019 and $4.0 million for fiscal 2019).

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 and other 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 third party costs and non-cash charges for the write-offs of deferred financing costs and debt discounts, non-cash charges for the write-off of deferred financing costs related to debt payments and other pension plan charges.

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 made by our CEO and under the heading “2020 Outlook” and including with respect to, without limitation, anticipated effects of our adoption of new accounting standards, the expected impact of strategic portfolio actions, the benefits and costs of our acquisitions of each of Avendra, LLC (“Avendra”) and AmeriPride Services, Inc. (“AmeriPride”), 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; 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 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; 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 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 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 21, 2018 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 presentation 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

 

 

September 27, 2019

 

September 28, 2018

Revenue

 

$

3,951,244

 

 

$

3,913,598

 

Costs and Expenses:

 

 

 

 

Cost of services provided

 

3,503,280

 

 

3,386,380

 

Depreciation and amortization

 

145,165

 

 

152,536

 

Selling and general corporate expenses

 

96,656

 

 

94,801

 

 

 

3,745,101

 

 

3,633,717

 

Operating income

 

206,143

 

 

279,881

 

Interest and Other Financing Costs, net

 

85,612

 

 

89,972

 

Income Before Income Taxes

 

120,531

 

 

189,909

 

Provision for Income Taxes

 

35,117

 

 

14,341

 

Net income

 

85,414

 

 

175,568

 

Less: Net income attributable to noncontrolling interest

 

(143

)

 

113

 

Net income attributable to Aramark stockholders

 

$

85,557

 

 

$

175,455

 

 

 

 

 

 

Earnings per share attributable to Aramark stockholders:

 

 

 

 

Basic

 

$

0.35

 

 

$

0.71

 

Diluted

 

$

0.34

 

 

$

0.69

 

Weighted Average Shares Outstanding:

 

 

 

 

Basic

 

247,431

 

 

246,321

 

Diluted

 

253,404

 

 

253,724

 

 

 

 

Fiscal Year Ended

 

 

September 27, 2019

 

September 28, 2018

Revenue

 

$

16,227,341

 

 

$

15,789,633

 

Costs and Expenses:

 

 

 

 

Cost of services provided

 

14,532,662

 

 

13,997,911

 

Depreciation and amortization

 

592,573

 

 

596,182

 

Selling and general corporate expenses

 

367,256

 

 

377,129

 

Gain on sale of Healthcare Technologies

 

(156,309

)

 

 

 

 

15,336,182

 

 

14,971,222

 

Operating income

 

891,159

 

 

818,411

 

Interest and Other Financing Costs, net

 

334,987

 

 

346,535

 

Income Before Income Taxes

 

556,172

 

 

471,876

 

Provision (Benefit) for Income Taxes

 

107,706

 

 

(96,564

)

Net income

 

448,466

 

 

568,440

 

Less: Net income (loss) attributable to noncontrolling interest

 

(83

)

 

555

 

Net income attributable to Aramark stockholders

 

$

448,549

 

 

$

567,885

 

 

 

 

 

 

Earnings per share attributable to Aramark stockholders:

 

 

 

 

Basic

 

$

1.82

 

 

$

2.31

 

Diluted

 

$

1.78

 

 

$

2.24

 

Weighted Average Shares Outstanding:

 

 

 

 

Basic

 

246,854

 

 

245,771

 

Diluted

 

252,010

 

 

253,352

 

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS*

(Unaudited)

(In Thousands)

 

 

 

 

 

 

 

September 27, 2019

 

September 28, 2018

Assets

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

246,643

 

 

$

215,025

 

Receivables

 

1,806,964

 

 

1,790,433

 

Inventories

 

411,319

 

 

724,802

 

Prepayments and other current assets

 

193,461

 

 

171,165

 

Total current assets

 

2,658,387

 

 

2,901,425

 

Property and Equipment, net

 

2,181,762

 

 

1,378,094

 

Goodwill

 

5,518,800

 

 

5,610,568

 

Other Intangible Assets

 

2,033,566

 

 

2,136,844

 

Other Assets

 

1,343,806

 

 

1,693,171

 

 

 

$

13,736,321

 

 

$

13,720,102

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

Current maturities of long-term borrowings

 

$

69,928

 

 

$

30,907

 

Accounts payable

 

999,517

 

 

1,018,920

 

Accrued expenses and other current liabilities

 

1,635,853

 

 

1,440,332

 

Total current liabilities

 

2,705,298

 

 

2,490,159

 

Long-Term Borrowings

 

6,612,239

 

 

7,213,077

 

Deferred Income Taxes and Other Noncurrent Liabilities

 

1,088,822

 

 

977,215

 

Redeemable Noncontrolling Interest

 

9,915

 

 

10,093

 

Total Stockholders’ Equity

 

3,320,047

 

 

3,029,558

 

 

 

$

13,736,321

 

 

$

13,720,102

 

 

 

 

 

 

*In connection with the Company’s adoption of ASC 606, Revenue from Contracts with Customers, the classification of certain balance sheet line items has been adjusted as of September 27, 2019, including Inventories, Property and Equipment, net and Other Assets. Further details will be available in the Annual Report on Form 10-K for the fiscal year ended September 27, 2019.

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

September 27, 2019

 

September 28, 2018

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

448,466

 

 

$

568,440

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

592,573

 

 

596,182

 

Deferred income taxes

 

40,503

 

 

(104,289

)

Share-based compensation expense

 

55,280

 

 

88,276

 

Net gain on sale of Healthcare Technologies

 

(139,165

)

 

 

Changes in operating assets and liabilities

 

44,855

 

 

(128,356

)

Payments made to clients on contracts1

 

(40,073

)

 

 

Other operating activities

 

(18,212

)

 

31,622

 

Net cash provided by operating activities

 

984,227

 

 

1,051,875

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Net purchases of property and equipment and other

 

(485,219

)

 

(618,113

)

Acquisitions, divestitures and other investing activities2

 

275,698

 

 

(2,247,163

)

Net cash used in investing activities

 

(209,521

)

 

(2,865,276

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Net proceeds/payments of long-term borrowings

 

(576,930

)

 

2,203,624

 

Net change in funding under the Receivables Facility

 

 

 

(254,200

)

Payments of dividends

 

(108,439

)

 

(103,115

)

Proceeds from issuance of common stock

 

39,087

 

 

21,507

 

Repurchase of stock

 

(50,000

)

 

(24,410

)

Other financing activities

 

(38,610

)

 

(49,253

)

Net cash provided by (used in) financing activities

 

(734,892

)

 

1,794,153

 

Effect of foreign exchange rates on cash and cash equivalents

 

(8,196

)

 

(4,524

)

Increase (decrease) in cash and cash equivalents

 

31,618

 

 

(23,772

)

Cash and cash equivalents, beginning of period

 

215,025

 

 

238,797

 

Cash and cash equivalents, end of period

 

$

246,643

 

 

$

215,025

 

 

 

 

 

 

1 Prior to the Company’s adoption of ASC 606, Revenue from Contracts with Customers, certain client contract investments were included within “Net purchases of property and equipment and other” in Net cash used in investing activities. Subsequent to adoption of ASC 606, these costs are now included within “Payments made to clients on contracts” in Net cash provided by operating activities.

2 Includes proceeds from the sale of Healthcare Technologies and $23.0 million of proceeds from governmental agencies related to property and equipment.

ARAMARK AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 27, 2019

 

 

FSS United States

 

FSS International

 

Uniform

 

Corporate

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

2,407,750

 

 

$

897,894

 

 

$

645,600

 

 

 

 

$

3,951,244

 

Operating Income (as reported)

 

$

156,290

 

 

$

49,209

 

 

$

46,843

 

 

$

(46,199

)

 

$

206,143

 

Operating Income Margin (as reported)

 

6.49

%

 

5.48

%

 

7.26

%

 

 

 

5.22

%

 

 

 

 

 

 

 

 

 

 

 

Revenue (as reported)

 

$

2,407,750

 

 

$

897,894

 

 

$

645,600

 

 

 

 

$

3,951,244

 

Effect of Currency Translation

 

458

 

 

47,869

 

 

576

 

 

 

 

48,903

 

Adjusted Revenue

 

$

2,408,208

 

 

$

945,763

 

 

$

646,176

 

 

 

 

$

4,000,147

 

Revenue Growth (as reported)

 

(2.95

)%

 

1.15

%

 

18.44

%

 

 

 

0.96

%

Adjusted Revenue Growth

 

1.13

%

 

6.55

%

 

18.54

%

 

 

 

4.88

%

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

156,290

 

 

$

49,209

 

 

$

46,843

 

 

$

(46,199

)

 

$

206,143

 

Amortization of Acquisition-Related Intangible Assets

 

21,209

 

 

1,952

 

 

6,148

 

 

 

 

29,309

 

Severance and Other Charges

 

(1,393

)

 

(888

)

 

(300

)

 

13,540

 

 

10,959

 

Merger and Integration Related Charges

 

1,014

 

 

 

 

8,738

 

 

 

 

9,752

 

Tax Reform Related Employee Reinvestments

 

3,228

 

 

 

 

1,144

 

 

 

 

4,372

 

Advisory Fees related to Shareholder Matters

 

 

 

 

 

 

 

7,661

 

 

7,661

 

Gains, Losses and Settlements impacting comparability

 

24,591

 

 

5,664

 

 

8,859

 

 

12,498

 

 

51,612

 

Adjusted Operating Income*

 

$

204,939

 

 

$

55,937

 

 

$

71,432

 

 

$

(12,500

)

 

$

319,808

 

Effect of Currency Translation

 

88

 

 

1,912

 

 

(48

)

 

 

 

1,952

 

Adjusted Operating Income (Constant Currency)

 

$

205,027

 

 

$

57,849

 

 

$

71,384

 

 

$

(12,500

)

 

$

321,760

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Growth (as reported)

 

(31.75

)%

 

20.66

%

 

(6.75

)%

 

(15.08

)%

 

(26.35

)%

Adjusted Operating Income Growth

 

(17.71

)%

 

26.31

%

 

0.54

%

 

63.87

%

 

(3.02

)%

Adjusted Operating Income Growth (Constant Currency)

 

(17.67

)%

 

30.63

%

 

0.47

%

 

63.87

%

 

(2.43

)%

Adjusted Operating Income Margin (Constant Currency)

 

8.51

%

 

6.12

%

 

11.05

%

 

 

 

8.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 28, 2018

 

 

FSS United States

 

FSS International

 

Uniform

 

Corporate

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

2,480,846

 

 

$

887,646

 

 

$

545,106

 

 

 

 

$

3,913,598

 

Effect of Divestitures

 

(99,598

)

 

 

 

 

 

 

 

(99,598

)

Adjusted Revenue

 

$

2,381,248

 

 

$

887,646

 

 

$

545,106

 

 

 

 

$

3,814,000

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

229,012

 

 

$

40,783

 

 

$

50,232

 

 

$

(40,146

)

 

$

279,881

 

Amortization of Acquisition-Related Intangible Assets

 

21,748

 

 

1,042

 

 

6,016

 

 

 

 

28,806

 

Severance and Other Charges

 

374

 

 

(2,216

)

 

 

 

3,886

 

 

2,044

 

Effect of Divestitures

 

(8,092

)

 

 

 

 

 

 

 

(8,092

)

Merger and Integration Related Charges

 

2,742

 

 

 

 

10,398

 

 

630

 

 

13,770

 

Gains, Losses and Settlements impacting comparability

 

3,251

 

 

4,676

 

 

4,401

 

 

1,030

 

 

13,358

 

Adjusted Operating Income*

 

$

249,035

 

 

$

44,285

 

 

$

71,047

 

 

$

(34,600

)

 

$

329,767

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin (as reported)

 

9.23

%

 

4.59

%

 

9.22

%

 

 

 

7.15

%

Adjusted Operating Income Margin

 

10.46

%

 

4.99

%

 

13.03

%

 

 

 

8.65

%

 

 

 

 

 

 

 

 

 

 

 

* Beginning in fiscal 2019, the definition of AOI changed. AOI for the three months ended September 28, 2018 has been calculated based on this new definition. See page 6 for the new definition of AOI.

ARAMARK AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

September 27, 2019

 

 

FSS United States

 

FSS International

 

Uniform

 

Corporate

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

9,898,568

 

 

$

3,742,939

 

 

$

2,585,834

 

 

 

 

$

16,227,341

 

Operating Income (as reported)

 

$

716,729

 

 

$

142,721

 

 

$

191,344

 

 

$

(159,635

)

 

$

891,159

 

Operating Income Margin (as reported)

 

7.24

%

 

3.81

%

 

7.40

%

 

 

 

5.49

%

 

 

 

 

 

 

 

 

 

 

 

Revenue (as reported)

 

$

9,898,568

 

 

$

3,742,939

 

 

$

2,585,834

 

 

 

 

$

16,227,341

 

Effect of Currency Translation

 

6,498

 

 

260,695

 

 

7,850

 

 

 

 

275,043

 

Adjusted Revenue

 

$

9,905,066

 

 

$

4,003,634

 

 

$

2,593,684

 

 

 

 

$

16,502,384

 

Revenue Growth (as reported)

 

(2.36

)%

 

2.38

%

 

29.55

%

 

 

 

2.77

%

Adjusted Revenue Growth

 

1.42

%

 

9.51

%

 

29.94

%

 

 

 

7.03

%

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

716,729

 

 

$

142,721

 

 

$

191,344

 

 

$

(159,635

)

 

$

891,159

 

Amortization of Acquisition-Related Intangible Assets

 

86,696

 

 

5,927

 

 

24,421

 

 

 

 

117,044

 

Severance and Other Charges

 

13,196

 

 

17,057

 

 

193

 

 

28,001

 

 

58,447

 

Merger and Integration Related Charges

 

6,534

 

 

 

 

29,526

 

 

8

 

 

36,068

 

Gain on sale of Healthcare Technologies

 

(156,309

)

 

 

 

 

 

 

 

(156,309

)

Tax Reform Related Employee Reinvestments

 

58,657

 

 

352

 

 

14,442

 

 

1,443

 

 

74,894

 

Advisory Fees related to Shareholder Matters

 

 

 

 

 

 

 

7,661

 

 

7,661

 

Gains, Losses and Settlements impacting comparability

 

19,930

 

 

9,171

 

 

8,859

 

 

22,504

 

 

60,464

 

Adjusted Operating Income*

 

$

745,433

 

 

$

175,228

 

 

$

268,785

 

 

$

(100,018

)

 

$

1,089,428

 

Effect of Currency Translation

 

1,332

 

 

10,094

 

 

602

 

 

 

 

12,028

 

Adjusted Operating Income (Constant Currency)

 

$

746,765

 

 

$

185,322

 

 

$

269,387

 

 

$

(100,018

)

 

$

1,101,456

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Growth (as reported)

 

4.99

%

 

0.35

%

 

5.45

%

 

15.05

%

 

8.89

%

Adjusted Operating Income Growth

 

(2.49

)%

 

(3.06

)%

 

11.78

%

 

26.86

%

 

3.86

%

Adjusted Operating Income Growth (Constant Currency)

 

(2.32

)%

 

2.52

%

 

12.03

%

 

26.86

%

 

5.00

%

Adjusted Operating Income Margin (Constant Currency)

 

7.54

%

 

4.63

%

 

10.39

%

 

 

 

6.67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

September 28, 2018

 

 

FSS United States

 

FSS International

 

Uniform

 

Corporate

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

10,137,825

 

 

$

3,655,803

 

 

$

1,996,005

 

 

 

 

$

15,789,633

 

Effect of Divestitures

 

(371,712

)

 

 

 

 

 

 

 

(371,712

)

Adjusted Revenue

 

$

9,766,113

 

 

$

3,655,803

 

 

$

1,996,005

 

 

 

 

$

15,417,921

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

682,655

 

 

$

142,228

 

 

$

181,452

 

 

$

(187,924

)

 

$

818,411

 

Amortization of Acquisition-Related Intangible Assets

 

85,931

 

 

4,614

 

 

17,256

 

 

 

 

107,801

 

Severance and Other Charges

 

22,283

 

 

21,333

 

 

1,571

 

 

22,390

 

 

67,577

 

Effect of Divestitures

 

(30,157

)

 

 

 

 

 

 

 

(30,157

)

Merger and Integration Related Charges

 

14,398

 

 

 

 

37,535

 

 

27,975

 

 

79,908

 

Gains, Losses and Settlements impacting comparability

 

(10,628

)

 

12,588

 

 

2,655

 

 

809

 

 

5,424

 

Adjusted Operating Income*

 

$

764,482

 

 

$

180,763

 

 

$

240,469

 

 

$

(136,750

)

 

$

1,048,964

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin (as reported)

 

6.73

%

 

3.89

%

 

9.09

%

 

 

 

5.18

%

Adjusted Operating Income Margin

 

7.83

%

 

4.94

%

 

12.05

%

 

 

 

6.80

%

 

* Beginning in fiscal 2019, the definition of AOI changed. AOI for the fiscal year ended September 28, 2018 has been calculated based on this new definition. See page 6 for the new definition of AOI.

ARAMARK AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED NET INCOME & ADJUSTED EPS

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Fiscal Year Ended

 

 

September 27, 2019

 

September 28, 2018

 

September 27, 2019

 

September 28, 2018

 

 

 

 

 

 

 

 

 

Net Income Attributable to Aramark Stockholders (as reported)

 

$

85,557

 

 

$

175,455

 

 

$

448,549

 

 

$

567,885

 

Adjustment:

 

 

 

 

 

 

 

 

Amortization of Acquisition-Related Intangible Assets

 

29,309

 

 

28,806

 

 

117,044

 

 

107,801

 

Severance and Other Charges

 

10,959

 

 

2,044

 

 

58,447

 

 

67,577

 

Effect of Divestitures

 

 

 

(8,092

)

 

 

 

(30,157

)

Merger and Integration Related Charges

 

9,752

 

 

13,770

 

 

36,068

 

 

79,908

 

Gain on sale of Healthcare Technologies

 

 

 

 

 

(156,309

)

 

 

Tax Reform Related Employee Reinvestments

 

4,372

 

 

 

 

74,894

 

 

 

Advisory Fees related to Shareholder Matters

 

7,661

 

 

 

 

7,661

 

 

 

Gains, Losses and Settlements impacting comparability

 

51,612

 

 

13,358

 

 

60,464

 

 

5,424

 

Effects of Refinancing and Other on Interest and Other Financing Costs, net

 

2,219

 

 

 

 

2,219

 

 

19,925

 

Effect of Tax Reform on Provision for Income Taxes

 

 

 

(38,190

)

 

(12,126

)

 

(221,998

)

Tax Impact of Adjustments to Adjusted Net Income

 

(28,858

)

 

(13,758

)

 

(73,156

)

 

(62,639

)

Adjusted Net Income

 

$

172,583

 

 

$

173,393

 

 

$

563,755

 

 

$

533,726

 

Effect of Currency Translation, net of Tax

 

1,358

 

 

 

 

8,846

 

 

 

Adjusted Net Income (Constant Currency)

 

$

173,941

 

 

$

173,393

 

 

$

572,601

 

 

$

533,726

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (as reported)

 

 

 

 

 

 

 

 

Net Income Attributable to Aramark Stockholders (as reported)

 

$

85,557

 

 

$

175,455

 

 

$

448,549

 

 

$

567,885

 

Diluted Weighted Average Shares Outstanding

 

253,404

 

 

253,724

 

 

252,010

 

 

253,352

 

 

 

$

0.34

 

 

$

0.69

 

 

$

1.78

 

 

$

2.24

 

Earnings Per Share Growth (as reported)

 

(50.72

)%

 

 

 

(20.54

)%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share

 

 

 

 

 

 

 

 

Adjusted Net Income*

 

$

172,583

 

 

$

173,393

 

 

$

563,755

 

 

$

533,726

 

Diluted Weighted Average Shares Outstanding

 

253,404

 

 

253,724

 

 

252,010

 

 

253,352

 

 

 

$

0.68

 

 

$

0.68

 

 

$

2.24

 

 

$

2.11

 

Adjusted Earnings Per Share Growth

 

%  

 

 

6.16

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share (Constant Currency)

 

 

 

 

 

 

 

 

Adjusted Net Income (Constant Currency)

 

$

173,941

 

 

$

173,393

 

 

$

572,601

 

 

$

533,726

 

Diluted Weighted Average Shares Outstanding

 

253,404

 

 

253,724

 

 

252,010

 

 

253,352

 

 

 

$

0.69

 

 

$

0.68

 

 

$

2.27

 

 

$

2.11

 

Adjusted Earnings Per Share Growth (Constant Currency)

 

1.47

%

 

 

 

7.58

%

 

 

 

 

 

 

 

 

 

 

 

* Beginning in fiscal 2019, the definition of Adjusted Net Income changed. Adjusted Net Income for the three months and fiscal year ended September 27, 2019 has been calculated based on this new definition. See page 6 for the new definition of Adjusted Net Income.

ARAMARK AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

NET DEBT TO COVENANT ADJUSTED EBITDA

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

Twelve Months Ended

 

 

September 27, 2019

 

September 28, 2018

 

 

 

 

 

Net Income Attributable to Aramark Stockholders (as reported)

 

$

448,549

 

 

$

567,885

 

Interest and Other Financing Costs, net

 

334,987

 

 

346,535

 

Provision (Benefit) for Income Taxes

 

107,706

 

 

(96,564

)

Depreciation and Amortization

 

592,573

 

 

596,182

 

Share-based compensation expense(1)

 

55,280

 

 

88,276

 

Unusual or non-recurring (gains) and losses(2)

 

(156,309

)

 

 

Pro forma EBITDA for equity method investees(3)

 

8,077

 

 

15,214

 

Pro forma EBITDA for certain transactions(4)

 

21,527

 

 

58,600

 

Other(5)

 

253,480

 

 

151,636

 

Covenant Adjusted EBITDA

 

$

1,665,870

 

 

$

1,727,764

 

 

 

 

 

 

Net Debt to Covenant Adjusted EBITDA

 

 

 

 

Total Long-Term Borrowings

 

$

6,682,167

 

 

$

7,243,984

 

Less: Cash and cash equivalents

 

$

246,643

 

 

$

215,025

 

Net Debt

 

$

6,435,524

 

 

$

7,028,959

 

Covenant Adjusted EBITDA

 

$

1,665,870

 

 

$

1,727,764

 

Net Debt/Covenant Adjusted EBITDA

 

3.86

 

 

4.07

 

 

 

 

 

 

(1) Represents compensation expense related to the Company’s issuances of share-based awards.

(2) Represents the gain from the divestiture of Healthcare Technologies.

(3) 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.

(4) Represents the annualizing of net EBITDA from certain acquisitions and divestitures made during the period.

(5) “Other” for the twelve months ended September 27, 2019 and September 28, 2018, respectively, includes expenses related to merger and integration related charges ($36.1 million and $78.1 million), adjustments to remove the impact attributable to the adoption of certain new accounting standards, including Accounting Standards Codification 606, Revenue from Contracts with Customers, in accordance with the Credit Agreement and indentures ($23.7 million and $7.7 million), organizational streamlining initiatives ($18.7 million and $36.6 million), duplicate rent charges, moving costs, opening costs to build out and ready the Company’s new headquarters while occupying its then existing headquarters and closing costs ($8.2 million and $7.7 million), the impact of hyperinflation in Argentina ($4.9 million and $3.8 million), the impact of the change in fair value related to certain gasoline and diesel agreements ($4.7 million loss and $0.2 million gain) and other miscellaneous expenses. “Other” for the twelve months ended September 27, 2019 also includes compensation expense for employee reinvestments funded by benefits from U.S. tax reform ($74.9 million), costs related to legal settlements ($27.9 million), asset impairment charges ($14.8 million), costs associated with the retirement of the Company’s former chief executive officer ($10.4 million), closing costs mainly related to customer contracts ($8.5 million), advisory fees related to shareholder matters ($7.7 million), banker fees and other charges related to the sale of Healthcare Technologies ($7.7 million) and settlement charges related to exiting a joint venture arrangement ($4.5 million). “Other” for the twelve months ended September 28, 2018 also includes property and other asset write-downs related to a joint venture liquidation and acquisition ($7.5 million), and certain environmental charges ($5.0 million).

ARAMARK AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

LEGACY BUSINESS REVENUE

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 27, 2019

 

 

FSS United States

 

FSS International

 

Uniform

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

2,407,750

 

 

$

897,894

 

 

$

645,600

 

 

$

3,951,244

 

Effect of Currency Translation

 

458

 

 

47,869

 

 

576

 

 

48,903

 

Adjusted Revenue

 

$

2,408,208

 

 

$

945,763

 

 

$

646,176

 

 

$

4,000,147

 

Changes pursuant to ASC 606, Revenue from Contracts with Customers

 

17,588

 

 

(2,023

)

 

(86,563

)

 

(70,998

)

Legacy Business Revenue

 

$

2,425,796

 

 

$

943,740

 

 

$

559,613

 

 

$

3,929,149

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 28, 2018

 

 

FSS United States

 

FSS International

 

Uniform

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

2,480,846

 

 

$

887,646

 

 

$

545,106

 

 

$

3,913,598

 

Effect of Divestitures

 

(99,598

)

 

 

 

 

 

(99,598

)

Legacy Business Revenue

 

$

2,381,248

 

 

$

887,646

 

 

$

545,106

 

 

$

3,814,000

 

 

 

 

 

 

 

 

 

 

Revenue Growth (as reported)

 

(2.95

)%

 

1.15

%

 

18.44

%

 

0.96

%

Legacy Business Revenue Growth

 

1.87

%

 

6.32

%

 

2.66

%

 

3.02

%

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

September 27, 2019

 

 

FSS United States

 

FSS International

 

Uniform

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

9,898,568

 

 

$

3,742,939

 

 

$

2,585,834

 

 

$

16,227,341

 

Effect of Currency Translation

 

6,498

 

 

260,695

 

 

7,850

 

 

275,043

 

Adjusted Revenue

 

$

9,905,066

 

 

$

4,003,634

 

 

$

2,593,684

 

 

$

16,502,384

 

Effect of AmeriPride and Avendra Acquisitions

 

(30,768

)

 

 

 

(167,616

)

 

(198,384

)

Changes pursuant to ASC 606, Revenue from Contracts with Customers

 

46,057

 

 

(8,090

)

 

(369,398

)

 

(331,431

)

Legacy Business Revenue

 

$

9,920,355

 

 

$

3,995,544

 

 

$

2,056,670

 

 

$

15,972,569

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

September 28, 2018

 

 

FSS United States

 

FSS International

 

Uniform

 

Aramark and

Subsidiaries

Revenue (as reported)

 

$

10,137,825

 

 

$

3,655,803

 

 

$

1,996,005

 

 

$

15,789,633

 

Effect of Divestitures

 

(371,712

)

 

 

 

 

 

(371,712

)

Legacy Business Revenue

 

$

9,766,113

 

 

$

3,655,803

 

 

$

1,996,005

 

 

$

15,417,921

 

 

 

 

 

 

 

 

 

 

Revenue Growth (as reported)

 

(2.36

)%

 

2.38

%

 

29.55

%

 

2.77

%

Legacy Business Revenue Growth

 

1.58

%

 

9.29

%

 

3.04

%

 

3.60

%

ARAMARK AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

FREE CASH FLOW

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

Fiscal Year Ended

 

 

September 27, 2019

 

September 28, 2018

Net Cash provided by operating activities

 

$

984,227

 

 

$

1,051,875

 

 

 

 

 

 

Net purchases of property and equipment and other1

 

(485,219

)

 

(618,113

)

 

 

 

 

 

Free Cash Flow

 

$

499,008

 

 

$

433,762

 

 

Does not include $23.0 million of proceeds from governmental agencies related to property and equipment.

 


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