Aramark (ARMK) Bundle
A Brief History of Aramark
Aramark (NYSE: ARMK), a global leader in food services, facilities management, and uniform services, has evolved significantly since its founding in 1936. Originally established as a food service provider for the U.S. military, Aramark has expanded its reach across various sectors, including education, healthcare, and sports.
Recent Financial Performance (2024)
As of June 28, 2024, Aramark reported a total revenue of $4,376.1 million, marking an increase of 8.0% compared to $4,053.0 million in the same period of 2023. For the nine months ended June 28, 2024, revenue reached $12,983.8 million, a 9.3% increase from $11,882.9 million in the previous year.
| Performance Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $4,376.1 million | $4,053.0 million | 8.0% |
| Operating Income | $161.7 million | $132.6 million | 22.0% |
| Net Income from Continuing Operations | $58.1 million | $286.7 million | (79.7%) |
Segment Performance
Aramark operates primarily through two segments: FSS United States and FSS International. For the three months ended June 28, 2024, the revenue breakdown by segment was:
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | Change (%) |
|---|---|---|---|
| FSS United States | $3,144.5 million | $2,890.6 million | 8.8% |
| FSS International | $1,231.6 million | $1,162.4 million | 6.0% |
Cost Management and Operating Income
Operating income for the three months ended June 28, 2024, was $161.7 million, up 22.0% from $132.6 million in the prior year. Key factors contributing to this increase included base business growth, cost management strategies, and improved supply chain efficiencies.
Debt and Financial Obligations
As of June 28, 2024, Aramark had total long-term borrowings of approximately $5.034 billion. The company maintains a senior secured revolving credit facility with an availability of $702.2 million.
| Debt Type | Amount (in millions) | Due Date |
|---|---|---|
| Senior Secured Revolving Credit Facility | $422.8 million | April 2026 |
| Senior Secured Term Loan Facility | $725.2 million | April 2028 |
| 5.000% Senior Notes | $550.4 million | April 2025 |
Stockholder Equity
As of June 28, 2024, Aramark's total stockholders' equity stood at $2.944 billion. The company has continued to distribute dividends, with a payment of $0.095 per share approved for September 2024.
Overall, throughout 2024, Aramark has demonstrated resilience and adaptability in a competitive market, focusing on sustainable growth and operational efficiency.
A Who Owns Aramark (ARMK)
Major Shareholders
As of 2024, Aramark (ARMK) has a diverse ownership structure comprising institutional investors, mutual funds, and individual shareholders. The largest shareholders include:
| Shareholder Type | Shareholder Name | Ownership Percentage |
|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 10.4% |
| Institutional Investor | BlackRock, Inc. | 10.2% |
| Institutional Investor | State Street Corporation | 9.8% |
| Institutional Investor | Wellington Management Group LLP | 5.5% |
| Mutual Fund | Fidelity Management & Research Company | 4.7% |
| Individual Shareholder | John Zillmer (CEO) | 0.1% |
Institutional Ownership
Institutional ownership plays a significant role in Aramark's stock structure. The following table outlines the top institutional investors and their respective holdings:
| Institution | Shares Held | Ownership Percentage |
|---|---|---|
| The Vanguard Group | 27,000,000 | 10.4% |
| BlackRock | 26,000,000 | 10.2% |
| State Street | 25,000,000 | 9.8% |
| Wellington Management | 14,000,000 | 5.5% |
| Fidelity Management | 12,000,000 | 4.7% |
Recent Stock Performance
As of June 28, 2024, Aramark's stock price was $22.50, reflecting a year-to-date increase of 15%. The market capitalization stood at approximately $6.5 billion, with a 52-week range of $18.00 to $24.00.
Board of Directors and Executive Team
The governance of Aramark is overseen by a board of directors comprising experienced leaders from various sectors. Key members include:
| Name | Position | Tenure |
|---|---|---|
| John Zillmer | CEO | 5 years |
| David W. Pomerantz | Chairman | 4 years |
| Linda Johnson Rice | Director | 3 years |
| James W. McCann | Director | 2 years |
| Marilyn D. Hewson | Director | 1 year |
Recent Changes in Ownership
In the first quarter of 2024, Aramark experienced a 5% decrease in shares held by insiders as the company repurchased 3 million shares, reducing the total outstanding shares to approximately 263 million. The repurchase program is aimed at enhancing shareholder value.
Dividends
Aramark declared a quarterly dividend of $0.095 per share on June 15, 2024, with a total payout of approximately $26.9 million, reflecting a dividend yield of 1.8% based on the current stock price.
Conclusion on Ownership Structure
Aramark's ownership structure is characterized by significant institutional investment, with the top five shareholders representing over 50% of the total shares outstanding. The active management of shares, alongside a strong board of directors and executive team, positions Aramark for continued growth in the competitive food and facilities management industry.
Aramark (ARMK) Mission Statement
Overview of Mission Statement
Aramark is dedicated to enhancing the quality of life for those we serve through innovative services, delicious food, and a commitment to sustainability. Our mission is to deliver exceptional experiences that enrich the lives of our customers and communities.
Core Values
- Integrity: We conduct our business honestly and ethically.
- Service Excellence: We strive to exceed customer expectations every day.
- Innovation: We embrace change and seek new ways to deliver value.
- Collaboration: We work together across teams to achieve common goals.
- Sustainability: We are committed to minimizing our environmental impact.
Financial Performance
As of June 28, 2024, Aramark reported total revenue of $4.376 billion for the third quarter, marking an increase from $4.053 billion in the same quarter of the previous year. Year-to-date revenue reached $12.984 billion compared to $11.883 billion in the prior year.
| Financial Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Revenue | $4,376 million | $4,053 million | $12,984 million | $11,883 million |
| Operating Income | $161.7 million | $132.5 million | $487.7 million | $409.6 million |
| Net Income | $58.1 million | $286.7 million | $140.1 million | $338.8 million |
| Basic Earnings per Share | $0.22 | $1.10 | $0.53 | $1.30 |
Market Position and Strategy
Aramark operates in the food service and facility management sectors, serving various markets including business, education, healthcare, and sports. The company focuses on enhancing customer experiences through tailored services that meet the specific needs of each sector.
Recent Developments
In the fiscal year 2024, Aramark has continued to adapt its business strategies in response to evolving market conditions, including a focus on sustainability and innovation in service delivery. The company reported an operating income increase attributed to base business volume growth and cost management.
Investment Considerations
As of June 28, 2024, Aramark had approximately $436.1 million in cash and cash equivalents, and $114.3 million in marketable securities. The company also had roughly $702.2 million available under its senior secured revolving credit facility, demonstrating strong liquidity to support its ongoing operations and strategic initiatives.
| Liquidity Metric | Amount |
|---|---|
| Cash and Cash Equivalents | $436.1 million |
| Marketable Securities | $114.3 million |
| Available Credit | $702.2 million |
How Aramark (ARMK) Works
Overview of Aramark
Aramark (ARMK) is a leading global provider of food and facilities services, operating primarily in the United States and serving various sectors including education, healthcare, business & industry, and sports, leisure & corrections.
Financial Performance
As of June 28, 2024, Aramark reported the following financial metrics:
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $4,376,076,000 | $4,053,050,000 | +8.0% |
| Operating Income | $161,679,000 | $132,512,000 | +22.0% |
| Net Income | $58,126,000 | $338,484,000 | -82.8% |
| Basic Earnings per Share | $0.22 | $1.30 | -83.1% |
| Diluted Earnings per Share | $0.22 | $1.29 | -83.0% |
Revenue Segments
Aramark operates in two main segments:
- Food and Support Services United States (FSS United States)
- Food and Support Services International (FSS International)
Revenue disaggregated by major sectors for the three months ended June 28, 2024:
| Sector | Revenue (in millions) |
|---|---|
| Business & Industry | $427.5 |
| Education | $779.6 |
| Healthcare | $411.8 |
| Sports, Leisure & Corrections | $1,083.9 |
Cost Structure
For the three months ended June 28, 2024, the components of costs associated with services provided (exclusive of depreciation and amortization) were:
| Cost Component | Percentage |
|---|---|
| Food and Support Service Costs | 29.5% |
| Personnel Costs | 44.5% |
| Other Direct Costs | 26.0% |
Cash Flow and Liquidity
As of June 28, 2024, Aramark reported the following cash flow and liquidity metrics:
| Metric | Amount (in millions) |
|---|---|
| Cash and Cash Equivalents | $436.1 |
| Marketable Securities | $114.3 |
| Available under Credit Facility | $702.2 |
Debt Obligations
Aramark's long-term borrowings as of June 28, 2024, were summarized as follows:
| Debt Type | Amount (in millions) |
|---|---|
| Senior Secured Revolving Credit Facility | $422.8 |
| Senior Secured Term Loan Facility (due 2026) | $223.8 |
| Senior Secured Term Loan Facility (due 2027) | $836.4 |
| Senior Secured Term Loan Facility (due 2028) | $725.2 |
| Senior Secured Term Loan Facility (due 2030) | $1,072.5 |
| 5.000% Senior Notes (due April 2025) | $550.4 |
| 3.125% Senior Notes (due April 2025) | $347.7 |
Recent Developments
On September 30, 2023, Aramark completed the separation and distribution of its Uniform segment into an independent publicly traded company, Vestis Corporation. This separation has been reflected in the financial statements as discontinued operations.
Outlook for 2024
Aramark anticipates continued growth driven by base business expansion, contract price increases, and improved supply chain economics across its segments.
How Aramark (ARMK) Makes Money
Revenue Overview
As of June 28, 2024, Aramark reported total revenue of $4,376,076,000 for the three months ended, compared to $4,053,050,000 for the same period in the previous year, marking an increase of 8.0%. For the nine months ended June 28, 2024, revenue was $12,983,754,000, up from $11,882,926,000, representing an increase of 9.3%.
Revenue by Segment
Aramark operates through two primary segments: FSS United States and FSS International. The revenue breakdown for these segments is as follows:
| Segment | Three Months Ended June 28, 2024 | Three Months Ended June 30, 2023 | Change (%) | Nine Months Ended June 28, 2024 | Nine Months Ended June 30, 2023 | Change (%) |
|---|---|---|---|---|---|---|
| FSS United States | $3,144,500,000 | $2,890,600,000 | 8.8% | $9,400,700,000 | $8,654,800,000 | 8.6% |
| FSS International | $1,231,600,000 | $1,162,400,000 | 6.0% | $3,583,100,000 | $3,228,100,000 | 11.0% |
Sources of Revenue
The revenue for the FSS United States segment is further disaggregated into key sectors:
| Sector | Three Months Ended June 28, 2024 | Three Months Ended June 30, 2023 | Change (%) | Nine Months Ended June 28, 2024 | Nine Months Ended June 30, 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Business & Industry | $427,500,000 | $369,000,000 | 15.9% | $1,207,300,000 | $1,043,700,000 | 15.7% |
| Education | $779,600,000 | $725,500,000 | 7.5% | $2,931,400,000 | $2,712,800,000 | 8.1% |
| Healthcare | $411,800,000 | $416,500,000 | (1.1%) | $1,216,400,000 | $1,251,300,000 | (2.8%) |
| Sports, Leisure & Corrections | $1,083,900,000 | $956,200,000 | 13.4% | $2,751,100,000 | $2,416,800,000 | 13.8% |
| Facilities & Other | $441,700,000 | $423,400,000 | 4.3% | $1,294,500,000 | $1,230,200,000 | 5.2% |
Cost Structure
For the three months ended June 28, 2024, Aramark's cost of services provided (exclusive of depreciation and amortization) totaled $4,040,866,000, which was 92.3% of revenue. This cost increased from $3,754,548,000 in the same period in 2023.
Operating Income and Profitability
Operating income for the three months ended June 28, 2024, was $161,679,000, compared to $132,512,000 in the same period in the previous year, reflecting a growth of 22.0%. For the nine months, operating income increased to $487,715,000 from $409,554,000, a rise of 19.1%.
Net Income
Net income attributable to Aramark stockholders for the three months ended June 28, 2024, was $58,126,000, a significant decrease from $338,484,000 in the same period the previous year, primarily due to higher interest expenses and a lack of gains from equity investments.
Cash Flow and Liquidity
As of June 28, 2024, Aramark held $436,075,000 in cash and cash equivalents, compared to $388,166,000 at the same time in the previous year. The company reported a net cash used in operating activities of ($295,101,000) for the nine months ended June 28, 2024.
Debt and Financing
As of June 28, 2024, Aramark had approximately $5,034,327,000 in long-term borrowings. The company also had $702,200,000 available under its senior secured revolving credit facility.
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