ANNUAL
REPORT
TSXV: KUT
2
Redishred Capital Corp. | 2022 Annual Report
About Redishred
3
Profile
4
Growth Strategy
5
Our Locations Across the US
5
Core Values
6
Purpose
7
Vision
8
Values
9
Goals
10
Annual Highligths
11
Letter to Shareholders
12
Strong Growth from our Same Location Operations
14
Another Strong Acquisition Year
14
Franchise Support
14
Care for our Environment and the Communities we Serve
15
Looking Forward to 2022
16
Financial & Operational Highlights
17
System Sales (USD) In Millions
19
OILI/Share Fully Diluted (CAD)
19
Corporate Location Operating Income (CAD) In Millions
20
Debt as a % of Total Asset
20
Strategic Targets
21
Our Secure Processes
23
Destroying Information at Your Door
24
Scanning & Information Management
25
Securely Recycling Your e-Waste
26
Our Team
27
Information
28
Table of Content
About Redishred
“We define a successful outcome by the good we do for our planet,
our employees and our clients. These good deeds are interlinked,
and by delivering on this we will and do provide easy client service,
build a great place to work and help change our environment for
the better, all while driving growth in our earnings with the view to
driving strong returns to our shareholders. Doing the right thing
drives a sustainable business for everyone.”
- Jeffrey Hasham
CEO
4
Redishred Capital Corp. | 2022 Annual Report
About Us
Profile
Redishred Capital Corp. (“Redishred” or “the Company”) is a publicly traded
company that owns and operates PROSHRED®, PROSCAN® and Secure e-Cycle.
Collectively, our brands operate in the information management industry and
provide services accross the major markets of the United States with System
Sales over $70 million USD.
REDISHRED™
The Company’s mandate is to build shareholder value through a market-
development and consolidation strategy, delivering highly profitable operations
by means of franchising, joint venture partnerships and corporate acquisitions.
On-site services
Document shredding
Hard drive destruction
Product destruction
SHREDDING
Digital retention
Digital imaging
Document management
SCANNING
Electronic security
Electronics recycling
Refurbishment services
RECYCLING
Redishred Capital Corp. | 2022 Annual Report
5
Our Locations Across the US
Redishred offers secure information management services in 42 metropolitan
markets across 25 states of the United States through its corporate and franchised
locations. In addition, with the network of certified shredding partners, the Company
provides services nationwide.
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 acquisitions, partnerships, and franchising
Drive service depth and cash flows in all locations by
way of tuck-in acquisitions
Core Values
Redishred Capital Corp. | 2022 Annual Report
7
Redishred is committed to providing the highest
standards of security, confidentiality, and customer
service. Our largest subsidiary, PROSHRED®
holds both ISO 9001 and NAID AAA certifications,
becoming the only national provider to be dual
certified. All materials are destroyed in accordance
with federal and state regulations.
Purpose
Easily! The most secure information
management services.
8
Redishred Capital Corp. | 2022 Annual Report
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.
Saving trees is one part of the
equation, we also strive to minimize
our driving and idling time on the
routes while providing shredding
services to our clients. We rigorously
maintain our shredding vehicles 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.
Vision
Durable overtime. Sustainable for good.
Easiest! Always.
During 2022, we saved approximately 895,000 trees
through our paper recycling services.
Redishred Capital Corp. | 2022 Annual Report
9
Operating with integrity, being open and transparent in our communications, creating
awareness, holding ourselves accountable, respecting others, and growing, both
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.
Values
Integrity - Communication - Awareness
Accountability - Respect - Growth
Together we believe we can Shred Cancer.
10
Redishred Capital Corp. | 2022 Annual Report
Goals
Make it easy. Stay relevant.
Empower people.
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. Our people drive the achievement of our goals.
The Company has a diverse workforce in all positions and at all levels; we believe
that the best service is provided by a diverse team that has care for our clients and
character to do the right thing when no one is looking.
Redishred Capital Corp. | 2022 Annual Report
11
Annual
Highlights
1. EBITDA is a non-IFRS measure and is defined as earnings before interest, taxes, depreciation and amortization. EBITDA also
excludes government assistance, re-measurements of contingent consideration, foreign exchange gains and losses, and gains
and losses on disposal of tangible assets.
2. OILI/share is a non-IFRS measure and is defined as Operating income (revenues less all operating expenses, including
depreciation on tangible assets), inclusive of interest expense and interest income, on a per share basis.
3. Debt as a percentage of total assets is a capital management measure.
Consolidated Revenue
$57.2M
(58% increase vs 2021)
Operating Income Less Net
Interest Expense per Share -
OILI/Share2
$0.40
(82% increase over 2021)
Trees Saved by PROSHRED®
~895,000
(Trees saved in 2022)
Consolidated EBITDA1 Margin
27%
(200 bps increase vs 2021)
Total Fair Value of Four
Acquisitions Completed
$13.8M
(Includes PROSHRED® Philadelphia)
Debt as a Percentage of Total
Assets3
52%
Letter to
Shareholders
Redishred Capital Corp. | 2022 Annual Report
13
Letter to
Shareholders
Dear Shareholders:
I am pleased to write the annual letter to our shareholders to report on Redishred’s financial
and operational performance and to comment on our goals and priorities for 2023.
2022 was another year of external challenges, starting with the Omicron variant of
COVID-19 that impacted many of our employees, followed by the invasion of Ukraine
by Russia that caused diesel fuel prices to skyrocket, the continuing supply chain
issues that impacted the delivery of new trucks and truck parts, and the highest
wage inflation since the early 1980s. All of this was thrown at the Redishred team
in 2022. How did the Redishred team respond? They responded with courage, care
and character, and were agile, flexible, and creative. Our over 250 employees found
ways to route more efficiently, extend the life of our trucks, and deliver excellent client
service, leading to Redishred’s best year ever.
Redishred’s financial and operating results for 2022 were very strong. We achieved
revenues of $57.2M, up 58% versus 2021. We attained 27% EBITDA margins,
a 200-basis point improvement over 2021, and OILI/Share of 40 cents, an 82%
increase versus 2021. Redishred’s management team was successful in meeting the
strategic targets for 2022.
Redishred’s management team remains firmly committed to maximizing value and
long-term profitability by concentrating on three key areas:
We have seen positive results from this focus, with all three of these focus areas
contributing to our earnings growth in 2022.
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.
14
Redishred Capital Corp. | 2022 Annual Report
Strong Growth from our Same Location Operations
Another Strong Acquisition Year
Franchise Support
Increasing earnings from our existing locations is a key component to our strategy. We
have invested in 2022 on initiatives to further drive revenues and control costs that will
drive continued operating leverage. Many of the initiatives that commenced in 2022
will continue into 2023, including: (1) finishing the deployment of our 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 marketing
and sales resources, both people and technology tools (including SalesForce CRM)
with a view to acquiring new clients and enhancing route density.
2022 was another strong year on the acquisition front, as Redishred acquired four
shredding operations during the year, valued at $13.8 million. Key acquisitions for us
included:
Chicago, IL: We acquired the business assets of MDD, a long standing shredding
independent just south of our Chicago location. This operation was a good tuck-in,
with over 60% in recurring revenue.
New Jersey and Florida: We acquired the assets of SDD, a long standing shredding
independent. The operation had clients in numerous PROSHRED® markets including
New Jersey and Southeast Florida, where Redishred has existing corporate locations.
New Jersey: We acquired the assets of Tech Shredders, a hard drive destruction
independent. The operation had clients in the New Jersey market, where Redishred
has a large corporate location. This acquisition expanded our Hard Drive destruction
capabilities in both the New Jersey and New York City markets.
Philadelphia, PA: We acquired the business from our long standing PROSHRED®
franchisee in the market. Philadelphia is one of the largest metropolitan markets
in the United States, and with this acquisition completed, we now have corporate
operations from Boston, MA, through Connecticut, New York, North New Jersey and
into Philadelphia.
All of the above acquisitions were conducted by utilizing cash on hand, earnouts and
appropriate bank financing.
Redishred’s heritage includes a strong performing franchise system. During 2022, the
PROSHRED® system saw same location system sales grow by 20% versus 2021.
This strong growth was driven by continued investment by the system in marketing
and sales resources, trucks and technology. The Redishred franchise support team
continues to evolve and deploy new programs and tools.
Redishred Capital Corp. | 2022 Annual Report
15
Care for our Environment and the Communities we Serve
Environment:
Redishred and its brands have 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 information’s life cycle, it is securely destroyed, 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 2022 we
saved approximately 895,000 trees by recycling the shredded paper we collect from
our clients. This effort keeps 895,000 trees in the eco-system to absorb CO2 and
deliver oxygen to the planet. This also prevents 895,000 trees from being used in the
pulping process; this process has heavy energy requirements.
2. During 2022, Redishred purchased fourteen 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.
3. Electronic and Media Recycling. Through our Responsible Recycling (R2) certified
partners, Redishred recycles and promotes the reuse of electronic devices. Reusing
electronics conserves our resources and decreases air/water pollution, as well as
greenhouse gas emissions that are caused by manufacturing virgin materials.
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 $100 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 10th 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.
16
Redishred Capital Corp. | 2022 Annual Report
Looking Forward to 2023
We are optimistic that the worst of the COVID-19 global pandemic and the collateral
economic damage it caused is in the past and we are very hopeful of 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 increase in clients served on any given route drives stronger route
density and enhanced gross profit margins and operating income.
We also look forward to conducting accretive acquisitions, Redishred has the
capability to continue the acquisition program that it commenced in earnest in 2018.
Redishred’s annual general meeting of shareholders will be held on May 25, 2023, at
1:00 PM Atlantic time at the Westin Nova Scotian, 1181 Hollis Street, Halifax, Nova
Scotia. We look forward to supporting the great city of Halifax and e-connecting with
our many shareholders there. Redishred will also be holding an investor reception
for our many Toronto, Ontario based shareholders and capital markets partners on
May 29, 2023, at 5:00 PM 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
Financial &
Operational
Highlights
18
Redishred Capital Corp. | 2022 Annual Report
Financial &
Operational
Highlights
Values in CAD and 000's, except per unit and percentage amounts.
As at and for the years ended
2022
2021
2020
Operations (Excludes COVID 19 Government Subsidies unless otherwise stated)
Revenue
57,226
$
36,199
$
25,437
$
EBITDA
15,318
$
9,191
$
5,938
$
Operating income less net interest expense ("OILI")
7,242
$
3,463
$
1,323
$
Cash provided from operations1
11,587
$
8,403
$
6,976
$
OILI/Share (Weighted average outstanding)
0.40
$
0.22
$
0.09
$
Financial Position
Total assets
97,811
$
79,334
$
58,688
$
Total liabilities
50,530
$
38,974
$
28,280
$
Total equity
47,281
$
40,360
$
30,408
$
Debt to total assets percentage
52%
49%
48%
Normalized Fixed Charge Coverage Ratio2
1.82
1.57
1.19
Normalized Total Funded Debt to EBITDA ratio3
2.11
2.39
2.95
Location Information
Corporate locations
15
14
11
Franchised locations
15
16
19
US Markets serviced
42
42
40
1. Includes COVID-19 related government subsidies in 2020 and 2021
2. A common measure of credit risk used by lenders, this measure considers the Redishred’s ability to pay both interest and principal on outstanding debt and is calculated
as defined in the Company’s credit facility agreement with one of its lenders.
3. This measures the Company’s leverage and its ability to pay all outstanding debt and assesses the Company’s financial health and liquidity position. This ratio is
calculated as defined in Redishred’s credit facility agreement with one of its lenders.
Redishred Capital Corp. | 2022 Annual Report
19
System Sales (USD)
In Millions
$3
$3
$4
$4
$5
$6
$8
$6
$5
$8
$16
$12
$14
$17
$21
$25
$28
$32
$38
$35
$43
$56
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
-$0.17
-$0.06
$0.08
$0.16
$0.18
$0.17
$0.19
$0.13
$0.09
$0.22
$0.40
$0.12
$0.09
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
OILI/Share Fully Diluted (CAD)
OILI/Share
CV19 Subsidy
20
Redishred Capital Corp. | 2022 Annual Report
Corporate Location Operating Income (CAD)
In Millions
Debt as a % of Total Asset
106%
106%
104%
95%
94%
42%
29%
44%
48%
49%
52%
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
$0
$1
$2
$2
$2
$3
$3
$4
$4
$8
$14
$2
$1
F12
F13
F14
F15
F16
F17
F18
F19
F20
F21
F22
CV19 Subsidy
Redishred Capital Corp. | 2022 Annual Report
21
Growth of Same Location Shredding System Sales:
Strategic
Targets
2022 Target
Same location shredding system sales growth of 10% to USD$45M.
2022 Performance
The target was exceeded. Same location shredding system sales
grew by 18% to USD$49M.
2023 Target
Same Location shredding system growth to USD$57M.
Longer-term Target
Growth averaging over 8% per year.
2022 Target
Growth of 8% in same location EBITDA to $13.4M and growth of 11%
in same location operating income to $8.8M.
2022 Performance
The target was exceeded. Same location EBITDA grew 39%
to $17.2M, and same location operating income grew 57% to
$12.4M.
2023 Target
Growth in same location EBITDA to $22.1M and growth in same
location operating income to $15.6M.
Longer-term Target
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.
Growth in Same Location EBITDA and Operating Income
(Corporate Locations):
22
Redishred Capital Corp. | 2022 Annual Report
2022 Target
Add USD$4M to USD$5M in revenue by way of accretive acquisitions.
2022 Performance
The target was exceeded. The Company completed the acquisition
of the assets of PROSHRED® Philadelphia, Tech Shredders LLC
(“Tech Shredders”), Mobile Document Destruction (“MDD”) and
Safeguard Document Destruction (“SDD”) in 2022. In prior year 2021,
these companies, in aggregate, generated revenue of USD$5.3M.
2023 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.
Expand by way of Accretive Acquisitions:
2022 Target
G&A costs at 12% of total revenue.
2022 Performance
This target was met. G&A costs were 12% of total revenue.
2023 Target
G&A costs at 12% of total revenue.
Longer-term Target
G&A costs at 10% of total revenue.
Improve Operating Leverage(1):
(1) G&A costs as a percentage of revenue target does not include Growth Fund revenue and costs.
2022 Target
EBITDA margin of at least 30% and operating income margin of at
least 20% before transition and acquisition costs.
2022 Performance
The target was exceeded. The EBITDA and operating income
margins from acquired operations were 36% and 22%, respectively.
2023 Target
EBITDA margin of at least 35% and operating income margin of at
least 20% before transition and acquisition costs.
Longer-term Target
Maintain EBITDA and operating income margins of at least 35%
and 20%, respectively.
EBITDA and Operating Income from acquired Corporate
Locations:
Our Secure
Processes
24
Redishred Capital Corp. | 2022 Annual Report
Redishred, throught 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. The process is entirely hands-free
and automated by our state-of-the-art shredding truck. We are often asked, how it
works and so the following outlines our process.
Destroying
Information
at Your Door
Place your confidential documents in
our locked PROSHRED® consoles, bins
or containers.
Our Customer Service Professional
(CSP) will arrive at client site at a
scheduled date and time.
The CSP will empty the documents into
a PROSHRED® security bin.
The bin is lifted by the truck’s automated
system and you can witness the whole
process in action.
The CSP will bring the locked bin to our
on-site mobile shredding truck.
All documents are fully shredded at
your door (crosscut) and you receive a
certifcate of destruction at the end.
1
3
5
2
4
6
Redishred Capital Corp. | 2022 Annual Report
25
Through its brand PROSCAN®, Redishred helps organizations digitize, retrieve, and
protect their physical documents, and as a result they can optimize space, time, costs,
and increase productivity. We pride ourselves on conducting strict quality control
at each stage in the document scanning and document management process. See
below how our process work to ensure a superior final product and customer service.
Scanning &
Information
Management
26
Redishred Capital Corp. | 2022 Annual Report
Redishred, through its brand Secure e-Cycle, offers high-standard electronic recycling
services with a decade of experience perfecting the e-waste process to ensure your
data is protected while responsibly recycling your IT and electronic assets.
Securely
Recycling
Your e-Waste
The equipment is registered in our
system. Unique serial numbers and
essential information associated with
each asset are scanned and recorded in
our proprietary database.
Our
technicians
will
perform
an
equipment
diagnosis
to
evaluate,
update and refurbish damaged or
outdated equipment. At this step, we
categorize it for “recycle” or “remarket”.
The data contained on hard drives
and electronics is eliminated via data
sanitization or physical destruction. All
company asset tags are removed from
the equipments at this phase.
Secure e-Cycle offers full transparency in
about the e-waste recycling process. After
the service is complete, customers will
receive a “Certificate of Destruction” and
“Continuity of Ownership” specifying the
disposition of each device handled and the
sale of all remarketed electronics.
Assets categorized as “remarket”, will
be marketed and sold. Equipment that
doesn’t qualify for resale are destroyed
and recycled usign an EPA-compliant
process.
1
3
5
2
4
Our Team
“The strength of the team is each individual member.
The strength of each member is the team.”
- Phil Jackson
Former Head Coach of the
Chicago Bulls (1989 to 1998)
Information
Redishred Capital Corp. | 2022 Annual Report
29
Information
Redishred Capital Corp.
Home Office & National Support Center
PROSHRED® Franchising Corp.
Franchise Support Center
Redishred Acquisitions Inc. | US Offices
Toronto, Ontario
2233 Argentia Rd, Suite 202, East Tower
Mississauga, Ontario, Canada, L5N 2X7
Syracuse, New York
6067 Corporate Drive East
Syracuse, NY 13057
NORTH EAST
Northern New Jersey, New Jersey
Primary Office
152 Eagle Rock
Avenue Roseland, NJ 07068
Albany, New York
164 Montgomery Street
Albany, NY 12207
Buffalo, New York
5384 Ontario Avenue
Hamburg, NY 14075
New Haven, Connecticut
801 North Main Street Ext.
Wallingford, CT 06492
New York City, New York
5 West Main Street Suite #104
Elmsford, NY 10523
Philadelphia, Pennsylvania
25 Industrial Blvd
Paoli, PA 19301
Rochester, New York
75 South Clinton Ave., Suite 510
Rochester, NY 14604
Springfield, Massachusetts
75 Post Office Park
Wilbraham, MA 01095
Syracuse, New York
6067 Corporate Drive East
Syracuse, NY 13057
Watertown, New York
118 N Massey St.
Watertown, NY 13601
SOUTH EAST
Atlanta, Georgia
Primary Office
5980 Unity Drive, Suite D
Norcross, GA 30071
Charlotte, North Carolina
803 Pressley Rd - Suite 108
Charlotte, NC 28217
Fort Lauderdale, Florida
5217 NW 35th Avenue
Fort Lauderdale, FL 33309
Miami, Florida
201 South Biscayne Blvd Suite 2800
Miami, FL 33131
Norfolk, Virginia
780 Lynnhaven Parkway, suite 400
Virginia Beach, VA 23452
Northern Virginia, Virginia
44845 Falcon Pl #104
Sterling, VA 20166
Richmond, Virginia
4730 Wistar Rd
Richmond, VA 23228
MIDWEST
Chicago, Illinois
Primary Office
7700 Graphics Drive
Tinley Park, IL 60477
Kansas City, Kansas
3052 S 24th Street
Kansas City, KC 66106
Milwaukee, Wisconsin
1425 Commerce Ave – Unit C
Brookfield, WI 53045
TSXV: KUT