Third Quarter
Highlights:
-Total system sales (1) in the PROSHRED(R)
system were $4.3 million USD in the third quarter
of 2013, growing 16% over the comparative period in
2012.
-Scheduled (recurring) system sales for
the third quarter reached a record of $2.26 million
USD, growing
20% over the third quarter of 2012;
-Unscheduled system sales for the third
quarter reached a record of $1.33 million USD, growing 30% over
the third quarter in 2012 and;
-Recycling system sales of
$734,000 USD
decreased by 10% over the third quarter of 2012 as a
result of a decline in the price of paper.
-The PROSHRED(R)
system shred and recycled 13% more paper during the
third quarter of 2013 than during the third quarter of
2012.
-Royalty and license
revenue for the third quarter of 2013 was $264,000
CDN. Royalty
and service revenues are generated by franchises of the
PROSHRED(R) franchise
system and are originally denominated in US dollars.
-During the third
quarter of 2013, the Company entered into agreements with two new
franchisees to operate a PROSHRED(R) shredding business
in the San Francisco Bay Area, California and Seattle, Washington.
The new franchisees commenced operations in the fourth quarter of
2013. The Company recognized $251,000 CDN in franchise fees
associated with the new franchises in the third quarter of
2013.
-On August 1, 2013,
the Company acquired the PROSHRED(R) Charlotte business
from an existing franchisee, which marks the Company's
5th directly operated
corporate location. The Charlotte business has been operated
directly by Redishred since August 1, 2013.
-The Company's five
directly operated corporate locations in Syracuse, Albany,
Milwaukee, New York City and Charlotte produced $937,034
CDN in
revenues during the three months ended September 30, 2013. The
Company's five directly operated corporate locations generated
$361,000 CDN
in earnings before interest, taxes, depreciation and
amortization ("EBITDA") during the third quarter of
2013.
-The Company earned a
record $1.46M CDN
in revenues during the three months ended September
30, 2013. This represents a growth of 36% over the prior
comparative period.
-During the three
months ended September 30, 2013, the Company generated
$136,000 CDN
in operating income, which was driven by the
corporate locations EBITDA and growth in franchising sales and
royalty revenue.
-Net loss for the
third quarter of 2013 was $214,000 CDN, down from a net
loss of $591,000 CDN
for the third quarter of 2012.
(1) System sales are
revenues generated from franchisees, licensees and corporate owned
locations. Redishred Capital Corp. derives its royalty and service
fee revenues based on a percentage of system sales from franchisees
and licensees. Redishred Capital Corp. derives revenues from
corporate location system sales.
Financial Highlights:
---------------------------------------------------------------------
|For the three months ended,| |September 30, 2013|September 30, 2012|
|-------------------------------------------------------------------|
| | |$ |$ |
|-------------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------------|
|System sales (USD) | |4,337,484 |3,738,939 |
|-------------------------------------------------------------------|
|Franchise operations: | | | |
|-------------------------------------------------------------------|
|Franchise and license fee | |264,205 |140,605 |
|revenues | | | |
|-------------------------------------------------------------------|
|Royalty and service fee | |251,040 |203,037 |
|revenues | | | |
|-------------------------------------------------------------------|
|Total franchise and license| |515,245 |343,642 |
|revenue | | | |
|-------------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------------|
|Corporate operations (1) : | | | |
| | | | |
|-------------------------------------------------------------------|
|Service and recycling | |948,625 |729,645 |
|revenue | | | |
|-------------------------------------------------------------------|
|Operating costs | |(576,365) |(611,076) |
|-------------------------------------------------------------------|
|EBITDA from corporate | |372,260 |118,569 |
|locations | | | |
|-------------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------------|
|Operating income (loss) | |136,398 |(206,447) |
|-------------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------------|
|Net loss | |(214,588) |(591,396) |
|-------------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------------|
|Loss per share | |(0.01) |(0.02) |
|-------------------------------------------------------------------|
| | | | |
|-------------------------------------------------------------------|
|Weighted average number of | | 28,884,658 | 28,884,658 |
|common shares outstanding | | | |
|– basic and diluted | | | |
|-------------------------------------------------------------------|
| | | | |
---------------------------------------------------------------------
-
(1)Corporate operations include the
results of the Miami business.
--------------------------------------------------------------------
|For the nine months ended,| |September 30, 2013|September 30, 2012|
|------------------------------------------------------------------|
| | |$ |$ |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Franchise operations: | | | |
|------------------------------------------------------------------|
|System sales (USD) | |12,767,211 |11,144,470 |
|------------------------------------------------------------------|
|Franchise and license fee | |266,764 |235,524 |
|revenues | | | |
|------------------------------------------------------------------|
|Royalty and service fee | |735,268 |611,516 |
|revenues | | | |
|------------------------------------------------------------------|
|Total franchise and | |1,002,032 |847,040 |
|license revenue | | | |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Corporate operations (1) :| | | |
| | | | |
|------------------------------------------------------------------|
|Service and recycling | |2,442,125 |2,293,128 |
|revenue | | | |
|------------------------------------------------------------------|
|Operating costs | |(1,573,307) |(1,818,779) |
|------------------------------------------------------------------|
| EBITDA from corporate | | 868,818 | 474,349 |
|locations | | | |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Operating loss | |(113,606) |(697,645) |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Net loss (2) | |(503,184) |(1,833,249) |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Net loss – excluding | |(503,184) |(1,304,379) |
|one-time costs (2) | | | |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Loss per share | |(0.01) |(0.06) |
|------------------------------------------------------------------|
| | | | |
|------------------------------------------------------------------|
|Weighted average number of| | 28,884,658 | 28,884,658 |
|common shares | | | |
|------------------------------------------------------------------|
| | | | |
--------------------------------------------------------------------
-
(1)Corporate operations include the
results of the Miami business.
-
(2)For the nine months ending September 30, 2012,
net loss includes $487,175 of the loss on settlement of the
pre-existing relationship related to the NYC and Miami
acquisitions, one-time costs related to the franchisee litigation
and the recovery of bad debt related to the Miami acquisition.
These costs have been classified as one-time costs.
System Sales
Redishred's
management team continued to focus its efforts through its
franchisees and its corporate locations on (1) building recurring
service revenues, (2) maximizing route density and logistical
efficiencies and (3) implementing dedicated hard drive destruction
trucks/equipment throughout the system. The strong service system
sales results are driven by Redishred's sales and marketing
programs that are aimed at educating clients on the legislative
requirements to destroy confidential information using a secure
on-site solution. Additionally, a larger number of clients are
requiring their facilities to recycle all products, including
office paper and, by using our service, clients are assured that
documents are securely destroyed and the materials are recycled.
Proshred also offers hard drive destruction services in almost all
of its locations, and has been deploying high speed on site hard
drive destruction trucks. Currently five franchised locations have
deployed high-speed on-site hard drive destruction
trucks.
These factors led to
strong growth in scheduled and unscheduled sales in the third
quarter of 2013 of 20% and 30% over the same quarter in 2012,
respectively.
Recycling system
sales decreased by 10% for the three months ended September 30,
2013 in comparison to the same period in 2012 as a result of the
decline in the price of paper. During the nine months ended
September 30, 2013, the PROSHRED(R) system shred
and recycled 19,000 tons of paper, which equates to 285,000 trees
saved.
Corporate Operations
During the nine months ended September
30, 2013, Redishred directly operated five shredding locations in
Syracuse, NY, Albany, NY, Milwaukee, WI, New York City, NY and
Charlotte, NC. The Miami business is jointly operated by Redishred
and the Company's Tampa Bay, FL franchisee location. The Company
earned rental revenue from the Miami business and is included
below.
On August 1, 2013, the Company
acquired the Charlotte franchise. The two month results of the
Charlotte business are included in the three and nine month results
of the corporate operations. During the three months ended
September 30, 2013, the corporate location revenues grew by 30%
over the same comparative prior year period. The Company has also
reduced its operating costs by 6% in the third quarter of 2013 over
the third quarter of 2012. As a result, EBITDA increased 225% over
the three months ended September 30, 2012.
All
Corporate Locations Results:
----------------------------------------------------------------------------------
| | 3 months | 9 months ended | |
| |ended September 30 |September 30 | |
|--------------------------------------------------------------------------------|
| |2013 |% of |2012 |% of |2013 |% of |2012 |% of | |
| | |revenue| |revenue| |revenue| |revenue| |
|--------------------------------------------------------------------------------|
| |$ | |$ | |$ | |$ | | |
|--------------------------------------------------------------------------------|
|Revenue: | | | | | | | | | |
|--------------------------------------------------------------------------------|
| |774,454|82% |577,305|79% |1,972,759|81% |1,837,359|80% |
|Shredding| | | | | | | | |
|service | | | | | | | | |
|--------------------------------------------------------------------------------|
| |162,580|17% |144,904|20% |435,121 |18% |448,333 |19% |
|Recycling| | | | | | | | |
|--------------------------------------------------------------------------------|
| Rental |11,591 |1% |7,436 |1% |34,245 |1% |7,436 |1% |
|revenue | | | | | | | | |
|--------------------------------------------------------------------------------|
|Total |948,625|100% |729,645|100% |2,442,125|100% |2,293,128|100% |
|revenue | | | | | | | | |
|--------------------------------------------------------------------------------|
| | | | | | | | | | |
|--------------------------------------------------------------------------------|
|Operating|576,365|62% |611,076|85% |1,573,307|65% |1,818,779|80% | |
|costs | | | | | | | | | |
|--------------------------------------------------------------------------------|
| EBITDA | |39% | |15% |868,818 |35% |474,349 |20% | |
| |372,260| |118,569| | | | | | |
----------------------------------------------------------------------------------
All
Corporate Locations Trend:
-----------------------------------------------------------
| |2013 |2012 |
|---------------------------------------------------------|
| |Q3 |Q2 |Q1 |Q4 |Q3 |Q2 |
|---------------------------------------------------------|
|Corporate|948,625|800,997|692,503|638,795|729,645|757,546|
|location | | | | | | |
|revenue | | | | | | |
|---------------------------------------------------------|
|Corporate|372,260|298,746|197,812|129,023|118,569|155,596|
|location | | | | | | |
|EBITDA | | | | | | |
-----------------------------------------------------------
Same
Store Corporate Locations Results:
Same store corporate operation
results are indicators of performance of corporate stores that have
been in the system for equivalent periods in 2013 and 2012. Same
store corporate results include the operations of Syracuse, Albany,
Milwaukee and New York City. During the three months ended
September 30, 2013, the same store corporate location revenues grew
by 6% and operating costs were reduced by 26%. This led to an
increase in EBITDA of 181%.
----------------------------------------------------------------------------------
| | 3 months | 9 months ended | |
| |ended September 30 |September 30 | |
|--------------------------------------------------------------------------------|
| |2013 |% of |2012 |% of |2013 |% of |2012 |% of | |
| | |revenue| |revenue| |revenue| |revenue| |
|--------------------------------------------------------------------------------|
| |$ | |$ | |$ | |$ | | |
|--------------------------------------------------------------------------------|
|Revenue: | | | | | | | | | |
|--------------------------------------------------------------------------------|
| |636,176|83% |577,305|80% |1,834,481|82% |1,837,359|80% |
|Shredding| | | | | | | | |
|service | | | | | | | | |
|--------------------------------------------------------------------------------|
| |128,894|17% |144,904|20% |401,436 |18% |448,333 |20% |
|Recycling| | | | | | | | |
|--------------------------------------------------------------------------------|
|Total |765,070|100% |722,209|100% |2,235,917|100% |2,285,692|100% |
|revenue | | | | | | | | |
|--------------------------------------------------------------------------------|
| | | | | | | | | | |
|--------------------------------------------------------------------------------|
|Operating|452,392|59% |611,076|85% |1,443,859|65% |1,818,779|80% | |
|costs | | | | | | | | | |
|--------------------------------------------------------------------------------|
| EBITDA | |41% | |15% |792,058 |35% |466,913 |20% | |
| |312,678| |111,133| | | | | | |
----------------------------------------------------------------------------------
Management's Comments on the Third Quarter of
2013
Jeffrey Hasham, the
Company's CEO, had the following comments on the third quarter
results, "We are pleased that all elements of our business are
growing concurrently. System sales hit all-time records, driven by
shredding service sales; our corporate locations are now starting
to perform at satisfactory levels; and we have grown our location
footprint to include two key markets, San Francisco and Seattle.
The investments made in our people and in new on-site shredding
trucks are starting to pay off, and management will continue to
look to push for strong results over the next twelve
months."
Community and Social Commitment
Our locations under
the PROSHRED(R)
banner conducted 94 community shredding events in
the nine months ended September 30, 2013 as well as 19 community
shredding events for Earth Day. 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. 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.
Financial Statements
Redishred's September 30, 2013
Interim Financial Statements, Notes and Management's Discussion and
Analysis will be available at www.sedar.com and www.redishred.com.
Services
Redishred
Capital Corp. is the owner of the PROSHRED(R)
trademarks and intellectual property in the United
States. PROSHRED(R)
shreds and recycles confidential
documents and proprietary materials for thousands of customers in
the United States in all industry sectors. PROSHRED(R)
is a pioneer in the mobile document destruction and
recycling industry and has the ISO 9001:2008 certification. It
is PROSHRED(R)'s vision to be the 'system of choice'
and provide shredding and recycling services on a global basis.
Redishred Capital Corp. grants PROSHRED(R)
franchise businesses in the United States and by way
of license arrangement in the Middle East. Redishred Capital Corp.
also operates five corporate shredding businesses directly. The
Company's plan is to grow its business by way of both franchising
and the acquisition and operation of document destruction
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)
Kasia Pawluk, CPA,
CA
Chief Financial Officer
kasia.pawluk@redishred.com
www.redishred.com
Phone: (416) 204-0076 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 and uncertainties. A number of
factors, including those discussed in the 2012 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.
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