G&K Services Inc. (NASDAQ:GK) Q3 2016 Earnings Conference Call - Final Transcript

Apr 26, 2016 • 11:00 am ET

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G&K Services Inc. (NASDAQ:GK) Q3 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning. My name is Brandy, and I will be your conference operator today. At this time I would like to welcome everyone to the G&K Third Quarter Fiscal Year 2016 Earnings 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)

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

Executive
Jeff Huebschen

Good morning and thank you for joining us for G&K Services' third quarter fiscal 2016 earnings call. With me today are Doug Milroy, G&K's Chairman and Chief Executive Officer, and Tracy Jokinen, Chief Financial Officer.

(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 we 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 26, and you may access the replay by visiting the Investor Relations section of our website.

So with that said, I would like to turn the call over to you, Doug.

Executive
Douglas Milroy

Thanks, Jeff, and thank you, everyone for calling in today. It is an especially busy day, busy week on the Street, so we appreciate you making the time.

You, no doubt, have already seen our team delivered another very strong quarter, so we are obviously glad to have the chance to talk with you about it. I am going to take you through some of the highlights of the quarter, talk a little bit about the market and economic trends we see ourselves in, touch on our game plan, and the role it's playing in our continuing success. And, after I cover those three things, Tracy will take you through the financials in more detail.

So with that, to the quarter, we would clearly characterize the quarter as another quarter of strong execution. We had mid single-digit organic growth again. Good progress in the quarter toward our 15% goals, operating margin up 70 basis points. Return on invested capital was up 70 basis points, that's a string now of 16 quarters of year-over-year improvements in both those measures. Something here that -- or something the team here is pretty proud of.

It shows up in double-digit earnings per share growth at 10%, and not surprisingly, very strong cash flow. In fact, we are on track to have the highest full-year operating cash flow in our company's history, and that is obviously terrific. That allows us to continue to invest in our business as we are. Make good, smart investments that set the company up for the long-term, and it allows us to continue increasing our cash returns to shareholders as we did again this quarter. So overall, I would say a strong quarter. Frankly, the kind of results you have come to expect from this team.

When I look at the market, the economy we