Crown Capital Partners, Inc. · TSXV:CRWN
Crown Capital Partners — Q2 2020 Earnings Presentation
29 slides from Crown Capital Partners's earnings presentation, August 2020
Slide 1: Q2 2020 Financial Results
Q2 2020 Financial Results TSX: CRWN
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains certain “forward looking statements” and certain “forward looking information” as defined under applicable Canadian securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “
Slide 3: Speakers & Agenda
SPEAKERS & AGENDA Chris Johnson President & • Q2 Operational & Financial Update Chief Executive Officer • Review Strategic Priorities • Business Review • Alternative Corporate Finance Michael Overvelde • Distributed Power Senior Vice President, Chief Financial Officer • Network Services • Q&A 3
Slide 4: Q2 2020 Summary
Q2 2020 SUMMARY • Special Situations portfolio remains in stable condition overall • Advanced realization process for two Long-Term investments • Transitioning to capital-light business • Solid quarterly Adjusted Funds from Operations (AFFO) of $3.6mm Mid-market highlights companies underlying healt
Slide 5: Alternative Lending
ALTERNATIVE LENDING Special Situations Investments (Crown Partners Fund) LOANS BY INDUSTRY Business services 9% Manufacturing 3% Diversified 43% Energy 22% 11 $218mm $20mm Long-Term Investments Current Currently Average investments invested investment Energy 2 $35mm Technology Services 10% 16% Curre
Slide 6: Alternative Lending: Loan Risk Ratings
ALTERNATIVE LENDING Loan Risk Ratings Special Situations June 30 March 31 December 31 September 30 2020 2020 2019 2019 • Additional $5 million advanced to CareRx Special Situations Financing: Source 3.05 3.05 2.54 2.48 (loan now at $27 million) Ferus 3.27 3.27 3.27 3.27 • Repayment of $20 million To
Slide 7: Q2 2020 Financial Results
Q2 2020 FINANCIAL RESULTS TOTAL REVENUE ($MM) INTEREST REVENUE ($MM) Three Months Six Months For the periods ended Jun. 30 Ended Ended ($thousands) 14.6 2020 2019 2020 2019 13.7 Revenue: 19.7 Interest revenue 7,224 5,714 14,557 13,677 13.3 Fees and other income 779 806 1,116 2,382 11.0 7.2 5.7 Net g
Slide 8: Q2 2020 Financial Results
Q2 2020 FINANCIAL RESULTS • Net loss of $(1.6) million compared with net ADJUSTED FUNDS FROM ADJUSTED FUNDS FROM OPERATIONS ($MM)* OPERATIONS PER SHARE* income of $2.3 million in Q2 2019 $0.82 • Mainly reflecting a $3.9 million provision for 7.8 credit losses, including $3.6 million re: PenEquity (i
Slide 9: Q2 2020 Financial Results
Q2 2020 FINANCIAL RESULTS TOTAL ASSETS ($MM) TOTAL EQUITY ($MM) TOTAL EQUITY PER SHARE) 324.9 299.7 265.7 97.5 100.0 $10.38 $10.43 93.0 $9.90 YE 2019 Q2 2019 Q2 2020 YE 2019 Q2 2019 Q2 2020 YE 2019 Q2 2019 Q2 2020 $5.9mm paid to shareholders through dividends and share buybacks in TTM 9
Slide 10: Q2 2020 Financial Results
Q2 2020 FINANCIAL RESULTS Adjusted Financing Funds from Costs Depreciation Provision Net Asset Income Other Share Ops* Expense for Credit Unrealized Impairment Net Loss Dividends Tax reconciling Loss Investment Expense Declared Repurchases Recovery items Losses TOTAL EQUITY TOTAL EQUITY Dec. 31, 201
Slide 11: Strategic Priorities
Strategic Priorities
Slide 12: Expand & Diversify Platform; Reposition Balance Sheet
Expand & Diversify Reposition Platform + Balance Sheet Increase market opportunity Capital-light model Focus on recurring revenue assets Source, seed, structure Increase non-investment earnings Improve capital efficiency Increase EPS over the next 12-24 months 12
Slide 13: Expand and Diversify Platform
EXPAND AND DIVERSIFY PLATFORM 2000 2018 2019 Business Corporate Distributed Network Services Finance Power Market Focus Capitalizing on gaps in mid- Addressing the growing need for Addressing the requirement for market corporate lending with lower cost and more predicable high-speed data connectivit
Slide 14: Transition to Capital-Light Model
TRANSITION TO CAPITAL-LIGHT MODEL CAPITAL SOURCES ($MM) 29.6 Total equity Reduce ownership in Lending Convertible assets to $25mm 20.0 debenture 93.8 Corporate Realize on Long-Term investments CROWN INVESTMENTS ($MM) credit facility Funds available for distribution to be used for strategic investmen
Slide 15: Alternative Corporate Finance
Alternative Corporate Finance
Slide 16: Enabling Entrepreneurs
ENABLING ENTREPRENEURS • Event-driven transactions including recapitalizations, growth financings, acquisitions and management buyouts • Alternative to banks and private equity • Competing on customization, responsive execution, reputation • Target companies generate cash flow and have strong leaders
Slide 17: Strong Risk-Adjusted Returns
STRONG RISK-ADJUSTED RETURNS 2019/2020 IRR Bill Gosling 18% 20 Number of realized investments Baylin Technologies 14%* Canadian Helicopters 24% Touchstone Exploration 16% Solo Liquor neg. 2017/2018 8 Petrowest 18% Marquee 15%* 6 4 Corrosion Service 25% CRH Medical 43% 2 Distinct Infrastructure 20% M
Slide 18: Corporate Finance: What's Next
CORPORATE FINANCE: WHAT’S NEXT Short-Term Medium-Term Support current Favorable market cycle portfolio companies $1.0B + Market opportunity Seek liquidity from higher-risk loans + Add senior debt/uni- tranche capacity New capital Grow and diversify (institutional + retail) portfolio 18
Slide 19: Distributed Power
Distributed Power 19
Slide 20: Electricity Markets Are Broken in Many Regions
ELECTRICITY MARKETS ARE BROKEN IN MANY REGIONS Ontario Alberta USA Electricity prices in Ontario are Closure of coal-fired power generation and CHP currently represents structurally high – increasing Global increased environmental compliance costs approximately 8% of U.S. generating Adjustment drivi
Slide 21: Key Benefits of Distributed Generation
KEY BENEFITS OF DISTRIBUTED GENERATION Efficiency Cost-Effectiveness Speed Flexibility Localization Distributed generation is More efficient power Distributed generation can be The small size of distributed Localizing distributed more energy-efficient, as generation results in cost installed quickly
Slide 22: Developers, Projects and Capital Partners
Developers Projects Capital Partners Partnered with numerous experienced Diversified group of end Crown Power Fund owns and leases developers customers DEPs to SPVs who contract to provide energy to end customers Partners sell, install and operate projects 10-20 year Power Purchase agreements Monthl
Slide 23: Growing Pipeline Drives Strong EBITDA
GROWING PIPELINE DRIVES STRONG EBITDA ~$200mm $250mm +$5mm Current project pipeline Fund assets EBITDA contribution • Developer Partners • Multiple components to drive returns • Fund Relationships • Lease payments (near term) • Industry Referrals • Operator profits (medium term) • Cap rate compressi
Slide 24: Distributed Power: What's Next
DISTRIBUTED POWER: WHAT’S NEXT Short-Term Medium-Term Additional projects New regions (U.S.) >$1.0B + Market opportunity New developer partners + Advance fund leverage Raise LP and debt Scale fee paying capital capital base 24
Slide 25: Network Services
Network Services 25
Slide 26: Market Opportunity, Projects, Capital Providers
Market Opportunity Projects Capital Providers Rural and remote telecommunications Diversified group of end Crown owns networks and is working market is underserved with low customers including large towards a 3rd party fund model broadband speeds and poor reliability carriers, municipalities and end
Slide 27: Q&A
Q&A 27
Slide 28: Appendix
oo Appendix 28
Slide 29: AFFO Reconciliation
AFFO RECONCILIATION Reconciliation of Income (Loss) before Income Taxes to Adjusted Funds from Operations Three Months Ended Six Months Ended FOR THE PERIODS ENDED JUN. 30 2020 2019 2020 2019 (THOUSANDS) Income (loss) before income taxes attributable to Shareholders (1,878) 3,092 (3,003) (2,391) Adj
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