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 (November 2018)
28 slides from Alaris Equity Partners Income Trust Trust Units Reg S 3c7's investor presentation, November 2018
Slide 1: Corporate Presentation November 2018
November 2018 C O R P O R AT E P R E S E N TAT I O N Title
Slide 2: 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 3: 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 4: Corporate Profile
CORPORATE PROFILE Corporate Summary Revenue (9 months ended September 30, 2018) $74.8 million Monthly Dividend $0.135 per share ($1.62 annually) Annualized Returns since listing date (Nov 2008) 15% (300% total return) Number of Employees 14 Market Summary Ticker Symbol: TSX: AD Average Daily Volume
Slide 5: 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. 5
Slide 6: Benefits to Shareholders
BENEFITS TO SHAREHOLDERS Five Pillars to the Optimal Dividend Low Volatility Visibility Diversification Liquidity Growth of Cash Flows of Cash Flows of Revenue Streams for Shareholders in Cash Flow Per Share Alaris’ preferred Alaris adjusts its Currently have 15 Average daily Historic organi
Slide 7: Benefits to Business Owners
BENEFITS TO BUSINESS OWNERS Non-Voting Preferred Equity Allows the entrepreneur to continue to run their successful businesses with minimal interference by Alaris Long-Term Capital Partner Alaris does not require an exit This allows the entrepreneur to focus on long-term goals rather than shor
Slide 8: Alaris' Ideal Partner Criteria
ALARIS’ IDEAL PARTNER CRITERIA Required services or products in mature industries Old Economy 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 Free Cash distri
Slide 9: Partner Revenue Summary
PARTNER REVENUE SUMMARY Annual % organic change in organic revenue Distribution (1) Partner (CAD$000s) % of total 6.00% DNT 15,080 15.8% 5.50% 5.00% SBI 14,586 15.2% Federal Resources 14,116 14.8% Body Contour Centers 8,501 8.9% Sandbox 7,164 7.5% 2.90% 2.60% 2.50% Providence 6,237 6.5% 2.10% 2.00%
Slide 10: Diversification
DIVERSIFICATION • Alaris has approximately 90% of its fair value of investments in US based companies. • Alaris has historically been weighted to healthcare. However, today, 44% of invested dollars are exposed to business services, 40% to industrials, and 16% to consumer products and services. • App
Slide 11: Returns From Exits to Date
RETURNS FROM EXITS TO DATE Number of Years Capital Distributions Exit Capital % total $millions CAD Invested Invested Received Received Total Return Return IRR % (1) MAHC 1.0 $ (18.5) $ 8.0 $ 19.2 $ 8.7 47% 47% LifeMark (2) 11.3 (67.5) 51.8 123.4 107.7 159% 29% Sequel 4.2 (77.5) 58.4 119.5 100.4 130
Slide 12: Earnings Coverage Heat Map
EARNINGS COVERAGE HEAT MAP Earnings Coverage Heat Map • The table to the left displays the range of earnings coverage ratios (“ECR”) for each of our Partners over Q4-17 Q1-18 Q2-18 Q3-18 Guide the last 4 quarters. Generally speaking, a ratio above DNT 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x 1.2x-1.5x <1.0x 1.
Slide 13: Cash Flow From Current Investments
CASH FLOW FROM CURRENT INVESTMENTS Financial Summary (millions CAD$) Run-Rate Figure 1 to the left displays the estimated run-rate Run-rate data Run-Rate $ per financial information needed to calculate the run-rate Figure 1 Gross $ share payout ratio as of November 5, 2018. Revenue (USDCAD$1.3200) (
Slide 14: Investment History
INVESTMENT HISTORY Capital Deployed $173 $178 $172 $125 $108 $108 2013 2014 2015 2016 2017 2018YTD Since Inception • Since Inception: • Invested over $1.2 billion in 28 Partner’s – 60 tranches • Collected over $550 million of distributions • Over $500 million of capital received through exit events
Slide 15: Balance Sheet
BALANCE SHEET Summary of Debt Capacity and Covenants • Alaris currently has approximately $203 million Millions CAD$ available to it to invest ($153m current capacity and Figure 1 Sept 30, 2018 $50 of additional capacity from the accordion feature of TTM EBITDA for debt covenant (a) $86.3 the credit
Slide 16: Dividend History and Sustainability
DIVIDEND HISTORY AND SUSTAINABILITY • Current dividend per share of $0.135 per month ($1.62 annual) • Alaris has paid over 123 consecutive monthly dividends totaling more than $13.70 per share and over $365 million gross. • 10 consecutive dividend increases totaling 93% gross increase. • Current ann
Slide 17: Scalable Model
SCALABLE MODEL • Alaris’ unique structure, which gives it protections that allow for a non-controlling investment, allows it to be a monitor of its Partners, not an operator. • For the addition of every 5 new (net) Partners, Alaris would likely have to add 1 employee to the monitoring team. Alaris’
Slide 18: Recent Financial Results
RECENT FINANCIAL RESULTS Three months ended Sept 30, 2018 vs same Nine months ended Sept 30, 2018 vs same period 2017: period 2017: • -4.6% decrease in revenue from Partners to • +10.9% increase in revenue from Partners to $22.7 million $74.8 million • -2.6% decrease in Normalized EBITDA to $20.2 •
Slide 19: Historic Financial Summary
HISTORIC FINANCIAL SUMMARY (millions CAD$) 2013A 2014A 2015A 2016A 2017A Revenue $ 52.70 $ 69.30 $ 82.80 $ 100.04 $ 89.07 % change 64% 31% 19% 21% -11% SG&A $ 5.00 $ 7.70 $ 7.90 $ 9.17 $ 8.06 % change 22% 54% 3% 16% -12% Normalized EBITDA $ 43.90 $ 57.40 $ 71.40 $ 81.84 $ 77.00 % change 68% 31% 24%
Slide 20: Track Record of Per Share Growth
TRACK RECORD OF PER SHARE GROWTH 5 year CAGR 10% 5 year CAGR 11% 5 year CAGR 8% 5 year CAGR 7% $2.75 $2.44 $2.44 $2.28 $2.25 $2.11 $2.10 $2.02 $1.97 $1.87 $1.85 $1.65 $1.65 $1.64 $1.63 $1.62 $1.62 $1.57 $1.48 $1.36 Partner revenue Normalized EBITDA Net cash from ops Dividend 2013 2014 2015 2016 2017
Slide 21: Corporate Information
CORPORATE INFORMATION BOARD OF DIRECTORS COMMITTEES AUDITORS KPMG, LLP Jack C. Lee, Chairman Audit, Compensation Mitch Shier, Director Corporate Governance (Chair), BANKING Bank of Montreal (co-lead) Compensation and Transaction SYNDICATE HSBC Bank Canada (co-lead) Mary Ritchie, Director Audit (Chai
Slide 22: Appendices
APPENDICES 22
Slide 23: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS BODY CONTOUR (MILLIONS $) CENTERS (DBA SONO ACCSCIENT LLC BELLO) CCCOMM Industry Business Services: Consumer Consumer Industrials: Business Services: IT Consulting and Discretionary: Discretionary: Civil Construction Fleet Management Staffing Cosmetic Surgery Sprint m
Slide 24: Appendix A: Summary of Partners (cont)
APPENDIX A: SUMMARY OF PARTNERS (CONT) (MILLIONS $) Industry Industrials: Industrials: Business Services: Industrials: Business Services: Distributor of Products Masonry Restoration, Commercial Janitorial Rebar Fabrication & Apparel Design, to Federal and Local Waterproofing and and Hospitality Inst
Slide 25: Appendix A: Summary of Partners (cont)
APPENDIX A: SUMMARY OF PARTNERS (CONT) PF GROWTH (MILLIONS $) PARTNERS Industry Consumer Business Services: Business Services: Industrials: Business Services: Discretionary: Full Service Marketing Management Mining Services IT Consulting Health and Fitness and Advertising Consulting, Sales & Clubs A
Slide 26: 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. Shares Gross Price on Date of Issued Proceeds Date Closing Announcement Issue Price (000's) ($000's) Closed Date 30-Sep-09 $ 6.00 2,300 $ 13,800 22-Oct-09 $
Slide 27: 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 28: Head Office
HEAD OFFICE Suite 250, 333 24th Avenue SW Calgary, Alberta T2S 3E6 Phone: 403.228.0873 Fax: 403.228.0906 Website: www.alarisroyalty.com
Alaris Royalty — Investor Presentation (November 2018) on 6ix