G&K Services Inc. (NASDAQ:GK) Q3 2015 Earnings Conference Call - Final Transcript

Apr 30, 2015 • 11:00 am ET

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G&K Services Inc. (NASDAQ:GK) Q3 2015 Earnings Conference Call - Final Transcript

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Operator
operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the G&K Services Q3 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions).

Thank you. I would now like to turn the call over to Mr. Jeff Huebschen. Please go ahead, sir.

Executive
Jeff Huebschen

Thanks. Good morning and thank you everyone for joining us to discuss G&K Services' third quarter fiscal year 2015 results. With me today are Doug Milroy, G&K's Chairman and CEO; and Tracy Jokinen, CFO.

(Forward-Looking Cautionary Statements)

During this call, we will reference certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the nearest GAAP measure is provided in the earnings release our company issued this morning, and is available on our website. A replay of this call will be available later today and will be available through May 30. You may access the replay by visiting the Investor Relations section of our website.

With that said, I'd like to turn the call over to you, Doug.

Executive
Doug Milroy

Good morning, thank you everybody for calling in. You've seen we had another strong quarter, so we're always glad to have the chance to take you through in a little more detail.

This morning I'll cover three things. I want to talk about the quarter a little bit and how it continues our trend lines, recap our game plan, most of you are well familiar with it but it is clearly driving our results so I want to hit a highlight or two there. And then I think we should comment on a few things we're seeing in the external environment as well. And after I do that, Tracy will take you through the quarter in a little more detail as well as talk about our guidance for the rest of the year.

So, with that, when we look at Q3, we would say, it is clearly sustained positive trends we've established in this business. If you look at revenue first, it's another quarter of solid mid-single-digit organic growth, 5.4% that's our fifth consecutive quarter with organic growth over 5%.

Margins also a nice story, our adjusted operating margin was up 90 basis points to 12%, 90 basis points year-over-year to 12%. That's the second quarter in a row now that we've been at 12% or higher, so it's nice to see us sustaining that level consistent with our 12+ plan.

ROIC advanced nicely, 140 basis points year-over-year to 11.5%. If you step back and look at those two measures which you know have been our primary focus that's now the 12th consecutive quarter that we've seen year-over-year increases in both operating margin and ROIC.

Not surprisingly that turns into strong earnings, another quarter of double-digit earnings growth, about 11%, that puts us just shy of 15% earnings growth year-to-date, which translates into a lot of cash, cash from operations $33 million in Q3.