MISSISSAUGA, ON / ACCESSWIRE / May 26, 2022 / Quarterly Earnings Call: 8:30am EST, May 27, 2022, Participant call in number is 1-800-319-4610
Quarterly Highlights:
Consolidated Highlights:
Corporate Locations Highlights:
Acquisitions
Capital Management:
Management's Comments on Q4-2021
Jeffrey Hasham, the Company's Chief Executive Officer, noted "We are off to a positive start in 2022, continuing to build the Proshred, Proscan and Secure E-Cycle brands, with each having their best quarter to date."
Mr. Hasham continued, "Our Proshred business continues to grow, driven by the shredding requirements of both existing and new customers, as businesses re-open and look to expand. We are continuing to see high levels of interest in customers looking to digitize their documents and as a result, have seen significant growth in our Proscan business. Secure E-Cycle is a relatively new offering for us in response to customer requirements to securely dispose of electronic waste, and this business has not only recovered, but grown from its pre-COVID-19 levels."
Mr. Hasham then added, "From the acquisition-front, we completed the acquisition of Mobile Document Destruction, an Illinois-based shredding business, in March 2022. I am also happy to report that American Shredding, which we acquired in December of 2021, has been performing to expectations. Also noteworthy is that paper prices so far in 2022 have been continuing their upward trajectory."
Mr. Hasham closed with, "From a financial perspective, Q1 2022 Corporate location EBITDA was $4.9 million Canadian, an increase of 105% from Q1 2021. This would not be possible without the support of the Redishred team, so I want to take this opportunity to thank them for their continued hard work and commitment to excellence."
Financial Highlights:
For the three months ended March 31, | 2022 | 2021 | Change(1) | |||||||||
System Sales Performance - in USD, in $000's | ||||||||||||
Total locations in the United States | 30 | 30 | 0 | % | ||||||||
Total system sales | $ | 16,409 | $ | 10,682 | 54 | % | ||||||
% of scheduled sales | 46 | % | 52 | % | ||||||||
Consolidated Operating Growth - in CAD, in $000's | ||||||||||||
Revenue | $ | 12,517 | $ | 7,313 | 71 | % | ||||||
EBITDA | $ | 4,066 | $ | 2,054 | 98 | % | ||||||
EBITDA margin | 32 | % | 28 | % | 400 | bps | ||||||
Operating income | $ | 2,732 | $ | 1,021 | 168 | % | ||||||
Operating income margin | 22 | % | 14 | % | 800 | bps | ||||||
Operating income less net interest expense | $ | 2,349 | $ | 773 | 204 | % | ||||||
Operating income per weighted average share fully diluted | $ | 0.030 | $ | 0.013 | 132 | % | ||||||
Government assistance not included in the above (2) | - | $ | 1,320 | 100 | % | |||||||
Corporate Location Performance - in CAD, in $000's | ||||||||||||
Revenue | $ | 11,996 | $ | 6,805 | 76 | % | ||||||
EBITDA | $ | 4,929 | $ | 2,403 | 105 | % | ||||||
EBITDA margin | 41 | % | 35 | % | 600 | bpm | ||||||
Operating income | $ | 3,617 | $ | 1,395 | 159 | % | ||||||
Operating income margin | 30 | % | 20 | % | 1,000 | bpm | ||||||
Operating income less recycling | $ | 1,321 | $ | 773 | 71 | % | ||||||
Capital Management - in CAD:
(In $000's)
As at March 31, and December 31, | 2022 | 2021 | Change (1) | |||||||||
Working capital | $ | 5,228 | $ | 3,977 | 31 | % | ||||||
Debt to total assets ratio | 0.48 | 0.49 | (3) | % | ||||||||
Normalized Fixed Charge Coverage ratio - rolling 3 months | 1.51 | 1.57 | (4) | % | ||||||||
Normalized Total Funded Debt to EBITDA ratio - rolling 3 months | 2.29 | 2.39 | (4) | % | ||||||||
(1) Change expressed as a percentage or basis point ("bp").
(2) During Q1-2021, the Company qualified for the second round of the United States Paycheck Protection Program ("PPP") forgivable loans which were made available to eligible US businesses that have been affected by the COVD-19 pandemic and the Canadian Emergency Wage Subsidy ("CEWS") in Canada.
Revenue Growth in Q1-2022
The Company achieved 71% total revenue growth and total revenue growth in constant currency during Q1-2022 versus Q1-2021 primarily due to the following:
The quarter-over-quarter and constant currency quarter-over-quarter growth is identical, as the average foreign exchange rate in Q1-2022 and Q1-2021 between the U.S. dollar and Canadian dollar was the same.
Q1-2022 System Sales Continued to Grow
Shredding system sales in Q1-2022 grew versus Q1-2021, from both franchise and corporate location organic and acquisition related growth.
Franchise Operations
During Q1-2022, the Company supported 16 franchisees across the United States. The franchise system's high-level sales results are as follows:
For the three months ended March 31, | ||||||||||||
In USD, In $000's | 2022 | 2021 | % Change | |||||||||
Total same locations | 16 | 18 | (11) | % | ||||||||
Total same location system sales | $ | 6,876 | $ | 4,763 | 44 | % | ||||||
Total same location scheduled service sales | $ | 3,351 | $ | 2,561 | 31 | % | ||||||
Total same location unscheduled service sales | $ | 2,040 | $ | 1,720 | 19 | % | ||||||
Total same location recycling sales | $ | 1,485 | $ | 482 | 208 | % | ||||||
Corporate Locations
Total corporate location revenues and EBITDA grew by 76% and 105%, respectively, in Q1-2022 versus Q1-2021 due to the acquisitions conducted over the past twelve months and the organic growth from same locations. Total EBITDA margin improved by 600 basis points over this period to 41% in Q1-2022.
During Q1-2022, same corporate location shredding revenue grew 21% over Q1-2021, recovering well from the pandemic. The Company also continued to manage its same location direct and administrative costs, resulting in same corporate location EBITDA growth of 66% compared to Q1-2021.
For the three months ended March 31, 2022 | Quarter-over-year growth | Constant currency Quarter-over-quarter growth | ||||||
Same Corporate Locations: | ||||||||
Total Revenue | 40 | % | 40 | % | ||||
EBITDA | 66 | % | 66 | % | ||||
Operating Income | 115 | % | 115 | % | ||||
Total Corporate Locations: | ||||||||
Total Revenue | 76 | % | 76 | % | ||||
EBITDA | 105 | % | 105 | % | ||||
Operating Income | 159 | % | 159 | % | ||||
Total Corporate Locations | Same Corporate Locations | Non-same Corporate Locations | ||||||||||||||||||||||||||||||
For the three months | ||||||||||||||||||||||||||||||||
ended March 31, | 2022 | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | ||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||
Shredding sales | 8,754 | 5,665 | 55 | % | 6,864 | 5,665 | 21 | % | 1,890 | - | ||||||||||||||||||||||
Electronic waste sales | 297 | 231 | 29 | % | 297 | 231 | 29 | % | - | - | ||||||||||||||||||||||
Scanning sales | 648 | 287 | 126 | % | 648 | 287 | 126 | % | - | - | ||||||||||||||||||||||
Recycling sales | 2,297 | 622 | 269 | % | 1,743 | 622 | 180 | % | 554 | - | ||||||||||||||||||||||
Total sales | 11,996 | 6,805 | 76 | % | 9,552 | 6,805 | 40 | % | 2,444 | - | ||||||||||||||||||||||
Operating costs (1) | 7,067 | 4,402 | 61 | % | 5,572 | 4,402 | 27 | % | 1,495 | - | ||||||||||||||||||||||
EBITDA | 4,929 | 2,403 | 105 | % | 3,980 | 2,403 | 66 | % | 949 | - | ||||||||||||||||||||||
% of revenue | 41 | % | 35 | % | 600 | bps | 42 | % | 35 | % | 700 | bps | 39 | % | - | |||||||||||||||||
Depreciation - tangible assets | 1,312 | 1,008 | 30 | % | 983 | 1,008 | (2) | % | 329 | - | ||||||||||||||||||||||
Operating income | 3,617 | 1,395 | 159 | % | 2,997 | 1,395 | 115 | % | 620 | - | ||||||||||||||||||||||
% of revenue | 30 | % | 20 | % | 1000 | bps | 31 | % | 20 | % | 1100 | bps | 25 | % | - | |||||||||||||||||
Operating income less recycling | 1,320 | 773 | 71 | % | 1,254 | 773 | 62 | % | 66 | - | ||||||||||||||||||||||
% of revenue excluding recycling | 14 | % | 13 | % | 100 | bps | 16 | % | 13 | % | 300 | bps | 3 | % | ||||||||||||||||||
EBITDA - in USD | 3,893 | 1,873 | 108 | % | 3,144 | 1,873 | 68 | % | 749 | - | ||||||||||||||||||||||
% of revenue | 41 | % | 35 | % | 600 | bps | 42 | % | 35 | % | 700 | bps | 39 | % | ||||||||||||||||||
Note 1: During Q1-2022, acquisition/vendor-related consulting fees of $58 (Q1-2021 $26) are included in the total and non-same corporate location operating costs.
Corporate Locations Trend:
2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||
In $000's, in CAD | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | ||||||||||||||||||||||||
Revenue ($) | 11,996 | 9,946 | 9,273 | 8,177 | 6,805 | 5,572 | 6,093 | 5,532 | ||||||||||||||||||||||||
Quarter over quarter % change | 21 | % | 7 | % | 13 | % | 20 | % | 22 | % | (9) | % | 10 | % | (8) | % | ||||||||||||||||
EBITDA ($) | 4,929 | 3,003 | 3,707 | 3,249 | 2,403 | 1,528 | 2,103 | 1,744 | ||||||||||||||||||||||||
Quarter over quarter % change | 64 | % | (19) | % | 14 | % | 35 | % | 57 | % | (27) | % | 21 | % | (2) | % | ||||||||||||||||
Community and Social Commitment
Our locations under the PROSHRED® banner conduct numerous community shredding events. These events provide an opportunity for our clients, clients' employees, local businesses and local residents to ensure their personal and confidential materials are securely destroyed. In addition to helping to reduce identity theft, several of these events allow for donations to various not-for-profit organizations. PROSHRED® is also proud that 100% of the shredded material is recycled, as our continued goal is to foster the use of fewer trees in the production of all paper products. Future community shredding event locations can be found at our website, www.proshred.com. Our annual national Shred Cancer event was held in June of 2021 at various Proshred locations. These events are held to raise research funds for the American Institute for Cancer Research ("AICR"). It is our goal as a Company and Franchise System to support AICR in their endeavor to prevent cancer and possibly cure this disease. So far, PROSHRED® has raised over USD$150,000 for this cause. Please visit www.proshred.com/aicr for more information on this effort.
Non-IFRS Measures
There are measures included in this press release that do not have a standardized meaning under International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similarly titled measures presented by other publicly traded companies. The Company includes these measures as a means of measuring financial performance of the Company.
Reconciliation of EBITDA and Operating Income to Net Income
For the three months ended March 31, | 2022 | 2021 | % Change | |||||||||
$ | $ | |||||||||||
EBITDA | 4,066 | 2,054 | 98 | % | ||||||||
Less: depreciation - tangible assets | (1,334 | ) | (1,033 | ) | 29 | % | ||||||
Operating income | 2,732 | 1,021 | 168 | % | ||||||||
Less: interest expense | (383 | ) | (252 | ) | 52 | % | ||||||
Add: interest income | - | 4 | (100) | % | ||||||||
Operating income less net interest expense | 2,349 | 772 | 204 | % | ||||||||
Less: amortization - intangible assets | (779 | ) | (642 | ) | 21 | % | ||||||
Add: gain on disposition of tangible assets | 7 | - | 100 | % | ||||||||
Add: remeasurement of contingent consideration | (39 | ) | - | 100 | % | |||||||
Add: government assistance | - | 1,320 | (100) | % | ||||||||
(Loss) income before foreign exchange and income tax | 1,538 | 1,450 | 6 | % | ||||||||
Less: foreign exchange loss | (750 | ) | (508 | ) | 48 | % | ||||||
Less: income tax recovery (expense) | (515 | ) | 15 | (3,533) | % | |||||||
Net (loss) income | 273 | 957 | (71) | % | ||||||||
Financial Statements
Redishred's March 31, 2022 Financial Statements and Management's Discussion and Analysis will be available on www.sedar.com and www.redishred.com.
About Redishred Capital Corp.
Redishred Capital Corp. ("Redishred") is the owner of the PROSHRED®, PROSCAN and secure e-Cycle brands, trademarks and intellectual property in the United States. Redishred digitizes, secures, shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. Redishred is a pioneer in the mobile document destruction and recycling industry and has the ISO 9001:2015 certification. It is Redishred's vision to be the ‘system of choice' in providing digital retention, secure shredding and recycling services on a global basis. Redishred Capital Corp. grants PROSHRED` and PROSCAN franchise businesses in the United States and by way of license arrangement in the Middle East. Redishred Capital Corp. also operates fourteen corporate businesses directly. The Company's plan is to grow its business by way of both franchising and the acquisition and operation of information security businesses that generate stable and recurring cash flow through a scheduled client base, continuous paper recycling and concurrent unscheduled shredding service.
FOR FURTHER INFORMATION PLEASE CONTACT:
Redishred Capital Corp. (TSX.V - KUT)
Jeffrey Hasham, MBA, CPA, CA
Chief Executive Officer
Jeffrey.hasham@redishred.com
www.redishred.com
Phone: (416) 849-3469
Fax: (905) 812-9448
or,
Redishred Capital Corp. (TSX.V - KUT)
Harjit Brar, CPA, CA
Senior Vice President and Chief Financial Officer
harjit.brar@redishred.com
www.redishred.com
Phone: (437) 328-6639
Fax: (905) 812-9448
Note: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward looking statements that reflect the current expectations of management of Redishred and Redishred's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as "may", "will", "estimate", "believe", "expect", "intend" and similar expressions have been used to identify these forward looking statements. These statements reflect current beliefs and are based on information currently available to management of Redishred. Forward looking statements necessarily involve known and unknown risks, uncertainties and other factors including risks and uncertainties relating to the COVID-19 pandemic. A number of factors, including those discussed in Redishred's 2021 Management Discussion and Analysis under "Risk Factors", could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward looking statements. There can be no assurance that the expectations of management of Redishred will prove to be correct. Readers are cautioned that such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Redishred can give no assurance that actual results will be consistent with these forward-looking statements.
SOURCE: Redishred Capital Corp.