K-Bro announces record revenue and EBITDA in Q3, 2012
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER U.S. NEWSWIRES/
(TSX: KBL)
Q3, 2012 Financial Results
- Revenue for the three months ended September 30, 2012 was $33.0 million, an increase of 6.0% over the comparable 2011 period.
- EBITDA for the third quarter increased by $0.7 million or by 11.5% to $6.7 million compared to $6.0 million in Q3, 2011.
- EBITDA margin increased in the quarter to 20.4% from 19.4% in the comparative period of 2011 due to the flow through of increased volumes and revenues coupled with favorable variances in commodity costs.
- Net earnings after taxes for the third quarter increased by $0.23 million to $2.96 million compared to $2.73 million in Q3, 2011.
EDMONTON, Nov. 7, 2012 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announced revenue of $33.0 million and EBITDA of $6.7 million for the three-months ended September 30, 2012. Net earnings after tax were $3.0 million, diluted earnings were $0.42 per share, and distributable cash was $0.750 per diluted share for the quarter.
| (thousands, except per share amounts | For the three months ended September 30 | |||||
| and percentages) | 2012 | 2011 | $ Change | % Change | ||
| Revenue | $ | 33,013 | $ | 31,144 | 1,869 | 6.0% |
| Operating expenses | 26,274 | 25,098 | 1,176 | 4.7% | ||
| EBITDA(1) | 6,739 | 6,046 | 693 | 11.5% | ||
| EBITDA(1) as a % of revenue | 20.4% | 19.4% | - | 1.0% | ||
| Earnings before income taxes | 4,183 | 3,679 | 504 | 13.7% | ||
| Income tax expense | 1,224 | 953 | 271 | 28.4% | ||
| Net earnings | 2,959 | 2,726 | 233 | 8.5% | ||
| Basic earnings per Share | $ | 0.42 | $ | 0.39 | 0.03 | 7.7% |
| Diluted earnings per Share | $ | 0.42 | $ | 0.39 | 0.03 | 7.7% |
| Total assets | 94,166 | 90,350 | 3,816 | 4.2% | ||
| Long-term debt, end of period | 7,787 | 7,224 | 563 | 7.8% | ||
| Cash provided by operating activities | 6,223 | 8,217 | (1,994) | -24.3% | ||
| Net change in non-cash working capital items | 775 | 2,928 | (2,153) | -69.9% | ||
| Maintenance capital expenditures | 168 | 9 | 159 | 1820.4% | ||
| Distributable cash flow(1) | 5,280 | 5,280 | - | 0.0% | ||
| Dividends declared | 2,028 | 1,927 | 101 | 5.3% | ||
| Payout ratio(1) | 38.3% | 36.4% | - | 2.0% | ||
| (1) Refer to the Terminology section for further details | ||||||
| (thousands, except per share amounts | For the nine months ended September 30 | |||||
| and percentages) | 2012 | 2011 | $ Change | % Change | ||
| Revenue | $ | 94,704 | $ | 87,701 | 7,003 | 8.0% |
| Operating expenses | 75,964 | 72,310 | 3,654 | 5.1% | ||
| EBITDA(1) | 18,740 | 15,391 | 3,349 | 21.8% | ||
| EBITDA(1) as a % of revenue | 19.8% | 17.5% | - | 2.2% | ||
| Earnings before income taxes | 11,444 | 8,557 | 2,887 | 33.7% | ||
| Income tax expense | 3,053 | 2,272 | 781 | 34.4% | ||
| Net earnings | 8,391 | 6,285 | 2,106 | 33.5% | ||
| Basic earnings per Share | $ | 1.20 | $ | 0.91 | 0.29 | 31.9% |
| Diluted earnings per Share | $ | 1.20 | $ | 0.90 | 0.30 | 33.2% |
| Total assets | 94,166 | 90,350 | 3,816 | 4.2% | ||
| Long-term debt, end of year | 7,787 | 7,224 | 563 | 7.8% | ||
| Cash provided by operating activities | 12,881 | 14,931 | (2,050) | -13.7% | ||
| Net change in non-cash working capital items | (2,358) | 1,322 | (3,680) | -278.4% | ||
| Maintenance capital expenditures | 534 | 656 | (122) | -18.6% | ||
| Distributable cash flow(1) | 14,704 | 12,953 | 1,751 | 13.5% | ||
| Dividends declared | 5,949 | 5,780 | 169 | 2.9% | ||
| Payout ratio(1) | 40.3% | 44.4% | - | -4.1% | ||
| (1) Refer to the Terminology section for further details | ||||||
In the third quarter of 2012, revenue was $33.0 million which was 6.0% higher than the $31.1 million generated in the comparable period in 2011. This year-over-year increase was due to the new volume from the Saskatoon Health Region contract, organic growth from new volume and price increases at existing customers across the remainder of the plants. EBITDA increased from $6.0 million in Q3, 2011 to $6.7 million in Q3, 2012, from the organic growth from our existing businesses, and the addition of the Saskatoon Health Region.
OUTLOOK
"Revenues, EBITDA, net earnings and operating margin experienced record highs during the third quarter of 2012 and we are pleased with the results," said Linda McCurdy, President & Chief Executive Officer. "Through the first three quarters of the year we have seen strong demand for our services and have been successful at developing new business and renewing with our long-term clientele. Our focus going forward is to commission our new Edmonton facility and complete the transition by the end of the third quarter 2013. During the transition we expect a temporary impact on margins until the relocation is complete and the anticipated efficiencies from our new location are fully realized."
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 eight processing facilities under three distinctive brands, including K-Bro Linen Systems Inc., Buanderie HMR and Les Buanderies Dextraze, in seven Canadian cities: Victoria, Vancouver, Calgary, Edmonton, Toronto, Montréal and Québec City.
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 huit usines sous trois marques distinctives, incluant K-Bro Linen Systems Inc., Buanderie HMR et Les Buanderies Dextraze, dans sept villes canadiennes: Québec, Montréal, Toronto, 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", "distributable cash" and "payout ratio". These terms do not have any standardized meaning under International Financial Reporting Standards ("IFRS") as set out in the CICA Handbook. Therefore, EBITDA, distributable cash and payout ratio may not be comparable to similar measures presented by other issuers. Specifically, the terms "EBITDA", "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) | 2012 | 2011 | 2012 | 2011 | ||||||||
| Net earnings | $ | 2,959 | $ | 2,726 | $ | 8,391 | $ | 6,285 | ||||
| Add: | ||||||||||||
| Income tax expense | 1,224 | 953 | 3,053 | 2,272 | ||||||||
| Interest expense and financial charges, net | 272 | 131 | 422 | 319 | ||||||||
| Depreciation of property, plant and equipment | 1,609 | 1,559 | 4,734 | 4,530 | ||||||||
| Amortization of intangible assets | 674 | 673 | 2,020 | 1,955 | ||||||||
| Loss (gain) on disposal of property, plant and equipment | 1 | 4 | 120 | 30 | ||||||||
| EBITDA | $ | 6,739 | $ | 6,046 | $ | 18,740 | $ | 15,391 | ||||
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.
Payout ratio is defined by management as the actual cash dividends 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) | 2012 | 2011 | 2012 | 2011 | ||||||
| Cash provided by operating activities | $ | 6,223 | $ | 8,217 | $ | 12,881 | $ | 14,931 | ||
| Deduct: | ||||||||||
| Net changes in non-cash working capital items | 775 | 2,928 | (2,358) | 1,322 | ||||||
| Maintenance capital expenditures | 168 | 9 | 534 | 656 | ||||||
| Distributable cash flow | $ | 5,280 | $ | 5,280 | $ | 14,705 | $ | 12,953 | ||
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.
Linda McCurdy
President & Chief Executive Officer
Chris Burrows
Vice-President & Chief Financial Officer
K-Bro Linen Inc. (TSX: KBL)
Phone: 780.453.5218
Email: [email protected]
Web: www.k-brolinen.com
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