Aramark reports first-quarter 2023 earnings

Feb. 9, 2023
Consolidated revenue was $4.6 billion in the first quarter, an increase of 17% year-over-year, driven by net new business, pricing and base business growth.

Aramark reported first quarter fiscal 2023 results.

Year-over-year summary

Revenue +17%; organic revenue +18%

  • Performance driven by net new business, pricing and base business growth.
  • Growth contribution from every reportable segment.

Operating income +42%; adjusted operating income (AOI) +47%

  • Operating income margin +79 bps; AOI margin +104 bps
  • Increased profitability from leveraging higher revenue levels, pricing, and operational cost management

EPS +65% to $0.28; adjusted EPS +91% to $0.44

  • Effect of currency translation impacted EPS by $0.02 and adjusted EPS by $0.03.

"We began the year as we ended the last one, focused on our principal strategic objective: to drive profitable growth," John Zillmer, Aramark's chief executive officer, said in the announcement. “Our performance in the quarter reflected continued financial and operational momentum in the business despite a challenging macro-environment, which is a testament to the commitment of our talent across the globe to provide exceptional service to clients. I couldn’t be more proud of our team members, who go out every day and show what makes Aramark so remarkable.

"Looking ahead, we have a strong pipeline of attractive new business opportunities, a highly motivated team, and an organic growth engine that is continuing to strengthen," Zillmer added. "We remain focused on managing our cost structure, maximizing unit efficiencies coupled with client pricing to counter persistent inflation, and taking actions to further strengthen our balance sheet. We believe these combined efforts will drive significant shareholder return."

First-quarter results

Consolidated revenue was $4.6 billion in the first quarter, an increase of 17% year-over-year, driven by net new business, pricing, and base business growth. A stronger dollar in the period impacted revenue results by $129 million, partially offset by the $72 million contribution of Union Supply Group, which was acquired in June 2022.

Organic revenue, which adjusts for the effect of currency translation and certain acquisitions, grew 18% year-over-year compared to the prior year period.

FSS United States revenue growth was driven by all sectors, primarily due to:

Education: Increased student enrollments, and improved presence of staff and more events on campuses in Higher Education, partially offset by the end of universal government-sponsored programs in K-12.

Sports, leisure and corrections: Increased event pricing and per capita spending, as well as a robust event calendar in sports and leisure. Corrections benefited from a significant level of new business growth.

Business and industry: Substantial year-over-year growth driven by client pricing, higher meal participation rates, and in-person activities, as well as solid new business openings.

Healthcare: Ongoing base business growth from vertical sales and greater visitor presence combined with the contribution from new business start-ups.

Facilities and other: Increase in base business driven by expanded services and frequency, particularly from large client accounts, along with a strong level of new business start-ups.

FSS International grew revenue primarily from consistent net new business performance, pricing, and ongoing base business volume recovery, particularly within the business and industry portfolio.

Operating income grew 42% year-over-year to $200 million and AOI improved 47% to $242 million, representing an operating income margin increase of 79 basis points and an AOI margin increase of 104 basis points. Improvement was from leveraging higher revenue levels, pricing, and effective cost management that more than offset the impact of inflation and start-up costs from significantly higher levels of new business. The effect of currency translation impacted results by $6.2 million.

Year-over-year improvement in profitability was a result of the following segment performance:

FSS United States increased due to base business volume recovery, primarily within the Business & Industry sector and Sports & Entertainment business, pricing, as well as leverage from operational and administrative cost management across wide-ranging revenue growth that more than offset higher food and labor costs associated with inflation and start-up costs from new client account openings.

FSS International also improved primarily from base business volume recovery within business & industry, pricing, and leverage from administrative cost management across strong revenue growth, in addition to operating efficiency initiatives, particularly within Continental Europe.

Uniform & Career Apparel performance was driven by improved operating efficiencies with increased revenue levels and pricing, partially offset by higher merchandise amortization expense. Operating income included non-cash charges for the impairment of operating lease right-of-use assets and other costs related to certain real estate properties, as well as personnel and other expenses associated with the Uniform Services spin-off.

Corporate expenses improved as overhead costs were tightly managed even as revenue increased.


Aramark currently expects the following full-year total company performance for fiscal 2023:

Organic revenue growth between +11% and +13%.

Updated to reflect AIM Services Transaction:

  • Adjusted operating income (AOI) growth of +32% to +37%; previously +34% to 39%
  • Transaction expected to be accretive to EPS
  • Leverage ratio at approximately 4.0x by the end of fiscal 2023; previously 4.0x to 4.5x


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