Alaris Royalty Corp. Releases Q2 2020 Financial Results



/NOT FOR DISTRIBUTION IN THE UNITED STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW./

TSX-AD     

CALGARY, AB, July 28, 2020 /CNW/ - Alaris Royalty Corp. ("Alaris" or the "Corporation") is pleased to announce its results for the three and six months ended June 30, 2020. The results are prepared under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The Corporation is proud of the ability of all of its seventeen Partners to withstand the economic impacts from the pandemic and to be well prepared throughout. As previously disclosed, second quarter revenue and cash flows were negatively impacted by the novel coronavirus disease 2019 ("COVID-19") as certain Partners, as defined below, required a deferral of distributions to help navigate through temporary closures. The direct impact of COVID-19 to the financial statements for the three-month period ended June 30, 2020 was a deferral of $5.8 million of distributions from Body Contours Centers, LLC ("BCC") and PF Growth Partners ("PFGP"), or 22% of the total expected revenue for that period. Also in the second quarter, there was a net aggregate increase in the fair value of the Partners of $8.4 million, resulting in a book value per share for the Corporation of $15.44 at June 30, 2020.

Q2 2020 Highlights:

  • Generated revenue of $20.2 million in the quarter, a 24% decline on a per share basis compared to the prior year period as a result of the deferral of all the second quarter distributions from BCC and PFGP:
    • The Corporation is pleased to report that beginning in Q3 2020, BCC will be restarting distributions as all their locations have re-opened and they have seen positive results from all key performance indicators to date.
    • PFGP has re-opened a majority of their locations with no clear timeline to opening the remaining 7 locations, and none that have re-opened have since been shut down. Discussions surrounding re-starting distributions will take place with PFGP and its lenders once all locations have re-opened and have returned to normal operating conditions. All deferred distributions from BCC and PFGP are expected to be collected at a future date but have not been recorded in the financial statements;
  • The Corporation is pleased to report a restart in distributions for Kimco Holdings, LLC ("Kimco") of US$1.2 million on an annual basis, beginning in July 2020, a result of the notable financial results as well as their outlook moving forward. Kimco has provided a number of ancillary cleaning services throughout the COVID-19 pandemic due to the heightened need for sanitization and have won a number of new clients that will generate recurring revenue into 2021;

  • The Corporation is also pleased to report a $0.4 million quarterly dividend on the common shares of Amur Financial Group Inc. ("Amur") after not receiving a common dividend in the first quarter of 2020;

  • Net increases to the fair value of Alaris' investments totalled $8.4 million for the quarter, which includes increases of: $8.1 million for Lower Mainland Steel ("LMS") based on positive results year-to-date and the expectation for another positive reset in 2021, $2.6 million for BCC as they have been able to recover from their COVID-19 shut down more quickly than originally anticipated and $2.1 million for Kimco for the reasons noted above. These were partially offset by a decrease in fair value on GWM Holdings, Inc. ("GWM") of $4.4 million as a result of an expectation of a negative reset in 2021 following the impact to 2020 results from COVID-19, although they remain one of the Corporation's strongest performing Partners with an Earnings Coverage Ratio well in excess of 2.0x;

  • The Corporation completed an initial investment into Carey Electric Contracting LLC ("Carey Electric") for US$17.0 million, consisting of US$16.1 million of preferred equity and a US$0.9 million investment in exchange for a minority ownership of their common equity. Alaris will initially receive US$2.4 million of preferred distributions and is expecting to receive dividends on its common equity investment on an annual basis, as Carey Electric's cash flows permit;

  • During June, Alaris finalized an amending agreement to its credit facility agreement with its syndicate of senior lenders that will allow for covenant flexibility throughout the next twelve to eighteen months, if required. One key amendment included that the maximum debt to contracted EBITDA covenant (the "leverage covenant") may be increased from 2.5:1, to 3.0:1 until March 30, 2021 (previously was for a period of up to 90 days), if needed (as of June 30, 2020 the Corporation's leverage covenant was 1.98x). The other key amendment is that the fixed charge coverage ratio of 1:1 may now include the Corporation's pro-forma dividends at $1.24 per share, whereas previously it was actual dividends paid in the previous twelve months, while pricing remained the same;

  • The Corporation announced on July 24, 2020, that its Board of Directors had unanimously approved the reorganization of the Corporation into an income trust to be named Alaris Equity Partners Income Trust ("AEP") pursuant to a plan of arrangement (the "Arrangement"). The Arrangement will be subject to shareholder approval at a special meeting of shareholders to be held on August 31, 2020. The Arrangement is the foundation of a plan to enhance shareholder value and for continued prudent growth and will help simplify the Corporation's existing cross-border investment structure;

  • In connection with the Arrangement, the Corporation further announced an expected increase to its annual distribution of $0.08 per trust unit (from $1.16 per share to $1.24 per trust unit on an annual basis). If the Arrangement is approved by shareholders on August 31, 2020, the next quarterly trust distribution would be declared in September 2020 and payable on or about October 15, 2020 to unitholders of record as of September 30, 2020 and is expected to be $0.31 per trust unit;

  • Subsequent to June 30, 2020, the Corporation entered into an agreement with a third-party supplier and Federal Resources Supply Company ("FED") to purchase Personal Protective Equipment (the "PPE Order"). The PPE Order is a part of a larger total order including the sourcing and sale of over 4.5 billion medical grade nitrile gloves which will be distributed to the U.S. Government. The capital commitment at any one time is expected to be between US$25 and US$35 million (the "PPE Funds") based on the timing of weekly cash inflows and outflows during the approximate 10-week period of the agreement. The first such advance of US$11.5 million was made on July 28, 2020. Alaris will provide the PPE Funds in exchange for a share of the margin on the products included in the PPE Order;

  • The Corporation paid $5.0 million of dividends during the three months ended June 30, 2020, resulting in an Actual Payout Ratio of 37.0% for the three-month period. The lower than expected Actual Payout Ratio was due to the change in timing for dividends being paid, as they are now being paid quarterly instead of monthly, with the first quarterly dividend being paid after June 30, 2020 on July 15, 2020; and

  • Up to the date of this release the Corporation has repurchased for cancellation 1,156,541 of its common shares at an average price of $8.69 per common share through its Normal Course Issuer Bid ("NCIB"). The share repurchases have resulted in a total annualized pre-tax savings of approximately $1.39 million or $0.04 per share, at the new dividend rate of $1.24 per share.

"With now three months of results in this unique environment, the quality of our businesses and the management teams that run them is showing through. The fair value increases in the current quarter is a reflection of Alaris' improved outlook around the expected impact that COVID-19 would have on each business. While we're not out of the woods, it has been encouraging to see that most of our businesses are providing required services and have been able to successfully operate in these unforeseen times," said Steve King, President and CEO, Alaris Royalty Corp. "Additionally, we are pleased to be supporting our partner Federal Resources in executing the largest PPE order in their history, delivering nearly five billion essential medical gloves to the U.S. Government. Part of Alaris' success in attracting best in class companies has been our speed and flexibility in dealing with unique opportunities like this one," said King.

Per Share Results

Three months ended

Six months ended 

Period ending June 30

2020

2019

% Change

2020

2019

% Change

Revenue

$ 0.57

$ 0.75

-24.0%

$ 1.50

$ 1.51

-0.7%

Normalized earnings

$ 0.45

$ 0.60

-25.0%

$ (0.68)

$ 0.91

-174.7%

Normalized EBITDA

$ 0.48

$ 0.66

-27.3%

$ 1.07

$ 1.34

-20.1%

Net cash from operating activities

$ 0.38

$ 0.44

-13.6%

$ 1.11

$ 1.01

+9.9%

Dividends declared

$ 0.29

$ 0.41

-29.7%

$ 0.70

$ 0.83

-14.8%

Basic earnings

$ 0.10

$ 0.60

-83.3%

$ (1.08)

$ 0.91

-218.7%

Fully diluted earnings

$ 0.10

$ 0.60

-83.3%

$ (1.08)

$ 0.90

-220.0%

Weighted average basic shares (000's)

35,735

36,556


36,214

36,527


Revenue per share decreased 24.0% during the three months ended June 30, 2020 due to the deferral of distributions during the quarter from BCC and PFGP. The additional revenue in the current period from new investments in Amur, Stride Consulting LLC ("Stride") and Carey Electric, along with a follow-on investment into Unify Consulting, LLC ("Unify"), was offset by the redemptions in Sales Benchmark Index LLC ("SBI") and Sandbox Acquisitions, LLC and Sandbox Advertising LP (collectively, "Sandbox"). The revenue per share decreased by just 0.7% for the six months ended June 30, 2020 as it included additional distributions from SBI on their redemption.

For the three months ended June 30, 2020, Normalized EBITDA of $0.48 per share ($17.3 million) was a decrease of 27.3% per share compared to $0.66 per share ($24.1 million) in the prior year comparable period. For the six months ended June 30, 2020, Normalized EBITDA of $1.07 per share ($38.7 million) represented a 20.1% decrease from the prior comparable period which was $1.34 per share or $48.9 million in total. The primary reason for the decrease in both periods was the deferral of distributions from BCC and PFGP during the second quarter.

Reconciliation of Net Income to Normalized EBITDA 

Three months ended
June 30

Six months ended
June 30

$ thousands

2020

2019

2020

2019

Earnings 

$ 3,535

$ 21,966

$ (39,127)

$ 33,228

Normalizing Adjustment





Non-recurring tax expenses related to US Tax Regulations

12,638

-

14,638

-

Normalized Earnings / (Loss)

$ 16,173

$ 21,966

$ (24,489)

$ 33,228

Adjustments to Net Income:





Amortization and depreciation

42

228

119

330

Finance costs

4,308

3,931

9,062

8,067

Income tax expense - net of non-recurring tax above

1,785

4,270

(11,837)

5,106

EBITDA

$ 22,308

$ 30,395

$ (27,145)

$ 46,731

Normalizing Adjustments





Realized (gain) / loss on investment

-

-

(11,603)

-

Unrealized (gain) / loss on investments at fair value

(8,385)

(9,292)

88,142

(4,195)

Transaction diligence costs

958

828

2,935

1,007

Bad debt expense / (recovery)

-

(2,018)

-

(2,018)

Distributions received on redemption (SBI)

-

-

(9,176)

-

Unrealized loss on foreign exchange

730

3,320

(6,263)

6,317

Realized loss on foreign exchange

264

878

186

1,048

Legal and accounting fees for trust conversion

1,430

-

1,650

-

Normalized EBITDA

$ 17,305

$ 24,111

$ 38,726

$ 48,890






The Corporation is also announcing that Peter Grosskopf has tendered his resignation as a director of Alaris effective as of July 28, 2020 because of other business commitments, including as CEO of Sprott. Inc.

Outlook

The Corporation's results in the three and six months ended June 30, 2020 were negatively affected by the COVID-19 pandemic, as revenue, cash flows from operations and Normalized EBITDA were all less than forecast during Q2 2020 and in the first quarter there was a net write-down in the fair values of investments due to anticipated reductions in future distributions from certain Partners at that time. Overall, the Partners' businesses have experienced a wide range of impact from the COVID-19 pandemic, but all continue to manage their operations and business landscapes effectively. However, due to the continued uncertainty regarding future impacts to the Partners from COVID-19, the Corporation deems it prudent to continue to withhold from providing financial guidance for the remainder of 2020. The potential for delays or issues with the recovery from COVID-19, makes it difficult to accurately project the expected distributions for the next twelve-month period but based on the current expectations from each Partner, revenue for Q3 is expected to be $22.8 million. The Corporation describes the impact COVID-19 has had on each Partner in further detail in the MD&A and continues to work with each management team to assist them through this unprecedented environment.

The senior debt facility was drawn to $176.2 million at June 30, 2020, with the capacity to draw up to another $157.7 million based on covenants and credit terms. The annual interest rate on that debt was approximately 5.9% at June 30, 2020. During the three months ended June 30, 2020, the Corporation also closed an amendment to its credit facility with its syndicate of senior lenders. The amendment will give Alaris the required flexibility on financial covenants and permitting deployment as the Corporation navigates through the next twelve to eighteen 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.alarisroyalty.com.

Earnings Release Date and Conference Call Details

Alaris management will host a conference call at 9am MDT (11am EDT), Wednesday, July 29, 2020 to discuss the financial results for Q2 2020 and outlook for the Corporation.

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: Q2 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 814575#.  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.alarisroyalty.com.  

Special Meeting

Alaris will be holding a special meeting of common shareholders at 11:00am MDT on Monday, August 31, 2020. Materials have been mailed to shareholders of record as of July 17, 2020 and copies are available along with the Corporation's profile on SEDAR at www.sedar.com as well as on its website under the "Investors" section. Please monitor our website at https://www.alarisroyalty.com/investors for updated information.

An updated corporate presentation will be posted to the Corporation's website within 24 hours at www.alarisroyalty.com.

About the Corporation:
Alaris provides alternative financing to private companies ("Partners") in exchange for distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders.  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, Actual Payout Ratio, Earnings Coverage Ratio, Per Share and IRR are financial measures used in this news release that are not standard measures under International Financial Reporting Standards ("IFRS"). The Corporation's method of calculating EBITDA, Normalized EBITDA, Actual Payout Ratio, Earnings Coverage Ratio, Per Share, IRR and Normalized Earnings may differ from the methods used by other issuers. Therefore, the Corporation's EBITDA, Normalized EBITDA, Actual Payout Ratio, Earnings Coverage Ratio, Per Share and IRR may not be comparable to similar measures presented by other issuers.

Actual Payout Ratio refers to Alaris' total cash dividends paid during the period (annually or quarterly) divided by the actual net cash from operating activities Alaris generated for the period.

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 Corporation's ability to generate cash available for debt service, working capital, capital expenditures, income taxes and dividends.

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 the Corporation incurs outside of its common day-to-day operations. For the six months ended June 30, 2020, these include the distributions received upon redemption of SBI and in the three and six months ended June 30, 2020 the non-recurring legal expenses related to the income trust conversion. For the three and six months ended June 30, 2019, these include a bad debt recovery related to Phoenix. 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 Share values, other than earnings per share, refer to the related financial statement caption as defined under IFRS or related term as defined herein, divided by the weighted average basic shares 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.

Normalized Earnings refers to Earnings excluding non-recurring tax expenses related to newly enacted US Tax regulations that were applied retrospectively to January 1, 2019.

The terms EBITDA, Normalized EBITDA, Actual Payout Ratio, Earnings Coverage Ratio, Per Share and IRR should only be used in conjunction with the Corporation'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 Corporation and the Private Company Partners, the future financial position or results of the Corporation, business strategy and plans and objectives of or involving the Corporation 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 Corporation's Partners; the impact of COVID-19 on the operations of the Corporation and those of its Partners; expected amendments to the Corporation's senior credit agreement and the impact thereof; the amount of the Corporation's dividend (both quarterly and on an annualized basis); the use of proceeds from the Corporation's senior credit facility; the Corporation's ability to deploy capital; impact of capital deployment; and the impact of the reduction in the Corporation's dividend. To the extent any forward-looking statements herein constitute a financial outlook, including estimates regarding revenues, distributions from Partners (including expected resets), 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 begin 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 current 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 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 Corporation 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 Corporation and its 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 redeem 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 Corporation; 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 the Corporation's Management Discussion and Analysis for the year ended December 31, 2019, which is filed under the Corporation's profile at www.sedar.com and on its website at www.alarisroyalty.com.  Accordingly, readers are cautioned not to place undue reliance on any forward-looking information contained in this news release.  Statements containing forward–looking information reflect management's current beliefs and assumptions based on information in its possession on the date of this news release.  Although management believes that the expectations represented in such forward–looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

Alaris Royalty Corp.
Condensed consolidated statements of financial position (unaudited)





30-Jun

31-Dec

$ thousands

2020

2019

Assets



Cash and cash equivalents

$ 21,655

$ 17,104

Prepayments

1,356

1,509

Derivative contracts

-

555

Trade and other receivables

2,144

1,226

Income taxes receivable

1,588

4,205

Investment tax credit receivable

600

1,032

Assets acquired held for sale

-

97,173

Promissory notes receivable

5,796

6,580

Current Assets

$ 33,139

$ 129,384

Promissory notes and other receivables

20,567

19,663

Deposits

20,206

20,206

Property and equipment

940

1,053

Investments

752,295

881,037

Investment tax credit receivable

2,372

2,243

Deferred income taxes

-

986

Non-current assets

$ 796,380

$ 925,188

Total Assets

$ 829,519

$ 1,054,572




Liabilities



Accounts payable and accrued liabilities

$ 2,892

$ 2,713

Dividends payable

10,319

5,047

Derivative contracts

2,829

-

Liabilities acquired held for sale

-

60,297

Office Lease

715

837

Income tax payable

460

384

Current Liabilities

$ 17,215

$ 69,278

Deferred income taxes

4,019

4,715

Loans and borrowings

167,226

285,193

Convertible debenture

91,792

90,939

Non-current liabilities

$ 263,037

$ 380,847

Total Liabilities

$ 280,252

$ 450,125




Equity



Share capital

$ 615,794

$ 625,313

Equity component of convertible debenture

4,059

4,059

Equity reserve

15,854

14,763

Translation reserve

34,884

17,076

Retained earnings / (deficit)

(121,324)

(56,764)

Total Equity

$ 549,267

$ 604,447




Total Liabilities and Equity

$ 829,519

$ 1,054,572

Alaris Royalty Corp.
Condensed consolidated statements of comprehensive income / (loss) (unaudited)








Three months ended
June 30


Six months ended
June 30

 $ thousands except per share amounts

2020

2019


2020

2019







Revenues, net of realized foreign exchange gain or loss

$ 20,203

$ 26,523


$ 54,174

$ 54,011

Net realized gain from investments

-

-


11,603

-

Net unrealized gain / (loss) of investments at fair value 

8,385

9,292


(88,142)

4,195

Total revenue and other operating income / (loss)

$ 28,588

$ 35,815


$ (22,365)

$ 58,206







General and administrative

3,712

2,391


6,485

4,916

Transaction diligence costs

958

828


2,935

1,007

Non-cash stock-based compensation

880

900


1,623

1,253

Bad debt expense / (recovery)

-

(2,018)


-

(2,018)

Depreciation and amortization

42

228


119

330

Total operating expenses

5,592

2,329


11,162

5,488

Earnings / (loss) from operations

$ 22,996

$ 33,486


$ (33,527)

$ 52,718

Finance costs

4,308

3,931


9,062

8,067

Unrealized (gain) / loss on foreign exchange

730

3,319


(6,263)

6,317

Earnings / (loss) before taxes

$ 17,958

$ 26,236


$ (36,326)

$ 38,334

Current income tax expense

7,857

2,785


2,271

5,317

Deferred income tax expense / (recovery)

6,566

1,485


530

(211)

Total income tax expense

14,423

4,270


2,801

5,106

Earnings / (loss)

$ 3,535

$ 21,966


$ (39,127)

$ 33,228







Other comprehensive income / (loss)






Foreign currency translation differences

(11,693)

(7,131)


17,808

(14,842)

Total comprehensive income / (loss)

$ (8,158)

$ 14,835


$ (21,319)

$ 18,386







Earnings / (loss) per share






Basic

$ 0.10

$ 0.60


$ (1.08)

$ 0.91

Fully diluted 

$ 0.10

$ 0.60


$ (1.08)

$ 0.90

Weighted average shares outstanding






Basic 

35,735

36,556


36,214

36,527

Fully Diluted 

36,127

36,905


36,606

36,876

Alaris Royalty Corp.
Condensed consolidated statements of cash flows (unaudited)


Six months ended June 30

 $ thousands

2020

2019

Cash flows from operating activities



Earnings / (loss) for the period

$ (39,127)

$ 33,228

Adjustments for:



Finance costs

9,062

8,067

Deferred income tax expense / (recovery)

530

(211)

Depreciation and amortization

119

330

Net realized gain from investments

(11,603)

-

Net unrealized (gain) / loss of investments at fair value 

88,142

(4,195)

Unrealized (gain) / loss on foreign exchange

(6,263)

6,317

Transaction diligence costs

2,935

1,007

Non-cash stock-based compensation

1,623

1,253

Change in:



- trade and other receivables

(452)

(962)

- income tax receivable / payable

2,693

327

- prepayments

153

764

- accounts payable, accrued liabilities

179

(1,248)

Cash generated from operating activities

47,991

44,677

Cash interest paid

(7,819)

(7,719)

Net cash from operating activities

$ 40,172

$ 36,958




Cash flows from investing activities



Acquisition of investments

$ (28,178)

$ (87,154)

Transaction diligence costs

(2,935)

(1,007)

Proceeds from partner redemptions

111,306

13,505

Proceeds on disposal of assets and liabilities held for sale

38,730

-

Promissory notes issued

-

(3,929)

Promissory notes repaid

784

870

Net cash from / (used in) investing activities

$ 119,707

$ (77,715)




Cash flows from financing activities



Repayment of loans and borrowings

$ (160,102)

$ (62,796)

Proceeds from loans and borrowings

38,015

30,634

Proceeds from convertible debenture, net of fees

-

95,572

Dividends paid

(20,161)

(30,103)

Common share repurchases

(10,051)

-

Office lease payments

(122)

(292)

Net cash from / (used in) financing activities

$ (152,421)

$ 33,015




Net increase / (decrease) in cash and cash equivalents

$ 7,458

$ (7,742)

Impact of foreign exchange on cash balances

(2,907)

(1,170)

Cash and cash equivalents, Beginning of period

17,104

22,774

Cash and cash equivalents, End of period

$ 21,655

$ 13,862




Cash taxes paid / (received)

$ (402)

$ 4,740

 

SOURCE Alaris Royalty Corp.


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