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 2023)
33 slides from Alaris Equity Partners Income Trust Trust Units Reg S 3c7's investor presentation, August 2023
Slide 1: Investor Presentation August 2023
INVESTOR PRESENTATION AUGUST 2023
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, 2023) $37 Million Quarterly Distribution $0.34 per unit ($1.36 annually) Number of Employees 18 Market Summary Ticker Symbol – Trust Units TSX: AD.UN Average Daily Volume (3-Month) 118,000 PROFILE Units Outstanding: 45,498,191 basic Unit Price: $15.
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 19 ▪ 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 allows the shareholder to set the exit, which allows the Capital Partner entrepreneur to focus on long-term goals rathe
Slide 13: Benefits to Business Owners: Why Choose Alaris?
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 Shareholders Discretion 3-6 Years Growth Participation Minimal Partially Capped Full Carry Future Funding Max
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 $ 18.4 11.7% PF Growth Partners (2) 17.2 10.9% DNT 15.5 9.9% Accscient 12.9 8.2% D&M 12.1 7.7% Brown & Settle 11.2 7.1% GWM Holdings 11.1 7.1% 3E 8.0 5.1% Amur Financial 6.9 4.4% Edgewater 5.7 3.6% FMP 5.7 3.6% LMS (3) 5.
Slide 16: Partner Revenue Summary: Historical Preferred Equity Resets
Overall Historical Preferred Equity Resets 6.00% 5.50% 5.00% 4.50% 4.10% PARTNER 2.90% REVENUE 2.60% 2.50% SUMMARY 2.10% 2.00% 2.10% 1.30% 1.00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 16
Slide 17: Diversification
DIVERSIFICATION Investment by Country Investment by Industry Segment 11% 27% 26% 13% 89% 34% 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, 34% of invested
Slide 18: Returns from Exits to Date
RETURNS FROM EXITS TO DATES Initial Number of ▪ Alaris has generated $574.5 million Investment Years Capital Distributions Exit Capital Total % total in total returns (+65%) on partners $millions CAD Date Invested Invested Received Received Return Return IRR % that have either repurchased all of (1)
Slide 19: Earnings Coverage Heat Map
EARNINGS COVERAGE HEAT MAP Partner Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 ▪ The table to the right displays the range of earnings coverage ratios (“ECR”) for each of our DNT >2.0x >2.0x >2.0x >2.0x >2.0x Planet Fitness 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x Partners over the last five quarters. Ge
Slide 20: Investment History
INVESTMENT HISTORY Capital Deployed ($ millions) $400 $358 $350 $300 $250 $185 $193 $200 $170 $156 $150 $100 $50 $50 $- 2018 2019 2020 2021 2022 2023 New Investments Follow-on Investments ❑ Since Inception: -Invested over $2.1 billion in 39 Partners and more than 90 tranches -Collected over $1 billi
Slide 21: Balance Sheet
Summary of Dept Capacity and Covenants Proforma Millions CAD$ August 2, 2023 Figure 1 Senior debt outstanding $184.0 Senior debt to EBITDA 1.50x Senior debt to EBITDA Covenant (1) 3.0x (1) Credit Available for Investment Purposes $266.0 Debentures Outstanding $165.0 (3) BALANCE Current Fixed Charge
Slide 22: Scalable Model
SCALABLE MODEL Revenue as compared to SG&A Expenses ($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 ▪ Alaris’ unique structure, which gives it protections that allow for a non-controlling investment, allows i
Slide 23: Recent Financial Results
RECENT FINANCIAL RESULTS Three months ended June 30, 2023 vs same Six months ended June 30, 2023 vs same period 2022: period 2022: ▪ 6.2% decrease in adjusted revenue from Partners to $36.9 million 1 ▪ 6.7% decrease in adjusted revenue from Partners to $73.5 million 1 ▪ 4.2% increase in adjusted cas
Slide 24: Historic Financial Summary
Millions (CAD $) 2018A 2019A 2020A 2021A 2022A Revenue $100.08 $114.97 $109.47 $147.66 $190.05 % Change 12% 15% -5% 35% 29% SG&A $12.13 $10.72 $14.52 $13.27 $22.03 % Change 50% -12% 35% -9% 66% Net Cash from Ops $78.31 $74.78 $71.86 $104.16 152.42 % Change 16% -5% -4% 45% 46% HISTORIC Distributions
Slide 25: Per Unit Metrics
PER UNIT METRICS 5 year CAGR 0% $4.20 $3.36 $3.37 $3.17 $3.03 $2.74 $2.37 $2.15 $2.04 $1.99 $1.62 $1.65 $1.30 $1.28 $1.33 Partner Revenue Net Cash from Ops Distribution 2018 2019 2020 2021 2022 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 $250,000 Representation Task Force on was donated to the community currently on Board of Trustees through Alaris’ charity pro
Slide 27: Corporate Information
CORPORATE INFORMATION Board of Trustees Committees Auditors KPMG, LLP Peter Grosskopf, Chairman Banking Bank of Montreal (co-lead) Syndicate HSBC Bank Canada (co-lead) ATB Financial Mitch Shier, Trustee - Corporate Governance National Bank of Canada (Chair) Royal Bank of Canada Canadian Western Bank
Slide 28: Appendices
Ad! ARIS EQUITY PARTNERS INCOME TRUST 28
Slide 29: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) 3E Accscient LLC AMUR Financial Body Contour Centers Brown & Settle Carey Electric Group (DBA Sono Bello) ² Industry Industrials: Business Services: IT Financial Services: Consumer Industrials: Industrials: Utility Services Consultin
Slide 30: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) DNT Edgewater Federal Fleet Advantage GWM Heritage LMS Construction Technical Management Restoration Associates Partners Industry Industrials: Civil Business Services: Business Services: Business Services: Business Services: Industri
Slide 31: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) Ohana Growth Sagamore SCR Stride Consulting Unify Vehicle Leasing Partners (formerly Holdings, LLC (DBA PF Growth Partners) D&M Leasing) Industry Consumer Industrials: Industrials: Industry: IT Business Services: Financial Services:
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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