Aramark · NYSE:ARMK
Aramark — Investor Presentation (August 2004)
38 slides from Aramark's investor presentation, Aug 23, 2004
Slide 1: Managed Services, Managed Better
Entrepreneurial Disciplined Business Healthcare Education Government Sports and Entertainment Exhibit 99.1 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: Important Disclosure
Important Disclosure In this presentation, we mention certain financial measures that are considered non-GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes items different than those prep
Slide 4: An Outsourced Services Leader
An Outsourced Services Leader A world leader in $600 billion outsourced services sector Food & Facilities Management Uniform Services Cafés, Executive Energy Management Uniform Rental / Lease Dining Rooms Groundskeeping Nationwide Service Catering Retail and C-Stores Custodial Services National Acco
Slide 5: An Outsourced Services Leader
An Outsourced Services Leader Growth driven by worldwide trend to outsource support services Outsourcing crosses all sectors of the economy Business, healthcare, education, government, sports and entertainment On-site relationship-driven service model creates high client retention rates Broad and de
Slide 6: Drivers of Outsourcing
Drivers of Outsourcing Client focus on core business Gain access to world-class capabilities, efficiencies Service innovation, quality and end-user satisfaction Cost effectiveness: Control operating costs
Slide 7: ARAMARK: Our Financial Profile
ARAMARK: Our Financial Profile 2003 Sales 2003 Segment Operating ($9.4 billion) Income ($592.8 million)1 Food & Support 84% Food & Support 77% Uniform & Career Apparel 16% Uniform & Career Apparel 23% 1) Operating Income excludes $30.1 million of corporate expenses and $10.7 million of other expense
Slide 8: Food & Support Services Provided
Food & Support Services Provided BUSINESS SERVICES Dining services for several million people annually at business and conference center locations CAMPUS SERVICES Over 200 million meals served annually to college and university students at 400 institutions SPORTS AND ENTERTAINMENT Serving millions p
Slide 9: Food & Support Services Provided
Food & Support Services Provided CORRECTIONAL SERVICES Proven industry leader in support service management to over 300,000 inmates at more than 450 correctional institutions in 42 states HEALTHCARE SUPPORT SERVICES A leading provider of non-clinical support services to hospitals, regional healthcar
Slide 10: Food & Support Services Provided
Food & Support Services Provided FACILITY SERVICES Provider of services to protect and enhance the plants, facilities and equipment for approximately 1,700 clients in the healthcare, business and industry and education sectors SCHOOL SUPPORT SERVICES Serving more than one million students in 400 sch
Slide 11: Food Services: A $300 Billion World Wide Opportunity
Food Services: A $300 Billion World Wide Opportunity worldwide food service US food service 120 100 80 60 40 20 0 North America Europe South America Asia Pacific 40 35 30 25 20 15 10 5 0 Business Edu. S&E HC Corr. Self Operated Contracted Out Sources: Company estimates, Morgan Stanley, Credit Suisse
Slide 12: ARAMARK Food & Support Services
ARAMARK Food & Support Services $8 Billion Sales Sector Analysis* Worldwide U.S. 82% Business Sports and Entertainment Correctional Healthcare * Estimated breakdown Education International 18%
Slide 13: ARAMARK: Our International Profile
ARAMARK: Our International Profile 2003 Sales International Segment $1.4 billion 2003 Sales Including Minority JV’s $2.6 billion U.K. Canada Germany Other Korea Belgium Spain Majority OwnedSubs Japan Ireland Chile* The Company believes that the inclusion of sales from minority-owned JV’s is useful a
Slide 14: Facility Services: Another $300 Billion World Wide Opportunity
Facility Services: Another $300 Billion World Wide Opportunity worldwide facilities services US facilities services 240 200 160 120 80 40 0 Europe & ROW United States 50 40 30 20 10 0 Business Education Healthcare Self Operated Contracted Out Sources: Company estimates, Morgan Stanley, Credit Suisse
Slide 15: ARAMARK Facility Services Client and Revenue Breakdown
ARAMARK Facility Services Client and Revenue Breakdown Education 25% Business 30% Business Healthcare Education Healthcare 45% Fiscal 2003 estimated sector breakdown
Slide 16: ARAMARK Uniform & Career Apparel
ARAMARK Uniform & Career Apparel A leading U.S. provider with approximately $1.5 billion in sales in fiscal 2003 Rental: A nationwide service network covering 180 of the top 200 markets Direct Marketing: Direct sales of a broad career apparel line through catalog, outbound telemarketing and internet
Slide 17: Uniforms: A $20 Billion U.S. Opportunity
Uniforms: A $20 Billion U.S. Opportunity # Employees (millions) Non-Addressable Market Employees Who Purchase Potential Uniform Wearers 84 56 Addressable Market 20 26 10 Employees Who Rent Sources: Company estimates, Bureau of Labor Statistics (1999)
Slide 18: ARAMARK Key Strategies & Objectives
ARAMARK Key Strategies & Objectives Entrepreneurial approach to solving client challenges Specific programs to drive organic growth Emphasis on profit margin, cash flow and ROIC Disciplined and “return-oriented” acquisition strategy
Slide 19: Entrepreneurial Culture Through Ownership
Entrepreneurial Culture Through Ownership Current Economic Ownership* Ownership well distributed post-IPO on 12/11/01 Employee ownership reaches deep into the organization Over 4,000 direct and 13,000 indirect employee owners Public float consists of institutional (90%) and retail (10%) owners Manag
Slide 20: How We Achieve Our Goals: Mission One
How We Achieve Our Goals: Mission One 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 21: Maximizing Retention Results
Maximizing Retention Results Disciplined client and end-user satisfaction measurement systems Management compensation aligned to reward retention success On-site service model builds client loyalty 95 94 93 92 91 90 Total Food &Support Services Uniform Services 95% 93% 95% 93% 92% 92% FY 03 FY 02
Slide 22: Increasing "Client Market Share"
Increasing “Client Market Share” How do we drive it higher? Focus on quality and innovation Marketing and promotion of products Food Service “Build-out” Food Courts Catering On-Site Convenience Stores Vending Coffee Kiosks Branded concepts
Slide 23: Growth Through Branded Concepts
Growth Through Branded Concepts ARAMARK Proprietary Brands External Brands
Slide 24: Mission One: Cross-Selling Successes
Mission One: Cross-Selling Successes Approx. $100 million in multi-service business sold in 2003
Slide 25: Building the One Best Team
Building the One Best Team Fueling the talent pipeline Leadership development Five specific leadership development programs for 5,000 management employees Workforce diversity Reinforcing the culture of highly ethical standards and customer service
Slide 26: Operating & Financial Discipline
Operating & Financial Discipline Organic growth—Driven by Mission One Margin Improvement Cash Flow Return on Invested Capital Acquisitions
Slide 27: Drivers of Margin Expansion
Drivers of Margin Expansion Product Costs (35-40%) Product mix Purchasing efficiencies Self manufacturing of uniforms Labor Cost (40-45%) Labor management tools Unit specific labor management metrics Push labor up the supply chain Overhead (10-20%) Growth differential
Slide 28: Cash Flow Matches Net Income
Cash Flow Matches Net Income* Low capital intensity Focused on adding value through optimal capital structure of debt and equity Strong cash flow generation supports debt service with a Y/E ‘03 debt to EBITDA ratio of 2.2x and EBITDA to interest ratio of 5.6x Objective to retain investment grade rat
Slide 29: 2003 Internal Cash Flow
2003 Internal Cash Flow* $600 $500 $400 $300 $200 $100 $0 Income from Cont Ops Internal CF $265 $263 $30 $13 $271 Other** Deferred Taxes D&A Net CapEX $274 * Defined as Income from continuing operations, plus non-cash charges such as depreciation and amortization and deferred taxes, less net capital
Slide 30: Other Financial Highlights
Other Financial Highlights Invest in business $271 million net capital expenditures Maintain strong debt rating Debt/EBITDA reduced from 2.6x FY02 to 2.2x FY03 Fitch Ratings recently upgraded to BBB from BBB- Placed on positive Credit Watch by Standard & Poors Acquisitions/partnerships Acquisitions
Slide 31: 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 and CTS Add or strengthen key services ServiceMaster Expand international reach AIM Services (Japan), Campbell Ca
Slide 32: History of Solid Performance: Sales Trends
History of Solid Performance Billions Sales Trends $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 Sales ‘85 ‘86 ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 Reflects actual amounts originally reported in Form 10K Annual Reports filed with the SEC. Not restated for discontinued operations (Edu
Slide 33: History of Solid Performance: Net Income Trends
History of Solid Performance Millions Net Income Trends $300.0 $250.0 $200.0 $150.0 $100.0 $50.0 $0.0 Net Income ‘85 ‘86 ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 Reflects actual amounts originally reported in Form 10K Annual Reports filed with the SEC. Not restated for dis
Slide 34: ARAMARK Key Strengths
ARAMARK Key Strengths Robust outsourcing trends Best-in-class service provider Diversified client and revenue portfolio History of financial integrity and performance Barriers to entry Strong, incentivized management team focused on profitable growth
Slide 35: We Can Do It All...
We Can Do It All… Dining & Refreshment Services ARAMARK ServiceMaster ARAMARK Harrison Lodging ARAMARK Uniform Services Turnkey Hotel Operations Uniform rental/sale Facilities Management Café Dining Plant Operations & Management Maintenance Conference Center Operations Entry mats Linen Retail Manage
Slide 36: Managed Services, Managed Better
Entrepreneurial Disciplined Business Healthcare Education Government Sports and Entertainment Managed Services, Managed Better
Slide 37: Reconciliation of Non-GAAP Measures: EBITDA
ARAMARK Corporation And Subsidiaries – Reconciliation of Non-GAAP Measures EBITDA (Unaudited, in Thousands) EBITDA represents operating income (defined as net income before income from discontinued operations, interest and taxes) before depreciation and amortization, a measurement used by management
Slide 38: Reconciliation of Non-GAAP Measures: Internal Cash Flow
ARAMARK Corporation And Subsidiaries – Reconciliation of Non-GAAP Measures Cash Flow Before Working Capital And After Capital Expenditures (Internal Cash Flow) (Unaudited, in Thousands) Fiscal Year Ended October 3, 2003 September 27, 2002 September 28, 2001 September 29, 2000 Cash flow before workin