K-Bro Linen Income Fund Announces Second Quarter 2007 Results

    EDMONTON, Aug. 13 /CNW/ - K-Bro Linen Income Fund ("K-Bro") (TSX -
KBL.UN) today announced its financial results for the second quarter ended
June 30, 2007.


    -   Revenue for the second quarter of 2007 was $18.6 million, an increase
        of 13.4% over the second quarter of 2006.
    -   EBITDA(1) for the second quarter of 2007 was $2.5 million, an
        increase of 17.6% over 2006.
    -   EBITDA margin improved to 13.5% in the second quarter of 2007 from
        13.0% in the fourth and in the second quarter of 2006.
    -   For the quarter, K-Bro made distributions of $0.27501 per unit ($1.10
        annualized) and distributable cash(1) was $0.40 per unit. Aggregate
        distributions for the quarter were $1.5 million compared to
        distributable cash of $2.2 million, resulting in a payout ratio(1) of
    -   Net earnings after taxes increased by 26.5% in the second quarter to
        $1.1 million from $0.9 million in the second quarter of 2006 as a
        result of the increased revenue and margin as well as an increased
        income tax recovery from a reduction in future tax rates.

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

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

                                          For the three         For the six
                                           months ended        months ended
                                             June 30,            June 30,
                                          2007      2006      2007      2006
    Revenue                            $18,560   $16,362   $36,317   $30,372
    Operating expenses                  16,050    14,228    31,441    26,420
    EBITDA(1)                            2,510     2,134     4,876     3,952
    EBITDA(1) as a % of revenue          13.5%     13.0%     13.4%     13.0%
    Earnings before income taxes           881       780     1,615     1,409
    Income tax recovery                    220        90       437       215
    Net earnings                        $1,101      $870    $2,052    $1,625
    Basic & diluted earnings per Unit    $0.20     $0.16     $0.37     $0.33

    Total assets                       $74,119   $72,260   $74,119   $72,260
    Long-term debt, end of period       $9,510    $6,303    $9,510    $6,303

    Cash provided by operating
     activities                           $124     $(432)   $3,769      $772
    Net change in non-cash working
     capital items                       2,231     2,497       773     2,969
    Maintenance capital expenditures      (170)     (110)     (396)     (259)
    Distributable cash(1)               $2,185    $1,955    $4,146    $3,482
    Distributions declared              $1,511    $1,512    $3,023    $2,726
    Payout ratio(1)                      69.2%     77.8%     72.4%     78.3%

          (1) Non-GAAP Measures:
              In order to provide a better understanding of its results, K-
              Bro uses the terms EBITDA, Distributable cash and Payout ratio.
              These are not earnings or cashflow measures recognized by
              Canadian generally accepted accounting principles ("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 management, and management believes by
              investors and other stakeholders, to evaluate the ongoing
              performance of K-Bro. K-Bro reports on its payout ratio
              (calculated as actual cash distributions divided by
              distributable cash) because management believes that this is a
              key measure used by investors to value K-Bro, assess its
              performance and provide an indication of the sustainability of
              its distributions. The payout ratio depends on the
              distributable cash and the Fund's distribution policy.

    The revenue increase in the second quarter of 2007 was primarily the
result of increases in price and volume from existing customers.
    EBITDA increased by $376 (17.6%) in the quarter compared to the
year-earlier period in 2006 as a result of this additional volume and an
improved EBITDA margin.
    K-Bro generated cash from operating activities of $124 for the second
quarter of 2007, an increase of $556 compared to the second quarter of 2006.
This increase is attributable to a decreased working capital requirement
associated with lower accounts receivable and lower linen purchases as a
result of fewer new customers compared to the year-earlier period.


    "Our outlook for the year remains positive. We're experiencing good
organic growth and progress continues to be made on our margins" said Linda
McCurdy, President and Chief Executive Officer. "Our labor costs and
productivity, completion and transitioning into a new Calgary plant, as well
as capitalizing on potential growth opportunities will be our focus for the
remainder of 2007."
    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
owns and operates processing plants from leased facilities in five Canadian
cities: Toronto, Edmonton, Calgary, Vancouver and Victoria.

    Financial Results

    Figures expressed in percentages are calculated from actual unrounded

    Notice to Readers

    This news release contains forward-looking information that represents
internal expectations, estimates or beliefs. Certain statements contained
within this news release constitute forward-looking statements. The use of any
of the words "anticipate", "continue", "expect", "may", "will", "project",
"should", "believe", and similar expressions are intended to identify forward
looking statements. The expectations, estimates and beliefs contained in such
forward-looking statements necessarily involve known and unknown risks and
uncertainties which may cause the Fund's actual performance and financial
results in future periods to differ materially from any expectations,
estimates and beliefs of future performance or results expressed or implied by
such forward-looking statements. These risks and uncertainties include, among
other things, K-Bro's competitive environment, labor costs and stability, the
Supreme Court's ruling on British Columbia's Bill 29, utility costs,
integration of acquisitions, K-Bro's dependence on long-term contracts, the
availability of future financing, the impact of the federal government's "Tax
Fairness Plan" and such other risks and uncertainties as described in the
Fund's periodic reports filed with Canadian securities regulatory authorities.
Accordingly, unitholders and potential investors are cautioned that events or
circumstances could cause actual results to differ materially from those
discussed. The Fund does not undertake any obligation to publicly revise these
forward-looking statements to reflect subsequent events or circumstances,
except as required by applicable law.

    %SEDAR: 00021539E

For further information:

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

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