Aramark (ARMK) shares are on the rise Monday morning, fueled by a strong fourth-quarter earnings report that showcased the company’s continued growth and profitability. Revenue climbed 5% year-over-year (organic revenue: +7%) to $4.42 billion, exceeding analysts’ expectations. This growth was driven by robust volume across both segments, with pricing stabilizing despite inflationary pressures, particularly in the Education sector.
The FSS United States segment experienced a 4% revenue increase, spearheaded by strong performances in Sports & Entertainment (thanks to higher per capita spending and robust stadium attendance), Business & Industry (driven by increased participation and new clients), and retail expansion in Corrections through micro-markets.
Meanwhile, FSS International revenue soared 9%, with strong growth across various regions, including the U.K., Germany, Canada, and South America. Key sectors contributing to this growth included Business & Industry, Sports & Entertainment, and Extractive Services.
Beyond revenue growth, Aramark’s fourth-quarter performance was highlighted by a 7% increase in adjusted operating income to $271 million. This impressive performance was attributed to higher revenue, cost discipline, and supply chain efficiencies. Adjusted earnings per share (EPS) of $0.54 also surpassed analysts’ expectations, coming in at $0.53.
Adding to the positive sentiment, Aramark’s operating cash flow surged 42% to $727 million, while free cash flow saw a remarkable 121% increase to $323 million for the year. As of the fiscal year-end, the company held over $2.6 billion in available cash.
The company’s commitment to shareholder value was further evident in the board’s approval of an 11% increase in the quarterly dividend, raising it to $0.105 per share. The dividend will be payable on December 12, 2024, to stockholders of record as of December 2, 2024.
Aramark also secured shareholder value by approving a new $500 million share repurchase program in early November.
Looking ahead, Aramark is optimistic about its future growth prospects. The company expects FY25 organic revenue growth to range from 7.5% to 9.5%, with adjusted EPS growth anticipated to be between 23% and 28%.
John Zillmer, Aramark’s Chief Executive Officer, expressed his satisfaction with the company’s achievements: “We reached new highs in our financial performance every quarter during fiscal 2024, ultimately achieving record revenue and AOI profitability for any year in Global FSS history.”
Investors seeking exposure to Aramark can consider the AdvisorShares Restaurant ETF (EATZ) and the SWP Growth & Income ETF (SWP).
As of Monday’s premarket trading, ARMK shares were up 3.55% at $40.50.
