Aramark (NYSE:ARMK) stock fell 1.14% (As on November 12, 11:20:24 AM UTC-4, Source: Google Finance) after the company posted higher than expected results for the fourth quarter of FY 24. FSS United States revenue growth was led by 1) Sports & Entertainment from higher per capita spending and strong fan attendance levels in stadiums; 2) Business & Industry as a result of increased participation rates and new client wins; and 3) retail expansion in Corrections, including micro-markets—which more than offset the exit of some lower margin accounts within Facilities. FSS International revenue growth was broad-based across geographies, particularly in the U.K., Germany, Canada, and South America. Top performing industries included Business & Industry, Sports & Entertainment, and Extractive Services. Net cash provided by operating activities increased 42% to $727 million in fiscal 2024, and Free Cash Flow was higher by 121% to $323 million. The year-over-year improvement was led by higher cash from operations and favorable working capital. In the fourth quarter, the Company had a significant source of cash driven by the Collegiate Hospitality business, consistent with Aramark’s historical seasonality. Net cash from investing activities in the current year included proceeds from the sale of the Company’s remaining portion of its ownership stake in the San Antonio Spurs NBA franchise. As a result of the cash flow performance, higher earnings, and over $1.6 billion of net debt reduction versus prior year-end, Aramark’s leverage ratio improved 50 basis points year-over-year to 3.4x at the end of September 2024. At fiscal year-end, the Company had over $2.6 billion in cash availability.

Moreover, in the fourth quarter, operating income increased 2% year-over-year to $219 million, and AOI grew 8%² to $271 million. Increased profitability was primarily due to higher revenue levels, cost discipline, and supply chain efficiencies. The prior year quarter included $17 million of income from proceeds associated with possessory interest at a Destinations site. The effect of currency translation reduced operating income by $3 million.

ARMK in the fourth quarter of FY 24 has reported the adjusted earnings per share of 54 cents, beating the analysts’ estimates for the adjusted earnings per share of 53 cents. The company had reported the adjusted revenue growth of 5 percent to $4.49 billion in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $4.46 billion. This is largely driven by strong base business from volume across both segments with pricing normalizing from favourable inflation trends, particularly in Education. The effect of currency translation reduced revenue by $72 million. Organic revenue grew 7% year-over-year.