ARMK

Aramark

NYSE · CONSUMER DISCRETIONARY · RETAIL-EATING PLACES

55.71

−0.41 −0.73%

USD · close Oct 21

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MKT CAP $14.7BP/E 39.2DIV YIELD —FCF YIELD 2.95%REV TTM —NET INCOME $382.9M +5.9%NET CASH $499.4M52W 36.04 – 62.39SEC XBRL · TTM TO Invalid Date

How ARMK rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Item 1A Risk Factors," "Part I, Item 3 Legal Proceedings" and "Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations" and other sections of this Annual Report on Form 10-K.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and in our other filings with the Securities and Exchange Commission (the "SEC").
As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, us.
Forward-looking statements speak only as of the date made.
We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, changes in our expectations, or otherwise, except as required by law.
Business Overview Aramark (the “Company”, “we” or “us”) is a leading global provider of food and facilities services to education, healthcare, business & industry, and sports, leisure & corrections clients.
Our largest market is the United States, which is supplemented by an additional 15-country footprint.
Based on total revenue in fiscal 2025, we hold a top 2 position in North America in food and facilities services and a top 3 position in food and facilities services internationally in most countries in which we have significant operations.
Our approximately 278,390 employees partner with thousands of education, healthcare, business and sports, leisure & corrections clients to serve millions of customers including students, patients, employees, sports fans and guests worldwide.
We operate our business in two reportable segments that share many of the same operating characteristics: Food and Support Services United States ("FSS United States") and Food and Support Services International ("FSS International").
The following chart shows a breakdown of our revenue and operating income by these reportable segments: Reportable Segments: FSS United States FSS International FY 2025 Revenue (1) : $ 13,211.9 $ 5,294.4 FY 2025 Operating Income (1) : $ 717.5 $ 193.5 (1) Dollars in millions.
Operating income excludes $119.2 million related to corporate expenses.
In fiscal 2025, we generated $18.5 billion of revenue, $791.8 million of operating income and $326.4 million of net income attributable to Aramark stockholders.
Our History Since our founding in 1959, we have broadened our service offerings and expanded our client base through a combination of organic growth and acquisitions, with the goal of further developing our food and facilities capabilities, as well as growing our international presence.
In 1984, we completed a management buyout, after which our management and employees increased their Company ownership to approximately 90% of our equity capital leading up to our December 2001 public offering.
On January 26, 2007, we delisted from the New York Stock Exchange (“NYSE”) in conjunction with a going-private transaction executed with certain private equity investment funds, as well as approximately 250 senior management personnel.
On December 17, 2013, we completed an initial public offering of our common stock.
Aramark’s Spin-off of the Uniform Segment On September 30, 2023, we completed the separation and distribution of our Aramark Uniform and Career Apparel ("Uniform") segment into an independent publicly traded company, Vestis Corporation ("Vestis").
The separation of our Uniform segment was structured as a tax free spin-off, which occurred by way of a pro rata distribution to Aramark stockholders.
Each of the Aramark stockholders received one share of Vestis common stock for every two shares of Aramark common stock held of record as of the close of business on September 20, 2023.
Vestis is now an independent public company under the symbol “VSTS” on the NYSE.
The historical results of the Uniform segment have been reflected as discontinued operations in our audited consolidated financial statements for all periods prior to the separation and distribution.
Additional disclosures regarding the separation and distribution are provided in Note 2 to the audited consolidated financial statements.
Our Business We manage a number of interrelated services, including food, hospitality, procurement and facility services, for school districts, colleges & universities, healthcare & senior living facilities, businesses, sports, entertainment & recreational venues, conference & convention centers, national & state parks and correctional institutions.
We are the exclusive provider of food and beverage services at most of the locations we serve and are responsible for hiring, training and supervising the majority of the food service personnel in addition to ordering, receiving, preparing and serving food and beverage items sold at those facilities.
Our facilities services capabilities are broad, and include plant operations and maintenance, custodial/housekeeping, energy management, grounds keeping and capital project management.
In governmental, business, educational and healthcare facilities (for example, offices and industrial plants, schools and universities and hospitals and senior living), our clients provide us with a captive customer base through their on-site employees, students and patients.
At sports, entertainment and recreational facilities, our clients attract patrons to their site, usually for specific events such as sporting events, concerts and conventions.
We manage our business in two reportable segments split between our United States and International operations.
In fiscal 2025, our FSS United States segment generated $13,211.9 million in revenue, or 71% of our total revenue, and our FSS International segment generated $5,294.4 million in revenue, or 29% of our total revenue.
No individual client represents more than 2% of our total revenue, other than, collectively, a number of United States government agencies.
Clients and Services We serve a number of sectors across 16 countries around the world.
Our operations focus on serving clients in five principal sectors: Education, Healthcare, Business & Industry, Sports, Leisure & Corrections and Facilities & Other.
In the FSS United States segment, the range of services provided by sector are as follows: Education.
Within the Education sector, we serve Higher Education and K-12 clients.
We deliver a wide range of food and food-related services, as well as procurement services, at approximately 1,345 colleges, universities, school systems & districts and private schools worldwide, including 685 within the FSS United States segment.
We offer our education clients a single source provider for food-related managed service solutions, including dining, catering, food service management and convenience-oriented retail operations.
We provide a wide range of non-clinical food, food-related and facility support services to approximately 170 healthcare and senior living client families and more than 920 facilities .
Our food and food-related services include patient food and nutrition, retail food, environmental services and procurement services.
We provide a comprehensive range of business dining services, including on-site restaurants, catering, convenience stores and executive dining.

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Risk Factors Risks Related to Our Business Economic and External Risks Unfavorable economic conditions have, and in the future could, adversely affect our results of operations and financial condition.
National and international economic downturns have, and in the future could, reduce demand for our services in each of our reportable segments, resulting in the loss of business or increased pressure to contract for business on less favorable terms than our generally preferred terms.
Economic downturns that impact our financial condition may be caused by inflation, supply chain disruptions, geopolitics, global energy shortages, major central bank policy actions including interest rate increases, public health crises, or other factors.
Economic hardship in our client base has also impacted and may continue to impact our business.
For example, in early stages of the COVID-19 pandemic, or in the period of economic distress following the financial crisis of 2008, certain of our businesses were negatively affected by reduced employment levels at our clients’ locations and declining levels of business and customer spending.
For example, in response to the changed circumstances caused by shutdowns at the beginning of the COVID-19 pandemic, we worked with clients to renegotiate contracts and financial structures in order to mitigate lost revenues caused by partial or full closure of client premises.
The portion of our business that provides services in facilities such as convention centers and tourist and recreational attractions is particularly sensitive to an economic downturn, as expenditures to take vacations or hold or attend conventions are funded to a partial or total extent by discretionary income.
There are many factors that could reduce the number of events in a facility, attendance at an event or decrease attendees’ discretionary income, including pandemics and other health crises, labor disruptions involving sports leagues, poor performance by the teams playing in a facility, number of playoff games, short-term weather conditions or more prolonged climate change-related conditions and adverse economic conditions which would adversely affect revenue and profits.
Natural disasters, global calamities, climate change, political unrest, geopolitical conflicts, energy shortages, sports strikes and other adverse incidents beyond our control could adversely affect our revenue and operating results.
Natural disasters, including hurricanes, earthquakes and droughts, global calamities, pandemics and other public health crises, or political unrest and global conflicts, have affected, and in the future could affect, our revenue and operating results.
In the past, due to more geographically isolated natural disasters, such as wildfires in the western United States and hurricanes and extreme cold conditions in the southern United States, we experienced lost and closed client locations, business disruptions and delays, the loss of inventory and other assets, asset impairments and the effect of the temporary conversion of a number of our client locations to provide food and shelter to those left homeless by storms.
For example, while we do not have direct operations within Russia or Ukraine, the conflict involving these nations has triggered inflation in our costs and may increase our risk of cyberattacks.
We also do not have direct operations in the Middle East, but the ongoing Israel-Hamas War and escalating tensions in the region may disrupt global markets and impact our supply chain.
Operational Risks Our failure to retain our current clients, renew our existing client contracts on comparable terms and obtain new client contracts on expected terms could adversely affect our business.
In addition, clients are increasingly focused on and requiring us to make commitments, set targets and meet standards related to environmental sustainability matters, such as waste management, greenhouse gas emissions, including lower-carbon food offerings, animal health and welfare, deforestation and land use.
In addition, we typically incur substantial start-up and operating costs and experience lower profit margin and operating cash flows in connection with the establishment of new business, and in periods with higher rates of new business, we have experienced and expect to continue to experience negative impact to our profit margin and our cash flows.
These risks may be exacerbated by the current economic environment, due to, among other things, increased cost pressure at our clients, tight labor markets and heightened competition.
In these cases, unions typically seek to prevent public sector entities from outsourcing and if that fails, ensure that jobs that are outsourced continue to be unionized, which can reduce our pricing and operational flexibility with respect to such businesses.
Therefore, we may be placed at a competitive disadvantage for clients who require multiservice or multinational bids.
Food prices can fluctuate as a result of permanent or temporary changes in supply, including as a result of incidences of severe weather such as droughts, heavy rains and late freezes or climate change, natural disasters or pandemics, geopolitical conflicts or to the extent we are unable to negotiate favorable terms on volume discounts, rebates or other applicable credits with our suppliers.
Increasing demands from clients, customers and other stakeholders relating to sustainability, including that we set reduced emissions, waste and other sustainability targets and take actions to meet them, also could result in increased costs for business.
Approximately two-thirds of our revenue in fiscal 2024 is from profit and loss contracts under which we have limited ability to pass on cost increases to our clients.
Therefore, absent our ability to negotiate contractual changes, including pricing, we may have to absorb cost increases, which may adversely impact our operating results.
We may be unable to fully recover costs on contracts that limit our ability to increase prices.
Generally, our contracts also limit our ability to raise prices on the food, beverages and merchandise we sell within a particular facility without the client's consent.
A significant portion of our revenue is derived from international business.
During fiscal 2024, approximately 28% of our revenue was generated outside of the United States.
We currently have a presence in 15 countries outside of the United States with approximately 125,250 personnel.
Bribery Act and other anti-corruption law compliance matters, as well as cybersecurity, data protection, corporate sustainability reporting and supply chain laws; potential difficulties in staffing and labor disputes; differing local labor laws; managing and obtaining support and distribution for local operations; credit risk or financial condition of local clients; potential imposition of restrictions on investments; potentially adverse tax consequences, including imposition or increase of withholding, VAT and other taxes on remittances and other payments by subsidiaries; foreign exchange controls; energy shortages; local political and social conditions; geopolitical tensions, including, for example, tensions between the United States and China or overall global volatility; and the ability to comply with terms of government assistance programs.
In addition, client, customer and other stakeholder expectations regarding environmental, social and governance considerations for suppliers are increasing and otherwise evolving.
Our ability to find qualified suppliers who meet our standards, including with respect to requirements around sustainably-sourced food and other products; human rights; and to access raw materials and finished products in a timely and efficient manner is a challenge, especially with respect to suppliers located and goods sourced outside the United States and other countries in which we operate.
Political and economic stability in the countries in which foreign suppliers are located, the financial stability of suppliers, suppliers' failure to meet our standards, labor problems experienced by our suppliers, the availability of raw materials and labor to suppliers, cybersecurity issues, currency exchange rates, transport availability and cost, tariffs, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control.
For example, global supply chain disruptions caused by global events, such as the Russian/Ukraine conflict have resulted, and may continue to result, in delivery delays as well as lower fill rates and higher substitution rates for a wide-range of products.
While we have continued to modify our business model in response to the current environment, including proactively managing inflation and global supply chain disruption, through supply chain initiatives and by implementing pricing pass-throughs, as appropriate, to cover incremental costs, there is no guarantee that we will be able to continue to do so successfully or on comparable terms in the future if supply chain disruptions continue or worsen.
In addition, domestic foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control.
Drought, flood, natural disasters and other extreme weather events associated with climate change as well as chronic climate impacts such as rising mean temperatures and changes in precipitation patterns could also result in supply chain disruptions or higher material costs.
Sysco, which distributed approximately 45% of our food and non-food products in the United States and Canada in fiscal 2024 based on purchase dollars, and other distributors are responsible for tracking our orders and delivering products to our specific locations.
For example, past labor shortages and other labor disputes at our primary distributors have exacerbated supply chain issues impacting our business.
Clients generally have the right to audit our contracts, and we periodically review our compliance with contract terms and provisions.
Any difficulty we may encounter in hiring such workers, immigration policies and general labor shortages, could result in significant increases in labor costs, which could have a material adverse effect on our business, financial condition and results of operations.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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