RediShred Capital (KUT) Q2 2024 earnings summary

Executive summary

• Achieved record consolidated revenue of CAD 18 million in Q2 2024, up 7% year-over-year, driven by strong organic shredding growth and two acquisitions (SelectShred in Florida and Confidential Shredding in NY/NJ).

• Organic shredding revenue grew 10% year-over-year, with total shredding revenue up CAD 2.1 million (17%), including CAD 1.3 million organic growth and CAD 1 million from acquisitions.

• EBITDA increased to CAD 4.5 million, up 1% year-over-year, with organic EBITDA (excluding paper) up 16% and EBITDA excluding net recycling revenue up 32%.

• Free cash flow for Q2 2024 was CAD 3.5 million (CAD 0.19 per share), a CAD 3.6 million increase from Q2 2023, mainly due to higher operating cash and capex timing.

• Net income for Q2 2024 was CAD 992,000, compared to a net loss of CAD 970,000 in Q2 2023.

Financial highlights

• Year-to-date revenue for the first six months was CAD 35.1 million, up from CAD 33.7 million in 2023; YTD EBITDA was CAD 8.6 million.

• Recycling revenue declined to CAD 2 million from CAD 2.6 million due to lower paper prices.

• Q2 2024 EBITDA margin was 25%; EBITDA less net recycling margin was 18%.

• Q2 2024 free cash flow per diluted share was CAD 0.19, up from negative CAD 0.01 in Q2 2023.

• CapEx for Q2 was CAD 0.5 million.

Outlook and guidance

• Price increases implemented in summer 2024 are expected to positively impact Q3 and Q4 results.

• Management remains confident in achieving the CAD 17.7 million EBITDA target for the year, citing acquisitions, cost improvements, and revenue growth.

• Q2 is typically the strongest margin quarter, but Q4 is expected to be stronger than previous years due to acquisitions and price increases.

• Management remains optimistic about continued demand for shredding services and ongoing growth in core operations.

• Forward-looking statements highlight risks and uncertainties, with no assurance of achieving management's expectations.