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Press release from Marketwire

Alaris Royalty Corp. Releases 2012 Financial Results

Thursday, March 14, 2013

Alaris Royalty Corp. Releases 2012 Financial Results08:00 EDT Thursday, March 14, 2013CALGARY, ALBERTA--(Marketwire - March 14, 2013) -NOT FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.Alaris Royalty Corp. (TSX:AD) ("Alaris" or the "Corporation") today announced its results for the year ended December 31, 2012. The results are prepared under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").2012 was a another 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:Diversification Added two new Partners, Labstat International Limited Partnership ("Labstat") in June and Agility Health LLC ("Agility") in December. GrowthThe addition of Labstat and Agility provided for growth to Alaris' net cash from operating activities. The Corporation completed follow-on contributions into KMH Limited Partnership ("KMH") in November and December and Killick Aerospace Limited Partnership ("Killick") in December. Alaris increased its monthly dividend twice for a total increase of 10.5% and provided a total annual return to shareholders of approximately 40%. Reducing VolatilityThe Corporation negotiated collars on the maximum increase or decrease of the annual distributions from Labstat and Agility. The Corporation realized organic growth from current Partners of 2.2%. VisibilityRevenues from the Corporation's ten partners for 2013 are already determined. The Corporation has predictable and low general and administrative expenses. LiquidityThe Corporation's float increased by 18% in 2012 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, 2012 increasing 49% to $32.1 million from $21.5 million in 2011. The increase was due to the addition of three new private company partners in the past thirteen months (Quetico LLC in December 2011 and Labstat and Agility in 2012) as well as follow on contributions in KMH and Killick. For the year ended December 31, 2012, the Corporation recorded earnings of $18.0 million and EBITDA and Normalized EBITDA of $25.9 million, compared to earnings of $34.7 million, EBITDA of $43.8 million and Normalized EBITDA of $16.1 million in the prior year. The increase in Normalized EBITDA in the current year is due to having a full year of revenues from Quetico and a half year from Labstat, along with increased revenue from KMH due to follow on contributions. EBITDA and earnings decreased compared to 2011 as the Corporation recorded a significant gain on the reduction of the Corporation's financial interests in LifeMark Health Limited Partnership ("LifeMark") and MEDIchair Ltd ("MEDIchair")."2012 was another excellent year for Alaris and its shareholders. We were able to increase our dividend twice in the year as we added great new partners in established and profitable businesses with high quality management teams; and contributed more capital into current partners who have been performing well. We funded our growth with successful bought deal financings in June 2012 and again in January 2013, and have a balance sheet that has us well positioned for further successes in 2013" said Stephen King, CEO, Alaris Royalty Corp. Reconciliation of Earnings to EBITDA (thousands)Dec 31, 2012Dec 31, 2011Earnings$18,036$34,712Adjustments to Earnings:Amortization108143Interest1,0331,235Deferred income tax expense6,6887,729EBITDA$25,865$43,819Normalizing Adjustments:Gain on reduction of LifeMark interest-23,816Gain on sale of intangible assets-3,892Normalized EBITDA$25,865$16,111Outlook Alaris' agreements with its partner companies (its "Private Company Partners") provide for estimated revenues to Alaris of approximately $44.7 million for 2013. Revenues from our Private Company Partners for the three months ended March 31, 2013 are expected to be $10.8 million. The Corporation has $36 million remaining on its $50.1 million credit facility for use in future transactions. 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 will be available on SEDAR at www.sedar.com and on our website at www.alarisroyalty.com.An updated corporate presentation is available on the Corporation's website. 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.Non-IFRS Measures 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.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 financial and operating performance of the Private Company Partners in 2013, the revenues to be received by Alaris and its general and administrative expenses in 2013, and the cash requirements of the Corporation 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 in 2013, 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, that the Corporation will experience positive resets to its annual royalties and distributions from its Private Company Partners in 2013, more private companies will require access to alternative sources of capital, 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.Alaris Royalty Corp.Consolidated statement of financial position December 31December 3120122011AssetsCash and cash equivalents$3,638,255$3,888,465Prepayments182,811119,508Trade and other receivables3,417,6423,443,679Current Assets7,238,7087,451,652Promissory note receivable1,250,000-Equipment59,88166,743Intangible assets6,570,2016,661,138Preferred LP Units298,226,402207,408,290Investment tax credit receivable10,922,39310,922,393Deferred income taxes8,673,12513,967,984Non-current assets325,702,002239,026,548Total Assets$332,940,710$246,478,200LiabilitiesAccounts payable and accrued liabilities$1,805,561$1,546,705Dividends payable2,345,3471,850,145Income taxes payable40,58567,590Current Liabilities4,191,4933,464,440Loans and borrowings50,000,0006,500,000Non-current liabilities50,000,0006,500,000Total Liabilities$54,191,493$9,964,440EquityShare capital252,016,172$200,822,160Equity reserve2,930,4834,626,500Fair value reserve2,336,6892,292,939Translation reserve(265,220)(124,947)Retained earnings21,731,09328,897,108Total Equity$278,749,217$236,513,760Total Liabilities and Equity$332,940,710$246,478,200Alaris Royalty Corp.Consolidated statement of comprehensive incomeYears ended Dec 3120122011RevenuesRoyalties and distributions$32,089,405$21,497,960Interest and other16,50968,408Gain on reduction of partner interests-23,815,973Gain on sale of intangible assets-3,891,560Total Revenue32,105,91449,273,901Salaries and benefits1,796,1741,875,508Corporate and office971,072859,727Legal and accounting fees1,330,689556,621Non-cash stock-based compensation1,901,6831,978,727Depreciation and amortization107,633143,244Subtotal6,107,2515,413,827Earnings from operations25,998,66343,860,074Finance costs1,033,3921,235,348Unrealized foreign exchange loss241,794183,060Earnings before taxes24,723,47742,441,666Deferred income tax expense5,978,7017,661,200Current income tax expense709,17368,022Total income tax expense6,687,8747,729,222Earnings18,035,60334,712,444Other comprehensive incomeNet change in fair value of Preferred LP units50,0001,093,437Tax impact of change in fair value(6,250)(136,679)Realized gain on reduction of partnership interest-(24,015,973)Tax impact of realized gain-3,001,997Foreign currency translation differences(140,273)(124,947)Other comprehensive income for the year, net of income tax(96,523)(20,182,165)Total comprehensive income for the year$ 17,939,080$ 14,530,279Earnings per shareBasic earnings per share$0.86$2.04Fully diluted earnings per share$0.84$1.97Weighted average shares outstandingBasic20,934,89917,036,346Fully Diluted21,475,99317,595,740Alaris Royalty Corp.Consolidated statement of cash flows Years ended Dec 3120122011Cash flows from operating activitiesEarnings from the year$18,035,603$34,712,444Adjustments for:Finance costs1,033,3921,235,348Deferred income tax expense5,978,7017,661,200Depreciation and amortization107,633143,244Gain on sale of intangible asset and reduction of partner interests-(27,707,533)(Gain)/Loss on foreign exchange forward contract3,750(21,864)Unrealized foreign exchange loss241,794183,060Non-cash stock-based compensation1,901,6831,978,72727,302,55618,184,626Change in:-trade and other receivables26,037(2,755,165)-prepayments(63,303)223,676-trade and other payables231,851192,303Cash generated from operating activities27,497,14115,845,440Finance costs(1,033,392)(1,235,348)Net cash from operating activities$26,463,749$14,610,092Cash flows from investing activitiesAcquisition of equipment(9,835)(12,979)Acquisition of Preferred LP Units(91,141,585)(78,948,286)Proceeds from sale of intangible asset and reduction of partner interests-65,000,000Net cash used in investing activities$(91,151,420)$(13,961,265)Cash flows from financing activitiesNew share capital, net of share issue costs46,286,37737,830,223Proceeds from exercise of warrants-3,988,875Proceeds from exercise of options607,500112,675Repayment of debt(49,000,000)(66,700,000)Proceeds from debt92,500,00044,000,000Promissory notes issued(1,250,000)-Dividends paid(24,464,678)(17,560,350)Payments in lieu of dividends on RSUs(241,738)(248,653)Net cash used in financing activities$64,437,461$1,422,770Net increase/(decrease) in cash and cash equivalents(250,210)2,071,597Cash and cash equivalents, Beginning of year3,888,4651,816,868Cash and cash equivalents, End of year$3,638,255$3,888,465FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Alaris Royalty Corp.Curtis KrawetzManager of Investor Relations, Analyst403-221-7305www.alarisroyalty.com