Rating Action: Moody’s affirms Aramark CFR at Ba3, sr sec at Ba2, sr uns at B1; outlook stableGlobal Credit Research – 14 Mar 2022Over $8 billion of rated debtNew York, March 14, 2022 — Moody’s Investors Service (“Moody’s”) affirmed Aramark Services, Inc.’s (“Aramark”) corporate family rating (“CFR”) at Ba3, probability of default rating (“PDR”) at Ba3-PD, senior secured at Ba2 and senior unsecured at B1. The Speculative Grade Liquidity (“SGL”) rating is maintained at SGL-1. The outlook remains stable.RATINGS RATIONALE”As COVID-19-related disruption to Aramark’s businesses continues to wane, revenue should climb back toward pre-pandemic levels, thereby fortifying still-weak credit metrics and providing support to the Ba3 CFR,” said Edmond DeForest, Moody’s Senior Vice President.The affirmation of the Ba3 CFR reflects Moody’s expectations for revenue, profits and free cash flow to continue to recover steadily and substantially, although slowly, driving debt to EBITDA of 8.0 times as of December 31, 2021 toward 5.0 times by fiscal 2023 (ends September). Revenue fell by more than 25% peak-to-trough during FY2020 and 2021. Moody’s anticipates revenue will grow by around that amount over the next 12 to 18 months. Revenue and credit metrics are expected to remain weak relative to FY2019 levels until FY2023. Moody’s expects adequate cash from operations to cover capital investments, capital expenditures, the regular shareholder dividend and required debt amortization. Financial leverage declines will come from slow EBITDA expansion and some debt repayment. Moody’s also anticipates modest free cash flow metrics compared to many other business service companies also rated in the Ba3 rating category over the longer term given the need to invest in new contracts before revenue is earned.All financial metrics cited reflect Moody’s standard adjustments.Moody’s considers Aramark’s business generally stable and predictable, with long term contracts and fixed asset investments providing high revenue visibility and meaningful competitive barriers. Moody’s anticipates Aramark will maintain market share and remain well positioned to rebound as customers resume their normal operations. Aramark is a leading provider of food and support services in the United States with operations globally and is the second largest provider of uniform and career apparel rental and sales in the United States. The scope of Aramark’s operations in both business lines, featuring thousands of highly recurring customer contracts, provides strong support for the ratings. Demand for food and related and uniform services from many of Aramark’s business and entertainment customers has not yet recovered to pre-pandemic levels, whereas customers in education, healthcare and those seeking services including sanitization have proven more resilient. EBITA margins around 3% in the LTM period ended December 31, 2021 are expected to rebound to above 5% in FY2022 and in a 6% to 7% range in FY2023.Social risks facing Aramark’s food service and uniform and related services include a diverse set of workplace and food safety and waste water handling rules and regulations. Aramark has a track record of complying with applicable laws. Aramark maintains job-appropriate training of its large almost 250,000 person employee base and board oversight of its risk management practices.As a public company, Aramark provides transparency into its governance and financial results and goals. The board of directors is controlled by independent directors. In late 2019, there were 5 director and several executive officer changes, including of the Chairman, CEO and CFO. Among Aramark’s stated near term capital allocation priorities are net financial leverage reduction, investing in the business and cash returns to shareholders. Moody’s considers Aramark’s financial strategies balanced and transparent. Aramark’s financial leverage remains well in excess of the company’s target range.The Ba2 rating on the senior secured credit facilities reflects their priority position in the debt capital structure and a loss given default (“LGD”) assessment of LGD2. The notes are secured by a first lien pledge of substantially all of the company’s domestic assets (excluding accounts receivable pledged for the securitization facility) and 65% of the stock of direct foreign subsidiaries. The Ba2 rating, one notch above the Ba3 CFR, benefits from loss absorption provided by the junior ranking debt and non-debt obligations.The B1 rating on the senior unsecured notes reflects a loss given default assessment of LGD5. The senior notes are guaranteed by substantially all of the domestic subsidiaries of the company (excluding the securitization subsidiaries). The loss given default assessment reflects effective subordination to all the secured debt and certain trade claims at default. The B1 rating is one notch higher than the outcome utilizing Moody’s Loss Given Default methodology, reflecting Moody’s expectations for a decrease in the proportion of secured to total debt once the currently fully drawn $1 billion revolver and $450 million asset securitization facilities are repaid.The SGL-1 speculative grade liquidity rating reflects Aramark’s very good liquidity profile, including from $415 million of cash as of December 31, 2021 and over $1 billion of available revolver and securitization commitments. Moody’s expects over $200 million of free cash flow in FY2022. The $1.2 billion revolving credit facility expires mostly in 2026 ($53.7 million of the revolving commitments expire in 2023) and there is a $450 million accounts receivable securitization facility maturing in 2024. The revolving credit facilities have a net senior secured debt to EBITDA covenant, as amended. Moody’s expects Aramark will maintain a good cushion with the covenant over the next 12 to 15 months. The fiscal first quarter is typically a seasonal borrowing peak for Aramark.The stable outlook reflects Moody’s anticipation of strong revenue growth driving elevated debt to EBITDA down toward 5.0x in FY2023. The stable outlook also anticipates Aramark will maintain balanced financial strategies and a very good liquidity profile.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe ratings could be upgraded if revenue and profit rates recover to exceed their pre-pandemic levels and Moody’s expects Aramark will maintain: 1) at least 1% to 2% revenue growth; 2) EBITA margins around 7%; 3) free cash flow of at least $400 million; and 4) debt to EBITDA below 4.5 times.The ratings could be downgraded if: 1) revenue remains pressured due to an expansion of adverse impacts from COVID-19, a loss of customers or declines in market share; 2) liquidity weakens; or 3) debt to EBITDA will be maintained above 5.5 times.The principal methodology used in these ratings was Business and Consumer Services published in November 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1287897. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.The following ratings/assessments are affected by today’s action:..Issuer: Aramark Services, Inc….. Corporate Family Rating, Affirmed Ba3…. Probability of Default Rating, Affirmed Ba3-PD….Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2 from LGD3)….Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)….Outlook, Remains Stable..Issuer: ARAMARK Canada Ltd…..Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2 from LGD3)….Outlook, Remains Stable..Issuer: Aramark International Finance Sarl….Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)….Outlook, Remains Stable..Issuer: Aramark Investments Limited….Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2 from LGD3)….Outlook, Remains StableAramark (NYSE:ARMK), based in Philadelphia, PA, is a provider of food and related services to a broad range of institutions and the second largest provider of uniform and career apparel in the United States. Moody’s expects fiscal 2022 (ends September) revenue of around $15 billion.REGULATORY DISCLOSURESFor further specification of Moody’s key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody’s Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. 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For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.These ratings are solicited. Please refer to Moody’s Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the EU and is endorsed by Moody’s Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody’s affiliates outside the UK and is endorsed by Moody’s Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody’s office that issued the credit rating is available on www.moodys.com.Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Edmond DeForest Senior Vice President Corporate Finance Group Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. 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