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G&K surpasses $1 billion in fiscal year revenue
12 Aug '08
6 min read
The organic rental growth rate is calculated using rental revenue, adjusted for foreign currency exchange rate differences and newly acquired revenue compared to prior-period results.
Gross margin from rental operations for the quarter was 32.0 percent, compared to 33.0 percent in the prior-year period. The change in gross margin was a result of increased production and delivery costs associated with higher energy prices and costs associated with environmental compliance activities.
Gross margin from direct sales was 27.3 percent, compared to 30.0 percent in the prior-year period as a result of expenses associated with systems implementation activities and the impact of fixed cost absorption from lower direct sales volume.
Selling and administrative expenses in the quarter were 23.2 percent of consolidated revenue, down from 23.6 percent in the prior-year period.
During the quarter, the company continued to gain positive leverage from revenue growth and productivity initiatives, which were partially offset by on-going systems implementation activities.
Depreciation and amortization expense was previously disclosed separately on the income statement. Depreciation expense has now been reclassified to the cost of rental operations, cost of direct sales and selling and administrative expense.
Amortization expense has been reclassified to selling and administrative expense. All prior year amounts have also been adjusted to reflect this new presentation. There is no impact on current period or previously reported income from operations or net income.
The company's balance sheet remains strong. As of June 28, 2008, the company had total borrowings of $288.3 million and a total debt to total capitalization ratio of 34.1 percent. Total stockholders' equity at the end of the third quarter was $557.5 million.
Cash provided by operating activities for the fiscal year ended June 28, 2008 increased to a record $103.1 million, up 28.2 percent from the prior-year period.
Cash provided from operating activities increased compared to the prior-year period due to strong growth in earnings, higher depreciation and amortization levels and a lower net working capital investment.
Cash used for property, plant and equipment during the fiscal year totaled $27.1 million, compared to $31.5 million in the prior-year period. Free cash flow, defined as cash flow from operations less capital expenditures, increased to $76.0 million, up 55.4 percent from $48.9 million in the prior year.
As previously disclosed, the company initiated a share repurchase program to purchase up to $100.0 million of the company's outstanding common stock. During the fourth quarter, the company announced a $75.0 million expansion to the share repurchase program.
For fiscal 2008, the company purchased approximately 2.5 million shares of common stock, including 0.7 million shares during the fourth quarter.
As of the end of the fiscal year, the company has purchased approximately 2.7 million shares, or approximately 12.6 percent of the total shares outstanding at the beginning of the program, at a cost of approximately $101.0 million.
The company expects fiscal 2009 first quarter revenue to range from $249.0 million to $252.0 million and earnings per diluted share from $0.53 to $0.57.
The revenue guidance includes continued solid new account sales, higher route sales and increased pricing, offset by the impact of economic conditions on customer retention, employment levels and a weaker Canadian dollar exchange rate.
Gross margin from rental operations for the quarter was 32.0 percent, compared to 33.0 percent in the prior-year period. The change in gross margin was a result of increased production and delivery costs associated with higher energy prices and costs associated with environmental compliance activities.
Gross margin from direct sales was 27.3 percent, compared to 30.0 percent in the prior-year period as a result of expenses associated with systems implementation activities and the impact of fixed cost absorption from lower direct sales volume.
Selling and administrative expenses in the quarter were 23.2 percent of consolidated revenue, down from 23.6 percent in the prior-year period.
During the quarter, the company continued to gain positive leverage from revenue growth and productivity initiatives, which were partially offset by on-going systems implementation activities.
Depreciation and amortization expense was previously disclosed separately on the income statement. Depreciation expense has now been reclassified to the cost of rental operations, cost of direct sales and selling and administrative expense.
Amortization expense has been reclassified to selling and administrative expense. All prior year amounts have also been adjusted to reflect this new presentation. There is no impact on current period or previously reported income from operations or net income.
The company's balance sheet remains strong. As of June 28, 2008, the company had total borrowings of $288.3 million and a total debt to total capitalization ratio of 34.1 percent. Total stockholders' equity at the end of the third quarter was $557.5 million.
Cash provided by operating activities for the fiscal year ended June 28, 2008 increased to a record $103.1 million, up 28.2 percent from the prior-year period.
Cash provided from operating activities increased compared to the prior-year period due to strong growth in earnings, higher depreciation and amortization levels and a lower net working capital investment.
Cash used for property, plant and equipment during the fiscal year totaled $27.1 million, compared to $31.5 million in the prior-year period. Free cash flow, defined as cash flow from operations less capital expenditures, increased to $76.0 million, up 55.4 percent from $48.9 million in the prior year.
As previously disclosed, the company initiated a share repurchase program to purchase up to $100.0 million of the company's outstanding common stock. During the fourth quarter, the company announced a $75.0 million expansion to the share repurchase program.
For fiscal 2008, the company purchased approximately 2.5 million shares of common stock, including 0.7 million shares during the fourth quarter.
As of the end of the fiscal year, the company has purchased approximately 2.7 million shares, or approximately 12.6 percent of the total shares outstanding at the beginning of the program, at a cost of approximately $101.0 million.
The company expects fiscal 2009 first quarter revenue to range from $249.0 million to $252.0 million and earnings per diluted share from $0.53 to $0.57.
The revenue guidance includes continued solid new account sales, higher route sales and increased pricing, offset by the impact of economic conditions on customer retention, employment levels and a weaker Canadian dollar exchange rate.
G&K Services Inc
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