On Wednesday, K-Bro Linen (TSX:KBL) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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The full earnings call is available at https://app.webinar.net/rDPpLy2oYRM
Summary
Keebler Foods Co reported its eighth consecutive quarter of record results with a revenue of $139 million and adjusted EBITDA of $22.6 million.
The company saw a 53% year-over-year increase in consolidated total revenue, driven significantly by the acquisition of Stellar Mayan.
Healthcare revenue increased by 67% while hospitality revenue rose by 35%, with healthcare now representing 61% of consolidated revenue.
The integration of Stellar Mayan is progressing well, with 30% of anticipated synergies achieved, and the company expects to realize full synergies over 24 months.
Adjusted EBITDA margin slightly decreased by 0.3% due to Stellar Mayan’s margin profile, offset by labor efficiencies and the elimination of the Canadian carbon tax.
The company maintains a strong balance sheet with a debt to EBITDA ratio of approximately 2.5 times and strong cash generation capabilities.
Future outlook remains positive with stable volume trends in healthcare and hospitality, though diesel and natural gas prices pose potential margin risks.
Management highlighted a disciplined approach to capital allocation, focusing on growth through acquisitions and a potential reactivation of the NCIB.
The company is proactively addressing potential energy cost impacts with customers, though not all contracts allow for automatic cost pass-through.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to the K-Bro Linen Inc. first quarter 2026 results conference call. At this time all lines are in listen only mode. If at any time during the call you require immediate assistance, please press Star zero for an operator. This call is being recorded on Wednesday, May 6, 2026 and I would now like to turn the conference over to Kristi Plaquin. Please go ahead.
Kristi Plaquin
Thank you operator and good morning everyone. Thank you for joining us today and welcome to our first quarter results conference call. On the line with me today is Linda McCurdy, President and Chief Executive Officer. Before we begin, I’d like to remind everyone that statements made during our prepared remarks to the conference call with reference to management’s expectations or our predictions of the future are forward looking statements. All statements made today which are not statements of historical fact are considered to be forward looking statements. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking information. Investors are also cautioned not to place undue reliance on these statements. Actual results could differ materially from those anticipated Risk factors that can affect the results are detailed in the corporation’s public filings. I’ll now turn the call over to our CEO Linda McCurdy who will provide her insights and remarks on the quarter.
Linda McCurdy (President and Chief Executive Officer)
Linda thank you very much Kristi and good morning to everyone. Thank you for joining us today to review our 2026 first quarter results. I’ll touch on some of the highlights of the first quarter. I’ll then hand it over to Kristi who will provide more details on our financial performance and the balance sheet. So we are delighted to have reported our eighth consecutive quarter of record results with revenue of 139 million and adjusted EBITDA of 22.6 million. We have steady trends in both our healthcare and hospitality segments and volumes for the quarter were generally in line with our expectations. Our Q1 results highlight the benefits of our strategic national platforms in both Canada and the UK. Stellar Myron, which we acquired in June 2025, is highly complementary to our existing UK businesses District and Fort Ridge and creates a top three national UK healthcare and hospitality platform. As our Stellar Myron first anniversary approaches, we’re pleased with the progress of our ongoing integration efforts. We continue to anticipate run rate cost synergies will be realized over the contemplated 24 month timeframe and we’ve seen great results so far. We estimate that we’ve achieved 30% of the anticipated synergies. Consolidated total revenue for the first quarter increased by 53% compared to 2025, with healthcare revenue having increased by 67% and hospitality revenue by 35%. Healthcare revenues represented approximately 61% of consolidated revenue, which is higher compared to approximately 56% in 2025 due to the acquisition of Stellar amid a more volatile global backbackdrop backdrop we’re pleased with our Q1 results underscoring our resilient growth
Linda McCurdy (President and Chief Executive Officer)
model and business performance. I’ll now turn the call over to Kristi to discuss our detailed financial results for the quarter, after which I’ll return to talk about our outlook and of course we’ll open it up to any questions. Chris Kristi, over to you.
Kristi Plaquin
Thank you, Linda. The information we are discussing today is also highlighted in our 2026 first quarter earnings press release issued yesterday and detailed supplemental financial information can be found on our Investor Relations website under the heading Financials. April’s consolidated revenue for Q1 of 2026 increased by 52.9% year over year to 1 39.1 million in Canadian dollars. Quarterly revenue for both The Canadian and UK divisions were roughly equal.
Kristi Plaquin
90% of the increase in consolidated revenue was due to the acquisition of stellar Mayan in June 2025 and the remaining portion was made up of price increases and volume increases. Strategic acquisitions of high quality operators with leading market positions in key regions continues to be an important contributor to K-Bro’s overall and as we actively pursue these growth opportunities, we will continue to incur certain transaction, transition and financing costs.
Kristi Plaquin
In this context, we believe adjusted EBITDA before these adjusting items will assist investors to assess our performance on a consistent basis as it is an indication of our capacity to generate income from operations. Consolidated adjusted EBITDA for Q1 of 2026 increased by 50.4% year over to 22.6 million. Consolidated adjusted EBITDA margin decreased 0.3% year over year to 16.2% largely due to the combination of the Stellar Mayan margin profile offset by labor efficiencies and the elimination of the Canadian carbon tax in Q2 of 2025. For the Canadian division, the adjusted EBITDA margin for Q1 of 26 increased by 2.2% year over year 20 to 20.1%. The increase in adjusted EBITDA margin is largely due to labor efficiencies and the elimination of the Canadian carbon tax in Q2 of 25. As a reminder to all Q1 of 2026 will be the last quarter where we see the year over year benefit due to the elimination of the carbon tax which again was eliminated in Q2 of 25. For the UK division, the adjusted EBITDA margin for Q1 of 26 was relatively flat, decreasing by 0.1% year over year to 12.4%.
Kristi Plaquin
Adjusted net earnings increased in 1Q26 to 4.3 million from 3.4 million in 25 and included adjusting items of 2.3 million. The adjusting items in the quarter include transaction costs, transition costs and intangible asset amortization related to the acquisition of Stellar. Mayan K-Bro has a strong cash flow generation profile and a disciplined approach to capital allocation which allows us to both invest in growing the business and return capital to shareholders.
Kristi Plaquin
Distributable Cash flow for Q1 of 26 was 9.4 million and our payout ratio was 41.5%. Our trailing twelve month payout ratio was 29.7%. The company paid out 0.3 per share in dividends during the quarter for total consideration of 3.9 million post acquisition debt and leverage levels have been consistent with our expectations. We have a strong balance sheet with ample undrawn capacity on our syndicated revolving credit facility with an operating line of 175 million and an amortizing turn loan of 1 34.6 and a further $50 million accordion for growth purposes. At the end of the first quarter of 2026 we had an undrawn balance of close to 68.2 million on our operating line without taking into account the accordion reinforcing our strong liquidity. This represents a pro forma debt to EBITDA ratio excluding leases of approximately 2.5 times on a pro forma basis. Debt to total capitalization for the period ended 3-31-26 with 49.5% total debt net of cash decreased from 214.2 million to 204.5 million primarily attributable to the timing of business activities and the acquisition of Stellar.
Kristi Plaquin
I’ll now turn things back over to Linda for additional commentary.
Linda McCurdy (President …
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