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G&K Services reports fiscal 2008 Q3 results
29 Apr '08
3 min read
The improvement in operating income was achieved despite continued economic softness, higher gasoline costs, increased bad debt expense, lower contribution from direct sales and systems implementation expenses.
Earnings per diluted share for the first nine months of fiscal 2008 were $1.72, an increase of 18.6 percent over the prior-year period. Earnings in the prior-year period were $1.45 per diluted share, and reflected a lower than normal effective tax rate of 33.8 percent. The lower effective tax rate resulted in a $0.10 per diluted share benefit in the prior-year nine month period.
"We're pleased to report a solid third quarter and strong year-to-date increases in revenue, operating margins, earnings and cash flow," said Richard Marcantonio, chairman and chief executive officer.
"Importantly, our long-term vision coupled with our focus on strategic initiatives continues to deliver positive momentum in a challenging economic environment. We will continue to execute against a number of growth and productivity initiatives to drive further revenue and earnings acceleration."
Income Statement Review:
Third quarter revenue from G&K's rental business increased to $233.0 million, up 10.0 percent over the prior-year period. The company's organic rental growth rate was approximately 2.75 percent in the quarter.
Organic rental growth continues to reflect strong new account and route sales performance, offset by an increase in economic-driven customer attrition and a reduction in employment levels within certain industries. Direct sale revenue was $18.1 million, compared to $23.4 million in the prior-year period.
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Earnings per diluted share for the first nine months of fiscal 2008 were $1.72, an increase of 18.6 percent over the prior-year period. Earnings in the prior-year period were $1.45 per diluted share, and reflected a lower than normal effective tax rate of 33.8 percent. The lower effective tax rate resulted in a $0.10 per diluted share benefit in the prior-year nine month period.
"We're pleased to report a solid third quarter and strong year-to-date increases in revenue, operating margins, earnings and cash flow," said Richard Marcantonio, chairman and chief executive officer.
"Importantly, our long-term vision coupled with our focus on strategic initiatives continues to deliver positive momentum in a challenging economic environment. We will continue to execute against a number of growth and productivity initiatives to drive further revenue and earnings acceleration."
Income Statement Review:
Third quarter revenue from G&K's rental business increased to $233.0 million, up 10.0 percent over the prior-year period. The company's organic rental growth rate was approximately 2.75 percent in the quarter.
Organic rental growth continues to reflect strong new account and route sales performance, offset by an increase in economic-driven customer attrition and a reduction in employment levels within certain industries. Direct sale revenue was $18.1 million, compared to $23.4 million in the prior-year period.
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G&K Services Inc
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