(TSX: KBL)
EDMONTON, AB, March 19, 2026 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announces its 2025 financial and operating results.
2025 Financial and Operating Highlights
-- Revenue
-- Revenue increased by 35.7% in 2025 to $506.8 million compared to
$373.6 million in 2024.
-- Healthcare revenue for 2025 increased to $276.5 million compared
to $195.8 million in 2024, or by 41.2%.
-- Hospitality revenue for 2025 increased to $230.3 million compared
to $177.9 million in 2024, or by 29.5%.
-- Adjusted EBITDA1, Adjusted EBITDA Margin1 & Adjusted Net Earnings1
-- Adjusted EBITDA increased by 36.9% in 2025 to $98.7 million
compared to $72.1 million in 2024.
-- Adjusted EBITDA margin increased to 19.5% in 2025 from 19.3% in
2024.
-- Adjusted net earnings for the year increased by 39.8% or $8.7
million to $30.4 million in 2025 from $21.7 million in 2024.
-- EBITDA, EBITDA Margin & Net Earnings
-- EBITDA increased for 2025 to $90.9 million compared to $69.0
million in 2024.
-- EBITDA margin for the year increased to 19.5% in 2025 from 19.3%
in 2024
-- Net earnings for the year decreased by $0.7 million to $18.0
million in 2025 from $18.7 million in 2024.
-- For fiscal 2025, K-Bro declared dividends of $1.20 per common share.
-- K-Bro issued 2,334,500 common shares to finance the Stellar Mayan
acquisition.
-- K-Bro amended its existing three-year committed Syndicated Credit
Facility Agreement to include a $134.3 million four-year amortizing term
loan and to extend the term of the facility to June 10, 2029.
-- Debt net of cash at the end of 2025 was $214.2 million compared to $114.4
million at the end of fiscal 2024 primarily related to the amortizing
term loan to finance the Stellar Mayan acquisition.
Linda McCurdy, President & CEO of K-Bro, commented that "2025 was a transformational year for K-Bro, as we built-out our strategic national presence across the UK while delivering record Q4 and full-year results. With the acquisition of Stellar Mayan, we're delighted to have two national healthcare and hospitality platforms in both Canada and the UK. K-Bro is a leader in Canadian healthcare, with half a century of experience as an essential service provider, and we're excited to extend that leadership into other global markets. We're excited for the future and see a positive outlook for our business in both Canada and the UK."
"Q4 marks our seventh consecutive quarter of record results and includes early contributions from Stellar Mayan. Integration has been progressing as expected, and we anticipate run-rate cost synergies will be realized over the twelve to twenty four months guided. Post acquisition debt and leverage levels have been consistent with our expectations. Both of K-Bro's healthcare and hospitality segments continue to experience steady volume trends. We continue to monitor the evolving global and Canadian foreign policies, geopolitical events, state of tariffs and other trade policies."
(1) Adjusted EBITDA, Adjusted EBITDA margin and Adjusted
Net Earnings are non-GAAP measures. See "Terminology"
for further information on the definition and composition
of these measures.
Highlights and Significant Events for 2025
Business Acquisition -- Stellar Mayan
On May 13, 2025, the Corporation announced the signing of a share purchase agreement to acquire 100% of UK based Stellar Mayan. Stellar Mayan includes three operating businesses: (i) Synergy Health Managed Services Limited ("Synergy"); (ii) Grosvenor Contracts (London) Limited ("Grosvenor Contracts", "GC"); and (iii) Aeroserve $(MSP)$ Limited and Aeroserve Euro Limited, jointly referred to as Aeroserve Linen Services ("AeroServe").
On June 11, 2025, the Corporation announced that it completed the previously announced acquisition of Stellar Mayan, a leading commercial laundry business in England serving the healthcare and hospitality markets. The Acquisition is highly complementary to K-Bro's existing UK businesses, Fishers and Shortridge, and creates a national footprint in the UK's commercial laundry and textile rental sector.
The Corporation partially financed the Stellar Mayan Acquisition through the issuance of 2,334,500 common shares (initially issued as subscription receipts) at a price of $34.55 per common share (initially issued as subscription receipts). The remainder of the Acquisition was funded by the Corporation's new $134.3 million four-year amortizing term loan. Based on the Corporation's evaluation of the Stellar Mayan Acquisition and the criteria in the identification of a business combination established in IFRS 3, the Stellar Mayan Acquisition has been accounted for using the acquisition method, whereby the purchase consideration is allocated to the fair values of the net assets acquired.
The purchase price allocated to the net assets acquired, based on their estimated fair values, is as follows:
(in thousands)
Cash consideration $ 194,695
Total purchase price (1) $ 194,695
1) This is presented net of cash acquired. Cash acquired
was $5,156.
The assets and liabilities recognized as a result of the Stellar Mayan Acquisition are as follows:
(in thousands)
Net Assets Acquired:
Accounts receivable 25,017
Prepaids and other assets 2,259
Linen in service 28,553
Accounts payable and other liabilities (26,302)
Lease liabilities (27,892)
Provisions (466)
Deferred income taxes (8,635)
Property, plant and equipment (1) 88,966
Intangible assets 45,474
Net identifiable assets acquired 126,974
Goodwill 67,721
Net assets acquired $ 194,695
1) Includes ROUA from the UK Segment of $32,556.
During the year ended December 31, 2025, the Corporation finalized the provisional purchase price allocation for the Stellar Mayan Acquisition, making certain measurement period adjustments, once the accounting for the business acquisition had been completed. This is summarized as a $1.6 million decrease to prepaids and other assets, a $1.6 million decrease to accounts payable and other liabilities, a $0.2 million increase to provisions, a $1.9 million decrease in property, plant, and equipment, and a $0.9 million increase in intangible assets. As a result, there was a corresponding $0.3 million net decrease in the deferred income tax liability and a $0.9 million increase to goodwill.
The intangible assets acquired are made up of $33.4 million related to customer relationships and $12.1 million related to the brands. The approach used in the valuation of customer contracts was based on the multi-period excess earnings method, a form of the Income Approach, and the valuation of brands was based on the Income Approach and Relief-from-royalty method both using discounted cash flow models. Management applied significant judgment in estimating the fair values of the intangible assets. Significant assumptions for customer contracts include revenue growth rates, EBITDA margins, economic depreciation, and the discount rate. Significant assumptions for the brand include the discount rate and the royalty rate.
The goodwill is attributable to the workforce, and the efficiencies and synergies created between the existing business of the Corporation and the acquired business. Goodwill will not be deductible for tax purposes.
Acquisition related costs
For the year ended December 31, 2025, $7,227 in professional fees associated with the Stellar Mayan Acquisition has been included in Corporate expenses.
Revenue and profit information
The acquired business contributed revenues of $99,074 to the Corporation for the period from June 12, 2025 to December 31, 2025. If the Acquisition had occurred on January 1, 2025, consolidated pro-forma revenue for the period ended December 31, 2025 would have been $582,956.
The acquired business contributed a net deficit of ($1,879) to the Corporation for the period from June 12, 2025 to December 31, 2025. If the Acquisition had occurred on January 1, 2025, consolidated pro-forma net earnings for the period ended December 31, 2025 would have been $26,567, including the recognition of a non-recurring tax loss carryforward of $8,133.
Common Share Offering
On June 11, 2025, the Corporation closed the Stellar Mayan Acquisition. Through a bought deal, the Corporation issued 2,334,500 common shares at $34.55 per share, which included full exercise of the over-allotment option. The proceeds of the common share offering were used to finance a portion of the Stellar Mayan Acquisition and pay certain fees and expenses related to acquisition and offering. The net proceeds of the offering after deducting expenses of the offering and the underwriter's fee were $75.6 million.
Revolving Credit Facility
On June 11, 2025, the Corporation amended its existing three-year committed Syndicated Credit Facility Agreement to include a $134.3 million four-year amortizing term loan and to extend the term of the facility from March 25, 2027 to June 10, 2029. The amendment included a reduction in the accordion to $50 million from $75 million.
On March 26, 2024, the Corporation entered into a three-year committed Syndicated Credit Facility Agreement from March 26, 2024 to March 25, 2027. The agreement consists of a $175 million revolving credit facility plus a $75 million accordion.
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