CALGARY, ALBERTA--(Marketwire - Nov. 2, 2011) - Alaris Royalty Corp. (TSX:AD) ("Alaris" or the "Corporation") today announced its results for the three and nine months ended September 30, 2011. The results are prepared under International Financial Reporting Standards ("IFRS").
Highlights for the quarter included:
- The addition of a new Partner, Killick Aerospace Limited Partnership ("Killick") in July 2011. Revenues from Killick were $1.005 million in the quarter and will be $1.075 million in the next full quarter.
- Partner revenues increased 16% and Normalized EBITDA increased 18% compared to the prior year quarter.
- Dividends were paid at $0.085 per share each month and have recently been increased to $0.095 per month starting with the dividend to be paid November 15, 2011.
Partner revenues for the three and nine months ended September 30, 2011 increased as expected by 16% and 28% respectively, to $4.84 million and $15.7 million, compared to $4.16 million and $12.3 million in the prior year periods. The increase was due to the addition of three new private company partners in the past eighteen months: KMH Limited Partnership ("KMH") in May 2010; Solowave Design Limited Partnership ("Solowave") in December 2010; and Killick in July 2011.
For the three and nine months ended September 30, 2011, the Corporation recorded net income of $2.7 million and $28.3 million, respectively; EBITDA of $3.8 million and $39.2 million, respectively; and Normalized EBITDA of $3.8 million and $11.5 million, respectively, compared to net income of $2.0 million and $5.8 million, and EBITDA and Normalized EBITDA of $3.2 million and $9.5 million in the prior year periods. The increases to Net Income and EBITDA in the current period are due to having full periods of revenues from KMH and Solowave and two and a half months of revenues from Killick while most of the increase in the nine month period was due to the significant gains realized on the reduction of the Corporation's interests in LifeMark Health Limited Partnership ("LifeMark") and MEDIchair Ltd ("MEDIchair") in June of the current year.
"After a remarkable second quarter where we realized significant gains on the reduction of our LifeMark and MEDIchair interests, our third quarter was a return to our normal and predictable results. In the current quarter, we saw the first revenues from our newest partner in Killick and our revenues from our other Partners were as expected. The end result is another strong quarter with an 18% increase in EBITDA compared to the prior year period." said Darren Driscoll, CFO, Alaris Royalty Corp.
|Reconciliation of Net Income to EBITDA (thousands)||3 months ending
Sept 30, 2011
|3 months ending
Sept 30, 2010
|9 months ending
Sept 30, 2011
|9 months ending
Sept 30, 2010
|Adjustments to Net Income:|
|Income tax expense||1,053||837||9,897||2,376|
|Gain on reduction of LifeMark interest||-||-||23,816||-|
|Gain on sale of intangible assets||-||-||3,892||-|
Alaris' agreements with its partner companies (its "Private Company Partners") provide for estimated revenues to Alaris of approximately $21.0 million for 2011, excluding the second quarter gains on the LifeMark and MEDIchair interests. Revenues from our Private Company Partners for the three months ended December 31, 2011 are expected to be $5.2 million. The Corporation still has over $15 million remaining on its $30 million credit facility for use in future transactions. General and administrative expenses are currently estimated to be $3.5 million for 2011, inclusive of all public company costs. Cash requirements after net income are expected to be minimal, as current capital expenditures consist of office furniture and computer equipment. The Corporation had no debt at September 30, 2011 and borrowed $14.5 million on October 7th for the previously announced further investment into KMH.
The Condensed 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 royalties or distributions with the principal objective of generating stable and predictable cash flows for dividend payments to its shareholders. Royalties or 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.
The terms EBITDA and Normalized EBITDA 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 and Normalized EBITDA may differ from the methods used by other issuers. Therefore, the Corporation's EBITDA and Normalized 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.
Normalized EBITDA refers to EBITDA excluding items that are non-recurring in nature, such as gains on the reduction of interests in Private Company Partners.
The terms EBITDA and Normalized 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.
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 financial and operating performance of the Private Company Partners in 2011, the revenues to be received by Alaris and its general and administrative expenses in 2011, and the cash requirements of the Corporation
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 2011 and 2012 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 in the balance of 2011 and 2012, that interest rates will remain low, 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, that the Corporation will experience positive resets to its annual royalties and distributions from its Private Company Partners in 2011, 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 continue to improve and that the Canadian dollar will strengthen modestly relative to the U.S. dollar. In determining expectations for economic growth, management of Alaris primarily consider 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, 2010, 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.
|Alaris Royalty Corp.|
|Condensed consolidated statement of financial position (unaudited)|
|September 30||December 31|
|Cash and cash equivalents||$ 12,298,443||$1,816,868|
|Trade and other receivables||577,431||688,514|
|Preferred LP Units||5||158,372,169||182,907,000|
|Investment tax credit receivable||6||10,922,393||10,922,393|
|Deferred income taxes||6||11,027,646||18,158,192|
|Accounts payable and accrued liabilities||$ 1,166,595||1,421,992|
|Loans and borrowings||9||-||29,200,000|
|Accumulated other comprehensive income||3,332,034||22,350,157|
|Total Liabilities and Equity||$200,004,125||$227,802,738|
|Alaris Royalty Corp.|
|Condensed consolidated statement of comprehensive income (unaudited)|
|Three months ended Sept 30||Nine months ended Sept 30|
|Royalties and distributions||5||$||4,842,028||4,165,073||15,712,932||$||12,253,560|
|Interest and other||24,847||-||38,624||2,190|
|Gain on reduction of partner interests||-||-||23,815,973||-|
|Gain on sale of intangible assets||-||-||3,891,560||-|
|Salaries and benefits||225,402||204,787||1,661,409||628,612|
|Corporate and office||124,180||131,271||592,331||467,226|
|Legal and accounting fees||120,658||118,446||377,676||321,217|
|Non-cash stock-based compensation||10||559,932||461,414||1,591,350||1,367,343|
|Depreciation and amortization||26,713||47,611||116,343||141,997|
|Earnings from operations||3,809,990||3,201,544||39,119,980||9,329,355|
|Earnings before taxes||3,774,616||2,893,902||38,241,213||8,152,721|
|Deferred income tax expense||6||1,053,375||836,733||9,897,408||2,376,401|
|Other comprehensive income|
|Net change in fair value of available-for-sale financial assets||5||-||984,000||2,280,975||4,129,466|
|Tax impact of change in fair value||-||(123,000||)||(285,122||)||(516,183||)|
|Realized gain on reduction of partnership interest||-||-||(24,015,973||)||-|
|Tax impact of realized gain||-||-||3,001,997||-|
|Other comprehensive income for the period, net of income tax||-||861,000||(19,018,123||)||3,613,283|
|Total comprehensive income for the period||$||2,721,000||$||2,918,169||$||9,325,682||$||9,389,603|
|Earnings per share|
|Basic earnings per share||$||0.16||$||0.15||$||1.68||$||0.46|
|Fully diluted earnings per share||$||0.16||$||0.14||$||1.62||$||0.44|
|Weighted average shares outstanding|
|Alaris Royalty Corp.|
|Condensed consolidated statement of cash flows (unaudited)|
|For the nine months ended September 30|
|Cash flows from operating activities|
|Earnings from the period||$28,343,805||$5,776,320|
|Deferred income taxes||6||9,897,408||2,376,401|
|Depreciation and amortization||7||116,343||141,997|
|Gain on intangible asset sale and reduction of partnership interest||(27,707,533||)||-|
|Non-cash stock based compensation||10||1,591,350||1,367,343|
|-trade and other receivables||111,083||(174,696||)|
|-trade and other payables||(254,257||)||(395,993||)|
|Cash generated from operating activities||13,263,142||10,046,631|
|Net cash from operating activities||12,384,375||8,869,997|
|Cash flows from investing activities|
|Acquisition of equipment||(7,232||)||(16,141||)|
|Acquisition/disposition of Preferred LP Units||(28,434,180||)||(13,289,437||)|
|Proceeds from reduction in Preferred LP Units||65,000,000||-|
|Net cash used in investing activities||$36,558,588||$(13,305,578||)|
|Cash flows from financing activities|
|New share capital||8||-||15,275,096|
|Proceeds from exercise of warrants||8||3,808,500||3,820,500|
|Proceeds from exercise of options||8||9,087||-|
|Repayment of debt||9||(29,200,000||)||(8,150,000||)|
|Payments in lieu of dividends on RSUs||10||(182,898||)||(164,969||)|
|Net cash used in financing activities||($38,461,388||)||$2,076,439|
|Net increase in cash and cash equivalents||10,481,575||(2,359,142||)|
|Cash and cash equivalents, Beginning of period||1,816,868||3,826,000|
|Cash and cash equivalents, End of period||$12,298,443||$1,466,858|