Q - Aramark

Previous wording

The following discussion and analysis of Aramark's (the "Company," "we," "our" and "us") financial condition and results of operations for the three and six months ended March 28, 2025 and March 29, 2024 should be read in conjunction with our audited consolidated financial statements and the notes to those statements for the fiscal year ended September 27, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on November 19, 2024.

Current wording

The following discussion and analysis of Aramark's (the "Company," "we," "our" and "us") financial condition and results of operations for the three and nine months ended June 27, 2025 and June 28, 2024 should be read in conjunction with our audited consolidated financial statements and the notes to those statements for the fiscal year ended September 27, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on November 19, 2024.

Previous wording

Recent developments regarding tariffs and global trade have resulted in increased volatility and uncertainty for macroeconomic conditions. For the first half of the fiscal year, we saw global inflationary costs in product, energy and labor and market interest rates moderating and experienced volatility in foreign currencies. Given the uncertainty of tariff policy and the resulting impact on current and future macroeconomic conditions, we may see continued volatility in foreign currencies as well as fluctuating trends in global inflationary costs and market interest rates in the near term. We regularly evaluate and believe we take appropriate actions when necessary to mitigate the risk in these areas. These actions include management of operating costs, including supply chain initiatives and pricing actions, and managing interest rate risk through the use of interest rate swaps.

Current wording

Recent developments regarding tariffs and global trade have resulted in increased volatility and uncertainty for macroeconomic conditions. Since the beginning of the fiscal year, we have seen a moderation in global inflationary costs in product, energy and labor as well as in market interest rates, while we have continued to experience volatility in foreign currencies. Given the uncertainty of tariff policy and the resulting impact on current and future macroeconomic conditions, we may see continued volatility in foreign currencies as well as fluctuating trends in global inflationary costs and market interest rates in the near term. We regularly evaluate and believe we take appropriate actions when necessary to mitigate the risk in these areas. These actions include management of operating costs, including supply chain initiatives and pricing actions, and managing interest rate risk through the use of interest rate swaps and other risk mitigation strategies.

Previous wording

The following tables present an overview of our results on a consolidated and segment basis with the amount of and percentage change between periods for the three and six months ended March 28, 2025 and March 29, 2024 (in millions).

Current wording

The following tables present an overview of our results on a consolidated and segment basis with the amount of and percentage change between periods for the three and nine months ended June 27, 2025 and June 28, 2024 (in millions).

Previous wording

(1) As a percentage of total revenue, FSS United States represented 72.0% and 72.7% and FSS International represented 28.0% and 27.3% for the six months ended March 28, 2025 and March 29, 2024, respectively.

Current wording

(1) As a percentage of total revenue, FSS United States represented 70.2% and 71.9% and FSS International represented 29.8% and 28.1% for the three months ended June 27, 2025 and June 28, 2024, respectively.

Previous wording

(1) As a percentage of total revenue, FSS United States represented 71.4% and 72.5% and FSS International represented 28.6% and 27.5% for the three months ended March 28, 2025 and March 29, 2024, respectively.

Current wording

(1) As a percentage of total revenue, FSS United States represented 71.4% and 72.4% and FSS International represented 28.6% and 27.6% for the nine months ended June 27, 2025 and June 28, 2024, respectively.

Previous wording

Revenue increased by approximately 1.9% and 2.6% during the three and six month periods of fiscal 2025 compared to the prior year periods, respectively. The increase was primarily attributable to base business growth, partially offset by the negative impact of foreign currency translation (1.2% and 1.3% for the three and six month periods, respectively) as well as the exit of some lower margin accounts occurring later in fiscal 2024 and fewer operating days due to weather-related closures within the FSS United States segment. Additionally, for the three month period of fiscal 2025, the FSS United States segment revenue was impacted by fewer operating days due to a calendar shift at several universities.

Current wording

Revenue increased by approximately 5.7% and 3.7% during the three and nine month periods of fiscal 2025 compared to the prior year periods, respectively. The increase was primarily attributable to base business growth and additional operating days due to a calendar shift at several universities in the FSS United States segment, partially offset by the exit of some lower margin accounts occurring later in fiscal 2024. The increase in the three month period of fiscal 2025 was also attributable to net new business and a favorable impact of foreign currency translation (0.5%). The increase for the nine month period of fiscal 2025 was partially offset by the negative impact of foreign currency translation (0.7%).

Previous wording

The following table presents the cost of services provided (exclusive of depreciation and amortization) by segment and as a percent of revenue for the three and six months ended March 28, 2025 and March 29, 2024 (in millions).

Current wording

The following table presents the cost of services provided (exclusive of depreciation and amortization) by segment and as a percent of revenue for the three and nine months ended June 27, 2025 and June 28, 2024 (in millions).

Previous wording

The following table presents the percentages attributable to the components in cost of services provided (exclusive of depreciation and amortization) for the three and six months ended March 28, 2025 and March 29, 2024.

Current wording

The following table presents the percentages attributable to the components in cost of services provided (exclusive of depreciation and amortization) for the three and nine months ended June 27, 2025 and June 28, 2024.

Previous wording

Operating income increased by $15.1 million and $65.4 million during the three and six month periods of fiscal 2025 compared to the prior year periods, respectively, driven by base business growth, cost management and supply chain efficiencies. The increase during the three month period of fiscal 2025 was partially offset by fewer operating days due to a calendar shift at several universities within the FSS United States segment. The increase in operating income during the six month period of fiscal 2025 was also attributable to prior year expenses related to the separation and distribution of the Uniform segment ($29.0 million), which was partially offset by higher contingent consideration expenses as compared to the prior year period ($10.6 million).

Current wording

Operating income increased by $20.9 million and $86.3 million during the three and nine month periods of fiscal 2025 compared to the prior year periods, respectively, driven by base business growth and supply chain efficiencies, partially offset by higher medical claims ($13.0 million and $12.5 million, respectively). The increase in operating income during the three month period of fiscal 2025 was partially offset by severance charges ($12.7 million). In addition, the increase in operating income during the nine month period of fiscal 2025 was attributable to prior year expenses related to the separation and distribution of the Uniform segment ($29.0 million), which was partially offset by higher amortization of acquisition-related intangible assets ($11.8 million) and higher contingent consideration expenses ($10.6 million).

Previous wording

Interest Expense, net, decreased by 17.6% during the six month period of fiscal 2025 compared to the prior year period due to the prior year payment of a $23.9 million call premium, a prior year $7.9 million non-cash loss for the write-off of unamortized deferred financing costs related to the repayment of the 6.375% Senior Notes due May 2025 (the "6.375% 2025 Notes"), a prior year $1.6 million write-off of unamortized deferred financing costs and discount on the United States dollar denominated Term B-5 Loans due 2028 and United States dollar denominated Term B-6 Loans due 2030, transaction costs related to the repricing of these loans and lower borrowings under the Receivables Facility and revolving credit facility.

Current wording

Interest Expense, net, decreased by 10.8% during the nine month period of fiscal 2025 compared to the prior year period due to the following: a prior year payment of a $23.9 million call premium; a prior year $7.9 million non-cash loss for the write-off of unamortized deferred financing costs related to the repayment of the 6.375% Senior Notes due May 2025 (the "6.375% 2025 Notes"); a prior year $1.6 million write-off of unamortized deferred financing costs and discount on the United States dollar denominated Term B-5 Loans due 2028 and United States dollar denominated Term B-6 Loans due 2030; and transaction costs related to the repricing of these loans and lower borrowings under the Receivables Facility and revolving credit facility. The decrease was partially offset by the payment of $5.8 million of transaction costs related to the refinancing of the U.S. Term B-8 Loans due 2030, a $2.5 million non-cash loss for the write-off of unamortized deferred financing costs and discount on the U.S. Term B-4 Loans due 2027 and 5.000% 2025 Notes as well as the aforementioned increase referenced in the paragraph above.

Previous wording

The Provision for Income Taxes for the three and six month periods of fiscal 2025 was recorded at an effective tax rate of 26.6% and 25.8%, respectively. The Provision for Income Taxes for the three and six month periods of fiscal 2024 was recorded at an effective tax rate of 27.1% and 34.8%, respectively. During the six month period of fiscal 2024, we recorded a $7.1 million valuation allowance adjustment against certain foreign tax credits, as it is more likely than not a tax benefit will not be realized due to the reduction of future forecasted foreign income as a result of the separation and distribution of the Uniform segment (see Note 6 to the condensed consolidated financial statements).

Current wording

The Provision for Income Taxes for the three and nine month periods of fiscal 2025 was recorded at an effective tax rate of 25.2% and 25.6%, respectively. The Provision for Income Taxes for the three and nine month periods of fiscal 2024 was recorded at an effective tax rate of 27.5% and 32.0%, respectively. During the three and nine month periods of fiscal 2025, we recorded an income tax benefit of $3.1 million for the reversal of a valuation allowance against deferred tax assets within a foreign subsidiary due to an acquisition of a business. During the nine month period of fiscal 2024, we recorded a $7.1 million valuation allowance adjustment against certain foreign tax credits, as it is more likely than not a tax benefit will not be realized due to the reduction of future forecasted foreign income as a result of the separation and distribution of the Uniform segment (see Note 6 to the condensed consolidated financial statements).

Previous wording

FSS United States segment revenue increased by approximately 0.4% and 1.6% during the three and six month periods of fiscal 2025 compared to the prior year periods, respectively, primarily attributable to base business growth. Specifically, for both the three and six month periods: the Business & Industry sector increase was due to volume growth in base business and net new business; the Sports, Leisure and Corrections sector increase was driven by higher net new business within the Corrections business; the Facilities & Other sector decrease resulted from the exit of some lower margin accounts in late fiscal 2024, partially offset by increased revenues from procurement services; and various sectors were negatively impacted by fewer operating days due to weather-related closures. Additionally, for the three month period of fiscal 2025, the Education sector revenue was impacted by fewer operating days due to a calendar shift.

Current wording

FSS United States segment revenue increased by approximately 3.3% and 2.2% during the three and nine month periods of fiscal 2025 compared to the prior year periods, respectively, primarily attributable to base business growth. Specifically, for both the three and nine month periods: the Business & Industry sector increase was due to volume growth in base business and net new business; the Education sector revenue was positively impacted by additional operating days due to a calendar shift at several universities; the Sports, Leisure and Corrections sector increase was driven by higher net new business within the Corrections business; and the Facilities & Other sector decrease resulted from the exit of some lower margin accounts in late fiscal 2024, partially offset by increased revenues from procurement services.

Previous wording

Operating income increased by $7.4 million and $26.3 million during the three and six month periods of fiscal 2025 compared to the prior year periods, respectively. The increase during both the three and six month periods of fiscal 2025 was primarily attributable to base business growth and supply chain efficiencies. The increase during the three month period of fiscal 2025 was partially offset by fewer operating days due to a calendar shift in the Education sector. The increase during the six month period of fiscal 2025 was partially offset by higher contingent consideration expenses as compared to the prior year period ($10.6 million).

Current wording

Operating income increased by $19.9 million and $46.2 million during the three and nine month periods of fiscal 2025 compared to the prior year periods, respectively. The increase was primarily attributable to base business growth and supply chain efficiencies, partially offset by higher medical claims ($13.0 million and $12.5 million for the three and nine month periods, respectively). The increase during the three month period of fiscal 2025 was also attributable to a greater number of operating days due to a calendar shift in the Education sector, partially offset by severance charges ($4.4 million). The increase during the nine month period of fiscal 2025 was partially offset by higher contingent consideration expenses ($10.6 million) and higher amortization of acquisition-related intangible assets ($5.2 million).

Previous wording

FSS International segment revenue increased by approximately 5.8% and 5.2% during the three and six month periods of fiscal 2025 compared to the prior year periods, respectively. The increase was primarily attributable to base business and net new business growth, partially offset by the negative impact of foreign currency translation (4.2% and 4.6% for the three and six month periods, respectively).

Current wording

FSS International segment revenue increased by approximately 12.0% and 7.5% during the three and nine month periods of fiscal 2025 compared to the prior year periods, respectively. The increase was primarily attributable to base business growth and net new business growth. Additionally, the increase during the three month period of fiscal 2025 compared to the prior year period was favorably impacted by foreign currency translation (1.7%). The increase during the nine month period of fiscal 2025 was partially offset by the negative impact of foreign currency translation (2.5%).

Previous wording

Corporate expenses, those administrative expenses not allocated to the business segments, increased by $1.3 million and decreased by $22.7 million during the three and six month periods of fiscal 2025 compared to the prior year periods, respectively. The decrease during the six month period of fiscal 2025 was mainly attributable to prior year expenses related to the separation and distribution of the Uniform segment ($29.0 million), partially offset by increases in acquisition costs and share-based compensation expense.

Current wording

Corporate expenses, those administrative expenses not allocated to the business segments, decreased by $4.2 million and $26.9 million during the three and nine month periods of fiscal 2025 compared to the prior year periods, respectively. The decrease during the three month period of fiscal 2025 was primarily attributable to lower share-based compensation expense. The decrease during the nine month period of fiscal 2025 was mainly attributable to prior year expenses related to the separation and distribution of the Uniform segment ($29.0 million), partially offset by an increase in acquisition costs.

Previous wording

As of March 28, 2025, we had $920.5 million of cash and cash equivalents, $43.3 million of marketable securities, $1,043.4 million of availability under our senior secured revolving credit facility and $14.0 million of availability under our Receivables Facility. A significant portion of our cash and cash equivalents are held in mature, liquid geographies where we have operations. As of March 28, 2025, we had $1,320.8 million of outstanding foreign currency borrowings.

Current wording

As of June 27, 2025, we had$501.5 million of cash and cash equivalents,$43.7 million of marketable securities,$906.5 million of availability under our senior secured revolving credit facility and $30.0 million of availability under our Receivables Facility. A significant portion of our cash and cash equivalents are held in mature, liquid geographies where we have operations. As of June 27, 2025, we had$1,058.7 million of outstanding foreign currency borrowings.

Previous wording

Cash used in operating activities decreased by $104.6 million during the six month period of fiscal 2025 compared to the prior year period. The decrease was driven by higher net income, lower payments made to clients on contracts and a lower use of cash from the change in operating assets and liabilities compared to the prior year period, partially offset by unfavorable non-cash gains and losses.

Current wording

Cash used in operating activities decreased by $40.6 million during the nine month period of fiscal 2025 compared to the prior year period. The decrease was driven by higher net income, lower payments made to clients on contracts and favorable non-cash gains and losses, partially offset by a greater use of cash from the change in operating assets and liabilities as compared to the prior year period.

Previous wording

The favorable change in operating assets and liabilities compared to the prior year period of $13.5 million was primarily due to:

Current wording

The unfavorable change in operating assets and liabilities compared to the prior year period of $69.1 million was primarily due to:

Previous wording

•Accounts payable by $83.7 million, resulting in a higher use of cash due to the timing of disbursements;

Current wording

•Accounts payable by $51.4 million, resulting in a higher use of cash due to the timing of disbursements;

Previous wording

•Prepayments by $23.1 million, resulting in a higher use of cash due to the timing of insurance and other annual contractual payments compared to the prior period.

Current wording

•Prepayments by $29.6 million, resulting in a higher use of cash due to the timing of insurance and other annual contractual payments compared to the prior period; and

Previous wording

•Inventories by $24.6 million, resulting in a use of cash during the six month period of fiscal 2025 compared to a source of cash in the prior period due to increased purchases from new business; and

Current wording

•Inventories by $26.3 million, resulting in a lower source of cash due to increased purchases from new business.

Previous wording

•Receivables by $110.3 million, resulting in a lower use of cash due to the timing of collections; and

Current wording

•Receivables by $28.6 million, resulting in a lower use of cash due to the timing of collections; and

Previous wording

•Accrued expenses by $34.5 million, resulting in a lower use of cash primarily due to the timing of interest payments and lower recognition of deferred income in our Higher Education business, partially offset by higher employee incentive payments and higher commission payments mainly in our Sports business.

Current wording

•Accrued expenses by $9.6 million, resulting in a lower use of cash primarily due to the timing of interest payments and payroll, partially offset by higher employee incentive payments and higher commission payments mainly in our Sports business.

Previous wording

Cash flows used in investing activities were $192.6 million higher during the six month period of fiscal 2025 compared to the prior year period primarily due to higher acquisitions of certain businesses ($155.1 million) and higher purchases of property and equipment ($32.6 million).

Current wording

Cash flows used in investing activities were $234.8 million higher during the nine month period of fiscal 2025 compared to the prior year period primarily due to higher acquisitions of certain businesses ($156.7 million) and higher purchases of property and equipment ($58.9 million).

Previous wording

During the six month period of fiscal 2025, cash provided by financing activities was primarily impacted by the following:

Current wording

During the nine month period of fiscal 2025, cash provided by financing activities was primarily impacted by the following:

Previous wording

These sources of cash were partially offset by repayment of the U.S. Term B-4 Loans due 2027 ($839.3 million), redemption of the 5.000% 2025 Notes ($551.5 million) and the repurchase of common stock through the share repurchase program ($109.3 million).

Current wording

These sources of cash were partially offset by repayment of the U.S. Term B-4 Loans due 2027 ($839.3 million), redemption of the 5.000% 2025 Notes ($551.5 million), repayment of the 3.125% 2025 Notes ($363.4 million), and the repurchase of common stock through the share repurchase program ($140.2 million).

Previous wording

During the six month period of fiscal 2024, cash used in financing activities was primarily impacted by repayment of the 6.375% 2025 Notes ($1,500.0 million), offset by borrowings under the Receivables Facility ($600.0 million) and borrowings under the revolving credit facility ($179.3 million).

Current wording

During the nine month period of fiscal 2024, cash used in financing activities was primarily impacted by repayment of the 6.375% 2025 Notes ($1,500.0 million), offset by borrowings under the Receivables Facility ($599.0 million) and borrowings under the revolving credit facility ($248.0 million).

Previous wording

The "Other financing activities" caption also reflects a use of cash during the six month periods of fiscal 2025 and fiscal 2024 primarily related to taxes paid by us when we withhold shares upon an employee's exercise or vesting of equity awards to cover income taxes. The six month period of fiscal 2025 includes the payment of transactions costs related to the issuance of the 4.375% 2033 Notes and the U.S. Term B-8 Loans due 2030 ($15.1 million). The six month period of fiscal 2024 includes the payment of a call premium on the 6.375% 2025 Notes ($23.9 million).

Current wording

The "Other financing activities" caption also reflects a use of cash during the nine month periods of fiscal 2025 and fiscal 2024 primarily related to taxes paid by us when we withhold shares upon an employee's exercise or vesting of equity awards to cover income taxes. The nine month period of fiscal 2025 includes the payment of contingent consideration obligations ($25.2 million) and transaction costs related to the issuance of the 4.375% 2033 Notes and the U.S. Term B-8 Loans due 2030 ($15.1 million). The nine month period of fiscal 2024 includes the payment of a call premium on the 6.375% 2025 Notes ($23.9 million) and contingent consideration obligations ($12.8 million).

Previous wording

(4) "Other" includes adjustments to remove the impact attributable to the adoption of certain accounting standards that are made to the calculation in accordance with the Credit Agreement and indentures ($52.8 million), non-cash adjustments to inventory based on expected usage ($18.2 million), charges related to a ruling on a foreign tax matter ($6.8 million), severance charges ($6.7 million), non-cash charges related to the impairment of a trade name ($3.3 million), contingent consideration expense related to acquisition earn outs, net of reversals ($2.4 million), the impact of hyperinflation in Argentina ($1.9 million) and other miscellaneous expenses.

Current wording

(4) "Other" includes adjustments to remove the impact attributable to the adoption of certain accounting standards that are made to the calculation in accordance with the Credit Agreement and indentures ($53.7 million), severance charges ($19.4 million), non-cash adjustments to inventory based on expected usage ($18.2 million), charges related to a ruling on a foreign tax matter ($6.8 million), dividends from miscellaneous investments, net of earnings ($5.0 million), the impact of hyperinflation in Argentina ($3.3 million), contingent consideration expense related to acquisition earn outs, net of reversals ($2.4 million), legal charges related to an anti-trust review ($1.1 million) and other miscellaneous expenses.

Previous wording

Our business activities do not include the use of unconsolidated special purpose entities and there are no significant business transactions that have not been reflected in the accompanying condensed consolidated financial statements. We insure portions of our risk related to general liability, automobile liability, workers’ compensation liability claims as well as certain property damage risks through a wholly owned captive insurance subsidiary (the "Captive") as part of our approach to risk finance. The Captive is subject to the regulations within its domicile of Bermuda, including regulations established by the Bermuda Monetary Authority (the "BMA") relating to levels of liquidity and solvency as such concepts are defined by the BMA. The Captive was in compliance with these regulations as of March 28, 2025. These regulations may have the effect of limiting our ability to access certain cash and cash equivalents held by the Captive for uses other than for the payment of our general liability, automobile liability, workers’ compensation liability, certain property damage and related Captive costs. As of March 28, 2025 and September 27, 2024, cash and cash equivalents at the Captive were $95.2 million and $94.7 million, respectively. The Captive also invests in United States Treasury securities where the amount as of March 28, 2025 and September 27, 2024 was $43.3 million and $42.3 million, respectively, and is recorded in "Prepayments and other current assets" on the Condensed Consolidated Balance Sheets.

Current wording

Our business activities do not include the use of unconsolidated special purpose entities and there are no significant business transactions that have not been reflected in the accompanying condensed consolidated financial statements. We insure portions of our risk related to general liability, automobile liability, workers’ compensation liability claims as well as certain property damage risks through a wholly owned captive insurance subsidiary (the "Captive") as part of our approach to risk finance. The Captive is subject to the regulations within its domicile of Bermuda, including regulations established by the Bermuda Monetary Authority (the "BMA") relating to levels of liquidity and solvency as such concepts are defined by the BMA. The Captive was in compliance with these regulations as of June 27, 2025. These regulations may have the effect of limiting our ability to access certain cash and cash equivalents held by the Captive for uses other than for the payment of our general liability, automobile liability, workers’ compensation liability, certain property damage and related Captive costs. As of June 27, 2025 and September 27, 2024, cash and cash equivalents at the Captive were$97.7 million and $94.7 million, respectively. The Captive also invests in United States Treasury securities where the amount as of June 27, 2025 and September 27, 2024 was$43.7 million and $42.3 million, respectively, and is recorded in "Prepayments and other current assets" on the Condensed Consolidated Balance Sheets.

Previous wording

Our significant accounting policies are described in the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K, filed with the SEC on November 19, 2024. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of our condensed consolidated financial statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the SEC on November 19, 2024.

Current wording

Our significant accounting policies are described in the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K, filed with the SEC on November 19, 2024. For a more complete discussion of our accounting policies and critical accounting estimates that we have identified in the preparation of our condensed consolidated financial statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the SEC on November 19, 2024.