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.
The term loan and revolving credit facility are collateralized by a general security agreement, bear interest at prime or the applicable banker's acceptance rate, plus an interest margin dependent on certain financial ratios. Interest payments only are due during the term for the revolving portion of the syndicated credit facility. For the term loan portion of the syndicated credit facility, repayments of the principal amount shall be repaid in quarterly installments commencing September 30, 2025, in addition to required interest payments. The additional interest margin can range between 0.00% to 2.00% dependent upon the calculated Total Funded Debt / Credit Facility EBITDA financial ratio, with a range between 0 to 3.50x. The Funded Debt to EBITDA Ratio requirement has an increase to 4.00x for the first four quarters following any material acquisition. The required calculated Funded Debt / Credit Facility EBITDA financial ratio is subject to change based off certain terms and conditions. As at December 31, 2025 the combined interest rate was 5.70%.
The Corporation's incremental borrowing rate under its existing credit facility is determined by the Canadian prime rate plus an applicable margin based on the ratio of Funded Debt to EBITDA as defined in the credit agreement.
Business Acquisition - Shortridge
In the year ended December 31, 2025, the provisional amounts that were previously disclosed in the December 31, 2024 Annual Financial Statements, associated with the 100% share capital acquisition of Shortridge Ltd, a private hospitality laundry provider based in the North West of England were finalized. No new information which resulted in adjustments to the fair value of net identifiable assets acquired was obtained during the year ended December 31, 2025.
In the year ended December 31, 2025, a contingent asset related to the Shortridge business acquisition has been identified and disclosed in note 15 of the December 31, 2025 Annual Financial Statements.
Business Acquisition - Buanderie C.M.
In the year ended December 31, 2025, the provisional amounts that were previously disclosed in the December 31, 2024 Annual Financial Statements, associated with the 100% share capital acquisition of Buanderie C.M., a private laundry and linen operator located in Montreal serving the healthcare market were finalized. No new information which resulted in adjustments to the fair value of net identifiable assets acquired was obtained during the year ended December 31, 2025.
Normal Course Issuer Bid
On May 15, 2023, the Corporation announced its intention to proceed with a normal course issuer bid (NCIB) to purchase up to 881,481 of its common shares ("Shares") through the TSX and / or alternative Canadian trading systems, representing approximately 10% of the public float of 8,814,816 shares as at May 9, 2023, during the twelve-month period commencing May 18, 2023 and ending May 17, 2024.
On May 16, 2024, the Corporation announced the renewal of its normal course issuer bid (NCIB) to purchase up to 754,247 of its common shares ("Shares") through the TSX and / or alternative Canadian trading systems, representing approximately 10% of the public float of 7,542,474 shares at May 7, 2024 during the twelve-month period commencing May 21, 2024 and ending May 20, 2025.
For the year ended December 31, 2025, the Corporation repurchased and cancelled 0 common shares (2024 - 113,614) for $0 (2024 - $3,950) under the NCIB.
To date, the Corporation has repurchased and cancelled a total of 312,676 common shares for $10.4 million under the NCIB.
No financial liability existed as at December 31, 2025 (2024 - $0) relating to automatic share repurchases during the blackout period.
Capital Investment Plan
For fiscal 2026, the Corporation's planned capital spending excluding right-of-use assets is expected to be in the range of $20.0 to $22.0 million on a consolidated basis. This guidance includes both strategic and maintenance capital requirements to support existing base business in both Canada and the UK. These amounts are reflective of incremental capital required for Stellar Mayan, for which the capital investment was initially announced at acquisition to be $9.3 million (£5.0 million). The 2026 guidance includes the remaining amount to be spent for this capital project. We will continue to assess capital needs within our facilities and prioritize projects that have shorter term paybacks as well as those that are required to maintain efficient and reliable operations.
Economic Conditions
Evolving global and Canadian foreign policies, geopolitical events and economic conditions may impact inflation, energy pricing, labour availability, supply chain efficiency, trade policies, tariffs and/or other items, which may have a direct or indirect impact on the Corporation's business.
The Corporation's Credit Facility is subject to floating interest rates and, therefore, is subject to fluctuations in interest rates which are beyond the Corporation's control. Changes in interest rates, both domestically and internationally, could negatively affect the Corporation's cost of financing its operations and investments.
Uncertainty about judgments, estimates and assumptions made by management during the preparation of the Corporation's consolidated financial statements related to potential impacts of geopolitical events and changing interest rates on revenue, expenses, assets, liabilities, and note disclosures could result in a material adjustment to the carrying value of the asset or liability affected.
Financial Results
For The Three Months Ended December 31,
(thousands, except per share amountsand percentages)
CanadianDivision2025
UKDivision2025
2025
CanadianDivision2024
UKDivision2024
2024
$ Change
% Change
Revenue
$ 70,125
$ 76,660
$ 146,785
$ 67,443
$ 28,003
$ 95,446
51,339
53.8 %
Expenses included in EBITDA
56,216
65,455
121,671
54,739
22,708
77,447
44,224
57.1 %
EBITDA(1)
13,909
11,205
25,114
12,704
5,295
17,999
7,115
39.5 %
EBITDA as a % of revenue
19.8 %
14.6 %
17.1 %
18.8 %
18.9 %
18.9 %
-1.8 %
-9.5 %
Adjusted EBITDA(1)
14,314
12,129
26,443
12,110
5,295
17,405
9,038
51.9 %
Adjusted EBITDA as a % of revenue
20.4 %
15.8 %
18.0 %
18.0 %
18.9 %
18.2 %
-0.2 %
-1.1 %
Net earnings
2,652
238
2,890
2,380
1,858
4,238
(1,348)
-31.8 %
Basic earnings per share
$ 0.206
$ 0.018
$ 0.224
$ 0.225
$ 0.176
$ 0.401
$ (0.177)
-44.1 %
Diluted earnings per share
$ 0.205
$ 0.018
$ 0.223
$ 0.224
$ 0.174
$ 0.398
$ (0.175)
-44.0 %
Dividends declared per diluted share
$ 0.300
$ 0.300
$ -
0.0 %
Adjusted net earnings (1)
3,057
4,133
7,190
1,786
1,858
3,644
3,546
97.3 %
Adjusted basic earnings per share (1)
$ 0.237
$ 0.321
$ 0.558
$ 0.167
$ 0.176
$ 0.344
$ 0.214
62.2 %
Adjusted diluted earnings per share (1)
$ 0.236
$ 0.319
$ 0.554
$ 0.165
$ 0.174
$ 0.340
$ 0.214
62.9 %
Total assets
704,443
438,150
266,293
60.8 %
Debt (excludes lease liabilities) (2)
237,551
123,778
113,773
91.9 %
Cash provided by operating activities
21,695
11,011
10,684
97.0 %
Net change in non-cash working capital items
790
(2,108)
2,898
137.5 %
Share-based compensation expense
813
418
395
94.5 %
Maintenance capital expenditures
1,202
267
935
350.2 %
Principal elements of lease payments
5,414
2,679
2,735
102.1 %
Distributable cash flow (1)
13,476
9,755
3,721
38.1 %
Dividends declared
3,897
3,174
723
22.8 %
Payout ratio (1)
28.9 %
32.5 %
-3.6 %
-11.1 %
Years Ended December 31,
(thousands, except per share amountsand percentages)
CanadianDivision2025
UKDivision2025
2025
CanadianDivision2024
UKDivision2024
2024
$ Change
% Change
Revenue
$ 278,811
$ 227,965
$ 506,776
$ 264,422
$ 109,187
$ 373,609
133,167
35.7 %
Expenses included in EBITDA
224,195
191,647
415,842
216,471
88,118
304,589
111,253
36.5 %
EBITDA(1)
54,616
36,318
90,934
47,951
21,069
69,020
21,914
31.7 %
EBITDA as a % of revenue
19.6 %
15.9 %
17.9 %
18.1 %
19.3 %
18.5 %
-0.6 %
-3.2 %
Adjusted EBITDA(1)
57,510
41,176
98,686
50,482
21,577
72,059
26,627
36.9 %
Adjusted EBITDA as a % of revenue
20.6 %
18.1 %
19.5 %
19.1 %
19.8 %
19.3 %
0.2 %
1.0 %
Net earnings
10,220
7,770
17,990
9,493
9,215
18,708
(718)
-3.8 %
Basic earnings per share
$ 0.864
$ 0.657
