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Aramark Reports Fourth Quarter and Full Year 2017 Earnings

FISCAL 2017 KEY HIGHLIGHTS

Sales +1%; Organic Sales +2%

Operating Income +8%; Adjusted Operating Income (AOI) +2%1

EPS +28% to $1.49; Adjusted EPS +14%1 to $1.94

Operating Income Margin up 35 bps to 5.5%; AOI Margin up 5 bps to 6.6%1

Record Full-Year Free Cash Flow

Achievement of 3.5x Leverage Ratio

Board Increases Quarterly Dividend

Aramark (NYSE: ARMK) today reported fourth quarter and full-year fiscal 2017 results.

“Our solid operating performance in the fourth quarter led to another very successful year of double digit adjusted EPS growth in 2017,” said Eric J. Foss, Chairman, President and CEO. “We continue to execute well against our strategy centered on driving quality and innovation to constantly elevate the customer experience.”

“The combination of robust cash flows and disciplined financial management has significantly strengthened Aramark’s balance sheet, paving the way for us to make the strategically sound and financially compelling acquisitions of Avendra and AmeriPride that we announced last month,” Foss continued. “We’re entering 2018 with solid momentum as we continue to focus on growth and shareholder value creation, consistent with our long-term framework.”

1 Constant Currency

FOURTH QUARTER RESULTS*

   
      Sales
      Q4 ’17     Q4 ’16     Change    

Organic
Change

FSS North America     $2,518M     $2,492M     1%     1%
FSS International     743     661     12%     10%
Uniform & Career Apparel     394     391     1%     1%
Total Company     $3,654M     $3,544M     3%     2%
           

* May not total due to rounding.

Consolidated revenues were $3.7 billion in the quarter, an organic increase of 2% over the prior-year period. Revenue growth was negatively impacted by an estimated $25 million from natural disasters in the quarter. The North America segment was positively impacted by growth across all sectors. The International segment continued to deliver strong, broad-based organic growth, while Uniform sales were up modestly as expected.

Income was negatively impacted by an estimated $17 million from natural disasters in the quarter, with a disproportionate impact in the Uniforms segment related to an asset impairment in Puerto Rico. In North America and International base accounts, the Company drove strong productivity improvements, while continuing to reinvest in technology and capabilities. Uniform income was also impacted by installation costs related to the onboarding of new business.

FOURTH QUARTER SUMMARY

On a GAAP basis, sales were $3.7 billion, operating income was $218 million, net income attributable to Aramark stockholders was $113 million and diluted earnings per share were $0.45. This compares to the fourth quarter of 2016 where, on a GAAP basis, sales were $3.5 billion, operating income was $191 million, net income attributable to Aramark stockholders was $83 million and diluted earnings per share were $0.33. Fourth quarter GAAP diluted earnings per share increased 36% year-over-year. Tax expense benefited from the results of tax planning efforts and the adoption of new accounting standards related to share-based compensation.

Adjusted net income was $137 million or $0.54 per share, versus adjusted net income of $123 million or $0.49 per share in the fourth quarter of 2016. A weaker U.S. dollar increased sales by approximately $24 million, but had no material impact on operating income or earnings per share.

FISCAL 2017 SUMMARY

On a GAAP basis, sales were $14.6 billion, operating income was $808 million, net income attributable to Aramark stockholders was $374 million and diluted earnings per share were $1.49. This compares to fiscal 2016 where, on a GAAP basis, sales were $14.4 billion, operating income was $746 million, net income attributable to Aramark stockholders was $288 million and diluted earnings per share were $1.16. Full-year 2017 GAAP diluted earnings per share increased 28% year-over-year.

Adjusted net income was $489 million or $1.94 per share, versus adjusted net income of $425 million or $1.71 per share in fiscal 2016. A stronger U.S. dollar decreased sales by approximately $72 million, but had no material impact on operating income or earnings per share.

FREE CASH FLOW, CAPITAL STRUCTURE & LIQUIDITY

The Company generated record Free Cash Flow of $520 million in the year, a 36% improvement over prior year. Total trailing 12-month net debt to covenant adjusted EBITDA was 3.5x, a 30 basis point reduction versus the prior year measurement. Financial flexibility remains strong, and at quarter-end the Company had approximately $1.2 billion in cash and availability on its revolving credit facility.

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 to 10.5 cents per share of common stock. The first quarter fiscal 2018 dividend, at the increased rate, will be payable on December 7, 2017, to stockholders of record at the close of business November 27, 2017.

2018 OUTLOOK

The Company provides its expectations for full-year adjusted EPS and full-year 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.

2018 adjusted EPS is expected to be within a range of $2.10 to $2.20 per share, the mid-point of which would represent the fifth consecutive year of double-digit adjusted EPS growth. The Company is also expecting full-year free cash flow of greater than $400 million. This outlook does not reflect the expected impact of the pending acquisitions of Avendra, LLC and AmeriPride Services, which, as previously disclosed, are expected to be dilutive to adjusted EPS in 2018, and accretive to free cash flow.

Selected Operational and Financial Metrics

Adjusted Sales (Organic)

Adjusted Sales (Organic) represents sales growth, adjusted to eliminate the effects of material acquisitions and divestitures and the impact of currency translation.

Adjusted Operating Income

Adjusted Operating Income represents operating income adjusted to eliminate the change in amortization of acquisition-related customer relationship intangible assets and depreciation of property and equipment resulting from the going-private transaction in 2007 (the “2007 LBO”); the impact of the change in fair value related to certain gasoline and diesel agreements; severance and other charges; share-based compensation; the effects of material acquisitions and divestitures and other items impacting comparability.

Adjusted Operating Income (Constant Currency)

Adjusted Operating Income (Constant Currency) represents Adjusted Operating Income adjusted to eliminate the impact of currency translation.

Covenant Adjusted EBITDA

Covenant Adjusted EBITDA represents net income attributable to Aramark stockholders adjusted for interest and other financing costs, net; provision (benefit) for income taxes; depreciation and amortization; and certain other items as defined in our debt agreements required in calculating covenant ratios and debt compliance. The Company also uses Net Debt for its ratio to Covenant Adjusted EBITDA, which is calculated as total long-term borrowings less cash and cash equivalents.

Adjusted Net Income

Adjusted Net Income represents net income attributable to Aramark stockholders adjusted to eliminate the change in amortization of acquisition-related customer relationship intangible assets and depreciation of property and equipment resulting from the 2007 LBO; the impact of changes in the fair value related to certain gasoline and diesel agreements; severance and other charges; share-based compensation; the effects of material acquisitions and divestitures and other items impacting comparability, less the tax impact of these adjustments. The tax effect for adjusted net income for our U.S. earnings is calculated using a blended U.S. federal and state tax rate. The tax effect for adjusted net income in jurisdictions outside the U.S. is calculated at the local country tax rate.

Adjusted Net Income (Constant Currency)

Adjusted Net Income (Constant Currency) represents Adjusted Net Income adjusted to eliminate the impact of currency translation.

Adjusted EPS

Adjusted EPS represents Adjusted Net Income divided by diluted weighted average shares outstanding.

Free Cash Flow

Free Cash Flow represents net cash provided by operating activities less net purchases of property and equipment, client contract investments and other. Management believes that the presentation of free cash flow provides useful information to investors because it represents a measure of cash flow available for distribution among all the security holders of the Company.

We use Adjusted Sales (Organic), Adjusted Operating Income (including on a constant currency basis), Covenant Adjusted EBITDA, Adjusted Net Income (including on a constant currency basis), Adjusted EPS and Free Cash Flow as supplemental measures of our operating profitability and to control our cash operating costs. We believe these financial measures are useful to investors because they enable better comparisons of our historical results and allow our investors to evaluate our performance based on the same metrics that we use to evaluate our performance and trends in our results. These financial metrics are not measurements of financial performance under generally accepted accounting principles, or GAAP. Our presentation of these metrics has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. You should not consider these measures as alternatives to sales, operating income, net income, or earnings per share, determined in accordance with GAAP. Adjusted Sales (Organic), Adjusted Operating Income, Covenant Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Free Cash Flow as presented by us, may not be comparable to other similarly titled measures of other companies because not all companies use identical calculations.

Explanatory Notes to the Non-GAAP Schedules

Amortization of acquisition-related customer relationship intangible assets and depreciation of property and equipment resulting from the 2007 Leveraged Buy-out – adjustments to eliminate the change in amortization and depreciation resulting from the purchase accounting applied to the January 26, 2007 going-private transaction executed with investment funds affiliated with GS Capital Partners, CCMP Capital Advisors, LLC and J.P. Morgan Partners, LLC, Thomas H. Lee Partners, L.P. and Warburg Pincus LLC as well as approximately 250 senior management personnel.

Share-based compensation – adjustments to eliminate compensation expense related to the Company’s issuances of share-based awards and the related employer payroll tax expense incurred by the Company when employees exercise in the money stock options or vest in restricted stock awards.

Severance and other charges – adjustments to eliminate severance expenses and other costs incurred in the applicable period such as organizational streamlining initiatives ($18.4 million net expense for fiscal 2017 and $15.9 million net expense for the fourth quarter of 2016 and $24.9 million net expense for fiscal 2016), other consulting costs related to transformation initiatives ($7.5 million for the fourth quarter 2017 and $9.9 million for fiscal 2017 and $4.8 million for the fourth quarter of 2016 and $16.2 million for fiscal 2016) and asset write-offs, mainly from the exit of certain operations in the FSS International segment ($0.6 million for the fourth quarter and fiscal 2016).

Effects of acquisitions and divestitures – adjustments to eliminate the impact that material acquisitions and divestitures had on the comparative periods.

Gains, losses and settlements impacting comparability – adjustments to eliminate certain transactions that are not indicative of our ongoing operational performance, primarily for income from prior years’ loss experience that were favorable under our casualty insurance program ($6.5 million gain for fiscal 2017), expenses related to acquisition costs ($2.1 million for the fourth quarter and fiscal year 2017 and $2.4 million for the fourth quarter of 2016 and $3.9 million for fiscal 2016), expenses related to long-term disability payments (approximately $2.3 million for fiscal 2016), property and other asset write-downs associated with the sale of a building ($6.8 million for fiscal 2016), asset write-offs ($7.0 million for the fourth quarter and fiscal 2016), multiemployer pension plan withdrawal charges ($2.6 million for the fourth quarter and fiscal 2016), certain consulting costs ($2.4 million for the fourth quarter of fiscal 2017 and $3.7 million for fiscal 2017) and the impact of the change in fair value related to certain gasoline and diesel agreements ($3.5 million gain for the fourth quarter of 2017 and $0.4 million loss for fiscal 2017 and $8.3 million gain for fiscal 2016).

Effect of currency translation – adjustments to eliminate the impact that fluctuations in currency translation rates had on the comparative results by presenting the periods on a constant currency basis. Assumes constant foreign currency exchange rates based on the rates in effect for the prior year period being used in translation for the comparable current year period.

Effect of refinancing on interest and other financing costs, net – adjustments to eliminate expenses associated with refinancing activities undertaken by the Company in the applicable period such as third party costs and non-cash charges for the write-offs of deferring financing costs and debt discounts.

Tax Impact of Adjustments to Adjusted Net Income – adjustments to eliminate the net tax impact of the adjustments to adjusted net income calculated based on a blended U.S. federal and state tax rate for U.S. adjustments and the local country tax rate for adjustments in jurisdictions outside the U.S.

 

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Amounts)

 
    Three Months Ended

September 29, 2017

    September 30, 2016
Sales $ 3,654,124   $ 3,543,824
Costs and Expenses:
Cost of services provided 3,231,082 3,152,291
Depreciation and amortization 129,954 125,593
Selling and general corporate expenses 75,186   75,177
3,436,222   3,353,061
Operating income 217,902 190,763
Interest and Other Financing Costs, net 62,624   68,548
Income Before Income Taxes 155,278 122,215
Provision for Income Taxes 42,121   38,774
Net income 113,157 83,441
Less: Net income attributable to noncontrolling interest 19   97
Net income attributable to Aramark stockholders $ 113,138   $ 83,344
 
Earnings per share attributable to Aramark stockholders:
Basic $ 0.46 $ 0.34
Diluted $ 0.45 $ 0.33
Weighted Average Shares Outstanding:
Basic 245,078 243,941
Diluted 252,016 250,135
 
   
Fiscal Year Ended
September 29, 2017     September 30, 2016
Sales $ 14,604,412   $ 14,415,829
Costs and Expenses:
Cost of services provided 12,988,973 12,890,408
Depreciation and amortization 508,212 495,765
Selling and general corporate expenses 299,170   283,342
13,796,355   13,669,515
Operating income 808,057 746,314
Interest and Other Financing Costs, net 287,415   315,383
Income Before Income Taxes 520,642 430,931
Provision for Income Taxes 146,455   142,699
Net income 374,187 288,232
Less: Net income attributable to noncontrolling interest 264   426
Net income attributable to Aramark stockholders $ 373,923   $ 287,806
 
Earnings per share attributable to Aramark stockholders:
Basic $ 1.53 $ 1.19
Diluted $ 1.49 $ 1.16
Weighted Average Shares Outstanding:
Basic 244,453 242,286
Diluted 251,557 248,763
 
 
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
       
September 29, 2017 September 30, 2016
Assets
 
Current Assets:
Cash and cash equivalents $ 238,797 $ 152,580
Receivables 1,615,993 1,476,349
Inventories 610,732 587,155
Prepayments and other current assets 187,617   276,487
Total current assets 2,653,139   2,492,571
Property and Equipment, net 1,042,031 1,023,083
Goodwill 4,715,511 4,628,881
Other Intangible Assets 1,120,824 1,111,883
Other Assets 1,474,724   1,325,654
$ 11,006,229   $ 10,582,072
 
Liabilities and Stockholders’ Equity
 
Current Liabilities:
Current maturities of long-term borrowings $ 78,157 $ 46,522
Accounts payable 955,925 847,588
Accrued expenses and other current liabilities 1,334,013   1,290,635
Total current liabilities 2,368,095   2,184,745
Long-Term Borrowings 5,190,331 5,223,514
Other Liabilities 978,944 1,003,013
Redeemable Noncontrolling Interest 9,798 9,794
Total Stockholders’ Equity 2,459,061   2,161,006
$ 11,006,229   $ 10,582,072
 
 
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
       
 
Fiscal Year Ended
September 29, 2017 September 30, 2016
 
Cash flows from operating activities:
Net income $ 374,187 $ 288,232
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 508,212 495,765
Income taxes deferred (37,856 ) 52,416
Share-based compensation expense 65,155 56,942
Changes in operating assets and liabilities 83,735 (35,061 )
Other operating activities 59,954   9,020  
Net cash provided by operating activities 1,053,387   867,314  
 
Cash flows from investing activities:
Net purchases of property and equipment, client contract investments and other (533,823 ) (485,708 )
Acquisitions, divestitures and other investing activities (144,661 ) (194,037 )
Net cash used in investing activities (678,484 ) (679,745 )
 
Cash flows from financing activities:
Net proceeds of long-term borrowings (60,575 ) 36,454
Net change in funding under the Receivables Facility (13,800 ) (82,000 )
Payments of dividends (100,813 ) (92,074 )
Proceeds from issuance of common stock 28,779 35,705
Repurchase of stock (100,000 ) (749 )
Other financing activities (42,277 ) (54,741 )
Net cash used in financing activities (288,686 ) (157,405 )
Increase in cash and cash equivalents 86,217 30,164
Cash and cash equivalents, beginning of period 152,580   122,416  
Cash and cash equivalents, end of period $ 238,797   $ 152,580  
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
                     
Three Months Ended
September 29, 2017

FSS North
America

FSS International

Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 2,517,602   $ 742,730   $ 393,792     $ 3,654,124  
Operating Income (as reported) $ 164,541   $ 48,436   $ 38,085   $ (33,160 ) $ 217,902  
Operating Income Margin (as reported) 6.54 % 6.52 % 9.67 % 5.96 %
 
Sales (as reported) $ 2,517,602 $ 742,730 $ 393,792 $ 3,654,124
Effect of Currency Translation (6,837 ) (17,638 )   (24,475 )
Adjusted Sales (Organic) $ 2,510,765   $ 725,092   $ 393,792   $ 3,629,649  
Sales Growth (as reported) 1.04 % 12.34 % 0.70 % 3.11 %
Adjusted Sales Growth (Organic) 0.77 % 9.67 % 0.70 % 2.42 %
 
Operating Income (as reported) $ 164,541 $ 48,436 $ 38,085 $ (33,160 ) $ 217,902
Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the 2007 LBO 14,127 (413 ) 13,714
Share-Based Compensation 107 10 25 14,881 15,023
Severance and Other Charges 4,877 2,577 7,454
Gains, Losses and Settlements impacting comparability       914   914  
Adjusted Operating Income $ 183,652   $ 48,033   $ 38,110   $ (14,788 ) $ 255,007  
Effect of Currency Translation (523 ) 87       (436 )
Adjusted Operating Income (Constant Currency) $ 183,129   $ 48,120   $ 38,110   $ (14,788 ) $ 254,571  
 
Operating Income Growth (as reported) 17.49 % 34.14 % (22.35 )% 3.72 % 14.23 %
Adjusted Operating Income Growth 6.74 % 9.02 % (30.49 )% 8.29 % 0.08 %
Adjusted Operating Income Growth (Constant Currency) 6.44 % 9.22 % (30.49 )% 8.29 % (0.09 )%
Adjusted Operating Income Margin (Constant Currency) 7.29 % 6.64 % 9.68 % 7.01 %
 
Three Months Ended
September 30, 2016

FSS North
America

FSS International

Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 2,491,648   $ 661,133   $ 391,043   $ 3,543,824  
Adjusted Sales (Organic) $ 2,491,648   $ 661,133   $ 391,043   $ 3,543,824  
 
Operating Income (as reported) $ 140,048 $ 36,108 $ 49,048 $ (34,441 ) $ 190,763
Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the 2007 LBO 17,022 209 (521 ) 16,710
Share-Based Compensation 339 35 32 13,591 13,997
Severance and Other Charges 8,910 7,707 4,704 21,321
Gains, Losses and Settlements impacting comparability 5,734     6,266   22   12,022  
Adjusted Operating Income $ 172,053   $ 44,059   $ 54,825   $ (16,124 ) $ 254,813  
 
Operating Income Margin (as reported) 5.62 % 5.46 % 12.54 % 5.38 %
Adjusted Operating Income Margin 6.91 % 6.66 % 14.02 % 7.19 %
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
                     
Fiscal Year Ended
September 29, 2017

FSS North
America

FSS International

Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 10,231,503   $ 2,808,191   $ 1,564,718     $ 14,604,412  
Operating Income (as reported) $ 621,864   $ 136,967   $ 182,287   $ (133,061 ) $ 808,057  
Operating Income Margin (as reported) 6.08 % 4.88 % 11.65 % 5.53 %
 
Sales (as reported) $ 10,231,503 $ 2,808,191 $ 1,564,718 $ 14,604,412
Effect of Currency Translation (5,117 ) 76,897 71,780
Effects of Acquisitions and Divestitures   (18,563 )   (18,563 )
Adjusted Sales (Organic) $ 10,226,386   $ 2,866,525   $ 1,564,718   $ 14,657,629  
Sales Growth (as reported) 1.08 % 2.87 % 0.07 % 1.31 %
Adjusted Sales Growth (Organic) 1.03 % 5.01 % 0.07 % 1.68 %
 
Operating Income (as reported) $ 621,864 $ 136,967 $ 182,287 $ (133,061 ) $ 808,057
Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the 2007 LBO 58,930 (962 ) (383 ) 57,585
Share-Based Compensation 606 436 271 65,776 67,089
Severance and Other Charges 12,230 10,733 1,098 4,267 28,328
Effects of Acquisitions and Divestitures (1,127 ) (1,127 )
Gains, Losses and Settlements impacting comparability (2,988 )   (1,336 ) 5,236   912  
Adjusted Operating Income $ 690,642   $ 146,047   $ 181,937   $ (57,782 ) $ 960,844  
Effect of Currency Translation (456 ) 1,763       1,307  
Adjusted Operating Income (Constant Currency) $ 690,186   $ 147,810   $ 181,937   $ (57,782 ) $ 962,151  
 
Operating Income Growth (as reported) 13.82 % 6.06 % (6.69 )% 6.85 % 8.27 %
Adjusted Operating Income Growth 5.80 % 3.33 % (9.87 )% 1.51 % 2.32 %
Adjusted Operating Income Growth (Constant Currency) 5.73 % 4.58 % (9.87 )% 1.51 % 2.46 %
Adjusted Operating Income Margin (Constant Currency) 6.75 % 5.16 % 11.63 % 6.56 %
 
Fiscal Year Ended
September 30, 2016

FSS North
America

FSS International

Uniform Corporate

Aramark and
Subsidiaries

Sales (as reported) $ 10,122,373   $ 2,729,782   $ 1,563,674   $ 14,415,829  
Adjusted Sales (Organic) $ 10,122,373   $ 2,729,782   $ 1,563,674   $ 14,415,829  
 
Operating Income (as reported) $ 546,356 $ 129,143 $ 195,346 $ (124,531 ) $ 746,314
Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the 2007 LBO 79,916 670 (2,412 ) 78,174
Share-Based Compensation 1,093 222 173 57,870 59,358
Severance and Other Charges 12,070 10,921 2,480 16,265 41,736
Gains, Losses and Settlements impacting comparability 13,325   381   6,266   (6,525 ) 13,447  
Adjusted Operating Income $ 652,760   $ 141,337   $ 201,853   $ (56,921 ) $ 939,029  
 
Operating Income Margin (as reported) 5.40 % 4.73 % 12.49 % 5.18 %
Adjusted Operating Income Margin 6.45 % 5.18 % 12.91 % 6.51 %
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED NET INCOME & ADJUSTED EPS
(Unaudited)
(In thousands, except per share amounts)
               
Three Months Ended Fiscal Year Ended

September 29,
2017

September 30,
2016

September 29,
2017

September 30,
2016

 
Net Income Attributable to Aramark Stockholders (as reported) $ 113,138 $ 83,344 $ 373,923 $ 287,806
Adjustment:
Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the 2007 LBO 13,714 16,710 57,585 78,174
Share-Based Compensation 15,023 13,997 67,089 59,358
Severance and Other Charges 7,454 21,321 28,328 41,736
Effects of Acquisitions and Divestitures (1,127 )
Gains, Losses and Settlements impacting comparability 914 12,022 912 13,447
Effects of Refinancing on Interest and Other Financing Costs, net 1,523 31,491 31,267
Tax Impact of Adjustments to Adjusted Net Income (14,445 ) (24,444 ) (69,039 ) (86,929 )
Adjusted Net Income $ 137,321 $ 122,950 $ 489,162 $ 424,859
Effect of Currency Translation, net of Tax (319 )   989    
Adjusted Net Income (Constant Currency) $ 137,002   $ 122,950   $ 490,151   $ 424,859  
 
Earnings Per Share (as reported)
Net Income Attributable to Aramark Stockholders

(as reported)

$ 113,138 $ 83,344 $ 373,923 $ 287,806
Diluted Weighted Average Shares Outstanding 252,016   250,135   251,557   248,763  
$ 0.45   $ 0.33   $ 1.49   $ 1.16  
Earnings Per Share Growth (as reported) 36.36 % 28.45 %
 
Adjusted Earnings Per Share
Adjusted Net Income $ 137,321 $ 122,950 $ 489,162 $ 424,859
Diluted Weighted Average Shares Outstanding 252,016   250,135   251,557   248,763  
$ 0.54   $ 0.49   $ 1.94   $ 1.71  
Adjusted Earnings Per Share Growth 10.20 % 13.45 %
 
Adjusted Earnings Per Share (Constant Currency)
Adjusted Net Income (Constant Currency) $ 137,002 $ 122,950 $ 490,151 $ 424,859
Diluted Weighted Average Shares Outstanding 252,016   250,135   251,557   248,763  
$ 0.54   $ 0.49   $ 1.95   $ 1.71  
Adjusted Earnings Per Share Growth

(Constant Currency)

10.20 % 14.04 %
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
NET DEBT TO COVENANT ADJUSTED EBITDA
(Unaudited)
(In thousands)
     
Twelve Months Ended
September 29, 2017 September 30, 2016
 
Net Income Attributable to Aramark Stockholders (as reported) $ 373,923 $ 287,806
Interest and Other Financing Costs, net 287,415 315,383
Provision for Income Taxes 146,455 142,699
Depreciation and Amortization 508,212 495,765
Share-based compensation expense(1) 65,155 56,942
Pro forma EBITDA for equity method investees(2) 14,198 14,277
Pro forma EBITDA for certain transactions(3) 18 4,098
Other(4) 36,833   35,436
Covenant Adjusted EBITDA $ 1,432,209   $ 1,352,406
 
Net Debt to Covenant Adjusted EBITDA
Total Debt $ 5,268,488 $ 5,270,036
Less: Cash and cash equivalents $ 238,797   $ 152,580
Net Debt $ 5,029,691 $ 5,117,456
Covenant Adjusted EBITDA $ 1,432,209   $ 1,352,406
Net Debt/Covenant Adjusted EBITDA 3.5   3.8
 

(1) Represents compensation expense related to the Company’s issuances of share-based awards but does not include the related employer payroll tax expense incurred by the Company when employees exercise in the money stock options or vest in restricted stock awards.

(2) Represents our estimated share of Covenant Adjusted EBITDA primarily from our AIM Services Co., Ltd. equity method investment, not already reflected in our Covenant Adjusted EBITDA. Covenant Adjusted EBITDA for this equity method investee is calculated in a manner consistent with consolidated Covenant Adjusted EBITDA but does not represent cash distributions received from this investee.
(3) Represents the annualizing of net EBITDA from certain acquisitions made during the period.
(4) Other includes organizational streamlining initiatives ($19.4 million for fiscal 2017 and $24.9 million for fiscal 2016), the impact of the change in fair value related to certain gasoline and diesel agreements ($0.4 million loss for fiscal 2017 and $8.3 million gain for fiscal 2016), expenses related to acquisition costs ($2.6 million for fiscal 2017 and $3.9 million for fiscal 2016) and other miscellaneous expenses. “Other” for the twelve months ended September 29, 2017 also includes the estimated impact from natural disasters of $17.0 million ($6.1 million of which relates to asset write-downs). “Other” for the twelve months ended September 30, 2016 also includes property and other asset write-downs associated with the sale of a building of $6.8 million and asset write-offs of $5.0 million.
 
 
ARAMARK AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FREE CASH FLOW
(Unaudited)
(In thousands)
         
Fiscal Year Ended

September 29, 2017

September 30, 2016

Net Cash provided by operating activities $ 1,053,387 $ 867,314
 
Net purchases of property and equipment, client contract investments and other (533,823 ) (485,708 )
   
Free Cash Flow $ 519,564   $ 381,606  
36.15 %  
 

Posted by on November 14, 2017.

Categories: Financial

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