Redishred Capital (TSXV:KUT)
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MISSISSAUGA, ON, Aug. 23, 2011 /CNW/ --
MISSISSAUGA, ON, Aug. 23, 2011 /CNW/ -
Second Quarter Highlights:
-- System sales( (1)) in our PROSHRED® system were $3.95 million
USD, setting a new record for system sales achieved in any one
quarter, growing 23% over the second quarter of 2010.
o Scheduled (recurring) system sales for the second quarter were a
record high of $1.7 million USD.
o Unscheduled system sales were a record high of $930,000 USD.
o Recycling system sales were a record high of $1.3 million USD.
-- Redishred's corporate locations generated $217,728 CDN in
earnings before interest, taxes, depreciation and amortization
("EBITDA") in the second quarter of 2011.
-- Royalty revenue for the second quarter of 2011 was $242,000
CDN. Royalty and service revenues are generated by franchises
of the PROSHRED® franchise system and are originally
denominated in US dollars.
-- On May 16, 2011, Redishred announced the addition of the
Indianapolis, Indiana franchise to the system. Operations
commenced in June of 2011. This marks the Company's 19(th)
PROSHRED® location in the United States. As a result, Redishred
generated $62,000 CDN in franchise revenue during the second
quarter of 2011.
((1)) System sales are revenues generated from the franchise system and
corporate owned locations. Redishred Capital Corp. derives its
royalty and service fee revenues based on a percentage of system
sales.
Financial Highlights:
For the three months ended, June 30, 2011 June 30, 2010
$ $
Franchise operations:
System sales (USD) 3,951,035 3,202,222
Franchise and license fee revenues 61,989 -
Royalty and service fee revenues 242,222 235,092
Total franchise and license revenue 304,211 235,092
Corporate operations:
Service and recycling revenue 523,068 100,685
Income from corporate locations 114,194 7,809
Operating income (loss) (83,756) (169,176)
Operating income (loss) - excluding
one-time costs 3,925 (169,176)
Net income (loss) (244,583) (216,006)
Income (loss) per share (0.01) (0.01)
For the six months ended, June 30, 2011 June 30, 2010
$ $
Franchise operations:
System sales (USD) 7,481,728 6,310,703
Franchise and license fee revenues 61,989 -
Royalty and service fee revenues 461,650 477,105
Total franchise and license revenue 523,639 477,105
Corporate operations:
Service and recycling revenue 1,014,832 100,685
Income from corporate locations 187,903 7,809
Operating income (loss) (253,301) (287,771)
Operating income (loss) - excluding
one-time costs (121,013) (287,771)
Net income (loss) (570,489) (427,117)
Income (loss) per share (0.02) (0.01)
Weighted average number of common shares 28,884,658 28,884,658
Management's Comments on the Industry
The North American shredding industry has continued to grow, as there is
continued and increasing awareness with respect to the following demand
drivers:
-- regulatory requirements and enforcement continue to be
increased with respect to document destruction, including the
federally enacted Health Information Technology for Economic
and Clinical Health Act;
-- an increasing need to destroy and recycle other media such as
hard-drives;
-- corporate initiatives to outsource "non-core" business
services; and
-- consumers and businesses have heightened awareness of their
responsibility towards the environment.
Additionally, prices for recycled paper have continued to show upward
momentum as a result of increased demand from overseas markets,
resulting in stronger recycling system sales.
Given these strong fundamentals, the company continues to be optimistic
about its short, intermediate and long-term development plans.
Management's Comments on the Second Quarter of 2011
Jeffrey Hasham, the Company's CEO, had the following comments on the
second quarter results, "Once again our system set new sales records in
every revenue category. These strong results are driven by our sales
programs targeted at educating our clients on the requirement to
securely destroy their confidential documents. Additionally, we are
pleased that we continue to recycle more paper every quarter, which
helps save trees and reduce our carbon footprint. I would like to thank
the entire Proshred team in contributing towards these record results."
System Sales - Redishred's management team continued to focus its efforts through
its franchisees and its corporate locations on (1) building recurring
service revenues and (2) maximizing route density and logistical
efficiencies. The strong 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, a larger 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.
Franchise and license development - On May 16, 2011, Redishred announced that Ken Carite was awarded the
Indianapolis, IN PROSHRED® franchise, which marks PROSHRED®'s fourth location in the Midwest, and 19(th) overall.
Ken Carite, the new Indianapolis franchisee, stated "I searched for over
a year to identify the right business model for my new business
endeavor. I selected Proshred because I think document security is
relevant in today's world of identity theft. I firmly believe that
there is solid demand for a "best in class" service in Central Indiana.
Proshred is attractive because it has a solid infrastructure and
support system in addition to a successful base of existing locations.
I look forward to duplicating the Proshred model in Indianapolis and
growing a great business."
Acquisitions and Corporate Operations - Since April 30, 2010, Redishred has completed three acquisitions in
Syracuse, Albany, and Milwaukee. The New York locations are managed
from the Syracuse regional office. The Milwaukee location is
corporately operated as of January 1, 2011. The acquisitions have been
accretive to Redishred's cash flows, generating the following results
in the three and six months ended June 30, 2011:
3 months ended 6 months ended
June 30 June 30
% of % of % of % of
2011 revenue 2010(1) revenue 2011 revenue 2010(1) revenue
$ $ $ $
Revenue:
Shredding 365,277 (70%) 79,195 (79%) 727,600 (72%) 79,195 (79%)
service
Recycling 157,791 (30%) 21,490 (21%) 287,232 (28%) 21,490 (21%)
Total revenue 523,068 (100%) 100,685 (100%) 1,014,832 (100%) 100,685 (100%)
Operating 305,340 (58%) 74,012 (74%) 624,819 (62%) 74,012 (74%)
costs
EBITDA 217,728 (42%) 26,673 (26%) 390,013 (38%) 26,673 (26%)
Depreciation
(2) 33,975 (6%) 9,666 (10%) 63,757 (6%) 9,666 (10%)
Interest 69,559 (13%) 9,198 (9%) 138,353 (14%) 9,198 (9%)
expense
Corporate
operating
income 114,194 (22%) 7,809 (8%) 187,903 (19%) 7,809 (8%)
(1) The results for the three and six months ended June 30, 2010
include the corporate operations of Syracuse, which began May
1, 2010.
(2) Includes depreciation expense taken on tangible assets,
including shredding vehicles, computer equipment, bins and
shredding containers, recycling equipment and furniture.
Community and Social Commitment - Our locations under the PROSHRED® banner conducted 88 community shredding events up to June 30(th), 2011. 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. 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. During the second quarter of 2011, the PROSHRED® system, through its recycling program, saved 85,200 trees and has
saved 164,000 trees in the first half of 2011.
Financial Statements
Redishred's June 30, 2011 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® trademarks and intellectual property in the United States. PROSHRED® shreds and recycles confidential documents and proprietary materials
for thousands of customers in the United States in all industry
sectors. PROSHRED® is a pioneer in the mobile document destruction and recycling industry
and has the ISO 9001:2008 certification. It is PROSHRED®'s vision to be the 'system of choice' and provide shredding and
recycling services on a global basis.
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
2010 and 2011 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.
In particular, certain statements in this document discuss Redishred's
anticipated outlook of future events. These statements include, but are
not limited to:
(i) anticipated system sales and royalty revenue which may be
impacted by industry growth levels which to date have been
driven by favorable legislation and favorable media coverage on
the impacts of identity theft; and
(ii) the short, intermediate and long-term development plans which
may be impacted by negative economic circumstances and industry
growth levels.
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.
To view this news release in HTML formatting, please use the following URL: http://www.cnw.ca/en/releases/archive/August2011/23/c5744.html
p Redishred Capital Corp. (TSX.V - KUT)br/ Jeffrey Hasham, MBA, CAbr/ Chief Executive Officerbr/ a href="mailto:Jeffrey.hasham@redishred.com" font-weight="bold"Jeffrey.hasham@redishred.com/abr/ a font-weight="bold" href="http://www.redishred.com"www.redishred.com/abr/ Phone: (416) 849-3469 Fax: (905) 812-9448 /p p or, /p p Redishred Capital Corp. (TSX.V - KUT)br/ Kasia Pawluk, CAbr/ Chief Financial Officerbr/ a href="mailto:kasia.pawluk@redishred.com" font-weight="bold"kasia.pawluk@redishred.com/abr/ a font-weight="bold" href="http://www.redishred.com"www.redishred.com/abr/ Phone: (416) 204-0076 Fax: (905) 812-9448 /p