MISSISSAUGA, ON / ACCESSWIRE / May 25, 2023 / Redishred Capital Corp. (TSX-V:KUT)

Quarterly Earnings Call:

8:30am EST, May 29, 2023, Participant call in number is 1-800-319-4610

Quarterly Highlights:

Consolidated Highlights:

• The Company generated record revenue of $17.0 million CAD, growing $4.5 million CAD, or 36% versus Q1 2022.
• Consolidated EBITDA for Q1 2023 was a record $4.7 million CAD, growing $0.7 million CAD, or 17% versus Q1 2022.
• The growth in consolidated EBITDA was driven by organic growth from increased bookings for existing and new customers, growth from acquisitions completed in the past twelve months; and price increases.
• Free Cash Flow for Q1 2023 was $2.4 million CAD, growing $0.8 million CAD, or 48% versus Q1 2022, driven by higher cash generated from operating activities from higher EBITDA and more favourable changes in non-cash operating working capital, partially offset by higher capital expenditures to support the Company's growth.

Corporate Locations Highlights:

• Corporate location revenue for Q1 2023 grew 37% versus Q1 2022 to $16.4 million CAD (28% constant currency growth - US Dollars is the constant currency).
• Corporate location EBITDA grew 23% versus Q1 2022 to $6.1 million CAD (15% constant currency growth).
• Same corporate location EBITDA was $5.6 million CAD, growing 13% versus Q1 2022 (6% constant currency growth).

Capital Management:

• The Company generated $3.6 million CAD in cash from operations during Q1 2023.
• As at March 31, 2023, the Company has $6.3 million CAD in cash, $1 million CAD available on its operating line of credit, and $3.8 million CAD available on its non-revolving re-advanceable term loan.

Management's Comments on Q1-2023

Jeffrey Hasham, the Company's Chief Executive Officer, noted 'We are very pleased with our results in the first quarter of 2023. We continue to see strong demand for our services, including our core shredding service offering, which, coupled with continued strong recycling revenue and increases in our e-waste business, has helped drive our organic revenue growth. The revenue from our Proscan business is in part dictated by timing and approval of customer budgets, which impacts when the Company can perform these services. Our pipeline of scanning projects remains strong.

From a cost perspective, we have started to see some signs of easing, particularly in driver wage inflation and fuel pricing. The Company is reviewing its pricing and will look to increase prices in 2023 in response to cost increases. The Company also expects to realize further synergies from recently completed acquisitions related to route densification and optimization that should help enhance future margins.

For the quarter, I am pleased to report that Q1 2023 Corporate location EBITDA was $6.1 million Canadian, an increase of 23% from Q1 2022. This, coupled with our franchise business, has driven consolidated EBITDA to $4.7 million Canadian for Q1 2023. These results are a reflection of the hard work and commitment of our employees, franchisees, management and board members, and I would like to personally thank each of them for their efforts and contributions to start the year.'

Capital Management - in CAD:
(In $000's)

(1) Change expressed as a percentage or basis point ('bp').
(2) Working Capital represents the excess of the Company's current assets over its current liabilities.

Revenue Growth in Q1-2023

The Company achieved 36% total revenue growth and 27% total revenue growth in constant currency during Q1 2023 versus Q1 2022 primarily due to acquisitions conducted during the last 12 months, organic sales growth from new customers and price increases.

Corporate Locations

Total corporate location revenue and EBITDA grew by 37% and 23%, respectively, in Q1 2023 versus Q1 2022 due to the acquisitions completed over the past twelve months, organic growth from same locations, and price increases.

Same corporate location revenue and EBITDA grew 21% and 13%, respectively, in Q1 2023 verses Q1 2022.

Note 1: During Q1-2023, acquisition/vendor-related consulting fees of $248 (Q1-2022 - $58) are included in the total and non-same corporate location operating costs.

Community and Social Commitment

Our locations under the PROSHRED^® banner conduct numerous community shredding events. These events provide an opportunity for our clients, clients' employees, local businesses and local residents to ensure their personal and confidential materials are securely destroyed. In addition to helping to reduce identity theft, several of these events allow for donations to various not-for-profit organizations. PROSHRED^® is also proud that 100% of the shredded material is recycled, as our continued goal is to foster the use of fewer trees in the production of all paper products. Future community shredding event locations can be found on our website, www.proshred.com. Our annual national Shred Cancer event will be held in June of 2023 at various Proshred locations. These events are held to raise research funds for the American Institute for Cancer Research ('AICR'). It is our goal as a Company and Franchise System to support AICR in their endeavor to prevent cancer and possibly cure this disease. So far, PROSHRED^® has raised over USD$205,000 for this cause. Please visit www.proshred.com/aicr for more information on this effort.

Non-IFRS Measures

There are measures included in this press release that do not have a standardized meaning under International Financial Reporting Standards ('IFRS') and therefore may not be comparable to similarly titled measures presented by other publicly traded companies. The Company includes these measures as a means of measuring financial performance of the Company.

• Total System Sales are sales generated by franchisees, licensees and corporately operated locations. The system sales generated by franchisees and licensees drive the Company's royalties. The system sales generated by corporate locations are included in the Company's revenue.
• Same Location are indicators of performance of corporately operated locations that have been in the system for equivalent periods in both the current period and the comparative period.
• Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Consolidated EBITDA also excludes government assistance, re-measurements of contingent consideration, foreign exchange gains and losses, and gains and losses on disposal of tangible assets. A reconciliation between net income and consolidated EBITDA is provided below.
• Consolidated Operating Income is defined as revenues less all operating expenses, including depreciation on tangible assets. Amortization for intangible assets has not been included in this calculation. A reconciliation between net income and consolidated operating income is provided below.
• Consolidated Free Cash Flow is defined as cash provided by operating activities net of capital expenditures. The calculation of Consolidated Free Cash Flow that begins with cash provided by operating activities is provided below.
• Capital Expenditures is defined as the purchase of tangible and intangible assets, net of proceeds received from their disposal.
• Corporate Location EBITDA is defined as earnings for corporately operated locations before interest, taxes, depreciation and amortization and also excludes items identified under the definition of Consolidated EBITDA above.
• Corporate Location Operating Income is the income generated by corporately operated locations. The operating income generated is inclusive of depreciation on tangible assets, including trucks, right-of-use-assets and secure collection containers. It does not include amortization related to intangibles assets and interest expense.
• Margin is the percentage of revenue that has turned into EBITDA or Operating Income. Margin is defined as EBITDA or operating income divided by revenue.
• Constant currency is a measure of growth before foreign currency translation impacts. It is defined as the current period results in CAD currency using the foreign exchange rate in the equivalent prior year period. This allows for period over period comparisons of business performance excluding the impact of currency fluctuations.

Reconciliation of EBITDA and Operating Income to Net Income

Reconciliation of Consolidated Free Cash Flow with Cash Provided by Operations

Financial Statements

Redishred's March 31, 2023 Financial Statements and Management's Discussion and Analysis will be available on www.sedar.com and www.redishred.com.

About Redishred Capital Corp.

Redishred Capital Corp. ('Redishred') is the owner of the PROSHRED^®, PROSCAN and secure e-Cycle brands, trademarks and intellectual property in the United States. Redishred digitizes, secures, shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. Redishred is a pioneer in the mobile document destruction and recycling industry and has the ISO 9001:2015 certification. It is Redishred's vision to be the ‘system of choice' in providing digital retention, secure shredding and recycling services on a global basis. Redishred Capital Corp. grants PROSHRED^` and PROSCAN franchise businesses in the United States and by way of a license arrangement in the Middle East. Redishred also operates fifteen corporate businesses directly. The Company's plan is to grow its business by way of both franchising and the acquisition and operation of information security businesses that generate stable and recurring cash flow through a scheduled client base, continuous paper recycling and concurrent unscheduled shredding service.

FOR FURTHER INFORMATION PLEASE CONTACT:

Redishred Capital Corp. (TSX.V - KUT)
Jeffrey Hasham, MBA, CPA, CA
Chief Executive Officer
[email protected]
www.redishred.com
Phone: (416) 849-3469 Fax: (905) 812-9448

or,

Redishred Capital Corp. (TSX.V - KUT)
Harjit Brar, CPA, CA
Senior Vice President and Chief Financial Officer
[email protected]
www.redishred.com
Phone: (437) 328-6639 Fax: (905) 812-9448

Note: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This news release contains forward looking statements that reflect the current expectations of management of Redishred and Redishred's future results, performance, achievements, prospects and opportunities. Wherever possible, words such as 'may', 'will', 'estimate', 'believe', 'expect', 'intend' and similar expressions have been used to identify these forward looking statements. These statements reflect current beliefs and are based on information currently available to management of Redishred. Forward looking statements necessarily involve known and unknown risks, uncertainties and other factors including risks and uncertainties relating to the COVID-19 pandemic. A number of factors, including those discussed in Redishred's 2022 Management Discussion and Analysis under 'Risk Factors', could cause actual results, performance, achievements, prospects or opportunities to differ materially from the results discussed or implied in the forward looking statements. These factors should be considered carefully and a reader should not place undue reliance on the forward looking statements. There can be no assurance that the expectations of management of Redishred will prove to be correct. Readers are cautioned that such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these statements. Redishred can give no assurance that actual results will be consistent with these forward-looking statements.

SOURCE: Redishred Capital Corp.