K-Bro Linen Inc. ($KBL)

Ladies and gentlemen, my name is Mike Percy, and I am a Director of K-Bro Linen. It gives me great pleasure to welcome you today to our 2026 Annual Meeting of Shareholders. Joining me and presenting today are Linda McCurdy, President and CEO; and Kristie Plaquin, CFO. We are holding this meeting today in a virtual-only format, which will be conducted via live audio and slide show webcast. Shareholders will have an equal opportunity to participate at the meeting online and ask questions live. This format was chosen with a view to maximizing shareholder attendance and making the meeting more accessible to all shareholders regardless of their geographic location. On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance of today's meeting. If you have logged into this meeting with a control number or user name provided to you by TSX Trust, please ensure that to vote on the resolutions put forth before the meeting today. As this meeting is being held virtually via live audio webcast, we think it is necessary to set out a few rules for the orderly conduct of this meeting. First, questions in respect to a motion can be submitted by a registered shareholder or duly appointed proxy holder using the question module of the virtual platform. Two, when asking a question, please indicate your name and which entity you represent, if any. Three, questions will be read aloud by the Secretary and addressed during the question period at the end of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. Four, for the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all such business items. Only registered shareholders and duly appointed proxy holders of the corporation are permitted to participate in the voting. Five, when you are asked to vote, you will receive a message on the virtual interface requesting you to register your votes. You will have only a certain amount of time to do so when the polls open. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move and second all motions. Following the formal meeting, Linda McCurdy, President and CEO of the Corporation; and Kristie Plaquin, CFO of the Corporation, will give a short presentation. I will now call to order the Annual General Meeting of the corporation's shareholders. With the consent of the meeting, I appoint Kristie Plaquin, the corporation's Chief Financial Officer as Secretary of the meeting. With the consent of the meeting, Kristine Calesso from TSX Trust Company will act as a scrutineer to report on the number of common shares at this meeting and to tabulate the votes on any ballot taken at this meeting and to report thereon to the chairperson of the meeting. Ms. Plaquin, can you please confirm the presence of a quorum?

Mr. Chair, I've been advised by the scrutineers that there are present by proxy a sufficient number of persons holding a sufficient number of shares entitled to vote at the meeting to constitute a quorum. As there is a quorum present, this meeting is regularly called and properly constituted the transaction of business.

Thank you, Ms. Plaquin. I hereby declare that this meeting has been duly convened and properly constituted to transact the business for which it has been called. Accordingly, unless there is an objection, I will dispense with the reading of the notice of meeting. I direct that a copy of the notice with proof of mailing be kept by the Secretary with the minutes of the meeting. The purposes of today's meetings are set out in the management information circular dated April 7, 2026, copies of which were mailed to shareholders together with the notice of the meeting and the form of proxy. Copies of the management information circular and other meeting materials are available on the corporation's website and under the corporation's profile on the SEDAR website. Voting on the items of business to come before today's meeting is being conducted by poll via a single electronic ballot that is now available on the web portal. Only registered shareholders and duly appointed proxy holders are able to vote on vote or ask questions. Voting can only be done through the virtual voting platform on the webcast. If you are a registered shareholder or proxy holder and wish to vote, click the voting icon at the top of the webcast page. Voting can be completed at any time from now until the polls are closed at the end of the formal business of the meeting. If you have already voted in advance of the meeting and do not wish to change your vote, you do not need to vote again during the meeting. The polls are now open. Those who have not yet voted, we encourage you to vote now. Questions can only be submitted through the webcast in -- if your question relates to a specific motion, please start your question by identifying the motion. We will respond to questions related to specific motions before the closing of the polls and we'll save all other questions for the general question-and-answer period at the end of the presentation of the corporation following the formal portion of the meeting. We will receive the questions and read them out in order for everyone to be aware of the question being addressed. If you have a number of questions that are same or very similar, we will consolidate the questions. We will endeavor to address all general questions. However, please note that due to time constraints, we may not be able to do so. If you have questions, we encourage you to submit them now. Questions can be submitted throughout the meeting. Finally, we'd like to remind you that our answers to your questions and our presentation may contain forward-looking information. By its nature, this information contains forecasts, assumptions and expectations about future outcomes, which are subject to the risks and uncertainties discussed more fully in our public disclosure filings. We will now go through each of the items on the agenda in turn. As noted earlier, to expedite the formal part of the meeting, I will move all motions and no such motion will need to be seconded. I now declare that this meeting is regularly called and properly constituted for the transaction of business. We now move to the formal part of today's agenda. As I mentioned earlier, the polls are open for voting on all matters of business. The first item of business is the tabling of the annual consolidated financial statements of K-Bro Linen as of December 31, 2025, and for the year then ended, together with the reports therein on management and the auditors of the company. A copy of these documents was made available to all shareholders of the corporation, along with the corporation's notice of meeting and the information circular dated April 7, 2026. Additional copies are available for anybody wishing to receive one. Unless there is an objection, I will dispense with the reading of the auditor's report. The annual report will be tabled at this time, but I would ask that any questions you may have arising from the annual report or financial statements be raised later when shareholder questions are entertained. I will entertain questions with respect to the financial statements of the corporation in general -- the general question period. We now move to the next point on today's agenda. The next matter to be acted upon is the election of 5 individuals to the Board of Directors. As per the management information circular, Mr. Matthew Hills, Mr. Steven Matyas, Ms. Rona Ambrose, Ms. Linda McCurdy and Ms. Elise Rees have been nominated as directors for the ensuing year or until their successors are elected or appointed. Each of the persons nominated has confirmed that he or she is prepared to serve as director. Each of them qualifies as a director under the provisions of the Business Corporations Act of Alberta. The motion to elect the 5 nominees is now on the floor. The act requires that the Board of Directors be elected. Proxies have been solicited for each of the 5 proposed qualified persons listed in the management information circular. The form of proxy for voting on the election of directors sets out each proposed nominee separately and allows shareholders to vote for each director individually. Is there any discussion on the motion or additional nominations? Thank you. As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic ballot. We will, therefore, continue with the next item of business, which is the appointment of the corporation's auditors, and you will be prompted to vote on the election of each proposed director after the presentation of all business items for this meeting unless there are any questions or discussions. I will move to the next item of business. The next item of business is the reappointment of PricewaterhouseCoopers LLP chartered accountants as the auditors of the corporation for the ensuing year and to authorize the directors of the corporation to fix the remuneration of the auditors. I move and second that PricewaterhouseCoopers LLP be appointed auditors of the corporation until the next Annual Meeting of Shareholders and that the Board of Directors be authorized to fix their remuneration. The motion is now on the floor. You will be prompted to vote on the reappointment of the auditors after the presentation of all business items for the meeting. Unless there are any questions or discussions, I will move to the next item of business. As previously mentioned, voting today will be conducted by a single electronic ballot. You will now be prompted to register your vote in respect of today's business items for the meeting. Please register your votes by accessing the voting page when prompted and pressing on the for or withhold buttons next to the name of each proposed director and next to the resolution with respect to the reappointment of PricewaterhouseCoopers LLP as the corporation's auditors. Once the electronic balloting closes, the voting page will disappear and your votes will automatically be submitted. We will now take a short pause to answer any questions that have been submitted and to permit any registered shareholders or duly appointed proxy holders who has not already done so to record their votes on the motions before the meeting. Having received no questions, I will close the poll in 30 seconds. [Voting]

The polls are now closed. I have now received the preliminary scrutineers' report. With respect to the election of the directors, I am advised by the scrutineers that each of the directors, the proposed nominees have been duly elected. With respect to the resolutions to appoint the auditors, I am advised by the scrutineers that this resolution has been duly carried. The scrutineer will prepare the scrutineer's report following the completion of the meeting, and we will announce the results of the meeting in a press release in accordance with the policies of the TSX and file the press release on SEDAR. Is there any other formal business to be properly brought before this meeting? If there is no further business to be brought before the meeting, I move and second that the formal portion of today's meeting be concluded. I will now call upon Linda McCurdy, President and CEO of the corporation; and Kristie Plaquin, CFO of the corporation, to lead a discussion on the corporation and a review of our 2025 annual and first quarter 2026 results.

Thank you, Mr. Chair, and thank you, everyone, for joining us for our 2026 AGM. Presenting today are myself, Linda McCurdy, President and CEO; and Kristie Plaquin, Chief Financial Officer. Before we begin, we'd like to remind everyone that this webcast contains forward-looking information, and we would draw your attention to Page 2 of the investor presentation for additional details on forward-looking statements. Just for a bit of background, K-Bro is the largest health care and hospitality laundry and linen processor in Canada. And with the acquisitions of Fishers, Shortridge and most recently, Stellar Mayan, we are one of the top 3 laundry platforms in the U.K. K-Bro started over 70 years ago in Edmonton as a family business and was subsequently sold to 2 different PE firms in the '80s and '90s who owned them until the company went public in 2005. We are an essential service provider to top-tier customers with a highly diversified customer base with a proven growth strategy that has led to strong, stable cash flow generation. We operate 25 facilities and 2 distribution centers, 11 facilities and 1 distribution center in Canada and 14 facilities in the U.K. It is this network of strategically positioned modern facilities that enables us to provide the critical services required by our health care and hospitality customers. Our ongoing reinvestment in the latest equipment and technologies enables us to provide the highest levels of service and quality to our customers. We have a track record of top line growth and ability to drive profitability through organic growth and acquisitions. With the acquisition of Stellar Mayan in June 2025, we anticipate pro forma revenues in the range of $600 million annually and adjusted EBITDA of just over $100 million. From a mix perspective, we anticipate half of our consolidated revenue and EBITDA to come from each of Canada and the U.K. and a business mix that is more weighted to health care at 60% health care and 40% hospitality. This slide details the circular nature of our essential service business model, which operates 7 days a week, 365 days a year. The pictures you see are from our Edmonton plant, which has become the blueprint for all of our new builds like Regina, Toronto and Vancouver, and we are achieving operating efficiencies from using the latest laundry technology, including a 30% reduction in water, 20% reduction in consumption of natural gas and a 30% gain in productivity. Just to step back and provide you with an overview of our business, it's a simple and easy business to understand from an investor's point of view, yet it is highly specialized, automated and has significant barriers to entry, which puts K-Bro in a strong market position. We purchase linen and manage it on behalf of our health care customers. We collect the soiled linen from our customers and return it to our processing plants 365 days a year. All of our plants follow processing regulations and the highest standards of cleaning. These processing requirements create a barrier to entry for small processors to enter the health care market. The first step in the process is to sort the linen by classification in order to wash it most efficiently and effectively. We wash the linen in tunnel washers, which are roughly 75 feet in length and are highly automated and controlled. After washing and drying the linen, we iron and fold it and then repackage the linen for distribution based on quotas by nursing unit or hotel demands and send it back to our customers 365 days a year. Our strategy remains focused on extending our core services to new regions as well as introducing new related services to existing and new customers. In addition to the services we spoke about on the previous slide, we also provide K-Bro operating room linen services to our major health care customers. Our core services provides reusable operating room linen, including surgical gowns, drapes, towels and in some cases, sterilization of these products prior to delivery to the hospital. Our services include the assembly of operating room packs specifically designed by the customer. For example, an open heart surgery pack may contain surgical gowns, drapes and towels, each in a predetermined quantity and that open heart surgery pack may differ in configuration between hospitals. We see this value-added service as an area for potential growth as more of our clients focus on environmental initiatives and supply chain sustainability. At certain locations, we also sterilize our operating room linen packs as well as provide other supplementary services such as on-site services, linen rental and many others as detailed on this slide. On this slide, you can see that both Canada and the U.K. are large markets with significant organic and acquisition growth opportunities in both the health care and hospitality spaces. In terms of the Canadian market, we estimate it to be about $725 million. We have approximately 35% of the market. Other private sector competitors have around 30% of the market and 35% remains in-sourced, which continues to represent opportunities for further growth. In the U.K., we estimate the size of the market to be approximately $1.6 billion. And with the acquisition of Stellar Mayan, we estimate our share to be roughly 10% of the overall market in the U.K. In terms of our management team, our ability to provide a high-quality linen service program is really only made possible by our senior our seasoned senior management team. And this slide provides a snapshot of our team. I won't go into to the entire detail, but big picture, I've been with the company for more than 28 years. Kristie, our CFO, has been with the company for over 25 years. Sean Curtis, our COO, has been with the company for more than 40 years and has been key to all aspects of business development, plant operations and development of future operating talent. In addition to the senior management team, all of our general managers have extensive experience in the business. Many of our GMs have been with K-Bro for more than 25 years and the combined years of experience in this group is roughly 230 years. Each member of this team is responsible for all elements of their respective business units from revenue growth to bottom line. We have the best operators in the business, and we're very proud of our team. In addition, we have significant breadth at the corporate and planet levels to provide this high-quality service each and every day of the year. Kristie, I'll pass it over to you.

Thanks, Linda. Slide 9 represents a consolidated financial overview of K-Bro. Just a quick note that this reflects our 2025 actual results and includes Stellar Mayan for the period of June 12 to December 31, 2025. Our revenue for 2025 was roughly $507 million, with approximately 55% of our revenue coming from health care and 45% from hospitality. If you look at the right side, in both 2021 and 2020, as a result of the impact of COVID, revenue decreased from historical levels. We finished 2025 with $99 million in adjusted EBITDA. On the left-hand side of the slide, with the exception of 2020 and 2021, which were impacted significantly by COVID, we've seen a steady increase in annual revenue. In 2025, again, we reported consolidated revenue of approximately $507 million, which is more than double compared to the $159 million in 2013. This growth has come through new contract wins, acquisitions and organic growth in existing markets and the acquisition of Fishers in 2017 and the 5 acquisitions we've recently concluded in the last couple of years, being Paranet, Fay, Shortridge, [indiscernible] and Stellar Mayan. In 2025, as we discussed earlier, with the acquisition of Shortridge and Stellar Mayan, we saw an increase in revenue of 35% in 2024. On the right-hand side of the slide, for fiscal 2025, adjusted EBITDA was $99 million. This represents an increase of approximately 37% on a year-over-year basis from fiscal 2024 adjusted EBITDA. This was largely driven by the acquisitions, the elimination of the Canadian carbon tax and more favorable natural gas rates in the U.K. We will not a sharp increase in adjusted EBITDA in both '23 and '24 from 2022 levels. In 2022, we faced significant inflationary pressure and geopolitical instability that had a negative impact on our cost structure, particularly on the utility, labor and distribution front. We were very focused throughout 2022 and into early 2023 on securing price increases from our customers to offset the negative impact of these pressures and have seen the full benefit of this in the second half of '23 and into '24 as we transition back to our historical margin levels. This slide highlights our 2025 and Q1 2026 results. We've already touched on 2025 revenue and EBITDA, but we also saw an increase in adjusted net earnings EPS and distributable cash flow. The increase in debt at December 31, 2025, reflects the acquisition of Stellar Mayan in which funding included the addition of $135 million term loan. For the 3 months ended March 31, 2026, K-Bro Linen's consolidated revenue increased by approximately 53% to $139 million from $91 million in the comparative period of '25. This increase was primarily due to the impact of the corporation's acquisitions of [indiscernible] and Stellar Mayan in Q2 '25. When we look at Q1 '26, we saw a sizable increase in adjusted EBITDA, again, due to the acquisitions we completed as well as the elimination of the Canadian carbon tax. We also saw increases in adjusted net earnings and adjusted EPS. That remained fairly consistent through Q4 2025 and dividends declared remained consistent on a year-over basis. Acquisitions have continued to play a meaningful part of our growth strategy, and we expect this to be the case going forward. We entered the Victoria, Montreal and Quebec City markets through acquisition and in the past 3 years have completed 5 additional acquisitions in various markets. There are 3 in the Canadian marketplace, all of which are in the province of Quebec and in. The 3 Canadian acquisitions closed in March 2023, November '23 and June '24, respectively, for net purchase prices of approximately $12 million each. U.K. acquisition of Shortridge in April '24 for approximately $41 million with a further earn-out of $3.4 million available for meeting certain targets. In 2025, we acquired Stellar Mayan for CAD 195 million. Stellar Mayan is anticipated to generate about CAD 94 million in revenue. Previous to this, at the end of 2017, we acquired Fishers in the U.K. for a net purchase price of about CAD 60 million, which was our entry into the U.K. market. In addition to these acquisitions, we've made additional bolt-on acquisitions in Calgary, Vancouver and Scotland. On Slide 11, you'll note our client base consists of large provincial health authorities, such as Alberta Health Services as well as individually managed major hospitals, such as the hospital in Toronto. We are also privileged to include national hoteliers such as Fairmont Hotels, Four Seasons, Hyatt Hilton, Delta Marriott and the Starwood Group among our clients. In the U.K., we are a key strategic supplier to the national health service through our acquisition of Stellar, and we also service large hotel chains such as Acor, [indiscernible], Hilton and Marriott. We continue to excel at renewing our existing contracts with our valued customers. We have very high retention rates up in the high 90th percentile range and have been servicing some of our major customers for many decades. As an example, we are in our fifth 10-year contract in Alberta. The long-term nature of our contracts helps us establish strong relationships and offer additional services to our customers, which further strengthens our position. On Slide 15, you can see our decade of reinvestment in state-of-the-art facilities has provided us with a network of highly efficient operations that has helped us become the low-cost producer in each of our markets. As you can see in each of our markets, we have excess capacity for growth to pursue new profitable business, maximizing the operating leverage and improving EBITDA margins by utilizing excess capacity. We've guided that our 2026 capital will be in the range of $20 million to $22 million to reflect additional carryforward of previous announced CapEx for Stellar Mayan. In the short to medium term, we'd anticipate annual CapEx requirements for both strategic and maintenance CapEx to be in the range of $15 million to $18 million. Slide 16. Our strategy remains focused on extending our core service to new regions and introduce new related services to existing and new customers. We've been successful in this strategy and have entered several new markets over the past decade. Most recently through our acquisition of Shortridge in April of '24 and Stellar in June of 2025, we've established our national footprint in the U.K. and established our position as a health care provider to the NHS. We've seen increasing demand for our reusable operating room products as health organizations increase their focus on sustainability and work to diversify their supply chain away from disposable products. We expect there to be continuing opportunities of this nature. We've reached the end of our aggressive strategic CapEx spending program to build new facilities and upgrade facilities that allows us to be the most cost-effective processor in our industry and to add millions of dollars of new business through our network of highly efficient plants. We'll also continue to focus on growth through acquisition, and we'll either consolidate the volume into our existing facilities or operate them independently depending on the assets acquired. And finally, we remain deeply committed to playing our role as a good corporate citizen and creating a sustainable future. On Slide 17, this slide speaks to the competitive landscape and trends that we've experienced over the past decades. In addition to K-Bro, the competitive landscape includes independent privately owned facilities, generally owner operators with 1 or 2 facilities, public and private sector central laundries that are off-site and processed for a number of member hospitals or their own hotels, public and private sector on-premise laundries that are located on-site at the hospital or hotel and in limited circumstances in the U.K., publicly traded companies. Over the past decade, we've seen an ongoing shift to outsourcing laundry and linen services. This has been driven by several key factors, including that linen is considered noncore to a hospital's mission of patient care and a hotel's desire to provide an excellent guest experience, significant capital and operating savings can be achieved through outsourcing as large laundry operators are able to achieve economies of scale, a desire to repurpose valuable square footage at both hospitals and hotels that can then be used for revenue-generating opportunities and specialization by experienced operators that use technology to manage linen inventory and report on linen usage, leading to better management of the entire laundry and linen supply chain. In terms of our commitment to ESG, we remain deeply committed to playing our role as a good corporate citizen and creating a sustainable future. In terms of our vision, we are proud of our history of responsible, innovative growth, and we are pleased to announce that we've published our third sustainability report in 2025. We'll continue to keep our focus on what matters, which is to deliver industry-leading service, be a great place to work. We'll continue to support our communities and be a dependable partner. K-Bro's Board oversees our ESG program and the team itself consists of a diverse experienced skill set throughout Canada and the U.K. Our stakeholders set our agenda to ensure we are on track. We collect feedback from employees, customers, investors and regulators. With that feedback, we focus on topics that are most important to everyone. And as a result, our priorities have been grouped into 3 pillars: people, partners and planet. We will work to make a difference by putting people first, by being dependable partners and by embracing environmental stewardship. We'll continue to embrace our ESG journey and advancing our sustainability agenda for the long run. In terms of our outlook, key themes for 2026 will be a continued -- we anticipate seeing a continued positive outlook for the business as both health care and hospitality segments continue to experience steady growth profiles, a strong balance sheet and liquidity position to support growth and our recently announced purchases under the NCIB, and we'll focus on continued integration of the acquisition of Stellar Mayan. Slide 20. In terms of our dividend payout ratio, our ability to maintain our dividends is made possible through increasing market share through new customer contracts. We'll continue to extend our core services to new markets through greenfield activity and targeted acquisitions. We'll introduce new related services, undertake accretive strategic capital expenditures and continue to control costs by entering into fixed supply contracts, particularly for natural gas and electricity where available. We continue to evaluate the payout ratio and dividend policy in the context of the current market environment. In terms of our financial position, for 2025, we continue to have moderately low levels of leverage with a funded debt-to-EBITDA ratio of just over 2.6x and March 31, 2026, of 2.5x. At the close of the Stellar acquisition, we were at approximately 3x. So we've seen a nice progression in debt paydown. Pro forma, we have approximately $70 million in available -- availability under our existing credit facility of $325 million plus a $50 million accordion. We anticipate continuing to generate free cash flow through 2026, and we'll continue to use this cash flow to pay down debt, fund our newly announced NCIB and pursue growth opportunities as they come available. Overall, we're confident in the strength of our business model. I'd like to point out some key investment highlights. We have deep industry experience and a reputation that spans over 50 years. We have long-term relationships with our clients, which are backed by multiyear contracts for large portions of our health care and hospitality volumes. We maintain a conservative financial position and credit profile with significant credit available to manage uncertain times and for various initiatives, including acquisitions. We operate a state-of-the-art processing network in our major health care markets that will enable us to be the low-cost producer and add millions of dollars of additional revenue to profitably grow and increase our margins. I'll now pause and open it up to any questions. I think we see no questions, I'll turn now to back to Linda for closing remarks.

On behalf of the management team and the Board of Directors, I'd like to thank everyone in attendance today. Finally, on behalf of the Board, I'd like to extend our sincere gratitude to Mike Percy for his exceptional leadership, dedication and steady guidance throughout his tenure as Chair. Mike's commitment has left a lasting impact on our organization, strengthening both our governance and our vision for the future. Mike, thank you for your many contributions, and we wish you every success in the next chapter ahead.

Thank you for those very kind words. Since I think we are at the end of the meeting, and I would move a motion to adjourn.