Aramark Services (NYSE: ARMK) reported Q4 EPS of ($0.35), $0.01 worse than the analyst estimate of ($0.34). Revenue for the quarter came in at $2.79 billion versus the consensus estimate of $2.66 billion.

Q4 SUMMARY

Generated positive cash flow and maintained strong liquidity

• Cash provided by operating activities of $252 million; Free Cash Flow generation of $146 million in the quarter
• Approximately $2.6 billion cash availability at quarter-end
• Subsequent to quarter-end, paid down $680 million on revolving credit facility

Revenue (32)%; Organic Revenue (36)%

• Sequential quarterly revenue improvement versus prior year across all segments
• Education led progress with university reopenings and K-12 participation in serving universal meal programs across the U.S.

EPS of $(0.59); Adjusted EPS of $(0.35)

• GAAP results additionally included certain non-cash impairment charges and costs related to organizational realignment
• AOI drop-through consistent with Company's expectations

“I am incredibly proud of our teams across the globe for their tireless work serving clients and communities in this extraordinary time of need,” said John Zillmer, Aramark’s Chief Executive Officer. “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.”

2021 OUTLOOK
The Company provides its expectations for organic revenue growth, Adjusted Operating Income and Free Cash Flow on a non-GAAP basis, and does not provide a reconciliation of such forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that could be made for the impact of the change in fair value related to certain gasoline and diesel agreements, severance and other charges and the effect of currency translation. The fiscal 2021 outlook reflects management's current assumptions regarding the continued impact of COVID-19 on Aramark and its clients. 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.

In fiscal 2021, Aramark will continue to leverage its resilient operating model, while managing the business with a long-term mindset. The Company believes it is well-positioned to navigate the ever-changing environment with current performance expectations as follows:

• Organic revenue improvement over the course of the fiscal year;
• Adjusted Operating Income (AOI) reflecting a drop-through rate of 20%-25% in the first half of the year as a result of disciplined cost management, balanced by ongoing restart costs associated with client reopenings as well as continued investment to support growth opportunities; and
• Free Cash Flow in a range of $100 million use to $200 million generation, dependent on the pace of recovery and timing of underlying growth. The first quarter will include seasonal outflow associated with Higher Education followed by positive cash flow over the balance of the year. Comparatively, Free Cash Flow was a use of $188 million in Fiscal 2020.

As Aramark did through the COVID-19 challenges in fiscal 2020, the Company will continue executing its growth acceleration strategies throughout fiscal 2021, including initiatives expected to drive base business, increase retention rates and win new clients, while gaining ongoing efficiencies from the Company's fit-for-purpose actions.

"I am extremely encouraged by a number of positive trends across our business and expect ongoing improvement as the year progresses, with Aramark playing a key role in the broader recovery," Zillmer added. "The passion and energy inside the organization fuels my confidence in Aramark's ability to create a promising future for our valued employees, partners and shareholders."

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