Aramark reports all-time revenue high for fiscal 2022

Aramark reported fourth quarter and annual fiscal 2022 results that showed the company rebounding strongly from the pandemic period, with revenues for its U.S. Food & Support Services (FSS) unit growing 47% over the year, from $6.8 billion to $10 billion. That performance led an overall revenue increase of 35% over the fiscal year ended Sept. 30, which represented an all-time revenue high for the company.

Fourth quarter revenue for the company as a whole increased 24% (26% organic) over the previous fourth quarter, which is 111% (113% organic) of its pre-COVID level. The U.S. FSS unit’s fourth quarter revenue increase of 29% was actually its smallest of the year after gains of 68%, 51% and 50% in the first three quarters, reflecting the pace at which the division was recovering from the pandemic-induced shortfalls of 2021, as the fourth quarter of fiscal 2021 had already seen a 51% revenue increase over Q4 of fiscal 2020.

Aramark attributed the U.S. FSS unit’s fourth quarter performance to a number of factors across its markets, including…

• a strong start to the new academic year that commenced at the end of the quarter following a typical seasonal slowdown in the summer months and where “additional pricing actions have been implemented, as appropriate, for board plans and on-campus retail outlets”;

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• continued steady progress in B&I “as return-to-office gained momentum across the portfolio, particularly in September, providing customized solutions tailored to client needs”;

• increased patient and retail activity in Healthcare, as well as “significantly higher net growth from newly awarded contracts, improved retention rates, and additional services”;

• high attendance levels being maintained in Sports & Entertainment “with better-than-historic per capita spending” while Destinations (parks, resorts, etc.) “had greater guest activity” and Corrections reported “strong growth led by a record level of new business wins.”

“We are extremely pleased with our performance in the fourth quarter and throughout fiscal 2022 as we delivered the highest annual revenue in Aramark’s history, a second consecutive year of record

Net New Business, and ongoing margin expansion,” said CEO John Zillmer. “The strong results and multiple milestones achieved over the past year are reflective of our 'everyone sells' mindset and a testament to the work of our teams across the globe to meet and exceed the demands of our clients. Our strong finish was driven by broad-based growth across all segments, as well as the strategic initiatives and hospitality-focused culture we have implemented to position our business for continued success.”

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Aramark cited “record-level Net New Business, pricing, and ongoing base revenue recovery, while navigating a complex operating environment” for its strong fiscal 2022 performance, with contributions from multiple lines of business, geographies and both large and small clients. It noted that annualized gross new business wins exceeded $1.6 billion, representing 10% of pre-COVID annual revenue, and the annual retention rate remained above 95% for the second consecutive year.

“Collectively, this resulted in $790 million of Net New Business, more than 50% higher than fiscal 2021 and over 8.5x greater than the historical five-year average prior to last fiscal year,” the company said. “At nearly 5% of pre-COVID revenue, this level of Net New Business achieved is already at the top end of the multi-year target range provided at Aramark's Analyst Day.”

As for the current inflationary environment, Aramark says it managed “by utilizing various actions available across the food, labor, and direct cost categories, and worked with clients to implement targeted pricing actions, where appropriate, to offset the impact on operational profitability.”

It added that it expects to sustain its growth momentum into fiscal 2023 and expects organic revenue growth between of between 11% and 13% “driven by Net New Business, pricing, and ongoing base recovery.”

“We enter fiscal 2023 with excellent momentum and remain intently focused on delivering upon our growth strategies that are expected to result in significant value for our clients, employees, and shareholders,” Zillmer said. “Aramark is well-poised to continue to win new business, drive operating efficiencies, and leverage enhanced financial flexibility for sustained success, while remaining committed to providing world-class service for clients.”