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Redishred Capital Corp. (“Redishred”) Announces Third Quarter 2013 Results – Record Sales Achieved

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By Accesswire

Third Quarter Highlights:

-Total system sales (1) in the PROSHRED(R) system were $4.3 million USD in the third quarter of 2013, growing 16% over the comparative period in 2012.

-Scheduled (recurring) system sales for the third quarter reached a record of $2.26 million USD, growing 20% over the third quarter of 2012;

-Unscheduled system sales for the third quarter reached a record of $1.33 million USD, growing 30% over the third quarter in 2012 and;

-Recycling system sales of $734,000 USD decreased by 10% over the third quarter of 2012 as a result of a decline in the price of paper.

-The PROSHRED(R) system shred and recycled 13% more paper during the third quarter of 2013 than during the third quarter of 2012.

-Royalty and license revenue for the third quarter of 2013 was $264,000 CDN. Royalty and service revenues are generated by franchises of the PROSHRED(R) franchise system and are originally denominated in US dollars.

-During the third quarter of 2013, the Company entered into agreements with two new franchisees to operate a PROSHRED(R) shredding business in the San Francisco Bay Area, California and Seattle, Washington. The new franchisees commenced operations in the fourth quarter of 2013. The Company recognized $251,000 CDN in franchise fees associated with the new franchises in the third quarter of 2013.

-On August 1, 2013, the Company acquired the PROSHRED(R) Charlotte business from an existing franchisee, which marks the Company’s 5th directly operated corporate location. The Charlotte business has been operated directly by Redishred since August 1, 2013.

-The Company’s five directly operated corporate locations in Syracuse, Albany, Milwaukee, New York City and Charlotte produced $937,034 CDN in revenues during the three months ended September 30, 2013. The Company’s five directly operated corporate locations generated $361,000 CDN in earnings before interest, taxes, depreciation and amortization ("EBITDA") during the third quarter of 2013.

-The Company earned a record $1.46M CDN in revenues during the three months ended September 30, 2013. This represents a growth of 36% over the prior comparative period.

-During the three months ended September 30, 2013, the Company generated $136,000 CDN in operating income, which was driven by the corporate locations EBITDA and growth in franchising sales and royalty revenue.

-Net loss for the third quarter of 2013 was $214,000 CDN, down from a net loss of $591,000 CDN for the third quarter of 2012.

(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,| |September 30, 2013|September 30, 2012|
 |-------------------------------------------------------------------|
 |                           | |$                 |$                 |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |System sales (USD)         | |4,337,484         |3,738,939         |
 |-------------------------------------------------------------------|
 |Franchise operations:      | |                  |                  |
 |-------------------------------------------------------------------|
 |Franchise and license fee  | |264,205           |140,605           |
 |revenues                   | |                  |                  |
 |-------------------------------------------------------------------|
 |Royalty and service fee    | |251,040           |203,037           |
 |revenues                   | |                  |                  |
 |-------------------------------------------------------------------|
 |Total franchise and license| |515,245           |343,642           |
 |revenue                    | |                  |                  |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |Corporate operations (1) : | |                  |                  |
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |Service and recycling      | |948,625           |729,645           |
 |revenue                    | |                  |                  |
 |-------------------------------------------------------------------|
 |Operating costs            | |(576,365)         |(611,076)         |
 |-------------------------------------------------------------------|
 |EBITDA from corporate      | |372,260           |118,569           |
 |locations                  | |                  |                  |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |Operating income (loss)    | |136,398           |(206,447)         |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |Net loss                   | |(214,588)         |(591,396)         |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |Loss per share             | |(0.01)            |(0.02)            |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 |-------------------------------------------------------------------|
 |Weighted average number of | |  28,884,658      |  28,884,658      |
 |common shares outstanding  | |                  |                  |
 |– basic and diluted        | |                  |                  |
 |-------------------------------------------------------------------|
 |                           | |                  |                  |
 ---------------------------------------------------------------------
  1. (1)Corporate operations include the results of the Miami business.


 --------------------------------------------------------------------
 |For the nine months ended,| |September 30, 2013|September 30, 2012|
 |------------------------------------------------------------------|
 |                          | |$                 |$                 |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Franchise operations:     | |                  |                  |
 |------------------------------------------------------------------|
 |System sales (USD)        | |12,767,211        |11,144,470        |
 |------------------------------------------------------------------|
 |Franchise and license fee | |266,764           |235,524           |
 |revenues                  | |                  |                  |
 |------------------------------------------------------------------|
 |Royalty and service fee   | |735,268           |611,516           |
 |revenues                  | |                  |                  |
 |------------------------------------------------------------------|
 |Total franchise and       | |1,002,032         |847,040           |
 |license revenue           | |                  |                  |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Corporate operations (1) :| |                  |                  |
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Service and recycling     | |2,442,125         |2,293,128         |
 |revenue                   | |                  |                  |
 |------------------------------------------------------------------|
 |Operating costs           | |(1,573,307)       |(1,818,779)       |
 |------------------------------------------------------------------|
 |   EBITDA from corporate  | |  868,818         |  474,349         |
 |locations                 | |                  |                  |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Operating loss            | |(113,606)         |(697,645)         |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Net loss (2)              | |(503,184)         |(1,833,249)       |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Net loss – excluding      | |(503,184)         |(1,304,379)       |
 |one-time costs (2)        | |                  |                  |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Loss per share            | |(0.01)            |(0.06)            |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 |------------------------------------------------------------------|
 |Weighted average number of| |  28,884,658      |  28,884,658      |
 |common shares             | |                  |                  |
 |------------------------------------------------------------------|
 |                          | |                  |                  |
 --------------------------------------------------------------------
  1. (1)Corporate operations include the results of the Miami business.

  2. (2)For the nine months ending September 30, 2012, net loss includes $487,175 of the loss on settlement of the pre-existing relationship related to the NYC and Miami acquisitions, one-time costs related to the franchisee litigation and the recovery of bad debt related to the Miami acquisition. 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/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, 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 five 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 third quarter of 2013 of 20% and 30% over the same quarter in 2012, respectively.

Recycling system sales decreased by 10% for the three months ended September 30, 2013 in comparison to the same period in 2012 as a result of the decline in the price of paper. During the nine months ended September 30, 2013, the PROSHRED(R) system shred and recycled 19,000 tons of paper, which equates to 285,000 trees saved.

Corporate Operations

During the nine months ended September 30, 2013, Redishred directly operated five shredding locations in Syracuse, NY, Albany, NY, Milwaukee, WI, New York City, NY and Charlotte, NC. The Miami business is jointly operated by Redishred and the Company’s Tampa Bay, FL franchisee location. The Company earned rental revenue from the Miami business and is included below.

On August 1, 2013, the Company acquired the Charlotte franchise. The two month results of the Charlotte business are included in the three and nine month results of the corporate operations. During the three months ended September 30, 2013, the corporate location revenues grew by 30% over the same comparative prior year period. The Company has also reduced its operating costs by 6% in the third quarter of 2013 over the third quarter of 2012. As a result, EBITDA increased 225% over the three months ended September 30, 2012.

All Corporate Locations Results:


 ----------------------------------------------------------------------------------
 |         |             3 months          |          9 months ended           |  |
 |         |ended September 30             |September 30                       |  |
 |--------------------------------------------------------------------------------|
 |         |2013   |% of   |2012   |% of   |2013     |% of   |2012     |% of   |  |
 |         |       |revenue|       |revenue|         |revenue|         |revenue|  |
 |--------------------------------------------------------------------------------|
 |         |$      |       |$      |       |$        |       |$        |       |  |
 |--------------------------------------------------------------------------------|
 |Revenue: |       |       |       |       |         |       |         |       |  |
 |--------------------------------------------------------------------------------|
 |         |774,454|82%    |577,305|79%    |1,972,759|81%    |1,837,359|80%       |
 |Shredding|       |       |       |       |         |       |         |          |
 |service  |       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |         |162,580|17%    |144,904|20%    |435,121  |18%    |448,333  |19%       |
 |Recycling|       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |  Rental |11,591 |1%     |7,436  |1%     |34,245   |1%     |7,436    |1%        |
 |revenue  |       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |Total    |948,625|100%   |729,645|100%   |2,442,125|100%   |2,293,128|100%      |
 |revenue  |       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |         |       |       |       |       |         |       |         |       |  |
 |--------------------------------------------------------------------------------|
 |Operating|576,365|62%    |611,076|85%    |1,573,307|65%    |1,818,779|80%    |  |
 |costs    |       |       |       |       |         |       |         |       |  |
 |--------------------------------------------------------------------------------|
 |  EBITDA |       |39%    |       |15%    |868,818  |35%    |474,349  |20%    |  |
 |         |372,260|       |118,569|       |         |       |         |       |  |
 ----------------------------------------------------------------------------------

All Corporate Locations Trend:


 -----------------------------------------------------------
 |         |2013                   |2012                   |
 |---------------------------------------------------------|
 |         |Q3     |Q2     |Q1     |Q4     |Q3     |Q2     |
 |---------------------------------------------------------|
 |Corporate|948,625|800,997|692,503|638,795|729,645|757,546|
 |location |       |       |       |       |       |       |
 |revenue  |       |       |       |       |       |       |
 |---------------------------------------------------------|
 |Corporate|372,260|298,746|197,812|129,023|118,569|155,596|
 |location |       |       |       |       |       |       |
 |EBITDA   |       |       |       |       |       |       |
 -----------------------------------------------------------

Same Store Corporate Locations Results:

Same store corporate operation results are indicators of performance of corporate stores that have been in the system for equivalent periods in 2013 and 2012. Same store corporate results include the operations of Syracuse, Albany, Milwaukee and New York City. During the three months ended September 30, 2013, the same store corporate location revenues grew by 6% and operating costs were reduced by 26%. This led to an increase in EBITDA of 181%.


 ----------------------------------------------------------------------------------
 |         |             3 months          |          9 months ended           |  |
 |         |ended September 30             |September 30                       |  |
 |--------------------------------------------------------------------------------|
 |         |2013   |% of   |2012   |% of   |2013     |% of   |2012     |% of   |  |
 |         |       |revenue|       |revenue|         |revenue|         |revenue|  |
 |--------------------------------------------------------------------------------|
 |         |$      |       |$      |       |$        |       |$        |       |  |
 |--------------------------------------------------------------------------------|
 |Revenue: |       |       |       |       |         |       |         |       |  |
 |--------------------------------------------------------------------------------|
 |         |636,176|83%    |577,305|80%    |1,834,481|82%    |1,837,359|80%       |
 |Shredding|       |       |       |       |         |       |         |          |
 |service  |       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |         |128,894|17%    |144,904|20%    |401,436  |18%    |448,333  |20%       |
 |Recycling|       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |Total    |765,070|100%   |722,209|100%   |2,235,917|100%   |2,285,692|100%      |
 |revenue  |       |       |       |       |         |       |         |          |
 |--------------------------------------------------------------------------------|
 |         |       |       |       |       |         |       |         |       |  |
 |--------------------------------------------------------------------------------|
 |Operating|452,392|59%    |611,076|85%    |1,443,859|65%    |1,818,779|80%    |  |
 |costs    |       |       |       |       |         |       |         |       |  |
 |--------------------------------------------------------------------------------|
 |  EBITDA |       |41%    |       |15%    |792,058  |35%    |466,913  |20%    |  |
 |         |312,678|       |111,133|       |         |       |         |       |  |
 ----------------------------------------------------------------------------------

Management’s Comments on the Third Quarter of 2013

Jeffrey Hasham, the Company’s CEO, had the following comments on the third quarter results, "We are pleased that all elements of our business are growing concurrently. System sales hit all-time records, driven by shredding service sales; our corporate locations are now starting to perform at satisfactory levels; and we have grown our location footprint to include two key markets, San Francisco and Seattle. The investments made in our people and in new on-site shredding trucks are starting to pay off, and management will continue to look to push for strong results over the next twelve months."

Community and Social Commitment

Our locations under the PROSHRED(R) banner conducted 94 community shredding events in the nine months ended September 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 September 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 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 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.

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.