EDMONTON, AB, May 5, 2026 /CNW/ - K-Bro Linen Inc. ("K-Bro" or the "Corporation") today announces its Q1 2026 financial and operating results.
Q1 2026 Financial and Operating Highlights
Revenue
Revenue increased by 52.9% in Q1 2026 to $139.1 million compared to $91.0 million in Q1 2025.
Healthcare revenue increased to $84.7 million for Q1 2026 compared to $50.6 million in Q1 2025, or by 67.4%.
Hospitality revenue increased to $54.4 million for Q1 2026 compared to $40.4 million in 2025, or by 34.7%.
Adjusted EBITDA1, Adjusted EBITDA Margin1 & Adjusted Net Earnings1
Adjusted EBITDA increased by 50.4% to $22.6 million in Q1 2026 compared to $15.0 million in Q1 2025.
Adjusted EBITDA margin decreased by 0.3% to 16.2% in Q1 2026 compared to 16.5% in Q1 2025.
Adjusted net earnings increased by 35.0% to $4.6 million in Q1 2026 from $3.4 million in Q1 2025.
EBITDA, EBITDA Margin & Net Earnings
EBITDA increased by $9.5 million to $21.9 million for Q1 2026 compared to $12.4 million in Q1 2025.
EBITDA margin for the quarter increased to 15.8% in 2026 from 13.6% in 2025.
Net earnings for the quarter increased by $1.5 million to $2.3 million in 2026 from $0.8 million in 2025.
For the first quarter of 2026, K-Bro declared dividends of $0.300 per common share.
Debt net of cash at the end of Q1 2026 was $204.4 million compared to $214.2 million at the end of fiscal 2025.
Linda McCurdy, President & CEO of K-Bro, commented that "We're delighted to report our eighth consecutive quarter of record results, highlighting the benefits of our strategic national platforms in both Canada and the UK. Our Stellar Mayan integration is progressing as expected, and we continue to anticipate run-rate cost synergies will be realized over the twelve to twenty four months guided. As always, we are focused on delivering industry-leading service and being dependable partners to our customers."
"We're excited with our strong momentum to start 2026, and we see a positive outlook amid the evolving macro landscape. As an essential service provider, K-Bro has a resilient business model. We have a highly experienced and diverse team, and we are focused on disciplined operations. K-Bro has a strong cash flow profile and our post acquisition debt and leverage levels have been consistent with our expectations. We continue to monitor the evolving global and Canadian foreign policies, geopolitical events, volatile energy prices, state of tariffs and other trade policies."
Highlights and Significant Events for Q1 2026
Business Acquisition, Stellar Mayan
As previously disclosed in the December 31, 2025 Annual Financial Statements, during 2025 the Corporation finalized the provisional purchase price allocation for the UK based Stellar Mayan Acquisition, a leading commercial laundry business in England serving the healthcare and hospitality markets. 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"). No new information which resulted in adjustments to the fair value of net identifiable assets acquired was obtained during the quarter ended March 31, 2026.
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.
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 March 31, 2026 the combined interest rate was 5.45%.
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
At March 31, 2026, the amount held in escrow at closing as part of the Shortridge Share Purchase Agreement remains under dispute. The escrow was established to secure the counter-party's obligations under the agreement in relation to certain post-closing conditions. The Corporation and through advisory from their legal counsel have determined those conditions were not met by the counterparty, and the Corporation has asserted their rights to retain the escrowed funds. The counterparty disputes this position and has contested the Corporation's claim to the escrow funds. Management continues to monitor the progress of negotiations with the counterparty, however a contingent asset has not been recognized as a receivable at March 31, 2026, as receipt of the escrow amount is dependent on the outcome of the negotiation process and may require settlement through court.
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 three months ended March 31, 2026, the Corporation repurchased and cancelled 0 common shares (2025 - 0) for $0 (2025 - $0) 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 March 31, 2026 (2025 - $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. Following a capital asset investment between 2013 and 2019, the Corporations' facilities are well capitalized and management expects a consistent level of capital spending in the range of $15.0 million to $18.0 million will be sufficient to support the base business in both Canada and the UK in the short to medium term.
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 March 31,
(thousands, except per share amountsand percentages)
CanadianDivision2026
UKDivision2026
2026
CanadianDivision2025
UKDivision2025
2025
$ Change
% Change
Revenue
$ 69,408
$ 69,701
$ 139,109
$ 66,572
$ 24,397
$ 90,969
48,140
52.9 %
Expenses included in EBITDA
55,616
61,571
117,187
56,551
22,014
78,565
38,622
49.2 %
EBITDA(1)
13,792
8,130
21,922
10,021
2,383
12,404
9,518
76.7 %
EBITDA as a % of revenue
19.9 %
11.7 %
15.8 %
15.1 %
9.8 %
13.6 %
2.2 %
16.2 %
Adjusted EBITDA(1)
13,917
8,638
22,555
11,941
3,052
14,993
7,562
50.4 %
Adjusted EBITDA as a % of revenue
20.1 %
12.4 %
16.2 %
17.9 %
12.5 %
16.5 %
-0.3 %
-1.8 %
Net earnings (loss)
2,632
(302)
2,330
846
(20)
826
1,504
182.1 %
Basic earnings (loss) per share
$ 0.204
$ (0.023)
$ 0.181
$ 0.081
$ (0.002)
$ 0.079
$ 0.102
129.1 %
Diluted earnings (loss) per share
$ 0.203
$ (0.023)
$ 0.180
$ 0.080
$ (0.002)
$ 0.078
$ 0.102
130.8 %
Dividends declared per diluted share
$ 0.300
$ 0.300
$ -
0.0 %
Adjusted net earnings (1)
2,757
1,852
4,609
2,766
649
3,415
1,194
35.0 %
Adjusted basic earnings per share (1)
$ 0.214
$ 0.144
$ 0.358
$ 0.263
$ 0.062
$ 0.325
$ 0.033
10.2 %
Adjusted diluted earnings per share (1)
$ 0.213
$ 0.143
$ 0.356
$ 0.262
$ 0.061
$ 0.323
$ 0.033
10.2 %
Total assets
697,957
438,446
259,511
59.2 %
Debt (excludes lease liabilities) (2)
235,262
119,295
115,967
97.2 %
Cash provided by operating activities
