Redishred Delivers Double-Digit Growth in Q3 2024 as Buyout Looms
Redishred Capital (TSXV: KUT) reported its third-quarter financial results for 2024, showcasing notable improvements in revenue and profitability compared to the prior year. Revenue for the third quarter of 2024 reached $17.9 million, an increase of $2.5 million, or 16%, compared to Q3 2023.
This performance reflects a combination of organic growth—primarily a 12% increase in shredding services—and contributions from the acquisition of Confidential Shredding LLC in July 2024. On a quarter-over-quarter basis, this represents a modest increase from $16.5 million in Q2 2024.
Year-to-date revenue growth has been more subdued at 8%, with $53.0 million recorded for the first three quarters of 2024 compared to $49.1 million in the same period last year.
The company’s consolidated EBITDA for Q3 2024 came in at $4.1 million, a 35% increase compared to $3.0 million in Q3 2023. When excluding the impact of volatile recycling revenue, EBITDA rose to $2.7 million from $1.7 million in Q3 2023, representing a 60% year-over-year improvement. However, sequential growth in EBITDA was less pronounced, rising just 7% from $3.8 million in Q2 2024.
Corporate locations played a critical role in the company’s performance, generating $17.3 million in revenue during Q3 2024, up 17% from $14.8 million in Q3 2023. This growth is attributed to higher shredding sales, bolstered by acquisitions and price increases, with constant-currency growth at 15%. EBITDA from corporate locations increased by 19% year-over-year to $6.0 million, compared to $5.0 million in Q3 2023. Sequentially, corporate location EBITDA rose by 4%, reflecting steady operational improvements.
Importantly, same-location performance continued to trend positively, with EBITDA growing 13% compared to Q3 2023. Excluding recycling revenue, same-location operating income surged by 38%, indicating that the company’s focus on core shredding services has effectively offset recycling-related challenges.
Year-to-date results reveal a more tempered growth trajectory for corporate locations, with revenue rising 8% to $51.4 million compared to $47.5 million in the first three quarters of 2023. EBITDA increased by 5% during the same period, growing from $16.7 million to $17.5 million. When excluding the impact of recycling revenue, EBITDA growth was 26%, suggesting the underlying health of the shredding segment.
Redishred produced $5.8 million in free cash flow during the first nine months of 2024, a 17% increase compared to $4.9 million in the same period last year. Cash flow from operations during Q3 2024 was $2.6 million, compared to $2.3 million in Q3 2023, representing a year-over-year increase of 13%. However, the cash position at the end of the quarter, $2.4 million, suggests limited immediate liquidity for larger-scale investments, though the company retains access to over $25 million in credit facilities.
The acquisition of Confidential Shredding LLC in July 2024 expanded Redishred’s geographic footprint into the New Jersey and New York markets, providing a new growth avenue. However, the impact of the acquisition is yet to be fully reflected in the year-to-date results..
One of the most significant developments for Redishred this quarter was the announcement of its acquisition by VRC Companies. Under the terms of the definitive agreement shareholders will receive $5.00 per common share. The transaction, which has been unanimously approved by Redishred’s board of directors, is expected to close in the first quarter of 2025, subject to shareholder and court approvals. Once complete, the acquisition will transition Redishred into a privately held company.
Redishred last traded at $4.87 on the TSX Venture.
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