Workflow
Aramark(ARMK) - 2022 Q2 - Quarterly Report
ARMKAramark(ARMK)2022-05-10 20:26
Transcript

Revenue and Income - Revenue for the three months ended April 1, 2022, was 3,860.5million,a373,860.5 million, a 37% increase from 2,819.7 million for the same period in 2021[9] - Net income attributable to Aramark stockholders for the three months ended April 1, 2022, was 35.7million,comparedtoalossof35.7 million, compared to a loss of 77.6 million for the same period in 2021[9] - Total revenue for the six months ended April 1, 2022, was 7,808.8million,anincreasefrom7,808.8 million, an increase from 5,563.5 million for the same period in 2021[77] - Net income for the six months ended April 1, 2022, was 78.252million,asignificantimprovementfromanetlossof78.252 million, a significant improvement from a net loss of 159.043 million for the same period in 2021[15] - Comprehensive income attributable to Aramark stockholders for the six months ended April 1, 2022, was 173.6million,comparedtoalossof173.6 million, compared to a loss of 106.6 million for the same period in 2021[12] Operating Performance - Operating income for the six months ended April 1, 2022, was 282.2million,comparedtoalossof282.2 million, compared to a loss of 15.1 million for the same period in 2021[10] - Operating income for the three months ended April 1, 2022, was 142.0million,comparedto142.0 million, compared to 5.4 million for the same period in 2021, reflecting a significant improvement[95] - Operating income increased by approximately 297.3millionduringthesix−monthperiodendedApril1,2022,drivenbyimprovedprofitabilityfromclientsreopeningafterCOVID−19restrictions[105]SegmentPerformance−FSSUnitedStatessegmentrevenuereached297.3 million during the six-month period ended April 1, 2022, driven by improved profitability from clients reopening after COVID-19 restrictions[105] Segment Performance - FSS United States segment revenue reached 2,338.3 million for the three months ended April 1, 2022, compared to 1,551.0millionintheprioryear,markingayear−over−yeargrowthofapproximately50.61,551.0 million in the prior year, marking a year-over-year growth of approximately 50.6%[61] - FSS International segment revenue increased to 870.9 million for the three months ended April 1, 2022, from 677.7millioninthesameperiodof2021,representingagrowthofapproximately28.5677.7 million in the same period of 2021, representing a growth of approximately 28.5%[61] - The Uniform segment generated revenue of 651.3 million for the three months ended April 1, 2022, compared to 591.0millionintheprioryear,reflectingagrowthofapproximately10.2591.0 million in the prior year, reflecting a growth of approximately 10.2%[61] Cash Flow and Financial Position - Net cash used in operating activities was (128.267) million, compared to 221.861millionprovidedintheprioryear,indicatingadeclineincashflow[15]−Cashflowsfrominvestingactivitiesresultedinanetcashoutflowof221.861 million provided in the prior year, indicating a decline in cash flow[15] - Cash flows from investing activities resulted in a net cash outflow of (289.819) million, up from (175.710)millioninthepreviousyear,reflectingincreasedinvestments[15]−Thecompanyreportedadecreaseincashandcashequivalentsto(175.710) million in the previous year, reflecting increased investments[15] - The company reported a decrease in cash and cash equivalents to 429.306 million at the end of the period, down from 1.400billionayearearlier[15]−AsofApril1,2022,thecompanyhad1.400 billion a year earlier[15] - As of April 1, 2022, the company had 429.3 million of cash and cash equivalents and approximately 1,043.8millionofavailabilityunderitsseniorsecuredrevolvingcreditfacility[112]ShareholderReturns−Cashdividendspaidtostockholderswereapproximately1,043.8 million of availability under its senior secured revolving credit facility[112] Shareholder Returns - Cash dividends paid to stockholders were approximately 56.5 million for the six months ended April 1, 2022, compared to 55.9millionforthesameperiodin2021[65]−Thecompanymadepaymentsofdividendstotaling55.9 million for the same period in 2021[65] - The company made payments of dividends totaling 56.464 million, slightly up from 55.875millioninthepreviousyear[15]StrategicInitiatives−Theproposedspin−offofAramarkUniformServicesisexpectedtocreateadditionalvalueforstockholders,withongoingevaluationsofitsimpactonoperations[6]−TheCompanyplanstoacquireUnionSupplyGroup,Inc.,acommissarygoodsandservicessupplier,withthetransactionexpectedtocloseinthethirdquarteroffiscal2022[83]−ThecompanyintendstospinoffitsUniformsegmentintoanindependentpubliclytradedcompany,expectedtobecompletedbytheendoffiscal2023[83]ChallengesandRisks−TheongoingimpactofCOVID−19onthecompany′soperationsremainsuncertain,withpotentialeffectsonrevenueandfinancialconditiondependingonfuturedevelopments[88]−Thecompanycontinuestoadaptitsbusinessmodelinresponsetoinflationandglobalsupplychaindisruptions,implementingpricingpass−throughwhereappropriate[88]AccountingandCompliance−Thecompanyiscurrentlyevaluatingtheimpactofseveralnewaccountingstandardseffectiveinfiscal2024,includingthoserelatedtotroubleddebtrestructuringandcontractassets[24]−ThecompanyadoptedoptionalexpedientsrelatedtothediscontinuanceofLIBOR,whichmayeasetheaccountingburdenforcontractmodifications[25]−Thecompanyincurred55.875 million in the previous year[15] Strategic Initiatives - The proposed spin-off of Aramark Uniform Services is expected to create additional value for stockholders, with ongoing evaluations of its impact on operations[6] - The Company plans to acquire Union Supply Group, Inc., a commissary goods and services supplier, with the transaction expected to close in the third quarter of fiscal 2022[83] - The company intends to spin off its Uniform segment into an independent publicly traded company, expected to be completed by the end of fiscal 2023[83] Challenges and Risks - The ongoing impact of COVID-19 on the company's operations remains uncertain, with potential effects on revenue and financial condition depending on future developments[88] - The company continues to adapt its business model in response to inflation and global supply chain disruptions, implementing pricing pass-through where appropriate[88] Accounting and Compliance - The company is currently evaluating the impact of several new accounting standards effective in fiscal 2024, including those related to troubled debt restructuring and contract assets[24] - The company adopted optional expedients related to the discontinuance of LIBOR, which may ease the accounting burden for contract modifications[25] - The company incurred 63.0 million in governmental labor-related tax credits due to the COVID-19 pandemic, net of labor charges and other expenses[126] Tax and Credits - The Company recorded a tax benefit of approximately 8.5millionduringthesixmonthsendedApril1,2022,duetothereversalofavaluationallowanceataforeignsubsidiary[65]−Thecompanyrecordedapproximately8.5 million during the six months ended April 1, 2022, due to the reversal of a valuation allowance at a foreign subsidiary[65] - The company recorded approximately 21.0 million and $33.2 million of labor-related tax credits in the FSS International segment during the three and six months ended April 1, 2022, respectively[36]