Record Client Retention and New Business Set the Tone for Aramark's Fiscal 2025
Aramark (NYSE: ARMK) has released its fiscal 2025 earnings, and two numbers immediately stand out: a best-ever client retention rate of 96.3% and $1.6 billion in annualized gross new business, both signaling the company's sharp execution and expansion capabilities. For investors and industry watchers, these achievements suggest strong operational momentum that may carry through fiscal 2026.
Revenue Growth Fueled by New Business and a Strategic 53rd Week
For fiscal 2025, consolidated revenue climbed to $18.51 billion, up 6% from the prior year. Organic revenue growth, stripping out currency fluctuations, was even stronger at 7%. Growth was underpinned by net new business, ongoing volume gains, and a boost from an additional 53rd week of operations—a structural tailwind contributing about 2% of total revenue.
Segment highlights included 5% revenue growth in the United States and an 11% organic growth rate internationally, led by notable performances in the UK, Canada, and Spain. Notably, Aramark landed its largest contract ever in the U.S. Food & Support Services segment.
| Segment | FY25 Revenue ($M) | FY24 Revenue ($M) | Change (%) | Organic Change (%) |
|---|---|---|---|---|
| FSS United States | 13,212 | 12,577 | 5% | 5% |
| FSS International | 5,294 | 4,824 | 10% | 11% |
| Total Company | 18,506 | 17,401 | 6% | 7% |
Margins Improve Amid Disciplined Cost Controls
Operating income rose by 12% to $792 million, and Adjusted Operating Income (AOI) hit $981 million—a growth of 12% on a constant-currency basis. The full-year AOI margin improved by nearly 25 basis points to 5.3%. These gains were supported by robust supply chain efficiencies and effective management of above-unit costs. This margin improvement occurred even as Aramark incurred approximately $25 million in incentive-based compensation related to strong new business results.
| Metric | FY25 | FY24 | Change (%) |
|---|---|---|---|
| Operating Income | $792M | $707M | 12% |
| Adjusted Operating Income (AOI) | $981M | $882M | 11% |
| AOI Margin | 5.3% | 5.1% | +0.2 pts |
| Adjusted EPS | $1.82 | $1.55 | 17% |
Balance Sheet and Cash Flow Show Significant Strength
Cash flow from operations surged 27% year-over-year to $921 million, with free cash flow up 41% to $454 million. The company achieved a leverage ratio of 3.25x—its lowest level in nearly two decades—and ended the year with over $2.4 billion in available cash. Notably, Aramark repurchased more than 4 million shares and raised its quarterly dividend by 14%, reflecting a proactive and shareholder-friendly capital allocation strategy.
Fourth Quarter Delivers Solid Top-Line Gains but Flat Income
In the final quarter, Aramark’s revenue rose 14% to $5.05 billion, aided by both organic growth and the extra week. Adjusted EPS increased by 6% to $0.57. Operating income was flat year-over-year as restructuring expenses and increased compensation offset top-line gains. Still, management indicated that the quarter saw significant groundwork laid for a record number of new account openings.
Looking Forward: Guidance Signals Continued Growth and Deleveraging
For fiscal 2026, Aramark projects revenue of $19.55–$19.95 billion, AOI of $1.10–$1.15 billion, and adjusted EPS of $2.18–$2.28—a year-over-year increase of up to 25% for earnings. The leverage ratio is expected to dip below 3.0x as cash generation continues.
| Metric | FY26 Guidance | FY25 Actual | Growth (%) |
|---|---|---|---|
| Revenue | $19,550–$19,950M | $18,180M* | +7%–9% |
| Adjusted Operating Income | $1,100–$1,150M | $981M | +12%–17% |
| Adjusted EPS | $2.18–$2.28 | $1.82 | +20%–25% |
| Leverage Ratio | Below 3.0x | 3.25x | Lower |
*For easier comparison, the FY25 revenue number is on a 52-week basis.
Investor Takeaway: Execution, Expansion, and Efficiency Drive Outlook
Aramark's record-breaking client retention and unprecedented new business wins reflect strong demand and disciplined management. Margin expansion and enhanced free cash flow provide further support to ongoing share repurchases and dividend growth. While some expense pressures—like incentive-based compensation—were notable this year, Aramark’s outlook for 2026 suggests a robust growth trajectory built on new contracts, operational efficiencies, and continued deleveraging.
For investors, these results highlight Aramark’s strengthening competitive position. With major new client launches in the pipeline and further operating leverage expected, Aramark enters the new fiscal year with momentum—and higher expectations for what comes next.
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