Alaris Royalty Corp Releases First Quarter Financial Results
CALGARY, ALBERTA -- (Marketwired) -- 05/06/13 -- Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX: AD) today announced its results for the three months ended March 31, 2013.
The Corporation continued to apply its five investment strategy pillars of Low Volatility, Visibility, Diversification, Liquidity and Growth during another strong quarter. The results of the quarter are summarized in three key performance metrics compared to the prior year period:
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Three Months Ended March 31, 2013 March 31, 2012 % Change
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Revenue per share(1) $ 0.44 $ 0.36 +22.4%
EBITDA per share(1) $ 0.38 $ 0.28 +31.2%
Dividends per share(1) $ 0.315 $ 0.285 +10.5%
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(1) Using the weighted average shares outstanding for the period.
For the three months ended March 31, 2013, the Corporation's revenue from partner companies increased 55% to $10.77 million compared to $6.93 in the prior year period. The increase was due to the addition of three new private company partners in the past 14 months: Labstat International Limited Partnership ("Labstat") in June 2012, Agility Health, LLC ("Agility") in December 2012, and SHS Services Management Limited Partnership ("SHS") in March 2013. The Corporation also completed follow on contributions into KMH Limited Partnership ("KMH") and Killick Aerospace Limited Partnership ("Killick") in the second half of 2012. Each of these transactions added new revenues in the first three months of 2013 compared to the prior year.
For the three months ended March 31, 2013, the Corporation recorded earnings of $6.69 million and EBITDA of $9.39 million compared to earnings of $3.96 million and EBITDA of $5.64 million in the prior year period. The 69% increase in earnings and the 66% increase in EBITDA in the current period was due to the new revenue streams noted above as they were added with minimal additional costs.
"Our first quarter was another successful one with the addition of a new Partner and financial results as we expected. Alaris experienced significant increases in both earnings and EBITDA in the quarter, a direct result of the continued execution of our business plan to find well run, successful new partners with a long track record of sustainable cash flow. With the early redemption of the LifeMark units subsequent to the end of the quarter, our balance sheet is poised for the next opportunity with a completely undrawn credit facility and approximately $10 million of cash," said Darren Driscoll, CFO, Alaris Royalty Corp.
Outlook
Alaris' agreements with its partner companies (its "Private Company Partners") provide for estimated revenues to Alaris of approximately $43.0 million for 2013. Revenues from our Private Company Partners for the three months ended June 30, 2013 are expected to be $10.8 million. The Corporation has all of its $50 million credit facility for use in future transactions alongside approximately $10 million in cash. General and administrative expenses are currently estimated to be $4.0 million for 2013, inclusive of all public company costs. Cash requirements after earnings are expected to remain at minimal levels.
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.
About the Corporation:
Alaris provides alternative financing to the Private Company 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 Private Company Partners are structured as a percentage of a "top line" financial performance measure such as gross margin and same-store sales and rank in priority to the owners' common equity position.
Non-IFRS Measures
The term EBITDA is a financial measure used in this news release that not a standard measure under International Financial Reporting Standards ("IFRS"). The Corporation's method of calculating EBITDA may differ from the methods used by other issuers. Therefore, the Corporation's EBITDA may not be comparable to similar measures presented by other issuers.
EBITDA refers to net earnings (loss) 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. The Corporation has provided a reconciliation of net income to EBITDA in this news release.
The term EBITDA should only be used in conjunction with the Corporation's annual audited and quarterly reviewed 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 statements under applicable securities laws. 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, the future financial position or results of the Corporation, business strategy, and plans and objectives of or involving the Corporation or the Private Company 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 revenues to be received by Alaris and its general and administrative expenses in 2013, and the cash requirements of Alaris in 2013.
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 in 2013 and how that will affect Alaris' business and that of its Private Company Partners 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 grow moderately over the next 12 months, that interest rates will not rise in a material way over the next 12 to 24 months, that the Private Company Partners will continue to make distributions to Alaris as and when required, that the businesses of the Private Company Partners will continue to grow, what the Corporation expects to experience regarding resets to its annual royalties and distributions from its Private Company Partners in 2013, 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 capital markets will remain stable and that the Canadian dollar will remain in a range of approximately plus or minus 5% of par relative to the U.S. dollar. 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.
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 Private Company 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 dependence of Alaris on the Private Company Partners; reliance on key personnel; general economic conditions; failure to complete or realize the anticipated benefit of Alaris' financing arrangements with the Private Company Partners; government regulations; and risks relating to the Private Company Partners and their businesses. Additional risks that may cause actual results to vary from those indicated are discussed under the heading "Risk Factors" in the Corporation's Annual Information Form for the year ended December 31, 2012, which is filed under the Corporation's profile at www.sedar.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.
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Reconciliation of Earnings to EBITDA
(thousands) March 31, 2013 March 31, 2012
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Earnings $ 6,689 $ 3,957
Adjustments to Earnings:
Amortization 26 27
Interest expense 595 116
Deferred income tax expense 2,076 1,538
EBITDA $ 9,386 $ 5,638
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Alaris Royalty Corp.
Condensed consolidated statement of financial position (unaudited)
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March 31 December 31
2013 2012
Assets
Cash and cash equivalents $ 6,009,865 $ 3,638,255
Prepayments 40,349 182,811
Trade and other receivables 2,842,934 3,417,642
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Current Assets 8,893,148 7,238,708
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Promissory note receivable 7,250,000 1,250,000
Equipment 56,188 59,881
Intangible assets 6,547,467 6,570,201
Preferred LP Units 314,341,599 298,226,402
Investment tax credit receivable 10,922,393 10,922,393
Deferred income taxes 7,330,415 8,673,125
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Non-current assets 346,448,062 325,702,002
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Total Assets $355,341,210 $332,940,710
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Liabilities
Accounts payable and accrued liabilities $ 536,770 $ 1,805,561
Dividends payable 2,646,957 2,345,347
Income taxes payable 341,837 40,585
Loans and borrowings 1,166,667 -
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Current Liabilities 4,692,231 4,191,493
Loans and borrowings 12,833,333 50,000,000
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Non-current liabilities 12,833,333 50,000,000
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Total Liabilities $ 17,525,564 $ 54,191,493
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Equity
Share capital $311,803,545 $252,016,172
Equity reserve 3,147,009 2,930,483
Fair value reserve 2,336,689 2,336,689
Translation reserve 38,823 (265,220)
Retained Earnings 20,489,580 21,731,093
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Total Equity $337,815,646 $278,749,217
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Total Liabilities and Equity $355,341,210 $332,940,710
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Commitments
Subsequent events
Alaris Royalty Corp.
Condensed consolidated statement of comprehensive income (unaudited)
For the three months ended March 31
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2013 2012
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Revenues
Royalties and distributions $10,766,230 $ 6,931,784
Interest 196,899 -
Gain/(loss) on foreign exchange contracts (155,653) 106,534
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Total Revenue 10,807,476 7,038,317
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Salaries and benefits 290,773 232,810
Corporate and office 384,217 307,157
Legal and accounting fees 153,575 185,327
Non-cash stock-based compensation 729,698 349,488
Depreciation and amortization 26,427 26,539
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Subtotal 1,584,690 1,101,321
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Earnings from operations 9,222,786 5,936,996
Finance cost 595,061 116,178
Unrealized foreign exchange (gain)/ loss (459,780) 325,988
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Earnings before taxes 9,087,505 5,494,830
Deferred income tax expense 2,076,180 1,400,958
Current income tax expense 321,937 137,232
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Earnings $ 6,689,388 $ 3,956,640
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Other comprehensive income
Foreign currency translation differences 304,043 (209,616)
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Other comprehensive income for the period, net of
income tax 304,043 (209,616)
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Total comprehensive income for the period $ 6,993,431 $ 3,747,024
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Earnings per share
Basic earnings per share $ 0.27 $ 0.20
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Fully diluted earnings per share $ 0.26 $ 0.20
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Weighted average shares outstanding
Basic 24,715,021 19,476,369
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Fully Diluted 25,329,889 20,135,586
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Alaris Royalty Corp.
Condensed consolidated statement of cash flows (unaudited)
For the three months ended March 31
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2013 2012
Cash flows from operating activities
Earnings from the period $ 6,689,388 $ 3,956,640
Adjustments for:
Finance costs 595,061 116,178
Deferred income taxes 2,076,180 1,400,958
Depreciation and amortization 26,427 26,539
Unrealized foreign exchange (gain)/loss (459,780) 325,988
(Gain)/Loss on foreign exchange contracts 155,653 (106,534)
Non-cash stock based compensation 729,698 349,488
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$ 9,812,627 $ 6,069,257
Change in:
-trade and other receivables $ 451,168 $ 3,082,362
-prepayments 142,462 38,268
-trade and other payables (967,539) (1,066,494)
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Cash generated from operating activities 9,438,718 8,123,393
Finance costs (595,061) (116,178)
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Net cash from operating activities $ 8,843,657 $ 8,007,215
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Cash flows from investing activities
Acquisition of equipment $ - $ (4,665)
Acquisition of Preferred LP Units (15,350,837) (210,223)
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Net cash used in investing activities $(15,350,837) $ (214,888)
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Cash flows from financing activities
Proceeds from debt 15,000,000 -
Repayment of debt (51,000,000) (2,000,000)
Promissory notes issued (6,000,000) -
New share capital, net of share issue costs 56,208,127 -
Proceeds from exercise of options 2,332,604 -
Dividends paid (7,597,310) (5,550,656)
Payments in lieu of dividends on RSUs (64,631) (68,146)
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Net cash used in financing activities $ 8,878,790 $ (7,618,802)
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Net increase in cash and cash equivalents $ 2,371,610 $ 173,525
Cash and cash equivalents, Beginning of period 3,638,255 3,888,465
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Cash and cash equivalents, End of period $ 6,009,865 $ 4,061,990
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Contacts:
Alaris Royalty Corp.
Curtis Krawetz
Analyst, Manager of Investor Relations
403-221-7305
www.alarisroyalty.com