Aramark · NYSE:ARMK
Aramark — Investor Presentation (February 2005)
28 slides from Aramark's investor presentation, Feb 24, 2005
Slide 1: Managed Services, Managed Better
Managed Services, Managed Better
Slide 2: Special Note about Forward-Looking Statements
Special Note about Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to our operations. These statemen
Slide 3: ARAMARK: An Outsourced Services Leader
ARAMARK: An Outsourced Services Leader Leading Provider of Food, Facilities and Uniform Services to Business, Education, Healthcare, Government and Sports & Entertainment Clients Mid-Teens Average Annual EPS Growth Since 2001 IPO With Strong Cash Flow More Than 240,000 Employees in 19 Countries Broa
Slide 4: Entrepreneurial Culture Through Ownership
Entrepreneurial Culture Through Ownership Employee Ownership Reaches Deep Into the Organization Over 19,000 Employee Owners – Direct and Through Benefit Plans Critical Advantage For a Services Company Current Economic Ownership* Management & Employees 38% Public Investors 62% *As of 12/31/04
Slide 5: Drivers of Outsourcing
Drivers of Outsourcing Client Focus on Core Business “Customer” (End-User) Satisfaction is Critical to Client Improved Effectiveness Often Important to Client’s Success Client Cost Reduction About 40% of New ARAMARK Business in 2003-2004 Came From Previously Self-Operated Clients
Slide 6: Worldwide Food & Support Services
Worldwide Food & Support Services 2004 Sales: $8.7 Billion International 21% U.S. 79% Sector Analysis* Sports & Entertainment Healthcare Business Corrections Education * Estimated breakdown. Significant Diversification Across Business Sectors
Slide 7: International Food & Support Services
International Food & Support Services 2004 Sales: $1.8 billion Chile Spain Belgium Other Korea U.K. Germany Canada * Includes $1.8 billion of international sales as reported plus $1.3 billion of sales from minority-owned JV’s. 2004 Sales Including Minority JV’s*: $3.1 billion Majority Owned Subs Jap
Slide 8: Business Model
Business Model On-Site Service Provider Contract with Client (Business, College, Hospital) Service Directly Affects “Customer” (Employee, Student, Patient, Fan) “Embedded” in the Client Organization Focus to Improve Outcomes Important to Client Cost Efficiencies Through Common Practices and Purchasi
Slide 9: How We Add Value
How We Add Value Customer Knowledge Understand Preferences Through Research and Operational Experience Tailor Service Offerings to Increase Customer Satisfaction Broad, Retail-Oriented Food Service Offerings Improved Environment Through Facilities Management Improve Economics to Client Through: Incr
Slide 10: Adding Value by Focusing on Client and Customer Needs
Adding Value by Focusing on Client and Customer Needs HEALTHCARE SPORTS & ENTERTAINMENT BUSINESS EDUCATION Healing Environment Convenience Service Efficiency Friendly, Caring Staff Local Favorites Menu Variety Convenience Service Good Value Healthy Alternatives Social Destination Convenience Healthy
Slide 11: Case Study: Adding Value to Healthcare Clients
Case Study: Adding Value to Healthcare Clients The Client Top Hospital in 9 Clinical Specialties One of the “100 Most Wired” Hospitals ~ 1,400 Beds / ~ 8,500 Employees ~ $ 1.1 Billion in Net Patient Revenue The Needs Consistent, High Quality Service Delivery Across All Support Services Commitment to
Slide 12: Healthcare Base Business Opportunity
Healthcare Base Business Opportunity 1,300 Healthcare Clients Facilities 11% CTS 10% Food 1% 4% 2004 New Business New single service to new client New multiple service to new client New service to existing client We Provide Food, Facilities and CTS For Only 4% of Our Healthcare Clients
Slide 13: Growth Opportunities
Growth Opportunities Additional Penetration Into Self-Operated Clients Healthcare, Education are Underpenetrated Higher Usage at Existing Clients Improved Service Offerings Attract More Customers From On-Site Population Additional Services Cross-Selling Food and Facilities Services International Exp
Slide 14: ARAMARK: Uniform & Career Apparel
ARAMARK: Uniform & Career Apparel A leading U.S. provider with approximately $1.5 billion in sales in fiscal 2004 Rental: A nationwide network servicing 1.5 million wearers in 90% of the top 200 markets Direct Marketing: Direct sales of a broad career apparel line through WearGuard/Crest and Galls t
Slide 15: Business Model
Business Model Broad Line of Rental and Direct Sale Career Apparel Covering Nearly All Job Categories A Nationwide Network of Uniform Rental Service Facilities Covering 90% of the Top 200 Markets Broad, Direct Distribution Through Catalog, Outbound Telemarketing, Sales Force and Internet Best-in-Cla
Slide 16: How We Add Value
How We Add Value Important Component of Employer Branding Particularly Service Companies Significant Customizing Capability Consistent Employee Image Increased Employee Satisfaction Improved Employee Protection
Slide 17: Growth Opportunities
Growth Opportunities Penetration of “Non-User” Population 26 Million Potential “First-Time” Users Currently About 50% of New Sales Ancillary Sales to Existing Customers Cross-Sell Allied, Sanitation Products Nationwide Clients Ability to Standardize Products, Services and Cost
Slide 18: Mission One
Mission One Helps Us Achieve Our Goals Retention One Best Team Base Business Growth New Business Through Mission One, ARAMARK is Striving to be Number One in Profitable Organic Growth by Providing a Full Portfolio of Unmatched Services to Our Clients
Slide 19: Operating & Financial Discipline
Operating & Financial Discipline Organic Sales Growth Margin Improvement Cash Flow Return on Invested Capital Acquisition Strategy
Slide 20: Accelerating Organic Sales Growth
Accelerating Organic Sales Growth Meaningful Progress From Mission One Growth Efforts 2005 Targets: Worldwide FSS: 5 – 7% Uniform: 2 – 4% Making Good Progress Toward Our Stated 6 – 8% Objective Organic Growth 6% 5% 4% 3% 2% 1% 0% 1% 3% 6% 2002 2003 2004
Slide 21: Drivers of Margin Expansion
Drivers of Margin Expansion Growth Differential Other Labor Product Product Mix Purchasing Efficiencies Self Manufacturing of Uniforms Labor Management Tools Unit Specific Labor Management Metrics Push Labor up the Supply Chain Labor, Product, Other Costs as a % of Total Sales
Slide 22: Strong Cash Flow and Return on Invested Capital
Strong Cash Flow and Return on Invested Capital Low Capital Intensity ~ 3% of Sales Focused on Adding Value Through Optimal Capital Structure Strong Cash Flow Generation Supports Debt Service Objective to Retain Investment Grade Rating Strong Low-Teens ROIC ROIC Significantly Exceeds Cost of Capital
Slide 23: Acquisition Strategy
Acquisition Strategy Disciplined and Return-Focused Target: 15% After-Tax IRR EPS Accretive in 1-2 years Strategies Strengthen Existing Services and Client Portfolio Fine Host, Harrison, CTS Add or Strengthen Key Services ServiceMaster Expand International Reach AIM Services (Japan), Campbell Cateri
Slide 24: History of Solid Performance
History of Solid Performance Sales—billions $10 $8 $6 $4 $2 $0 Net Income—millions $300 $250 $200 $150 $100 $50 $0 ‘85 ‘86 ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 Sales Net Income Reflects actual amounts originally reported in Form 10K Annual Reports. Not restated for
Slide 25: Long-Term Financial Objectives
Long-Term Financial Objectives Top-Line Organic Growth: 6-8% Key Focus: Mission One Operating Income Growth: 8-12% Key Focus: Product Mix, Labor Management EPS Growth: 12-14% Key Focus: Optimal Capital Structure
Slide 26: Key Strengths
Key Strengths Ability to Add Value to Customer Tangible Benefits to Our Clients Operational Excellence and Economies of Scale Shared With Our Clients High Client Retention Mid 90% Range Diversification Across Business Sectors Business, Education, Government, Healthcare, Sports & Entertainment
Slide 27: Managed Services, Managed Better
Managed Services, Managed Better
Slide 28: Reconciliation of Non-GAAP Measures: Organic Growth
ARAMARK Corporation And Subsidiaries – Reconciliation of Non-GAAP Measures Organic Growth (Unaudited, in Thousands) Management believes that presentation of sales growth, as adjusted to eliminate the effects of acquisitions, divestitures, the effect of the 53rd week in fiscal 2003 and the impact of