K-Bro Linen (KBL) Q3 2025 earnings summary

Executive summary

• Achieved record Q3 results with revenue of CAD 156 million (USD 155.9 million), up 49.3% year-over-year, and adjusted EBITDA of CAD 33.5 million, marking the sixth consecutive quarter of record performance.

• Completed the Stellar Mayan acquisition, expanding the UK footprint and diversifying revenue streams geographically and by business mix.

• Early contributions from Stellar Mayan expanded the business, now split evenly between Canada and the U.K.

• Healthcare revenue now represents 53% of consolidated revenues, up from 47% in 2024, driven by the acquisition.

• Strategic acquisitions remain a key growth driver, with ongoing integration and transition costs reflected in adjusted EBITDA.

Financial highlights

• Consolidated revenue increased by 49% year-over-year; healthcare revenue up 67% to $82.4 million, hospitality revenue up 34% to $73.5 million.

• Adjusted EBITDA rose 45.9% to CAD 33.5 million; adjusted EBITDA margin decreased to 21.5% from 22%.

• Net earnings increased 8.9% to CAD 8.9 million; adjusted net earnings rose 45.8% to $12.0 million; net earnings margin decreased to 5.7% from 7.8%.

• Wages and benefits rose to CAD 60.6 million, 38.9% of revenue, mainly due to Stellar Mayan's cost structure.

• Debt (excluding lease liabilities) increased to $246.3 million, up 81.3% from the prior year, reflecting acquisition financing.

Outlook and guidance

• Expect mid to mid-single digit organic growth in Canada through 2026, with strength in Quebec and Toronto.

• Integration of Stellar Mayan expected to take 12–18 months, with run-rate cost synergies anticipated over 24 months.

• Combined adjusted EBITDA margins expected to remain at seasonally adjusted historical levels; U.K. margins will be lower due to Stellar's profile.

• Maintenance CapEx to be spent evenly over quarters; Stellar Mayan CapEx (GBP 5 million) to be completed by Q2 2026.

• Tax rate for modeling suggested at 25%-26%.