Alaris Equity Partners Income Trust Trust Units Reg S 3c7 · TSX:AD.UN
Alaris Equity Partners Income Trust Trust Units Reg S 3c7 — Alaris Equity Partners Income Trust — Investor Presentation (March 2024)
33 slides from Alaris Equity Partners Income Trust Trust Units Reg S 3c7's investor presentation, March 2024
Slide 1: Investor Presentation March 2024
INVESTOR PRESENTATION MARCH 2024
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This corporate presentation contains forward-looking information and forward-looking statements (collectively, “forward-looking statements”) under applicable securities laws, including any applicable “safe harbor” provisions. Statements other than statements of historical
Slide 3: Forward Looking Statements
FORWARD LOOKING STATEMENTS By their nature, forward-looking statements require Alaris to make assumptions and are subject to inherent risks and uncertainties. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will affect Alaris’ business and th
Slide 4: Forward Looking Statements
FORWARD LOOKING STATEMENTS Readers are cautioned that the assumptions used in the preparation of forward-looking statements, including FOFI, although considered reasonable at the time of preparation, based on information in Alaris’ possession as of the date hereof, may prove to be imprecise. In addi
Slide 5: US Investor Disclosure
US INVESTOR DISCLOSURE The securities of Alaris Equity Partners Income Trust (“Alaris” or the “Trust”) 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 is relying on the exemption from registration under t
Slide 6: Profile
Corporate Summary Revenue (12 months ended December 31, 2023) $163 million Quarterly Distribution $0.34 per unit ($1.36 annually) Number of Employees 20 Market Summary Ticker Symbol – Trust Units TSX: AD.UN Average Daily Volume (3-Month) 52,000 PROFILE Units Outstanding: 45,498,191 basic Unit Price:
Slide 7: Defining the Business
DEFINING THE BUSINESS Alaris’ long term goal is to create the optimal income stream available for investors Alaris provides capital to private businesses using an innovative structure that fills a niche in the private capital markets 7
Slide 8: Access to Private Equity Market
ACCESS TO PRIVATE EQUITY MARKET • The potential for competitive returns by accessing private companies has been traditionally reserved for institutional investors and high-net-worth individuals. • In 1996, there were more than 8,000 public companies. Today there are approximately 50% less, where onl
Slide 9: Investment Highlights
INVESTMENT HIGHLIGHTS The best companies in the world are never for sale. Alaris’ unique investment structure generates attractive returns from a universe of businesses that would be otherwise unavailable to traditional equity investors Unique investment strategy combines equity like returns with 1
Slide 10: Alaris Represents a Unique Asset Class
ALARIS REPRESENTS A UNIQUE ASSET CLASS Attractive initial cash yields with participation in growth through an annual adjustment Equity-Like Returns Adjustment tied to top-line growth in the underlying business Exposure to market-leading businesses that are not otherwise accessible to tradition
Slide 11: Benefits to Unitholders
BENEFITS TO UNITHOLDERS Five Pillars to the Optimal Income Stream Low Volatility Visibility Diversification Liquidity Growth of Cash Flow of Cash Flows of Revenue Streams for Unitholders in Cash Flow per Unit Alaris’ preferred Alaris adjusts its Currently have 20 Average daily Historic overa
Slide 12: Benefits to Business Owners
BENEFITS TO BUSINESS OWNERS Non-Voting Allows the entrepreneur to continue to run their successful Preferred Equity businesses with minimal interference by Alaris. Long-Term Alaris allows the shareholder to set the exit, which allows the Capital Partner entrepreneur to focus on their long-term goals
Slide 13: Benefits to Business Owners: Alaris versus other sources of capital
BENEFITS TO BUSINESS OWNERS Alaris versus other sources of capital: Why choose Alaris? Debt Alaris Traditional Private Equity Operating Control None None Needs Control Time Horizon 3-5 Years Shareholder’s Discretion 3-6 Years Growth Participation Minimal Partially Capped Full Carry Future Funding Ma
Slide 14: Alaris' Ideal Partner Criteria
ALARIS’ IDEAL PARTNER CRITERIA Old Economy Required services or products in mature industries Business Businesses with a risk of obsolescence or a declining asset base are not a good fit Alaris looks at historical free cash flow to predict sustainability of its Track Record of distribution Fre
Slide 15: Partner Revenue Summary
Annual Distribution Partner (CAD$millions) (1) % of total Body Contour Centers $ 18.7 11.0% Ohana Growth Partners (2) 18.3 10.8% DNT 14.8 8.7% Accscient 12.4 7.3% Brown & Settle 12.1 7.1% D&M 11.5 6.8% GWM Holdings 10.3 6.1% The Shipyard 8.0 4.7% 3E 7.6 4.5% Amur Financial 7.2 4.2% FMP 6.2 3.7% Edge
Slide 16: Partner Revenue Summary: Historical Preferred Equity Resets
Overall Historical Preferred Equity Resets 6.00% 5.50% 4.50% 4.10% PARTNER REVENUE 2.50% SUMMARY 2.10% 2.00% 2.10% 1.30% 0.00% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 16
Slide 17: Diversification
DIVERSIFICATION Investment by Country Investment by Industry Segment 11% 24% 26% 12% 89% 38% Canada US Consumer Products/ Services Consumer Financial Services Business Services • Alaris has approximately 89% of its fair value of investments Industrial in US based companies. • Today, 38% of invested
Slide 18: Returns from Exits to Date
RETURNS FROM EXITS TO DATES Alaris has generated $582.9 million in total returns (+65%) on partners that have either repurchased all of Alaris’ units, ceased operations or where Alaris carries no fair value for preferred units from such partner. The monthly or quarterly distributions Alaris rece
Slide 19: Earnings Coverage Heat Map
EARNINGS COVERAGE HEAT MAP The table to the right displays the range of earnings coverage ratios (“ECR”) for each of our Partners over the last five quarters. Generally speaking, a ratio above 1.0x provides enough earnings to cover preferred distributions to Alaris, interest and principal payments
Slide 20: Investment History
INVESTMENT HISTORY Capital Deployed ($ millions) $400 $358 $350 $300 $250 $185 $193 $200 $170 $156 $150 $130 $100 $50 $- 0 2019 2020 2021 2022 2023 New Investments Follow-on Investments Since Inception: -Invested over $2.2 billion in 40 Partners and more than 90 tranches -Collected over $1.3 billi
Slide 21: Balance Sheet
Summary of Dept Capacity and Covenants Proforma Millions CAD$ March 14, 2024 Figure 1 Senior debt outstanding $247.0 Senior debt to EBITDA 1.8x Senior debt to EBITDA Covenant 3.0x Available Debt Capacity $253.0 Debentures Outstanding $165.0 (2) BALANCE Current Fixed Charge Ratio 1.22:1.00 (1) SHEET
Slide 22: Scalable Model
SCALABLE MODEL Revenue as compared to SG&A Expenses ($millions) $200 $175 $150 $125 $100 $75 Revenue $50 SG&A $25 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Alaris’ unique structure, which gives it protections that allow for a non-controlling investment, all
Slide 23: Recent Financial Results
RECENT FINANCIAL RESULTS Three months ended December 31, 2023 vs Year ended December 31, 2023 vs same same period 2022: period 2022: 18.1% decrease in revenue from Partners to $41.9 million 0.6% increase in adjusted revenue from Partners to $161.6 million 1 30.2% increase in EBITDA to $61.3 mi
Slide 24: Historic Financial Summary
Millions (CAD $) 2019A 2020A 2021A 2022A 2023A Revenue $114.97 $109.47 $147.66 $190.05 $162.57 % Change 15% -5% 35% 29% -14% SG&A $10.72 $14.52 $13.27 $22.03 $29.19 % Change -12% 35% -9% 66% 33% Net Cash from Ops $74.78 $71.86 $104.16 $152.42 $82.96 % Change -5% -4% 45% 46% -46% HISTORIC Distributio
Slide 25: Per Unit Metrics
PER UNIT METRICS $4.20 $3.58 $3.36 $3.37 $3.17 $3.03 $2.37 $2.04 $1.99 $1.83 $1.65 $1.30 $1.28 $1.33 $1.36 Partner Revenue Net Cash from Ops Distribution 2019 2020 2021 2022 2023 25
Slide 26: ESG at Alaris
ESG AT ALARIS Environmental Environmental Social Social Governance Governance 5 year CAGR 0% In 2022: Alaris has adopted a phased 33% Female approach to implementing the Over $250,000 Representation Task Force on was donated to the community currently on Board of Trustees through Alaris’ charity pro
Slide 27: Corporate Information
CORPORATE INFORMATION Board of Trustees Committees Auditors KPMG, LLP Peter Grosskopf, Chairman Banking Bank of Montreal (co-lead) Syndicate HSBC Bank Canada (co-lead) ATB Financial Mitch Shier, Trustee - Corporate Governance National Bank of Canada (Chair) Royal Bank of Canada Canadian Western Bank
Slide 28: Appendices
Ad ARIS EQUITY PARTNERS INCOME TRUST 28
Slide 29: Appendix A: Summary of Partners (in US$ unless noted)
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) 3E Accscient LLC Amur Financial Body Contour Centers Brown & Settle Carey Electric Group (DBA Sono Bello) ² Industry Industrials: Business Services: IT Financial Services: Consumer Industrials: Industrials: Utility Services Consultin
Slide 30: Appendix A: Summary of Partners (in US$ unless noted)
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) DNT Edgewater Federal Fleet Advantage GWM Heritage LMS Construction Technical Management Restoration Associates Partners Industry Industrials: Civil Business Services: Business Services: Business Services: Business Services: Industri
Slide 31: Appendix A: Summary of Partners (in US$ unless noted)
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) Ohana Growth Sagamore SCR The Shipyard Stride Consulting Unify Vehicle Leasing Partners Holdings, LLC (formerly PF (DBA D&M Growth Partners) Leasing) Industry Consumer Industrials: Industrials: Business Services: Industry: IT Busines
Slide 32: Non-GAAP Measures & Other Financial Measures
NON-GAAP MEASURES & OTHER FINANCIAL MEASURES The terms EBITDA, Payout Ratio, Run Rate Payout Ratio, Earnings Coverage Ratio, and IRR (collectively the “Non-GAAP and Other Financial Measures”) are financial measures used in this presentation that are not standard measures under International Financia
Slide 33: Thank You
Head Office: THANK Suite 250, 333 24th Avenue SW Calgary, Alberta T2S 3E6 YOU Phone: 403.228.0873 Fax: 403.228.0906 Website: www.alarisequitypartners.com 33
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