(TSX: KBL)
EDMONTON, AB, Nov. 9, 2023
/CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today
announces its Q3 2023 financial and operating
results.
Q3 2023 Financial and Operating
Highlights
- Consolidated revenue increased 18.0% compared to Q3 2022, with
healthcare revenue having increased by 9.2% and hospitality revenue
by 30.1%.
- EBITDA increased in the third quarter of 2023 by $6.7 million to $17.7
million compared to $11.0
million over the comparable 2022 period, a 60.5%
increase.
- EBITDA margin increased to 20.4% from 15.0% in the comparable
period.
- Net earnings in the third quarter of 2023 increased by
$4.2 million to $6.7 million compared to $2.5 million in the comparative period of 2022,
and as a percentage of revenue increased by 4.3% to 7.7%.
- For the third quarter of 2023, K-Bro declared dividends of
$0.300 per common share.
- Long-term debt at the end of Q3 2023 was $55.2 million compared to $45.2 million at the end of fiscal 2022, with the
acquisition of Paranet having been completed in early March.
- K-Bro has repurchased and cancelled 102,828 shares year-to-date
under the normal course issuer bid announced May 15, 2023.
Linda McCurdy, President &
CEO of K-Bro, commented that "I'm pleased with our strong third
quarter results, with record revenue and EBITDA. Throughout
the pandemic, we have worked hard to meet the changing needs of our
customers while managing the impact of inflation, volatile energy
prices and local labour market shortages. Our third quarter results
highlight the resilience of our business model and responsiveness
of our team.
Consistent with the first half of the year, we saw continued
growth in healthcare revenue and significant growth in hospitality
revenue as business and leisure travel volumes have returned.
In the third quarter, the improvement in EBITDA margins was in-line
with our expectations and reflects our disciplined approach to
managing operations, combined with price increases that we have
secured to offset inflation-related costs. Going forward, we
expect EBITDA margins to follow historical seasonal
trends.
On November 1, we announced the
acquisition of Villeray, enhancing K-Bro's position within the
attractive Montréal market. As part of the transaction, K-Bro
will close its Granby facility and
consolidate existing volumes into Villeray. Villeray's modern
plant is strategically located in close proximity to customers, and
we are investing to expand capacity, consolidate volumes, enhance
operating efficiency, reduce fixed costs and support significant
growth opportunities."
As we emerge from the pandemic, we are excited about our
outlook. On May 15, we
announced a normal course issuer bid and have repurchased 102,828
shares to date. We have been refocusing on strategic acquisitions,
such as Paranet and Villeray, and have an active M&A pipeline
and remain well positioned from a balance sheet and liquidity
perspective and will continue to be disciplined as we evaluate
acquisitions."
Highlights and Significant Events for Fiscal
2023
Acquisition of Villeray
On November 1, 2023, the
Corporation announced the closing of a share purchase agreement to
acquire all the assets of Buanderie Villeray and its affiliate
Buanderie La Relance (together "Villeray"), a private laundry and
linen services company incorporated in Canada and operating in Montréal,
Quebec in the healthcare and hospitality markets. The total
consideration is $11.5 million plus a
potential earnout of $1 million,
subject to fair value considerations, working capital adjustments,
and completion of the related purchase price accounting. K-Bro will
invest a further $5 million in
capital expenditures to expand capacity and enhance operational
efficiencies. As part of the transaction, K-Bro will close its
Granby facility and consolidate
its volumes into Villeray. The acquisition will be accounted for
using the acquisition method, whereby the purchase consideration
will be allocated to the net assets acquired. The purchase price
will be satisfied by drawing down on the Corporation's revolving
credit facility.
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 acquisition of Villeray.
Acquisition of Buanderie Paranet
On March 1, 2023 the Corporation
completed the acquisition of 100% of the share capital of Buanderie
Para-Net ("Paranet") operating as Paranet (the "Acquisition"), a
private laundry and linen services company operating in Québec
City, Quebec. The Acquisition was
completed through a share purchase agreement consisting of existing
working capital, fixed assets, contracts and an employee base. The
contracts acquired are in the Quebec healthcare and hospitality sector,
which complements the existing business of the Corporation. Based
on the Corporation's evaluation of the Acquisition and the criteria
in the identification of a business combination established in IFRS
3, the Acquisition will be accounted for using the acquisition
method, whereby the purchase consideration will be 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 Acquisition of Paranet.
This includes the accounting for the amounts attributable to
property, plant & equipment, intangible assets and the
associated goodwill. No measurement adjustments were made in
the current period.
The Corporation financed the Acquisition and transaction costs
from existing loan facilities.
The preliminary purchase price allocated to the net assets
acquired, based on their estimated fair values, is as follows:
|
2023
|
|
|
Cash
consideration
|
$
11,248
|
Contingent
consideration
|
$
945
|
Total purchase
price
|
$
12,193
|
The assets and liabilities recognized as a result of the
Acquisition are as follows:
Net Assets
Acquired:
|
|
Accounts
receivable
|
1,132
|
Prepaid expenses and
deposits
|
137
|
Linen in
service
|
970
|
Accounts payable and
accrued liabilities
|
(1,119)
|
Lease
liabilities
|
(1,176)
|
Deferred income
taxes
|
(1,474)
|
Property, plant and
equipment(1)
|
5,923
|
Intangible
assets
|
2,450
|
Net identifiable assets
acquired
|
6,843
|
Goodwill
|
5,350
|
Net assets
acquired
|
$
12,193
|
(1)
|
Includes ROUA from
the Canadian Division of $1,176 comprised of buildings of $964 and
vehicles of $212
|
The provisional intangible assets acquired are made up of
$2,450 for the customer contracts
along with related relationships and customer lists. 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.
a)
Contingent consideration
The estimated fair value of payment has been classified as
contingent consideration by exercising significant judgment as to
whether it should be classified as such, or as renumeration to the
former owner, who will be employed subsequent to the close of the
transaction. The Corporation has determined by considering all
relevant factors included in the agreements as it pertains to
employment terms, valuation of the business, and other relevant
terms that the additional consideration is most appropriately
reflected as contingent consideration.
In the event that a certain EBITDA target is achieved by Paranet
for the twelve month period ended August 31,
2023, additional undiscounted consideration of up to
$1,890 will be payable in cash during
the fourth quarter of 2023. The potential undiscounted amount
payable within the agreement will only be paid should the EBITDA
target be achieved. Should the EBITDA target not be achieved
no payment will be made.
The fair value of the contingent consideration of $945 was estimated by considering the
probability-adjusted future expected cash flows in regards to
Paranet achieving the target that would result in consideration
being paid. The impact of discounting those future cash flows was
not considered because the impact would be nominal.
Since the estimated future cash flows and probability of
achieving the EBITDA target are an unobservable input, the fair
value of the contingent consideration is classified as a level 3
fair value measurement.
b)
Acquisition related costs
For the nine months ended September 30,
2023, $280 in professional
fees associated with the Acquisition has been included in Corporate
expenses.
c)
Revenue and profit information
The acquired business contributed revenues of $5,561 to the Corporation for the period from
March 1, 2023 to September 30, 2023. If the Acquisition had
occurred on January 1, 2023,
consolidated pro-forma revenue for the period ended September 30, 2023 would have been $239,745.
The acquired business contributed a net deficit of ($214) to the Corporation for the period from
March 1, 2023 to September 30, 2023. If the Acquisition had
occurred on January 1, 2023,
consolidated pro-forma net income for the period ended September 30, 2023 would have been $13,315.
These amounts have been calculated using Paranet's results and
adjusting them for differences in the accounting policies between
the Corporation and Paranet as it pertains to property, plant and
equipment. The Corporation follows the requirements of IFRS
16 whereas Paranet previously reported under Accounting Standards
for Private Enterprises (ASPE), the additional depreciation and
amortization that would have been charged assuming the fair value
adjustments to property, plant and equipment and intangible assets
had applied from January 1, 2023,
together with the consequential tax effects.
3sHealth Contract Extension
In Q2 2022, the Corporation extended its existing contract with
3sHealth for an additional six years to May
31, 2031 on terms that are consistent with the existing
contract.
Revolving Credit Facility
On August 31, 2023, the
Corporation completed an amendment to its existing revolving credit
facility to extend the agreement from July
31, 2026 to July 31, 2027, as
previously amended on July 18, 2022.
In addition, the agreement expanded the revolving credit facility
from $100,000 to $125,000 plus a $25,000 accordion. 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.
During fiscal 2022 and 2023, the Canadian prime rate increased from
3.70% in January 2022 to 6.95% in
June 2023, and July 2023 it increased to 7.20%. Had the prime
rate in effect at July 12, 2023 been
in effect for the nine months ended September 30, 2023, total interest rate expense
for the period ended September 30,
2023 would have been $142
higher than reported assuming equivalent debt levels as at
September 30, 2023.
Capital Investment Plan
For fiscal 2023, the Corporation's planned capital spending is
expected to be approximately $8.0
million on a consolidated basis, excluding the expenditures
associated with the Villeray acquisition. This guidance includes
both strategic and maintenance capital requirements to support
existing base business in both Canada and the UK and does not take into
account amounts accrued in 2022 that are to be paid in 2023. 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
Since 2020, due to changing government restrictions to mitigate
the ongoing COVID-19 pandemic, supply chain disruption,
geopolitical events impacting key inputs such as natural gas,
electricity and diesel and inflationary impacts to labour and
materials the Corporation has faced varying degrees of financial
impact within Canada and the UK.
The COVID-19 pandemic has also contributed to unusually competitive
labour markets, causing inefficiencies in attracting, training and
retaining employees. While the Corporation anticipates labour
markets will stabilize, the timing remains uncertain and until such
time as labour markets stabilize the Corporation will continue to
be impacted financially by these conditions.
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.
Increases 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 the COVID-19
pandemic, geopolitical events and rising 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
and percentages)
|
Canadian
Division
2023
|
UK
Division
2023
|
2023
|
Canadian
Division
2022
|
UK
Division
2022
|
2022
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
63,379
|
$
23,513
|
$
86,892
|
$
55,067
|
$
18,561
|
$
73,628
|
13,264
|
18.0 %
|
Expenses included in
EBITDA
|
50,455
|
18,744
|
69,199
|
46,037
|
16,570
|
62,607
|
6,592
|
10.5 %
|
EBITDA
|
12,924
|
4,769
|
17,693
|
9,030
|
1,991
|
11,021
|
6,672
|
60.5 %
|
EBITDA as a % of
revenue
|
20.4 %
|
20.3 %
|
20.4 %
|
16.4 %
|
10.7 %
|
15.0 %
|
5.4 %
|
36.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
4,169
|
2,498
|
6,667
|
2,122
|
334
|
2,456
|
4,211
|
171.5 %
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.392
|
$
0.235
|
$
0.627
|
$
0.199
|
$
0.031
|
$
0.230
|
$
0.397
|
172.6 %
|
Diluted earnings per
share
|
$
0.389
|
$
0.233
|
$
0.622
|
$
0.197
|
$
0.031
|
$
0.228
|
$
0.394
|
172.8 %
|
Dividends declared per
diluted share
|
|
|
$
0.30
|
|
|
$
0.300
|
$
-
|
0.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
341,662
|
|
|
321,527
|
20,135
|
6.3 %
|
Long-term debt
(excludes lease liabilities)
|
|
|
55,162
|
|
|
39,141
|
16,021
|
40.9 %
|
|
|
|
|
|
|
-
|
|
|
Cash provided by
operating activities
|
|
|
22,758
|
|
|
11,530
|
11,228
|
97.4 %
|
Net change in non-cash
working capital items
|
|
|
8,344
|
|
|
1,204
|
7,140
|
593.0 %
|
Share-based
compensation expense
|
|
|
438
|
|
|
438
|
-
|
0.0 %
|
Maintenance capital
expenditures
|
|
|
379
|
|
|
520
|
(141)
|
-27.1 %
|
Principal elements of
lease payments
|
|
|
2,360
|
|
|
1,834
|
526
|
28.7 %
|
Distributable cash
flow
|
|
|
11,237
|
|
|
7,534
|
3,703
|
49.2 %
|
Dividends
declared
|
|
|
3,228
|
|
|
3,234
|
(6)
|
-0.2 %
|
Payout ratio
|
|
|
28.7 %
|
|
|
42.9 %
|
-14.2 %
|
-33.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Nine
Months Ended September 30,
|
|
|
(thousands,
except per share amounts
and percentages)
|
Canadian
Division
2023
|
UK
Division
2023
|
2023
|
Canadian
Division
2022
|
UK
Division
2022
|
2022
|
$
Change
|
%
Change
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
178,039
|
$
60,381
|
$
238,420
|
$
157,584
|
$
48,368
|
$
205,952
|
32,468
|
15.8 %
|
Expenses included in
EBITDA
|
145,052
|
50,841
|
195,893
|
132,964
|
45,222
|
178,186
|
17,707
|
9.9 %
|
EBITDA
|
32,987
|
9,540
|
42,527
|
24,620
|
3,146
|
27,766
|
14,761
|
53.2 %
|
EBITDA as a % of
revenue
|
18.5 %
|
15.8 %
|
17.8 %
|
15.6 %
|
6.5 %
|
13.5 %
|
4.3 %
|
31.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
9,243
|
4,115
|
13,358
|
5,220
|
(1,594)
|
3,626
|
9,732
|
268.4 %
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
$
0.865
|
$
0.385
|
$
1.250
|
$
0.490
|
$
(0.150)
|
$
0.340
|
$
0.910
|
267.6 %
|
Diluted earnings (loss)
per share
|
$
0.860
|
$
0.383
|
$
1.243
|
$
0.487
|
$
(0.149)
|
$
0.338
|
$
0.905
|
267.8 %
|
Dividends declared per
diluted share
|
|
|
$
0.90
|
|
|
$
0.900
|
$
-
|
0.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
341,662
|
|
|
321,527
|
20,135
|
6.3 %
|
Long-term debt
(excludes lease liabilities)
|
|
|
55,162
|
|
|
39,141
|
16,021
|
40.9 %
|
|
|
|
|
|
|
-
|
|
|
Cash provided by
operating activities
|
|
|
33,188
|
|
|
25,081
|
8,107
|
32.3 %
|
Net change in non-cash
working capital items
|
|
|
(2,665)
|
|
|
(625)
|
(2,040)
|
-326.4 %
|
Share-based
compensation expense
|
|
|
1,386
|
|
|
1,378
|
8
|
0.6 %
|
Maintenance capital
expenditures
|
|
|
2,458
|
|
|
2,288
|
170
|
7.4 %
|
Principal elements of
lease payments
|
|
|
6,844
|
|
|
5,489
|
1,355
|
24.7 %
|
Distributable cash
flow
|
|
|
25,165
|
|
|
16,551
|
8,614
|
52.0 %
|
Dividends
declared
|
|
|
9,696
|
|
|
9,678
|
18
|
0.2 %
|
Payout ratio
|
|
|
38.5 %
|
|
|
58.5 %
|
-20.0 %
|
-34.2 %
|
(1) See "Terminology"
for further details
|
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, 2023,
to be paid on December 15, 2023 to
shareholders of record on November 30,
2023. 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
The Corporation's healthcare segment continues to experience a
steady growth trend. For the hospitality segment, management
expects a solid recovery in activity with the elimination of
government-imposed restrictions on international border crossings,
increasing business/leisure travel, and price increases which will
all continue to support the strong momentum in hospitality revenues
experienced through 2022 as well as throughout 2023.
Throughout the pandemic we encountered volatile energy prices,
local labour market shortages and cost inflation. Since early
March 2022, particularly in the UK,
the Corporation has faced significant volatility in energy costs
due to current geopolitical issues. In April
2022, to mitigate this instability, the Corporation locked
in natural gas supply rates in the UK until December 2024.
The Corporation has also faced temporary labour inefficiencies
from unusually competitive labour markets. Management remains
focused on the retention of existing staff, in addition to
implementing strategies to recruit and hire new staff. While
labour markets have been stabilizing, certain regional markets
continue to experience constrained labour availability. The
Corporation is managing more challenging regional labour
availability with complementary temporary foreign worker
programs.
Throughout 2023, EBITDA margins have benefited from price
increases that we have secured to offset inflation-related costs.
Going forward, management expects EBITDA margins to follow
historical seasonal trends.
With continued momentum in existing operations, management has
refocused attention on strategic acquisitions, such as the
acquisitions of Villeray and Paranet, to accelerate growth in both
North America and Europe, 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 the COVID-19 pandemic and 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 market leader for laundry and textile rental services in
Scotland and the North East of
England. 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 ten processing facilities and
two distribution centres under three distinctive brands:
K‑Bro Linen Systems Inc., Buanderie HMR and Les Buanderies
Dextraze. The Corporation operates in ten Canadian cities: Québec
City, Montréal, Toronto,
Regina, Saskatoon, Prince
Albert, Edmonton,
Calgary, Vancouver and Victoria.
The Corporation's operations in the UK include Fishers, which
was acquired by K‑Bro on November 27,
2017. Fishers was established in 1900 and is a leading
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. The Corporation operates
four UK sites located in Perth,
Newcastle, Livingston and
Coatbridge.
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") 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
K‑Bro reports EBITDA (Earnings before interest, taxes,
depreciation and amortization) as a key measure used by management
to evaluate performance. EBITDA is utilized to measure compliance
with debt covenants and to make decisions related to dividends to
Shareholders. We believe 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 and costs of consuming
tangible and intangible capital assets, which vary according to
their vintage, technological currency and management's estimate of
their useful life. Accordingly, EBITDA 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
in accordance with the amendments made to IAS 1 which became
effective January 1, 2016. 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
September 30,
|
|
Nine Months Ended
September 30,
|
(thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net earnings
|
$
6,667
|
|
$
2,456
|
|
$
13,358
|
|
$
3,626
|
Add:
|
|
|
|
|
|
|
|
Income tax expense
|
2,294
|
|
759
|
|
4,256
|
|
1,236
|
Finance expense
|
1,860
|
|
1,340
|
|
4,917
|
|
3,341
|
Depreciation of property, plant and equipment
|
6,719
|
|
5,854
|
|
19,626
|
|
17,646
|
Amortization of intangible assets
|
153
|
|
612
|
|
370
|
|
1,917
|
EBITDA
|
$
17,693
|
|
$
11,021
|
|
$
42,527
|
|
$
27,766
|
Non-GAAP Measures
Distributable Cash Flow
Distributable cash flow is a measure used by management to
evaluate the Corporation's performance. While the closest IFRS
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
September 30,
|
|
Nine Months Ended
September 30,
|
(thousands)
|
|
2023
|
2022
|
|
2023
|
2022
|
Cash provided by
operating activities
|
|
$
22,758
|
$
11,530
|
|
$
33,188
|
$
25,081
|
Deduct
(add):
|
|
|
|
|
|
|
|
Net changes in non-cash
working capital items
|
|
8,344
|
1,204
|
|
(2,665)
|
(625)
|
|
Share-based
compensation expense
|
|
438
|
438
|
|
1,386
|
1,378
|
|
Maintenance capital
expenditures
|
|
379
|
520
|
|
2,458
|
2,288
|
|
Principal elements of
lease payments
|
|
2,360
|
1,834
|
|
6,844
|
5,489
|
Distributable cash
flow
|
|
$
11,237
|
$
7,534
|
|
$
25,165
|
$
16,551
|
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
September 30,
|
|
Nine Months Ended
September 30,
|
(thousands)
|
|
2023
|
2022
|
|
2023
|
2022
|
|
Cash
dividends
|
|
3,228
|
3,234
|
|
9,696
|
9,678
|
|
Distributable cash
flow
|
|
11,237
|
7,534
|
|
25,165
|
16,551
|
Payout ratio
|
|
28.7 %
|
42.9 %
|
|
38.5 %
|
58.5 %
|
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 and are not considered
an alternative to IFRS 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 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; * textile
demand; (xi) the adverse impact of the COVID-19 pandemic on the
Corporation, which has been significant to date and which we
believe will continue to be significant for the short to medium
term; (xii) availability and access to labour; (xiii) rising wage
rates in all jurisdictions the Corporation operates and (ix)
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, as well as
statements related to the impact of the COVID-19 pandemic on the
Corporation.
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 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.