Aramark Services (NYSE: ARMK) reported Q4 EPS of $0.21, $0.02 better than the analyst estimate of $0.19. Revenue for the quarter came in at $3.55 billion versus the consensus estimate of $3.29 billion.

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 2022 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.
• Aramark believes it is well-positioned to perform strongly in the recovery period and continue to build on its early Net New Business momentum. In fiscal 2022, the Company currently expects the following full-year performance:
• Organic growth between +23% and +27%, with revenue expected to approach pre-COVID levels by year-end. The impact from acquisitions and foreign currency fluctuations is expected to add approximately 2% to revenue
• Revenue outlook reflects a continued impact from COVID-19 in fiscal 2022 of approximately $1.6 billion to $1.9 billion, or approximately 10% to 12% of pre-COVID revenue, partially offset by net new business and pricing pass-through
• Adjusted Operating Income (AOI) margin in a range of 5.0% to 5.5% with the second half of the year reaching 6.0% to 6.5%
• AOI margin outlook considers the impact of COVID-19, noted above. In many cases, the Company has brought back operating and above unit costs in advance of full revenue recovery. As COVID-impacted volumes recover, Aramark expects this transitional impact on AOI margin to unwind, with an incremental margin on the remaining COVID-19 volume recovery of 15% to 20%. AOI margin will also be temporarily affected by the start-up of new accounts, which typically have lower margins in year one with an acceleration thereafter. The magnitude of new account start-ups in fiscal 2022 has grown meaningfully following recent New Business wins
• Pricing, supply chain initiatives and operational efficiencies are expected to offset cost inflation
• Free Cash Flow between $300 million and $400 million, which includes repaying approximately $65 million of deferred payroll taxes associated with the CARES Act
• Annualized Net New Business in a range of $550 million to $650 million, which would represent 3.5% to 4.0% of pre-COVID revenue and an increase relative to the record performance achieved in fiscal 2021
• Aramark ultimately expects mid-single digit organic revenue growth and ongoing margin progression, with margins that exceed pre-COVID levels. The Company looks forward to sharing further details on its expected multi-year progression at Aramark's upcoming Analyst Day.
• "Our investments in growth are generating results. The robust pipeline of opportunities continues to grow, enabling Aramark to enter the new fiscal year with exceptionally strong momentum. I'm emboldened by our team's drive and remain confident in our ability to build on this success and deliver for our stakeholders as the recovery period is underway," Zillmer continued.

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