Vending

Aramark’s Q1 2021 revenue falls 35%, but sales, earnings beat analyst expectations

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February 9, 2021

Aramark Corp.'s consolidated revenue fell 35% from $4.25 billion in the first quarter of 2020 to $2.7 billion in the quarter ending Jan. 1, 2021, according to a press release, on account of COVID-19.

On a GAAP basis, the operating loss was $20 million and net loss attributable to Aramark stockholders was $81 million and diluted loss per share was 32 cents while adjusted EPS was 31 cents.

The revenue beat analyst projections by $20 million while the 31 cents Non-GAAP EPS beat projections by 10 cents and the 32 cents GAAP EPS beat projections by 19 cents, according to Seeking Alpha.

Shares traded today at $36.80 today against a 52-week range of $12.78-$42.34.

"Our ability to stabilize revenue, improve cash flow and maintain a steadfast commitment to cost discipline has enabled us to navigate the COVID environment with a strong liquidity position and we believe Aramark is poised for success as the recovery across our business segments occurs," CEO John Zillmer said in a prepared statement.

Operating loss of $20 million and adjusted operating loss of $9 million in the recent quarter were due to the impact of COVID-19 on business operations. Adjusted operating income drop-through was managed to 20% of the corresponding revenue decline led by cost discipline as well as actions taken to leverage the company's flexible operating model.

Business activity across all segments contributed to stable quarter-over-quarter revenue performance on a 13-week period with sustained improvement since the trough in the third quarter of fiscal 2020, according to the release.

Food and facilities services international leveraged prior experiences to navigate government-imposed protocols across regions, while benefiting from continued resilience in healthcare and extractive services businesses. Europe demonstrated modestly improved levels of activity, while balancing regulatory restrictions. Rest of world experienced improvement led by ongoing growth in China as well as favorable performance trends in South America.

Food and facilities services international operated the business to nearly break-even that reflected applying strategies in food cost management, waste reduction and general overhead spend, despite government-imposed restrictions.

Food and facilities services in the U.S. managed food, labor and selling, general and administrative costs that resulted in an improved adjusted operating income drop-through rate compared to the prior quarter.

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.

The company believes it is well-positioned to navigate the changing environment and will improve organic revenue over the course of the fiscal year.

It further expects updated adjusted operating income drop-through rate of 18%-22% in the second quarter as a result of improved operating efficiencies, while driving client reopenings and growth investments.

For an update on how the coronavirus pandemic has affected convenience services, click here.