K-Bro Reports Record Annual Revenue and EBITDA for 2019
(TSX: KBL)
EDMONTON, March 19, 2020 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announces its 2019 Q4 financial and operating results.
2019 Financial and Operating Highlights
- Revenue for the three and twelve months ended December 31, 2019, was $62.9 million and $252.4 million, and respectively increased by 5.8% and 5.4% over the comparable 2018 periods.
- EBITDA increased in the fourth quarter to $11.1 million, compared to $6.6 million for the fourth quarter last year. On an annual basis, 2019 EBITDA increased to $47.6 million compared to $29.6 million in 2018.
- EBITDA without the adoption of IFRS 16 in the fourth quarter increased to $9.1 million, compared to $6.6 million for the fourth quarter last year. On an annual basis, 2019 EBITDA increased to $38.7 million compared to $29.6 million in 2018.
- EBITDA margin for the fourth quarter increased to 17.7% from 11.1% for the same period in 2018. Annual EBITDA margin for 2019 increased to 18.8% from 12.3% for the same period in 2018.
- EBITDA without the adoption of IFRS 16 margin for the fourth quarter increased to 14.5% from 11.1% for the same period in 2018. Annual EBITDA margin for 2019 increased to 15.3% from 12.3% for the same period in 2018.
- Net earnings in the fourth quarter of 2019 increased by $1.1 million to $2.2 million compared to $1.1 million in the same comparative period of 2018, and as a percentage of revenue increased by 1.7% to 3.5%. On an annual basis, net earnings increased by $4.7 million to $10.9 million compared to $6.2 million in the same comparative period of 2018, and as a percentage of revenue increased by 1.7% to 4.3%.
- During the quarter, K-Bro declared dividends of $0.300 per common share and distributable cash was $0.665 per common share on a fully diluted basis. On an annual basis, K-Bro declared dividends of $1.200 per common share and distributable cash was $2.801 per common share on a fully diluted basis
"We were very pleased with our results in 2019, which set records in both revenue and EBITDA and with the progress we have made in the last several quarters to return to historical EBITDA margins", said Linda McCurdy, President and Chief Executive Officer. "However, we expect that the COVID-19 pandemic will have a significant adverse impact on our operations and financial results in 2020, particularly in the second quarter. While our healthcare business remains solid, we have recently seen large declines in hospitality volume and expect to see further declines until such times as the impact of COVID-19 is lessened. We expect that the impact will be especially significant in our UK operations, which are almost entirely hospitality-based. In addition, several of our Canadian plants are primarily or entirely hospitality focused, although overall healthcare represents 71.1% of our Canadian revenue. We believe that liquidity remains strong, with cash flow generation and access to significant undrawn credit line capacity being sufficient throughout 2020".
Highlights and Significant Events for Fiscal 2019
Vancouver Facility Development
K‑Bro has now completed the development of a new state‑of‑the‑art facility located in Burnaby, BC and has incurred all of the capital costs related to this facility. The new facility has enabled K‑Bro to expand current capacity, to accommodate additional awarded volume, and to provide the opportunity to consolidate the healthcare volume from its existing two Vancouver‑area facilities.
In addition to investing in this new facility, K‑Bro has upgraded and replaced equipment at one of its existing Vancouver‑area facilities, which is being used to process the consolidated hospitality volume. During the third quarter of 2018, K‑Bro completed the decommissioning of the third Vancouver‑area facility, with related assets and volume transitioned to the existing upgraded Vancouver K‑Bro facility.
Business Acquisition
On October 3, 2018, the Corporation announced that it successfully completed the previously announced $4.7 million acquisition (the "Acquisition") of Linitek, a private laundry and linen services company operating in Calgary, Alberta. The Acquisition is accounted for using the acquisition method, whereby the purchase consideration is allocated to the net assets acquired.
National Contract Award
Effective January 1, 2019, K-Bro replaced its existing agreement with Avendra Canada, Inc. ("Avendra") with a new five-year agreement pursuant to which K-Bro became an Avendra-approved provider of laundry and linen services across Canada, with exclusivity in K-Bro's markets commencing at various stages throughout the term. Avendra is North America's leading hospitality procurement and supply chain service provider. While K-Bro has existing contracts with and services the customers initially covered by the agreement, the new arrangement with Avendra will strengthen its relationships with these customers and secure K-Bro's position with them, as well as open up new opportunities in the hospitality segment.
Revolving Credit Facility
During 2019 K-Bro completed amendments to its existing $100 million revolving credit facility, which extended the agreement to July 31, 2022 and made changes to the definitions within the agreement to clarify that all financial covenants would be tested on a pre-IFRS 16 Leases basis.
UK Acquisition
On July 19, 2019, the Corporation signed a share purchase agreement to acquire all the assets of a Scotland-incorporated private laundry and linen services company operating in Aberdeen. This acquisition closed in September 2019 for a total consideration of £775k plus a working capital adjustment. For accounting purposes, the transaction has been treated as an asset acquisition, whereby the net working capital was recorded at closing, and the customer contracts acquired have been recorded as an intangible asset for £883k representing the total purchase price of £775k and associated transaction costs of £88k.
Capital Investment Plan
For fiscal 2020, K-Bro had previously anticipated capital spending to be approximately $5.0 million on a consolidated basis. However, in light of the current public health crisis, management is considering whether to significantly lower the Corporation's planned capital spending for fiscal 2020 in order to mitigate the expected significant negative impacts of the COVID-19 pandemic on the Corporation's results of operations. This guidance includes both strategic and maintenance capital requirements to support existing base business in both Canada and the UK.
Alberta Contract Award
On March 1, 2020, the Corporation was awarded a one-year extension to provide laundry and linen services to Alberta Health Services Calgary. The contract extends the existing relationship between the Corporation and Alberta Health Services Calgary.
Loss of Whitbread Group Contract
Subsequent to the 2019 fiscal year, the Corporation was unsuccessful in renewing its UK-based contract with the Whitbread Group. The associated volume will be phased out of the relevant plant over the first two quarters of 2020. For the year ended December 31, 2019, this contract accounted for approximately 14% of Fishers' overall revenue.
Coronavirus ("COVID-19") Pandemic
The ongoing COVID-19 pandemic has caused world governments to institute travel restrictions both in and out of and within Canada and the UK, which has already had, and is expected to continue to have, a significant adverse impact on the Corporation's hospitality business, the duration of which we are unable to predict with any degree of accuracy. In recent weeks, we have seen significantly reduced hotel occupancy rates compared to historical levels. More recently, demand for both business and leisure airline travel has declined significantly on a global basis, and airlines are responding by cancelling international and domestic flights. Accordingly, hospitality volume in all of our Canadian and UK markets have slowed to historically low levels. To date, we have seen a slight increase in our healthcare business due to the increase in demand for certain products in response to COVID-19.
We have adjusted operations at many of our plants that have experienced significant declines in hospitality volume, including by reducing the size of the workforce. We anticipate implementing further adjustments as circumstances develop.
Management believes that liquidity remains strong, with cash flow generation and access to significant undrawn credit line capacity being sufficient throughout 2020.
The extent of such negative effects on our hospitality business and our financial and operational performance will depend on future developments, including the duration, spread and severity of the outbreak, the duration and geographic scope of related travel advisories and restrictions and the extent of the impact of COVID-19 on overall demand for personal and business travel, all of which are highly uncertain and cannot be predicted with any degree of accuracy. If hotels continue to experience significantly reduced occupancy rates for an extended period, our 2020 consolidated results of operations will be significantly impacted. The extent to which the outbreak affects our earnings will depend in part on our ability to implement various measures intended to reduce expenses, including consolidating production capacity and laying off additional workers. Earnings in the hospitality segment will continue to be particularly affected if we continue to experience further reductions in travel. Additionally, our suppliers or other third parties we rely upon may experience delays or shortages, which could have an adverse effect on our business prospects and results of operations.
Financial Impact of the adoption of new accounting standards
As discussed in Note 3 – Changes in accounting policies to the 2019 Audited Financial Statements, the Corporation has adopted IFRS 16 retrospectively from January 1, 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions set out in IFRS 16.
The tables below provide a reconciliation of actual Q4 2019 financial results compared with what would have occurred had we not adopted this new accounting policy.
EBITDA without adoption of IFRS 16 Leases
Segment |
Adjustments |
EBITDA |
||||||
For the three months ended December 31, |
2019 |
2019 |
2019 |
2018 |
||||
Canadian Division |
$ |
8,737 |
$ |
(1,454) |
$ |
7,283 |
$ |
4,838 |
UK Division |
2,365 |
(532) |
1,833 |
1,781 |
||||
$ |
11,102 |
$ |
(1,986) |
$ |
9,116 |
$ |
6,619 |
|
Segment |
Adjustments |
EBITDA |
||||||
For the years ended December 31, |
2019 |
2019 |
2019 |
2018 |
||||
Canadian Division |
$ |
35,843 |
$ |
(5,791) |
$ |
30,052 |
$ |
21,370 |
UK Division |
11,730 |
(3,089) |
8,641 |
8,211 |
||||
$ |
47,573 |
$ |
(8,880) |
$ |
38,693 |
$ |
29,581 |
|
Net earnings without adoption of IFRS 16 Leases
Segment 2019 |
Adjustments |
Net |
||||||
For the three months ended December 31, |
2019 |
2019 |
2018 |
|||||
Canadian Division |
$ |
1,760 |
$ |
75 |
$ |
1,835 |
$ |
32 |
UK Division |
435 |
138 |
573 |
1,020 |
||||
$ |
2,195 |
$ |
213 |
$ |
2,408 |
$ |
1,052 |
|
Segment |
Adjustments |
Net |
||||||
For the years ended December 31, |
2019 |
2019 |
2019 |
2018 |
||||
Canadian Division |
$ |
7,787 |
$ |
210 |
$ |
7,997 |
$ |
2,701 |
UK Division |
3,119 |
223 |
3,342 |
3,468 |
||||
$ |
10,906 |
$ |
433 |
$ |
11,339 |
$ |
6,169 |
|
For the three months ended December 31, |
||||||||||||||||
(thousands, except per share amounts |
Canadian |
UK |
2019(3) |
Canadian |
UK |
2018 |
$ Change |
%Change |
||||||||
Revenue |
$ |
46,001 |
$ |
16,891 |
$ |
62,892 |
$ |
45,067 |
$ |
14,373 |
$ |
59,440 |
3,452 |
5.8% |
||
Expenses included in EBITDA |
37,264 |
14,526 |
51,790 |
40,229 |
12,592 |
52,821 |
(1,031) |
-2.0% |
||||||||
EBITDA |
8,737 |
2,365 |
11,102 |
4,838 |
1,781 |
6,619 |
4,483 |
67.7% |
||||||||
EBITDA as a % of revenue |
19.0% |
14.0% |
17.7% |
10.7% |
12.4% |
11.1% |
6.6% |
59.5% |
||||||||
EBITDA without adoption of IFRS 16 |
7,283 |
1,833 |
9,116 |
4,838 |
1,781 |
6,619 |
2,497 |
37.7% |
||||||||
EBITDA without adoption of IFRS 16 as % of revenue |
15.8% |
10.9% |
14.5% |
10.7% |
12.4% |
11.1% |
3.4% |
30.6% |
||||||||
Net earnings |
1,760 |
435 |
2,195 |
32 |
1,020 |
1,052 |
1,143 |
108.7% |
||||||||
Basic earnings per share |
$ |
0.167 |
$ |
0.041 |
$ |
0.209 |
$ |
0.003 |
$ |
0.097 |
$ |
0.100 |
$ |
0.109 |
109.0% |
|
Diluted earnings per share |
$ |
0.166 |
$ |
0.041 |
$ |
0.207 |
$ |
0.003 |
$ |
0.097 |
$ |
0.100 |
$ |
0.107 |
107.0% |
|
Dividends declared per diluted share |
$ |
0.30 |
$ |
0.30 |
$ |
- |
0.0% |
|||||||||
Net earnings without adoption of IFRS 16 |
1,835 |
573 |
2,408 |
32 |
1,020 |
1,052 |
1,356 |
128.9% |
||||||||
Basic earnings per share without adoption of IFRS 16 |
$ |
0.174 |
$ |
0.054 |
$ |
0.229 |
$ |
0.003 |
$ |
0.097 |
$ |
0.100 |
$ |
0.129 |
129.0% |
|
Diluted earnings per share without adoption of IFRS 16 |
$ |
0.173 |
$ |
0.054 |
$ |
0.227 |
$ |
0.003 |
$ |
0.097 |
$ |
0.100 |
$ |
0.127 |
127.0% |
|
Total assets |
352,059 |
322,229 |
29,830 |
9.3% |
||||||||||||
Long-term debt, end of period |
62,494 |
70,203 |
(7,709) |
-11.0% |
||||||||||||
Cash provided by operating activities |
11,555 |
7,799 |
3,756 |
48.2% |
||||||||||||
Net change in non-cash working capital items |
1,534 |
1,082 |
452 |
41.8% |
||||||||||||
Share-based compensation expense(4) |
404 |
380 |
24 |
6.3% |
||||||||||||
Maintenance capital expenditures |
1,072 |
526 |
546 |
103.8% |
||||||||||||
Principal elements of lease payments(4) |
1,501 |
- |
1,501 |
100.0% |
||||||||||||
Distributable cash flow |
7,044 |
5,811 |
1,233 |
21.2% |
||||||||||||
Dividends declared |
3,181 |
3,168 |
13 |
0.4% |
||||||||||||
Payout ratio |
45.2% |
54.5% |
-9.3% |
-17.1% |
||||||||||||
Years Ended December 31, |
||||||||||||||||
(thousands, except per share amounts |
Canadian |
UK |
2019(3) |
Canadian |
UK |
2018 |
$ Change |
% Change |
||||||||
Revenue |
$ |
186,624 |
$ |
65,786 |
$ |
252,410 |
$ |
179,889 |
$ |
59,645 |
$ |
239,534 |
12,876 |
5.4% |
||
Expenses included in EBITDA |
150,781 |
54,056 |
204,837 |
158,519 |
51,434 |
209,953 |
(5,116) |
-2.4% |
||||||||
EBITDA |
35,843 |
11,730 |
47,573 |
21,370 |
8,211 |
29,581 |
17,992 |
60.8% |
||||||||
EBITDA as a % of revenue |
19.2% |
17.8% |
18.8% |
11.9% |
13.8% |
12.3% |
6.5% |
52.8% |
||||||||
EBITDA without adoption of IFRS 16 |
30,052 |
8,641 |
38,693 |
21,370 |
8,211 |
29,581 |
9,112 |
30.8% |
||||||||
EBITDA without adoption of IFRS 16 as % of revenue |
16.1% |
13.1% |
15.3% |
11.9% |
13.8% |
12.3% |
3.0% |
24.4% |
||||||||
Net earnings |
7,787 |
3,119 |
10,906 |
2,701 |
3,468 |
6,169 |
4,737 |
76.8% |
||||||||
Basic earnings per share |
$ |
0.741 |
$ |
0.297 |
$ |
1.038 |
$ |
0.258 |
$ |
0.331 |
$ |
0.589 |
$ |
0.449 |
76.2% |
|
Diluted earnings per share |
$ |
0.737 |
$ |
0.295 |
$ |
1.032 |
$ |
0.257 |
$ |
0.330 |
$ |
0.588 |
$ |
0.444 |
75.5% |
|
Dividends declared per diluted share |
$ |
1.20 |
$ |
1.20 |
$ |
- |
0.0% |
|||||||||
Net earnings without adoption of IFRS 16 |
7,997 |
3,342 |
11,339 |
2,701 |
3,468 |
6,169 |
5,170 |
83.8% |
||||||||
Basic earnings per share without adoption of IFRS 16 |
$ |
0.761 |
$ |
0.318 |
$ |
1.079 |
$ |
0.258 |
$ |
0.331 |
$ |
0.589 |
$ |
0.490 |
83.2% |
|
Diluted earnings per share without adoption of IFRS 16 |
$ |
0.756 |
$ |
0.316 |
$ |
1.072 |
$ |
0.257 |
$ |
0.330 |
$ |
0.588 |
$ |
0.484 |
82.3% |
|
Total assets |
352,059 |
322,229 |
29,830 |
9.3% |
||||||||||||
Long-term debt, end of period |
62,494 |
70,203 |
(7,709) |
-11.0% |
||||||||||||
Cash provided by operating activities |
43,916 |
17,554 |
26,362 |
150.2% |
||||||||||||
Net change in non-cash working capital items |
1,866 |
(11,380) |
13,246 |
116.4% |
||||||||||||
Share-based compensation expense(4) |
1,810 |
1,817 |
(7) |
-0.4% |
||||||||||||
Maintenance capital expenditures |
3,941 |
2,352 |
1,589 |
67.6% |
||||||||||||
Principal elements of lease payments(4) |
6,691 |
- |
6,691 |
100.0% |
||||||||||||
Distributable cash flow |
29,608 |
24,765 |
4,843 |
19.6% |
||||||||||||
Dividends declared |
12,707 |
12,651 |
56 |
0.4% |
||||||||||||
Payout ratio |
42.9% |
51.1% |
-8.2% |
-16.0% |
||||||||||||
(1) |
Refer to the Terminology section for further details |
(2) |
Prior to the acquisition of Fishers on November 27, 2017, K-Bro was reporting and operating as a single Canadian division. |
(3) |
Effective January 1, 2019, the Corporation has adopted IFRS 16 Leases ("IFRS 16") using the modified retrospective method but has not restated comparatives for the prior periods, |
(4) |
Effective January 1, 2019, distributable cash flow includes the addition of principal elements of lease payments. This accounts for the change in accounting policies and the adoption |
Dividend
The Board of Directors has declared a monthly dividend of $0.10 per common share for the period from March 1 to March 31, 2020, to be paid on April 15, 2020 to shareholders of record on March 31, 2020. The Corporation's policy is for shareholders of record on the last business day of a calendar month to receive dividends during the fifteen days following the end of such month. K-Bro designates this dividend as an eligible dividend pursuant to subsection 89(14) of the Income Tax Act (Canada) and similar provincial and territorial legislation.
Outlook
While COVID-19 will have a significant negative impact on our hospitality revenue, management believes the prospects for the Corporation's healthcare business remains strong in the medium to long-term. In addition, management believes that the financial flexibility provided by our strong balance sheet will enable us to operate without disruption to our business model while maintaining our ability to service the healthcare and hospitality sectors in our Canadian and UK markets.
CORPORATE PROFILE
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada and a market leader for laundry and textile rental services in Scotland and the North East of England. K‑Bro and its wholly owned subsidiaries operate across Canada and the UK, providing a range of linen services to healthcare institutions, hotels and other commercial accounts that include the processing, management and distribution of general linen and operating room linen.
The Corporation's operations in Canada include nine processing facilities and two distribution centres under three distinctive brands: K‑Bro Linen Systems Inc., Buanderie HMR, and Les Buanderies Dextraze. The Corporation operates in ten Canadian cities: Québec City, Montréal, Toronto, Regina, Saskatoon, Prince Albert, Edmonton, Calgary, Vancouver and Victoria.
The Corporation's operations in the UK include Fishers Topco Ltd. ("Fishers"), which was acquired by K‑Bro on November 27, 2017. Fishers was established in 1900 and is a leading operator of laundry and linen processing facilities in Scotland, providing linen rental, workwear hire and cleanroom garment services to the hospitality, healthcare, manufacturing and pharmaceutical sectors. The Corporation operates six UK sites located in Cupar, Perth, Newcastle, Livingston and Coatbridge.
Additional information regarding the Corporation including required securities filings are available on our website at www.k-brolinen.com and on the Canadian Securities Administrators' website at www.sedar.com; the System for Electronic Document Analysis and Retrieval ("SEDAR").
TERMINOLOGY
Throughout this news release, and other documents referred to, and in order to provide a better understanding of the financial results, K-Bro uses the terms "EBITDA", "Adjusted EBITDA", "Adjusted net earnings", "Adjusted net earnings per share", "debt to total capital", "distributable cash" and "payout ratio". These terms do not have any standardized meaning under International Financial Reporting Standards ("IFRS") as set out in the CICA Handbook. Therefore, EBITDA, Adjusted EBITDA, Adjusted net earnings, Adjusted net earnings per share, distributable cash and payout ratio may not be comparable to similar measures presented by other issuers. Specifically, the terms "EBITDA", "Adjusted EBITDA", "Adjusted net earnings", "Adjusted net earnings per share", "distributable cash", and "payout ratio" have been defined as:
EBITDA is defined as earnings before finance expense, income taxes, depreciation, and amortization. EBITDA is not a recognized measure for financial statement presentation under IFRS. EBITDA is not intended to represent cash flow from operations, as defined by IFRS, and it should not be considered as an alternative to net earnings, cash flow from operations, or any other measure of performance prescribed by IFRS. The Corporation's EBITDA may also not be comparable to EBITDA used by other corporations, which may be calculated differently. The Corporation considers EBITDA to be a meaningful measure to assess its operating performance in addition to standardized IFRS measures. It is included because the Corporation believes it can be useful in measuring its ability to service debt, fund capital expenditures, and expand its business.
Three Months Ended |
Years Ended |
||||||||||
(thousands) |
2019 |
2018 |
2019 |
2018 |
|||||||
Net earnings |
$ |
2,195 |
$ |
1,052 |
$ |
10,906 |
$ |
6,169 |
|||
Add: |
|||||||||||
Income tax expense |
683 |
(551) |
2,900 |
1,222 |
|||||||
Finance expense |
1,213 |
866 |
5,802 |
3,315 |
|||||||
Depreciation of property, plant and equipment |
6,053 |
4,484 |
24,705 |
15,871 |
|||||||
Amortization of intangible assets |
958 |
768 |
3,260 |
3,004 |
|||||||
EBITDA |
$ |
11,102 |
$ |
6,619 |
$ |
47,573 |
$ |
29,581 |
|||
Adjusted EBITDA is a measure which has been reported in order to assist in the comparison of historical EBITDA to current results. Adjusted EBITDA is defined as EBITDA (defined above) with the exclusion of certain material items that are unusual in nature, infrequently occurring or not considered part of our core operations.
Adjusted net earnings and adjusted net earnings per share are measures which have been reported in order to assist in the comparison of historical net earnings to current results. Adjusted net earnings is defined as net earnings with the exclusion of certain material items that are unusual in nature, infrequently occurring or not considered part of our core operations. The calculation of adjusted net earnings normalizes the impact of the transaction costs related to the acquisition of Fishers, and the related impact on net earnings and net earnings per share. The normalization of this net expense in the calculation of adjusted net earnings and adjusted net earnings per share is considered by management to be a more accurate representation of the net earnings from core operations.
Distributable cash flow is a measure used by management to evaluate its performance. While the closest IFRS measure is cash provided by operating activities, distributable cash flow is considered relevant because it provides an indication of how much cash generated by operations is available after capital expenditures. It shall be noted that although we consider this measure to be distributable cash flow, financial and non-financial covenants in our credit facilities and dealer agreements may restrict cash from being available for dividends, re-investment in the Corporation, potential acquisitions, or other purposes. Investors should be cautioned that distributable cash flow may not actually be available for growth or distribution from the Corporation. Management refers to "Distributable cash flow" as to cash provided by (used in) operating activities with the addition of net changes in non-cash working capital items, less share-based compensation, maintenance capital expenditures and principal elements of lease payments.
Three Months Ended |
Years Ended |
||||||||||
(thousands) |
2019(1) |
2018 |
2019(1) |
2018 |
|||||||
Cash provided by operating activities |
$ |
11,555 |
$ |
7,799 |
$ |
43,916 |
$ |
17,554 |
|||
Deduct (add): |
|||||||||||
Net changes in non-cash working capital items |
1,534 |
1,082 |
1,866 |
(11,380) |
|||||||
Share-based compensation expense |
404 |
380 |
1,810 |
1,817 |
|||||||
Maintenance capital expenditures |
1,072 |
526 |
3,941 |
2,352 |
|||||||
Principal elements of lease payments(2) |
1,501 |
- |
6,691 |
- |
|||||||
Distributable cash flow(2) |
$ |
7,044 |
$ |
5,811 |
$ |
29,608 |
$ |
24,765 |
|||
(1) |
Effective January 1, 2019, the Corporation has adopted IFRS 16 Leases ("IFRS 16") using the modified retrospective method but has not restated comparatives for the prior periods, |
(2) |
Effective January 1, 2019, distributable cash flow includes the addition of principal elements of lease payments. This accounts for the change in accounting policies and the adoption |
Payout ratio is defined by management as the actual cash dividend divided by distributable cash. This is a key measure used by investors to value K-Bro, assess its performance and provide an indication of the sustainability of dividends. The payout ratio depends on the distributable cash and the Corporation's dividend policy.
Three Months Ended |
Years Ended |
||||
(thousands) |
2019 |
2018 |
2019 |
2018 |
|
Cash dividends |
3,181 |
3,168 |
12,707 |
12,651 |
|
Distributable cash flow |
7,044 |
5,811 |
29,608 |
24,765 |
|
Payout ratio |
45.2% |
54.5% |
42.9% |
51.1% |
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FORWARD LOOKING STATEMENTS
This news release contains forward‑looking information that represents internal expectations, estimates or beliefs concerning, among other things, future activities or future operating results and various components thereof. The use of any of the words "anticipate", "continue", "expect", "may", "will", "project", "should", "believe", and similar expressions suggesting future outcomes or events are intended to identify forward‑looking information. Statements regarding such forward‑looking information reflect management's current beliefs and are based on information currently available to management.
These statements are not guarantees of future performance and are based on management's estimates and assumptions that are subject to risks and uncertainties, which could cause K-Bro's actual performance and financial results in future periods to differ materially from the forward-looking information contained in this news release. These risks and uncertainties include, among other things: (i) risks associated with acquisitions, including the possibility of undisclosed material liabilities; (ii) K-Bro's competitive environment; (iii) utility costs, minimum wage legislation and labour costs; (iv) K-Bro's dependence on long-term contracts with the associated renewal risk; (v) increased capital expenditure requirements; (vi) reliance on key personnel; (vii) changing trends in government outsourcing; (viii) changes or proposed changes to minimum wage laws in Ontario, British Columbia, Alberta, Quebec, Saskatchewan and the United Kingdom (the "UK"), which could have an adverse effect on expenses in respect of employees situated in those jurisdictions and while a portion of such expenses may be passed on to or be recoverable from customers, there can be no assurances that that will occur; (ix) the availability of future financing; * textile demand; (xi) the adverse impact of the coronavirus (COVID-19) pandemic on the Corporation, which is likely to be significant, particularly to our hospitality segment; and (xii) foreign currency risk. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include: (i) volumes and pricing assumptions; (ii) expected impact of labour cost initiatives; (iii) frequency of one-time costs impacting quarterly and annual financial results; (iv) foreign exchange rates; and (v) the level of capital expenditures. Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain statements regarding forward-looking information included in this news release may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this news release. Forward looking information included in this news release includes the expected annual healthcare revenues to be generated from the Corporation's contracts with new customers, the anticipated capital costs for the Toronto and Vancouver facilities, calculation of costs, including one-time costs impacting the quarterly financial results, anticipated future capital spending and statements with respect to future expectations on margins and volume growth.
All forward‑looking information in this news release is qualified by these cautionary statements. Forward‑looking information in this news release is presented only as of the date made. Except as required by law, K‑Bro does not undertake any obligation to publicly revise these forward‑looking statements to reflect subsequent events or circumstances.
SOURCE K-Bro Linen Inc.
Linda McCurdy, Chief Executive Officer, K-Bro Linen Inc. (TSX: KBL), Phone: 780.453.5218, Email: [email protected], Web: www.k-brolinen.com
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