PHILADELPHIA–(BUSINESS WIRE)–Aramark (NYSE: ARMK) today reported first quarter fiscal 2025 results.
“We are off to a great start in fiscal ‘25 as we remain committed to our strategic priorities: driving strong profitable top-line growth from base business and net new business; accelerating AOI growth from increased volume, supply chain efficiencies, and cost discipline; and leveraging our capital structure capabilities—most recently with our oversubscribed debt refinancing and repurchasing Aramark shares,” said John Zillmer, Aramark’s Chief Executive Officer.
“Across the organization, we are focused and motivated to achieve the financial performance targets we have set for ourselves. I want to thank our employees for their tireless dedication to these goals, which I am confident we’ll achieve together.”
| 1 |
Prior year Operating Income, Operating Income Margin, and GAAP EPS included expenses associated with the completion of the spin-off. |
| 2 |
On a constant currency basis |
FIRST QUARTER RESULTS
Consolidated revenue was $4.6 billion in the first quarter, a 3% increase year-over-year, with Organic revenue growth of 5% compared to the prior year period. The growth in revenue more than offset the prior year exit of some lower margin Facilities accounts in the FSS United States segment. Foodservice revenue grew 5% and Foodservice Organic revenue increased 6% as a result of strong base business and net new business. The impact of currency translation reduced revenue by $62 million.
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Revenue |
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Q1 ’25 |
Q1 ’24 |
Change (%) |
Organic Revenue Change (%) |
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FSS United States |
$3,301M |
$3,213M |
3 % |
* |
3 % |
* |
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FSS International |
1,251 |
1,195 |
5 % |
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10 % |
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Total Company |
$4,552M |
$4,408M |
3 % |
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5 % |
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*The Change (%) and Organic Revenue Change (%) reflected the prior year exit of some lower margin Facilities accounts Difference between Change (%) and Organic Revenue Change (%) reflected the impact of currency translation May not total due to rounding |
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- FSS United States revenue growth was driven by 1) Business & Industry from higher participation rates, new client wins, and additional micro-market and vending services; 2) Education, primarily from Collegiate Hospitality, as a result of meal plan optimization; and 3) Corrections from strong new business wins—which more than offset the exit of Facilities accounts referenced above. The Facilities business would have experienced growth in the quarter without these account exits.
Foodservice revenue and Foodservice Organic revenue both increased 5% compared to the prior year period. - FSS International revenue growth was broad-based across all geographic regions, largely from ongoing base business growth and net new business performance—with the U.K., Canada, Chile, and Ireland driving the increase. Revenue on a GAAP basis included the impact of currency translation.
Operating Income increased 30% year-over-year to $217 million, and AOI grew 13%2 to $258 million, representing an operating income margin increase of 100 basis points and an AOI margin increase of 40 basis points2 year-over-year. Profitability growth was due to the Company’s ability to leverage higher revenue levels, supply chain efficiencies, and effective management of in-unit costs. The impact of currency translation reduced operating income by $3 million.
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Operating Income |
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Adjusted Operating Income (AOI) |
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Q1 ’25 |
Q1 ’24 |
Change (%) |
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Q1 ’25 |
Q1 ’24 |
Change (%) |
Constant Currency Change (%) |
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FSS United States |
$194M |
$175M |
11% |
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$229M |
$202M |
13% |
13% |
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FSS International |
54 |
46 |
16% |
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59 |
54 |
10% |
15% |
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Corporate |
(30) |
(54) |
44% |
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(30) |
(25) |
(21)% |
(21)% |
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Total Company |
$217M |
$167M |
30% |
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$258M |
$231M |
12% |
13% |
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May not total due to rounding |
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Year-over-year profitability growth resulted from the following segment performance:
- FSS United States experienced higher base business volume combined with the maturity of new business, supply chain productivity, and efficiencies in operational performance.
- FSS International achieved higher base business volume and net new business, along with stronger supply chain economics, which more than offset reduced profit in Spain from severe flooding in the Valencia region that temporarily affected client operations.
- Corporate primarily reflected expenses associated with the GPO acquisition and higher share-based compensation. Prior year GAAP results included spin-off related expenses.
CASH FLOW AND CAPITAL STRUCTURE
As expected, the first quarter experienced a cash outflow associated with the Company’s seasonal business cadence, specifically related to Collegiate Hospitality. Aramark reported stronger cash flow compared to the prior year period with Net Cash used in operating activities improving approximately $70 million and Free Cash Flow improving approximately $63 million. This performance was led by higher net income and favorable working capital.
At quarter-end, the Company had over $1.7 billion in cash availability.
Aramark commenced repurchasing shares toward the end of the first quarter as part of its $500 million share repurchase program announced in November 2024. To date, the Company has repurchased over 645,000 shares for an aggregate purchase price of approximately $25 million.
Aramark initiated steps subsequent to quarter-end to extend debt maturities and further enhance financial flexibility, including:
- Issued notice to fully repay $552 million of Senior Notes due April 2025, effective on February 18, 2025; and
- Completed a syndication process for $1.4 billion of new term loans due June 2030 with the proceeds to be used to repay $552 million of Senior Notes due April 2025 as well as to refinance certain term loans.
These actions are leverage neutral and at comparable interest rates.
DIVIDEND DECLARATION
The Company’s Board of Directors approved a quarterly dividend of 10.5 cents per share of common stock, as announced on January 27, 2025. The dividend will be payable on February 24, 2025, to stockholders of record at the close of business on February 10, 2025.
BUSINESS UPDATE
Given the Company’s success in both new account wins and client retention, Aramark continues to expect revenue growth to accelerate, particularly in the second half of the year, resuming double-digit top-line growth. The Company’s new business pipeline across the organization remains significant, including in first-time outsourcing. Aramark is confident in its ability to achieve Net New of 4% to 5% of prior year revenue—with retention levels above 95%—in fiscal 2025 and beyond. As a result of the favorable trends in the business, the Company reaffirms its performance expectations for fiscal 2025.
In December 2024, Aramark completed the acquisition of the European-based GPO, Quantum Cost Consultancy Group, further strengthening the Company’s position as a leading global professional procurement and supply chain services provider. Quantum has managed spend of $500 million with operations in countries such as Spain, Portugal, Germany, and the Netherlands, serving hotels, restaurants, gaming destinations, and senior and youth residencies. Aramark’s Global Supply Chain spend now exceeds $20.5 billion with enhanced capabilities in key geographies.
OUTLOOK
The Company provides its expectations for organic revenue growth, Adjusted Operating Income growth (constant currency), Adjusted Earnings per Share growth (constant currency), and Net Debt to Covenant Adjusted EBITDA (“Leverage Ratio”) on a non-GAAP basis, and does not provide a reconciliation of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for the effect of currency translation. The fiscal 2025 outlook reflects management’s current assumptions regarding numerous evolving factors that are difficult to accurately predict, including those discussed in the Risk Factors set forth in the Company’s filings with the United States Securities and Exchange Commission.
Aramark continues to anticipate its full-year performance for fiscal 2025 as follows:
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($ in millions, except EPS) |
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FY24 |
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FY25* Outlook |
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Reference Point |
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Year-over-year Growth1 |
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Organic Revenue |
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$17,401 |
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+7.5% |
— |
+9.5% |
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Adjusted Operating Income |
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$882 |
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+15% |
— |
+18% |
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Adjusted EPS |
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$1.55 |
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+23% |
— |
+28% |
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Leverage Ratio |
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3.4x |
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~3.0x |
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Adjusted EPS Outlook does not include benefit from potential share repurchases |
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* 53 week year |
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1Constant Currency, except Leverage Ratio |
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“We feel incredible momentum throughout the Company. Our new business pipeline is significant, and we are already having success this fiscal year in both new account wins and client retention,” Zillmer added. “We have the strategy, sales pipeline, and talent in place around the globe to capitalize on the many value-creating opportunities ahead. I firmly believe the best is yet to come.”
About Aramark
Aramark (NYSE: ARMK) proudly serves the world’s leading educational institutions, Fortune 500 companies, world champion sports teams, prominent healthcare providers, iconic destinations and cultural attractions, and numerous municipalities in 16 countries around the world with food and facilities management. Because of our hospitality culture, our employees strive to do great things for each other, our partners, our communities, and the planet. Learn more at www.aramark.com and connect with us on LinkedIn, Facebook, X, and Instagram.
