Mr. Jeffrey Hasham reports

REDISHRED CAPITAL CORP. ("REDISHRED", OR THE "COMPANY") ANNOUNCES STRONG Q3 2023 RESULTS

Redishred Capital Corp. has released its results for the third quarter of 2023.

Quarterly highlights:

Consolidated highlights:

• The company generated revenue of $15.4-million, growing $700,000 or 5 per cent versus Q3 2022.
• The company generated free cash flow of $2.7-million, growing $2.1-million or 333 per cent versus Q3 2022.
• Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization), excluding the impact of net recycling revenue, was $1.7-million, growing by $900,000 or 121 per cent versus Q3 2022.
• Consolidated EBITDA for Q3 2023 was $3.0-million, decreasing 16 per cent versus Q3 2022, driven by lower net recycling revenue due to lower commodity paper prices.

Corporate locations highlights:

• Corporate location revenue for Q3 2023 grew 5 per cent versus Q3 2022 to $14.9-million (2-per-cent constant currency growth -- U.S. dollars is the constant currency).
• Corporate location EBITDA grew 3 per cent versus Q3 2022 to $5.0-million (no change in constant currency growth).
• Same-corporate-location EBITDA was $4.6-million, decreasing 6 per cent versus Q3 2022 (9-per-cent constant currency decrease).

Year-to-date highlights:

Consolidated highlights:

• The company generated revenue of $49.1-million, growing $7.3-million or 17 per cent versus Q3 2022 YTD.
• The company generated free cash flow of $5.0-million, growing $600,000 or 15 per cent versus Q3 2022 YTD.
• Consolidated EBITDA excluding the impact of net recycling revenue was $5.6-million, growing by $1.2-million or 26 per cent versus Q3 2022 YTD.
• Consolidated EBITDA for Q3 2023 YTD was $12.3-million, flat versus Q3 2022 YTD.

Corporate locations highlights:

• Corporate location revenue grew 18 per cent versus Q3 2022 YTD to $47.5-million (13-per-cent constant currency growth -- U.S. dollars is the constant currency).
• Corporate location EBITDA grew 11 per cent versus Q3 2022 YTD to $17.3-million (6 per cent constant currency growth).
• Same-corporate-location EBITDA was $15.6-million, flat versus Q3 2022 YTD (4-per-cent constant currency decrease).

Capital management:

• The company generated $3.5-million and $9.8-million in cash from operations during Q3 2023 and Q3 2023 YTD, respectively.
• As at Sept. 30, 2023, the company has $3.6-million in cash, $1-million available on its operating line of credit and $4.1-million available on its non-revolving re-advanceable term loan.

Management's comments on Q3 2023

Jeffrey Hasham, the company's chief executive officer, noted: "We are very pleased with our EBITDA less net recycling revenue growth of 121 per cent during the third quarter of 2023. Our continued focus on route efficiencies and cost optimization were the main drivers of the $900,000 increase in EBITDA less net recycling revenue. We continue to see strong demand for our core recurring shredding service offering, which has helped drive our organic shredding revenue growth of 9 per cent in Q3 2023 versus Q3 2022. In addition, our new client relationship management system will allow us to increase sales efficiency and better connect with our customers moving forward. From a paper market perspective, paper prices have continued to decline, impacting our recycling revenue. We had anticipated this and continue to focus on growing our recurring revenue stream. Looking at our Proscan business, we saw strong revenue growth of 16 per cent when compared to Q3 2022 and our pipeline of scanning projects remains strong.

"During the quarter, we also completed the acquisitions of Proshred Baltimore and Security Shredding, which were accretive to the company's EBITDA and cash flows. We also expect to realize further synergies from these acquisitions related to route densification and cost optimization that should enhance future margins.

"For the quarter, I am also pleased that Q3 2023 free cash flow was $2.7-million, an increase of 333 per cent from Q3 2022.

"These results reflect the hard work and commitment of our employees, franchisees, management and board members, and I would like to personally thank each of them for their efforts and contributions."

Revenue growth

The company achieved 5-per-cent total revenue growth during Q3 2023 versus Q3 2022 and 17-per-cent total revenue growth during Q3 2023 YTD versus Q3 2022 YTD, primarily due to acquisitions conducted during the last 12 months, and organic sales growth from new customers and price increases, partially offset by a decrease in recycling revenue from lower commodity paper prices.

Corporate locations Q3 2023 performance

Total corporate location revenue and EBITDA grew by 5 per cent and 3 per cent, respectively, in Q3 2023 versus Q3 2022.

Same-corporate-location operating income, excluding the impact of net recycling revenue, grew 324 per cent in Q3 2023 versus Q3 2022. Same-corporate-location shredding revenue grew by 9 per cent in Q3 2023 versus Q3 2022, with same-corporate-location EBITDA decreasing by 6 per cent, driven by lower commodity paper pricing.

Corporate locations Q3 2023 YTD performance

Total corporate location revenue and EBITDA grew by 18 per cent and 11 per cent, respectively, in Q3 2023 YTD versus Q3 2022 YTD.

Same-corporate-location operating income, excluding the impact of net recycling revenue, grew 46 per cent in Q3 2023 YTD versus Q3 2022 YTD. Same-corporate-location shredding revenue grew by 16 per cent in Q3 2023 YTD versus Q3 2022 YTD, with same-corporate-location EBITDA remaining flat, driven by lower commodity paper pricing.

Community and social commitment

The company's locations under the Proshred banner conduct numerous community shredding events. These events provide an opportunity for the company's clients, clients' employees, local businesses and local residents to ensure their personal and confidential materials are securely destroyed. In addition to helping to reduce identity theft, several of these events allow for donations to various not-for-profit organizations. Proshred is also proud that 100 per cent of the shredded material is recycled, as the company's continued goal is to foster the use of fewer trees in the production of all paper products. Future community shredding event locations can be found on the company's website. The company's annual national Shred Cancer event was held in June of 2023 at various Proshred locations. These events are held to raise research funds for the American Institute for Cancer Research (AICR). It is Redishred's goal as a company and franchise system to support AICR in its endeavour to prevent cancer and possibly cure this disease. So far, Proshred has raised over $239,000 (U.S.) for this cause. Please visit the Proshred website for more information on this effort.

Financial statements

Redishred's Sept. 30, 2023, financial statements and management's discussion and analysis will be available on SEDAR+ and the company's website.

About Redishred Capital Corp.

Redishred Capital is the owner of the Proshred, Proscan and Secure e-Cycle brands, trademarks and intellectual property in the United States. Redishred digitizes, secures, shreds and recycles confidential documents and proprietary materials for thousands of customers in the United States in all industry sectors. Redishred is a pioneer in the mobile document destruction and recycling industry, and has the ISO 9001:2015 certification. It is Redishred's vision to be the system of choice in providing digital retention, secure shredding and recycling services on a global basis. Redishred Capital grants Proshred and Proscan franchise businesses in the United States, and by way of a licence arrangement in the Middle East. Redishred also operates 16 corporate businesses directly. The company's plan is to grow its business by way of both franchising, and the acquisition and operation of information security businesses that generate stable and recurring cash flow through a scheduled client base, continuous paper recycling and concurrent unscheduled shredding service.

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