Aramark (ARMK) Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended January 2, 2026. Aramark operates as a leading global provider of food and facilities services across education, healthcare, business & industry, and sports, leisure & corrections sectors. The company reports through two segments: Food and Support Services United States (FSS United States) and Food and Support Services International (FSS International).
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $4,831.5 million | $4,552.1 million |
| Operating Income | $217.5 million | $217.3 million |
| Net Income (Aramark Stockholders) | $96.2 million | $105.6 million |
| Diluted EPS | $0.36 | $0.39 |
| Adjusted Operating Income | $294.0 million | $287.7 million |
| Cash and Cash Equivalents | $439.6 million | $484.1 million |
| Total Debt (Long-Term + Current) | $6,247.1 million | $5,405.9 million |
| Operating Cash Flow | ($782.2 million) used | ($587.2 million) used |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased 6.1% ($279.4 million), driven by base business growth, net new business, and a 1.1% favorable foreign currency impact. This was partially offset by a ~3% reduction in operational service days due to a calendar shift (fiscal 2025 had 53 weeks).
- Segment Performance:
- FSS United States: Revenue up 1.9%. Adjusted operating income declined 1.4% ($3.2 million) primarily due to the calendar shift and higher medical claims ($7.5 million), despite volume growth.
- FSS International: Revenue surged 17.4% ($218.3 million) driven by growth in the U.K., Chile, Germany, and Spain, plus a 4.1% favorable currency impact. Adjusted operating income rose 16.1%.
- Costs: Cost of services increased 6.4%. Personnel costs rose 9.2% due to business expansion, higher medical claims, and a $5.6 million multiemployer pension plan withdrawal charge. Other direct costs included a $6.1 million non-cash impairment charge for assets held-for-sale.
- Interest Expense: Increased 8.1% ($6.1 million) due to higher fixed rates on new interest rate swaps, increased borrowings on the Receivables Facility, and $1.1 million in costs related to debt repricing.
Outlook, Risks, and Unusual Items
- Debt Refinancing: In December 2025, the company repriced $2.4 billion of U.S. Term B-8 Loans due 2030, refinancing them into new Term B-10 Loans due June 2030. This incurred $1.1 million in charges (transaction costs and write-offs).
- Liquidity: As of January 2, 2026, the company had $439.6 million in cash and $936.2 million available under its senior secured revolving credit facility. Management believes liquidity is adequate for foreseeable needs.
- Dividends and Buybacks: A quarterly dividend of $0.12 per share was declared. The company repurchased 792,445 shares for $29.3 million under its $500 million authorization program.
- Risks: Key risks include macroeconomic volatility, tariff impacts, foreign currency fluctuations, labor costs, and the contract-intensive nature of the business. A shareholder class action lawsuit regarding the former Uniform segment (Vestis) remains pending.
- Calendar Shift Impact: Management estimates the reduced number of service days in Q1 2026 negatively impacted operating income by approximately $25 million.
Investor Verification Checklist
- Verify the impact of the 53-week fiscal year in 2025 on year-over-year comparability, specifically the estimated $25 million operating income reduction.
- Monitor the $6.1 million non-cash impairment charge related to assets held-for-sale and the status of the divestiture.
- Review the terms of the new $2.4 billion Term B-10 Loans and the associated interest rate exposure.
- Assess the sustainability of the 17.4% revenue growth in the FSS International segment given foreign currency volatility.
- Track the resolution of the pending Vestis shareholder class action lawsuit.