Alaris Equity Partners Income Trust Trust Units Reg S 3c7 · TSX:AD.UN
Alaris Equity Partners Income Trust Trust Units Reg S 3c7 — Alaris Royalty — Investor Presentation (May 2016)
31 slides from Alaris Equity Partners Income Trust Trust Units Reg S 3c7's investor presentation, May 2016
Slide 1: Corporate Presentation May 2016
CORPORATE PRESENTATION MAY 2016
Slide 2: Non-IFRS Measures
NON-IFRS MEASURES The terms EBITDA, Normalized EBITDA and Payout Ratio are financial measures used in this presentation hat are not standard measures under International Financial Reporting Standards (“IFRS”). The Corporation’s method of calculating EBITDA, Normalized EBITDA and Payout Ratio may dif
Slide 3: Forward Looking Statements
FORWARD LOOKING STATEMENTS Alaris’ communications often include written or oral statements which contain forward-looking information. Statements other than statements of historical fact contained in this corporate presentation may be forward-looking statements under applicable securities legislation
Slide 4: U.S. Investor Disclosure
U.S. INVESTOR DISCLOSURE The securities of Alaris Royalty Corp. have not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the “US Investment Company Act”) and Alaris Royalty Corp. is relying on the exemption from registration under the US Investment Company
Slide 5: Market Profile
MARKET PROFILE Exchange Listing Toronto Stock Exchange (TSX) Symbol TSX: AD Share Price $29.15 52 week range: $34.47 (May 14, 2015) to $21.00 (January 20,2016) Total Shares Outstanding 36,302,736 basic ~38,542,927 fully diluted Market Capitalization ~$1.0 billion Annualized Dividend $1.62 per share
Slide 6: Defining the Corporation
DEFINING THE CORPORATION Alaris’ long term goal is to create the optimal dividend stream available for investors. Alaris provides capital to private businesses using an innovative structure that fills a niche in the private capital markets. 6
Slide 7: Benefits to Business Owners
BENEFITS TO BUSINESS OWNERS → Allows the entrepreneur to continue to run their successful businesses with Non-Voting minimal interference by Alaris Preferred Equity → Alaris does not require an exit Long-Term Capital → This allows the entrepreneur to focus on long-term goals rather than short-term P
Slide 8: Five Pillars to the Optimal Dividend Stream
FIVE PILLARS TO THE OPTIMAL DIVIDEND STREAM Alaris’ preferred distributions are: • based on top-line performance and paid in priority to other equity Low Volatility • covered by a cash-flow buffer and protective covenants of Cash Flows • paid monthly providing monthly cash returns vs returns on an e
Slide 9: Alaris' Ideal Partner Criteria
ALARIS’ IDEAL PARTNER CRITERIA → Required services or products in mature industries Old Economy → Businesses with a risk of obsolescence or a declining asset base are not a good fit Business Track Record of Free → Alaris looks at historical free cash flow to predict sustainability of its distributio
Slide 10: Partner Revenue Summary
PARTNER REVENUE SUMMARY Annualized Distribution • 16 current Partners generating >$100(1) million in annualized revenue Partner (CAD$000s) % of total Sequel $ 15,418 15.0% • Only three Partners account for >10% of total revenue DNT 13,715 13.3% Federal Resources 10,397 10.1% • Revenue from Partners
Slide 11: Revenue Diversification
REVENUE DIVERSIFICATION • Alaris generates the 69% of its revenue from U.S. based Partners • Of the 31% of Canadian revenue, only 6% is from Partners who generate the majority of their revenue in Western Canada (LMS/End of the Roll) • Revenue from U.S. Partners is spread among many US states • Of no
Slide 12: Recent Financial Results
RECENT FINANCIAL RESULTS Three months ended March 31, 2016 vs same period 2015: • 29.2% increase in revenue from Partners to $24.6 million • 23.3% increase in Normalized EBITDA to $19.8 million • 21.9% increase in dividends paid to $14.7 million Per Share Highlights: • 15.3% increase in revenue from
Slide 13: Historic Financial Summary
HISTORIC FINANCIAL SUMMARY Current "run rate" (1) (millions CAD$) 2011A 2012A 2013A 2014A 2015A Revenue $ 22.10 $ 32.10 $ 52.70 $ 69.30 $ 82.80 $ 102.95 % change 45% 64% 31% 19% 24% SG&A $ 3.40 $ 4.10 $ 5.00 $ 7.70 $ 7.90 $ 8.00 Normalized EBITDA $ 18.70 $ 26.10 $ 43.90 $ 57.40 $ 69.70 $ 94.95 % cha
Slide 14: Track Record of Per Share Growth
$1.27 $1.27 $1.53 $1.97 Partner revenue $2.28 $2.44 $0.97 $0.96 2010 $1.25 $1.65 2011 $1.87 Normalized EBITDA $2.05 2012 $0.94 2013 $0.86 2014 $1.26 $1.64 2015 $1.63 Net cash from ops $1.65 $0.85 $1.00 $1.18 TRACK RECORD OF PER SHARE GROWTH $1.36 Dividend $1.48 $1.57 14
Slide 15: Investment History
INVESTMENT HISTORY • Since 2004, management of Alaris has (as of May 1, 2016): • Invested over $870 million • Collected over $330 million in distributions from Partners and ~$210 million in redemptions • In addition to regular distributions received, Alaris has realized net gains of over $30 million
Slide 16: Sustainable - Increasing Dividend
SUSTAINABLE - INCREASING DIVIDEND 16
Slide 17: New Royalty Revenue Scorecard (Canadian deals)
SCORECARD – ACCRETION VIA NEW REVENUE STREAMS ALARIS SHARE PRICE (based on new Canadian deals) $ 35.00 $ 33.00 $ 31.00 $ 29.00 $ 27.00 $ 25.00 $10MM $ 2.26 $ 2.25 $ 2.24 $ 2.23 $ 2.23 $ 2.21 NEW ROYALTY $8MM $ 2.23 $ 2.22 $ 2.22 $ 2.21 $ 2.20 $ 2.19 REVENUE $6MM $ 2.20 $ 2.19 $ 2.19 $ 2.18 $ 2.18 $
Slide 18: New Royalty Revenue Scorecard (U.S. deals)
SCORECARD – ACCRETION VIA NEW REVENUE STREAMS ALARIS SHARE PRICE (based on new U.S. deals) $ 35.00 $ 33.00 $ 31.00 $ 29.00 $ 27.00 $ 25.00 $10MM $ 2.21 $ 2.20 $ 2.19 $ 2.18 $ 2.17 $ 2.16 NEW ROYALTY $8MM $ 2.19 $ 2.18 $ 2.17 $ 2.17 $ 2.16 $ 2.15 REVENUE $6MM $ 2.17 $ 2.16 $ 2.16 $ 2.15 $ 2.15 $ 2.14
Slide 19: Summary
SUMMARY • Alaris continues to provide capital to a niche segment of the private capital markets • 2015 capital deployed of $178 million was most capital deployed to date • Continue to focus on the long-term per share growth of the Corporation by making accretive investments into profitable, well man
Slide 20: Corporate Information
CORPORATE INFORMATION Management Team Steve King, CFA President and CEO AUDITORS KPMG, LLP Darren Driscoll, CA Chief Financial Officer Rachel Colabella, LLB Chief Legal Officer BANKING Bank of Montreal SYNDICATE HSBC Bank Canada Curtis Krawetz, BCOMM VP Investments and IR Mike Ervin, LLB VP Legal AN
Slide 21: Appendices
Appendices
Slide 22: Appendix A: Private Company Partners
APPENDIX A: PRIVATE COMPANY PARTNERS AGILITY DNT CONSTRUCTION END OF THE ROLL FEDERAL RESOURCES KIMCO Industry Healthcare: Industrials: Consumer Industrials: Industrials: Physiotherapy Services Civil Construction Discretionary: Distributor Commercial Janitorial Services Discount Flooring and Hospita
Slide 23: Appendix A: Private Company Partners
APPENDIX A: PRIVATE COMPANY PARTNERS PG GROWTH KMH LABSTAT LMS MID-ATLANTIC PARTNERS Industry Healthcare: Industrials: Industrials and Healthcare: Consumer Cardiovascular Laboratory Testing Materials: Skilled Nursing Facilities discretionary: Diagnostic Imaging Rebar Fabrication & Health and Fitness
Slide 24: Appendix A: Private Company Partners
APPENDIX A: PRIVATE COMPANY PARTNERS PROVIDENCE SANDBOX SCR SEQUEL SOLOWAVE Industry Industrials: Business Services: Industrials: Healthcare: Consumer Apparel Design, Full Service Marketing Mining Services Behavioral and Mental Discretionary: Engineering and and Advertising Agency Health Services Ou
Slide 25: Appendix A: Private Company Partners
APPENDIX A: PRIVATE COMPANY PARTNERS SMI Industry Industrials: Engineering and Construction Services Total Alaris Capital $40,500 Injected ($000’s) (3 tranches) Use of Proceeds Recapitalization Annualized Distribution $6,768 to Alaris ($000’s) (1) Annual Reset Metric Percentage change in net revenue
Slide 26: Appendix B: Contribution Summary
APPENDIX B: CONTRIBUTION SUMMARY Contributed in excess of CAD$870 million of capital in 47 tranches Capital Capital Canadian Partner Contributions Tranches Contributed US Partner Contributions Tranches Contributed (CAD $000's) (USD $000's) LMS 4 $ 59,803 Agility Health 3 $ 20,100 End of the Roll 1 7
Slide 27: Appendix C: Partner Redemption Summary
APPENDIX C: PARTNER REDEMPTION SUMMARY Repurchases from Partners totalling CAD$209 million to date Repurchase Canadian Partner Repurchases Amount (CAD $000's) (1) LifeMark $ 123,400 (1) MediChair 10,000 (2) Killick 44,300 Total Candian Repurchases $ 177,700 Repurchase US Partner Repurchases Amount (
Slide 28: Appendix D: Offering History
APPENDIX D: OFFERING HISTORY The following table summaries the equity offerings Alaris has completed since its public listing in November 2008. History of Equity Offerings Shares Gross Price on Date of Issued Proceeds Date Closing Announcement Issue Price (000's) ($000's) Closed Date Days to Close 3
Slide 29: Appendix E: Current Private Company Partners
APPENDIX E: CURRENT PRIVATE COMPANY PARTNERS Partner since 2007 Partner since 2005 Partner since May 2010 Partner since Dec 2010 Partner since June 2012 $59.8 million $7.2 million $54.8 million $42.5 million $47.2 million 4 tranches 5 tranches 2 tranches 2 tranches 18+ Years in Business 22+ Years in
Slide 30: Appendix E: Current Private Company Partners
APPENDIX E: CURRENT PRIVATE COMPANY PARTNERS Partner since March 2016 US$30.0 million 20+ years in business Full Service Provider of Design, Engineering and Sourcing Services to Apparel Industry 30
Slide 31: Contact Information
CONTACT INFORMATION For more information Contact: Steve King, CFA President and CEO 403-221-7300 sking@alarisroyalty.com Darren Driscoll, CA CFO 403-221-7303 ddriscoll@alarisroyalty.com Curtis Krawetz Vice President, Investments and Investor Relations 403-221-7305 ckrawetz@alarisroyalty.com www.alar