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 (May 2021)
34 slides from Alaris Equity Partners Income Trust Trust Units Reg S 3c7's investor presentation, May 2021
Slide 1: Corporate Presentation May 2021
CORPORATE PRESENTATION MAY 2021
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: Trust Conversion
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) were delisted a
Slide 7: Profile
Corporate Summary Revenue (3 months ended March 31, 2021) $32.2 Million Quarterly Distribution $0.31 per unit ($1.24 annually) Annualized Total Returns since listing date (Nov 2008) 340% (12.7% annualized) Number of Employees 16 Market Summary Ticker Symbol – Trust Units TSX: AD.UN Average Daily Vol
Slide 8: 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 8
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 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: Alaris vs Other 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 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 (CAD$000s) (1) % of total GWM Holdings 15,180 11.7% Federal Resources 14,168 10.9% DNT 13,503 10.4% Body Contour Centers 11,246 8.7% Brown & Settle 9,398 7.2% Accscient 8,607 6.6% LMS 8,501 6.5% Amur Financial 6,110 4.7% Kimco 5,868 4.5% FNC Title Services 5,626 4.3% Edge
Slide 16: Partner Revenue Summary: Organic Change
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% 1.00% 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 15% 19% 40% 11% 85% 30% Canada US Consumer Products/ Services Consumer Financial Services Business Services • Alaris has approximately 85% of its fair value of investments Industrial in US based companies. • Today, 40% of invested
Slide 18: Preferred Equity Returns from Exits to Date
PREFERRED EQUITY RETURNS FROM EXITS TO DATES Number of Alaris has generated $391 million in $millions CAD Years Invested Capital Distributions Exit Capital Invested Received Received Total Return % total Return IRR % total returns (+57%) on partners that (1) MAHC 1.0 $ (18.4) $ 7.2 $ 20.0 $ 8.8 48
Slide 19: Earnings Coverage Heat Map
EARNINGS COVERAGE HEAT MAP Partner Q2-20 Q3-20 Q4-20 Q1-21 The table to the right displays the range of DNT 1.5x-2.0x 1.5x-2.0x 1.5x-2.0x 1.5x-2.0x earnings coverage ratios (“ECR”) for each of our Federal Resources >2.0x >2.0x >2.0x >2.0x Partners over the last 4 quarters. Generally Planet Fitness
Slide 20: Investment History
INVESTMENT HISTORY Capital Deployed ($ millions) $172 $185 $193 $171 $174 $108 2016 2017 2018 2019 2020 2021 Since Inception: -Invested over $1.8 billion in 36 Partners and more than 75 tranches -Collected over $680 million of distributions -Over $665 million of capital received through exit event
Slide 21: Balance Sheet
Summary of Dept Capacity and Covenants Proforma Millions CAD$ May 6, 2021 Figure 1 Senior debt outstanding $312 Senior debt to EBITDA 2.5x Senior debt to EBITDA Covenant (1) 3.5x (1) Credit Available for Investment Purposes $88 Convertible Debentures Outstanding $100.0 BALANCE Current Fixed Charge R
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: 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 Alaris’ unique structure, which gives it protections that allow for a non-controlling investme
Slide 24: Recent Financial Results
RECENT FINANCIAL RESULTS Three months ended March 31, 2021 vs same period 2020: 5.1% decrease in revenue from Partners to $32.2 million 35.2% increase in Normalized EBITDA to $28.8 million 0.8% increase in net cash from operating activities to $26.8 million 7.8% decrease in dividends declare
Slide 25: Historic Financial Summary
Millions (CAD $) 2016A 2017A 2018A 2019A 2020A Revenue $100.04 $89.07 $100.08 $114.97 $109.47 % Change 21% -11% 12% 15% -5% SG&A $9.17 $8.06 $12.13 $10.72 $14.52 % Change 16% -12% 50% -12% 35% Normalized EBITDA $81.84 $76.98 $80.81 $100.94 $85.70 % Change 15% -6% 5% 25% 15% HISTORIC Net Cash from Op
Slide 26: Per Unit Metrics
PER UNIT METRICS 5 year CAGR 0% $3.17 $3.03 $2.75 $2.74 $2.76 $2.44 $2.36 $2.25 $2.21 $2.11 $2.15 $2.02 $2.04 $1.99 $1.85 $1.62 $1.62 $1.62 $1.65 $1.32 Partner Revenue Normalized EBITDA Net Cash from Ops Dividend 2016 2017 2018 2019 2020 26
Slide 27: Corporate Information
CORPORATE INFORMATION Board of Directors Committees Auditors KPMG, LLP Jay Ripley, Chairman - Transaction (Chair) - Compensation and Audit Banking Bank of Montreal (co-lead) Syndicate HSBC Bank Canada (co-lead) ATB Financial Mitch Shier, Director - Corporate Governance (Chair) National Bank of Canad
Slide 28: Appendices
Ad ARIS EQUITY PARTNERS INCOME TRUST 28
Slide 29: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) 3E Accscient LLC AMUR Financial Body Contour Brown & Settle Carey Electric ccComm Group Centers (DBA Sono Bello) Industry Industrials: Business Services: Financial Services: Consumer Industrials: Industrials: Consumer Utility Service
Slide 30: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) DNT Edgewater Fleet Advantage Federal FNC Title Services GWM Heritage Construction Technical Resources Restoration Associates Industry Industrials: Civil Business Business Services: Industrials: Business Services: Business Services:
Slide 31: Appendix A: Summary of Partners
APPENDIX A: SUMMARY OF PARTNERS (IN US$ UNLESS NOTED) Millions ($) Kimco LMS PF Growth SCR Stride Consulting Unify Partners Industry Business Services: Industrials: Rebar Consumer Industrials: Industry: IT Business Commercial Fabrication and Discretionary: Mining Services Consulting Services: Janito
Slide 32: 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 33: 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 Trust’s method of calculating EBITDA, Normalized EBITDA and Payout Ratio may differ fr
Slide 34: 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 34
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