K-Bro Linen (KBL) Q2 2025 earnings summary

Executive summary

• Achieved record Q2 2025 results with revenue of $113.1 million and adjusted EBITDA of $23.7 million, reflecting a 21% year-over-year revenue increase and 30% rise in adjusted EBITDA compared to Q2 2024.

• Growth driven by early contributions from recent acquisitions, notably Stellar Mayan, and steady volume trends in both healthcare and hospitality segments.

• Completed the largest acquisition in company history, Stellar Mayan, expanding UK presence and creating a top-three commercial laundry platform.

• Revenue split is now approximately even between Canada and the UK, enhancing diversification.

• Healthcare and hospitality revenues each increased by about 21% year-over-year, with healthcare representing 51% of consolidated revenue.

Financial highlights

• Adjusted EBITDA margin rose to 21% from 19.5% year-over-year; consolidated EBITDA margin increased to 18.9% from 17.7%.

• Net earnings grew 19.5% to $5.4 million, with net earnings as a percentage of revenue stable at 4.8%.

• Basic EPS for Q2 2025 was $0.491, up 13.7% year-over-year; adjusted basic EPS was $0.706, up 18.9%.

• Wages and benefits increased by $7.1 million but decreased as a percentage of revenue due to labor efficiencies.

• Utilities costs fell by $0.5 million and as a percentage of revenue, driven by lower gas costs in the U.K. and elimination of the Canadian carbon tax.

Outlook and guidance

• Expectation for adjusted EBITDA margins to remain consistent with historical levels, with synergies from Stellar Mayan to be realized over 12–24 months.

• Healthcare segment activity expected to remain strong due to focus on reducing wait times and enhancing patient care; hospitality segment to benefit from robust business and leisure travel.

• Q3 2025 adjusted EBITDA margin anticipated to be in line with prior year seasonal highs, despite lower initial margin profile from Stellar Mayan.

• Capital spending for 2025 projected at $10–12 million, excluding $9.3 million for Stellar Mayan.

• No significant impact anticipated from tariffs or US trade policy due to customer and supplier base.