K-Bro Linen Inc Q3 2024 Earnings Call Transcript

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

Question: Derek Lessard - TD Cowen - Analyst : Yeah, good morning. Linda, Kristie congrats on the strong quarter. 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: Derek Lessard - TD Cowen - Analyst : Maybe I'll just start with wondering if you could give us a quick update on the Shortridge acquisition and how the integration is going there and any new opportunities as a result?

Question: Derek Lessard - TD Cowen - Analyst : Yeah, sorry.

Question: Derek Lessard - TD Cowen - Analyst : Awesome. That's very helpful and maybe just one last one for me before I reach you, I was curious on the Grand B building and land sale if you have and maybe this one is for Kristie, if you have any you know, expectation on the timing and potential proceeds?

Question: Derek Lessard - TD Cowen - Analyst : Okay. Thank you everyone.

Question: Kyle McPhee - Cormark Securities Inc. - Analyst : Hi, everyone. First question on the top line outlook. You know, your commentary suggests you're looking for steady volume trends. But you also say in your filings, you're excited about organic growth prospects. Can you add some color on what you mean by that? What are the exciting growth prospects you're referring to?

Question: Kyle McPhee - Cormark Securities Inc. - Analyst : Got it. Okay. When you said mid-single digit organic growth, you're talking volume plus price, I assume.

Question: Kyle McPhee - Cormark Securities Inc. - Analyst : Got it. Okay. And then on EBITDA margins, it looks like, you know, a lot of the moving parts aiding your even a margin gains continue to show up in the year over year trend, the pricing, the Quebec acquisition synergies, you know, at the higher margin shortage now in the mix. And your commentary is calling for margins to stay at similar levels. So you're expecting to hold on to all these games. But looking into next year, as your new UK gas pricing becomes effective, is something we should be aware of that's going to offset the gas cost benefit or is there potential here for margins to still be picking up here over year into next year?

Question: Kyle McPhee - Cormark Securities Inc. - Analyst : Okay. Thank you. That's helpful to understand all the moving parts here. And then just maybe a follow up on, Derek was asking about Shortridge. It looks like your UK EBITDA margin had a nice leap forward in Q3 on a year over year basis. Is that essentially the Shortridge revenue mix impact from the first full quarter of Shortridge? Or is there anything else meaningful we should be aware of that led to such a strong UK margin performance?

Question: Kyle McPhee - Cormark Securities Inc. - Analyst : Got it. Okay. I'll pass the line. Thank you very much.

Question: Michael Glen - Raymond James - Analyst : Hey, good morning. Just to start on the balance sheet. Linda, you're carrying just over $20 million of cash, which is somewhat uncharacteristic for the company just wondering if there's a specific reason for carrying that level of cash?

Question: Michael Glen - Raymond James - Analyst : So we should expect then a decent size pay down like with most of that, then go to debt repayment in Q4 then. 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: Michael Glen - Raymond James - Analyst : Okay. And I think the prior question was on organic growth and hospitality, but maybe can you talk about the outlook for Canadian healthcare organic growth? What like mostly from I guess a volume perspective, I understand the price dynamic just wondering more from a volume perspective. What's reasonable to think about for Canadian healthcare organic.

Question: Michael Glen - Raymond James - Analyst : Okay. And like volume though, should volume will volume continue to move higher?

Question: Michael Glen - Raymond James - Analyst : Okay. And then if you could provide an update on the renewals that you've been working through for this quarter?

Question: Michael Glen - Raymond James - Analyst : And can you indicate what the success rate has been on the renewals?

Question: Michael Glen - Raymond James - Analyst : North of 95%, okay. And then I think I just had, the CapEx. CapEx outlook for 2024 and any indication for 2025. 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: Michael Glen - Raymond James - Analyst : $10 million. And that's a combination that would be mostly maintenance, then.

Question: Michael Glen - Raymond James - Analyst : Okay. That's it for me. Thank you.

Question: Justin Keywood - Stifel - Analyst : Good morning. Thanks for taking my call.

Question: Justin Keywood - Stifel - Analyst : Thanks. Just first, not sure if I missed it, the organic growth rate in the quarter.

Question: Justin Keywood - Stifel - Analyst : Okay, thank you. And then on the contract renewals, how we understand it was, there's potentially a large set of RFPs that are to come out for bid in 2025 with GTA hospitals. Is that still the case, and if you can give any other color on that potential opportunity? 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 - Analyst : So what's the mechanism or visibility behind it? Like does this come out into some type of public site or public domain or how can we track that opportunity?

Question: Justin Keywood - Stifel - Analyst : Okay. And maybe just one more question around this. The timing I know it's a little variable but it is it safe to say that there would be a couple RPS that come in 2025.

Question: Justin Keywood - Stifel - Analyst : Okay, great. Maybe just one more on M&A if there's an opportunity for more tuck in or if there's some more transformational acquisitions in the pipe and potential timing on the next transaction. Thank you.

Question: Justin Keywood - Stifel - Analyst : Thank you very much.