Zinger Key Points
- Aramark's Q4 revenue grew 5% YoY, driven by growth across all segments, notably in Sports, Business, and Education.
- Adjusted EPS of $0.54 exceeded estimates, with an 8% rise in operating income and increased free cash flow.
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Aramark ARMK shares are trading higher after the company reported fourth-quarter results and raised quarterly dividend.
Revenue grew 5% year-over-year (Organic revenue: +7%) to $4.42 billion, missing the consensus of $4.46 billion. Revenues were driven by strong volume growth across both segments, with pricing stabilizing due to inflation trends, especially in Education.
FSS United States saw revenue growth of 4%, led by Sports & Entertainment on higher per capita spending and strong stadium attendance, Business & Industry with increased participation and new clients, and retail expansion in Corrections through micro-markets.
FSS International revenue increase of 9% was led by broad-based, especially in the U.K., Germany, Canada, and South America, with top-performing sectors in Business & Industry, Sports & Entertainment, and Extractive Services.
In the fourth quarter, adjusted operating income grew 7% to $271 million, driven by higher revenue, cost discipline, and supply chain efficiencies. Adjusted EPS of $0.54 exceeded the consensus of $0.53.
Operating cash flow increased 42% to $727 million, while Free Cash Flow rose 121% to $323 million in the year. As of fiscal year-end, the company had available cash of over $2.6 billion.
Dividend: Aramark’s Board of Directors approved an 11% increase in the quarterly dividend, raising it to $0.105 per share. The dividend will be payable on December 12, 2024, to stockholders of record as of December 2, 2024.
Repurchase: The Board of Directors approved a new $500 million share repurchase program in early November.
Guidance: Aramark expects FY25 organic revenue growth of 7.5% to 9.5%, with adjusted EPS growth of 23% to 28%.
John Zillmer, Aramark’s Chief Executive Officer, said, “We reached new highs in our financial performance every quarter during fiscal 2024, ultimately achieving record revenue and AOI profitability for any year in Global FSS history.”
Investors can gain exposure to the stock via AdvisorShares Restaurant ETF EATZ and SWP Growth & Income ETF SWP.
Price Action: ARMK shares are up 3.55% at $40.50 premarket at the last check Monday.
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