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Aramark announces second quarter 2014 results

Published 09 May 2014

Aramark Holdings Corporation, the $14 billion global provider of award winning services in food, facilities management, and uniforms, reported second quarter 2014 results with strong sales, solid adjusted operating income growth and several key account wins.

KEY SECOND QUARTER HIGHLIGHTS

  • Sales of $3.5 billion, with organic growth of 4%;
  • Adjusted operating income of $197.8 million up 6%, operating income of $120.8 million;
  • Adjusted net income of $75.2 million, net income of $13.1 million;
  • Adjusted earnings per share of $0.31, earnings per share of $0.05;
  • Quarterly dividend declared.

KEY YEAR-TO-DATE HIGHLIGHTS

  • Sales of $7.3 billion, with organic growth of 5%;
  • Adjusted operating income of $457.4 million up 12%, operating income of $278.0 million.

"I am pleased to report strong business results for the second quarter and first half of 2014," said Eric J. Foss, President and Chief Executive Officer. "We experienced growth across all segments and continued our journey to improve profitability. We are investing for the future by building the Aramark brand and ensuring our front-line associates have the training, tools, and technology to build a strong connection with our customers and consumers. We remain confident in our ability to drive continued growth and shareholder value."

SECOND QUARTER RESULTS

Sales were $3.5 billion versus $3.4 billion in the second quarter of 2013, with organic growth of 4%. Adjusted operating income was $197.8 million versus $187.3 million last year, an increase of 6%. Unusually severe winter weather during the quarter affected results at a number of client locations.

Adjusted net income for the quarter was $75.2 million or $0.31 per share, versus adjusted net income of $53.6 million or $0.26 per share in the second quarter of 2013. The diluted share count in the second quarter was 243.4 million shares, up from 208.6 million shares in the same period last year, primarily as a result of the company's initial public offering this past December.

On an as reported basis for the quarter, sales were $3.5 billion, operating income was $120.8 million, net income was $13.1 million and earnings per share were $0.05. Changes in currency rates from the prior year reduced sales and operating income in the quarter. A reconciliation of adjusted financial measures to as reported financial measures, including changes in currency translation rates is presented below. See "Non-GAAP Measures."

SECOND QUARTER SEGMENT RESULTS

Food and Support Services - North America

Sales in the Food and Support Services - North America segment were $2.4 billion, up 3% on an organic basis (up 2% on a reported basis) and adjusted operating income for the segment was up 1%. Sales growth in the Education and Sports, Leisure and Corrections sectors were particularly notable as new business wins continue to come online. Severe winter weather in North America affected many client locations, reducing sales and adjusted operating income by an estimated 1% and 5% to 6%, respectively. Consistent with what the company previously communicated, reinvestment in growth, technology and people accelerated during the second quarter.

Food and Support Services - International

Sales in the Food and Support Services - International segment were $744.1 million, an 8% increase on an organic basis (up 6% on a reported basis) and adjusted operating income for the segment was up 26%. Growth in Europe improved from the first quarter and emerging markets continued to grow in the double digits during the second quarter. Results were aided by the timing of the Easter Holiday, which falls in the fiscal third quarter this year versus the second quarter in 2013.

Uniform and Career Apparel

Sales in the Uniform and Career Apparel segment were $361.0 million, up 4% on an organic basis (up 4% on a reported basis) and adjusted operating income for the segment was up 8%. The combination of solid sales growth and continuing merchandise and plant productivity initiatives outweighed higher production and route costs from the severe weather.

Declaration of Dividend

On May 6, 2014, the company's Board of Directors declared a 7.5 cent dividend per share of common stock, payable on June 9, 2014, to shareholders of record at the close of business May 19, 2014.

LIQUIDITY & CAPITAL STRUCTURE

As of March 28, 2014, total debt was $5.6 billion, a reduction of approximately $600 million from the year prior. The company's total debt to adjusted EBITDA ratio has been reduced to 4.6x, from 5.5x in March 2013. Corporate liquidity remains strong, and as of quarter-end the company had $580.8 million of available borrowing capacity on its $770.0 million revolving credit facility. During the second quarter, the company completed the refinancing of approximately $4.0 billion in outstanding debt obligations, extending the maturity of approximately $2.6 billion to 2021 and repricing $1.4 billion of debt obligations due 2019. In connection with this refinancing, approximately $26 million of incremental interest and other financing charges, net was recorded during the quarter and is detailed in the company's non-GAAP reconciliations.



Source: Company Press Release