Alaris Equity Partners Income Trust Releases 2025 Second Quarter Financial Results

NOT FOR DISTRIBUTION IN THE UNITED STATES.

FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.

CALGARY, Alberta, Aug. 07, 2025 (GLOBE NEWSWIRE) — Alaris Equity Partners Income Trust (together, as applicable, with its subsidiaries, “Alaris” or the “Trust“) is pleased to announce its results for the three and six months ended June 30, 2025. All amounts below are in Canadian dollars unless otherwise noted.

Highlights:

• Alaris’s Net book value ⁽¹⁾ per unit of $23.57 at June 30, 2025 decreased by $0.77 from March 31, 2025. . The $0.59 in growth of per unit earnings from Q1 2025 was offset by $0.98 per unit unrealized foreign exchange loss related to the rise in the Canadian/US dollar exchange rate as well as the Trust’s quarterly distribution of $0.34 per unit;
• Total revenue and operating income increased by 20.9% to $34.5 million as compared to Q2 2024. The strong growth in both revenue and operating income was driven primarily from positive performance from nine of our Partner investments, which resulted in a $5.5 million net unrealized gain during Q2 2025;
• Year to date, the Trust, through its Acquisition Entities invested approximately $154 million into new and current Partners, including a follow-on US$21.5 million of preferred equity investment in The Shipyard, LLC. Alaris’ total invested capital in Shipyard is now US$108.5 million, inclusive of both preferred and common equity;
• Alaris’ Run Rate Revenue ⁽⁵⁾ reached approximately $183 million at the end of the quarter, up 12.5% from $162.6 million in Q2 2024 and up from $178 million in Q1 2025;
• The Trust, together with its Acquisition Entities, earned a total of $42.5 million of revenue from Partners, including $41.8 million of Partner distribution revenue and $0.7 million in third party fees in Q2 2025, which is relatively consistent to $42.3 million earned in Q2 2024;
• During the quarter, the Trust, through its normal course issuer bid (“NCIB“), purchased and cancelled 133,600 units, which in addition to the 218,900 units in Q1 2025, results in a total of 352,500 units purchased and cancelled through the NCIB during the six months ended Q2 2025, and reflects a $0.04 per unit of additional Net book value ⁽¹⁾;
• Alaris issued $92 million of convertible debentures during the quarter and used the net proceeds to invest into its Acquisition Entities portfolio;
• The Actual Payout Ratio ⁽³⁾ for the Trust, based on the Alaris net distributable cash ⁽²⁾ flow for the six months ended June 30, 2025 is 65%;
• The weighted average combined Earnings Coverage Ratio ⁽⁴⁾ for Alaris’ Partners is approximately 1.5x with 13 of 20 Partners greater than 1.5x. In addition, 13 of our Partners have either no debt or less than 1.0x Senior Debt to EBITDA on a trailing twelve-month basis.

“Aside from the foreign exchange move in a negative direction, our second quarter showed strength during an uncertain political and economic environment. With a strong majority of partners experiencing gains, ample room on our balance sheet and a robust pipeline of opportunities, we are in an excellent position going into the second half of the year.” said Steve King President and CEO.

Results of Operations

Net book value ⁽¹⁾ per unit at June 30, 2025 decreased by $0.77 during the quarter to $23.57 per unit, which also represents a $0.65 per unit decrease for the six months ended June 30, 2025. Overall, this decrease in net book value at June 30, 2025 is primarily the result of an approximate 4.5% improvement in the Canadian dollar as compared to the US dollar and the resulting foreign exchange loss that was recorded during Q2 2025.

Total revenue and operating income increased by 20.9% and 20.5% in the three and six month periods ended June 30, 2025, respectively, compared to the prior year. While Partner distribution revenue in the current period was relatively consistent with the prior year, the main driver of the increase was the overall net fair value gains on the portfolio. The total net fair value increase to Partner investments during the current quarter was $5.5 million. Partially offsetting fair value increases amongst nine separate investments during the quarter was an FMP fair value write down of US$14.6 million caused by FMP’s sudden loss of certain key contracts, as a result of changes in US procurement policies, and Alaris’ expectation the deferral of Distributions will continue for a period of time.

Earnings (loss) and comprehensive income in both the three and six months periods were heavily impacted by an unrealized loss on foreign exchange, as the portfolio is marked to the period end foreign exchange rate each quarter. The relative appreciation of the Canadian dollar as compared to the US dollar resulted in a $44.8 million unrealized foreign exchange loss during the quarter (Q2 2024 – $9.8 million gain). For the six month period the unrealized foreign exchange loss recognized was a $49.7 million loss (2024 – $30.6 million gain). In the prior year there was also a $30.3 million gain resulting from the change to investment entity accounting in Q1 2024.

Cash from / used in operations prior to changes in working capital decreased in both the current three and six month periods, compared to the prior year. This decrease was mainly caused by a repayment of outstanding senior debt during the quarter, which was funded by the net proceeds the Trust received from a $92 million convertible debenture raise that closed during Q2 2025.

Alaris net distributable cash flow ⁽²⁾ decreased by 31.8% and 2.4% each, respectively, in the three and six months ended June 30, 2025, as compared to the prior year comparable periods. The decrease of 31.8% in Q2 2025 was mainly driven by higher cash taxes paid and higher transaction costs. However, for the six month period, these higher cash outflows were primarily offset by increased Partner distribution revenue compared to the prior year, resulting in a year-over-year decrease of 2.4%. Higher Partner distribution revenue during the six months ended June 30, 2025, is reflective of year over year positive resets in preferred unit investment Distributions, Distributions from new investments including Berg Demo Holdings, LLC. (“Berg“), and Professional Electric Contractors of Connecticut, Inc. (“PEC“), as well as follow on investments in The Shipyard LLC (“Shipyard“) in Q2 2025 and Cresa, LLC (“Cresa“) in Q4 2024. This growth has more than offset FMP deferring Distributions during Q2 2025, the redemption of Brown & Settle Investments, LLC and a subsidiary thereof (collectively, “Brown & Settle“) in Q2 2024 and a lower cash yield in 2025 from Ohana Growth Partners, LLC (“Ohana“) following the asset under management transaction that closed in Q4 2024.

Outlook

In Q2 2025, the Trust together with its Acquisition Entities earned $42.5 million of revenue from Partners, which included $41.8 million of Partner Distributions and $0.7 million of third party transaction and management fee revenue. This was ahead of previous guidance of $41.4 million due to the incremental Distributions received from the follow on investment into Shipyard in May 2025, as well as higher than expected common Distribution received from Sagamore Plumbing and Heating, LLC (“Sagamore“). Alaris expects total revenue from its Partners in Q3 2025 of approximately $56.9 million, which is an increase from Q2 2025 due to incremental common Distributions expected from certain investments.

During Q2 2025, the Trust, through its Acquisition Entities re-invested in Shipyard as a follow-on investment as noted above, which brings the total invested during the six months ended June 30, 2025 to approximately $154 million. During Q2 2025, LMS redeemed $2.0 million of its preferred unit investment. Due to the loss of certain key contracts FMP has deferred Distributions but expects to make partial payments as cashflows allow. These items are reflected in Alaris’ Run Rate Revenue ⁽⁵⁾ for the next twelve months, of approximately $183 million, which includes an estimated $19.1 million of common Distributions and $1.2 million of Distributions from FMP.

The Run Rate Cash Flow ⁽⁶⁾ table below outlines the Trust and its Acquisition Entities combined expectation for Partner Distribution revenue, transaction fee revenue, general and administrative expenses, third party interest expense, tax expense and Distributions to unitholders for the next twelve months. The Run Rate Cash Flow ⁽⁶⁾ is a forward looking supplementary financial measure and outlines the net cash from operating activities, less the distributions paid, that Alaris is expecting to generate over the next twelve months. The Trust’s method of calculating this measure may differ from the methods used by other issuers. Therefore, it may not be comparable to similar measures presented by other issuers.

Run rate general and administrative expenses are currently estimated at $18.5 million and include all public company costs incurred by the Trust and its Acquisition Entities. The Trust’s Run Rate Payout Ratio ⁽⁷⁾ is expected to be within a range of 60% and 65% when including Run Rate Revenue ⁽⁵⁾, overhead expenses and its existing capital structure. The table below sets out our estimated Run Rate Cash Flow as well as the after-tax impact of positive net investments, the impact of every 1% increase in Secure Overnight Financing Rate (“SOFR”) based on current outstanding USD debt and the impact of every $0.01 change in the USD to CAD exchange rate.

The Trust’s Run Rate Payout Ratio ⁽⁷⁾ does not include new potential investment opportunities. However, Alaris expects to maintain our track record of net positive capital investment as a result of the demand for Alaris’ capital which continues to fill a niche in the private capital markets.