Ladies and gentlemen, thank you for standing by, and Welcome to the Alaris Q2 2022 Earnings Release. At this time, all participants are in a listen-only mode. After the speakers present, there will be a question-and-answer session. To ask a question during the session, you need to press star one one. I would now like to turn the call over to your host, Amanda. Thank you, Kevin. We appreciate everyone taking the time to join us this morning. We are excited to present our Q2 results. I am joined on this call by Steve King, President and Chief Executive Officer of Alaris. Before we begin, I'd like to remind our listeners that all amounts given are in Canadian dollars unless otherwise noted. Listeners are cautioned that comments made today may contain forward-looking information. This forward-looking information is based upon a number of important factors and assumptions, and as a result, actual results could differ materially. Additional information concerning the underlying factors, assumptions, and risks is available in last night's press release and our MD&A under the heading Forward-Looking Statements and Risk Factors, copies of which are available on SEDAR at sedar.com as well as our website. Non-IFRS data is also presented and may differ from the way other companies present such data. As with the forward-looking statements, please refer to last night's press release and our MD&A for more clarification regarding non-IFRS measures. Now for the Q2 highlights. Q2 revenue of CAD 56.5 million was up 62% over the prior period, driven largely by CAD 17.2 million of deferred Kimco distributions received upon their redemption early in the quarter. The remaining CAD 39.3 million represents a 13% increase over the prior period. Drivers of this increase include new and follow-on investments year-over-year, receipt of monthly catch-up payments from Planet Fitness, and year-over-year increases in average exchange rates. Cash generated from operations prior to changes in working capital of CAD 44.4 million was an increase of 51% over the CAD 29.4 million in the prior period, again, mainly as a result of the gain and deferred distributions received from the Kimco redemption. The increase in the quarter was partially offset by an increase in G&A expenses. CAD 2.5 million of the increase in G&A is due to a change in the mechanics of the bonus calculation. Bonus accruals are now made on a quarterly basis and driven by a percentage of total cash flow available for distribution. The accrual in the period doesn't change Alaris' expectation for total salaries and benefits expected in fiscal 2022. Another CAD 1.5 million of the increase was due to increased spending on further exploring the corporate implications of the AUM strategy, administrative costs from closing an inactive subsidiary, and increased legal spending in regards to the Sandbox matter. These costs are event-specific and not expected to be ongoing in nature. Quite a few of the fair value changes in Q2 on a net basis, including the common units, a decrease of CAD 500,000. Increasing interest rates impact discount rates and move multiples lower. We anticipate continued impact into Q3. Despite these factors, we saw increasing fair values for Amur of CAD 6.2 million, Fleet of $4.4 million, and BCC of $2.1 million. All of these companies continue to see record highs in their respective businesses with significant growth over prior periods. Amur continues to see both organic growth and has been entering into new partnerships which are driving incremental demand. Amur has also grown their base assets under management each quarter, which provides a stable income source that alone would provide an ECR of greater than 1.8x. Fleet has been able to generate an increase in syndications through both new customers and growth in current relationships. With a large backlog, their outlook for the remainder of 2022 and 2023 continues to be very positive. BCC continues to see impressive year-over-year growth with record high activity the past number of months. BCC has also improved mix leading to revenue increases per procedure, the combination of which has resulted in an upward revision to our reset metric, same customer sales. Offsetting these increases were declines in GlobalWide of $10.8 million, SCR of $4.4 million, and LMS of $1.5 million. GWM, while continuing to maintain a strong ECR, has not achieved the growth expected at the time of our investment. This coupled with low interest rates and peak multiples at the time of our common investment and the shift in these metrics in recent months have driven a revision to the common fair value of $4.5 million. While they are seeing month-over-month top-line growth and the company has diversified their customer base as compared to the prior year, we have decreased our reset expectations to reflect this performance. As a result, the preferred equity value decreased by $6.3 million. Despite this slower-than-expected start to their growth initiatives, we have not changed our long-term view on the trajectory of this business and remain confident in the outlook for this investment. SCR's business can be impacted by the timing of project-related work throughout the year. This coupled with inflationary wage pressures and increased competition has impacted our expectations for the cash flow sweep for the 1st half of the year and resulted in a fair value decline. While the 1st five months were down compared to the last year, their project work through the summer has picked up, and we expect the last half of the year to improve. They continue to pay their monthly fixed distributions, and with no bank debt in the company, we don't expect any risk to these payments. LMS's reset for the current year was adjusted due to the finalization of their 2022 audit. As a result, our reset was revised down from 18%- 21%. This change drove the decline in the fair value, and no changes to any current expectations were made to the calculation. Other less significant movements in DNT, Edgewater, Heritage, and Planet Fitness rounded out the changes in the quarter. In addition to a small follow-on with Heritage for $3.5 million during the quarter, we deployed a further $26 million into our existing partner Axient earlier this week. The follow-on investment includes $60 million of preferred equity and $10 million of common equity. These two investments bring our year-to-date deployment to $116 million. During the quarter, we decreased our senior debt outstanding by $77 million as a result of both the $67 million Kimco redemption as well as $10 million through cash flow as a result of our low payout ratio. Following the Axient investment earlier this week, we currently have CAD 287 million of senior debt outstanding, resulting in CAD 113 million of available capacity. Our portfolio continues to have a weighted average ECR of over 1.75x, with 14 of 18 partners continuing to have an ECR over 1.5x, and eleven of those being over 2x. Our current outlook calls for CAD 39.3 million of revenue in Q3 and a 12 month run rate of CAD 159.3 million, up from CAD 154.8 million last quarter. I'll now turn it over to Steve for his comments. Great. Thanks, Amanda, and thanks everybody for tuning in today. Obviously really excited about another record quarter of revenue and earnings. You know, it's nice profits, you know, that we get from steady monthly distributions from our 18 partners, and combined with intermittent earnings from the sale of assets, like we just had with Kimco, continues to build both our book value as well as provide our shareholders a really valuable stable yield. While we're in statistically a period of economic decline, our portfolio remains as strong as ever, with most of our companies still putting up record results on a monthly basis. As discussed before, our portfolio is ideally suited to be a defensive vehicle, given that our partners share some very important features. First of all, our companies are almost all required service businesses that don't show very much economic sensitivity historically. While some of them may have slight declines in short-term periods, these companies have been operating for an average of 25 years and have all shown strong performance in various environments. The 2nd factor is low debt levels. The majority of our partners don't have any long-term debt on their balance sheets, and the ones that do have much lower than industry comparables. The combination of potential earnings declines and borrowing cost increases and lender increased conservatism that will impact many companies will not have a material effect on our portfolio. Thirdly, our structure itself is ideally suited to the environment we're in today. The fact that our distributions from our partners increase with revenue, and not from the bottom line insulates us from the impact of inflation. In fact, it actually benefits us since the revenue in an inflationary environment will go up, and we get protected 'cause we don't share in the increased costs below the top line. The final shared factor is the alignment and quality of our management teams. Each of these groups has chosen us specifically for being able to stay in control of their businesses and keep more of the economic upside. Having top people that are heavily incented and are, in fact, majority owners of the businesses also allows the portfolio to be more resilient in challenging times. The best management teams always find a way to get through and even flourish in these types of environments. We also have on average a 75% cash flow buffer from our partners to pay their distributions, and we ourselves have a record low payout ratio of just over 60% that we pay out to our shareholders. From a deployment point of view, we have seen a higher flow of new deals come across our desk over the 1st six months of the year, but the quality of those companies has been lower than in previous years. You know, we are very strict in our investment criteria. This is not unexpected and is actually in keeping with what we saw in 2009 as we came out of the Great Recession. Simply the best companies make the decision not to go to the market during the times like this. They wait until markets are better because they can. With all that said, we're starting to see a rebound in the quality of opportunities and expect to be active in the 2nd half with not only more follow-on transactions but also adding new partners to our stable. On a broader viewpoint, a higher interest rate environment is a huge positive to our deployment opportunities going forward. As a cash pay investor, the cost of our preferred shares compared to debt always looks far more attractive when debt rates are higher, which we haven't seen in, obviously, a number of years. Higher interest rates also means more challenging deal terms being offered by traditional common equity competitors. We expect our win rate to improve from previous years and our total deployment to increase as higher quality companies return to the market. We've been in the lowest interest rate environment in history over the last decade, so we're very much looking forward to competing in a higher capital cost setting. As we've alluded to in our disclosure, we continue to make progress on our asset management strategy that we've communicated in previous quarters. There are several opportunities that have presented themselves to us, all at various stages of certainty, and I'm quite excited about these opportunities. I think it'll be a great add to our revenue and earnings without requiring capital and will also very much benefit our preferred share deployment capabilities. Kevin will open it up to questions if you can. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your touchtone telephone. We'll pause for a moment while we compile our Q&A roster. Operator, our next question comes from Nik Priebe with CIBC. Your line is open. Okay, thanks. Good morning, everyone. Morning. Wanted to start with a pair of questions on a couple of private company partners in the quarter. You'd made some good comments on GWM, and what you're seeing there, you know, with the negative fair value change, as well as revenue and EBITDA being down on a year-to-date basis. I think in the qualitative script in the MD&A, you had alluded to the fact there was a lower earnings contribution from the legacy performance division. Can you help us just understand, you know, what share of the business mix that might represent? Also, you know, what the magnitude of the enterprise-wide decline might look like? I don't think it moved ECR bands in the quarter. I'm just wondering, you know, how meaningful that shift in performance has been. Yeah. We don't think it's gonna be meaningful long term. This was always a division that was essentially being wound down. They had a large customer last year. It was actually TikTok that represented the majority of that performance business. TikTok changed their kind of media in terms of their digital advertising, so that dropped right off. That was essentially the main cause for the decline in the performance business. This is purely a programmatic play for us as an investor. Programmatic has been growing and the company actually has a much bigger backlog than they've ever had in their history. They are very confident in the 2nd half of this year based on that booked backlog. As Amanda said, we haven't changed at all our expectations for this investment over our investment horizon. Certainly the 1st half of the year was impacted by that one customer. Okay, understood. That's helpful. Just moving on to ECR. I was wondering if you could expand a little bit on some of the headwinds that they're facing and your outlook there. I know they dropped down to a lower ECR band. I suspect that that's the type of business that would have a pipeline of work in front of it. Do you have good visibility and, you know, that gives you confidence in the sustainability of the current distributions you're receiving from that investment? Yeah. The investment is really project based. You know, the timing of where those projects fall can move at any time during the year, and that's what we saw here. We did have a slower start, you know, in the 1st five months of the year as compared to the prior year, and we've seen that rebound in the last few months. We do have good visibility to the end of the year. We don't foresee, you know, this continued decline. We think things will level off, and continue to work pretty closely with management with regards to, you know, the forecast for their outlook. Okay. Okay, very good. Last one from me before I pass the line. You had some comments in the press release around the, you know, the progress you've been making on the development of the 3rd-party asset management platform. Maybe it's still early days, but do you have a sense of what level of AUM, you know, might be necessary to achieve break even? I'm just trying to triangulate, you know, how large that might need to scale before, you know, it's capable of producing kind of an independent earnings contribution. Well, it really doesn't require much at all. You know, any assets that we manage will have a work fee as well as a carry, and that work fee will more than cover our expenses. We already have essentially the infrastructure fully in place to do this type of thing. We don't anticipate needing to add very many people. Everything should be quite incremental to our revenue and earnings when it comes to the addition of assets under management. We're pretty excited about it. As I said, you know, we do have, you know, a few things. We've learned a lot and have been approached on different types of concepts, so we're still getting things sorted out. There is some kind of infrastructure to put in place from a regulatory point of view and making sure that, you know, any conflicts of interest are sorted out. All of those kind of things have added to our expenses. But that should be more or less a one-time cost in advance of setting up the asset management division, and we don't expect those kind of expenses to persist. Got it. Okay, that's great. That's it for me. I'll pass the line. Thank you. Great. Thanks. One moment for our next question. Our next question comes from Geoffrey Kwan with RBC. Your line is open. Hi. Good morning. Just your comments on the existing partners and potential acquisitions they're doing, are these acquisitions that they've, you know, kind of signed and are just waiting to close? Or are these ones that you have some insight into, of what they may potentially be looking at, trying to do in the 2nd half of the year? Yeah. We've got a few partners that are, you know, like Axient that we just closed this week. An environment like we're in today actually presents more opportunities for companies like our partners that have the financial wherewithal and backing to go out and acquire companies. You know, it's a little too early stage to talk about, you know, probabilities and sizes. The nice thing about having a large portfolio is that, you know, in any given quarter, we're likely working on probably one or two follow-on deals with our current partners. It's a nice kinda steady stream of deployment opportunities for us. Just my 2nd question was you kinda talked about you're seeing still good, I guess, quantity of deals coming on your plate, but the quality isn't quite as good. Is it you're being shown sectors that you don't have interest? Is it some companies may have leverage or, you know, are you getting referrals from, you know, people outside your kind of traditional network of referral partners? Yeah, it's a combination of all those things. We certainly have seen more, what I would call cyclical companies come to the market trying to get a deal done, maybe before things get tough. We've also seen companies with higher leverage numbers come to the market trying to, you know, refinance their balance sheet. That's again, not really something that we do. It's all, you know, it never lasts very long. At the end of the day, the good companies will require capital and I think, you know, with any recession, with anything in the public markets, even in the private, the kind of the concept of an impending recession is usually worse than the recession itself when you're in it. We just need to get through this period of uncertainty and, you know, whatever the world looks like. Once we know what it looks like, you know, that's when the companies move back in, the good companies move back in and take advantage of whatever opportunities they have. We're already starting to see a return to some better opportunities. You know, we've been doing this for almost 19 years now, so we've been through the cycles. You know, we've seen it before and we're pretty confident in how it's gonna end up. Okay. Thank you. One moment for our next question. Our next question comes from Gary Ho with Desjardins. Your line is open. Great. Thanks. Good morning, Steve, Amanda. Good morning, Gary. Steve, yeah, you mentioned your model benefits in an inflationary period. You know, just wondering on the reset side, you probably have seven months of data. You know, how does the 2023 rate reset kinda looks right now or tracking? Just maybe comment on the larger investments, looking at the portfolio summary table, kinda top five looks pretty healthy here. Just increases on revenue year-over-year and decent EBITDA growth as well. Yeah. At this point, I mean, we'll have to wait to see how the back half of the year plays out, and if this sort of economic slowdown that people are expecting materializes. At the moment, we're looking at probably a fairly healthy reset across the board. You know, the more meaningful partners are doing well, as well as a number of the smaller partners, and it all adds up to a fairly decent increase for our expected reset. One of the swing factors that we've had is the one uncollared partner in LMS, where we had a pretty large decline last year, which muted the really significant growth that the rest of our portfolio had. We are hoping that LMS gets a little bit of that back this year. Things on the steel side have stabilized, and so I think they're expecting a better 2nd half of the year than they had the 1st. Certainly going into next year, I think it's gonna be a very good environment for them 'cause the demand from their customers is still extremely high. It was really just a margin issue with the price of steel more than doubling in a very short period of time. Okay. Got it. My next one, just going back to the capital deployment side, you know, good to see the two follow on. Did notice the higher yields, 15%, I think that was for Heritage. Is that a trend that we should expect on future deployments, like slight bump versus the 13% we've seen in recent deployments, or is that more of a one-off? No, I think it is something that you can expect more of. Some of the deals that we're bidding on right now, we are able to get a 15% as opposed to, you know, probably traditionally a 14%. So that is another advantage of a higher interest rate environment is, you know, we're seeing a lot of these companies getting debt rates on senior debt at 8%-10%. So having, you know, this kind of preferred equity that shares in the business risk and gives them, you know, eliminates refinance risk because they never have to pay it back if they don't want to, you know, the value of our offering is much higher than it was before in the previous environment. Yeah, I think you can expect a few more 15%, still some 14% in there. Maybe the odd follow-on like, you know, Axient, as a follow-on deal where we have almost no costs and a trusted partner, we did that at 13.3%. But yeah, you'll certainly see some new deals at 15% moving forward. Okay. Just on the other side, any potential redemptions in the 2nd half of this year that we should monitor? Oh, redemptions. I mean, as always, you know, with an 18 company portfolio, our average hold period over the 18 years has been about five and a half years. Just doing the math, we should get a couple each year. You know, there are a couple of companies that, you know, they expressed a desire to sell and move on. You know, quite frankly, I would quite welcome that. Eight of our partners, we now have common equity in out of the 18 and, you know, having some liquidity, some crystallization of profits on our common, I think would be very good to show and, would also, you know, really dramatically increase the kind of the operating leverage we have, where we'll have, you know, money coming in that we weren't getting much credit for, that we'll be able to then redeploy into new investments that'll generate cash. That's a really good equation. It increases our growth rate without needing to go to the market. You know, redemptions are not something that I'm afraid of. I'm hoping they, you know, we get a couple in the 2nd half of this year. Maybe just to follow on to that, Steve, is that some of those redemptions are they kinda top five? Like, just trying to pick how big those can be. Yeah. That I'm certain at this point, Gary. Okay. All right. Those are my questions. Thanks very much. Okay, thanks. One moment for our next question. Our next question comes from Zachary Evershed with National Bank Financial. Your line is open. Good morning. Thanks for taking my questions. Yeah. Thanks. Good morning. For SCR, could you help us quantify the risk of an interruption in distributions? At this point, like, the lack of debt within that business, there's really no reason that we would be turned off. That CAD 4.2 million of fixed distributions, we're quite comfortable with that. We don't really see there being any risk to those payments at this point in time. Good call. Thanks. Just more macro to get my head right. Mm-hmm. Markets are turbulent, so deployments have slowed a little. With rates moving up, as you mentioned, shouldn't there be more interest in Alaris from higher quality companies, given the lower spread to debt? Yeah. It really is what I was trying to say over the course of our 18 years, you know, especially through 2008, 2009, we did see an increase in demand for our product. There was a lag, because, you know, if you're a really successful cash-rich company, you're just not gonna go to the market when things are this turbulent. You do end up waiting. You know, companies that can't wait are in the market. Companies that can wait, which is, you know, the market sector that we're interested in, they have waited. But that never lasts long. Like, you know, we've never seen anything more than a six-month interruption in that flow. You know, we are starting to see some good opportunities now. For us, there's no feeling of pressure to do deals. They have to be the right deals. You know, just like in 2009 and 2010, we didn't do a whole lot of new stuff. We focused on our current portfolio and helped them grow. It's been a similar situation this year, not as pronounced as it was in 2009, but you know, I think we'll benefit from being patient and waiting for those good companies to come back, and they are. Great answer. Thanks. I'll turn it over. One moment for our next question. Our next question comes from Trevor Reynolds with Acumen Capital. Your line is open. Morning, guys. Trevor. Just on the Axient common equity, is there any expectations around dividends from them? Probably not in the short term. No. They have a little bit of debt on their balance sheet, and they always have growth opportunities. I think, you know, the vast majority of their cash flow will go into those growth opportunities. This is a company that we've wanted to own common shares in since the start of our investment with them. Quite honestly, you know, when we sat down with the principal of Axient and worked through the math of how much common equity value we had created for him, over, you know, the last four years, it really was a matter of, "You know what? You're right. You know, it's probably right to share some of that with you, going forward." We're quite ecstatic to be common equity partners with their management team. You know, we've got a partner there that has shown a really outstanding ability to create value, and that's not gonna stop. Yeah, it'll be more exit-weighted than dividend-weighted. Great. Then this has kinda been a theme in some of your follow-on investments, is adding the common and equity portion. Is this something we should expect on some of the follow-on investments that you have expect for this year? It is. Yeah. I think at the end of the day, you know, we've been doing the common equity investments for the last, I guess, three years now. We're really excited about what it is providing to us, both in terms of increased deal flow, but mostly just a much better return profile for our total investment. I really like the alignment of it with the management teams. Yes, that is something that you can expect. You know, we still won't be able to get it in all cases. There's still companies that just refuse to issue any common equity because they know that that's the most expensive capital you can issue. You know, where we can, we would like to have kind of a small part of our investment being common, along with our kind of bread and butter debt business. Got it. Thanks. Great. Thanks, Trevor. I'm not showing any further questions at this time. I turn the call back to Steve King for any closing remarks. Okay. Well, thanks again, everybody, for tuning in. You know, we see more good things for the rest of this year, so we look forward to sitting with you over the next three months and sharing our next results in November. Thanks very much. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.