14:34:40 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Alaris Royalty Corp
Symbol AD
Shares Issued 35,947,576
Close 2015-07-28 C$ 30.35
Market Cap C$ 1,091,008,932
Recent Sedar Documents

Alaris earns $8.95-million in Q2

2015-07-28 20:53 ET - News Release

Mr. Darren Driscoll reports

ALARIS ROYALTY CORP. RELEASES SECOND QUARTER FINANCIAL RESULTS

Alaris Royalty Corp. has released its results for the three and six months ended June 30, 2015.

The results of the quarter are summarized in four key performance metrics compared with the prior-year period on a per-share basis (the corporation used normalized earnings before interest, taxes, depreciation and amortization rather than EBITDA to back out the non-cash foreign exchange gains and losses and a 2015 gain on the sale of Killick Aerospace Limited Partnership).

Gross revenue from private company partners increased by 8.9 per cent and 14.6 per cent for the three and six months ended June 30, 2015, and, on a per-share basis, revenue was flat for the three months ended June 30, 2015, and up 2.7 per cent for the six months ended June 30, 2015, when compared with the prior-year period. The growth levels are lower than previous periods due to no revenue being accrued for KMH Limited Partnership in the second quarter, as well as the Killick redemption in early 2015. However, new accretive partnerships and organic growth in current partners contributed to increases in revenue, normalized EBITDA and dividends paid on a per-share basis.

Net cash from operating activities on a per-share basis decreased by 22.2 per cent and 11.3 per cent in the three and six months ended June 30, 2015, due to a $6.8-million deposit paid to the Canada Revenue Agency in the period. Adding back the CRA deposit results in net cash from operating activities of 56 cents per share (a 24-per-cent increase for the three-month period) and net cash from operating activities of 92 cents per share (a 15-per-cent increase for the six-month period).

Subsequent to June 30, 2015, the corporation completed a follow-on contribution to PF Growth Partners LLC for $5.0-million in preferred units to support growth initiatives at Planet Fitness. The units have an annualized distribution of $700,000 (a 14-per-cent return). Additionally, on July 16, 2015, the corporation closed an equity offering that provided $109.7-million of net proceeds, almost all of which were applied against the senior credit facility resulting in senior debt of $35.2-million at July 28, 2015, compared with $144.2-million as at June 30, 2015.

For the three and six months ended June 30, 2015, the corporation recorded earnings of $8.95-million and $30.8-million, earnings before interest, taxes, depreciation and amortization of $12.7-million and $40.3-million, and normalized EBITDA of $13.8-million and $29.9-million compared with earnings of $8.75-million and $20.70-million, EBITDA of $9.0-million and $25.48-million, and normalized EBITDA of $11.9-million and $25.8-million in the prior-year periods. The increase was due to the addition of four new partners in the past 12 months: Kimco Holdings LLC, Planet Fitness, DNT Construction LLC and Federal Resources Supply Company and follow-on investments into Solowave Design LP, Sequel Youth and Family Services LLC, and SM Group International LP. Each of these transactions added new revenues in the current period compared with the prior year. These new revenues were partially offset by two redemptions in the last 12 months: Quetico LLC in November, 2014, and Killick in January, 2015, as well as a decline in revenue from KMH. Expenses were as expected in the quarter.

At each quarter-end, the corporation reviews the fair value of the preferred units in each of the partners. At June 30, 2015, there were seven changes to the fair values of the partners for a net increase in fair values of $2.2-million: an increase to Sequel's units of $4.71-million due to better than expected same-program sales performance for Sequel's year ended June 30, 2015; an increase in the LifeMark Health Limited Partnership units of $1.48-million as the repurchase right LifeMark has on the units increases by 4 per cent in June of each year; an increase in the Solowave units of $1.97-million due to better than expected performance; a reduction to the KMH units of $2-million due to a reduction in expectations; a reduction to the SCR Mining and Tunneling LP units of $2.5-million; a reduction to the Agility Health LLC units of $910,000; and a reduction to the Kimco units of $570,000, each due to a reduction in growth expectations. More information related to the financial performance of the partners is provided in the private company partner update portion of the corporation's management's discussion and analysis for the period (a copy of which is available under Alaris's profile at SEDAR), which readers are encouraged to review.

"The second quarter was a significant one with two new partners in DNT ($87-million (Canadian)) and Federal Resources ($58-million (Canadian)), the ninth and 10th consecutive dividend increases, and a successful equity offering that brought our debt outstanding down to $35.2-million as of July 28, 2015. The accretive transactions with new partners, along with an accretive follow-on contribution to Planet Fitness shortly after the quarter-end, and net increases expected from our current partner distribution resets are expected to continue to fuel our growth on a gross and per-share basis in the quarters to follow," said Darren Driscoll, chief financial officer, Alaris Royalty.

Outlook

Alaris's agreements with its partners provide for estimated revenues to Alaris of approximately $81.1-million for 2015 (no further distributions from KMH are included in this total). Revenues from its partners for the three months ended Sept. 30, 2015, are expected to be approximately $22.2-million (no further distributions from KMH are included in this total). After the successful equity offering closed on July 16, 2015, the corporation has $35.2-million drawn on its $90.1-million credit facility (extended to $150.1-million until Aug. 31, 2015). Annual general and administrative expenses are currently estimated at $7.0-million annually and include all public company costs. Cash requirements after earnings are expected to remain at minimal levels.

Alaris's financial statements and management's discussion and analysis are available on SEDAR and on the company's website.

Conference call

Alaris management will host a conference call at 9 a.m. MST (11 a.m. EST) on July 29, 2015, to discuss the financial results and outlook for the corporation. Participants can access the conference call by dialling toll-free 1-866-223-7781 (or 1-416-340-2216). Please connect to the call 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 replay until 11 a.m. EST Aug. 5, 2015. You can access the replay by dialling toll-free 1-800-408-3053 (or 1-905-694-9451) and entering the passcode 9949566. A webcast will be archived for 90 days and is available for replay by clicking on the link the company will have stored under the investor section on its website.

                              
         CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME         
           
                               Three months                   Six months          
                              ended June 30,                 ended June 30,        
                            2015           2014           2015           2014
Revenues and
other income
Royalties and
distributions        $17,446,917    $15,920,210    $36,227,126    $31,407,252
Interest and
other                    239,990        314,505        476,596        626,078
Gain on
reduction of
partner
interests                     --             --      2,792,457             --
Gain/(loss) on
foreign
exchange
contracts                 47,375        675,535     (2,000,872)       315,906
Total revenue
and other
income                17,734,282     16,910,250     37,495,307     32,349,236
Expenses
Salaries and
benefits               1,301,737      2,353,965      1,805,678      2,691,243
Corporate and
office                   827,639        429,606      1,600,298        923,079
Legal and
accounting fees          591,690        453,204        894,473        762,663
Non-cash stock-
based
compensation           1,125,443      1,110,080      2,454,778      1,833,142
Depreciation and
amortization              47,531         27,699         76,823         54,315
Subtotal               3,894,040      4,374,554      6,832,050      6,264,442
Earnings from
operations            13,840,242     12,535,696     30,663,257     26,084,794
Finance cost             696,548        876,075      1,480,928      2,041,212
Unrealized
foreign
exchange
(gain)/loss            1,212,492      3,559,064     (9,553,823)       661,442
Earnings before
taxes                 11,931,202      8,100,557     38,736,152     23,382,140
Current income
tax expense            1,570,399       (123,912)     3,429,123      1,548,144
Deferred income
tax expense            1,409,527       (520,700)     4,547,831      1,129,800
Earnings              $8,951,276     $8,745,169    $30,759,198    $20,704,196
Other
comprehensive
income
Net change in
fair value of
preferred LP
units                  2,176,700        (73,940)     2,176,700        (73,940)
Tax impact of
change in fair
value                 (1,102,806)       128,800     (1,102,806)       128,800
Realized gain on
reduction of
partnership
interest
Tax impact of
realized gain
Foreign currency
translation
differences             (990,910)    (1,959,871)     5,414,611       (143,281)
Other
comprehensive
income for the
period, net of
income tax                82,984     (1,905,011)     6,488,505        (88,421)
Total
comprehensive
income for the
period                $9,034,262     $6,840,158    $37,247,703    $20,615,775
Earnings per
share
Basic earnings
per share                  $0.28          $0.30          $0.96          $0.72
Fully diluted
earnings per
share                      $0.27          $0.30          $0.94          $0.70

We seek Safe Harbor.

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