K-Bro Linen Income Fund Announces A Strong Start to the 2009 Year



    
    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/
    

    EDMONTON, May 14 /CNW/ - K-Bro Linen Income Fund ("K-Bro") (TSX - KBL.UN)
today announced its financial results for the quarter ended March 31, 2009.

    
    Highlights

    -  Revenue for the three months ended March 31, 2009 was $21.5 million,
       an increase of 9.3% over the comparable 2008 period.
    -  EBITDA for the first quarter of 2009 increased by $1.3 million to
       $3.5 million from the first quarter of 2008. The EBITDA margin
       increased significantly in the first quarter to 16.2% from 11.1% in
       the first quarter of 2008 due primarily to the improvements in labour
       productivity assisted by the new Calgary plant which fully came on
       stream in Q2, 2008
    -  For the period, K-Bro made distributions of $0.275 per unit and
       distributable cash was $0.46 per unit. This amounted to distributions
       of $1.9 million for the period compared to distributable cash of
       $3.3 million for a payout ratio of 59.2%.
    -  Earnings before income taxes increased in the first quarter of 2009 as
       a result of the increased EBITDA but offset somewhat by increased
       amortization charges. Net earnings after taxes increased in the first
       quarter of 2009 to $1.6 million from $0.7 million in the first quarter
       of 2008.

    Financial Highlights (in $000's except percentages and per unit amounts)

    The following table provides certain selected consolidated financial and
operating data prepared by K-Bro management for the periods indicated:

    -------------------------------------------------------------------------
    Fiscal year                                        2009           2008(2)
    -------------------------------------------------------------------------
                                                        Q1              Q1
    -------------------------------------------------------------------------
    Revenue                                           21,493          19,663
    -------------------------------------------------------------------------
    Operating expenses                                18,001          17,490
    -------------------------------------------------------------------------
    EBITDA(1)                                          3,492           2,173
    -------------------------------------------------------------------------
    EBITDA as a % of revenue                            16.2%           11.1%
    -------------------------------------------------------------------------
    Earnings before income taxes                       1,506             357
    -------------------------------------------------------------------------
    Income tax recovery                                   85             359
    -------------------------------------------------------------------------
    Net earnings                                       1,591             716
    -------------------------------------------------------------------------
    Diluted earnings per Unit                           0.23            0.12
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total assets                                      86,344          89,463
    -------------------------------------------------------------------------
    Long-term debt, end of period                      7,210           4,000
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Cash (used) provided by operating activities        (796)          3,688
    -------------------------------------------------------------------------
    Net change in non-cash working capital items       4,183          (1,878)
    -------------------------------------------------------------------------
    Maintenance capital expenditures                    (133)            (70)
    -------------------------------------------------------------------------
    Distributable cash(1)                              3,254           1,740
    -------------------------------------------------------------------------
    Distributions declared                             1,926           1,775
    -------------------------------------------------------------------------
    Payout ratio(1)                                     59.2%          102.0%
    -------------------------------------------------------------------------

    (1) Non-GAAP Measures:

        In order to provide a better understanding of the results, K-Bro uses
        the terms EBITDA, distributable cash and payout ratio. These are not
        earnings or cashflow measures recognized by GAAP and have no
        standardized meaning prescribed by GAAP. Therefore, EBITDA,
        distributable cash and payout ratio may not be comparable to similar
        measures presented by other issuers. EBITDA is defined by management
        as revenue less operating expenses which represents income from
        operations before amortization. Distributable cash is defined by
        management as cash provided by operating activities, plus or minus
        the net change in non-cash working capital items, less maintenance
        capital expenditures and less cash taxes. Management believes this
        measure reflects the cash generated from the ongoing operation of the
        business. Distributable cash is a non-GAAP measure generally used by
        Canadian income trusts as an indicator of financial performance and
        it should not be seen as a measurement of liquidity or a substitute
        for comparable metrics prepared in accordance with GAAP. This measure
        is commonly used by investors, management and other stakeholders to
        evaluate the ongoing performance of K-Bro. K-Bro reports on its
        payout ratio (actual cash distribution divided by distributable cash)
        because this is a key measure used by investors to value K-Bro,
        assess its performance and provide an indication of the
        sustainability of distributions. The payout ratio depends on the
        distributable cash and the Fund's distribution policy.

    (2) Adoption of new accounting policy:

        Restated for the adoption of CICA accounting standard 3064, which
        requires the expensing of certain expenditures related to a pre-
        operating period of a facility rather than recording them as assets.
    

    The revenue increase in the first quarter of 2009 was primarily the
result of increases in price and volume from existing customers, the
acquisition in Quebec City which occurred January 31, 2008 and increased
volume under a new Calgary Health Region contract that commenced March 1,
2008.
    EBITDA increased by $1.3 million for the quarter compared to 2008 as a
result of the increased revenue and improved labour productivity with the
result that EBITDA as a percentage of revenue increased in the first quarter
of 2009 to 16.2% from 11.1% in the first quarter of 2008.
    K-Bro used $796 of cash in operating activities in the first quarter of
2009 compared to cash generated from operating activities of $3,688 in the
first quarter of 2008. This is as a result of the $1.3 million of increased
EBITDA being offset by increased accounts receivable and decreased accounts
payable due to the timing of various receipts and disbursements.

    Outlook

    "Our strong start to 2009 supports our belief that the year will once
again show meaningful increases in revenue and EBITDA." said Linda McCurdy,
President and Chief Executive Officer. "We entered 2009 with the majority of
our business based on long-term healthcare contracts and continue to
anticipate a low payout ratio, a strong balance sheet, low debt levels and
effective control over our cost profile. This will help us weather the current
economic storms and allow us to pursue growth opportunities that exist."
    Further information can be found in the disclosure documents filed by
K-Bro Linen Income Fund with the securities regulatory authorities, available
at www.sedar.com.

    Corporate Profile

    K-Bro is the largest owner and operator of laundry and linen processing
facilities in Canada. K-Bro provides a comprehensive range of general linen
and operating room linen processing, management and distribution services to
healthcare institutions, hotels and other commercial accounts. K-Bro currently
has processing plants in six Canadian cities: Toronto, Edmonton, Calgary,
Vancouver, Victoria and Quebec City.

    Financial Results

    Figures expressed in percentages are calculated from actual unrounded
amounts.

    Notice to Readers

    This news release contains forward-looking information within the meaning
of applicable securities laws. The use of any of the words "anticipate",
"continue", "expect", "may", "will", "project", "should", "believe", and
similar expressions suggesting future outcomes or events are intended to
identify forward-looking information. Statements regarding such
forward-looking information reflect management's current beliefs and are based
on information currently available to management.
    These statements are not guarantees of future performance and are based
on management's estimates and assumptions that are subject to risks and
uncertainties, which could cause K-Bro's actual performance and financial
results in future periods to differ materially from the forward-looking
information contained in this press release. These risks and uncertainties
include, among other things, (i) K-Bro's competitive environment; (ii) utility
costs; (iii) K-Bro's dependence on long-term contracts, (iv) increased capital
expenditure requirements; (v) reliance on key personnel; and (vi) the
availability of future financing. Material factors or assumptions that were
applied in drawing a conclusion or making an estimate set out in the
forward-looking information include: (i) volumes and pricing assumptions; (ii)
utility costs; (iii) expected contribution from new Calgary plant; (iv)
expected impact of labour cost initiatives; and, (v) the level of capital
expenditures. Although the forward-looking information contained in this news
release is based upon what management believes are reasonable assumptions,
there can be no assurance that actual results will be consistent with these
forward-looking statements. Certain statements regarding forward-looking
information included in this news release may be considered "financial
outlook" for purposes of applicable securities laws, and such financial
outlook may not be appropriate for purposes other than this news release.
    All forward-looking information in this news release is qualified by
these cautionary statements. Forward-looking information in this news release
is presented only as of the date made. Except as required by law, K-Bro does
not undertake any obligation to publicly revise these forward-looking
statements to reflect subsequent events or circumstances.

    %SEDAR: 00021539E




For further information:

For further information: Linda McCurdy, President & CEO, K-Bro Linen
Income Fund, Phone: (780) 453-5218; Doug Thomson, FCA, Vice-President & CFO,
K-Bro Linen Income Fund, Phone: (780) 453-5218


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