K-Bro Linen (KBL) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 results with consolidated revenue of CAD 93.5 million, up 15.8% year-over-year, driven by 5.5% growth in healthcare and 28.9% in hospitality segments.

• Adjusted EBITDA rose 25.2% to CAD 18.2 million, with margin improving to 19.5% from 18.1% year-over-year; adjusted net earnings increased to CAD 6.2 million.

• Net earnings decreased 3.3% to CAD 4.5 million due to higher depreciation, amortization, and nonrecurring costs.

• Completed two acquisitions: Shortridge in the UK for CAD 44.7 million and Buanderie C.M. in Montreal for CAD 11.8 million, expanding geographic reach and customer base.

• Declared Q2 dividend of CAD 0.30 per share; long-term debt increased to CAD 134.8 million, reflecting acquisition financing.

Financial highlights

• Q2 2024 consolidated revenue: CAD 93.5 million, up from CAD 80.7 million in Q2 2023.

• Adjusted EBITDA: CAD 18.2 million (19.5% margin), up from CAD 14.6 million (18.1% margin) in Q2 2023.

• Net earnings: CAD 4.5 million, down from CAD 4.7 million; adjusted net earnings: CAD 6.2 million, up from CAD 4.8 million.

• Basic EPS: CAD 0.432; adjusted basic EPS: CAD 0.594, up 33.5% year-over-year.

• Distributable cash flow: CAD 9.7 million; payout ratio improved to 32.7% from 36.7%.

Outlook and guidance

• Positive outlook for both healthcare and hospitality segments, with continued strong activity and growth opportunities in Canada and the UK.

• Adjusted EBITDA margins expected to follow historical seasonal trends; continued focus on organic growth and strategic M&A.

• One-time transition costs expected to be limited to the remainder of 2024.

• CapEx for 2024 guided at CAD 15–17 million, dropping to around CAD 10 million in 2025.

• Management highlights stabilized energy and labor markets, with ongoing regional labor constraints managed via foreign worker programs.