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Aramark Reports Strong Fourth Quarter And Full Year 2015 Results

The following excerpt is from the company's SEC filing.

Full Year Adjusted EPS Increased 10% on a Comparable Basis to $1.57

Full Year Adjusted Operating Margin 6.2%, a 30 Basis Point Increase

Board of Directors Increases Quarterly Dividend 10%

2016 Adjusted EPS Expected $1.65 to $1.75

Aramark (NYSE:ARMK), a global leader in food, facilities management, and uniforms, today reported strong fourth quarter and full-year fiscal 2015 results which generated a 13% increase in full year adjusted net income. The company provided an initial outlook for fiscal 2016, and also announced approval by the Board of Directors of a 10% increase in the company’s regular quarterly dividend.

Calendar Shift

As previously disclosed, the company’s fiscal calendar timing resulted in a 53 week year in the fourth quarter of 2014. As a result, the fourth quarter of 2015 was negatively impacted by approximately one week less of both sales and adjusted operating income vs the prior year, or approximately 7% for the quarter and 2% for the year. The 53

week is estimated to have increased 2014 fourth quarter and full-year adjusted EPS by $0.02. The calculation of organic sales growth adjusts for the 53

week and all references to organic growth in this release are to a comparable 52 week basis. Adjusted operating income and adjusted EPS have not been adjusted for the 53

week.

KEY HIGHLIGHTS

2015 sales of $14.3 billion with organic growth of 2%. Organic sales were flat in Q4;

2015 adjusted operating income rose to $881 million, Q4 adjusted operating income rose to $239 million. 2015 and Q4 GAAP operating income of $628 million and $154 million, respectively;

2015 and Q4 adjusted earnings per share of $1.57 and $0.44, respectively. 2015 and Q4 GAAP earnings per share of $0.96 and $0.23, respectively;

Board of Directors increases regular quarterly dividend to 9.5 cents per share

“The power of our clear and focused strategy, combined with our relentless focus on operational excellence, delivered strong returns for our shareholders," said Eric J. Foss, Chairman, President and Chief Executive Officer. "Our strategic transformation is squarely on track and we expect to continue driving meaningful shareholder value by focusing on growth, innovation, brand building and operational excellence to capture productivity and deliver great customer experiences.”

FOURTH QUARTER SALES RESULTS

Organic Sales

GAAP Sales

Growth (GAAP)

Organic Sales Growth

Estimated Impact on Organic Growth from Calendar Shift

FSS North America

FSS International

Uniform & Career Apparel

Total Company

Organic Sales Growth adjusts for currency translation, acquisitions and divestitures, and the 53

week in 2014, but does not adjust for the estimated calendar shift impact.

The company experienced solid retention rates, strong new client wins and underlying base business expansion in the quarter. As previously disclosed, a large client non-renewal along with non-recurring facilities revenue reported in the fourth quarter of 2014, which totaled about 5% of total company sales in the quarter, reduced North American organic sales. The Education business experienced a particularly strong quarter as new account wins on-boarded during the back-to-school season. FSS International’s organic growth remained strong driven by expansion in Emerging Markets, especially China. Organic sales growth in the Uniform and Career Apparel segment accelerated to 5% as incremental capacity continued to come on-line.

FOURTH QUARTER ADJUSTED OPERATING INCOME (AOI) RESULTS

Q4 AOI

Q4 GAAP Operating Income

Operating Income Growth (GAAP)

AOI Growth

Estimated Impact on AOI Growth from Calendar Shift

Corporate

AOI does not adjust for the estimated calendar shift impact or the 53

week in 2014.

In the fourth quarter the company continued to drive solid productivity gains from food and labor initiatives, particularly in its FSS North America base locations. Consistent with the company’s previously disclosed expectations, the lapping of certain start-up accounts as well as the phasing of reinvestment spending were also contributors to operating income growth versus the prior year. FSS International’s results reflect continued strong revenue and productivity trends, particularly in the emerging markets. The Uniform & Career Apparel segment achieved strong underlying profit expansion driven by revenue and productivity improvement, however this was offset in the quarter by temporary start-up costs associated with capacity expansion.

FOURTH QUARTER EARNINGS SUMMARY

Adjusted net income was $110 million or $0.44 per share, versus adjusted net income of $91 million or $0.37 per share in the fourth quarter of 2014. The calendar shift is estimated to have increased fourth quarter 2015 earnings per share by $0.02. On a GAAP basis, sales were $3.5 billion, operating income was $154 million, net income attributable to Aramark stockholders was $57 million and diluted earnings per share were $0.23. This compares to the fourth quarter of 2014 where on a GAAP basis, sales were $3.9 billion, operating income was $145 million, net income attributable to Aramark stockholders was $44 million and diluted earnings per share were $0.18. The significant strengthening of the U.S. dollar versus the prior year period decreased sales by approximately $130 million, operating income by $8 million and net income by $4 million ($0.02 in earnings per share) in the quarter.

FISCAL 2015 RESULTS

Sales were $14.3 billion, versus $14.8 billion in 2014, with organic growth of 2%. The calculation of organic growth includes an adjustment for 2014’s 53

week of approximately $258 million, or approximately 2%, and adjusts for adverse currency translation of $471 million. Adjusted operating income was $881 million, versus $852 million in

2014 (which includes approximately $14 million related to the 53

week). Adjusted net income was $387 million or $1.57 per share, versus adjusted net income of $344 million (which includes an estimated $5 million related to the 53

week) or $1.45 per share (which includes an estimated $0.02 related to the 53

week) in 2014. On a GAAP basis, sales were $14.3 billion, operating income was $628 million, net income attributable to Aramark stockholders was $237 million and earnings per share were $0.96.

DIVIDEND INCREASE & DECLARATION

In recognition of the company’s improving growth and profitability, the company’s Board of Directors is increasing the regular quarterly dividend by 10%, to 9.5 cents per share of common stock. The first quarter fiscal 2016 dividend, at the increased rate, will be payable on December 19, 2015, to stockholders of record at the close of business November 30, 2015.

LIQUIDITY & CAPITAL STRUCTURE

As of October 2, 2015 the company’s total debt was $5.3 billion, representing a reduction of $152 million versus the prior year. Total debt to adjusted EBITDA decreased to 4.15x, an approximate 25 basis point improvement versus 2014. Corporate liquidity remains strong, and at year-end the company had approximately $645 million available on its revolving credit facility. The company generated $178 million of free cash flow in fiscal 2015, an improvement of approximately $300 million versus the prior year, inclusive of approximately $45 million of voluntary pension contributions made during the fourth quarter of 2015.

2016 OUTLOOK

Based upon the current foreign exchange rates, currency translation is estimated to be a $0.03 per share headwind to adjusted EPS in 2016, primarily in the first half of the year. Therefore, 2016 adjusted EPS is currently expected to be within a range of $1.65 to $1.75 per share.

INVESTOR DAY

The company will webcast an Investor Day on December 1, 2015 beginning at 8 a.m. Eastern Standard Time. Participants may access the event via the company’s website at

www.aramark.com/

on the investor relations tab.

CONFERENCE CALL SCHEDULED

The company has scheduled a conference call at 10 a.m. Eastern Standard Time today to discuss its earnings. This call and related materials can be heard and reviewed, either live or on a delayed basis, on the company's web site,

on the investor relations page.

About Aramark

Aramark (NYSE: ARMK) is in the customer service business across food, facilities and uniforms, wherever people work, learn, recover, and play. United by a passion to serve, our more than 270,000 employees deliver experiences that enrich and nourish the lives of millions of people in 21 countries around the world every day. Aramark is recognized among the Most Admired Companies by FORTUNE and the World’s Most Ethical Companies by the Ethisphere Institute. Learn more at www.aramark.com or connect with us on Facebook and Twitter.

Selected Operational and Financial Metrics

Adjusted Sales (Organic)

Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions and divestitures, the...


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