K-Bro Linen Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Derek Lessard - TD Cowen - Analyst : Good morning, Linda and Kristie, and congratulations on a really strong quarter.

Question: Derek Lessard - TD Cowen - Analyst : Linda, maybe I just wanted to talk on the your positive outlook. And just maybe if you could talk about that in relation to hospitality and some of the clouds that are gathering on the macro front, particularly as it relates to the consumer and maybe the impact on future travel, particularly the US traveled to Europe, which is which is up, I think at record high.

Question: Derek Lessard - TD Cowen - Analyst : Okay. That's super helpful. And I guess maybe on there is there are also some industry data that's pointing to the return of business travel? I'm curious on what you're hearing from the business side of the business travel side?

Question: Derek Lessard - TD Cowen - Analyst : Okay. That's fair. And one last one for me before I recuse. Maybe if you could help us understand, I guess the relative contribution to growth from pricing versus volume, sir.

Question: Derek Lessard - TD Cowen - Analyst : Thanks for that, I'll re-queue. Thanks, everybody.

Question: Michael Glen - Raymond James - Analyst : Hey, good morning. Just following on the last question. Linda, are you able to indicate what Q2 organic growth was if we peel out the M&A from the quarter?

Question: Michael Glen - Raymond James - Analyst : Okay. So this would look to be trending up of what you had seen historically any like is this still a rebound in hospitality coming through or is there? And so there's a lot of things happening on the healthcare side pushing that number higher as well?

Question: Michael Glen - Raymond James - Analyst : Okay. And just on the renewals, though, you flagged to us earlier in the year, can you give an update on where we sit with the renewals and progress towards that?

Question: Michael Glen - Raymond James - Analyst : So why would that that would be [1.5]? I think the number was 67 million or somewhere?

Question: Michael Glen - Raymond James - Analyst : So roughly half of the 70 million renewed. Okay.

Question: Michael Glen - Raymond James - Analyst : Okay. And any can you just also provide a comment on your on the outlook for organic win opportunities or RFPs coming in the next year or two?

Question: Michael Glen - Raymond James - Analyst : Okay. Thank you. I'll jump back in the queue.

Question: Kyle McPhee - Cormark Securities - Analyst : Just a follow up on the pricing contributions. All the information you provided from prior questions indicate pricing was about 6.5%. Does that I think it was similar to last quarter as well. Does that type of pricing contribution start to fall now going forward, have you largely lapped the big round of inflation catch-up pricing gains that became effective throughout last year?

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, great. And then just on, I wanted to talk about Quebec. So regarding your most recent acquisition in the province that you announced in June, should we expect revenue to land a typical cable margins or any notable differences or margin mix impacts we should be aware of from that deal?

Question: Kyle McPhee - Cormark Securities - Analyst : And then a higher level on your Quebec plan. You've done a series of acquisitions in the province. The deals landed. You have three facilities in the province looks like you already made the decision to close one site and consolidate the volume. Would you keep the two remaining sites or should we expect further facility consolidation in the province. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Kyle McPhee - Cormark Securities - Analyst : Is that a significant amount of excess capacity you're leaving yourself within the province like it's Quebec going to be an above-average organic volume growth province, leveraging your now much bigger position in the firm?

Question: Kyle McPhee - Cormark Securities - Analyst : Got it. Okay. And then last one, nice to see. You're now adjusting for the true one-time items in your results with the detailed breakdown. I see one-time costs will continue as you integrate the series of acquisitions you've done in Quebec in the UK. Can you provide guidance on the level of one-time costs for the rest of this year and next year?

Question: Kyle McPhee - Cormark Securities - Analyst : Thank you. That's it from me.

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Good morning, and thanks for taking my call.

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Thanks. Just some follow ups on the upcoming contracts. So if I understand correctly, there's [70 million] from existing customers to be renewed and then there's tens of millions in RFPs, I assume from competing companies?

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Understood. And the remaining [35 million] to be renewed, is that with one or several customers? And what's your confidence in that being renewed without any issue?

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Okay, thank you. And then what about the outlook on wages? We've seen some sizable increases with for companies that have unions in place do you feel confident in the margin outlook going into next year?

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Okay. And then just finally on the comments on potential M&A if you have any additional color as far as size and transaction or geographic focus? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : And target multiples. I know Shortridge the multiple was implied at a bit of the higher end of K-Bro's typical range. Would you anticipate future M&A to be at or below those levels?

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Thank you for taking my questions.

Question: Derek Lessard - TD Cowen - Analyst : Just one follow up in a couple of housekeeping for me. Linda, maybe just on the Shortridge acquisition, could you just talk about how the integration is going any incremental learnings since acquiring them and maybe some opportunities to leverage that capacity there.

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Awesome. And maybe just some housekeeping just on for Kristie. Like on your working capital, changes to working capital expectations for the year, given the acquisitions?

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Okay. And the same thing for depreciation, it was higher this quarter. I'm assuming that reflects the recent acquisitions and should we basically consider the new run rate.

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Okay. And then just one last one on the finance expense, which was also higher. Is this the one-time related to the M&A as well?

Question: Derek Lessard - TD Cowen - Analyst : Got it. Thanks everyone.

Question: Michael Glen - Raymond James - Analyst : Hi, just updated CapEx guidance for this year and perhaps if you could indicate for 2025, what CapEx might look like as well?

Question: Michael Glen - Raymond James - Analyst : Okay. So this for this year, then the CapEx will drop off quite a bit in the back half of the year?

Question: Justin Keywood - Stifel Nicolaus and Company, Incorporated - Analyst : Okay. Okay. Thank you.