Bullboard - Stock Discussion Forum Alaris Equity Partners Income 6 25 Senior Unsecured Debentures T.AD.DB.A

Alternate Symbol(s): ADLRF | T.AD.UN

Alaris Equity Partners Income Trust (the Trust) is a Canada-based trust. The Trust’s operations consist of investments in private operating entities, typically in the form of preferred or common limited partnership interests, preferred or common interest in limited liability corporations in the United States, and loans receivable. The Trust’s Canadian investments are made through a wholly owned... see more

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TSX:AD.DB.A - Post Discussion

Alaris Equity Partners Income 6 25 Senior Unsecured Debentures > RBC Raise Target

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Post by retiredcf on Mar 15, 2024 12:30pm

RBC Raise Target

Their upside scenario target is $25.00. GLTA

March 15, 2024

Alaris Equity Partners Income Trust
Q4/23 normalized EBITDA was ahead of forecast

Our view: Q4/23 normalized EBITDA was ahead of our forecast, primarily due to higher-than-forecast common equity dividend income. Overall investment portfolio health continues to show signs of stabilization, although we think clearer evidence of an improving trend would be a positive catalyst for the stock. We increase our target to $18 (was $17) and maintain our Sector Perform rating.

Key points:

Q4/23 normalized EBITDA of $37.6MM was ahead of our $36.5MM forecast and $35.7MM consensus (range of $34.5MM to $36.5MM). Of note, we backed out $2.6MM of F/X losses; $27.5MM from investment fair value gains; and $2.0MM of transaction costs from Alaris’ reported EBITDA of $61.3MM. The positive variance was driven primarily by higher-than- forecast common share dividends from equity investments.

Investment portfolio health continues to show early signs of stabilization as Alaris’ Earnings Coverage Ratios (ECRs) were largely unchanged Q/Q. Alaris’ Q4/23 weighted-average ECR was ~1.6x (vs. ~1.6x Q/Q in Q3/23) with ~43% of its portfolio having an ECR >1.5x (vs. ~36% Q/Q in Q3/23). See page 3 for more analysis on Alaris’ reported ECRs this quarter.

Other takeaways: (1) Alaris expects distribution revenue of ~$39.2MM in Q1/24 from its preferred and equity investments; (2) Alaris expects that of its Partners in 2024, 9 will have a positive annual preferred distribution reset and 8 will have a negative annual preferred distribution reset; (3) Alaris expects annual general and administrative expenses of $16.5MM in 2024; (4) Alaris amended its credit facility, which increased the base from $450MM to $500MM with reduced pricing and an increase in the senior debt to contracted EBITDA covenant from 2.5:1 to 3.0:1; and (5) starting in 2024, Alaris indicated it qualified as an investment entity as defined by IFRS 10, which will change Alaris’ financial reporting.

Increasing our 12-month target to $18/share (was $17) and maintaining our Sector Perform rating. The increased target reflects slightly higher BVPS forecasts.

Conference call today at 11am ET; link to webcast available on Alaris’ website.

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