Alaris Royalty Corp. :ALARF-US: Earnings Analysis: Q1, 2017 By the Numbers : June 12, 2017

Alaris Royalty Corp. reports financial results for the quarter ended March 31, 2017.

Highlights

  • Summary numbers: Revenues of USD 15.51 million, Net Earnings of USD 8.95 million.
  • Change in operating cash flow of 10.50% compared to same period last year is about the same as change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating (EBIT) margins contributed to decline in earnings, despite some positive contribution from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 15.51 24.16 19.77 19.19 33.24
Revenue Growth (%YOY) -53.33 55.94 35.56 33.05 108.71
Earnings (mil) 8.95 16.22 13.05 5.46 15.17
Earnings Growth (%YOY) -40.99 5.4 164.11 -24.95 -13.65
Net Margin (%) 57.71 67.15 66.02 28.47 45.64
EPS 0.24 0.44 0.35 0.15 0.41
Return on Equity (%) 7.34 13.26 10.54 4.34 12.2
Return on Assets (%) 6.11 10.76 8.43 3.52 10.21

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, ALARF-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if ALARF-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by -35.78% and earnings by -44.80% compared to the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

ALARF-US‘s year-on-year change in operating cash flow of 10.50% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s earnings fell, largely because of the narrowing in operating margins, which decreased from 89.04% to 80.89%. The decline in earnings probably would have been worse, were it not for some one-time items that improved pretax margins from 57.32% to 70.53%.

EBIT Margin History
PreTax Margin History

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Company Profile

Alaris Royalty Corp. is a Canadian investment company, which provides alternative financing to profitable and well-managed private businesses. It offers long-term equity capital to companies to which traditional debt or private equity is not available or attractive, including privately-held companies whose owners want to retain long-term control of their business. The company also offers an alternative to raise capital through leverage, private equity or public offerings for private companies. It provides capital to private companies in a way that maximizes valuations and tax efficiency; and allows existing management to maintain control and common equity ownership. Alaris Royalty is designed for entrepreneurs who wish to raise capital for a partial exit, generational transfer, recapitalization, management buyout, as well as growth and who want to maintain control of their companies while not attracting the added risk that comes with high leverage levels. The company was founded on May 23, 2006 and is headquartered in Calgary, Canada.

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