/NOT FOR DISTRIBUTION IN THE UNITED
STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF UNITED STATES
SECURITIES LAW./
TSX-AD.UN
CALGARY, AB, March 9, 2021 /CNW/ - Alaris Equity Partners
Income Trust. (together, as applicable, with its subsidiaries,
"Alaris" or the "Trust") is pleased to announce its
results for the three months and year ended December 31, 2020. The results are prepared under
International Financial Reporting Standards ("IFRS") as
issued by the International Accounting Standards Board
("IASB"). All amounts below are in Canadian dollars unless
otherwise noted.
2020 Highlights:
- Capital deployment in 2020 of approximately $170.0 million, consistent with Alaris' five-year
average. Subsequent to December 31,
2020, Alaris invested an incremental $180.0 million into three new Partners and one
current Partner increasing the total capital deployed in the twelve
months up to the date of this release to over $350.0 million. This was by far a record amount
of deployment for Alaris in a twelve-month period. This deployment
will generate, at a minimum, additional annualized distributions of
approximately $42.0 million, or
$0.93 per unit. These capital
deployments in 2020 and up to the date of this release in 2021
include:
-
- New Partner contribution in June
2020 of US$17.0 million to
Carey Electric Contracting, LLC ("Carey Electric"),
(US$16.1 million of preferred equity
and a US$0.9 million minority common
equity investment). Common distributions received by Alaris in 2020
were US$0.4 million;
- Follow-on contribution in October
2020 of US$55.0 million to GWM
Holdings Inc. and a subsidiary thereof (collectively
"GWM");
- Follow-on contribution in December
2020 of US$20.0 million to
Body Contour Centers ("BCC");
- New Partner contribution in late December 2020 of US$34.0
million to Edgewater Technical Associates, LLC
("Edgewater"),
(US$30.6 million of preferred equity
and a US$3.4 million minority common
equity investment)
Subsequent to December 31, 2020
-
- New Partner contribution of US$40.0
million to Falcon Master Holdings LLC ("FNC"),
(US$32.2 million of preferred equity
and a US$7.8 million minority common
equity investment). Based on FNC's past practice of declaring and
paying distributions, Alaris expects to receive its pro-rata
portion of common equity distributions in 2021 as cashflows permit,
with US$0.1 million already haven
been received up to the date of this release based on FNC's 2021
results to date;
- New Partner contribution of US$66.0
million to Brown & Settle Investments, LLC and a
subsidiary thereof (collectively, "Brown & Settle"),
(US$53.7 million of a combination of
subordinated debt and preferred equity and a US$12.3 minority common equity investment).
Common equity distributions in the near term are not expected as
Brown & Settle will be re-investing excess cash flows into
their business; however, in the longer-term period Alaris will be
entitled to their ownership percentage of any common equity
distributions declared;
- Follow-on contribution to Accscient, LLC ("Accscient")
of US$8.0 million; and
- New Partner contribution of US$30.0
million to 3E, LLC ("3E"), US$22.5 million of preferred equity and
US$7.5 million placed into escrow
account to fund up to two additional preferred unit tranches, once
escrow targets are met by 3E. Alaris' interest expense on the
escrowed funds will be paid by 3E until the funds are
released.
- Alaris generated revenue of $32.0
million in Q4 2020 and $109.6
million for the year ended December
31, 2020, along with Normalized EBITDA of $27.0 million and $85.7
million in each period, respectively. Compared to Q3 2020,
revenue increased 32% on a per unit basis and Normalized EBITDA
increased 30% per unit, as a result of:
-
- Kimco Holdings, LLC ("Kimco") paid $4.5 million of distributions during the quarter
(US$3.5 million) inclusive of
previously deferred distributions after achieving certain
performance targets and their previously agreed upon Q4 2020
distribution payments. As a result, Kimco paid all contracted
distributions in 2020 (US$4.4
million);
- BCC paid an incremental US$1.7
million of previously deferred distributions during Q4 2020.
These distributions were deferred in Q2 2020 had not been accrued
and were therefore included in revenue in the current quarter;
- Additional revenue of US$1.5
million from GWM following their follow-on contribution in
October 2020; and
- Amur Financial Group Inc. ("Amur") and Carey paid common
distributions totalling $0.8 million
in Q4.
- Increases to the fair value of Alaris' investments totalled
$23.2 million for the quarter or
approximately $0.64 per unit, while
the total net reduction to the fair value of Alaris' investments in
2020 was $41.5 million or
$1.15 per unit;
- During Q4 2020 Alaris continued to defer distributions from
PFGP due to the impact of COVID-19; however, subsequent to
December 31, 2020, PFGP, Alaris and
PFGP's senior lending syndicate came to an agreed upon amendment,
wherein PFGP began to pay partial distributions of US$0.33 million per month (US$4.0 million per annum) in January 2021 and will continue to do so until
June 2021. Beginning in July 2021 distributions would return to full
contracted amounts, as long as PFGP is onside with all bank
covenants at that time;
- Based on unaudited results from each of its Partners, Alaris
estimates the weighted average performance metric reset of the
annual distributions to be approximately 1% effective January 2021 resulting in approximately
$1.0 million of new distribution
revenue;
- After an overall positive Q4 2020 for Alaris' Partners, the
weighted average combined Earnings Coverage Ratio ("ECR")
has increased to greater than 1.7x, compared to 1.5x in early 2020
before any impacts of COVID-19. Of note, currently Alaris has 15/20
partners (75%) with an ECR over 1.5x (including six over 2x),
compared to 9/16 (56%) over 1.5x (including three over 2x) at the
same time one year ago;
- During Q4 2020, Alaris completed a bought deal short-form
prospectus offering of 3,346,500 trust units at a price of
$13.75 per unit, for aggregate gross
proceeds of $46.0 million. Subsequent
to December 31, 2020, in March 2021 Alaris completed an additional bought
deal short-form prospectus offering of 5,909,375 trust units at a
price of $16.00 per unit, for
aggregate gross proceeds of $94.6
million; and
- Both Federal Resources Supply Company ("FED") and Kimco
are actively evaluating the possibility of a full or partial
redemption of Alaris' investment. Nothing is imminent, nor can any
redemption be assured, but the redemption value of FED is
approximately US$86.0 million and
Kimco's is based upon a revised formula factoring in several
valuation factors and is estimated to be between US$53.0 million and US$75.0 million.
President's Message
"While nobody could have foreseen the kind of year 2020 would
become, looking back on the outcome for Alaris almost exactly one
year after the world was essentially shut down by the virus, we are
incredibly proud of how Alaris was able to perform. The stock
market sold our stock heavily during the panic of the shutdown,
believing that we were a proxy to the overall economy which was
expected to be hit hard by the forced closures of so many
businesses. What people understand better now is that we are
actually a proxy to North
America's required services and that our Partners were
resilient and performed much better than expected, with an overall
net positive reset. We move into 2021 with the best
underlying fundamentals within our portfolio that we've had in our
17-year history. Based on our weighted average ECR, we have
the largest average cashflow buffer at 70%, the lowest debt levels
within our partner companies, eleventh straight year of net
positive distribution resets, our best portfolio diversification
ever with 20 partners - none more than 12% of our revenue and
finally the company had its highest level of capital deployment in
its history. I can't thank our staff enough for the
incredible effort that has gone into this kind of performance,
especially under less than ideal conditions.
With a Run Rate Payout Ratio now below 70%, there are a couple
of factors that we expect will push that number even lower in the
coming months. The first one is the continued improvements
from PFGP who are showing improved performance indicators on a
weekly basis. Getting PFGP back to 100% distributions and
also making up the distributions that were missed is a large swing
factor for Alaris.
The second factor is the growing contributions from the common
equity portfolio that we have been building over the last two
years. This facet of Alaris is one of the most exciting
things that has transpired in our recent history. The
addition of common equity along with our preferred equity on
transactions has provided our unitholders with three benefits: 1)
It is better aligning our risk profile on investments, allowing us
to participate in all of the upside on companies during good times,
helping to balance out the times where companies may
struggle; 2) We believe that the common equity will provide a
higher overall return than the preferred equity alone, which is
based on a look back analysis on our prior investments over the
last 17 years. Early returns on our common equity have also
shown this as Carey Electric, as one example, just paid us a common
distribution equal to more than a 35% yield on our initial
investment; and 3) The addition of common equity has allowed
us to ramp up our capital deployment substantially by allowing us
to be a larger portion of the capital structure to compete on deals
where that's required, by removing the optics of being a debt
provider as opposed to the equity investor that we are and by
better aligning ourselves with the founders of our Partner
companies by owning the same class of shares that they own.
Deploying over $350 million over
the last twelve months during a pandemic has been a massive
achievement for our team and will have a measurable affect on all
of our performance measures for years to come. 2021 will see
higher than average growth in revenue and earnings per unit because
of the work done over these last six months. We also believe
that we are extremely well positioned to keep that growth rate
going as opportunities to deploy our capital keep coming in.
Between our excess free cash flow that we generate, our expanded
credit facility and the expected sale of a couple of our assets, we
have the balance sheet capabilities to capitalize on those
opportunities."
Per Unit
Results
|
Three months
ended
|
Year
ended
|
Period ending
December 31
|
2020
|
2019
|
%
Change
|
2020
|
2019
|
%
Change
|
Revenue
|
$ 0.87
|
$ 0.84
|
+3.6%
|
$ 3.03
|
$ 3.17
|
-4.4%
|
Earnings
|
$ 0.85
|
$ (0.49)
|
n.a
|
$ 0.56
|
$ 0.99
|
-43.4%
|
Normalized
EBITDA
|
$ 0.74
|
$ 0.71
|
+4.2%
|
$ 2.37
|
$ 2.76
|
-14.1%
|
Net cash from
operating activities
|
$ 0.59
|
$ 0.48
|
+22.9%
|
$ 1.99
|
$ 2.04
|
-2.5%
|
Distributions
declared
|
$ 0.31
|
$ 0.41
|
-24.8%
|
$ 1.32
|
$ 1.65
|
-19.8%
|
Basic earnings /
(loss)
|
$ 0.85
|
$
(0.49)
|
+273.8%
|
$ 0.56
|
$ 0.99
|
-43.4%
|
Fully diluted
earnings / (loss)
|
$ 0.84
|
$ (0.49)
|
+272.1%
|
$ 0.56
|
$ 0.98
|
-42.9%
|
Weighted average
basic units (000's)
|
36,472
|
36,688
|
|
36,121
|
36,597
|
|
For the three months ended December 31,
2020, revenue per unit increased by 3.6% due to receiving
$4.7 million of distributions during
the period from BCC, which included previously deferred
distributions from Q2 2020 which were not recorded as revenue until
received. There were also $4.5
million of distributions received from Kimco (including
catch-up payments from earlier in 2020), distributions from Alaris'
new investment in Carey Electric, including a $0.5 million common distribution, and additional
distributions from GWM as a result of the follow-on contribution in
October 2020. These were partially
offset by distributions deferred during the quarter by PFGP as well
as the redemption of Sales Benchmark Index LLC ("SBI") and
sale of Sandbox Acquisitions, LLC and Sandbox Advertising LP
(collectively, "Sandbox") in Q1 2020. For the year ended
December 31, 2020, revenue per unit
decreased by 4.4% due to the deferral of nine months of
distributions from PFGP and redemptions of two Partners early in
the year offset by the Kimco distributions noted above as well as
new revenues from capital deployment in the last half of the
year.
Earnings of $0.85 per unit in the
quarter improved significantly due to the comparable 2019 period
including a one-time loss on assets held for sale of $45.9 million related to the redemption of
Sandbox in February 2020. Earnings
for the full year were lower due to the net fair value reductions
(most of which was in Q1 2020) as a result of the impact COVID-19
on certain Partners.
Normalized EBITDA of $0.74 per
unit increased by 4.2% in the quarter primarily due to the increase
in revenue during the period as discussed above. Additionally, the
unit-based compensation expense related to the amortization of RTUs
was lower in the current quarter compared to Q4 2019, due to the
fact that the units that were issued in 2020 have a lower weighted
average expense per unit than those that were collectively being
amortized in Q4 2019, which is due to the change in the trust unit
prices at the time of issuances. This was partially offset by the
increase in legal expenses in Q4 2020 compared to Q4 2019.
Normalized EBITDA for the full year was 14.1% less than the prior
year due to the deferred revenues from PFGP and additional legal
fees incurred for the conversion to an income trust.
Net cash from operating activities of $0.59 per unit increased by 22.9% in the quarter
as a result of the increase in distributions during the period as
well as the reduction in finance costs. This reduction in finance
costs was due to lower weighted average debt outstanding as well as
lower average interest rates compared to the prior year. Net cash
from operating activities for the year was consistent with the
prior year (a reduction of only 2.5%).
Outlook
In the last twelve months as of the date of this release, the
Trust has invested over $350 million
into a combination of new Partners (Carey Electric, Edgewater, FNC, Brown & Settle and 3E) as
well as follow-on contributions into current Partners (GWM, BCC and
Accscient). This productive period of capital deployment for
Alaris, along with consistently positive results amongst the
majority of the current portfolio, is contributing to Run Rate
Revenue of approximately $136.7
million over the next twelve months. At this rate, Run Rate
Revenue would exceed the 2020 actual revenue by $27.1 million, an approximate increase of 25%.
Run Rate Revenue of $136.7 million
includes current contracted amounts, agreed upon partial
distributions of US$0.33 million per
month from PFGP and no distributions from ccComm. Alaris has agreed
with PFGP to receive monthly distributions of US$0.33 million between January 2021 and June
2021, which equates to approximately 40% of the contracted
distributions. Commencing in July
2021, PFGP may resume full distributions to Alaris in the
event they are compliant with bank covenants. This would add
$6.9 million to Run Rate Revenue and
reduce the Run Rate Payout Ratio by approximately 5%. Alaris
expects total revenue from Partners in Q1 2021 of approximately
$32.2 million.
Annual general and administrative expenses are currently
estimated at $12.5 million and
include all public company costs. The Trust's Run Rate Payout Ratio
is expected to be within a range of 65% to 70% when including run
rate distributions, overhead expenses and its existing capital
structure. The table below sets out our estimated Run Rate Payout
Ratio alongside the after-tax impact of additional PFGP
distributions as well as positive net deployment.
Run Rate Cash Flow
($ thousands except per unit)
|
Amount
($)
|
$ /
Unit
|
Revenue
|
|
$ 136,700
|
$ 3.04
|
General &
Admin.
|
|
(12,500)
|
(0.28)
|
Interest &
Taxes
|
|
(43,200)
|
(0.96)
|
Free cash
flow
|
|
$ 81,000
|
$ 1.80
|
Annual
Distribution
|
|
55,700
|
1.24
|
Excess Cash
Flow
|
|
$
25,300
|
$
0.56
|
Run Rate Payout
Ratio (excluding PFGP distributions)
|
|
|
|
|
|
|
|
|
|
Other
Considerations (after taxes and interest):
|
|
|
PFGP
|
Full distributions of
$12.0 million per year
|
+5,172
|
+0.12
|
Common
Dividends
|
Every additional $1.0
million of common dividends
|
+1,000
|
+0.02
|
New
Investments
|
Every $50 million
deployed @ 14%
|
+3,188
|
+0.07
|
The senior debt facility was drawn to $231.4 million at December
31, 2020. Subsequent to December 31,
2020, Alaris drew an additional US$40.0 million for its investment in FNC,
US$66.0 million for its investment in
Brown and Settle and US$30.0 million
for its investment in 3E. The Trust also repaid US$71.0 million of outstanding USD debt following
the completion of a bought deal short-form prospectus offering of
5,909,375 trust units at a price of $16.00 per unit, for aggregate gross proceeds of
$94.6 million.
Also subsequent to December 31,
2020, Alaris entered into amendments with the syndicate of
senior lenders increasing the base of its credit facility from
$330 million to $400 million, which included the addition of a
seventh bank to the syndicate of lenders. Following this amendment
and the transactions noted above, the senior debt facility was
drawn to $320.0 million, with the
capacity to draw up to another $80.0
million based on covenants and credit terms. The leverage
covenant is approximately 2.6x with a maximum of 3.5x through the
next two reporting periods March
31st and June
30th.
The annual interest rate on that debt, inclusive of the standby
charges on available capacity, was approximately 5.1% for the year
ended December 31, 2020. During Q4
2020, Alaris closed a two-year extension of its credit facility
with its syndicate of senior lenders. The maturity of the credit
facility is now extended to November
2023. Alaris also closed an amendment subsequent to
December 31, 2020, that increased the
base of its credit facility as noted, but additionally the
amendment increased the Senior Debt to EBITDA leverage covenant by
0.5x EBITDA for the March 2021 and
June 2021 measurement periods,
bringing the maximum leverage to 3.5x through those two periods.
Covenants return to previous levels from September 30, 2021 onwards.
Since converting to an income trust, the tax profile of
distributions changed from 100% eligible dividends to a combination
of eligible dividends, trust income, capital gains and return of
capital. For 2020, the split of the distributions was as
follows:
|
|
|
|
|
|
Tax Profile of
Distributions
|
|
|
|
|
For the year ended
December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Per
unit
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
Dividends
|
$
|
0.41250
|
$
|
0.29000
|
$
|
0.02154
|
$
|
0.02154
|
$
|
0.74558
|
Trust
Income
|
$
|
-
|
$
|
-
|
$
|
0.21677
|
$
|
0.21677
|
$
|
0.43354
|
Taxable Capital
Gains
|
$
|
-
|
$
|
-
|
$
|
0.00336
|
$
|
0.00336
|
$
|
0.00672
|
Return of
Capital
|
$
|
-
|
$
|
-
|
$
|
0.06833
|
$
|
0.06833
|
$
|
0.13666
|
|
|
|
|
|
|
Total
paid
|
$
0.41250
|
$
0.29000
|
$
0.31000
|
$
0.31000
|
$
1.32250
|
|
|
|
|
|
|
As a percentage of
total
|
Q1
|
Q2
|
Q3
|
Q4
|
TOTAL
|
Dividends
|
100.0%
|
100.0%
|
6.9%
|
6.9%
|
56.4%
|
Trust
Income
|
0.0%
|
0.0%
|
69.9%
|
69.9%
|
32.8%
|
Taxable Cap
Gains
|
0.0%
|
0.0%
|
1.1%
|
1.1%
|
0.5%
|
Return of
Capital
|
0.0%
|
0.0%
|
22.0%
|
22.0%
|
10.3%
|
|
|
|
|
|
|
Total
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
Environmental, Social and Governance ("ESG") Update
Alaris recognizes that integrating ESG factors into its
investment decisions can help to mitigate risk and identify strong
investment opportunities. Its due diligence procedures already
include a review of the ESG policies and practices of potential
Private Company Partners. Alaris has taken significant steps
to develop a more comprehensive approach to ESG. It has
engaged external advisors to assist it in developing an ESG
policy. The ESG policy will detail Alaris' approach to
integrating ESG factors into its investment due diligence and its
ongoing monitoring of its Private Company Partners. Alaris'
approach will be focused on ensuring that it considers all
financially material ESG factors for itself and its Partners.
Alaris will be disclosing its ESG policy in April 2021 and will eventually publish an annual
ESG report, which will provide its investors with more information
on how that policy is being implemented. Alaris expects to release
its first ESG report within the next twelve months.
The Consolidated Statement of Financial Position, Statement of
Comprehensive Income, and Statement of Cash Flows are attached to
this news release. Alaris' financial statements and MD&A are
available on SEDAR at www.sedar.com and on our website
at www.alarisequitypartners.com.
Earnings Release Date and Conference Call Details
Alaris management will host a conference call at 9am MT (11am ET),
Wednesday, March 10, 2021 to discuss
the financial results and outlook for the Trust.
Participants can access the conference call by dialing toll free
1-888-390-0546. Alternatively, to listen to this event online,
please click the webcast link and follow the prompts given: Q4
Webcast. Please connect to the call or log into the webcast
at least 10 minutes prior to the beginning of the event.
For those unable to participate in the conference call at the
scheduled time, it will be archived for instant replay for a week.
You can access the replay by dialing toll free 1-888-390-0541 and
entering the passcode 415842#. The webcast will be archived
and is available for replay by using the same link as above or by
finding the link we'll have stored under the "Investor" section –
"Presentation and Events", on our website at
www.alarisequitypartners.com.
An updated corporate presentation will be posted to the Trust's
website within 24 hours at www.alarisequitypartners.com.
About the Trust:
Alaris, through its subsidiaries, provides alternative financing
to private companies ("Partners") in exchange for distributions,
dividends or interest (collectively, "Distributions") with the
principal objective of generating stable and predictable cash flows
for distribution payments to its unitholders. Distributions
from the Partners are adjusted annually based on the percentage
change of a "top-line" financial performance measure such as gross
margin or same store sales and rank in priority to the owner's
common equity position.
Non-IFRS Measures
The terms EBITDA, Normalized EBITDA,
Run Rate Payout Ratio, Actual Payout Ratio, Run Rate Revenue,
Earnings Coverage Ratio, Per Unit and IRR are financial measures
used in this news release that are not standard measures under
International Financial Reporting Standards ("IFRS"). The
Trust's method of calculating EBITDA, Normalized EBITDA, Run Rate
Payout Ratio, Actual Payout Ratio, Run Rate Revenue, Earnings
Coverage Ratio, Per Unit and IRR may differ from the methods used
by other issuers. Therefore, the Trust's EBITDA, Normalized EBITDA,
Run Rate Payout Ratio, Actual Payout Ratio, Run Rate Revenue,
Earnings Coverage Ratio, Per Unit and IRR may not be comparable to
similar measures presented by other issuers.
Run Rate Payout Ratio refers to Alaris' total
distribution per unit expected to be paid over the next twelve
months divided by the estimated net cash from operating activities
per unit that Alaris expects to generate over the same twelve month
period (after giving effect to the impact of all information
disclosed as of the date of this report).
Actual Payout Ratio refers to Alaris' total cash
distributions paid during the period (annually or quarterly)
divided by the actual net cash from operating activities Alaris
generated for the period.
Run Rate Revenue refers to Alaris' total revenue
expected to be generated over the next twelve months.
EBITDA refers to earnings determined in accordance with
IFRS, before depreciation and amortization, net of gain or loss on
disposal of capital assets, interest expense and income tax
expense. EBITDA is used by management and many investors to
determine the ability of an issuer to generate cash from
operations. Management believes EBITDA is a useful supplemental
measure from which to determine the Trust's ability to generate
cash available for debt service, working capital, capital
expenditures, income taxes and distributions.
Normalized EBITDA refers to EBITDA excluding items that
are non-recurring in nature and is calculated by adjusting for
non-recurring expenses and gains to EBITDA. Management deems
non-recurring items to be unusual and/or infrequent items that
Alaris incurs outside of its common day-to-day operations. For the
year ended December 31, 2020, these
include the distributions received upon redemption of SBI, the
non-recurring legal expenses related to the income trust
conversion, the non-cash impact of trust conversion and the
unit-based compensation expense related to the quarterly
re-valuation of the outstanding unit-based compensation. For the
year ended December 31, 2019, these
include a bad debt recovery related to Phoenix and the loss on assets held for sale
relating to Sandbox. Transaction diligence costs are recurring but
are considered an investing activity. Foreign exchange realized and
unrealized gains and losses are recurring but not considered part
of operating results and excluded from normalized EBITDA on an
ongoing basis. Changes in investments at fair value are non-cash
and although recurring are also removed from normalized EBITDA.
Adjusting for these non-recurring items allows management to assess
cash flow from ongoing operations.
Earnings Coverage Ratio refers to the Normalized EBITDA
of a Partner divided by such Partner's sum of debt servicing
(interest and principal), unfunded capital expenditures and
distributions to Alaris. Management believes the earnings coverage
ratio is a useful metric in assessing our partners continued
ability to make their contracted distributions.
Per Unit values, other than earnings per unit, refer to
the related financial statement caption as defined under IFRS or
related term as defined herein, divided by the weighted average
basic units outstanding for the period.
IRR refers to internal rate of return, which is a
metric used to determine the discount rate that derives a net
present value of cash flows to zero. Management uses IRR to analyze
partner returns.
The terms EBITDA, Normalized EBITDA, Run Rate Payout Ratio,
Actual Payout Ratio, Earnings Coverage Ratio, Per Unit and IRR
should only be used in conjunction with the Trust's annual audited
financial statements, excerpts of which are available below, while
complete versions are available on SEDAR at www.sedar.com.
Forward-Looking Statements
This news release 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 fact contained in this news release are
forward–looking statements, including, without limitation,
management's expectations, intentions and beliefs concerning the
growth, results of operations, performance of the Trust and the
Partners, the future financial position or results of the Trust,
business strategy and plans and objectives of or involving the
Trust or the Partners. Many of these statements can be
identified by looking for words such as "believe", "expects",
"will", "intends", "projects", "anticipates", "estimates",
"continues" or similar words or the negative thereof. In
particular, this news release contains forward–looking statements
regarding: the anticipated financial and operating performance of
the Partners; the impact of COVID-19 on the operations of the Trust
and those of the Partners; the timing and impact of restarting or
increasing Distributions from Partners not currently paying the
full amount or at all; the Trust's Run Rate Payout Ratio and Run
Rate Revenue; the continued deferral of PFGP's Distributions and
the timing to restart full distributions; the impact of the new
investments in Carey Electric, FNC, Edgewater, Brown & Settle, 3E as well as
the follow-on investments in GWM, BCC and Accscient, including,
without limitation, the expected yield therefrom and the impact on
the Trust's net cash from operating activities, Run Rate Revenue
and Run Rate Payout Ratio; expected resets of Distributions in
2021; the Trust's consolidated expenses; expectations regarding
receipt (and amount of) any common equity distributions from
Partners in which Alaris holds common equity, including the impact
on the Trust's net cash from operating activities, Run Rate Revenue
and Run Rate Payout Ratio; the impact of investing in common equity
on Alaris' ability to deploy more capital, overall return and Run
Rate Payout Ratio; the amount of the Trust's distributions to
unitholders (both quarterly and on an annualized basis); the use of
proceeds from the senior credit facility; the Trust's ability to
deploy capital; potential Partner redemptions, including the
timing, if at all, thereof and the amounts to be received by the
Trust; Alaris' new ESG policy and future reporting of ESG matters;
and impact of new deployment and restarting Distributions from
Partners not paying full contractual amounts. To the extent any
forward-looking statements herein constitute a financial outlook or
future oriented financial information (collectively,
"FOFI"), including estimates regarding revenues.
Distributions from Partners (including expected resets, restarting
full or partial Distributions and common equity distributions), Run
Rate Payout Ratio, net cash from operating activities, expenses and
impact of capital deployment, they were approved by management as
of the date hereof and have been included to provide an
understanding with respect to Alaris' financial performance and are
subject to the same risks and assumptions disclosed herein. There
can be no assurance that the plans, intentions or expectations upon
which these forward-looking statements are based will occur.
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 that of its Partners (including,
without limitation, the ongoing impact of COVID-19) are material
factors considered by Alaris management when setting the outlook
for Alaris. Key assumptions include, but are not limited to,
assumptions that: the Canadian and U.S. economies will continue to
recover from the ongoing economic downturn created by the response
to COVID-19 within the next twelve months, interest rates will not
rise in a material way over the next 12 to 24 months, that those
Alaris Partners detrimentally affected by COVID-19 will recover
from the pandemic's impact and return to their pre-COVID-19
operating environments; following a recovery from the COVID-19
impact, the businesses of the majority of our Partners will
continue to grow; more private companies will require access to
alternative sources of capital; the businesses of new Partners and
those of existing Partners will perform in line with Alaris'
expectations and diligence; and that Alaris will have the ability
to raise required equity and/or debt financing on acceptable
terms. Management of Alaris has also assumed that the
Canadian and U.S. dollar trading pair will remain in a range of
approximately plus or minus 15% of the current rate over the next 6
months. In determining expectations for economic growth, management
of Alaris primarily considers historical economic data provided by
the Canadian and U.S. governments and their agencies as well as
prevailing economic conditions at the time of such
determinations.
There can be no assurance that the assumptions, plans,
intentions or expectations upon which these forward–looking
statements are based will occur. Forward–looking statements
are subject to risks, uncertainties and assumptions and should not
be read as guarantees or assurances of future performance. The
actual results of the Trust and the Partners could materially
differ from those anticipated in the forward–looking statements
contained herein as a result of certain risk factors, including,
but not limited to, the following: the ongoing impact of the
COVID-19 pandemic on the Trust and the Partners (including how many
Partners will experience a slowdown or closure of their business
and the length of time of such slowdown or closure); management's
ability to assess and mitigate the impacts of COVID-19; the
dependence of Alaris on the Partners; leverage and restrictive
covenants under credit facilities; reliance on key personnel;
general economic conditions, including the ongoing impact of
COVID-19 on the Canadian, U.S. and global economies; failure to
complete or realize the anticipated benefit of Alaris' financing
arrangements with the Partners; a failure to obtain required
regulatory approvals on a timely basis or at all; changes in
legislation and regulations and the interpretations thereof; risks
relating to the Partners and their businesses, including, without
limitation, a material change in the operations of a Partner or the
industries they operate in; inability to close additional Partner
contributions or collect proceeds from any redemptions in a timely
fashion on anticipated terms, or at all; a change in the ability of
the Partners to continue to pay Alaris at expected Distribution
levels or restart distributions (in full or in part); a failure to
collect material deferred Distributions; a change in the unaudited
information provided to the Trust; and a failure to realize the
benefits of any concessions or relief measures provided by Alaris
to any Partner or to successfully execute an exit strategy for a
Partner where desired. Additional risks that may cause actual
results to vary from those indicated are discussed under the
heading "Risk Factors" and "Forward Looking Statements" in Alaris'
Management Discussion and Analysis for the year ended December 31, 2020, which is filed under Alaris'
profile at www.sedar.com and on its website at
www.alarisequitypartners.com.
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 addition, there are a number of factors that
could cause Alaris' actual results, performance or achievement to
differ materially from those expressed in, or implied by, forward
looking statements and FOFI, or if any of them do so occur, what
benefits the Trust will derive therefrom. As such, undue reliance
should not be placed on any forward-looking statements, including
FOFI.
The Trust has included the forward-looking statements and FOFI
in order to provide readers with a more complete perspective on
Alaris' future operations and such information may not be
appropriate for other purposes. The forward-looking statements,
including FOFI, contained herein are expressly qualified in their
entirety by this cautionary statement. Alaris disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Alaris Equity Partners Income Trust
Consolidated
statements of financial position
|
31-Dec
|
31-Dec
|
$
thousands
|
2020
|
2019
|
Assets
|
|
|
Cash and cash
equivalents
|
$
|
16,498
|
$
|
17,104
|
Prepayments
|
177
|
1,509
|
Derivative
contracts
|
1,489
|
555
|
Accounts
receivables
|
804
|
1,226
|
Income taxes
receivable
|
12,669
|
4,205
|
Investment tax credit
receivable
|
-
|
1,032
|
Assets acquired held
for sale
|
-
|
97,173
|
Promissory notes
receivable
|
4,000
|
6,580
|
Current
Assets
|
$
|
35,637
|
$
|
129,384
|
Promissory notes and
other receivables
|
19,233
|
19,663
|
Deposits
|
20,206
|
20,206
|
Property and
equipment
|
846
|
1,053
|
Investments
|
880,512
|
881,037
|
Investment tax credit
receivable
|
-
|
2,243
|
Deferred income
taxes
|
-
|
986
|
Non-current
assets
|
$
|
920,797
|
$
|
925,188
|
Total
Assets
|
$
|
956,434
|
$
|
1,054,572
|
|
|
|
Liabilities
|
|
|
Accounts payable and
accrued liabilities
|
$
|
5,351
|
$
|
2,713
|
Distributions
payable
|
12,089
|
5,047
|
Liabilities acquired
held for sale
|
-
|
60,297
|
Office
Lease
|
659
|
837
|
Income tax
payable
|
723
|
384
|
Current
Liabilities
|
$
|
18,822
|
$
|
69,278
|
Deferred income
taxes
|
16,112
|
4,715
|
Loans and
borrowings
|
229,477
|
285,193
|
Convertible
debenture
|
86,029
|
90,939
|
Other long-term
liabilities
|
980
|
-
|
Non-current
liabilities
|
$
|
332,598
|
$
|
380,847
|
Total
Liabilities
|
$
|
351,420
|
$
|
450,125
|
|
|
|
Equity
|
|
|
Unitholders'
capital
|
$
|
659,988
|
$
|
625,313
|
Equity component of
convertible debenture
|
-
|
4,059
|
Equity
reserve
|
17,621
|
14,763
|
Translation
reserve
|
12,431
|
17,076
|
Retained earnings /
(deficit)
|
(85,026)
|
(56,764)
|
Total
Equity
|
$
|
605,014
|
$
|
604,447
|
|
|
|
Total Liabilities
and Equity
|
$
|
956,434
|
$
|
1,054,572
|
Alaris Equity Partners Income Trust
Condensed
consolidated statements of comprehensive income / (loss)
|
Year ended
December 31
|
$ thousands
except per unit amounts
|
2020
|
2019
|
|
|
|
Revenues, net of
realized foreign exchange gain or loss
|
$
|
109,568
|
$
|
114,956
|
Net realized gain /
(loss) from investments
|
(26,863)
|
11,724
|
Net unrealized loss
of investments at fair value
|
(14,623)
|
(11,304)
|
Loss on assets held
for sale
|
-
|
(45,883)
|
Total revenue and
other operating income
|
$
|
68,082
|
$
|
69,493
|
|
|
|
General and
administrative
|
14,519
|
10,718
|
Transaction diligence
costs
|
5,532
|
2,754
|
Unit-based
compensation
|
2,708
|
4,315
|
Bad debt expense /
(recovery)
|
(183)
|
(2,018)
|
Depreciation and
amortization
|
222
|
384
|
Total operating
expenses
|
22,798
|
16,153
|
Earnings from
operations
|
$
|
45,284
|
$
|
53,340
|
Finance
costs
|
18,103
|
19,294
|
Unrealized (gain) /
loss on foreign exchange
|
(729)
|
6,069
|
Non-cash impact of
trust conversion
|
(7,138)
|
-
|
Earnings before
taxes
|
$
|
35,048
|
$
|
27,977
|
Current income tax
expense / (recovery)
|
(875)
|
5,347
|
Deferred income tax
expense / (recovery)
|
15,632
|
(13,628)
|
Total income tax
expense / (recovery)
|
14,757
|
(8,281)
|
Earnings
|
$
|
20,291
|
$
|
36,258
|
|
|
|
Other
comprehensive income
|
|
|
Foreign currency
translation differences
|
(4,645)
|
(15,649)
|
Total
comprehensive income
|
$
|
15,646
|
$
|
20,609
|
|
|
|
Earnings per
unit
|
|
|
Basic
|
$ 0.56
|
$ 0.99
|
Fully
diluted
|
$ 0.56
|
$ 0.98
|
Weighted average
units outstanding
|
|
|
Basic
|
36,121
|
36,597
|
Fully
Diluted
|
36,482
|
36,889
|
Alaris Equity Partners Income Trust
Condensed
consolidated statements of cash flows
|
Year ended
December 31
|
$
thousands
|
2020
|
2019
|
Cash flows from
operating activities
|
|
|
Earnings for the
period
|
$
|
20,291
|
$
|
36,258
|
Adjustments
for:
|
|
|
Finance
costs
|
18,103
|
19,294
|
Deferred income tax
expense / (recovery)
|
15,632
|
(13,628)
|
Depreciation and
amortization
|
222
|
384
|
Loss on assets held
for sale
|
-
|
45,883
|
Net realized gain /
(loss) from investments
|
26,863
|
(11,724)
|
Net unrealized loss
of investments at fair value
|
14,623
|
11,304
|
Unrealized (gain) /
loss on foreign exchange
|
(729)
|
6,069
|
Non-cash impact of
trust conversion
|
(7,138)
|
-
|
Transaction diligence
costs
|
5,532
|
2,754
|
Unit-based
compensation
|
2,708
|
4,315
|
Changes in working
capital (operating):
|
|
|
- accounts
receivables
|
422
|
(4,428)
|
- income tax
receivable / payable
|
(11,424)
|
(3,594)
|
-
prepayments
|
(605)
|
672
|
- accounts payable,
accrued liabilities
|
2,327
|
(957)
|
Cash generated
from operating activities
|
86,827
|
92,602
|
Cash interest
paid
|
(14,965)
|
(17,824)
|
Net cash from
operating activities
|
$
|
71,862
|
$
|
74,778
|
|
|
|
Cash flows from
investing activities
|
|
|
Acquisition of
investments
|
$
|
(170,465)
|
$
|
(193,357)
|
Transaction diligence
costs
|
(5,532)
|
(2,754)
|
Proceeds from partner
redemptions
|
117,698
|
20,089
|
Proceeds on disposal
of assets and liabilities held for sale
|
39,196
|
-
|
Promissory notes
issued
|
-
|
(8,823)
|
Promissory notes
repaid
|
2,499
|
4,916
|
Changes in working
capital - investing
|
-
|
-
|
Net cash used in
investing activities
|
$
|
(16,604)
|
$
|
(179,929)
|
|
|
|
Cash flows from
financing activities
|
|
|
Repayment of loans
and borrowings
|
$
|
(228,970)
|
$
|
(68,030)
|
Proceeds from loans
and borrowings
|
184,465
|
134,005
|
Issuance of
unitholders' capital, net of unit issue costs
|
43,375
|
-
|
Proceeds from
convertible debenture, net of fees
|
-
|
95,527
|
Distributions
paid
|
(41,511)
|
(60,367)
|
Trust unit
repurchases
|
(10,051)
|
-
|
Office lease
payments
|
(178)
|
(253)
|
Net cash from /
(used in) financing activities
|
$
|
(52,870)
|
$
|
100,882
|
|
|
|
Net increase /
(decrease) in cash and cash equivalents
|
$
|
2,388
|
$
|
(4,269)
|
Impact of foreign
exchange on cash balances
|
(2,994)
|
(1,401)
|
Cash and cash
equivalents, Beginning of year
|
17,104
|
22,774
|
Cash and cash
equivalents, End of year
|
$
|
16,498
|
$
|
17,104
|
|
|
|
Cash taxes
paid
|
$
|
7,616
|
$
|
8,759
|
SOURCE Alaris Equity Partners Income Trust