Aramark sales, profit up in first report since IPO

Eric Foss, Aramark president and CEO . AP
Eric Foss, Aramark president and CEO . AP
Posted: February 07, 2014

Aramark Holdings Corp. spent $5.2 million refining its brand and logo, and awarded $4.3 million to executives for the completion of the Philadelphia company's initial public offering in December.

Those are two concrete tidbits from Aramark's quarterly earnings, released Wednesday, its first since the food- and uniform-services company listed its stock publicly for the third time.

In early trading Wednesday, Aramark's shares shot as high as $29.71 from $24.99 the day before, but they settled down to close at $26.10, up $1.11 or 4.44 percent. The shares are up 30.5 percent from their $20 IPO price.

Aramark said its sales for the three months ended Dec. 27 were $3.76 billion, up 6.4 percent from $3.54 billion in the comparable period a year ago. Net income climbed 4.5 percent, to $44.76 million, or 21 cents per share, from $42.81 million, or 20 cents per share, Aramark said.

"While we're pleased with our sales growth," Aramark's chief executive, Eric J. Foss, told analysts during a conference call, "we have a long way to go."

During the call, company executives and analysts focused on complicated adjusted figures. They showed, for example, that net income was $111.86 million in the quarter, up 59 percent from $70.56 million in 2012.

Analysts also focused on how much operating profit Aramark made in the quarter for every dollar of revenue. For the company's North American food and support services business, by far its largest unit, that ratio was 7.5 percent in the most recent quarter, up from 7 percent the year before.

Foss said there were three main areas of focus for further margin gains. They are food costs; labor management; and sales, general, and administrative expenses.

In the last category, Foss said, "we've focused a lot around reducing duplication and redundancy. We're in the process of standing up a share-service center in Nashville."

That means the transfer of 300 positions from Philadelphia, the company said last year.

In conjunction with the IPO, Aramark introduced a tweaked logo and a corporate slogan: "We dream. We do." The company did not identify the executives who shared the $4.3 million in bonuses.

An analyst asked Foss for his thoughts on a possible increase in the minimum wage, given the attention the issue has been getting lately.

Foss said that just 1 percent of the company's employees are paid the minimum and that any "reasonable increase" would be manageable.


hbrubaker@phillynews.com

215-854-4651

@InqBrubaker

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