"In fiscal 2005, they continued to focus on the fundamentals of the business in addition to driving their new vision to enhance to customers' image and safety through innovation," said Richard Marcantonio, G&K's president and chief executive officer. "We've begun to successfully execute the long-term vision through a number of strategies to enhance the value proposition they provide to customers. They will continue to capitalize on market growth opportunities by delivering innovative solutions that meet the needs of customers."
Income Statement Review Fourth quarter revenue from G&K's rental business increased to $193.2 million, up 10.7 percent over the prior-year period, when excluding the extra week of operations. The company's organic industrial rental growth rate was approximately 2.5 percent in the fourth quarter compared to the year-ago period. Direct sale revenue more than doubled to $14.2 million during the quarter from $5.6 million a year-earlier, when excluding the extra week of operations. The increase in direct sale revenue was driven primarily by the acquisition of the Lion Uniform Group. On an organic basis, direct sales increased 26.1 percent during the quarter. The organic growth rates are calculated using industrial rental and direct sale revenue, respectively, adjusted for foreign currency exchange rate differences, revenue from newly acquired locations and the extra week recorded in the prior-period results.
"During fiscal 2005, they continued to focus on delivering earnings momentum in addition to putting increasing emphasis on driving revenue growth," Marcantonio said. "The result of efforts improved their organic rental growth rate 500 basis points, more than doubled direct sale business and expanded their market presence through acquisitions. The combination of these accomplishments has increased current annual revenue run-rate to well over $800 million, and more importantly, has better positioned the company for future growth."
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