Alaris Equity Partners Income Trust Releases 2025 Second Quarter Financial Results

Executive Summary

• Alaris Equity Partners Income Trust reported financial results for the three and six months ended June 30, 2025, highlighting a significant drop in net book value per unit due to foreign exchange losses, despite strong revenue growth.
• Total revenue and operating income increased by 20.9% to $34.5 million in Q2 2025, driven by a $5.5 million net unrealized gain on partner investments, partially offset by a $14.6 million fair value write-down at FMP due to lost contracts.
• The Trust issued $92 million in convertible debentures during the quarter, used net proceeds to repay senior debt, and continued its normal course issuer bid (NCIB) by purchasing and cancelling 133,600 units.

Key Details

• Net Book Value: Decreased by $0.77 per unit during Q2 2025 to $23.57 per unit (down from $24.34 at March 31, 2025). This represents a $0.65 decrease for the six-month period.
• Revenue & Operating Income:
  • Q2 2025: $34.46 million (up 20.9% from $28.50 million in Q2 2024).
  • Six Months 2025: $70.85 million (up 20.5% from $58.81 million in 2024).
  • Growth driven by positive performance from nine partner investments resulting in a $5.5 million net unrealized gain.
• Earnings & Comprehensive Income:
  • Q2 2025: Loss of $(17.94) million (vs. $31.68 million gain in Q2 2024).
  • Six Months 2025: Gain of $5.03 million (vs. $105.45 million gain in 2024).
  • Heavily impacted by unrealized foreign exchange losses: $(44.8) million in Q2 2025 (vs. $9.8 million gain in Q2 2024) and $(49.7) million for the six months (vs. $30.6 million gain in 2024).
• Distributable Cash Flow:
  • Q2 2025: $17.92 million (down 31.8% from $26.29 million in Q2 2024).
  • Six Months 2025: $48.04 million (down 2.4% from $49.24 million in 2024).
  • Q2 decrease driven by higher cash taxes and transaction costs; six-month decrease offset by increased partner distribution revenue.
• Investments & Capital Deployment:
  • Total invested capital in new and current partners for the six months ended June 30, 2025: ~$154 million.
  • Follow-on US$21.5 million preferred equity investment in The Shipyard, LLC, bringing total invested capital in Shipyard to US$108.5 million.
  • LMS redeemed $2.0 million of its preferred unit investment.
  • FMP deferred distributions due to loss of key contracts; expects partial payments as cashflows allow.
• Financing & Share Repurchases:
  • Issued $92 million in convertible debentures during Q2 2025; net proceeds used to invest in Acquisition Entities portfolio and repay outstanding senior debt.
  • NCIB: Purchased and cancelled 133,600 units in Q2 2025. Total units cancelled through NCIB for the six months ended June 30, 2025: 352,500 units.
• Run Rate Metrics:
  • Run Rate Revenue: ~$183 million (up 12.5% from $162.6 million in Q2 2024).
  • Run Rate Payout Ratio: Expected to be within 60% - 65%.
  • Run Rate Cash Flow: Estimated at $39.9 million ($0.88 per unit) for the next twelve months.
• Outlook:
  • Q3 2025 Partner revenue expected to be ~$56.9 million, up from Q2 2025 due to incremental common distributions.
  • Run Rate Revenue includes estimated $19.1 million of common distributions and $1.2 million from FMP.

Notable Quotes

• “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.” — Steve King, President and CEO