CALGARY, ALBERTA--(Marketwired - May 5, 2014) -
NOT FOR DISTRIBUTION IN THE UNITED STATES.
FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.
Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX:AD) is pleased to announce its results for the three months ended March 31, 2014.
The results of the quarter are summarized in four key performance metrics compared to the prior year period on a per share basis (the Corporation used Normalized EBITDA rather than EBITDA to back out the non-cash foreign exchange gains and losses):
|ending March 31|
|Revenue per share||$||0.55||$||0.44||+25.0%|
|Normalized EBITDA per share||$||0.49||$||0.38||+28.9%|
|Net cash from operating activities per share||$||0.45||$||0.40||+12.5%|
|Dividends per share||$||0.36||$||0.315||+14.3%|
|Weighted average basic shares outstanding (000's)||28,713||24,715|
Alaris experienced significant increases in revenue, Normalized EBITDA, net cash from operating activities and dividends on a per share basis in the quarter, a direct result of the continued execution of our business plan to find well run, successful new private company partners ("Partners") with a long track record of sustainable cash flow.
For the three months ended March 31, 2014, the Corporation's revenue from its Private Company Partners was as expected and increased 44.1% to $15.80 million compared to $10.96 million in the prior year period. On a per share basis, the increase was 25.0%. The increase was due to the addition of three new Private Company Partners in the past 12 months: SCR Mining and Tunneling, LP ("SCR") in May 2013; Sequel Youth Family Services, LLC ("Sequel") in July 2013; and SM Group International LP ("SMi") in November 2013. The Corporation also completed additional contributions into Agility Health LLC ("Agility") and Killick Aerospace Limited Partnership ("Killick") in the fourth quarter of 2013. Each of these transactions added new revenues in the current period compared to the prior year. Expenses were as expected in the quarter with legal and accounting expenses were higher compared to the prior year period due to increased tax compliance matters.
At each quarter end, the Corporation reviews the fair value of the preferred units in each of the Private Company Partners. At March 31, 2014, there were no changes to the fair values of any of the Partners. More information is provided in the Private Company Partner Update portion of the Corporation's MD&A.
|Three months ending|
|Reconciliation of Earnings to EBITDA (000's)||2014||2013|
|Adjustments to Earnings:|
|Income tax expense||3,333||2,398|
|Unrealized foreign exchange loss/(gain)||(2,538||)||(304||)|
For the three months ended March 31, 2014, the Corporation recorded earnings of $11.95 million, EBITDA of $16.47 million and Normalized EBITDA of $13.93 million compared to earnings of $6.69 million, EBITDA of $9.71 million and Normalized EBITDA of $9.40 million in the prior year period. The 48% increase in Normalized EBITDA in the quarter was due to the new revenue streams noted above as they were added with minimal additional costs. On a per share basis, the increase in Normalized EBITDA was 28.9%. The Corporation has raised the dividend twice since the end of the first quarter in the prior year resulting in a 14.3% increase in the dividends paid per share compared to the prior year period.
"We're pleased to be reporting another quarter with results in line with the outlook we provided when we announced our year end results. Despite the challenges we experienced in late 2013, the strength of our model showed through in this quarter again with significant growth on a per share basis in all of our key financial performance metrics," said Darren Driscoll, CFO, Alaris Royalty Corp.
Alaris' agreements with its Private Company Partners provide for estimated revenues to Alaris of approximately $63.2 million for 2014. Revenues from our Private Company Partners for the three months ended June 30, 2014 are expected to be approximately $15.5 million. Labstat has experienced a strong start in 2014. Based on unaudited financial statements prepared by management for the three months ended March 31, 2014, revenue and EBITDA are both well ahead of the prior year due to contracts Labstat procured in recent months commencing in 2014. Given these results are only for three months, the Corporation has not accrued any amount in the first quarter for the amount of the cash sweep expected in 2014. The Corporation has $24.5 million of its $75 million credit facility available for use in future transactions. General and administrative expenses are currently estimated to be $5.3 million for 2014, 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.
Alaris' management will host a conference call at 9am MST (11am EST) this morning to discuss the financial results and outlook for the Corporation. Participants can access the conference call by telephone by dialing toll free 1-800- 766-6630 or 1-416-340-8530. Alternatively, to listen to this event online, please enter http://www.gowebcasting.com/5405 in your web browser and follow the prompts given. 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 replay until the end of day May 12, 2014. You can access the replay by dialing toll free 1-800-408-3053 or 1-905-694-9451 and entering the passcode 2880691. The webcast will be archived for 90 days and is available for replay by using the same link as above or by clicking on the link we'll have stored under the "Investor Briefcase" 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.
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, 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. Management deems non-recurring charges to be unusual and/or infrequent charges that the Corporation incurs outside of its common day-to-day operations. For the three months ended March 31, 2014, the unrealized foreign exchange gains and losses gain are considered by management to be non-recurring charges. Adding back these non-recurring charges allows management to assess EBITDA from ongoing operations.
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. The Corporation has provided a reconciliation of net income to EBITDA and Normalized EBITDA in this news release.
This news release contains forward-looking statements as defined 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 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 2014, and the cash requirements of Alaris in 2014. To the extent any forward-looking statements herein constitute a financial outlook, 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 in 2014 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 2014, 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 th e Private Company Partners; government regulations; a failure to obtain required regulatory approvals on a timely basis or at all; changes in legislation and regulations and the interpretations thereof; and risks relating to the Private Company Partners and their businesses, including, without limitation, a material change in the operations of a Private Company Partner or the industries they operate in and a change in the ability of the Private Company Partners to continue to pay Alaris' preferred distributions. 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, 2013, 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)|
|March 31||December 31|
|Cash and cash equivalents||$||8,382,942||$||8,998,342|
|Prepayments and deposits||1,318,283||125,543|
|Trade and other receivables||2,003,891||955,831|
|Promissory notes receivable||8,550,000||8,500,000|
|Promissory notes receivable||6,915,000||6,915,000|
|Preferred LP and LLC Units||445,013,091||433,988,295|
|Investment tax credit receivable||9,569,693||10,922,393|
|Deferred income taxes||3,487,215||3,785,015|
|Accounts payable and accrued liabilities||$||456,263||$||1,361,588|
|Income taxes payable||2,532,657||1,031,701|
|Foreign exchange contracts||993,431||633,801|
|Loans and borrowings||4,208,333||-|
|Loans and borrowings||46,291,667||44,500,000|
|Fair value reserve||(4,883,951||)||(4,883,951||)|
|Total Liabilities and Equity||$||491,754,983||$||480,729,509|
|Alaris Royalty Corp.|
|Condensed consolidated statement of comprehensive income (unaudited)|
|For the three months ended March 31|
|Royalties and distributions||$||15,488,567||$||10,766,230|
|Loss on foreign exchange contracts||(359,629||)||(155,653||)|
|Salaries and benefits||337,277||290,773|
|Corporate and office||497,104||384,217|
|Legal and accounting fees||309,474||153,575|
|Non-cash stock-based compensation||723,062||729,698|
|Depreciation and amortization||26,616||26,427|
|Earnings from operations||13,546,978||9,222,786|
|Unrealized foreign exchange gain||(2,897,622||)||(459,780||)|
|Earnings before taxes||15,279,463||9,087,505|
|Deferred income tax expense||1,650,500||2,076,180|
|Current income tax expense||1,682,129||321,937|
|Other comprehensive income|
|Foreign currency translation differences||1,816,590||304,043|
|Other comprehensive income for the period, net of income tax||1,816,590||304,043|
|Total comprehensive income for the period||$||13,763,424||$||6,993,431|
|Earnings per share|
|Basic earnings per share||$||0.42||$||0.27|
|Fully diluted earnings per share||$||0.41||$||0.26|
|Weighted average shares outstanding|
|Alaris Royalty Corp.|
|Condensed consolidated statement of cash flows (unaudited)|
|For the three months ended March 31|
|Cash flows from operating activities|
|Earnings from the period||$||11,946,834||$||6,689,388|
|Deferred income taxes||1,650,500||2,076,180|
|Depreciation and amortization||26,616||26,427|
|Unrealized foreign exchange (gain)/loss||(2,897,622||)||(459,780||)|
|(Gain)/Loss on foreign exchange contracts||359,629||155,653|
|Non-cash stock based compensation||723,062||729,698|
|-trade and other receivables||$||(1,080,041||)||$||451,168|
|-trade and other payables||595,631||(967,539||)|
|Cash generated from operating activities||11,297,006||9,438,718|
|Net cash from operating activities||$||10,131,869||$||8,843,657|
|Cash flows from investing activities|
|Acquisition of equipment||$||(2,394||)||$||-|
|Acquisition of Preferred LP Units||(6,278,572||)||(15,350,837||)|
|Net cash used in investing activities||$||(6,280,966||)||$||(15,350,837||)|
|Cash flows from financing activities|
|Proceeds from debt||6,000,000||15,000,000|
|Repayment of debt||-||(51,000,000||)|
|Promissory notes issued||(50,000||)||(6,000,000||)|
|New share capital, net of share issue costs||-||56,208,127|
|Proceeds from exercise of options||5,453||2,332,604|
|Payments in lieu of dividends on RSUs||(85,192||)||(64,631||)|
|Net cash used in financing activities||$||(4,466,303||)||$||8,878,790|
|Net increase in cash and cash equivalents||$||(615,400||)||$||2,371,610|
|Cash and cash equivalents, Beginning of period||8,998,342||3,638,255|
|Cash and cash equivalents, End of period||$||8,382,942||$||6,009,865|