MISSISSAUGA, ON / ACCESSWIRE / August 24, 2023 /
Quarterly Earnings Call:
8:30am EST, August 25, 2023, Participant call in number is 1-800-319-4610
Quarterly Highlights:
Consolidated Highlights:
Corporate Locations Highlights:
Capital Management:
Management's Comments on Q2-2023
Jeffrey Hasham, the Company's Chief Executive Officer, noted "We are pleased with our results in the second quarter of 2023. We continue to see strong demand for our services, including our core recurring shredding service offering, which has helped drive our organic revenue growth. From a paper market perspective, paper prices have started to decline, impacting our recycling revenue. We had anticipated this, and as a result, are well positioned to deal with any softness in the paper market. Looking at our Proscan business, we have started seeing an uptick in revenue when compared to the beginning of 2023 and our pipeline of scanning projects remains strong.
We have continued to focus on route efficiencies, and this was very evident by the strong EBITDA less net recycling revenue growth of 28%. We are seeing some signs of easing from a cost front, particularly in driver wage inflation and fuel pricing. From a pricing perspective, beginning in May 2023, we started implementing price increases across our corporate locations, with all price increases now fully implemented. We also expect to realize further synergies from recently completed acquisitions related to route densification and optimization that should help enhance future margins.
For the quarter, I am pleased to report that Q2 2023 Corporate location EBITDA was $6.2 million Canadian, an increase of 8% from Q2 2022. This, coupled with our franchise business, has driven consolidated EBITDA to $4.5 million Canadian for Q2 2023. These results reflect the hard work and commitment of our employees, franchisees, management and board members, and I would like to personally thank each of them for their efforts and contributions."
For the three months ended June 30, | 2023 | 2022 | Change(1) | ||||
System Sales Performance - in USD, in $000's | |||||||
Total locations in the United States | 30 | 30 | -% | ||||
Total system sales | $ | 19,238 | $ | 18,748 | 3% | ||
% of scheduled sales | 47% | 43% | |||||
Consolidated Operating Growth - in CAD, in $000's | |||||||
Revenue | $ | 16,751 | $ | 14,597 | 15% | ||
EBITDA | $ | 4,488 | $ | 4,540 | (1)% | ||
EBITDA margin | 27% | 31% | (400) bps | ||||
EBITDA less net recycling | $ | 2,188 | $ | 1,708 | 28% | ||
EBITDA less net recycling margin | 15 | 15% | - bps | ||||
Operating income | $ | 2,501 | $ | 3,150 | (21)% | ||
Operating income margin | 15% | 22 | (700) bps | ||||
Free cash flow | $ | (100 | $ | 2,099 | (105)% | ||
Operating income per weighted average share fully diluted | $ | 0.14 | $ | 0.17 | (21)% | ||
EBITDA per weighted average share fully diluted | 0.25 | 0.25 | - | ||||
EBITDA less net recycling per weighted average share fully diluted | 0.12 | 0.09 | 28 | ||||
Free cash flow per weighted average share fully diluted | $ | (0.01 | $ | 0.12 | (108)% | ||
Corporate Location Performance - in CAD, in $000's | |||||||
Revenue | $ | 16,184 | $ | 14,037 | 15% | ||
EBITDA | $ | 6,200 | $ | 5,717 | 8% | ||
EBITDA margin | 38% | 41% | (300) bps | ||||
Operating income | $ | 4,259 | $ | 4,351 | (2)% | ||
Operating income margin | 26% | 31% | (500) bps | ||||
Operating income less net recycling | $ | 1,958 | $ | 1,519 | 29% |
Capital Management - in CAD:
(In $000's)
As at June 30, and December 31, | 2023 | 2022 | Change (1) | ||||
Working capital(2) | $ | 831 | $ | 8 | 10,288% | ||
Debt to total assets ratio | 0.50 | 0.52 | (4)% | ||||
Normalized Fixed Charge Coverage ratio - rolling 12 months | 1.29 | 1.82 | (29)% | ||||
Normalized Total Funded Debt to EBITDA ratio - rolling 12 months | 2.05 | 2.11 | (3)% |
Revenue Growth in Q2-2023
The Company achieved 15% total revenue growth and 8% total revenue growth in constant currency during Q2 2023 versus Q2 2022 primarily due to acquisitions conducted during the last 12 months, organic sales growth from new customers and price increases.
Corporate Locations
Total corporate location revenue and EBITDA grew by 15% and 8%, respectively, in Q2 2023 versus Q2 2022 due to the acquisitions completed over the past twelve months, organic growth from same locations, and price increases.
Same corporate location revenue grew 2% and EBITDA decreased 5%, in Q2 2023 verses Q2 2022, driven by lower recycling revenue due to lower commodity paper prices.
Total Corporate Locations | Same Corporate Locations | Non-same Corporate Locations | ||||||
For the three months ended | ||||||||
June 30, | 2023 | 2022 | % Change | 2023 | 2022 | % Change | 2023 | 2022 |
$ | $ | $ | $ | $ | $ | |||
Revenue: | ||||||||
Shredding sales | 12,530 | 9,773 | 28% | 11,123 | 9,773 | 14% | 1,407 | - |
Secure e-Cycle electronic waste sales | 332 | 378 | (12)% | 332 | 378 | (12)% | - | - |
Scanning sales | 713 | 816 | (13)% | 713 | 816 | (13)% | - | - |
Recycling sales | 2,608 | 3,070 | (15)% | 2,207 | 3,070 | (28)% | 401 | - |
Total sales | 16,184 | 14,037 | 15% | 14,376 | 14,037 | 2% | 1,808 | - |
Operating Costs(1) | 9,984 | 8,320 | 20% | 8,956 | 8,320 | 8% | 1,028 | - |
EBITDA | 6,200 | 5,717 | 8% | 5,420 | 5,717 | (5)% | 780 | - |
% of revenue | 38% | 41% | (300) bps | 38% | 41% | (300) bps | 43% | - |
Depreciation - tangible assets | 1,941 | 1,366 | 42% | 1,687 | 1,366 | 24% | 254 | - |
Operating income | 4,259 | 4,351 | (2)% | 3,733 | 4,351 | (14)% | 526 | - |
% of revenue | 26% | 31% | -500 bps | 26% | 31% | (500) bps | 29% | - |
Operating income less recycling | 1,958 | 1,519 | 29% | 1,816 | 1,519 | 20% | 142 | - |
% of revenue excluding recycling | 14% | 14% | -bps | 15% | 14% | 100bps | 10% | |
EBITDA - in USD | 4,617 | 4,480 | 3% | 4,037 | 4,480 | (10)% | 580 | - |
% of revenue | 37% | 41% | (400) bps | 38% | 41% | (300) bps | 43% |
Note 1: During Q2-2023, acquisition/vendor-related consulting fees of $37 (Q2-2022 - $81) are included in the total and non-same corporate location operating costs.
Community and Social Commitment
Our locations under the PROSHRED® banner conduct numerous community shredding events. These events provide an opportunity for our clients, clients' employees, local businesses and local residents to ensure their personal and confidential materials are securely destroyed. In addition to helping to reduce identity theft, several of these events allow for donations to various not-for-profit organizations. PROSHRED® is also proud that 100% of the shredded material is recycled, as our continued goal is to foster the use of fewer trees in the production of all paper products. Future community shredding event locations can be found on our website, www.proshred.com. Our annual national Shred Cancer event was held in June of 2023 at various Proshred locations. These events are held to raise research funds for the American Institute for Cancer Research ("AICR"). It is our goal as a Company and Franchise System to support AICR in their endeavor to prevent cancer and possibly cure this disease. So far, PROSHRED® has raised over USD$212,000 for this cause. Please visit www.proshred.com/aicr for more information on this effort.
Non-IFRS Measures
There are measures included in this press release that do not have a standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similarly titled measures presented by other publicly traded companies. The Company includes these measures as a means of measuring financial performance of the Company.
Reconciliation of EBITDA and Operating Income to Net Income
For the three months ended | |||||||
June 30, | |||||||
2023 | 2022 | % Change | |||||
$ | $ | ||||||
EBITDA | 4,488 | 4,540 | (1)% | ||||
Less: net recycling revenue | (2,300) | (2,832) | (19)% | ||||
EBITDA less net recycling | 2,188 | 1,708 | 28% | ||||
Add: net reycling revenue | 2,300 | 2,832 | (19)% | ||||
Less: depreciation - tangible assets | (1,987) | (1,390) | 43% | ||||
Operating income | 2,501 | 3,150 | (21)% | ||||
Less: interest expense | (610) | (403) | 51% | ||||
Less: amortization - intangible assets | (1,005v | (798) | 26% | ||||
Add: gain on disposition of tangible assets | - | 13 | (100)% | ||||
Add/(deduct): remeasurement of contingent consideration | (143) | 2 | (7250)% | ||||
Add/(deduct): foreign exchange gain (loss) | (1,336) | 1,533 | (187)% | ||||
Income (loss) before income taxes | (593) | 3,497 | (117)% | ||||
Deduct: income tax expense | (377) | (684) | (45)% | ||||
Net income (loss) | (970) | 2,813 | (134)% |
Reconciliation of Consolidated Free Cash Flow with Cash Provided by Operations
For the three months ended | |||||||
June 30, | |||||||
2023 | 2022 | % Change | |||||
$ | $ | ||||||
Cash provided by operations | 2,665 | 3,284 | (19)% | ||||
Less: Capital expenditures | (2,765) | (1,185) | 133% | ||||
Free Cash Flow | (100) | 2,099 | (105)% |
Financial Statements
Redishred's June 30, 2023 Financial Statements and Management's Discussion and Analysis will be available on www.sedar.com and www.redishred.com.
About Redishred Capital Corp.
Redishred Capital Corp. ("Redishred") is the owner of the PROSHRED®, PROSCAN and secure e-Cycle brands, trademarks and intellectual property in the United States. Redishred digitizes, secures, shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. Redishred is a pioneer in the mobile document destruction and recycling industry and has the ISO 9001:2015 certification. It is Redishred's vision to be the ‘system of choice' in providing digital retention, secure shredding and recycling services on a global basis. Redishred Capital Corp. grants PROSHRED` and PROSCAN franchise businesses in the United States and by way of a license arrangement in the Middle East. Redishred also operates fifteen corporate businesses directly. The Company's plan is to grow its business by way of both franchising and the acquisition and operation of information security businesses that generate stable and recurring cash flow through a scheduled client base, continuous paper recycling and concurrent unscheduled shredding service.
FOR FURTHER INFORMATION PLEASE CONTACT:
Redishred Capital Corp. (TSX.V - KUT)
Jeffrey Hasham, MBA, CPA, CA
Chief Executive Officer
Jeffrey.hasham@redishred.com
www.redishred.com
Phone: (416) 849-3469 Fax: (905) 812-9448
or,
Redishred Capital Corp. (TSX.V - KUT)
Harjit Brar, CPA, CA
Senior Vice President and Chief Financial Officer
harjit.brar@redishred.com
www.redishred.com
Phone: (437) 328-6639 Fax: (905) 812-9448
Note: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward looking statements that reflect the current expectations of management of Redishred and Redishred's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "may", "will", "estimate", "believe", "expect", "intend" and similar expressions have been used to identify these forward looking statements. These statements reflect current beliefs and are based on information currently available to management of Redishred. Forward looking statements necessarily involve known and unknown risks, uncertainties and other factors. A number of factors, including those discussed in Redishred's 2022 Management Discussion and Analysis under "Risk Factors", could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward looking statements. There can be no assurance that the expectations of management of Redishred will prove to be correct. Readers are cautioned that such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Redishred can give no assurance that actual results will be consistent with these forward-looking statements.
SOURCE: Redishred Capital Corp.