K-Bro Linen (KBL) Q4 2025 earnings summary

Executive summary

• Achieved record annual revenue of CAD 507 million and adjusted EBITDA of CAD 99 million for 2025, marking the seventh consecutive quarter of record results, driven by strong healthcare and hospitality segment growth and the acquisition of Stellar Mayan, expanding the U.K. platform.

• Growth driven by strategic acquisitions, notably Stellar Mayan, which expanded the U.K. platform and contributed to higher healthcare revenue share.

• Integration of acquired businesses, including Stellar Mayan, progressing well, with 25% of anticipated cost synergies realized by year-end and full run-rate synergies expected over 12–24 months.

Financial highlights

• Consolidated revenue rose 36% year-over-year to CAD 506.8 million, primarily due to acquisitions and price increases; healthcare revenue up 41.2% and hospitality revenue up 29.5%.

• Adjusted EBITDA increased 36.9% to CAD 98.7 million; adjusted EBITDA margin improved to 19.5%.

• Adjusted net earnings grew to CAD 30.4 million; reported net earnings decreased to CAD 18 million due to higher interest, amortization, and acquisition-related costs.

• Dividends declared totaled $1.20 per share for 2025; payout ratio improved to 30.4%.

• Debt (excluding leases) increased to $237.6 million, reflecting acquisition financing.

Outlook and guidance

• Expect continued strong activity in healthcare and hospitality segments, with adjusted EBITDA margins to remain at similar historical levels in Canada and lower in the U.K. due to Stellar Mayan's profile.

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

• Anticipate CAD 40 million in free cash flow before dividends for 2026, with leverage expected to move into the low 2x range.

• CapEx for 2026 projected at CAD 20–22 million, split between maintenance and growth/strategic investments, including remaining Stellar Mayan investment.