K-Bro Reports Q3, 2015 Results and Declares November Dividend

(TSX: KBL)

Q3, 2015 Financial Highlights

  • Revenue for the three months ended September 30, 2015 was $37.7 million, an increase of 4.6% over the comparable 2014 period.

  • EBITDA for the third quarter remained constant at $7.6 million compared to Q3, 2014.

  • EBITDA margin decreased on a quarter over quarter basis to 20.1% in Q3, 2015 compared to 21.1% in Q3, 2014.

  • Net earnings after taxes for the third quarter increased by $0.1 million to $3.9 million compared to $3.8 million in Q3, 2014.





(thousands, except per share amounts

For the three months ended September 30

and percentages)

2015

2014

$ Change

% Change






Revenue

$

37,700

$

36,028

1,672

4.6%

Operating expenses

30,123

28,411

1,712

6.0%

EBITDA(1)

7,577

7,617

(40)

-0.5%

EBITDA(1)as a % of revenue

20.1%

21.1%

-

-1.0%

Earnings before income taxes

5,375

5,182

193

3.7%

Income tax expense

1,523

1,431

92

6.4%

Net earnings

3,852

3,751

101

2.7%

Basic earnings per Share

$

0.49

$

0.53

(0.04)

-7.5%

Diluted earnings per Share

$

0.48

$

0.53

(0.05)

-9.4%

Dividends declared per diluted share    

$

0.30

$

0.30

-

0.0%






Total assets

145,106

117,983

27,123

23.0%






Cash provided by operating activities

5,733

7,787

(2,054)

-26.4%

Net change in non-cash working capital items

(1,193)

1,544

(2,737)

-177.3%

Share-based compensation expense(1)

329

319

10

3.1%

Maintenance capital expenditures

226

127

99

78.0%

Distributable cash flow(1)

6,371

5,797

574

9.9%

Dividends declared

2,395

2,137

258

12.1%

Payout ratio(1)

37.6%

36.7%

-

0.9%

(1) Refer to the Terminology section for further details














(thousands, except per share amounts

For the nine months ended September 30

and percentages)

2015

2014

$ Change

% Change






Revenue

$

106,857

$

102,647

4,210

4.1%

Operating expenses

85,890

82,739

3,151

3.8%

EBITDA(1)

20,967

19,908

1,059

5.3%

EBITDA(1)as a % of revenue

19.6%

19.4%

-

0.2%

Earnings before income taxes

14,275

12,658

1,617

12.8%

Income tax expense

4,365

3,543

822

23.2%

Net earnings

9,910

9,115

795

8.7%

Basic earnings per Share

$

1.25

$

1.30

(0.05)

-3.8%

Diluted earnings per Share

$

1.25

$

1.29

(0.04)

-3.1%

Dividends declared per diluted share

$

0.90

$

0.89

0.01

1.1%






Total assets

145,106

117,983

27,123

23.0%






Cash provided by operating activities

13,720

14,508

(788)

-5.4%






Net change in non-cash working capital items

(4,934)

(2,539)

(2,395)

94.3%

Share-based compensation expense(1)

1,042

793

249

31.4%

Maintenance capital expenditures

859

933

(74)

-7.9%

Distributable cash flow(1)

16,753

15,321

1,432

9.3%

Dividends declared

7,174

6,278

896

14.3%

Payout ratio(1)

42.8%

40.9%

-

1.9%

(1) Refer to the Terminology section for further details.




EDMONTON, Nov. 10, 2015 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announced revenue of $37.7 million and EBITDA of $7.6 million for the three months ended September 30, 2015.  Net earnings after tax were $3.9 million, earnings of $0.49 per share, and distributable cash of $0.799 per diluted share for the quarter.

In the third quarter of 2015, revenue was $37.7 million which was 4.6% higher than the $36.0 million generated in the comparable period in 2014. This period-over-period increase was mainly due to organic growth at existing customers across the plants in addition to new customers secured in existing markets, and additional volume from the 3sHealth Region associated with the opening of the Regina facility in Q3. EBITDA remained constant at $7.6 million in Q3, 2015 in comparison to Q3, 2014.

DIVIDEND

The Board of Directors has declared a monthly dividend of $0.10 per common share for the period from November 1 to 30, 2015, to be paid on December 15, 2015 to shareholders of record on November 30, 2015.  The Corporation's policy is for shareholders of record on the last business day of a calendar month to receive dividends during the fifteen days following the end of such month.  K-Bro designates this dividend as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act (Canada) and similar provincial and territorial legislation.

OUTLOOK

"We are pleased with the solid results for the quarter which are being driven by strong revenues from new and existing customers." said Linda McCurdy, President & Chief Executive Officer.  "We have commenced the transition to our new Regina facility and it is progressing well.  We look forward to completing this transition by the end of the year and further growing the business in a new province. We remain excited about our future and confident in our ability to continue to provide value to our customers and our shareholders."

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 operates nine processing facilities and one distribution centre under three distinctive brands, including K-Bro Linen Systems Inc., Buanderie HMR and Les Buanderies Dextraze, in nine Canadian cities: Québec City, Montréal, Toronto, Saskatoon, Regina, Edmonton, Calgary, Vancouver and Victoria.

Additional information regarding the Corporation including required securities filings are available on our website at www.k-brolinen.com and on the Canadian Securities Administrators' website at www.sedar.com; the System for Electronic Document Analysis and Retrieval ("SEDAR").

K‑Bro est le plus important propriétaire et exploitant de buanderies au Canada. K‑Bro fournit une gamme étendue de services de buanderie aux établissements de soins de santé, hôtels et autres clients commerciaux. K‑Bro exploite actuellement neuf usines sous trois marques distinctives, incluant K-Bro Linen Systems Inc., Buanderie HMR et Les Buanderies Dextraze, dans neuf villes canadiennes: Québec, Montréal, Toronto, Saskatoon, Regina, Edmonton, Calgary, Vancouver et Victoria.

Vous pouvez obtenir des renseignements supplémentaires sur la Société, y compris les documents déposés auprès des autorités de réglementation, sur notre site Web, au www.k-brolinen.com et sur le site Web des autorités canadiennes en valeurs mobilières au www.sedar.com, le site Web du Système électronique de données, d'analyse et de recherche (« SEDAR »).

TERMINOLOGY

Throughout this news release, and other documents referred to, and in order to provide a better understanding of the financial results, K-Bro uses the terms "EBITDA", "Adjusted EBITDA", "Adjusted net earnings", "Adjusted net earnings per share", "distributable cash" and "payout ratio". These terms do not have any standardized meaning under International Financial Reporting Standards ("IFRS") as set out in the CPA Handbook. Therefore, EBITDA, Adjusted EBITDA, Adjusted net earnings, Adjusted net earnings per share, distributable cash and payout ratio may not be comparable to similar measures presented by other issuers.  Specifically, the terms "EBITDA", "Adjusted EBITDA", "Adjusted net earnings", "Adjusted net earnings per share", "distributable cash", and "payout ratio" have been defined as:

EBITDA is defined as earnings before interest, income taxes, depreciation, and amortization. EBITDA is not a recognized measure for financial statement presentation under IFRS.  EBITDA is not intended to represent cash flow from operations, as defined by IFRS, and it should not be considered as an alternative to net earnings, cash flow from operations, or any other measure of performance prescribed by IFRS.  The Corporation's EBITDA may also not be comparable to EBITDA used by other corporations, which may be calculated differently.  The Corporation considers EBITDA to be a meaningful measure to assess its operating performance in addition to standardized IFRS measures.  It is included because the Corporation believes it can be useful in measuring its ability to service debt, fund capital expenditures, and expand its business.












Three Months Ended
September 30,


Nine Months Ended
September 30,

(thousands)


2015

2014


2015

2014

Net earnings


3,852

3,751


$

9,910

$

9,115

Add:








Income tax expense


1,523

1,431


4,365

3,543


Depreciation of property, plant and equipment


1,819

1,742


5,220

5,092


Amortization of intangible assets


507

531


1,503

1,591


Finance expenses (recovery)


(128)

125


(49)

490


Loss on disposal of property, plant and equipment


4

37


18

77

EBITDA


$

7,577

$

7,617


$

20,967

$

19,908

Distributable cash flow 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 an additional GAAP measure generally used by dividend paying corporations 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 IFRS.










Three Months Ended
September 30,


Nine Months Ended
September 30,

(thousands)


2015

2014


2015

2014

Cash provided by operating activities


$

5,733

$

7,787


$

13,720

$

14,508

Deduct (add):








Net changes in non-cash working capital items


(1,193)

1,544


(4,934)

(2,539)


Share-based compensation expense


329

319


1,042

793


Maintenance capital expenditures


226

127


859

933

Distributable cash flow


$

6,371

$

5,797


$

16,753

$

15,321

Payout ratio is defined by management as the actual cash divided by distributable cash. This is a key measure used by investors to value K-Bro, assess its performance and provide an indication of the sustainability of dividends.  The payout ratio depends on the distributable cash and the Corporation's dividend policy.










Three Months Ended
September 30,


Nine Months Ended
September 30,

(thousands)


2015

2014


2015

2014


Cash dividends


2,395

2,137


7,174

6,278


Distributable cash


6,371

5,797


16,753

15,321

Payout ratio


37.6%

36.7%


42.8%

40.9%

Figures expressed in percentages are calculated from amounts rounded in thousands of dollars.

FORWARD LOOKING STATEMENTS

This news release contains forward-looking information that represents internal expectations, estimates or beliefs concerning, among other things, future activities or future operating results and various components thereof. 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 inherent 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 news release.  These risks and uncertainties include, among other things, (i) risks associated with acquisitions, including the possibility of undisclosed material liabilities; (ii) K-Bro's competitive environment; (iii) utility and labour costs; (iv) K-Bro's dependence on long-term contracts with the associated renewal risk, (v) increased capital expenditure requirements; (vi) reliance on key personnel; and (vii) 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 impact of labour cost initiatives; and (iv) 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, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

SOURCE K-Bro Linen Inc.

For further information: Linda McCurdy, President & Chief Executive Officer; Kristie Plaquin, Chief Financial Officer; K-Bro Linen Inc. (TSX: KBL), Phone: 780.453.5218, Email: inquiries@k-brolinen.com, Web: www.k-brolinen.com

RELATED LINKS
http://www.k-brolinen.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890