(TSX: KBL)
EDMONTON, AB, May 6, 2024
/CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today
announces its Q1 2024 financial and operating results.
Q1 2024 Financial and Operating Highlights
- Consolidated revenue increased 13.3% compared to Q1 2023, with
healthcare revenue having increased by 8.4% and hospitality revenue
by 21.4%.
- EBITDA increased in the first quarter of 2024 by $1.3 million to $11.6
million compared to $10.3
million over the comparable 2023 period, an 12.3%
increase.
- One-time transaction costs of $1.5
million associated with the syndicated credit facility and
the acquisition of Shortridge had negative impact on margin of
1.8%.
- EBITDA margin decreased to 14.5% from 14.6% in the comparable
period.
- Net earnings in the first quarter of 2024 decreased by
$0.2 million to $1.8 million compared to $2.0 million in the comparative period of 2023,
and as a percentage of revenue decreased by 0.5% to 2.3%
- For the first quarter of 2024, K-Bro declared dividends of
$0.300 per common share.
- Long-term debt at the end of Q1 2024 was $65.7 million compared to $70.2 million at the end of fiscal 2023.
- K-Bro entered into a three-year, $175
million committed, syndicated revolving credit facility on
March 26, 2024.
- K-Bro repurchased and cancelled 64,554 shares in Q1 2024 under
the normal course issuer bid. To date, a total of 263,616 shares
have been repurchased and cancelled.
- Subsequent to the quarter, on April 30,
2024, K-Bro acquired Shortridge Ltd. a high-quality
hospitality laundry provider based in the North West of
England.
Linda McCurdy, President &
CEO of K-Bro, commented that "I'm pleased with our strong first
quarter results and our momentum to start the year. Both of
K-Bro's healthcare and hospitality segments continue to experience
steady growth trends and we remain focused on delivering
industry-leading service to our existing and new customers.
We see a positive outlook for K-Bro and are excited about our
organic growth prospects and potential future M&A.
Strategic acquisitions of complementary high-quality operators
continue to be an important contributor to K-Bro's overall growth
profile. Our new upsized $175
million syndicated credit facility, with a further
$75 million accordion, provides
further financial flexibility to pursue growth opportunities.
On April 30, 2024, we announced the
acquisition of Shortridge and I'm excited by the potential this
acquisition presents in the UK. Shortridge further
diversifies our customer base in the UK and helps position our
combined UK business for more growth as we look to extend K-Bro's
footprint further south into the remainder of the UK. We 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.
On May 15, 2023, we announced a
normal course issuer bid and have repurchased 263,616 shares to
date. As we emerge from a challenging number of years, we are
excited about our outlook."
Highlights and Significant Events
for Q1 2024
Acquisition of Shortridge
On April 30, 2024 the Corporation
announced the acquisition of Shortridge Ltd. ("Shortridge
Acquisition"), a private hospitality laundry provider based in the
North West of England, expanding
K-Bro's geographic footprint in the UK. The Shortridge Acquisition
was completed through a share purchase agreement consisting of
existing working capital, fixed assets, contracts and an employee
base.
Shortridge is being acquired for consideration of $41.2 million (£24.1 million), on a cash-free,
debt free basis (subject to customary conditions, including certain
escrows of $7.7 million (£4.5
million)) and with a further potential earn-out of $3.4 million (£2.0 million) for achieving certain
targets for the 12 months through September
2024. Shortridge's last twelve months' revenue for the
period ended March 31, 2024 was
approximately $21.4 million (£12.5
million). The transaction includes the freehold and leasehold real
estate for Shortridge's laundry processing facilities. The
acquisition is being funded entirely from K-Bro's recently
increased syndicated debt facility and is expected to be accretive
to the Corporation.
The contracts acquired are in the England hospitality sector, which complements
the existing business of the Corporation. Based on the
Corporation's evaluation of the Shortridge Acquisition and the
criteria in the identification of a business combination
established in IFRS 3, the Shortridge 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 however given the proximity of the transaction to
March 31, 2024 the Corporation has
not yet finished its accounting of the Shortridge Acquisition.
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 "Paranet
Acquisition"), a private laundry and linen services company
operating in Québec City, Quebec.
The Paranet 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 Paranet Acquisition and the
criteria in the identification of a business combination
established in IFRS 3, the Paranet Acquisition has been accounted
for using the acquisition method, whereby the purchase
consideration is allocated to the fair values of the net assets
acquired.
The Corporation financed the Paranet Acquisition and transaction
costs from existing loan facilities.
The purchase price allocated to the net assets acquired, based
on their estimated fair values, is as follows:
|
|
Cash
consideration
|
$
11,074
|
Contingent
consideration
|
$
945
|
Total purchase
price
|
$
12,019
|
The assets and liabilities recognized as a result of the Paranet
Acquisition are as follows:
Net Assets
Acquired:
|
|
Accounts
receivable
|
1,317
|
Prepaid expenses and
deposits
|
137
|
Linen in
service
|
970
|
Accounts payable and
accrued liabilities (2)
|
(1,552)
|
Lease
liabilities
|
(1,176)
|
Deferred income
taxes
|
(1,474)
|
Property, plant and
equipment(1,2)
|
6,142
|
Intangible
assets
|
2,450
|
Net identifiable assets
acquired
|
6,814
|
Goodwill
|
5,205
|
Net assets
acquired
|
$
12,019
|
|
1) Includes ROUA from
the Canadian Division of $1,176 comprised of buildings of $964 and
vehicles of $212
|
|
2) Includes provision
of $219 for asset retirement obligation
|
The 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. As at March 31, 2024, the
purchase price allocation is no longer provisional and has been
finalized for Paranet.
Contingent consideration
In the event that a certain EBITDA target was achieved by
Paranet for the twelve month period ended August 31, 2023, additional undiscounted
consideration of up to $1,890 would
have been payable in cash during the fourth quarter of 2023. While
performance was in-line with expectations, the target was not
achieved; therefore, no payment was made.
During the first three quarters of 2023, the estimated fair
value of the possible payment was classified as contingent
consideration. The fair value of the contingent consideration 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 these
future cash flows was not considered because the impact would be
nominal. Given that the EBITDA target was not achieved for the
twelve month period ended August 31,
2023, the contingent consideration amount of $945 has been derecognized and a gain on
settlement of contingent consideration has been recorded in
Consolidated Statement of Earnings and Comprehensive Income for the
twelve months ended December 31,
2023.
Acquisition of Villeray
On November 1, 2023, the
Corporation completed the acquisition of 100% of the share capital
of Buanderie Villeray and its affiliate Buanderie La Relance (the
"Villeray Acquisition"), a private laundry and linen services
company incorporated in Canada and
operating in Montréal, Quebec. The
Villeray Acquisition was completed through a share purchase
agreement consisting of existing working capital, fixed assets,
customer relationships and an employee base. Villeray operates in
the hospitality and healthcare sector, which complements the
existing business of the Corporation. As part of the transaction,
the Corporation closed its Granby
facility and consolidated existing volumes into Villeray. Based on
the Corporation's evaluation of the Villeray Acquisition and the
criteria in the identification of a business combination
established in IFRS 3, the Villeray Acquisition has been accounted
for using the acquisition method, whereby the purchase
consideration is allocated to the fair values of the net assets
acquired.
The Corporation financed the Villeray Acquisition and
transaction costs from existing loan facilities.
The purchase price allocated to the net assets acquired, based
on their estimated fair values, is as follows:
|
|
Cash
consideration
|
$
11,204
|
Contingent
consideration
|
$
500
|
Total purchase
price
|
$
11,704
|
The assets and liabilities recognized as a result of the
Villeray Acquisition are as follows:
Net Assets
Acquired:
|
|
Accounts
receivable
|
907
|
Prepaid expenses and
deposits
|
187
|
Income tax
receivable
|
69
|
Accounts payable and
accrued liabilities (2)
|
(807)
|
Lease
liabilities
|
(2,706)
|
Deferred income
taxes
|
(1,416)
|
Property, plant and
equipment(1,2)
|
7,161
|
Intangible
assets
|
2,530
|
Net identifiable assets
acquired
|
5,925
|
Goodwill
|
5,779
|
Net assets
acquired
|
$
11,704
|
1) Includes ROUA from
the Canadian Division of $2,706 related to buildings
|
2) Includes provision
of $97 for asset retirement obligation
|
The provisional intangible assets acquired are made up of
$2,530 related to customer
relationships. 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.
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
Villeray for the twelve month period ended October 31, 2024, additional undiscounted
consideration ranging from $500 to
$1,000 will be payable in cash during
the first quarter of 2025. 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 $500 was estimated by considering the
probability-adjusted future expected cash flows in regards to
Villeray 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.
Acquisition related costs
For the three months ended March 31,
2023, $87 in professional fees
associated with the Villeray Acquisition has been included in
Corporate expenses.
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.
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 new agreement
consists of a $175,000 revolving
credit facility plus a $75,000
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.
Capital Investment Plan
For fiscal 2024, the Corporation's planned capital spending is
expected to be between $15.0 and
$17.0 million on a consolidated
basis, including 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. 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 labour markets have
been stabilizing, certain regional markets continue to experience
constrained labour availability.
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
(thousands,
except per share amounts
and percentages)
|
Canadian
Division
2024
|
UK
Division
2024
|
2024
|
Canadian
Division
2023
|
UK
Division
2023
|
2023
|
$
Change
|
%
Change
|
Revenue
|
$
62,700
|
$
17,527
|
$
80,227
|
$
55,499
|
$
15,284
|
$
70,783
|
9,444
|
13.3 %
|
Expenses included in
EBITDA
|
52,821
|
15,801
|
68,622
|
46,141
|
14,309
|
60,450
|
8,172
|
13.5 %
|
EBITDA(1)
|
9,879
|
1,726
|
11,605
|
9,358
|
975
|
10,333
|
1,272
|
12.3 %
|
EBITDA as a % of
revenue
|
15.8 %
|
9.8 %
|
14.5 %
|
16.9 %
|
6.4 %
|
14.6 %
|
-0.1 %
|
-0.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
9,879
|
1,726
|
11,605
|
9,358
|
975
|
10,333
|
1,272
|
12.3 %
|
Adjusted EBITDA as a %
of revenue
|
15.8 %
|
9.8 %
|
14.5 %
|
16.9 %
|
6.4 %
|
14.6 %
|
-0.1 %
|
-0.7 %
|
Net earnings
(loss)
|
1,679
|
127
|
1,806
|
2,245
|
(245)
|
2,000
|
(194)
|
-9.7 %
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
$
0.160
|
$
0.012
|
$
0.172
|
$
0.210
|
$
(0.023)
|
$
0.187
|
$
(0.015)
|
-8.0 %
|
Diluted earnings (loss)
per share
|
$
0.159
|
$
0.012
|
$
0.171
|
$
0.209
|
$
(0.023)
|
$
0.186
|
$
(0.015)
|
-8.1 %
|
Dividends declared per
diluted share
|
|
|
$
0.30
|
|
|
$
0.300
|
$
-
|
0.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
361,859
|
|
|
337,276
|
24,583
|
7.3 %
|
Long-term debt
(excludes lease liabilities)
|
|
|
65,727
|
|
|
53,713
|
12,014
|
22.4 %
|
Cash provided by
operating activities
|
|
|
12,692
|
|
|
9,308
|
3,384
|
36.4 %
|
Net change in non-cash
working capital items
|
|
|
3,192
|
|
|
606
|
2,586
|
426.7 %
|
Share-based
compensation expense
|
|
|
508
|
|
|
505
|
3
|
0.6 %
|
Maintenance capital
expenditures
|
|
|
387
|
|
|
936
|
(549)
|
-58.7 %
|
Principal elements of
lease payments
|
|
|
2,631
|
|
|
2,144
|
487
|
22.7 %
|
Distributable cash
flow
|
|
|
5,974
|
|
|
5,117
|
857
|
16.7 %
|
Dividends
declared
|
|
|
3,177
|
|
|
3,231
|
(54)
|
-1.7 %
|
Payout ratio
|
|
|
53.2 %
|
|
|
63.1 %
|
-9.9 %
|
-15.7 %
|
(1) See
"Terminology" for further details
|
OUTLOOK
The Corporation's healthcare and hospitality segments continues
to experience steady growth trends. For the healthcare segment,
management expects activity levels to remain strong from 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.
The volatility we encountered from energy prices, local labour
market shortages and cost inflation throughout the pandemic has
stabilized. In early 2022, particularly in the UK, the Corporation
faced significant volatility in energy costs due to geopolitical
issues. In April 2022, to mitigate
this instability, the Corporation locked in natural gas supply
rates in the UK until December 2024.
In April 2024, the Corporation's UK
division extended their natural gas supply commitment until
December 2026.
The Corporation also faced temporary labour inefficiencies from
unusually competitive labour markets. 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 and has seen
positive staffing support in this regard.
Throughout 2023, EBITDA margins benefited from stronger client
activity, price increases that we have secured to offset
inflation-related costs, the completion of the AHS transition,
operating efficiencies, and lower delivery 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 Shortridge, Villeray and Paranet, to accelerate
growth in both North America and
Europe, geographies which remain
highly fragmented. K-Bro's upsized $175
million syndicated credit facility, with a further
$75 million accordion, provides
further financial flexibility to pursue growth opportunities. 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 market leader for laundry and textile rental services in
Scotland and the North 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 two distinctive brands: K–Bro
Linen Systems Inc. and Buanderie HMR. 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
five UK sites located in Cupar,
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
March 31,
|
(thousands)
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
1,806
|
|
$
2,000
|
Add:
|
|
|
|
|
Income tax
expense
|
569
|
|
539
|
|
Finance
expense
|
1,923
|
|
1,473
|
|
Depreciation of
property, plant and equipment
|
7,006
|
|
6,251
|
|
Amortization of
intangible assets
|
301
|
|
70
|
|
|
|
|
|
EBITDA
|
$
11,605
|
|
$
10,333
|
Non-GAAP Measures
Adjusted EBITDA
Adjusted EBITDA is a measure which has been reported in order to
assist in the comparison of historical EBITDA to current results.
"Adjusted EBITDA" is defined as EBITDA (defined above) with the
exclusion of certain material items that are unusual in nature,
infrequently occurring or not considered part of our core
operations. There were no adjusting items to EBITDA for the three
month periods ending March 31, 2024
or March 31, 2023.
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
March 31,
|
(thousands)
|
|
2024
|
2023
|
|
|
|
|
|
Cash provided by
operating activities
|
|
$
12,692
|
$
9,308
|
Deduct
(add):
|
|
|
|
|
Net changes in non-cash
working capital items
|
|
3,192
|
606
|
|
Share-based
compensation expense
|
|
508
|
505
|
|
Maintenance capital
expenditures
|
|
387
|
936
|
|
Principal elements of
lease payments
|
|
2,631
|
2,144
|
Distributable cash
flow
|
|
$
5,974
|
$
5,117
|
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
March 31,
|
|
|
2024
|
2023
|
|
|
|
|
Cash
dividends
|
|
3,177
|
3,231
|
Distributable cash
flow
|
|
5,974
|
5,117
|
|
|
|
|
|
|
53.2 %
|
63.1 %
|
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.