CALGARY, ALBERTA--(Marketwire - March 15, 2012) - Alaris Royalty Corp. ("Alaris" or the "Corporation") (TSX:AD) today announced its results for the year ended December 31, 2011. The results are prepared under International Financial Reporting Standards ("IFRS").
2011 was a significant year for the Corporation as it continued to focus on five main "pillars" aimed at providing a more secure dividend stream to Alaris shareholders. They are as follows:
- Alaris realized a $27.7 million gain on the reduction of its financial interest in LifeMark Health Limited Partnership ("LifeMark").
- The proceeds from the LifeMark transaction, as well as additional capital sources, were used to add two new partners as well as to make a further contribution to an existing partner. As a result, Alaris' largest revenue stream went from 68% in 2010 to 43% in 2011 and will be under 25% in 2012 based on current contractual revenue sources.
- The addition of two new partners, Killick Aerospace Limited Partnership ("Killick") in July 2011 and Quetico, LLC ("Quetico") in December 2011 provided for growth to Alaris' distributable cash.
- The Corporation completed a follow on contribution into KMH Limited Partnership ("KMH") in October 2011.
- Alaris increased its monthly dividend by 12% and provided a total annual return to shareholders of over 60%.
- Reducing Volatility
- The Corporation locked in a fixed growth metric for LifeMark's annual distribution at 4% per year and negotiated collars on the maximum increase or decrease of the annual distributions from Killick and Quetico.
- Revenues from the Corporation's seven partners for 2012 are already determined.
- The Corporation has predictable and low general and administrative expenses.
- The Corporation's float increased by 15% in 2011 and daily trading volume continues to grow.
The Corporation's focus on these five pillars translated into partner revenues for the year ended December 31, 2011 increasing 29% to $21.5 million from $16.7 million in 2010. The increase was due to the addition of three new private company partners in the past thirteen months: Solowave Design Limited Partnership ("Solowave") in December 2010; Killick and Quetico in 2011. The Corporation also recorded a significant gain on the reduction of the Corporation's financial interests in LifeMark and MEDIchair Ltd ("MEDIchair") in June of the current year.
For the year ended September 30, 2011, the Corporation recorded earnings of $34.7 million and EBITDA of $43.8 million, and Normalized EBITDA of $16.1 million compared to earnings of $7.4 million and EBITDA and Normalized EBITDA of $12.7 million in the prior year. The increase to Normalized EBITDA in the current period is due to having a full year of revenues from Solowave, a half year from Killick and just over a month from Quetico while the gain on the LifeMark transaction contributed to the more significant increases in earnings and EBITDA.
"2011 was a tremendous year for Alaris and its shareholders. The LifeMark deal was important to show the complete life cycle of our structure as it enabled the owners of LifeMark to realize a sizeable gain, which was attainable because of the unique structure Alaris offers entrepreneurs. We added some great new partners in established and profitable businesses with high quality management teams. We had another successful bought deal financing in December and have a balance sheet that has us well positioned for further successes in 2012" said Stephen King, CEO, Alaris Royalty Corp.
|Reconciliation of Earnings to EBITDA (thousands)||
Dec 31, 2011
Dec 31, 2010
|Adjustments to Earnings:|
|Deferred income tax expense||7,729||3,411|
|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 $27.8 million for 2012. Revenues from our Private Company Partners for the three months ended March 31, 2012 are expected to be $6.9 million. The Corporation still has $25.5 million remaining on its $30 million credit facility for use in future transactions. General and administrative expenses are currently estimated to be $3.2 million for 2012, 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 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 2012, the revenues to be received by Alaris and its general and administrative expenses in 2012, and the cash requirements of the Corporation in 2012.
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 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 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 2012, 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 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, 2011, 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.|
|Consolidated statement of financial position|
|December 31||December 31||January 1|
|Cash and cash equivalents||$3,888,465||$1,816,868||$ 3,826,000|
|Trade and other receivables||3,443,679||688,514||2,470|
|Preferred LP Units||5||207,408,290||182,907,000||122,286,000|
|Investment tax credit receivable||6||10,922,393||10,922,393||11,030,007|
|Deferred income taxes||6||13,967,984||18,158,192||22,454,167|
|Accounts payable and accrued liabilities||$1,546,705||$1,421,992||$939,085|
|Income taxes payable||67,590||-||-|
|Loans and borrowings||9,11||-||-||9,350,000|
|Loans and borrowings||9||6,500,000||29,200,000||19,700,000|
|Fair value reserve||2,292,939||22,350,157||9,766,188|
|Total Liabilities and Equity||$246,478,200||$227,802,738||$172,486,743|
|Alaris Royalty Corp.|
|Consolidated statement of comprehensive income|
|Years ended Dec 31|
|Royalties and distributions||5||$21,497,960||$16,657,034|
|Interest and other||68,408||2,190|
|Gain on reduction of partner interests||5||23,815,973|
|Gain on sale of intangible assets||5||3,891,560||-|
|Salaries and benefits||11||1,875,508||1,060,915|
|Corporate and office||859,727||626,990|
|Legal and accounting fees||556,621||443,262|
|Non-cash stock-based compensation||10,11||1,978,727||1,817,981|
|Depreciation and amortization||143,244||190,028|
|Earnings from operations||43,860,074||12,520,048|
|Unrealized foreign exchange loss||183,060||-|
|Earnings before taxes||42,441,666||10,812,335|
|Deferred income tax expense||6||7,661,200||3,411,119|
|Current income tax expense||6||68,022||-|
|Other comprehensive income|
|Net change in fair value of Preferred LP units||5||1,093,437||14,381,679|
|Tax impact of change in fair value||(136,679||)||(1,797,710||)|
|Realized gain on reduction of partnership interest||5||(24,015,973||)||-|
|Tax impact of realized gain||3,001,997||-|
|Foreign currency translation differences||(124,947||)||-|
|Other comprehensive income for the period, net of income tax||(20,182,165||)||12,583,969|
|Total comprehensive income for the period||$ 14,530,279||$ 19,985,185|
|Earnings per share|
|Basic earnings per share||$2.04||$0.56|
|Fully diluted earnings per share||$1.97||$0.54|
|Weighted average shares outstanding|
|Alaris Royalty Corp.|
|Consolidated statement of cash flows|
|For the years ended December 31|
|Cash flows from operating activities|
|Earnings from the year||$34,712,444||$7,401,216|
|Deferred income taxes||6||7,661,200||3,411,119|
|Depreciation and amortization||7||143,244||190,028|
|Gain on intangible asset sale and reduction of partnership interest||(27,707,533||)||-|
|Gain on foreign exchange forward contract||(21,864||)||-|
|Unrealized foreign exchange loss||183,060||-|
|Non-cash stock based compensation||10||1,978,727||1,817,981|
|-trade and other receivables||(2,755,165||)||(686,044||)|
|-trade and other payables||192,303||482,907|
|Cash generated from operating activities||15,845,440||14,085,208|
|Net cash from operating activities||14,610,092||12,377,495|
|Cash flows from investing activities|
|Acquisition of equipment||(12,979||)||(11,989||)|
|Acquisition of Preferred LP Units||(78,948,286||)||(46,239,320||)|
|Proceeds from reduction in Preferred LP Units and Intangible asset sale||65,000,000||-|
|Net cash used in investing activities||$(13,961,265||)||$(46,251,309||)|
|Cash flows from financing activities|
|New share capital, net of share issue costs||8||37,830,223||39,487,617|
|Proceeds from exercise of warrants||8||3,988,875||4,488,000|
|Proceeds from exercise of options||8||112,675||-|
|Repayment of debt||9||(66,700,000||)||(9,350,000||)|
|Proceeds from debt||9||44,000,000||9,500,000|
|Payments in lieu of dividends on RSUs||10||(248,653||)||(226,105||)|
|Net cash used in financing activities||$1,422,770||$31,864,683|
|Net increase in cash and cash equivalents||2,071,597||(2,009,132||)|
|Cash and cash equivalents, Beginning of year||1,816,868||3,826,000|
|Cash and cash equivalents, End of year||$3,888,465||$1,816,868|
Manager, Investor Relations