CALGARY, ALBERTA--(Marketwire - July 28, 2011) - Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX:AD) today announced its results for the three and six months ended June 30, 2011. The results are prepared under International Financial Reporting Standards ("IFRS").
As previously announced on June 9, 2011, Alaris reduced its interest in LifeMark Health Limited Partnership ("LifeMark") and sold its interest in MEDIchair Ltd ("MEDIchair") for total proceeds of $65 million and as a result, realized a significant gain (the "LifeMark/MEDIchair Transaction"). During the quarter, the Corporation realized a $23.8 million gain on the LifeMark portion, and a $3.9 million gain on the MEDIchair portion. The LifeMark/MEDIchair Transaction enabled Alaris to repay all amounts outstanding under its revolving senior credit facility ($26.2 million), resulting in the Corporation having no debt at June 30, 2011. At June 30, 2011, Alaris also had over $40 million cash on hand, $27.25 million of which was contributed to the previously announced newly-formed Killick Limited Partnership ("Killick") which transaction closed on July 6, 2011, just days after the quarter ending June 30, 2011 (the "Killick Transaction").
Partner revenues for the three and six months ended June 30, 2011 increased by 34% as expected to $5.2 million and $10.9 million, respectively, compared to $3.9 million and $8.1 million in the prior year periods. The increase was due to the addition of two new private company partners, KMH Limited Partnership ("KMH") in May 2010 and Solowave Design Limited Partnership ("Solowave") in December 2010. Additionally, a 6.5% increase in same clinic sales for LifeMark increased the annual distributions from LifeMark effective January 1, 2011.
For the three and six months ended June 30, 2011, the Corporation recorded net income of $22.7 million and $25.6 million, respectively; EBITDA of $30.9 million and $35.4 million, respectively; and Normalized EBITDA of $3.2 million and $7.7 million, respectively, compared to net income of $1.8 million and $3.7 million, and EBITDA and Normalized EBITDA of $3.0 million and $6.2 million in the prior year periods. Most of the increase was due to the significant gains realized on the Corporation's interests in LifeMark and MEDIchair, while the increase in Normalized EBITDA was due to having full periods of revenues from KMH and Solowave.
Total dividends paid for the three and six months ended June 30, 2011 equaled $0.255 per share and $0.51 per share, respectively ($4,312,446 and $8,621,337 in aggregate), representing 92% of cash flow from operations (excludes the gain on the LifeMark/MEDIchair Transaction).
"We had an exceptional quarter for our shareholders as we realized significant gains, improved the diversification and balance of our revenue base, and sit debt free today." said Stephen King, CEO, Alaris Royalty Corp. "On top of the gains, both our normal operating revenues from our partner companies and our Normalized EBITDA are up over 20%. With the addition of a new partner in Killick just after quarter end, along with the strength of our balance sheet, we are well positioned to continue a successful 2011."
|Reconciliation of Net Income to EBITDA (thousands)||3 months ending
||3 months ending
||6 months ending
||6 months ending
|Adjustments to Net Income:|
|Income tax expense||7,724||757||8,844||1,540|
|Gain on reduction of LifeMark interest||23,816||-||23,816||-|
|Gain on sale of intangible assets||3,892||-||3,892||-|
After taking into account the LifeMark/MEDIchair Transaction and the Killick Transaction, Alaris' agreements with its partner companies (its "Private Company Partners") provide for estimated revenues to Alaris of approximately $20.8 million for 2011. Revenues from our Private Company Partners for the three months ended September 30, 2011 are expected to be $4.9 million. The Corporation still has over $10 million in cash remaining from the proceeds of the LifeMark/MEDIchair Transaction, as well as $30 million available on its revolving senior 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 has no debt at June 30, 2011.
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 20101and 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 2011, 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)|
|June 30||December 31|
|Cash and cash equivalents||$||41,162,460||$||1,816,868|
|Trade and other receivables||39,504||688,514|
|Preferred LP Units||5||130,608,132||182,907,000|
|Investment tax credit receivable||6||10,922,392||10,922,393|
|Deferred income taxes||6||12,081,021||18,158,192|
|Accounts payable and accrued liabilities||$||1,881,574||1,421,992|
|Loans and borrowings||9||-||29,200,000|
|Accumulated other comprehensive income||3,332,034||22,350,157|
|Total Liabilities and Equity||$||201,644,136||$||227,802,738|
|Alaris Royalty Corp.|
|Condensed consolidated statement of comprehensive income (unaudited)|
| Three months ended
|Six months ended
|Royalties and distributions||5||$||5,235,584||3,895,625||10,870,903||$||8,088,487|
|Interest and other||13,778||1,030||13,778||2,190|
|Gain on reduction of partner interests||23,815,973||-||23,815,973||-|
|Gain on sale of intangible assets||3,891,560||-||3,891,560||-|
|Salaries and benefits||1,212,670||205,614||1,436,007||423,826|
|Corporate and office||191,012||124,887||468,151||335,955|
|Legal and accounting fees||130,518||99,033||243,568||202,771|
|Non-cash stock-based compensation||10||518,353||456,781||1,031,418||905,929|
|Depreciation and amortization||42,459||47,256||89,631||94,386|
|Earnings from operations||30,861,883||2,963,084||35,323,439||6,127,810|
|Earnings before taxes||30,437,889||2,577,743||34,480,046||5,258,818|
|Deferred income tax expense||6||7,727,380||757,261||8,844,033||1,539,668|
|Other comprehensive income|
|Net change in fair value of available-for-sale financial assets||5||544,429||3,145,466||2,280,975||3,145,466|
|Tax impact of change in fair value||(68,054||)||(393,183||)||(285,122||)||(393,183||)|
|Realized gain on reduction of partnership interest||(24,015,973||)||-||(24,015,973||)||-|
|Tax impact of realized gain||3,001,997||-||3,001,997||-|
|Other comprehensive income for the period, net of income tax||(20,537,601||)||2,752,283||(19,018,123||)||2,752,283|
|Total comprehensive income for the period||$||2,172,908||$||4,572,765||$||6,617,890||$||6,471,433|
|Earnings per share|
|Basic earnings per share||$||1.34||$||0.14||$||1.52||$||0.31|
|Fully diluted earnings per share||$||1.30||$||0.14||$||1.47||$||0.29|
|Weighted average shares outstanding|
|Alaris Royalty Corp.|
|Condensed consolidated statement of cash flows (unaudited)|
|For the six months ended June 30|
|Cash flows from operating activities|
|Earnings from the period||$||25,636,013||$||3,719,150|
|Deferred income taxes||6||8,844,033||1,539,668|
|Depreciation and amortization||7||89,630||94,386|
|Gain on intangible asset sale and reduction of partnership interest||(27,707,533||)||-|
|Non-cash stock based compensation||10||1,031,418||905,929|
|-trade and other receivables||649,010||(293,322||)|
|-trade and other payables||460,723||(501,484||)|
|Cash generated from operating activities||10,132,863||6,204,677|
|Net cash from operating activities||$||9,289,470||5,335,685|
|Cash flows from investing activities|
|Acquisition of equipment||(5,104||)||(3,360||)|
|Acquisition/disposition of Preferred LP Units||(670,145||)||(13,244,533||)|
|Proceeds from reduction in Preferred LP Units||65,000,000||-|
|Net cash from/(used in) investing activities||$||64,324,751||$||(13,247,893||)|
|Cash flows from financing activities|
|New share capital||8||-||15,313,346|
|Proceeds from exercise of warrants||8||3,633,000||3,282,375|
|Repayment of Senior debt||9||(29,200,000||)||(1,900,000||)|
|Repayment of Subordinated debt||9||-||(5,300,000||)|
|Payments in lieu of dividends on RSUs||10||(121,932||)||(107,591||)|
|Net cash used in financing activities||($34,268,629||)||$||(5,890,485||)|
|Net increase/(decrease) in cash and cash equivalents||39,345,592||(2,021,723||)|
|Cash and cash equivalents, Beginning of period||1,816,868||3,826,000|
|Cash and cash equivalents, End of period||$||41,162,460||$||1,804,277|