K-Bro Linen ((TSE:KBL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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K-Bro Linen’s recent earnings call conveyed a generally positive sentiment, underscored by robust revenue growth and the successful integration of the Stellar Mayan acquisition. This strategic move has significantly bolstered the company’s market presence in the U.K., although it has also introduced challenges with decreased EBITDA margins and increased costs. Despite these hurdles, the overall sentiment remains optimistic, with growth metrics and strategic positioning taking precedence over cost concerns.
Record Revenue and Growth
K-Bro Linen Systems reported record-breaking results for the third quarter of 2025, achieving revenue of $156 million and adjusted EBITDA of $33.5 million. This marks the sixth consecutive quarter of record results, with consolidated revenue increasing by an impressive 49% compared to the same period in 2024.
Stellar Mayan Acquisition Impact
The acquisition of Stellar Mayan has been pivotal for K-Bro, establishing a national footprint in the U.K.’s commercial laundry and textile rental sector. This strategic acquisition has diversified revenue streams, contributing to a 67% increase in healthcare revenue and a 34% rise in hospitality revenue.
Financial Performance and Strong Balance Sheet
K-Bro’s consolidated adjusted EBITDA saw a 45.9% increase, reaching $33.5 million. The company maintains a strong balance sheet, with ample undrawn capacity on its syndicated revolving credit facility, resulting in a debt-to-EBITDA ratio of approximately 2.7x.
Expansion Opportunities
K-Bro’s U.K. division is strategically positioned for future growth, with a national presence and scale. The company remains optimistic about medium-term growth prospects in the U.K. healthcare and hospitality sectors.
Sustainability and Board Appointment
K-Bro is committed to sustainable growth, planning to publish its third annual sustainability report. Additionally, the company announced the appointment of the Honorable Rona Ambrose to its Board of Directors, signaling a focus on governance and strategic leadership.
Decreased EBITDA Margins
The adjusted EBITDA margin decreased slightly to 21.5% in 2025 from 22% in 2024, primarily due to the lower margin profile of the Stellar Mayan acquisition.
Increased Costs
Wages and benefits rose by $21.4 million to $60.6 million, with net earnings as a percentage of revenue decreasing to 5.7% in 2025 from 7.8% in 2024. These cost increases are largely attributed to the cost structure associated with the Stellar Mayan acquisition.
Forward-Looking Guidance
CEO Linda McCurdy emphasized the company’s record-breaking third-quarter results, driven by significant increases in healthcare and hospitality revenues. The Stellar Mayan acquisition has played a crucial role in this growth, contributing to a balanced revenue distribution between Canada and the U.K. The Canadian division benefited from labor efficiencies and the elimination of the carbon tax, while the U.K. division faced margin challenges. K-Bro’s strong balance sheet, with substantial undrawn credit capacity, positions it well for future endeavors.
In summary, K-Bro Linen’s earnings call painted a picture of a company achieving substantial growth and strategic expansion, despite facing some cost-related challenges. The overall sentiment was positive, with a focus on leveraging acquisitions for market presence and maintaining a strong financial position to support future growth initiatives.