Redishred Capital Corp. (“Redishred”) Announces Fourth Quarter And Year-End 2013 Results

Mississauga, ON / ACCESSWIRE / April 30, 2014 /

Fourth Quarter Highlights:

-Total system sales (1) in the PROSHRED(R) system were $4.3 million USD in the fourth quarter of 2013, growing 15% over the comparative period in 2012.

-Scheduled (recurring) system sales for the fourth quarter reached a record of $2.29 million USD, growing 19% over the fourth quarter of 2012;

-Unscheduled system sales for the fourth quarter reached $1.35 million USD, growing 19% over the fourth quarter in 2012 and;

-Recycling system sales for the fourth quarter were $687,000 USD a decrease of 1% over the fourth quarter of 2012 as a result of a decline in the price of paper.

-The PROSHRED(R) system shred and recycled 10% more paper during the fourth quarter of 2013 than during the fourth quarter of 2012.

• -Royalty and license revenue for the fourth quarter of 2013 was $239,000 CDN. This category of revenue is generated by franchisees and licensees of the PROSHRED(R) system, originally denominated in US dollars.

  -The Company's five directly operated corporate locations in Syracuse, Albany, Milwaukee, New York City and Charlotte produced $985,000 CDN in revenues during the three months ended December 31, 2013. The Company's five directly operated corporate locations generated $364,000 CDN in earnings before interest, taxes, depreciation and amortization ("EBITDA") during the fourth quarter of 2013.

Annual Highlights:

-Total annual PROSHRED(R) system sales (1) were $17.1 million USD in 2013, growing 15% over 2012.

-Scheduled (recurring) system sales were $8.7 million USD, growing 17% over 2012;

-Unscheduled system sales were $5.3 million USD, growing 22% over 2012 and;

-Recycling system sales were $3 million USD and remained consistent with the prior year.

-The Company awarded two new franchise locations in San Francisco, California and Seattle, Washington, recognizing $264,000 CDN in franchise fees. The new franchise locations commenced operations in the fourth quarter of 2013.

-The Company's corporate locations produced $3.4 million CDN in revenues during 2013, growing 16% over 2012, and generated $1.2 million CDN in EBITDA during 2013, an increase of 99% over 2012.

(1) System sales are revenues generated from franchisees, licensees and corporate owned locations. Redishred Capital Corp. derives its royalty and service fee revenues based on a percentage of system sales from franchisees and licensees. Redishred Capital Corp. derives revenues from corporate location system sales.

Financial Highlights:

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1. (1)Corporate operations include the results of the Miami business.

2. (2)For the three months ended December 31, 2013, net loss includes the following one-time costs: legal fees related to the defence of the past franchisee litigation, legal fees related to the Charlotte acquisition, additional audit fees, reversal of impairment of $431,180 and a gain related to the Charlotte acquisition of $148,228. As of April 29, 2014, all claims against the Company were dismissed. For the three months ended December 31, 2012, net loss includes the following one-time costs: the settlement of the pre-existing franchise relationships as part of the New York City and Miami acquisitions of $712,567, the impairment of goodwill and other intangible assets of $545,008, the gain on re-acquired rights of $138,439, the gain on sale of assets of $7,540 and one-time operating costs.

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1. (1)Corporate operations include the results of the Miami business.

2. (2)For the year ended December 31, 2013, net loss includes the following one-time costs: legal fees related to the defence of the past franchisee litigation, legal fees related to the Charlotte acquisition, additional audit fees, reversal of impairment of $431,180 and a gain related to the Charlotte acquisition of $148,228As of April 29, 2014, all claims against the Company were dismissed. For the year ended December 31, 2012, net loss includes the following one-time costs: the settlement of the pre-existing franchise relationships as part of the New York City and Miami acquisitions of $712,567 and the impairment of goodwill and other intangible assets of $545,008.

System Sales

Redishred's management team continued to focus its efforts through its franchisees and its corporate locations on (1) building recurring service revenues, (2) maximizing route density and logistical efficiencies and (3) implementing dedicated hard drive destruction trucks/equipment throughout the system. The strong service system sales results are driven by Redishred's sales and marketing programs that are aimed at educating clients on the legislative requirements to destroy confidential information using a secure on-site solution. Additionally, an increasing number of clients are requiring their facilities to recycle all products, including office paper and, by using our service, clients are assured that documents are securely destroyed and the materials are recycled. Proshred also offers hard drive destruction services in almost all of its locations, and has been deploying high speed on-site hard drive destruction trucks. Currently five franchised locations have deployed high-speed on-site hard drive destruction trucks.

These factors led to 19% growth in scheduled and unscheduled sales in the fourth quarter of 2013 over the same quarter in 2012.

Recycling system sales decreased by 1% for the three months ended December 31, 2013 in comparison to the same period in 2012 as a result of the decline in the price of paper. During the year ended December 31, 2013, the PROSHRED(R) system shred and recycled 25,000 tons of paper, which equates to 377,000 trees saved.

Corporate Operations

During the year ended December 31, 2013, Redishred directly operated five shredding locations in Syracuse, NY, Albany, NY, Milwaukee, WI, New York City, NY and Charlotte, NC. The Miami business is jointly operated by Redishred and the Company's Tampa Bay, FL franchisee location. The Company earned rental revenue from the Miami business and is included below.

On July 31, 2013, the Company acquired the Charlotte franchise. The five month results of the Charlotte business are included in the three and twelve month results of the corporate operations. During the three months ended December 31, 2013, the corporate location revenues grew by 52% over the same comparative prior year period. The Company has also increased adjusted EBITDA by 160% over the three months ended December 31, 2012.

All Corporate Locations Results:

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Corporate Locations Trend:

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Same Store Corporate Locations Results:

Same store corporate operation results are indicators of performance of corporate stores that have been in the system for equivalent periods in 2013 and 2012. Same store corporate results include the operations of Syracuse, Albany, Milwaukee and New York City. During the three months ended December 31, 2013, the same store corporate location revenues grew by 11% and operating costs were reduced by 5%. This led to an increase in adjusted EBITDA of 74%.

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Management's Comments on the Fourth Quarter of 2013

Jeffrey Hasham, the Company's CEO, had the following comments on the fourth quarter results, "We continue to be pleased with the performance of the Proshred system as our franchisees continue to see strong double digit growth, as they continue to invest in new equipment and human resources. Simultaneously we have continued to award new franchises to very high caliber individuals who have both achieved a solid start in San Francisco and Seattle. Concurrently, our corporate locations have performed well this year. The investments in new trucks and people made last year have started to pay off for the Company. The Company's plan is to continue to invest in new trucks and sales resources to further drive results in 2014. I would like to thank our franchisees and employees for their hard work and our shareholders for their continued support of our Company."

Community and Social Commitment

Our locations under the PROSHRED(R) banner conducted 126 community shredding events in 2013 as well as 19 community shredding events for Earth Day. 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(R) 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 at our website, www.proshred.com.

On June 1, 2014, PROSHRED(R) will be holding a Shred for Cancer event at most of its locations, raising money for the American Institute for Cancer Research ("AICR"). It is our goal as a Company to support the AICR in their endeavor to conduct research to prevent and possibly cure this disease.

Financial Statements

Redishred's December 31, 2013 Financial Statements, Notes and Management's Discussion and Analysis will be available at www.sedar.com and www.redishred.com.

Services

Redishred Capital Corp. is the owner of the PROSHRED(R) trademarks and intellectual property in the United States. PROSHRED(R) shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. PROSHRED(R) is a pioneer in the mobile document destruction and recycling industry and has the ISO 9001:2008 certification. It is PROSHRED(R)'s vision to be the 'system of choice' and provide shredding and recycling services on a global basis. Redishred Capital Corp. grants PROSHRED(R) franchise businesses in the United States and by way of license arrangement in the Middle East. Redishred Capital Corp. also operates five corporate shredding businesses directly. The Company's plan is to grow its business by way of both franchising and the acquisition and operation of document destruction 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

[e-mail]

www.redishred.com

Phone: [phone] Fax: [phone]

or,

Redishred Capital Corp. (TSX.V - KUT)

Kasia Pawluk, CPA, CA

Chief Financial Officer

[e-mail]

www.redishred.com

Phone: [phone] Fax: [phone]

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 and uncertainties. A number of factors, including those discussed in the 2013 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.