Redishred Capital Corp. announces second quarter results - Highlighting record system sales

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.


 


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p Redishred Capital Corp. (TSX.V - KUT)br/ Jeffrey Hasham, MBA, CAbr/ Chief Executive Officerbr/ a href="mailto:[e-mail]" font-weight="bold"[e-mail]/abr/ a font-weight="bold" href="http://www.redishred.com"www.redishred.com/abr/ Phone: [phone] Fax: [phone] /p p or, /p p Redishred Capital Corp. (TSX.V - KUT)br/ Kasia Pawluk, CAbr/ Chief Financial Officerbr/ a href="mailto:[e-mail]" font-weight="bold"[e-mail]/abr/ a font-weight="bold" href="http://www.redishred.com"www.redishred.com/abr/ Phone: [phone] Fax: [phone] /p 

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