MISSISSAUGA, ON / ACCESSWIRE / November 26, 2024 /
Quarterly Earnings Call:
8:30am EST, November 28, 2024, Participant call in number is 1-844-763-8274
Quarterly Highlights:
Consolidated Highlights:
The Company generated revenue of $17.9 million CAD, growing by $2.5 million CAD, or 16% versus Q3 2023.
Consolidated EBITDA excluding the impact of net recycling revenue was $2.7 million CAD, growing by $1.0 million CAD, or 60% versus Q3 2023.
Consolidated EBITDA was $4.1 million CAD, increasing by 35% versus Q3 2023, driven by shredding revenue growth.
Corporate Locations Highlights:
Corporate location revenue grew 17% versus Q3 2023 to $17.3 million CAD (15% constant currency growth - US Dollars is the constant currency).
Corporate location EBITDA increased by 19% versus Q3 2023 to $6.0 million CAD (17% constant currency increase) driven by continued growth in shredding sales.
Same corporate location EBITDA increased by 13% versus Q3 2023 to $5.7 million CAD (11% constant currency increase).
Acquisitions
On July 29, 2024 the Company acquired the assets of Confidential Shredding LLC ("Confidential"), a New Jersey and New York-based company offering on-site paper and hard drive shredding, product destruction, and paper recycling services.
Year-to-Date Highlights:
Consolidated Highlights:
The Company generated revenue of $53.0 million CAD, growing by $3.9 million CAD, or 8% versus Q3 2023 YTD.
Consolidated EBITDA excluding the impact of net recycling revenue was $7.9 million CAD, growing by $2.3 million CAD, or 41% versus Q3 2023 YTD.
The Company generated free cash flow of $5.8 million CAD, increasing by $0.9 million, or 17%, versus Q3 2023 YTD.
Corporate Locations Highlights:
Corporate location revenue grew by 8% versus Q3 2023 YTD to $51.4 million CAD (7% constant currency growth).
Corporate location EBITDA increased by 5% (4% constant currency increase) versus Q3 2023 YTD, driven by shredding revenue growth, partially offset by lower net recycling revenue due to lower commodity paper prices.
Same corporate location EBITDA was consistent with Q3 2023 YTD.
Capital Management:
The Company generated $2.6 million CAD and $9.7 million CAD in cash from operations during Q3 2024 and Q3 2024 YTD, respectively.
As at September 30, 2024, the Company has $2.4 million CAD in cash, $1 million CAD available on its demand operating line of credit, $18.6 million CAD available on its demand non-revolving re-advanceable term loan facility, and $5.4 million CAD available on its demand revolving re-advanceable interest only acquisition facility.
Recent Developments:
On November 21, 2024, the Company entered into a definitive agreement (the "Arrangement Agreement") with VRC Companies, LLC whereby a subsidiary of VRC Companies, LLC (the "Purchaser") will acquire all of the outstanding common shares of the Company (the "Transaction") for cash consideration of CA$5.00 per common share.
The Transaction, which was approved unanimously by the Board, is subject to shareholder approval and court approval, and other customary closing conditions. Subject to the satisfaction of such conditions, the Transaction is expected to close in the first quarter of 2025.
Upon completion of the Transaction, Redishred will become a privately held company.
Management's Comments on Q3 2024
Jeffrey Hasham, the Company's Chief Executive Officer, noted "We are pleased with our financial results in the third quarter of 2024, with EBITDA of $4.1 million Canadian. When we look at EBITDA less net recycling revenue, this increased to $2.7 million Canadian compared to $1.7 million Canadian in Q3 2023, highlighting the strength in our core operating business. From a revenue perspective, we continue to see demand in our service offerings with top-line revenue growth of 16%, including 12% organic shredding revenue growth, versus Q3 2023.
From a business development perspective, I wanted to note that as we previously announced, the Company has entered into a definitive agreement with VRC whereby VRC will acquire all of outstanding common shares of the Company. This transaction is subject to certain approvals and customary closing conditions. For further details on this transaction please refer to the Company's joint press release with VRC that was issued on November 22nd, 2024 and under the "Recent Developments" section of this press release.
Lastly, as always, I wanted to thank our dedicated employees, franchisees, management and board members for their hard work and contributions to the Company."
Financial Highlights:
(1) Change expressed as a percentage or basis point ("bp").
Revenue Growth
The Company achieved 16% revenue growth during Q3 2024 versus Q3 2023 and 8% revenue growth during Q3 2024 YTD versus Q3 2023 YTD, primarily due to acquisitions conducted and organic shredding revenue growth.
Corporate Locations Q3 2024 Performance
Total corporate location revenue and EBITDA grew by 17% and 19%, respectively, in Q3 2024 versus Q3 2023.
Same corporate location revenue and EBITDA grew by 8% and 13%, respectively, in Q3 2024 versus Q3 2023.
Same corporate location operating income, excluding the impact of net recycling revenue, grew 38% in Q3 2024 versus Q3 2023.
Note 1: During the three months ended September 30, 2024, acquisition/vendor-related consulting fees of $93 (three months ended September 30, 2023 - $22) are included in the total and non-same corporate location operating costs.
Corporate Locations Q3 2024 YTD Performance
Total corporate location revenue and EBITDA grew by 8% and 5%, respectively, during Q3 2024 YTD versus Q3 2023 YTD. EBITDA excluding the impact of net recycling revenue grew 26% during Q3 2024 YTD vs Q3 2023 YTD.
Same corporate location operating income, excluding the impact of net recycling revenue, grew 49% during Q3 2024 YTD versus Q3 2023 YTD. Same corporate location EBITDA, excluding the impact of net recycling revenue, grew 22% during Q3 2024 YTD versus Q3 2023 YTD. Same corporate location revenue grew by 1% during Q3 2024 YTD versus Q3 2023 YTD, driven by shredding revenue growth partially offset by lower recycling revenue due to lower commodity paper prices.
Note 1: During the nine months ended September 30, 2024, acquisition/vendor-related consulting fees of $281 (nine months ended September 30, 2023 - $307) are included in the total and non-same 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 2024 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 US$253,000 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.
Total System Sales are sales generated by franchisees, licensees and corporately operated locations. The system sales generated by franchisees and licensees drive the Company's royalties. The system sales generated by corporate locations are included in the Company's revenue.
Same Location are indicators of performance of corporately operated locations that have been in the system for equivalent periods in both the current period and the comparative period.
Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Consolidated EBITDA also excludes government assistance, re-measurements of contingent consideration, foreign exchange gains and losses, and gains and losses on disposal of tangible assets. A reconciliation between net income and consolidated EBITDA is provided below.
Consolidated EBITDA less Net Recycling is defined as the consolidated EBITDA excluding the impact of corporate location recycling sales, net of paper baling costs. A reconciliation between net income and consolidated EBITDA less net recycling is provided below.
Consolidated Operating Income is defined as revenues less all operating expenses, including depreciation on tangible assets. Amortization for intangible assets has not been included in this calculation. A reconciliation between net income and consolidated operating income is provided below.
Consolidated Free Cash Flow is defined as cash provided by operating activities net of capital expenditures. The calculation of Consolidated Free Cash Flow that begins with cash provided by operating activities is provided below.
Capital Expenditures is defined as the purchase of tangible and intangible assets, net of proceeds received from their disposal.
Corporate Location EBITDA is defined as earnings for corporately operated locations before interest, taxes, depreciation and amortization and also excludes items identified under the definition of Consolidated EBITDA above.
Corporate Location Operating Income is the operating income generated by corporately operated locations. The operating income generated is inclusive of depreciation on tangible assets, including trucks, right-of-use-assets and secure collection containers. It does not include amortization related to intangibles assets and interest expense.
Corporate Location Operating Income less Net Recycling is the corporate location operating income excluding the impact of corporate location recycling sales, net of paper baling costs.
Corporate Location EBITDA less Net Recycling is the corporate location EBITDA excluding the impact of corporate location recycling sales, net of paper baling costs.
Margin is the percentage of revenue that has turned into EBITDA or Operating Income. Margin is defined as EBITDA or operating income divided by revenue.
Constant currency is a measure of growth before foreign currency translation impacts. It is defined as the current period results in CAD currency using the foreign exchange rate in the equivalent prior year period. This allows for period over period comparisons of business performance excluding the impact of currency fluctuations.
Reconciliation of EBITDA and EBITDA less net recycling to Operating Income - in CAD, in $000's
Reconciliation of Operating Income to Net Income - in CAD, in $000's
Reconciliation of Consolidated Free Cash Flow with Cash Provided by Operations - in CAD, in $000's
Financial Statements
Redishred's September 30, 2024, 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 seventeen 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
[email protected]
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
[email protected]
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, Redishred's future results, performance, achievements, prospects and opportunities, and the anticipated acquisition of all of the outstanding common shares of Redishred by VRC. 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 2023 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. Other factors including the ability of VRC and Redishred to receive, in a timely manner and on satisfactory terms, the necessary court and shareholder approvals; and the satisfaction of the other closing conditions could impact the closing of the acquisition of Redishred by VRC. 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.
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