First Quarter Highlights
(In Canadian
Dollars):
-Total system sales (1) in
the PROSHRED(R) system were
$5 million in the first quarter of 2014, growing 25% over the
comparative period in 2013.
-Scheduled (recurring) system sales for the first quarter
reached a record of $2.5 million, growing 22% over the first
quarter of 2013;
-Unscheduled system sales for the first quarter reached a
record of $1.65 million, growing 37% over the first
quarter in 2013 and;
-Recycling system sales for the first quarter were
$860,000,
growing 11% over the first quarter of 2013.
-The PROSHRED(R) system
shred and recycled 6,800 tons of paper during the first quarter of
2014, an increase of 8% over the first quarter of 2013.
-Redishred's six directly
operated corporate locations in Syracuse, Albany, Milwaukee, New
York City, Charlotte and Miami produced $1.15 million
in revenues during the three months ended March 31, 2014,
generating $517,000 in earnings before interest, taxes,
depreciation and amortization ("EBITDA"), an increase of 179% in
EBITDA versus Q1-2013.
-Redishred's same store
corporate stores, namely Syracuse, Albany, Milwaukee, and New York
City, grew EBITDA 74% quarter over quarter. As well, the Company
began directly operating the Miami corporate location on January 1,
2014. The Miami results during the first quarter of 2014 were
accretive to the Company's results.
-The Company earned franchise
fee revenue during the first quarter of 2014 as a result of
awarding the Southern New Jersey franchise in December of
2013.
(1) System sales are revenues
generated from franchisees, licensees and corporate owned
locations. Redishred Capital Corp. derives its royalty and service
fee revenues based on a percentage of system sales from franchisees
and licensees. Redishred Capital Corp. derives revenues from
corporate location system sales.
Financial Highlights:
-------------------------------------------------------------------------
|For the 3 months ended, |2014 |2013 |Percentage|
| | | |change |
|-----------------------------------------------------------------------|
| |$ |$ |% |
|-----------------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------------|
|Corporate location financial results(1):| | | |
|-----------------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------------|
|Corporate location revenue |1,157,734|674,616 |72% |
|-----------------------------------------------------------------------|
|Corporate location operating costs |(640,594)|(489,442)|31% |
|-----------------------------------------------------------------------|
|Corporate location EBITDA |517,140 |185,174 |179% |
|-----------------------------------------------------------------------|
|Depreciation– tangible assets |(94,746) |(54,218) |75% |
|-----------------------------------------------------------------------|
|Interest expense |(202,092)|(153,413)|32% |
|-----------------------------------------------------------------------|
|Operating income (loss) | | |1081% |
|from |220,302 |(22,457) | |
| corporate locations | | | |
|-----------------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------------|
|Franchise sales: | | | |
|-----------------------------------------------------------------------|
|Franchise and license fees |69,788 |1,165 |5890% |
|-----------------------------------------------------------------------|
|Royalties and service fees |258,058 |232,349 |11% |
|-----------------------------------------------------------------------|
|Franchise related revenue |327,846 |233,514 |40% |
|-----------------------------------------------------------------------|
| | | | |
|-----------------------------------------------------------------------|
|Operating income (loss) | | |172% |
| |131,602 |(181,740)| |
|-----------------------------------------------------------------------|
|Net income (loss) | | |164% |
| |140,653 |(220,417)| |
|-----------------------------------------------------------------------|
|Income (loss) per share |0.00 |(0.01) |164% |
|-----------------------------------------------------------------------|
|System sales |5,059,003|4,054,498|25% |
-------------------------------------------------------------------------
(1) The Miami operations are excluded
in the three months ended March 31, 2013 results, as the Miami
business was jointly operated by Redishred and one of the Company's
franchise locations. The Company commenced operations of the Miami
location directly on January 1, 2014.
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, an increasing 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 28%
growth in scheduled and unscheduled sales in the first quarter of
2014 over the same quarter in 2013.
Recycling system sales
increased by 2% during the three months ended March 31, 2014 in
comparison to the same period in 2013. During the three months
ended March 31, 2014, the PROSHRED(R) system shred and
recycled 6,800 tons of paper, which equates to 102,000 trees
saved.
Corporate Operations
During the three months ended
March 31, 2014, Redishred directly operated six shredding locations
in Syracuse, NY, Albany, NY, Milwaukee, WI, New York City, NY,
Charlotte, NC and Miami, FL.
On July 31, 2013, the Company
acquired the Charlotte franchise and on January 1, 2014 the Company
began directly operating the Miami, FL location. During the three
months ended March 31, 2014, the corporate location revenues grew
by 72% over the same comparative prior year period. The Company
also increased EBITDA by 179% over the three months ended March 31,
2013.
Same store corporate store results are indicators of
performance of corporate stores that have been in the system for
equivalent periods in 2014 and 2013. Same store corporate results
include the operations of Syracuse, Albany, Milwaukee and New York
City. During the three months ended March 31, 2014,
the same store corporate location revenue grew by 14% and operating
costs were reduced by 12%. This led to an increase in EBITDA of
74%.
All
Corporate Locations Results:
---------------------------------------------------------------------------------------------
| |All corporate locations |Same | |
| | |store | |
| | |corporate | |
| | |locations | |
|-------------------------------------------------------------------------------------------|
|For the |2014 |% |2013 |% |2014 |% |2013 |% |
|3 months | |of | |of | |of | |of |
|ended | |revenue| |revenue| |revenue| |revenue |
|March | | | | | | | | |
|31, | | | | | | | | |
|-------------------------------------------------------------------------------------------|
| |$ | |$ | |$ | |$ | | |
|-------------------------------------------------------------------------------------------|
|Revenue: | | | | | | | | | |
|-------------------------------------------------------------------------------------------|
| Shredding service|952,301 |82% |547,581|81% |646,025 |84% |547,581|81% | |
|-------------------------------------------------------------------------------------------|
| Recycling |205,433 |18% |127,035|19% |122,150 |16% |127,035|19% | |
|-------------------------------------------------------------------------------------------|
|Total revenue |1,157,734|100% |674,616|100% |768,175 |100% |674,616|100% | |
|-------------------------------------------------------------------------------------------|
| | | | | | | | | | |
|-------------------------------------------------------------------------------------------|
|Operating costs |640,594 |55% |489,442|73% |433,105 |56% |489,442|73% | |
|-------------------------------------------------------------------------------------------|
| | |45% | |27% | |44% | |27% | |
|EBITDA |517,140 | |185,174| |335,070 | |185,174| | |
|-------------------------------------------------------------------------------------------|
| | | | | | | | | | |
---------------------------------------------------------------------------------------------
Corporate
Locations Trend:
-----------------------------------------------------------------------------
| |2014 |2013 |2012 |
|---------------------------------------------------------------------------|
| |Q1 |Q4 |Q3 |Q2 |Q1 |Q4 |
|---------------------------------------------------------------------------|
|Corporate |1,157,734|985,158|948,625|800,997|674,616|649,944|
|location | | | | | | |
|revenue | | | | | | |
|---------------------------------------------------------------------------|
|Corporate location EBITDA| | | | | | |
| |517,140 |364,307|372,260|298,746|185,174|140,119|
-----------------------------------------------------------------------------
Management's Comments on the First Quarter of
2014
Jeffrey Hasham, the Company's
CEO, had the following comments, "The first quarter's results
indicate that Proshred's on-site solution for destroying paper,
hard drives and other materials is resonating with our clients. The
on-site solution, in our view, is the most secure method to destroy
confidential information. The performance of the system continues
to be a result of our 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 2014 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(R) banner
conducted 34 community shredding events in the first quarter of
2014. 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(R) 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 1, 2014,
PROSHRED(R) will be
holding a Shred for 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. Please
visit www.proshred.com/aicr for
more information on this effort.
Financial Statements
Redishred's March 31, 2014
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 2013 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.
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