Vending

Aramark rebounds from COVID with strong Q3 2021 results

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August 10, 2021

Aramark Corp. posted strong revenue and earnings growth in the third quarter as business activity recovered from the COVID-19 setback in 2020, according to an earnings release.

Consolidated revenue rose 39% from $2.15 billion to $3 billion in the quarter, reflecting increased levels of business activity. Organic revenue, which adjusts for the effect of currency and the revenue contribution from the Next Level Hospitality acquisition that closed on June 4, 2021, grew 34% compared to the prior year.

The accelerated pace of client reopenings contributed to ongoing sequential quarterly improvement with organic revenue reaching 73% of pre-COVID levels. The upward trend was broad-based, led by the leisure, sports and entertainment businesses within the U.S. foodservice segment.

International foodservice grew organic revenue 28% compared to prior year with solid quarter-over-quarter improvement that balanced strong performance from healthcare in China and mining in Chile with government-imposed restrictions, particularly in Canada.

Operating income rose from a $328 million loss in Q3 2020 to a $74 million gain in Q3 2021, an increase of $402 million. Adjusted operating income was $106 million, a year-over-year increase of $250 million.

Third quarter fiscal 2021 GAAP results across all metrics demonstrated increased levels of business activity while still recovering from COVID-19.

Earnings per share improved $1.14 to 13 cents, while adjusted EPS improved 72 cents to 3 cents.

"Our third quarter performance continues to reflect Aramark's strong competitive position and flexible business model as we help clients reopen within various stages of recovery, while also driving growth initiatives that resulted in meaningful new business wins and high levels of client retention," CEO John Zillmer said in a prepared statement. "I am extremely proud of our team's dedication to serving clients and focusing on our growth agenda."

The $3 billion in quarterly revenue missed analyst expectations by $90 million, while the non-GAAP EPS of 3 cents beat expectations by 1 cent and the GAAP EPS of 13 cents beat expectations by 21 cents, according to Seeking Alpha.

Shares traded at $34.03 today against a 52-week range of $22.94-$43.12.

In the fourth quarter, Aramark expects ongoing business performance progress led by an accelerated pace of client reopenings, including essentially all education clients returning to in-person learning for the start of the academic year.

For the fourth quarter, the company expects continued organic revenue improvement, reaching 80% to 85% of 2019 levels and adjusted operating income margin in a range of 4.5% to 5%.