Aramark reports return to 90% of pre-COVID revenue level in fourth fiscal quarter

Aramark this morning reported 2021 fiscal results showing fourth quarter revenues at 90% (87% organic) of pre-COVID levels. For the 2021 fiscal year, overall company revenue stood at $12.1 billion, a 6% decline from fiscal 2020, which had included five-plus pre-COVID months. The resurgence was particularly pronounced in the company’s United States Food & Support Services (USFSS) unit, which posted a 51% revenue increase (58% organic) in the fourth quarter, following a 55% increase in the third quarter.

Overall, USFSS reported fiscal 2021 revenues of $6.8 billion, compared to nearly $7.4 billion in fiscal 2020, which, again, was only impacted by COVID over little more than half of its length. By contrast, the company’s FSS International unit saw a 22% fourth quarter increase while the Uniform & Career Apparel unit actually declined by 2%.

Significantly, USFSS saw fourth quarter operating income of $102 million, a $154 million turnaround from the $53 million operating loss sustained by the unit in 2020 4Q, and the main contributor to the company’s overall 2021 fourth quarter operating income total of $132 million. To achieve it, the company said in its fiscal announcement press release that “FSS United States strategically layered in operating costs to support increased levels of activity, particularly in Education, while continuing to invest in growth resources.”

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Among individual operating markets, USFSS reported that in both K-12 and Higher Education, while students and staff were returning to in-person learning, on-campus retail and catering volumes were slower to recover. Similarly, in Healthcare gradual improvement was seen as patient care began to normalize with a higher level of voluntary procedures, routine medical appointments and hospital visitations but retail and catering operations remained impacted.

In B&I, client companies introduced greater in-person return-to-work activity, although at a measured pace, particularly with white-collar clients, while the Facilities/Other unit saw higher in-demand services as client locations experienced greater in-person activity, with performance surpassing pre-COVID levels.

In Sports, fans largely returned with stadiums at full capacity for Major League Baseball and the currently ongoing National Football League season, while the Leisure unit benefited from ongoing demand at National Parks even as conference centers and events had less activity. Corrections operations had already returned to pre-COVID levels.

For fiscal 2022, Aramark says it “believes it is well-positioned to perform strongly in the recovery period and continue to build on its early Net New Business momentum.” It says it expects organic growth of 23-27%, with revenue expected to approach pre-COVID levels

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by year-end. That revenue outlook reflects an expected continued impact from COVID-19 of approximately $1.6 billion to $1.9 billion, or approximately 10-12% of pre-COVID revenue, partially offset by net new business and pricing pass-through.

“The Company achieved record Net New Business performance across lines of business, geographies, and client size—demonstrating the execution of our strategic growth initiatives, which we are confident will position Aramark to drive higher sustainable growth and create meaningful value for our stakeholders," said CEO John Zillmer in the 2021 results announcement. "Despite the challenges presented over the last fiscal year, Aramark generated strong, steady performance due to our focus on innovation, ability to control costs and flex our business model to meet shifting client demands, and unwavering commitment to serving customers."