Second Quarter
Highlights:
-Total system sales (1) in our PROSHRED(R) system were a
record $4.4 million USD in the second
quarter of 2013, growing 17% over the comparative period in
2012.
-Scheduled (recurring) system sales for
the second quarter reached a record of $2.16 million
USD, growing
16% over the second quarter of 2012;
-Unscheduled system sales for the second
quarter reached a record of $1.41 million USD, growing 27% over
the second quarter in 2012 and;
-Recycling system sales of
$831,000 USD
increased by 7% over the second quarter of
2012.
-The PROSHRED(R) system shred
and recycled 15% more paper during the second quarter of 2013 than
during the second quarter of 2012.
-Royalty and license
revenue for the second quarter of 2013 was $259,000
CDN. Royalty
and service revenues are generated by franchises of the
PROSHRED(R) franchise
system and are originally denominated in US dollars.
-Redishred's four
corporate locations in Syracuse, Albany, Milwaukee, and New York
City produced $789,000 CDN in revenues during
the three months ended June 30, 2013. The Company's four corporate
locations generated $293,000 CDN in earnings before
interest, taxes, depreciation and amortization ("EBITDA") during
the second quarter of 2013.
-Net loss for the
second quarter of 2013 was $68,000 CDN, down from a net
loss of $418,000 CDN
for the second quarter of 2012.
-Subsequent to the
second quarter of 2013, the Company entered into an agreement with
two new franchisees to operate a PROSHRED(R) shredding business
in San Francisco/San Jose, California and Seattle, Washington. The
Company expects its new franchisees to commence operations in the
fourth quarter of 2013. The franchise fees associated with the new
franchises will be recognized in the third quarter of
2013.
-Subsequent to the
second quarter of 2013, the Company acquired the
PROSHRED(R)
Charlotte business from an existing franchisee. The
Charlotte location has been operated directly by the Company since
August 1, 2013.
(1) System sales are
revenues generated from franchisees, licensees and corporate owned
locations. Redishred Capital Corp. derives its royalty and service
fee revenues based on a percentage of system sales from franchisees
and licensees. Redishred Capital Corp. derives revenues from
corporate location system sales.
Financial Highlights:
-------------------------------------------------------------------
|For the three months ended, | |June 30, 2013|June 30, 2012|
|-----------------------------------------------------------------|
| | |$ |$ |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|System sales (USD) | |4,406,210 |3,751,552 |
|-----------------------------------------------------------------|
|Franchise operations: | | | |
|-----------------------------------------------------------------|
|Franchise and license fee revenues | |1,394 |694 |
|-----------------------------------------------------------------|
|Royalty and service fee revenues | |258,469 |207,591 |
|-----------------------------------------------------------------|
|Total franchise and license revenue| |259,863 |208,285 |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Corporate operations (1) : | | | |
| | | | |
|-----------------------------------------------------------------|
|Service and recycling revenue | |800,997 |757,546 |
|-----------------------------------------------------------------|
|Operating costs | |(502,251) |(601,950) |
|-----------------------------------------------------------------|
|EBITDA from corporate locations | |298,746 |155,596 |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Operating loss | |(64,768) |(315,387) |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Net loss | |(68,280) |(418,385) |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Loss per share | |(0.00) |(0.01) |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Weighted average number of common | | 28,884,658 | 28,884,658 |
|shares outstanding – basic and | | | |
|diluted | | | |
|-----------------------------------------------------------------|
| | | | |
-------------------------------------------------------------------
-
(1)Corporate operations include the
results of the Miami business.
-------------------------------------------------------------------
|For the six months ended, | |June 30, 2013|June 30, 2012|
|-----------------------------------------------------------------|
| | |$ |$ |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Franchise operations: | | | |
|-----------------------------------------------------------------|
|System sales (USD) | |8,429,727 |7,405,531 |
|-----------------------------------------------------------------|
|Franchise and license fee revenues | |2,559 |94,919 |
|-----------------------------------------------------------------|
|Royalty and service fee revenues | |484,156 |408,479 |
|-----------------------------------------------------------------|
|Total franchise and license revenue| |486,715 |503,398 |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Corporate operations (1) : | | | |
| | | | |
|-----------------------------------------------------------------|
|Service and recycling revenue | |1,493,500 |1,563,483 |
|-----------------------------------------------------------------|
|Operating costs | |(996,942) |(1,207,494) |
|-----------------------------------------------------------------|
| EBITDA from corporate locations | | 496,558 | 355,989 |
| | | | |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Operating loss | |(250,076) |(491,199) |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Net loss (2) | |(288,698) |(1,241,853) |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Net loss – excluding one-time | |(288,698) |(765,272) |
|costs (2) | | | |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Loss per share | |(0.01) |(0.04) |
|-----------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------|
|Weighted average number of common | | 28,884,658 | 28,884,658 |
|shares | | | |
|-----------------------------------------------------------------|
| | | | |
-------------------------------------------------------------------
-
(1)Corporate operations include the
results of the Miami business.
-
(2)For the six months ending June 30, 2012, net loss
includes $352,065 of the loss on settlement of the pre-existing
relationship related to the NYC acquisition and one-time costs
related to the franchisee litigation. 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 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 four 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 second
quarter of 2013 of 16% and 27% over the same quarter in 2012,
respectively.
Recycling system
sales increased by 7% for the three months ended June 30, 2013 in
comparison to the same period in 2012. During the first half of
2013, the PROSHRED(R) system shred
and recycled 12,700 tons of paper, which equates to 190,000 trees
saved.
Corporate Operations
During the six months
ended June 30, 2013, Redishred operated four shredding locations in
Syracuse, NY, Albany, NY, Milwaukee, WI and New York City, NY. The
Miami business is jointly operated by Redishred and the Company's
Tampa Bay, FL franchisee location. The results of the Miami
business are not included below.
During the first
quarter of 2013, the Syracuse and Milwaukee
locations experienced significant truck down-time resulting in a
decline in revenues during this period. During the second quarter
of 2013, the Company refurbished the affected
shredding vehicles to ensure high customer service levels are
maintained. The corporate locations revenues grew 18% in the second
quarter of 2013, over the first quarter of 2013.
During the three
months ended June 30, 2013, the corporate locations revenues grew
by 5% over the same comparative prior year period. The Company also
significantly reduced its operating costs by 16% in the second
quarter of 2013 over the second quarter of 2012. As a result,
EBITDA increased 89% over the three months ended June 30,
2012.
Corporate Locations Results:
------------------------------------------------------------------------------------
| | 3 months | 6 months ended June 30 | |
| |ended June 30 | | |
|----------------------------------------------------------------------------------|
| |2013 |% of |2012 |% of |2013 |% of |2012 |% of | |
| | |revenue| |revenue| |revenue | |revenue | |
|----------------------------------------------------------------------------------|
| |$ | |$ | |$ | |$ | | |
|----------------------------------------------------------------------------------|
|Revenue: | | | | | | | | | |
|----------------------------------------------------------------------------------|
| |644,078|82% |618,885|82% |1,198,305|81% |1,260,054|81% |
|Shredding| | | | | | | | |
|service | | | | | | | | |
|----------------------------------------------------------------------------------|
| |145,506|18% |138,661|18% |272,541 |19% |303,429 |19% |
|Recycling| | | | | | | | |
|----------------------------------------------------------------------------------|
|Total |789,584|100% |757,546|100% |1,470,846|100% |1,563,483|100% |
|revenue | | | | | | | | |
|----------------------------------------------------------------------------------|
| | | | | | | | | | |
|----------------------------------------------------------------------------------|
|Operating|496,776|63% |601,950|79% |991,467 |67% |1,207,494|77% | |
|costs | | | | | | | | | |
|----------------------------------------------------------------------------------|
| EBITDA | |37% | |21% |479,379 |33% |355,989 |23% | |
| |292,808| |155,596| | | | | | |
------------------------------------------------------------------------------------
Corporate
Locations Trend:
--------------------------------------------------------------------
| |2013 |2012 |
|------------------------------------------------------------------|
| |Q2 |Q1 |Q4 |Q3 |Q2 |
|------------------------------------------------------------------|
|Corporate location revenue|789,584|674,616|638,794|729,645|757,546|
|------------------------------------------------------------------|
|Corporate location EBITDA |292,808|185,174|129,233|118,570|155,596|
--------------------------------------------------------------------
Management's Comments on the Second Quarter of
2013
Jeffrey Hasham, the
Company's CEO, had the following comments on the second quarter
results, "We are very pleased to see that our service system sales
and tonnage continue to increase over prior years. Setting another
new quarterly record in Q2 is an added bonus and is a result of the
hard work of our franchisees and employee's. All of our locations
continued to deliver high levels of client service and also
continued to invest in trucks and human resources. Our Corporate
locations, in the second quarter continued to build upon the
rebound in EBITDA seen in Q1, as the Company continued to invest in
new trucks, new routing technology and new training programs. This
helped us better service customers, which in turn continues to
drive the turnaround in corporate location EBITDA."
Community and Social Commitment
Our locations under
the PROSHRED(R)
banner conducted 61 community shredding events in
the six months ended June 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 June 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 four 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,
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, 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.
In particular, certain statements
in this document discuss Redishred's anticipated outlook of future
events. These statements include, but are not limited
to:
-
(i)the
anticipated reduction in downtime related to the purchase of two
new shredding trucks may be impacted by unforeseen mechanical
issues related to the two new trucks.
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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