ARMK earnings analysis
What we found in ARMK's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Aramark delivered strong third-quarter growth, with revenue up 9.3% to $5,057.9 million, operating income up 18.1% to $215.6 million and improved implied gross and operating margins. Growth was broad-based, led by FSS International and U.S. Business & Industry, Sports, Leisure & Corrections and Healthcare, while Education declined because of the calendar shift. Liquidity and covenant metrics were adequate, but negative operating cash flow of $264.8 million year to date and increased working-capital absorption remain important concerns.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and operating income accelerated
- Third-quarter revenue was $5,057.9 million, up $431.5 million or 9.3% from $4,626.4 million. Operating income increased 18.1% to $215.6 million from $182.6 million, while net income rose 36.0% to $97.8 million.
- Margins expanded year over year
- The implied gross margin was approximately 8.5% based on revenue of $5,057.9 million less cost of services of $4,627.6 million, versus approximately 8.0% in the prior-year quarter. Operating margin improved to approximately 4.3% from 3.9%.
- Broad-based segment growth
- FSS International was the fastest-growing segment, with revenue up 13.2% to $1,561.5 million and adjusted operating income up 26.1% to $85.0 million. FSS United States revenue increased 7.7% to $3,496.4 million and adjusted operating income increased 11.5% to $211.1 million.
- Business and sports led U.S. growth
- Business & Industry revenue increased 17.8% to $589.7 million, while Sports, Leisure & Corrections grew 12.0% to $1,258.6 million and Healthcare grew 11.6% to $460.9 million. Management attributed growth to base business, net new business, higher per-capita spending and attendance, including FIFA World Cup matches and NBA and NHL playoffs.
- Liquidity and covenant headroom
- Liquidity included $499.4 million of cash and cash equivalents plus $914.9 million of revolver availability as of July 3, 2026. The company reported a 2.59x consolidated secured debt ratio versus a maximum requirement of 5.125x and a 4.77x interest coverage ratio versus a 2.000x minimum.
- Lower interest burden
- The company reduced interest expense by $6.5 million to $79.9 million, primarily from term-loan repayments and lower interest rates. It also reported $1,621.6 million of covenant-adjusted EBITDA for the twelve months ended July 3, 2026.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Operating cash flow remained negative
- Net cash used in operating activities was $264.8 million for the nine months ended July 3, 2026, compared with $254.5 million in the prior-year period. The increased cash use was driven partly by a $118.0 million greater use from operating assets and liabilities and $90.4 million of higher client-contract payments.
- Working-capital absorption increased
- Receivables consumed an additional $79.6 million of cash because of base-business growth, net new business and collection timing, while accounts payable consumed an additional $113.8 million due to disbursement timing. This creates working-capital pressure despite reported revenue growth of 9.3%.
- Calendar shift distorts comparisons
- The calendar shift from the prior fiscal year's fifty-third week reduced operational service days by approximately 2% in the quarter and negatively affected operating income by an estimated $20 million. Education revenue declined 3.4% to $784.3 million, with management estimating a roughly 10% calendar-related reduction for the quarter.
- Macro and foreign-exchange exposure
- The company had $1.1 billion of outstanding foreign-currency borrowings as of July 3, 2026. Management also noted that evolving tariff policies and the Middle East conflict could increase volatility in inflation, interest rates and foreign-currency markets.
- Direct-cost and impairment pressure
- Cost pressures remain visible in other direct costs, which increased 14.3% to $1,180.1 million, including $40.7 million of higher commissions primarily in Sports & Entertainment. The filing also identifies a $6.1 million non-cash impairment charge related to assets held for sale.
- No formal risk-factor change disclosed
- The filing states that there were no material changes to the risk factors disclosed in the October 3, 2025 Form 10-K. Nonetheless, covenant compliance depends on maintaining a consolidated secured debt ratio no higher than 5.125x; the reported actual ratio was 2.59x.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.36
- Gross margin
- 8.5%
- Operating margin
- 4.3%
- Segment
- FSS United States revenue: $3,496.4 million, up 7.7% year over year; adjusted operating income: $211.1 million, up 11.5%.
- Segment
- FSS International revenue: $1,561.5 million, up 13.2% year over year; adjusted operating income: $85.0 million, up 26.1%.
- Segment
- FSS United States sectors: Business & Industry $589.7 million, up 17.8%; Education $784.3 million, down 3.4%; Healthcare $460.9 million, up 11.6%; Sports, Leisure & Corrections $1,258.6 million, up 12.0%; Facilities & Other $402.9 million, up 1.3%.
What they said about what is next.
The 10-Q does not provide explicit quantitative revenue or EPS guidance. The filing states that cash and revolving-credit availability should fund anticipated requirements for the foreseeable future, and that capital expenditures may be deferred as appropriate.
The filing reads better than the one before it.
What came before.
- 10-Q · May 12, 2026
- Aramark reported strong Q2 results with revenue of $4.91 billion, up 14.7% year-over-year, exceeding expectations and achieving an EPS of $0.49, beating estimates by 2%. The solid performance was bolstered by…
- 10-K · November 25, 2025
- Aramark describes a scale-driven strategy focused on food and facilities services across Education, Healthcare, Business & Industry and Sports/Leisure, operating in 16 countries and emphasizing contract-based, captive…
- 10-K · November 19, 2024
- Aramark reports scale with $17.4 billion of revenue and $706.5 million of operating income in fiscal 2024, driven primarily by its FSS United States business ($12,576.7M, 72% of revenue) and FSS International…
- 10-Q · February 6, 2024
- Aramark reported quarter revenue of $4,407,765,000, up $494,045,000 (12.6%) versus the prior-year quarter, with operating income rising to $166,950,000 (up $15,265,000). Gross margin was essentially stable at 8.23%…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
Read the next one first.
We read every filing ARMK makes the day it lands, and put it next to what the options market did about it. Members get both, and an alert when a filing arrives.
Cancel anytime · Month to month · Switch tiers whenever