K-BRO REPORTS RECORD Q3 REVENUE, EBITDA AND ADJUSTED EBITDA
(TSX: KBL)
EDMONTON, AB, Nov. 12, 2025 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announces its Q3 2025 financial and operating results.
Q3 2025 Financial and Operating Highlights
- Revenue
- Revenue increased by 49.3% in Q3 2025 to $155.9 million compared to $104.5 million in Q3 2024.
- Healthcare revenue increased to $82.4 million for Q3 2025 compared to $49.4 million in Q3 2024, or by 66.8%.
- Hospitality revenue increased to $73.5 million for Q3 2025 compared to $55.1 million in 2024, or by 33.6%.
- Adjusted EBITDA1, Adjusted EBITDA Margin1 & Adjusted Net Earnings1
- Adjusted EBITDA increased by 45.9% to $33.5 million in Q3 2025 compared to $23.0 million in Q3 2024.
- Adjusted EBITDA margin decreased by 0.5% to 21.5% in Q3 2025 compared to 22.0% in Q3 2024 as a result of the combination of the Stellar Mayan cost profile.
- Adjusted net earnings increased by 45.8% to $12.0 million in Q3 2025 from $8.3 million in Q3 2024.
- EBITDA, EBITDA Margin & Net Earnings
- EBITDA increased by $9.2 million to $32.0 million for Q3 2025 compared to $22.8 million in Q3 2024.
- EBITDA margin for the quarter decreased to 20.5% in 2025 compared to 21.9% in 2024 as a result of the combination of the Stellar Mayan cost profile and one-time costs.
- Net earnings for the quarter increased by $0.8 million to $8.9 million in 2025 from $8.1 million in 2024.
- For the third quarter of 2025, K-Bro declared dividends of $0.300 per common share.
- Debt net of cash at the end of Q3 2025 was $220.3 million compared to $114.4 million at the end of fiscal 2024 due to the amortizing term loan to finance the Stellar Mayan acquisition.
Linda McCurdy, President & CEO of K-Bro, commented that "On June 11, 2025, we completed the acquisition of Stellar Mayan establishing a national footprint in the UK commercial laundry and textile rental sector and enhancing K-Bro's revenue diversification by geographic and business mix. We are excited to become a strategic supplier to the healthcare sector in the UK like we are in Canada. We're proud of our talented combined team that focuses tirelessly on being dependable partners to our existing and new healthcare and hospitality customers."
"Q3 marks our sixth consecutive quarter of record results and includes early contributions from Stellar Mayan. While still early, we're pleased with the progress of our ongoing integration efforts as we work towards optimizing our local and national footprints, and positioning K-Bro for long-term growth. Concurrently, our transition team is reviewing cost synergies, operational efficiencies and platform optimizations and we anticipate run-rate cost synergies will be realized over the contemplated twenty four month time horizon. Both of K-Bro's healthcare and hospitality segments continue to experience steady volume trends. We continue to monitor the evolving state of tariffs and other trade policies. We are not currently anticipating meaningful impacts on our business, as key customers and suppliers are not US-based."
| (1) |
Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Earnings are non-GAAP measures. See "Terminology" for further information on the definition and composition of these measures. |
Highlights and Significant Events for Q3 2025
Business Acquisition - Stellar Mayan
On May 13, 2025, the Corporation announced the signing of a share purchase agreement to acquire 100% of UK based Stellar Mayan. Stellar Mayan includes three operating businesses: (i) Synergy Health Managed Services Limited ("Synergy"); (ii) Grosvenor Contracts (London) Limited ("Grosvenor Contracts", "GC"); and (iii) Aeroserve (MSP) Limited and Aeroserve Euro Limited, jointly referred to as Aeroserve Linen Services ("AeroServe").
On June 11, 2025, the Corporation announced that it completed the previously announced acquisition of Stellar Mayan, a leading commercial laundry business in England serving the healthcare and hospitality markets. The Acquisition is highly complementary to K-Bro's existing UK businesses, Fishers and Shortridge, and creates a national footprint in the UK's commercial laundry and textile rental sector.
The Corporation partially financed the Stellar Mayan Acquisition through the issuance of 2,334,500 common shares (initially issued as subscription receipts) at a price of $34.55 per common share (initially issued as subscription receipts). The remainder of the Acquisition was funded by the Corporation's new $134.3 million four-year amortizing term loan. Based on the Corporation's evaluation of the Stellar Mayan Acquisition and the criteria in the identification of a business combination established in IFRS 3, the Stellar Mayan Acquisition has been accounted for using the acquisition method, whereby the purchase consideration is allocated to the fair values of the net assets acquired.
At the time the financial statements were authorized for issue, and due to the timing of the Acquisition, the Corporation has not yet completed the accounting for the Stellar Mayan Acquisition. This includes the accounting for the amounts attributable to property, plant and equipment, intangible assets and the associated goodwill.
The preliminary purchase price allocated to the net assets acquired, based on their estimated fair values, is as follows:
| |
(in thousands) |
| |
|
| Cash consideration |
$ 194,695 |
| Total purchase price (1) |
$ 194,695 |
| 1) |
This is presented net of cash acquired. Cash acquired was $5,156. |
The assets and liabilities recognized as a result of the Stellar Mayan Acquisition are as follows:
| (in thousands) |
|
| Net Assets Acquired: |
|
| Accounts receivable |
25,017 |
| Prepaid expenses and deposits |
3,867 |
| Linen in service |
28,553 |
| Accounts payable and accrued liabilities |
(27,911) |
| Lease liabilities |
(27,892) |
| Provisions |
(220) |
| Deferred income taxes |
(8,938) |
| Property, plant and equipment (1) |
90,863 |
| Intangible assets |
44,542 |
| Net identifiable assets acquired |
127,881 |
| Goodwill |
66,814 |
| Net assets acquired |
$ 194,695 |
| 1) |
Includes ROUA from the UK Division of $32,556. |
The provisional intangible assets acquired are made up of $33.2 million related to customer contracts and $11.3 million related to the brands. The goodwill is attributable to the workforce, and the efficiencies and synergies created between the existing business of the Corporation and the acquired business. Goodwill will not be deductible for tax purposes.
Acquisition related costs
For the nine months ended September 30, 2025, $7,334 in professional fees associated with the Stellar Mayan Acquisition has been included in Corporate expenses.
Revenue and profit information
The acquired business contributed revenues of $53,867 to the Corporation for the period from June 12, 2025 to September 30, 2025. If the Acquisition had occurred on January 1, 2025, consolidated pro-forma revenue for the period ended September 30, 2025 would have been $436,171.
The acquired business contributed a net deficit of ($605) to the Corporation for the period from June 12, 2025 to September 30, 2025. If the Acquisition had occurred on January 1, 2025, consolidated pro-forma net earnings for the period ended September 30, 2025 would have been $23,677, including the recognition of a non-recurring tax loss carryforward of $8,133.
Common Share Offering
On June 11, 2025, the Corporation closed the Stellar Mayan Acquisition. Through a bought deal, the Corporation issued 2,334,500 common shares at $34.55 per share, which included full exercise of the over-allotment option. The proceeds of the common share offering were used to finance a portion of the Stellar Mayan Acquisition and pay certain fees and expenses related to acquisition and offering. The net proceeds of the offering after deducting expenses of the offering and the underwriter's fee were $75.6 million.
Revolving Credit Facility
On June 11, 2025, the Corporation amended its existing three-year committed Syndicated Credit Facility Agreement to include a $134.3 million four-year amortizing term loan and to extend the term of the facility from March 25, 2027 to June 10, 2029. The amendment included a reduction in the accordion to $50 million from $75 million.
On March 26, 2024, the Corporation entered into a three-year committed Syndicated Credit Facility Agreement from March 26, 2024 to March 25, 2027. The agreement consists of a $175 million revolving credit facility plus a $75 million accordion.
The term loan and revolving credit facility are collateralized by a general security agreement, bear interest at prime or the applicable banker's acceptance rate, plus an interest margin dependent on certain financial ratios. Interest payments only are due during the term for the revolving portion of the syndicated credit facility. For the term loan portion of the syndicated credit facility, repayments of the principal amount shall be repaid in quarterly installments commencing September 30, 2025, in addition to required interest payments. The additional interest margin can range between 0.00% to 2.00% dependent upon the calculated Total Funded Debt / Credit Facility EBITDA financial ratio, with a range between 0 to 3.50x. The Funded Debt to EBITDA Ratio requirement has an increase to 4.00x for the first four quarters following any material acquisition. The required calculated Funded Debt / Credit Facility EBITDA financial ratio is subject to change based off certain terms and conditions. As at September 30, 2025 the combined interest rate was 5.70%.
The Corporation's incremental borrowing rate under its existing credit facility is determined by the Canadian prime rate plus an applicable margin based on the ratio of Funded Debt to EBITDA as defined in the credit agreement.
Business Acquisition - Shortridge
In the nine months ended September 30, 2025, the provisional amounts that were previously disclosed in the December 31, 2024 Annual Financial Statements, associated with the 100% share capital acquisition of Shortridge Ltd, a private hospitality laundry provider based in the North West of England were finalized. No new information which resulted in adjustments to the fair value of net identifiable assets acquired was obtained during the quarter ended September 30, 2025.
Business Acquisition - Buanderie C.M.
In the nine months ended September 30, 2025, the provisional amounts that were previously disclosed in the December 31, 2024 Annual Financial Statements, associated with the 100% share capital acquisition of Buanderie C.M., a private laundry and linen operator located in Montreal serving the healthcare market were finalized. No new information which resulted in adjustments to the fair value of net identifiable assets acquired was obtained during the quarter ended September 30, 2025.
Capital Investment Plan
For fiscal 2025, the Corporation's planned capital spending is expected to be in the range of $10.0 to $12.0 million on a consolidated basis. This guidance includes both strategic and maintenance capital requirements to support existing base business in both Canada and the UK. These amounts are not reflective of incremental capital required for Stellar Mayan, for which the capital investment is anticipated to be $9.3 million ($5.0 million GBP). We will continue to assess capital needs within our facilities and prioritize projects that have shorter term paybacks as well as those that are required to maintain efficient and reliable operations.
Economic Conditions
Evolving global and Canadian foreign policies, geopolitical events and economic conditions may impact inflation, energy pricing, labour availability, supply chain efficiency, trade policies, tariffs and/or other items, which may have a direct or indirect impact on the Corporation's business.
The Corporation's Credit Facility is subject to floating interest rates and, therefore, is subject to fluctuations in interest rates which are beyond the Corporation's control. Changes in interest rates, both domestically and internationally, could negatively affect the Corporation's cost of financing its operations and investments.
Uncertainty about judgments, estimates and assumptions made by management during the preparation of the Corporation's consolidated financial statements related to potential impacts of geopolitical events and changing interest rates on revenue, expenses, assets, liabilities, and note disclosures could result in a material adjustment to the carrying value of the asset or liability affected.
Financial Results
| |
For The Three Months Ended September 30, |
|
|
|||||
| (thousands, except per share amounts |
Canadian |
UK |
2025 |
Canadian |
UK |
2024 |
$ Change |
% Change |
| Revenue |
$ 72,727 |
$ 83,221 |
$ 155,948 |
$ 69,610 |
$ 34,859 |
$ 104,469 |
51,479 |
49.3 % |
| Expenses included in EBITDA |
56,323 |
67,591 |
123,914 |
55,229 |
26,397 |
81,626 |
42,288 |
51.8 % |
| EBITDA(1) |
16,404 |
15,630 |
32,034 |
14,381 |
8,462 |
22,843 |
9,191 |
40.2 % |
| EBITDA as a % of revenue |
22.6 % |
18.8 % |
20.5 % |
20.7 % |
24.3 % |
21.9 % |
-1.4 % |
-6.4 % |
| |
|
|
|
|
|
|
|
|
| Adjusted EBITDA(1) |
16,599 |
16,924 |
33,523 |
14,510 |
8,462 |
22,972 |
10,551 |
45.9 % |
| Adjusted EBITDA as a % of revenue |
22.8 % |
20.3 % |
21.5 % |
20.8 % |
24.3 % |
22.0 % |
-0.5 % |
-2.3 % |
| Net earnings |
3,870 |
4,985 |
8,855 |
3,659 |
4,470 |
8,129 |
726 |
8.9 % |
| |
|
|
|
|
|
|
|
|
| Basic earnings per share |
$ 0.301 |
$ 0.388 |
$ 0.689 |
$ 0.350 |
$ 0.428 |
$ 0.778 |
$ (0.089) |
-11.4 % |
| Diluted earnings per share |
$ 0.299 |
$ 0.385 |
$ 0.684 |
$ 0.347 |
$ 0.424 |
$ 0.771 |
$ (0.087) |
-11.3 % |
| Dividends declared per diluted share |
|
|
$ 0.300 |
|
|
$ 0.300 |
$ - |
0.0 % |
| |
|
|
|
|
|
|
|
|
| Adjusted net earnings (1) |
4,065 |
7,975 |
12,040 |
3,788 |
4,470 |
8,258 |
3,782 |
45.8 % |
| Adjusted basic earnings per share (1) |
$ 0.316 |
$ 0.620 |
$ 0.936 |
$ 0.363 |
$ 0.428 |
$ 0.791 |
$ 0.145 |
18.3 % |
| Adjusted diluted earnings per share (1) |
$ 0.314 |
$ 0.615 |
$ 0.929 |
$ 0.359 |
$ 0.424 |
$ 0.783 |
$ 0.146 |
18.6 % |
| Total assets |
|
|
718,556 |
|
|
452,077 |
266,479 |
58.9 % |
| Debt (excludes lease liabilities) (2) |
|
|
246,318 |
|
|
135,875 |
110,443 |
81.3 % |
| Cash provided by operating activities |
|
|
20,609 |
|
|
18,384 |
2,225 |
12.1 % |
| Net change in non-cash working capital items |
|
|
(4,100) |
|
|
603 |
(4,703) |
-779.9 % |
| Share-based compensation expense |
|
|
564 |
|
|
443 |
121 |
27.3 % |
| Maintenance capital expenditures |
|
|
99 |
|
|
464 |
(365) |
-78.7 % |
| Principal elements of lease payments |
|
|
4,452 |
|
|
2,670 |
1,782 |
66.7 % |
| Distributable cash flow (1) |
|
|
19,594 |
|
|
14,204 |
5,390 |
37.9 % |
| Dividends declared |
|
|
3,897 |
|
|
3,174 |
723 |
22.8 % |
| Payout ratio (1) |
|
|
19.9 % |
|
|
22.3 % |
-2.4 % |
-10.8 % |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
For The Nine Months Ended September 30, |
|
|
|||||
| (thousands, except per share amounts |
Canadian |
UK |
2025 |
Canadian |
UK |
2024 |
$ Change |
% Change |
| Revenue |
$ 208,686 |
$ 151,305 |
$ 359,991 |
$ 196,979 |
$ 81,184 |
$ 278,163 |
81,828 |
29.4 % |
| Expenses included in EBITDA |
167,979 |
126,192 |
294,171 |
161,732 |
65,410 |
227,142 |
67,029 |
29.5 % |
| EBITDA(1) |
40,707 |
25,113 |
65,820 |
35,247 |
15,774 |
51,021 |
14,799 |
29.0 % |
| EBITDA as a % of revenue |
19.5 % |
16.6 % |
18.3 % |
17.9 % |
19.4 % |
18.3 % |
0.0 % |
0.0 % |
| |
|
|
|
|
|
|
|
|
| Adjusted EBITDA(1) |
43,196 |
29,047 |
72,243 |
38,372 |
16,282 |
54,654 |
17,589 |
32.2 % |
| Adjusted EBITDA as a % of revenue |
20.7 % |
19.2 % |
20.1 % |
19.5 % |
20.1 % |
19.6 % |
0.5 % |
2.6 % |
| Net earnings |
7,568 |
7,532 |
15,100 |
7,113 |
7,357 |
14,470 |
630 |
4.4 % |
| |
|
|
|
|
|
|
|
|
| Basic earnings per share |
$ 0.660 |
$ 0.656 |
$ 1.316 |
$ 0.679 |
$ 0.703 |
$ 1.382 |
$ (0.066) |
-4.8 % |
| Diluted earnings per share |
$ 0.656 |
$ 0.652 |
$ 1.308 |
$ 0.675 |
$ 0.698 |
$ 1.373 |
$ (0.065) |
-4.7 % |
| Dividends declared per diluted share |
|
|
$ 0.900 |
|
|
$ 0.900 |
$ - |
0.0 % |
| |
|
|
|
|
|
|
|
|
| Adjusted net earnings (1) |
10,057 |
13,162 |
23,219 |
10,238 |
7,865 |
18,103 |
5,116 |
28.3 % |
| Adjusted basic earnings per share (1) |
$ 0.877 |
$ 1.147 |
$ 2.024 |
$ 0.978 |
$ 0.753 |
$ 1.731 |
$ 0.293 |
16.9 % |
| Adjusted diluted earnings per share (1) |
$ 0.870 |
$ 1.140 |
$ 2.010 |
$ 0.970 |
$ 0.747 |
$ 1.717 |
$ 0.293 |
17.1 % |
| Total assets |
|
|
718,556 |
|
|
452,077 |
266,479 |
58.9 % |
| Debt (excludes lease liabilities) (2) |
|
|
246,318 |
|
|
135,875 |
110,443 |
81.3 % |
| |
|
|
|
|
|
|
|
|
| Cash provided by operating activities |
|
|
41,014 |
|
|
38,939 |
2,075 |
5.3 % |
| Net change in non-cash working capital items |
|
|
(8,864) |
|
|
(2,298) |
(6,566) |
-285.7 % |
| Share-based compensation expense |
|
|
1,900 |
|
|
1,497 |
403 |
26.9 % |
| Maintenance capital expenditures |
|
|
3,793 |
|
|
1,915 |
1,878 |
98.1 % |
| Principal elements of lease payments |
|
|
10,308 |
|
|
7,969 |
2,339 |
29.4 % |
| Distributable cash flow (1) |
|
|
33,877 |
|
|
29,856 |
4,021 |
13.5 % |
| Dividends declared |
|
|
10,493 |
|
|
9,520 |
973 |
10.2 % |
| Payout ratio (1) |
|
|
31.0 % |
|
|
31.9 % |
-0.9 % |
-2.8 % |
| (1) |
See "Terminology" for further details |
| (2) |
Debt is comprised of current and long-term debt. |
Dividends
The Board of Directors has declared a monthly dividend of $0.10 per common share for the period from November 1 to November 30, 2025, to be paid on December 15, 2025, to shareholders of record on November 30, 2025. 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
On June 11, 2025, the Corporation completed its acquisition of Stellar Mayan establishing a national footprint in the UK commercial laundry and textile rental sector, enhancing revenue diversification by geographic mix and business mix. Based on annualized consolidated revenue, K-Bro's combined business is approximately evenly split between Canada and the UK with national platforms in both countries. Prior to the acquisition, Stellar Mayan had experienced both new customer wins and customer losses, which were factored into the negotiation of the final purchase price. The net impact to Stellar Mayan revenue and adjusted EBITDA on a run-rate basis has been consistent with management expectations.
The UK Managing Director oversees K-Bro's UK operations, including the Stellar Mayan business integration plan. The Corporation anticipates business integration will take 12 to 18 months, and a transition team is executing the business integration plan. The transition team is reviewing cost synergies, operational efficiencies and platform optimizations to position the combined UK business for long-term growth. Management anticipates run-rate cost synergies will be realized towards the end of anticipated timelines to achieve.
The Corporation's healthcare and hospitality segments continue to experience steady volume trends. Management believes the UK healthcare market shares similar characteristics and trends to the Canadian healthcare market. For the healthcare segment, management expects steady increases to activity levels supported by a continued focus on reducing wait times and enhancing patient care. For the hospitality segment, management expects solid activity levels from both business and leisure travel reflecting historical seasonal trends.
Going forward, management expects the Adjusted EBITDA margin for the Canadian division to remain at similar levels to seasonally adjusted historical margins. In-line with management's expectations, due to the lower EBITDA margin profile of Stellar Mayan, the consolidated UK divisional adjusted EBITDA margins will be lower than seasonally adjusted historical margins. The Corporation continues to monitor evolving global and Canadian foreign policies, geopolitical events and economic conditions, which could have a direct or indirect impact on the business. The Corporation is not currently expecting meaningful impacts on the business, as key customers and suppliers are not US-based.
In 2024, the Corporation modified its definition of Adjusted EBITDA. As K-Bro actively pursues its growth opportunities, the Corporation will continue to incur certain transaction, transition, syndication/structural financing costs. In this context, management believes Adjusted EBITDA assists investors to assess our performance on a consistent basis as it is an indication of our capacity to generate income from operations. Adjusting items are detailed in the tables within "Terminology".
With the completion of the Stellar Mayan acquisition, management's near-term focus is on business integration. However, K-Bro evaluates potential strategic acquisitions that may complement its platform. Over the medium and longer-term, management sees opportunities to accelerate growth in North America, Europe, and similar geographies which remain highly fragmented. K-Bro will look to leverage its strong liquidity position, balance sheet and access to the capital markets to execute on these opportunities, should they arise. For further information about the impact of other economic factors on our business, see the "Summary of Interim Results and Key Events".
CORPORATE PROFILE
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada and a national market leader for laundry and textile rental services in the UK. K‑Bro and its wholly-owned subsidiaries operate across Canada and the UK, providing a range of linen services to healthcare institutions, hotels and other commercial accounts that include the processing, management and distribution of general linen and operating room linen.
The Corporation's operations in Canada include eleven processing facilities and one distribution centre in nine Canadian cities: Québec City, Montréal, Toronto, Regina, Saskatoon, Edmonton, Calgary, Vancouver and Victoria.
The Corporation's operations in the UK include five distinctive brands, Fishers Topco Ltd. ("Fishers") which was acquired by K-Bro on November 27, 2017, Shortridge Ltd. ("Shortridge"), which was acquired by K-Bro on April 30, 2024, and three brands acquired through the acquisition of Stellar Mayan Ltd. ("Stellar Mayan") on June 11, 2025, previously known as Star Mayan Limited. The three brands acquired were Synergy Health Managed Services Limited ("Synergy"), Aeroserve (MSP) Limited and Aeroserve Euro Limited, jointly referred to as Aeroserve Linen ("Aeroserve"), and Grosvenor Contracts (London) Limited ("Grosvenor Contracts", "GC").
Fishers was established in 1900 and is an operator of laundry and linen processing facilities in Scotland, providing linen rental, workwear hire and cleanroom garment services to the hospitality, healthcare, manufacturing and pharmaceutical sectors. Fishers' client base includes major hotel chains and prestigious venues across Scotland and the North of England. The company operates in five cities, in Scotland and the North of England with facilities in Cupar, Perth, Newcastle, Livingston and Coatbridge.
Shortridge is headquartered in North West England, with laundry processing sites in Lillyhall and Dumfries and a distribution centre in Darlington. Shortridge, established in 1845, specialises in providing high quality laundry services to local independent hospitality businesses, including hotels, B&Bs, self-catering units and restaurants.
Stellar Mayan, doing business as Synergy, Grosvenor Contracts and AeroServe, is a leading commercial laundry business in England, serving the healthcare and hospitality markets. Typical services offered include processing, management and distribution of healthcare and hospitality linens, including sheets, blankets, towels, surgical gowns and other linen. Stellar Mayan has seven operating facilities strategically located across England: Bermondsey, Derby, Dunstable, Sheffield, Slough (2), and St. Helens, in addition to a distribution depot in Manchester.
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.sedarplus.ca; the System for Electronic Document Analysis and Retrieval ("SEDAR +").
TERMINOLOGY
Throughout this news release and other documents referred to herein, 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", "debt to total capital", "distributable cash" and "payout ratio". These terms do not have any standardized meaning under International Financial Reporting Standards ("IFRS Accounting Standards") as set out in the CICA 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 follows:
EBITDA
EBITDA (Earnings before interest, taxes, depreciation and amortization) comprises revenues less operating costs before financing costs, capital asset and intangible asset amortization, and income taxes.
EBITDA is a sub‑total presented within the statement of earnings. EBITDA is not considered an alternative to net earnings in measuring K‑Bro's performance. EBITDA should not be used as an exclusive measure of cash flow since it does not account for the impact of working capital changes, capital expenditures, debt changes and other sources and uses of cash, which are disclosed in the consolidated statements of cash flows.
| |
|
Three Months Ended |
|
Nine Months Ended |
||||
| (thousands) |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
| |
|
|
|
|
|
|
|
|
| Net earnings |
$ 8,855 |
|
$ 8,129 |
|
$ 15,100 |
|
$ 14,470 |
|
| Add: |
|
|
|
|
|
|
|
|
| |
Income tax expense |
3,241 |
|
2,481 |
|
4,209 |
|
4,175 |
| |
Finance expense |
5,024 |
|
3,322 |
|
11,920 |
|
8,129 |
| |
Depreciation of property, plant and equipment |
12,069 |
|
7,823 |
|
29,182 |
|
22,110 |
| |
Amortization of intangible assets |
2,845 |
|
1,088 |
|
5,409 |
|
2,137 |
| |
|
|
|
|
|
|
|
|
| EBITDA |
$ 32,034 |
|
$ 22,843 |
|
$ 65,820 |
|
$ 51,021 |
|
Non-GAAP Measures
Adjusted EBITDA
K‑Bro reports Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) as a key measure used by management to evaluate performance. We believe Adjusted EBITDA assists investors to assess our performance on a consistent basis as it is an indication of our capacity to generate income from operations before taking into account management's financing decisions as well as costs of acquiring tangible and intangible capital assets. The Corporation modified its definition for Adjusted EBITDA in 2024 and has updated its comparative quarters to reflect the modified definition.
"Adjusted EBITDA" is EBITDA (defined above) with the addition or deduction of certain amounts incurred which management does not consider indicative of ongoing operating performance. This includes transaction costs, structural finance costs, transition and integration costs, restructuring costs, gains/losses on settlement of contingent consideration and any other non-recurring transactions.
The Corporation believes these non-GAAP definitions provide more meaningful reflections of normalized financial performance from operations and will enhance period-over-period comparability.
| |
|
Three Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| EBITDA |
$ 16,404 |
$ 15,630 |
$ 32,034 |
$ 14,381 |
$ 8,462 |
$ 22,843 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
133 |
149 |
282 |
139 |
- |
139 |
| |
Syndication/Structural Finance Costs 2 |
- |
- |
- |
- |
- |
- |
| |
Transition Costs 3 |
62 |
1,145 |
1,207 |
490 |
- |
490 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(500) |
- |
(500) |
| Adjusted EBITDA |
$ 16,599 |
$ 16,924 |
$ 33,523 |
$ 14,510 |
$ 8,462 |
$ 22,972 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| |
|
Nine Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| EBITDA |
$ 40,707 |
$ 25,113 |
$ 65,820 |
$ 35,247 |
$ 15,774 |
$ 51,021 |
|
| Adjusting Items: |
|
|
|
|
|
- |
|
| |
Transaction Costs 1 |
4,033 |
2,789 |
6,822 |
822 |
508 |
1,330 |
| |
Syndication/Structural Finance Costs 2 |
484 |
- |
484 |
1,892 |
- |
1,892 |
| |
Transition Costs 3 |
62 |
1,145 |
1,207 |
911 |
- |
911 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(500) |
- |
(500) |
| |
Non-recurring gains 5 |
(2,090) |
- |
(2,090) |
- |
- |
- |
| Adjusted EBITDA |
$ 43,196 |
$ 29,047 |
$ 72,243 |
$ 38,372 |
$ 16,282 |
$ 54,654 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to non-recurring gain of $1,519 from the sale of the Granby facility and a gain of $571 related to a one-time gain on a customer contract. |
Adjusted Net Earnings and Adjusted Earnings per Share
Adjusted Net Earnings and Adjusted Earnings per Share are non-GAAP measures. These non-GAAP measures are defined to exclude certain amounts which management does not consider indicative of ongoing operating performance. This includes transaction costs, structural finance costs, transition and integration costs, restructuring costs, gains/losses on settlement of contingent consideration, any other non-recurring transactions, and the amortization of intangible assets from the Stellar Mayan acquisition on June 11, 2025, given the material nature of the acquisition. The Corporation believes these non-GAAP definitions provide more meaningful reflections of normalized financial performance from operations and will enhance period-over-period comparability.
| |
|
Three Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| Net Earnings |
$ 3,870 |
$ 4,985 |
$ 8,855 |
$ 3,659 |
$ 4,470 |
$ 8,129 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
133 |
149 |
282 |
139 |
- |
139 |
| |
Syndication/Structural Finance Costs 2 |
- |
- |
- |
- |
- |
- |
| |
Transition Costs 3 |
62 |
1,145 |
1,207 |
490 |
- |
490 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(500) |
- |
(500) |
| |
Stellar Mayan intangible asset amortization 5 |
- |
1,696 |
1,696 |
- |
- |
- |
| Adjusted Net Earnings |
$ 4,065 |
$ 7,975 |
$ 12,040 |
$ 3,788 |
$ 4,470 |
$ 8,258 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to amortization of acquired intangible assets from Stellar Mayan acquisition on June 11, 2025. |
| |
|
Nine Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| Net Earnings |
$ 7,568 |
$ 7,532 |
$ 15,100 |
$ 7,113 |
$ 7,357 |
$ 14,470 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
4,033 |
2,789 |
6,822 |
822 |
508 |
1,330 |
| |
Syndication/Structural Finance Costs 2 |
484 |
- |
484 |
1,892 |
- |
1,892 |
| |
Transition Costs 3 |
62 |
1,145 |
1,207 |
911 |
- |
911 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(500) |
- |
(500) |
| |
Non-recurring gains 5 |
(2,090) |
- |
(2,090) |
- |
- |
- |
| |
Stellar Mayan intangible asset amortization 6 |
- |
1,696 |
1,696 |
- |
- |
- |
| Adjusted Net Earnings |
$ 10,057 |
$ 13,162 |
$ 23,219 |
$ 10,238 |
$ 7,865 |
$ 18,103 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to non-recurring gain of $1,519 from the sale of the Granby facility and a gain of $571 related to a one-time gain on a customer contract. |
| 6 |
Relates to amortization of acquired intangible assets from Stellar Mayan acquisition on June 11, 2025. |
| |
|
Three Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| Basic Earnings per Share |
0.301 |
0.388 |
0.689 |
0.350 |
0.428 |
0.778 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
0.010 |
0.012 |
0.022 |
0.014 |
- |
0.014 |
| |
Syndication/Structural Finance Costs 2 |
- |
- |
- |
- |
- |
- |
| |
Transition Costs 3 |
0.005 |
0.088 |
0.093 |
0.047 |
- |
0.047 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(0.048) |
- |
(0.048) |
| |
Stellar Mayan intangible asset amortization 5 |
- |
0.132 |
0.132 |
- |
- |
- |
| Adjusted Basic Earnings per Share |
0.316 |
0.620 |
0.936 |
0.363 |
0.428 |
0.791 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to amortization of acquired intangible assets from Stellar Mayan acquisition on June 11, 2025. |
| |
|
Nine Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| Basic Earnings per Share |
0.660 |
0.656 |
1.316 |
0.679 |
0.703 |
1.382 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
0.352 |
0.243 |
0.595 |
0.080 |
0.050 |
0.130 |
| |
Syndication/Structural Finance Costs 2 |
0.042 |
- |
0.042 |
0.180 |
- |
0.180 |
| |
Transition Costs 3 |
0.005 |
0.100 |
0.105 |
0.087 |
- |
0.087 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(0.048) |
- |
(0.048) |
| |
Non-recurring gains 5 |
(0.182) |
- |
(0.182) |
- |
- |
- |
| |
Stellar Mayan intangible asset amortization 6 |
- |
0.148 |
0.148 |
- |
- |
- |
| Adjusted Basic Earnings per Share |
0.877 |
1.147 |
2.024 |
0.978 |
0.753 |
1.731 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to non-recurring gain of $1,519 from the sale of the Granby facility and a gain of $571 related to a one-time gain on a customer contract. |
| 6 |
Relates to amortization of acquired intangible assets from Stellar Mayan acquisition on June 11, 2025. |
| |
|
Three Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| Diluted Earnings per Share |
0.299 |
0.385 |
0.684 |
0.347 |
0.424 |
0.771 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
0.010 |
0.012 |
0.022 |
0.013 |
- |
0.013 |
| |
Syndication/Structural Finance Costs 2 |
- |
- |
- |
- |
- |
- |
| |
Transition Costs 3 |
0.005 |
0.088 |
0.093 |
0.047 |
- |
0.047 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(0.048) |
- |
(0.048) |
| |
Stellar Mayan intangible asset amortization 5 |
- |
0.130 |
0.130 |
- |
- |
- |
| Adjusted Diluted Earnings per Share |
0.314 |
0.615 |
0.929 |
0.359 |
0.424 |
0.783 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to amortization of acquired intangible assets from Stellar Mayan acquisition on June 11, 2025. |
| |
|
Nine Months Ended September 30, |
|||||
| |
|
Canadian |
UK |
|
Canadian |
UK |
|
| (thousands) |
2025 |
2025 |
2025 |
2024 |
2024 |
2024 |
|
| Diluted Earnings per Share |
0.656 |
0.652 |
1.308 |
0.675 |
0.698 |
1.373 |
|
| Adjusting Items: |
|
|
|
|
|
|
|
| |
Transaction Costs 1 |
0.348 |
0.243 |
0.591 |
0.077 |
0.049 |
0.126 |
| |
Syndication/Structural Finance Costs 2 |
0.042 |
- |
0.042 |
0.179 |
- |
0.179 |
| |
Transition Costs 3 |
0.005 |
0.099 |
0.104 |
0.086 |
- |
0.086 |
| |
Gain on settlement of contingent consideration 4 |
- |
- |
- |
(0.047) |
- |
(0.047) |
| |
Non-recurring gains 5 |
(0.181) |
- |
(0.181) |
- |
- |
- |
| |
Stellar Mayan intangible asset amortization 6 |
- |
0.146 |
0.146 |
- |
- |
- |
| Adjusted Diluted Earnings per Share |
0.870 |
1.140 |
2.010 |
0.970 |
0.747 |
1.717 |
|
| 1 |
Relates to legal, professional and consulting fee expenditures made related to acquisitions. |
| 2 |
Relates to costs related to syndication and credit agreement restructuring costs. |
| 3 |
Relates to transition costs incurred as a result of the Corporation's acquisitions. |
| 4 |
Relates to derecognition of contingent consideration. This gain is a non-cash item outside of core operations. |
| 5 |
Relates to non-recurring gain of $1,519 from the sale of the Granby facility and a gain of $571 related to a one-time gain on a customer contract. |
| 6 |
Relates to amortization of acquired intangible assets from Stellar Mayan acquisition on June 11, 2025. |
Distributable Cash Flow
Distributable cash flow is a measure used by management to evaluate the Corporation's performance. While the closest IFRS Accounting Standards measure is cash provided by operating activities, distributable cash flow is considered relevant because it provides an indication of how much cash generated by operations is available after capital expenditures. It should be noted that although we consider this measure to be distributable cash flow, financial and non‑financial covenants in our credit facilities and dealer agreements may restrict cash from being available for dividends, re‑investment in the Corporation, potential acquisitions, or other purposes. Investors should be cautioned that distributable cash flow may not actually be available for growth or distribution from the Corporation. Management refers to "Distributable cash flow" as to cash provided by (used in) operating activities with the addition of net changes in non‑cash working capital items, less share‑based compensation, maintenance capital expenditures and principal elements of lease payments.
| |
|
|
Three Months Ended |
|
Nine Months Ended |
||
| (thousands) |
|
2025 |
2024 |
|
2025 |
2024 |
|
| Cash provided by operating activities |
|
$ 20,609 |
$ 18,384 |
|
$ 41,014 |
$ 38,939 |
|
| Deduct (add): |
|
|
|
|
|
|
|
| |
Net changes in non-cash working capital items |
|
(4,100) |
603 |
|
(8,864) |
(2,298) |
| |
Share-based compensation expense |
|
564 |
443 |
|
1,900 |
1,497 |
| |
Maintenance capital expenditures |
|
99 |
464 |
|
3,793 |
1,915 |
| |
Principal elements of lease payments |
|
4,452 |
2,670 |
|
10,308 |
7,969 |
| Distributable cash flow |
|
$ 19,594 |
$ 14,204 |
|
$ 33,877 |
$ 29,856 |
|
Payout Ratio
"Payout ratio" is defined by management as the actual cash dividend 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 |
|
Nine Months Ended |
||
| (thousands) |
|
2025 |
2024 |
|
2025 |
2024 |
| Cash dividends |
|
3,897 |
3,174 |
|
10,493 |
9,520 |
| Distributable cash flow |
|
19,594 |
14,204 |
|
33,877 |
29,856 |
| Payout ratio |
|
19.9 % |
22.3 % |
|
31.0 % |
31.9 % |
Debt to Total Capital
"Debt to total capital" is defined by management as the total long‑term debt (excludes lease liabilities) divided by the Corporation's total capital. This is a measure used by investors to assess the Corporation's financial structure.
Distributable cash flow, payout ratio, debt to total capital adjusted EBITDA, adjusted net earnings, and adjusted net earnings per share are not calculations based on IFRS Accounting Standards and are not considered an alternative to IFRS Accounting Standards measures in measuring K‑Bro's performance. Distributable cash Flow, payout ratio, adjusted EBITDA, adjusted net earnings, and adjusted net earnings per share do not have standardized meanings in IFRS Accounting Standards and are therefore not likely to be comparable with similar measures used by other issuers.
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 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 (a) the possibility of undisclosed material liabilities, disputes or contingencies, (b) challenges or delays in achieving synergy and integration targets, (c) the diversion of management's time and focus from other business concerns and (d) the use of resources that may be needed in other parts of our business; (ii) K-Bro's competitive environment; (iii) utility costs, minimum wage legislation and labour costs; (iv) K-Bro's dependence on long-term contracts with the associated renewal risk and the risks associated with maintaining short term contracts; (v) increased capital expenditure requirements; (vi) reliance on key personnel; (vii) changing trends in government outsourcing; (viii) changes or proposed changes to minimum wage laws in Ontario, British Columbia, Alberta, Quebec, Saskatchewan and the United Kingdom (the "UK"); (ix) the availability and terms of future financing; (x) textile demand; (xi) availability and access to labour; (xii) rising wage rates in all jurisdictions the Corporation operates and (xiii) foreign currency risk. 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) expected impact of labour cost initiatives; (iii) frequency of one-time costs impacting quarterly and annual financial results; (iv) foreign exchange rates; (v) the level of capital expenditures and (vi) the expected impact of the COVID-19 pandemic on the Corporation. 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. Forward looking information included in this news release includes the expected annual healthcare revenues to be generated from the Corporation's contracts with new customers, calculation of costs, including one-time costs impacting the quarterly financial results, anticipated future capital spending and statements with respect to future expectations on margins and volume growth.
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.
This news release also makes reference to certain measures in this document that do not have any standardized meaning as prescribed by IFRS Accounting Standards and, therefore, are considered non‑GAAP measures. These measures may not be comparable to similar measures presented by other issuers. Please see "Terminology" for further discussion.
SOURCE K-Bro Linen Inc.
For more information, please contact: Linda McCurdy, Chief Executive Officer, K-Bro Linen Inc. (TSX: KBL), Phone: 780.453.5218, Email: [email protected]; Web: www.k-brolinen.com
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