K-Bro Linen Inc Q4 2018 Earnings Call Transcript

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

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Just talk about Fishers a little bit. I'm looking at the full year EBITDA margin. And given what we understood at the time of acquisition in December, it seems it's come in lower than what margins were at that time, so maybe you can walk us through what contributed to that lower margin on an annual basis and if there is opportunity to continue to improve that?

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Okay. And when it comes to margin expansion in that market specifically, what can you say in terms of any expectation for 2019 or is that really more of a 2020 type of expectation? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Okay. No, understood. And when it comes to the reduction in margin year-over-year, I know, Kristie, you went over a couple of items that contributed to the, basically the 3% shortfall. Just to confirm, sorry, if I missed it, there were 4 items, roughly 0.5% from increased freight, 0.5% carbon tax utilities and minimum wage impact was 2%. Was there a fourth thing in that list?

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Okay. So when it comes to tight labor markets, you're separating those additional costs out from minimum wage. Should we read into that you're effectively having to pay overtime or pay above-market rates because the labor's just simply not available?

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Okay. Great. And just one final for me, in terms of transition costs for 2019. Are you able to give us a sense of how that should compare versus the tail end of transition cost experience in Toronto or Edmonton or one of the other plants, just to get a sense of where that would rank?

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Yes.

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Just a quick follow-up for me in terms of minimum wage and the price increases you're expecting to come through. So when it comes to the drag, which you highlighted Kristie, about 2% for minimum wage, if we think about the increases that you're expecting in pricing in the second half of this year, are you able to quantify how much of that 2% you think you might be able to recoup, would you say it's roughly half of it, just trying to get a sense of that time line?

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Okay. And are you able to just give us a sense of -- so there's price increases in the second half, are most of your contracts -- I don't know if you can even quantify, trying to get a sense of when your contracts come up for renewal, is it mostly in the second half or is it -- does it vary year to year, just trying to see if there is opportunity for further increases in, say, the first half of 2020 that could also contribute?

Question: Elizabeth Johnston - Laurentian Bank Securities, Inc., Research Division - Analyst : Okay, no understood. And just one more for me. In terms of the U.K., with respect to Brexit, obviously, it's difficult to predict at this point, but is there anything that you've had to do to prepare yourself for any potential outcome, any uncertainty as a result of that, that means you've taken steps to either improve the situation with labor or anything else, anything you can comment on with respect to that will be helpful?