Aramark Beats Q1 Earnings, Company Expects Revenue Growth To Pick Up

Aramark ARMK shares are trading lower on Tuesday.

The company reported first-quarter adjusted earnings per share 51 cents, beating the street view of 48 cents. Quarterly sales of $4.55 billion (+3%) missed the analyst consensus estimate of $4.62 billion.

Revenue growth outweighed the loss of lower-margin accounts in the FSS U.S. segment.

Food service revenue rose 5%, with a 6% increase in organic revenue due to strong business and new contracts. Currency translation reduced revenue by $62 million.

Operating income grew 30% year-over-year to $217 million, while AOI increased 13% to $258 million. Profitability improved due to higher revenue, supply chain efficiencies and cost management.

Currency translation reduced operating income by $3 million.

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Aramark saw stronger cash flow, with net cash used in operating activities improving by $70 million and free cash flow up by $63 million, driven by higher net income and favorable working capital.

The company ended the quarter with over $1.7 billion in cash availability.

Dividend: The company approved a quarterly dividend of 10.5 cents per share of common stock, as announced on January 27. The dividend will be payable on Feb. 24.

Outlook: Aramark expects revenue growth to pick up, especially in the second half of the year with double-digit growth.

The company forecasts FY25 organic revenue growth of 7.5% to 9.5% and adjusted EPS growth of 23% to 28%.

“Our new business pipeline is significant, and we are already having success this fiscal year in both new account wins and client retention,” said Aramark CEO John Zillmer.

“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.”

ARMK Price Action: Aramark shares are trading lower by 2.55% to $37.47 at publication Tuesday.

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Photo: Courtesy Aramark