Redishred Capital Corp. Announces Q2-2015 Results

August 27, 2015 4:15 PM EDT | Source: RediShred Capital Corp.

Mississauga, Ontario--(Newsfile Corp. - August 27, 2015) - Redishred Capital Corp. (TSXV: KUT) ("Redishred") announces Q2-2015 results.

Second Quarter Highlights:

  • Total system sales (1) in the PROSHRED® system were $6.4 million USD in the second quarter of 2015, growing 21% over the comparative period in 2014.
    • Scheduled (recurring) system sales for the second quarter reached a record of $3.0 million USD, growing 20% over the second quarter of 2014;
    • Unscheduled system sales for the second quarter reached a record of $2.2 million USD, growing 21% over the second quarter in 2014 and;
    • Recycling system sales for the second quarter were $1.2M USD, growing 27% over the second quarter of 2014.
    • The PROSHRED® system shred and recycled a record of 9,700 tons of paper during the second quarter of 2015, an increase of 21% over the second quarter of 2014.
  • Redishred's six directly operated corporate locations in Syracuse, Albany, Milwaukee, New York City, Charlotte and Miami produced $1.44 million CDN in revenues during the three months ended June 30, 2015, generating $678,000 CDN in earnings before interest, taxes, depreciation and amortization ("EBITDA"), an increase of 20% over the comparative period in 2014.
  • Franchise and license revenue for the second quarter of 2015 was $381,000 CDN, growing 33% over the second quarter of 2014. This category of revenue is generated by franchisees and licensees of the PROSHRED® system, originally denominated in US dollars.
(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:

    3 months ended June 30     6 months ended June 30  
                %                 %  
(in CDN except where noted)   2015     2014     Change     2015     2014     Change  
  $   $         $   $        
                                     
Corporate location financial results:                                    
Corporate location revenue   1,443,384     1,263,114     14%     2,817,445     2,420,848     16%  
Corporate location operating costs   (764,529 )   (695,882 )   (10)%     (1,563,056 )   (1,336,478 )   (17)%  
Corporate location EBITDA   678,855     567,232     20%     1,254,389     1,084,370     16%  
Depreciation – tangible assets   (119,418 )   (72,844 )   (64)%     (240,196 )   (167,590 )   (43)%  
Operating income from corporate locations   559,437     494,388     13%     1,014,193     916,780     11%  
Franchise and license sales:                                    
Franchise and license fees   2,210     1,038     113%     29,108     70,827     (59)%  
Royalties and service fees   378,989     285,192     33%     750,980     543,249     38%  
Franchise related revenue   381,199     286,230     33%     780,088     614,076     27%  
Operating income (loss)   486,889     399,752     22%     935,256     739,824     26%  
Net income (loss)   35,710     (70,084 )   152%     641,550     70,569     809%  
Income (loss) per share   0.00     (0.00 )   152%     0.02     0.00     809%  
System sales (USD)   6,391,021     5,262,823     21%     12,140,267     9,853,986     23%  

 

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 utilizing a secure on-site solution. Additionally, an increasing number of clients are requiring their facilities to recycle all paper documents, by using our services, 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 11 franchised locations have deployed high-speed on-site hard drive destruction trucks. These factors led to 20% growth in scheduled and unscheduled system sales in the second quarter of 2015 over the same quarter in 2014.

Recycling system sales increased by 27% during the three months ended June 30, 2015 in comparison to the same period in 2014. During the three months ended June 30, 2015, the PROSHRED® system shred and recycled 9,700 tons of paper, which equates to 146,000 trees saved.

Corporate Operations

During the six months ended June 30, 2015, Redishred directly operated six shredding locations in Syracuse, NY, Albany, NY, Milwaukee, WI, New York City, NY, Charlotte, NC and Miami, FL.

During the three months ended June 30, 2015, the corporate location revenue grew by 14% over the same comparative prior year period. The Company has also increased EBITDA by 20% and operating income by 13% over the three months ended June 30, 2014.

All Corporate Locations Results:

    3 months ended June 30     6 months ended June 30  
2015 % of
revenue 		2014 % of
revenue 		2015 % of
revenue 		2014 % of
revenue
  $         $         $         $        
Revenue:                                                
     Shredding service   1,198,858     83%     1,035,174     82%     2,335,531     83%     1,987,475     82%  
     Recycling   244,526     17%     227,940     18%     481,914     17%     433,373     18%  
Total revenue   1,443,384     100%     1,263,114     100%     2,817,445     100%     2,420,848     100%  
                                                 
Operating costs   764,529     53%     695,882     55%     1,563,056     55%     1,336,478     55%  
                                                 
EBITDA   678,855     47%     567,232     45%     1,254,389     45%     1,084,370     45%  
                                                 
Depreciation - equipment   119,418     8%     72,844     6%     240,196     9%     167,590     7%  
                                                 
Operating income   559,437     39%     494,388     39%     1,014,193     36%     916,780     38%  

 

Corporate Locations Trend:

    2015     2014     2013  
    Q2     Q1     Q4     Q3     Q2     Q1     Q4     Q3  
Corporate location revenue ($)   1,443,384     1,374,062     1,257,312     1,247,349     1,263,114     1,157,734     973,436     937,033  
Quarter over quarter % change   5%     9%     1%     (1)%   9%     19%     4%        
                                                 
Corporate location EBITDA ($)   678,855     575,535     533,728     527,868     567,232     517,141     352,585     360,514  
Quarter over quarter % change   18%     8%     1%     (7)%   10%     47%     (2)%      

 

Management's Comments on the Second Quarter of 2015

Jeffrey Hasham, the Company's CEO, had the following comments, "PROSHRED® continues to see record growth and system sales results, and this is a strong indication that our focus on on-site information destruction has hit home with our clients. It is our view that the on-site solution for destroying paper, hard drives and products is the most secure method of destruction. It is Proshred's mandate to continue to provide peace of mind that our client's information will be shred on-site, significantly reducing the risk of information breach. Furthermore, our system performance continues to be a result of our collective willingness to invest in human resources and modern equipment so we can continue to provide a best in class service. The Company's plan is to continue to invest in new trucks and sales resources to further drive results in 2015 and beyond. I would like to thank our franchisees, employees and vendor partners for their hard work and our shareholders for their continued support of our Company."

Community and Social Commitment

Our locations under the PROSHRED® banner conducted 123 community shredding events in the first half of 2015. 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.

On June 6, 2015, PROSHRED® held its' 2nd annual Shred Cancer event at most of its locations, raising money for the American Institute for Cancer Research ("AICR"). It is our goal as a Company to support the AICR in their endeavor to conduct research to prevent and possibly cure this disease. Mr. Hasham commented that "all of us at PROSHRED® are committed to working with AICR on their goal to reduce the instances of cancer by preventing it. The research they do is crucial in the battle against this disease. I want to thank every PROSHRED® owner and all our collective employees for the time and effort put forth to these events." Please visit www.proshred.com/aicr for more information on this effort.

Financial Statements

Redishred's June 30, 2015 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® trademarks and intellectual property in the United States. PROSHRED® shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. PROSHRED® is a pioneer in the mobile document destruction and recycling industry and has the ISO 9001:2008 certification. It is PROSHRED®'s vision to be the ‘system of choice' and provide shredding and recycling services on a global basis. Redishred Capital Corp. grants PROSHRED® 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. (TSXV: 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. (TSXV: 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 2014 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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