Vending

Aramark Q4 revenue, earnings tumble due to COVID-19

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November 17, 2020

Aramark Corp. reported consolidated revenue of $2.69 billion in the fourth quarter ending Oct. 2, 2020, down 32% compared to prior year's $3.95 billion caused by the impact of COVID-19, according to an earnings report. Organic revenue, which adjusts for the effect of currency as well as the 53rd week of operations, declined by $1.43 billion, a 36% fall year-over-year.

Net loss attributable to Aramark stockholders was $149 million and diluted loss per share was 59 cents. Comparatively, fourth quarter 2019 net income attributable to stockholders was $86 million and diluted earnings per share were 34 cents.

Revenue met market expectations for the quarter, but a GAAP earnings per share loss of 59 cents missed expectations by 22 cents, according to Seeking Alpha.

Shares traded at $33.56 today against a 52-week range of $9.65-$47.22

"I am incredibly proud of our teams across the globe for their tireless work serving clients and communities in this extraordinary time of need," John Zillmer, Aramark CEO, said in the release. "This dedication, combined with our resilient platform, flexible operating model and steadfast commitment to effectively manage cash flow and liquidity, enabled us to deliver quarter-over-quarter business improvement and cash availability of $2.6 billion at quarter-end. While navigating the unusual challenges of the current environment, we remain focused on fully realizing Aramark's potential for accelerated long-term growth and enhanced efficiency."

Client re-openings as well as Aramark's expanded service offerings contributed to sequential improvement in business performance across all segments compared to the third quarter, according to the earnings report.

An operating loss of $94 million and adjusted operating loss of $12 million in the quarter were due to the impact of COVID-19. Adjusted operating income drop-through was managed to 23% of the corresponding revenue decline, on a constant-currency basis, driven by the ongoing cost-reduction efforts and flexible operating model, offset by restart costs from increased business activity.

Food and facilities services in the U.S. reflected initial re-start costs, particularly in education and sports, leisure and corrections, as client operations reactivated throughout the quarter. The food and facilities services international segment navigated government-imposed protocols across regions while continuing to win new business driven by the front-line response to COVID-19.

The extent to which COVID-19 continues to impact business, operations and financial results, including the duration and magnitude of such impact, will depend on numerous evolving factors that are difficult to accurately predict, including those discussed in the risk factors set forth in the company's filings with the U.S. Securities and Exchange Commission, according to the earnings report.

The company expects organic revenue improvement over the course of the fiscal year.

For an update on how the coronavirus pandemic is affecting convenience services, click here.