ARAMARK Holdings Corp. ((ARMK)) has held its Q2 earnings call. Read on for the main highlights of the call.
Aramark Holdings Corp. recently held its earnings call, revealing a strong performance and growth trajectory across its business sectors. The company demonstrated robust client retention and international revenue growth, despite facing challenges such as facility exits and weather-related disruptions. Aramark remains optimistic about its continued growth and profitability.
Strong Client Retention Rate
Aramark reported an impressive client retention rate exceeding 98% in both its Food and Support Services (FSS) US and international segments. This retention level is notably high for this point in the fiscal calendar, underscoring the company’s effective client management strategies.
Revenue Growth
The company experienced accelerated revenue growth throughout the second quarter, continuing into April with a 6% growth rate. Organic revenue reached $4.3 billion, marking a 3% increase compared to the previous year, highlighting Aramark’s ability to expand its market presence.
Record AOI Profitability
Aramark achieved record Adjusted Operating Income (AOI) profitability for any second quarter in its global FSS history. The company reported over 20% adjusted EPS growth on a constant currency basis, reflecting its strong financial health and operational efficiency.
International Segment Performance
The international segment saw organic revenue rise to $1.3 billion, a 10% year-over-year increase. Countries like the UK, Spain, Chile, and Canada were key contributors to this growth, showcasing Aramark’s successful international expansion efforts.
New Client Wins
Aramark secured new client wins totaling $760 million fiscal year-to-date, indicating significant new business opportunities. These wins are expected to bolster the company’s revenue streams and enhance its competitive edge in the market.
Facilities Accounts Exit Impact
The exit of certain facilities accounts last year resulted in a 3% revenue impact during the second quarter. Despite this setback, Aramark has managed to maintain its growth trajectory through strategic adjustments and new client acquisitions.
Weather and Calendar Shifts
Revenue was adversely affected by a calendar shift in the education sector and temporary weather-related closures at client sites in the Southeast United States. These factors presented short-term challenges but are not expected to have a lasting impact on the company’s overall performance.
Forward-Looking Guidance
Looking ahead, Aramark’s guidance for the remainder of the fiscal year emphasizes sustaining strong performance metrics. The company aims for a net new business growth target of 4% to 5%, supported by a client retention rate above 98% and new client wins. Aramark anticipates double-digit revenue growth in the second half of fiscal ’25, driven by a strong sales pipeline and continued operational excellence.
In summary, Aramark Holdings Corp.’s earnings call highlighted a positive sentiment with strong client retention and international revenue growth. Despite some challenges, the company remains confident in its ability to achieve continued growth and profitability, supported by strategic client wins and a robust sales pipeline.