Redishred Capital Corp. announces second quarter 2010 results
MISSISSAUGA, ON, Aug. 10 /CNW/ -
Financial Highlights:
- System sales(1) from our PROSHRED(R) system for the second quarter of
2010 were $3.2 million USD - setting a new record for system sales
achieved in any one quarter. For the first half of 2010, system sales
were $6.3 million USD, which represents a 42% increase over the first
half of 2009.
- Scheduled (recurring) system sales in the second quarter grew by
15% over the same period in 2009.
- On April 30, 2010, Redishred acquired its first corporate location in
Syracuse, New York and on June 30, 2010, Redishred acquired its
second corporate location in Albany, New York.
- The Syracuse location generated $100,685CDN in revenue and
$15,787CDN in net income for the two months ended June 30, 2010.
- Redishred's royalty and fee revenue for the second quarter of 2010
was $235,000CDN (2009 - $200,000CDN). Royalty and fee revenues are
generated by franchises of the PROSHRED(R) franchise system and are
originally denominated in US dollars.
- Following the end of the second quarter of 2010, on July 26, 2010,
Redishred awarded the San Diego, CA franchise. Operations are
expected to commence in the third quarter of 2010.
(1) System sales are revenues generated from the franchise system and
from corporately operated locations. Redishred Capital Corp. derives
its royalty and service fee revenues based on a percentage of system
sales.
For the three months ended, June 30, 2010 June 30, 2009
(in CDN) --------------- ---------------
Franchising:
Royalty and service fee revenues $ 235,092 $ 200,175
Corporate operations:
Service and recycling revenue $ 100,685 -
Income from corporate location $ 15,787 -
Operating income (loss) (Before
depreciation, amortization and
interest) $ (157,498) $ (522,471)
Net income (loss) $ (300,831) $ (751,641)
Income (loss) per share $ (0.01) $ (0.03)
Weighted average number of common shares 28,884,658 22,884,614
Management's Comments on the Industry
The North American shredding industry continues to grow, as there is increasing awareness with respect to the following demand drivers:
- regulatory requirements and enforcement continue to be increased with
respect to document destruction, including the federally enacted
Health Information Technology for Economic and Clinical Health Act;
- consumers and businesses have heightened awareness of their
responsibility towards safeguarding the environment;
- corporate initiatives to outsource "non-core" business services, and
- increasing need to destroy and recycle other media such as hard-
drives.
Additionally, prices for recycled paper have continued to show upward momentum as a result of increased demand from overseas markets, resulting in stronger recycling system sales.
Given these strong fundamentals, the company continues to be optimistic about its short, intermediate and long-term development plans.
Management's Comments on the Second Quarter
System Sales - System sales in all three major categories continued to grow during the second quarter of 2010.
- Scheduled system sales, which are recurring in nature, were up 15%
over the second quarter of 2009.
- Unscheduled system sales, which is revenue generated from customers
with one time requirements or having less frequent shredding
requirements, grew by 17% over the second quarter of 2009.
- Recycling system sales, which is revenue generated from selling the
shredded paper to recycling facilities, grew by 259% over the second
quarter of 2009. In addition the number of tons of paper recycled by
the PROSHRED(R) system was up 24% over the second quarter of 2009.
These solid 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.
Franchise Development - Redishred had strong franchise recruitment activities take place in the second quarter of 2010, which garnered a new franchisee and a resale of an existing franchise in July of 2010.
Tom Hosea, our Denver, CO franchisee of six years, sold his PROSHRED(R) franchise to, Tom and Darcy Nash. Tom and Darcy completed their new franchisee training program in Toronto and Syracuse in June, and closed their purchase of the franchise on July 1, 2010. Tom and Darcy Nash had the following comments on joining the PROSHRED(R) system, "we felt that with the heightened awareness of identity theft and security concerns driving demand, coupled with the fact that we are first time business owners, the Proshred franchise system made a lot of sense for us. We also feel that there is a good opportunity to grow the business in the Denver market."
On July 26, 2010, Todd Hoover and Bill and Desiree Chiles were awarded the San Diego, CA PROSHRED(R) franchise. This franchise marks the 18th location in the PROSHRED(R) system. Redishred's President John Prittie commented, "We are very pleased to award our first new franchise for 2010 and our second on the west coast in the last 12 months. We are looking to establish a strong presence on the west coast of the United States and have targeted Los Angeles, San Francisco, San Jose, Portland and Seattle for future expansion". Mr. Prittie further noted, "The new franchise will service San Diego and Imperial counties and augment our existing presence in Southern California. Our new franchisees are well known in the Southern California business community and have many connections within the commercial real estate and finance industries."
Todd Hoover and Bill and Desiree Chiles, the new San Diego franchises, noted that "we decided to get involved with Proshred because we think the business model is relevant in today's world of identity theft. We feel there is solid demand for a "best in class" service and we believe the Proshred model represents this and will be well received by our San Diego customers. Proshred is attractive because it has a solid infrastructure and support system in addition to a successful base of existing locations. We look forward to duplicating the Proshred model in San Diego and growing a sustainable business."
Acquisitions and Corporate Operations - On April 30, 2010, Redishred completed the acquisition of the PROSHRED(R) Syracuse business from its existing franchisee for a purchase price of $317,000. On June 30, 2010, Redishred completed the acquisition of the PROSHRED(R) Albany business from its existing franchisee for a purchase price of $398,000, not including contingent consideration. The results for the first two months from the corporate location are as follows:
two months ended June 30, 2010 % of revenue
(in USD)
Revenue:
Shredding service $ 76,820 79%
Recycling 20,900 21%
---------------
Total revenue 97,720 100%
---------------
Corporate store operating costs 59,766 61%
Depreciation 13,858 14%
Interest expense 8,946 9%
---------------
Total corporate store costs 82,570 84%
---------------
Corporate store income (loss) 15,150 16%
---------------
---------------
Community and Social Commitment - Our locations under the PROSHRED(R) banner conducted eighty six community shredding events in the first half of 2010. 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. During the first half of 2010, the PROSHRED(R) system, through its recycling program, saved 149,000 trees.
Robert Crozier, the Company's CEO, had the following comments on the second quarter results, "We had a very busy second quarter, setting new system sales records, acquiring two shredding businesses, and seeing the fruits of our franchise recruitment efforts in July. All of these positive results confirm that this industry remains strong and our PROSHRED(R) brand and systems are meeting the needs of our customers. We are certainly looking forward to an even better second half of 2010, with the goal of conducting additional accretive acquisitions in new markets, continuing to award new franchises in new markets, and continuing to build on our system sales growth"
Financial Statements
Redishred's June 30, 2010 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 certification. In addition to the ISO certification, most of our locations are NAID certified. It is PROSHRED(R)'s vision is to be the 'system of choice' and provide shredding and recycling services on a global basis.
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 2009 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) franchise development or the awarding of franchises (including the
recognition of franchise fee revenue), which is subject to the
identification and recruitment of candidates with the financial
capacity and managerial capability to own and operate a Proshred
franchise;
(ii) the development of further west coast locations may not be attained
due to negative local economic circumstances that may limit the
number of qualified franchisee candidates;
(iii) the commencement of a new franchise operation may be delayed by the
inability of the franchisee to comply with the franchise agreement
terms and conditions post execution;
(iv) acquisition activity, which is subject to the identification of
appropriate assets that are accretive to the Company's cash flows
and agreement of suitable terms;
(v) anticipated system sales and royalty revenue which may be impacted
by industry growth levels which to date have been driven by
favourable legislation and favourable media coverage on the impacts
of identity theft;
(vi) commodity paper prices and the demand for this commodity which will
vary with market conditions in the United States and international,
and
(vii) results for the second half of 2010, maybe impacted by industry
growth levels, the price of recycled paper and the performance of
the overall economy.
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.
For further information: Redishred Capital Corp. (TSX.V - KUT): Jeffrey Hasham, CA, Chief Financial Officer, Phone: (416) 849-3469, Fax: (905) 812-9448, [email protected], www.redishred.com; Robert Crozier, Chief Executive Officer, Phone: (902) 429-2437, Fax: (905) 812-9448, [email protected], www.redishred.com
Share this article