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 (August 2022)
37 slides from Alaris Equity Partners Income Trust Trust Units Reg S 3c7's investor presentation, August 2022
Slide 1: Investor Presentation August 2022
INVESTOR PRESENTATION AUGUST 2022
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 (3 months ended June 30, 2022) $56.5 Million Quarterly Distribution $0.33 per unit ($1.32 annually) Annualized Total Returns since listing date (Nov 2008) 407% (13% annualized) Number of Employees 17 Market Summary Ticker Symbol – Trust Units TSX: AD.UN Average Daily Volume
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 18 Average daily Historic organ
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 does not require an exit. Capital Partner This allows the entrepreneur to focus on long-term goals rather than short-t
Slide 13: Benefits to Business Owners
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 Indefinite 3-6 Years Growth Participation Minimal Capped Full Carry Future Funding Maxes Out Unlimited Maxes
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 U (CAD$000s) (1) % of total Body Contour Centers 27,182 17.1% PF Growth Partners (2) 15,642 9.8% DNT 14,102 8.9% D&M 12,006 7.5% Accscient 11,946 7.5% GWM Holdings 11,688 7.3% Brown & Settle 10,200 6.4% 3E 7,229 4.5% LMS 6,823 4.3% Amur Financial 6,480 4.1% FNC Title Serv
Slide 16: Partner Revenue Summary
Percent Organic Change in Organic Revenue 6.00% 5.50% 5.00% 4.50% 4.10% PARTNER REVENUE 2.90% 2.60% 2.50% SUMMARY 2.10% 2.00% 2.10% 1.00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 16
Slide 17: Diversification
DIVERSIFICATION Investment by Country Investment by Industry Segment 13% 27% 21% 20% 87% 31% Canada US Consumer Products/ Services Consumer Financial Services Business Services • Alaris has approximately 87% of its fair value of investments Industrial in US based companies. • Today, 27% of invested
Slide 18: Preferred Equity Returns from Exits to Date
PREFERRED EQUITY RETURNS FROM EXITS TO DATES Number of Years Capital Distributions Exit Capital Total % total $millions CAD Invested Invested Received Received Return Return IRR % Alaris has generated $545.3 million in MAHC(1) 1.0 $ (18.4) $ 7.2 $ 20.0 $ 8.8 48% 53% total returns (+65%) on partner
Slide 19: Earnings Coverage Heat Map
EARNINGS COVERAGE HEAT MAP Partner Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 The table to the right displays the range of earnings coverage ratios (“ECR”) for each of our DNT 1.5x-2.0x >2.0x >2.0x >2.0x >2.0x Partners over the last 4 quarters. Generally Planet Fitness 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x 1
Slide 20: Investment History
INVESTMENT HISTORY Capital Deployed ($ millions) $357 $172 $185 $193 $171 $108 $116 2016 2017 2018 2019 2020 2021 2022 Since Inception: -Invested over $2.0 billion in 37 Partners and more than 85 tranches -Collected over $1 billion of distributions -Over $838 million of capital received through ex
Slide 21: Balance Sheet
Summary of Dept Capacity and Covenants Proforma Millions CAD$ Aug 9, 2022 Figure 1 Senior debt outstanding $287 Senior debt to EBITDA 2.00x Senior debt to EBITDA Covenant (1) 3.0x (1) Credit Available for Investment Purposes $113 BALANCE Debentures Outstanding $165.0(3) SHEET Current Fixed Charge Ra
Slide 22: Distribution History & Sustainability
DISTRIBUTION HISTORY & SUSTAINABILITY Since 2008 Alaris has provided consistent dividend income through its monthly dividend, and now, through trust distributions. In March 2020, Alaris made the decision to change its dividend from monthly to quarterly. The first payment of such quarterly divide
Slide 23: ESG at Alaris
ESG AT ALARIS Environmental Social Governance In 2021: Alaris has adopted a phased 33% Female approach to implementing the Over $110,000 Representation Task Force on were donated to the community currently on Board of Trustees through Alaris’ charity programs Climate-Related _______________ ________
Slide 24: Distributions – Tax Information
DISTRIBUTIONS – TAX INFORMATION In 2021, Alaris distributed $1.28 per trust unit to unitholders. Unitholders will pay tax on such distributions based on the character of the distributions. As shown in the table below, 77.5% of the distributions are taxed as Regular Income in the hands of the unithol
Slide 25: Scalable Model
SCALABLE MODEL Alaris’ model is highly scalable Revenue Growth vs Operating Expenses 120 110 100 90 80 70 60 50 40 Revenue 30 20 SG&A 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Alaris’ unique structure, which gives it protections that allow for a non-controlling inv
Slide 26: Recent Financial Results
RECENT FINANCIAL RESULTS Three months ended June 30, 2022 vs same Six months ended June 30, 2022 vs same period 2021: period 2021: 62% increase in revenue from Partners to $56.5 million 43% increase in revenue from Partners to $96.1 million 51% increase in cash generated from operations prior
Slide 27: Historic Financial Summary
Millions (CAD $) 2017A 2018A 2019A 2020A 2021A Revenue $89.07 $100.08 $114.97 $109.47 $147.66 % Change -11% 12% 15% -5% 35% SG&A $8.06 $12.13 $10.72 $14.52 $13.27 % Change -12% 50% -12% 35% -9% Net Cash from Ops $67.25 $78.31 $74.78 $71.86 $104.16 % Change -8% 16% -5% -4% 45% HISTORIC Distributions
Slide 28: Per Unit Metrics
PER UNIT METRICS 5 year CAGR 0% $3.36 $3.17 $3.03 $2.74 $2.44 $2.37 $2.15 $2.04 $1.99 $1.85 $1.62 $1.62 $1.65 $1.30 $1.28 Partner Revenue Net Cash from Ops Distribution 2017 2018 2019 2020 2021 28
Slide 29: Corporate Information
CORPORATE INFORMATION Board of Trustees Committees Auditors KPMG, LLP Jay Ripley, Chairman Banking Bank of Montreal (co-lead) Mitch Shier, Trustee - Corporate Governance Syndicate HSBC Bank Canada (co-lead) (Chair) ATB Financial National Bank of Canada Royal Bank of Canada Canadian Western Bank Bob
Slide 30: Appendices
Ad ARIS EQUITY PARTNERS INCOME TRUST 30
Slide 31: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) 3E Accscient LLC AMUR Financial Body Contour Brown & Settle Carey Electric Group Centers (DBA Sono Bello) Industry Industrials: Business Services: IT Financial Services: Consumer Industrials: Industrials: Utility Services Consulting
Slide 32: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) DNT Construction Edgewater Fleet Advantage FNC Title Services GWM Heritage Technical Restoration Associates Industry Industrials: Civil Business Services: Business Services: Business Services: Business Services: Industrials: Construc
Slide 33: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) LMS PF Growth Partners SCR Stride Consulting Unify Vehicle Leasing Holdings, LLC (DBA D&M Leasing) Industry Industrials: Consumer Industrials: Industry: IT Business Services: Financial Services: Rebar Discretionary: Health Mining Ser
Slide 34: Appendix B: Offering History
APPENDIX B: OFFERING HISTORY The following table summaries the equity offerings Alaris has completed since its public listing in November 2008. Date of Announcement Issue Shares Issued Gross Proceeds Date Price on Price ($000’s) ($000’s) Closed Closing Date 30 - Sept – 09 $6.00 2,300 $13,800 22 - Oc
Slide 35: Appendix C: Trust Conversion
APPENDIX C: TRUST CONVERSION After receiving shareholder approval on August 31, 2020, Alaris Royalty Corp. converted to an income trust on September 1, 2020 and changed its name to “Alaris Equity Partners Income Trust” (“Alaris” or the “Trust”). The common shares of Alaris Royalty Corp. (AD) wer
Slide 36: 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 37: 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 37
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