Download - RMK Aramark March 2006 Presentation
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Managed Services,Managed Better
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ARAMARK: An Outsourced Services Leader
Leading provider of food, facilitiesand uniform services to Business,Education, Healthcare, Governmentand Sports & Entertainment clients
Mid-teens average annual EPSgrowth since 2001 IPO with strongcash flow
240,000 employees in 19 countries
Broad and deep managementownership that fostersentrepreneurial culture Food & Support 86%
Uniform & CareerApparel 14%
2005 Sales: $11.0 bill ion
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Cafs, Executive
Dining Rooms
Catering
Retail and C-Stores
Conference CenterManagement
RefreshmentServices
Concessions
Event Planning
On-site Restaurants
Lodging
Uniform Rental / Lease
Nationwide Service
National AccountPrograms
Clean Rooms
WearGuard & Crest Brands
Direct Sale Offerings
Managed & NationalAccount Programs
QSR / Healthcare
Leader
Galls Brand
Public Safety
Catalog Business
Services Provided
Uniform ServicesFood & Support Services
Energy Management
Groundskeeping
Laundry & Linen Services
Plant Operations
Central Transportation
Building Commissioning
Clinical Equipment Services
Environmental Services
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Total Sales
Net Income Diluted Earnings Per
Share
Cash Flow* Dividend
Cash Returned toShareholders
Additional RepurchaseAuthorization
Up 8% to $11.0B
Up 10% to $288M
Up 13% to $1.53
Up 18% to $612M Up 27% to $0.28**
$215M***
$200M
* From operating activities.** On an annualized basis (2006 vs. 2005).*** Open market share repurchases and cash dividends.
Fiscal Year 2005 Highlights
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Entrepreneurial Culture Through Ownership
Employee ownershipreaches deep into theorganization
Over 19,000 employeeowners direct andthrough benefit plans
Critical advantage for aservices company
Management& Employees
34%
Public Investors66%
Current Economic Ownership*
*As of 12/31/05.
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Drivers of Outsourcing
Client focus on core business
Customer (end-user) satisfaction is criticalto client
Improved effectiveness often important toclients success
Client cost reduction
About 40% of New ARAMARK Business in 2004-2005Came From Previously Self-Operated Clients
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International 24%
2005 Sales: $9.4 Billion Sector Analysis*
Worldwide Food & Support Services
Significant Diversification Across Business Sectors
Business
* Estimated. Education
Healthcare
Sports &Entertainment
U.S. 76%
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Spain
2005 Sales: $2.3 bi ll ion
International Food & Support Services
Belgium
Korea
Other
2005 Sales Including Minority JVs*:$3.4 bill ion
ChileU.K.
CanadaGermany
MajorityOwnedSubs
Japan
* Includes $2.3 billion of international sales as reported plus $1.1 billion of sales fromminority-owned JVs.
** Increased ownership to 90% in February 2005.
Ireland**
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On-site service provider
Contract with client (Business, College, Hospital)
Service directly affects customer (Employee,Student, Patient, Fan)
Embedded in the client organization mid 90%retention
Focus to improve outcomes important to client Cost efficiencies through common practices and
purchasing volume
Business Model
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Customer knowledge
Understand preferences through research and operationalexperience
Tailor service offerings to increase customer satisfaction
Broad, retail-oriented food service offerings
Improved environment through facilities management Improve economics to client through:
Increased customer spend and participation
Higher quality / efficiency to support clients mission
Standardized operation and volume to drive cost efficiencies
How We Add Value
Value is More Than Just Low Cost
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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 expansion Grow from current 19 country base
Growth Opportunities
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Higher Usage at Existing Clients Higher Education
Convenience Solutions
Same store sales up 16%
eCommerce and POS Solutions
Check average up 27%
Lifestyle Meal Plan Marketing andCustomer Loyalty Programs
Voluntary Plan enrollment up 15%
Earn Points
Product Mix and Marketing
Programs:Driving Higher Margin BaseBusiness Growth through.
Note: Percentages represent year-over-year increases in the account
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2000 2001 2002 2003 2004 2005
Higher Usage at Existing Clients Sports & Entertainment
Per Capita SpendingAt Fenway Park
14% CAGR Yawkee Way
Concourse,Rt Field Restaurant
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ClinicalTechnology
Facilities
Food 4%
11%
10%
1%
Additional Services Healthcare
We Provide Food, Facilities and CTS ForOnly 4% of Our Healthcare Clients
1,000 Healthcare Facilities 2004 - 2005 New Business
New service to
existing clientNew multipleservice to newclient
New singleservice to newclient
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International Expansion
Achieve Top 3 presence incountries representing80%+ of worlds GDP
Accelerate organic growth
build B&I, diversify intoHealthcare, Education andS&E
Make selective acquisitions
Focus on the end consumer
Europe HealthcareOpportunity: $43B
Strategy
Europe EducationOpportunity: $22B
Self-OpPotential
Self-OpPotential
Source: Gira
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ARAMARK: Uniform & Career Apparel
Rental: Uniform Services
Direct Marketing: WearGuard/Crest and Galls
A leading U.S. provider with approximately $1.6 billion in sales in fiscal 2005
WearGuard/
Crest
GallsUniform
Services
Sourcing, Manufacturing, Distribution
Workwear, Image Apparel
Mass Personalization / Design
Managed Account Programs
Quick Service RestaurantLeader
Healthcare
Uniform Rental / Lease/Direct Purchase
Dust Control
Clean Room
Nationwide Network
Public Safety
Equipment / Supplies
Apparel
Accessories
Managed Account Programs
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Broad line of rental and direct sale career apparel
covering nearly all job categories
A nationwide network of uniform rental servicefacilities covering 90% of the top 200 markets
Broad, direct distribution through catalog, outboundtelemarketing, sales force and internet
Best-in-class global uniform manufacturing /sourcing to reduce costs and control quality
Business Model
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Important component of employer branding
Particularly service companies
Significant customizing capability
Consistent employee image
Increased employee satisfaction
Improved employee protection
How We Add Value
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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
Growth Opportunities
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Organic sales growth
Margin improvement
Cash flow
Acquisition strategy
Operating & Financial Discipline
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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
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Product costs
Supply chain driven
Production discipline andoperational efficiency
Product mix and marketingprograms
Uniform sourcing andmanufacturing initiatives
Labor and related costs
Labor management tools
Technology driven initiatives Medical costs
Workers compensation
Costs as % of total
Labor
ProductOther
Drivers of Margin Expansion
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2001 2002 2003 2004 2005
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2003 2004 2005
CAPEX DA
Strong Cash Flow Dynamics
Net Capex Trends as a % of Sales
Significant cash sales component
30%+ of total Scale drives attractive vendor terms
Cash Flow from Operating Activit ies*
%
Low inventory requirements
Food approximately 2-3% of sales Facilities inventory is negligible
Working Capital Dynamics
* From continuing operations.
$ Million
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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 Catering (Ireland);Restauracion Colectiva & Rescot (Spain); CentralRestaurantes (Chile); Catering Alliance (UK); BrightChina Service Industries, Golden Collar (China)
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History of Solid Performance
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' 85 ' 86 ' 87 ' 88 ' 89 ' 90 ' 91 ' 92 ' 93 ' 94 ' 95 ' 96 ' 97 ' 98 ' 99 ' 00 ' 01 ' 02 ' 03 ' 04 ' 05
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Sales - billions
Reflects actual amounts originally reported in Form 10K Annual Reports. Not restated for discontinued operations (Educational Resources businesssold in FY 2003). Fiscal 2003 includes insurance proceeds of $19.7 million net of tax and income from discontinued operations of $35.7 million.Effective beginning FY 2002 goodwill is no longer amortized.1985 is a 9 month period. 1986, 1992, 1997, 2003 are 53 week years.
Net Income - millions
Sales
NetIncome
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Managed Services,Managed Better
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Fiscal Year Ended
October 3, 2003 October 1, 2004 September 30, 2005
Reconciliation of net purchases of property and equipment and client contract investments:
Purchases of property and equipment and client contract investments (298,606)$ (308,763)$ (315,560)$
Disposals of property and equipment 28,183 20,503 21,581
Net purchases of property and equipment and client contract investments (270,423)$ (288,260)$ (293,979)$
ARAMARK Corporation Consolidated Sales 9,447,815$ 10,192,240$ 10,963,360$
Net purchases of property and equipment and client contract investments
as a percentage of sales 2.9% 2.8% 2.7%
(In Thousands)
Net capital expenditures, expressed as a percentage of sales, is a metric utilized by management to review cash flow dynamics, which long term investors may find useful.
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
NET CAPITAL EXPENDITURES AS A PERCENTAGE OF SALES
(Unaudited)
Reconciliation of Non-GAAP Measures
Net Capital Expenditures as a Percentage of Sales