1
ANNUAL
REPORT
2021
About Redishred
Profile
Redishred Capital Corp. (“Redishred” or “the Company”) is a growth-oriented company
that owns and operates various platforms in the information management and e-waste
space:
Providing document and hard drive
destruction services, primarily on-site.
Providing digital imaging and document
management services.
Providing electronics recycling and
refurbishment services.
Collectively, our brands operate in the information management industry and provide
services in 40 major markets in the United States with System Sales in excess of $50
million USD.
Growth Strategy
Redishred’s strategy is to:
Grow durable and sustainable revenue and EBITDA streams for all locations,
Expand the location footprint in North America by way of franchising and
acquisitions, and
Drive service depth and cash flows in all locations by way of tuck-in acquisitions.
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Redishred Capital Corp. | Annual Report 2021
Vision | Purpose | Goals
Purpose:
The Company provides certified and secure
information management services to its clients.
Redishred’s subsidiary, PROSHRED® is both ISO
9001 and NAID AAA certified, the only national
provider to be dual certified.
Vision:
The Company’s vision is to provide easy and
environmentally sustainable solutions
for our
clients, recognizing the responsibility and impact
we have on the communities we serve and the
environment we live in.
During 2021, we saved over three quarters of one million trees through our paper recycling
services.
Trees Saved in 2021
In 000's
250
200
150
100
50
0
205
200
190
178
Q1
Q2
Q3
Q4
Quarter
Saving trees is one part of the equation, we
also strive to minimize the driving and idling
time on the routes while providing shredding
services to our clients and we maintain our
shredding vehicles in optimal condition to
minimize undue exhausts and reduce our
carbon footprint. As we look to the future, we
will continue to operate newer and more fuel-
efficient vehicles and we are also exploring
with our shredding truck partners the use of
shredding vehicles that run on alternative
energy sources, including electric.
Redishred Capital Corp. | Annual Report 2021
3
Values:
Operating with integrity, being open and
transparent in our communications, creating
awareness, holding ourselves accountable,
respecting others, and growing, financially and
as a business organization, represent our core
values.
These core values extend beyond just providing and delivering our core services to clients.
We are also involved in our communities and create awareness of issues that impact
many. For example, we are a key partner of the American Institute for Cancer Research,
annually hosting Nationwide Shred Cancer Events. To date, we have raised over
$200,000 to support cancer research through our shred events. Together we believe we
can Shred Cancer.
Goals:
Through our purpose, vision and values, our goals are to make it easy for our clients to
use our services, stay relevant in our industry, and empower our clients to be secure and
green. We invest in technology to stay at the forefront of the latest developments in our
industry and empower our people to provide the best services to clients. Without our
people, this delivery of services would not be possible. The Company has a diverse
workforce, both at the client-facing through to the most senior management positions; we
believe that the best service is provided by a diverse team that has care for the services
provided to our clients and character to do the right thing when no one is looking.
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Redishred Capital Corp. | Annual Report 2021
2021 Highlights
Consolidated Revenue
$36.2M
(42% increase vs 2020)
Consolidated EBITDA1 Margin
25%
(200 bps increase vs 2020)
OILI/Share2
$0.044
(159% increase over 2020)
Four Acquisitions Completed
$16.6M
(4% increase vs 2020)
Trees Saved by PROSHRED®
~750,000
(Trees saved in 2021)
Debt as a Percentage of
Total Assets3
49%
1. EBITDA is defined as Earnings before Interest, Taxes and Depreciation, and is a non-IFRS measure. For a full description
of non-IFRS measures, please refer to the Year end 2021 Management Discussion and Analysis.
2. OILI is defined as EBITDA less depreciation on tangible assets and net interest expense and is a non-IFRS measure. For
a full description of non-IFRS measures, please refer to the Year end 2021 Management Discussion and Analysis.
3. Debt as a percentage of total assets is a capital management measure. For a full description of debt as a percentage of
total assets please refer to the Year end 2021 Management Discussion and Analysis.
Redishred Capital Corp. | Annual Report 2021
5
Letter to Shareholders
Dear Shareholders:
I am pleased to write this year’s annual letter to our shareholders to report on Redishred’s
financial and operational performance and to comment on our goals and priorities for
2022.
2021 was the second consecutive year that required the Redishred team to be vigilant in
meeting COVID-19 protocols; these protocols changed frequently in various U.S. states
and to make matters more challenging, the COVID-19 virus also mutated on several
occasions in 2021 causing even further disruption to our clients and our operations. What
did not change was the resolve, the care, and the character of the Redishred team in
responding to these unprecedented challenges. Our over 200 employees continued to
find ways to service our clients and in doing so propelled Redishred to the best year ever
in our history.
Redishred’s financial and operating results for 2021 were very strong. We achieved
revenues of $36.2M, up 42% versus 2020. We attained 25% EBITDA margins a 200-basis
point improvement over 2020, and OILI/Share of 4.4 cents, a 159% increase from the prior
year. Redishred’ management team was successful in meeting the strategic targets for
2021.
Redishred’s management team remains committed to maximizing value and long-term
profitability by concentrating on three key areas:
1.
2.
3.
Drive same and existing location revenue and EBITDA growth, focusing on the
acquisition of recurring revenue clients from small and medium sized
enterprises.
Conduct accretive acquisitions by purchasing franchisees when they are ready
to exit and independents in existing and new markets.
Support franchisees to help them grow durable and sustainable revenue and
EBITDA streams
We have seen positive results from this focus, all three areas contributed to our earnings
growth in 2021.
Strong Growth from our Same Location Operations
Increasing earnings from our existing locations is a key component to our strategy. We
have invested in 2021 on initiatives to further drive revenues and control costs that will
drive continued operating leverage. Many of the initiatives that commenced in late 2021
will continue into 2022, including: (1) the deployment of a new workflow software that
includes stronger route management tools, client engagement tools and a collection
automation platform, (2) continued investment in newer trucks with a view to reducing
client disruptions due to repairs, reducing repair costs, reducing fuel consumption and
enhancing our green initiatives, and (3) investment in sales resources, both people and
tools with a view to acquiring new clients and enhancing route density.
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Redishred Capital Corp. | Annual Report 2021
Another Strong Acquisition Year
2021 was another strong year on the acquisition front, as Redishred acquired four
shredding operations during the year, valued at $16.6M. Key acquisitions for us included:
Richmond, VA: We acquired the business form our long standing PROSHRED®
franchisee in the market; with the existing ownership of PROSHRED® Northern Virginia,
Redishred can provide service to 75% of the state of Virginia.
Atlanta, GA: We acquired the business form our long standing PROSHRED® franchisee
in the market. Atlanta is one of the largest metropolitan markets in the United States; post
acquisition Redishred has invested in new sales resources and has deployed the new
workflow software into the location.
New York and New Jersey: We acquired the American Security Shredding business
from one of the largest independent operators in the region late in 2021. With this
acquisition, Redishred obtained two new baling and plant-based facilities enhancing
recycling opportunities. Redishred has commenced the integration of the acquired
business into the existing business with a view to enhancing client service and route
density.
All of the above acquisitions were conducted prior to our equity raise of $8.6M that closed
on December 23, 2021.
Franchise Support
Redishred’s legacy includes a strong performing franchise system. During 2021, the
PROSHRED® system saw same location system sales grow by 22% versus 2020. This
strong growth was driven by continued investment by our franchisees in new trucks and
sales resources. Furthermore, the Franchise support team continued to evolve and
deploy new programs.
Redishred Capital Corp. | Annual Report 2021
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Care for our Environment and the Communities we Serve
Environment:
Redishred through the brand PROSHRED® has a deep legacy of focusing on recycling
and energy savings. The very foundation of our business is to secure our client’s
information and to ensure that at the end of the life cycle for the information it is destroyed
securely, and the destroyed materials are recycled into other products.
Our Green initiatives include:
1. 99% of the paper and products destroyed are sent for recycling. In 2021 we saved
over 750,000 trees by recycling the shredded paper we collect from our clients.
This effort keeps 750,000 trees in the eco-system to absorb CO2 and deliver
oxygen to the planet. This also prevents 750,000 trees from being used in the
pulping process; this process has heavy energy requirements.
2. During 2021, Redishred purchased twelve new trucks, these trucks have the latest
emissions equipment and are much more fuel efficient than older models.
Redishred’s five-year plan is to ensure that 90% of its fleet is under five years in
age to ensure we are doing our part to reduce carbon emissions. Redishred is also
in early-stage discussions with its key shred truck partner to be one of the first
shredding service providers to test a fully electric shredding vehicle.
Community:
The American Institute for Cancer Research (“AICR”) is the cancer charity that fosters
research on the relationship of nutrition, physical activity, and weight management to
cancer risk. AICR interprets the scientific literature and educates the public about the
results. They have contributed more than $96 million for innovative research on the
prevention of cancer. Cancer can be prevented.
As a Company and a Franchise System, we have raised over $200,000 USD for AICR
since 2014. This year marks the 9th anniversary of our annual, national Shred Cancer
events that are typically held in the Summer and Fall. It is at this moment that many of us
at PROSHRED® take more than a moment to remember David Wright, our former
franchisee in Charlotte, North Carolina. He was a wonderful father and husband, a
collaborative and bright business leader and, unfortunately, did not survive his battle with
brain cancer. It is in his honour that we hold this event every year.
Please join us in the Summer and Fall at your nearest PROSHRED® location to not only
Shred your private information, but more importantly help join us in our endeavor to Shred
Cancer.
Looking Forward to 2022
We are optimistic that the worst of the COVID-19 global pandemic is in the past and we
are very hopeful to the opportunities in front of us.
We look to continue our operational plans which emphasize growing the number of new
recurring clients we service in our existing locations. This pathway is the most effective
manner to combat inflationary pressures that are a biproduct of the pandemic as the
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Redishred Capital Corp. | Annual Report 2021
increase in clients served on any given route drives stronger route density and enhanced
gross profit margins and ultimately our OILI/Share.
We also look forward to conducting accretive acquisitions, with the $8.6M equity raise
conducted in December of 2021, Redishred has the capital to continue the acquisition
program that commenced in earnest in 2018.
Redishred’s annual general meeting of shareholders will be held on May 26, 2022, at
1:00PM Atlantic time at the Courtyard Marriott, 5120 Salter Street, Halifax, Nova Scotia.
This will be our first in person meeting of shareholders in three years and we look forward
to supporting the great city of Halifax and reconnecting with our many founding
shareholders there. Redishred will also be holding an investor reception for our many
Toronto, Ontario based shareholders and capital markets partners on May 30, 2022, at
5:00PM Eastern time at the Vintage Conservatory, 100 Lombard Street, Toronto, Ontario.
Thank you for your continued interest, support, and investment in Redishred.
Yours truly,
Jeffrey Hasham
Chief Executive Officer
Redishred Capital Corp. | Annual Report 2021
9
Financial and Operational Highlights
Values in CAD and 000's, except per unit and percentage amounts.
As at and for the years ended
2021
2020
2019
Operations (Excludes COVID 19 Government Subsidies unless otherwise stated)
Revenue
EBITDA
$
36,199
$
25,437
$
22,407
$
9,191
$
5,938
$
5,045
Operating income less net interest expense ("OILI")
$
3,464
$
1,323
$
1,862
Cash provided from operations1
$
8,403
$
6,976
$
4,460
$ 0.044
$
0.017
$
0.025
$
79,334
$
58,688
$
53,770
$
38,974
$
28,280
$
23,870
$
40,360
$
30,408
$
29,900
49%
1.57
2.39
14
16
42
48%
1.19
2.95
11
19
40
44%
2.39
2.94
10
20
38
OILI/Share
Financial Position
Total assets
Total liabilities
Total equity
Debt to total assets percentage
Normalized Fixed Charge Coverage Ratio2
Normalized Total Funded Debt to EBITDA ratio2
Location Information
Corporate locations
Franchised locations
US Markets serviced
1. Includes COVID‐19 related government subsidies in 2020 and 2021
2. Trailing twelve months
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Redishred Capital Corp. | Annual Report 2021
Charts related to Financial and Operational Highlights
System Sales (USD)
In Millions
Service
Recycling
$8
$6
$5
$8
$38 $35
$32
$43
$6
$5
$25 $28
$4
$21
$4
$3
$3
$12 $14 $17
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
OILI/Share (Fully
Diluted) (CAD)
OILI/Share
CV19 Subsidy
$0.017
$0.044
Corporate Location
Operating Income (CAD)
In Millions
Base
CV19 Subsidy
$1
$0.035
$0.037
$0.024
$0.032
$0.016
-$0.011
-$0.034
$0.034
$0.025
$0.017
$2
$8
$2 $2 $2 $3
$0 $1
$3 $4 $4
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Debt as a % of Total
Assets
106% 106% 104%
95% 94%
42%
44%
48% 49%
29%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Redishred Capital Corp. | Annual Report 2021
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Strategic Targets
1. Growth of Same Location Shredding System Sales(1):
2021 Target
2021 Performance
Same location shredding system sales growth of 5% to USD$38M, subject to
COVID-19 related restrictions being lifted by Q2-2021.
The target was exceeded. Same location shredding system sales grew by 19%
to USD$41M, as the majority of offices and facilities have re-opened and clients
have resumed shredding services.
2022 Target
Same location shredding system sales growth of 10% to USD$45M.
Longer-term target
Growth averaging over 8% per year.
2. Growth in Same Location EBITDA and Operating Income(1):
2021 Target
2021 Performance
2022 Target
Longer-term target
Growth of 10% in same location EBITDA to $7.9M and growth of 22% in same
location operating income to $4.4M, subject to COVID-19 related restrictions
being lifted by Q2-2021.
The target was exceeded. Same location EBITDA grew 28% to $9.2M, and
same location operating income grew 66% to $6.0M.
Growth of 8% in same location EBITDA to $13.4M and growth of 11% in same
location operating income to $8.8M.
Same location EBITDA and Operating Income growth of 10% per year. The
Company will revisit this longer-term target, if the inflationary environment in the
U.S. continues to persist, and the Company’s CSP wages and fuel costs are
impacted.
3. EBITDA and Operating Income from acquired operations(1):
2021 Target
2021 Performance
2022 Target
Longer-term target
EBITDA margin of at least 30% and operating income margin of at least 20%
before transition and acquisition costs.
The target was exceeded. The EBITDA and operating income margins from
acquired operations were 40% and 25%, respectively.
EBITDA margin of at least 30% and operating income margin of at least 20%
before transition and acquisition costs.
Maintain EBITDA and operating income margins of at least 30% and 20%
respectively.
4. Franchise Development:
2021 Target
Open one new market in the United States by way of franchising.
2021 Performance
2022 Target
The target was not met. The Company did not award any new franchise
locations during 2021. Redishred is pursuing franchise opportunities in available
markets.
The Company will drive footprint growth primarily by way of accretive
acquisitions (please refer to the fifth strategic target below).
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Redishred Capital Corp. | Annual Report 2021
Strategic Targets (continued)
5. Expand by way of Accretive Acquisitions:
2021 Target
Add USD$3M to USD$4M in revenue by way of accretive acquisitions.
2021 Performance
The target was exceeded. The Company has added approximately
USD$6.3M in revenue, based on prior year 2020 results, by way of
accretive acquisitions.
On May 1, 2021, the Company closed on the acquisition of the
PROSHRED® Richmond, Virginia business, which generated USD$0.9
million in revenue in 2020. On July 30, 2021, the Company closed on the
acquisition of the PROSHRED® Atlanta business, which generated
USD$1.3 million in revenue in 2020. Lastly, on December 1, 2021 the
Company closed on the acquisition of American Shredding, which
generated USD$4.1 million in revenue in 2020.
2022 Target
Add USD$4M to USD$5M in revenue by way of accretive acquisitions.
Longer-term target
Add, in aggregate, USD$4M to USD$5M in revenue per year by way of
acquisitions of both existing franchise locations, and independent shredding
and scanning businesses.
Improve Operating Leverage(2):
6.
2021 Target
General and administrative (“G&A”) costs at 13% of total revenue.
2021 Performance
This target was met. G&A costs were 13% of total revenue.
2022 Target
G&A costs at 12% of total revenue.
Longer-term target
G&A costs at 10% of total revenue.
(1) 2021 corporate location targets were subject to the U.S. economy re-opening, including businesses
returning to offices, as well as an improvement in the number of COVID-19 cases and the distribution
of COVID-19 vaccines.
(2) G&A costs as a percentage of revenue target does not include Growth Fund revenue and costs.
Redishred Capital Corp. | Annual Report 2021
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Securing Information at Your Door
Redishred and its brand PROSHRED® is the innovator of the on-site destruction process.
We shred at your door and then ensure that your shredded paper is recycled, contributing
to the reduction of waste. We are often asked, how it works and so the following outlines
our process.
Step 1: Place your confidential documents in our PROSHRED®
executive console.
Step 2: Our Customer Service Professional (CSP) will arrive at client
site at a regularly scheduled date/time.
Step 3: The CSP will empty documents into a PROSHRED® security
bin.
Step 4: The CSP brings the locked bin outside to our on-site shredding
truck.
Step 5: The bin is lifted by the truck's automated system.
Step 6: All documents are fully shredded at your door (crosscut). The
process is entirely hands-free and automated by our state-of-the-art
shredding truck.
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Redishred Capital Corp. | Annual Report 2021
Management Team
Jeffrey Hasham, CPA, CA
Chief Executive Officer
Mr. Hasham is the Chief Executive Officer of Redishred. He has held this
position since April 2011. Mr. Hasham has worked in franchising and in
particular with logistics-based franchise concepts for 16 years. Mr. Hasham
is also a Chartered Professional Accountant, having articled at Ernst & Young
LLP.
Harjit Brar, CPA, CA
Sr. Vice President Finance and Chief Financial Officer
As of November 2021, Mr. Brar is the Senior Vice President of Finance and
Acquisitions. Mr. Brar has also, as of January 2022, assumed the position of
Chief Financial Officer (“CFO”), as Mrs. Pawluk, the Company’s long-standing
CFO, left on maternity leave. Mr. Brar began his career at Ernst and Young in
their Assurance practice, and subsequently has held a number of senior
financial roles at various publicly listed companies, including those listed on
the Toronto Stock Exchange and TSX Venture Exchange.
Kasia Pawluk, CPA, CA (on Mat Leave)
Chief Financial Officer
Mrs. Pawluk is the Chief Financial Officer of Redishred, a position she has
held since April 2011. Prior to being appointed to her current position, Mrs.
Pawluk was the Manager of Finance for Redishred. Mrs. Pawluk is also a
Chartered Professional Accountant, having articled with the accounting firm of
Deloitte LLP.
Ron Gable
Sr. Vice President of Performance & Operations
Mr. Gable is the Sr. Vice President of Performance and Operations. He has
held this position since November 2015 and has been employed with the
Company since July of 2015. Mr. Gable has spent 25 years as a business
strategy and performance consultant. His clients included many multi-national
corporations with multiple branches and with diverse business models,
including franchising and logistics.
Redishred Capital Corp. | Annual Report 2021
15
Management Team (continued)
Francesco Marascia, MBA, CM
Vice President of Marketing & PROSCAN Solutions
Mr. Francesco Marascia joined Redishred in July 2016. Prior to being
appointed to his position, Mr. Marascia was the National Marketing Director
for Redishred. Mr. Marascia brings over 15 years of experience developing
Omni-Channel strategies across a range of sectors with a strong emphasis on
digital technologies.
Brian Samson
Vice President of Performance & Operations
Mr. Samson joined Redishred in July 2014. Prior to this position, Mr. Samson
had held multiple operational roles within the organization. Mr. Samson has
over 10 years of experience in operations and logistics, emphasizing
technology and innovation.
Dave Knowles
Vice President of Business Development
Dave Knowles joined Redishred in July 2019. Mr. Knowles brings over 28
years of sales experience managing sales teams across North America,
emphasizing coaching and technology adoption.
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Redishred Capital Corp. | Annual Report 2021
Information
Redishred Capital Corp. – Home Office
Toronto, Ontario
6505 Mississauga Road, Suite A
Mississauga, Ontario, Canada, L5N 1A6
PROSHRED® Franchising Corp.
Syracuse, New York
6067 Corporate Drive
East Syracuse, NY 13057
Redishred Acquisition Inc. – US Offices:
New York City, New York
5 West Main Street Suite #104
Elmsford, NY 10523
Albany, New York
164 Montgomery Street
Albany, NY 12207
Syracuse, New York
6067 Corporate Drive
East Syracuse, NY 13057
Buffalo, New York
5384 Ontario Avenue
Hamburg, NY 14075
Charlotte, North Carolina
803 Pressley Rd - Suite 108
Charlotte, NC 28217
Fort Lauderdale, Florida
5217 NW 35th Avenue
Fort Lauderdale, FL 33309
Milwaukee, Wisconsin
1425 Commerce Ave – Unit C
Brookfield, WI 53045
Kansas City, Kansas
3052 S 24th Street
Kansas City, KC 66106
New Haven, Connecticut
801 North Main Street Ext.
Wallingford, CT 06492
Rochester, New York
75 South Clinton Ave., Suite 510
Rochester, NY 14604
Watertown, New York
118 N Massey St.
Watertown, NY 13601
Northern Virginia
44845 Falcon Pl #104,
Sterling, VA 20166
Miami, Florida
201 South Biscayne Blvd Suite 2800
Miami, FL 33131
Northern New Jersey, New Jersey
152 Eagle Rock Avenue
Roseland, NJ 07068
Chicago, Illinois
7700 Graphics Drive
Tinley Park, IL 60477
Springfield, Massachusetts
75 Post Office Park
Wilbraham, MA 01095
Redishred Capital Corp. | Annual Report 2021
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Richmond, Virginia
4730 Wistar Road
Richmond, VA 23228
Atlanta, Georgia
5980 Unity Drive, Suite D
Norcross, GA 30071
Norfolk, Virginia
780 Lynnhaven Parkway, suite 400
Virginia Beach, VA 23452
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Redishred Capital Corp. | Annual Report 2021