Earnings release
Page 1
NOT FOR DISTRIBUTION IN THE UNITED STATES . FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW A ALARIS EQUITY PARTNERS INCOME TRUST PRESS RELEASE TSX - AD.UN Alaris Releases 2026 Second Quarter Financial Results Record Net Book Value Per Unit and 42 % Growth in Alaris Net Distributable Cash Flow Calgary , Alberta , August 6 , 2026 – 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 , 2026. All amounts below are in Canadian dollars unless otherwise noted . Second Quarter Highlights • • • • • Record Net Book Value : Net book value ( 4 ) per unit increased by $ 0.52 during Q2 to a record $ 25.83 . Earnings and comprehensive income contributed $ 0.92 per unit , including $ 0.46 per unit of unrealized foreign exchange gains , partially offset by quarterly distributions of $ 0.38 per unit . Strong Cash Flow Generation : Alaris net distributable cash flow ( 1 ) increased by 41.8 % compared to Q2 2025 , primarily reflecting higher Partner distributions from recent investments . The increase was partially offset by higher interest expenses and operating costs . The year - to - date payout ratio was 58 % ( 2025 - 65 % ) and remains below the Trust's long- term target range of 65 % -70 % . Revenue and Operating Income : Total revenue and operating income increased by 24.5 % compared to Q2 2025 , driven by growth in contractual Partner distributions from recent investments and higher realized and net unrealized gains on Partner investments . Record Recurring Run Rate Revenue : Estimated Run Rate Revenue increased to a record $ 208.4 million , reflecting recent investments and annual contractual distribution resets that support future cash flow growth . New Capital Deployment : Alaris invested $ 75.3 million in Kubik Inc ( " Kubik ” ) during Q2 and , subsequent to quarter end , completed a US $ 35.0 million investment in Tesco - The Eastern Specialty Company , LLC ( " Tesco " ) . These investments increased total capital deployed in 2026 to $ 126.1 million and further expanded the Trust's recurring revenue base . Portfolio Strength : Alaris ' portfolio expanded to a record 25 Partners , the largest in Alaris ' history , with a weighted average Earnings Coverage Ratio ( 3 ) of approximately 1.5x . Nineteen Partners report ECRs above 1.2x . Sixteen Partners have no senior debt or senior debt leverage below 1.0x senior debt to EBITDA . Partner Revenue Ahead of Guidance : Total Partner revenue of $ 50.6 million exceeded guidance by 5.6 % , including $ 49.9 million of Partner distributions and $ 0.7 million of third - party fees . Results also benefited from a stronger U.S. dollar relative to guidance assumptions . " The second quarter results reflect the positive momentum that we've been experiencing for some time . Built on the bedrock of solid free cash flow generation , Alaris has been able to add considerable growth drivers in our book value as well as our earnings . Adding our 25th partner in the quarter and being well below our targeted payout ratio without even including the large Fleet dividend that came in just after quarter - end , are signals that further growth is ahead . The environment for quality capital deployment also continues to be very strong . We look forward to an active second half of the year " . said Steve King President and CEO .
Page 2
Results of Operations Three months ended June 30 Six months ended June 30 $ thousands except per unit amounts 2026 2025 % Change 2026 2025 % Change Change in Net book value (4) per unit $ 0.52 $ (0.77) $ 1.04 $ (0.65) Net book value (4) per unit $ 25.83 $ 25.31 +2.1% $ 25.83 $ 25.31 +2.1% Total revenue and operating income $ 42,916 $ 34,457 +24.5% $ 80,285 $ 70,845 +13.3% Cash from / (used in) operations, prior to changes in working capital $ 23,477 $ (63,145) n/a $ 43,908 $ (43,328) n/a Total Partner distribution revenue (9) $ 49,928 $ 41,771 +19.5% $ 97,806 $ 84,743 +15.4% Alaris net distributable cash flow (1) $ 25,410 $ 17,920 +41.8% $ 58,077 $ 48,036 +20.9% Payout Ratio (5) 66.1% 86.5% -23.3% 57.8% 64.5% -10.8% Annualized distribution yield on preferred capital invested (2) 12.8% 12.2% +60pts 12.4% 12.6% -20pts Capital deployment $ 76,196 $ 32,749 +132.7% $ 77,067 $ 153,632 -49.8% Revenue and Operating Performance Total revenue and operating income increased 24.5% to $42.9 million, compared to $34.5 million in Q2 2025. The increase primarily reflected higher Partner distribution revenue from recent new and follow -on investments, including Kubik , together with higher realized and unrealized gains on Partner investments. Total Partner distribution revenue (9) increased 19.5% compared to Q2 2025, reflecting higher contributions from investments completed throughout 2025 and the initial investment in Kubik during 2026. The annualized distribution yield on preferred capital invested (2) was 12.8% in Q2 2026 compared to 12.2% in Q2 2025, reflecting the continued strength of Alaris’ preferred investment portfolio. Earnings and Net Book Value Earnings and comprehensive income increased to $41.9 million compared to a loss of $17.9 million in Q2 2025. The improvement was primarily driven by an unrealized foreign exchange gain of $21.1 million, compared to an unrealized foreign exchange loss of $44.8 million in the prior year period. Net book value per unit increased to a record $25.83, reflecting continued growth in the underlying value of the investment portfolio. Cash Flow and Capital Allocation Cash from operations prior to changes in working capital increased compared to 2025. The increase primarily reflects the prior year investment of convertible debenture net proceeds by the Trust into the Acquisition Entities to repay outstanding debt. Alaris net distributable cash flow (1) increased by 41.8%, driven by higher Partner distribution revenue together with lower cash taxes paid by the Acquisition Entities . The year-to-date Payout Ratio (5) was 58%, remaining below the Trust’s long term target range of 65%–70%, providing continued flexibility to fund future investments while supporting distribution growth. Outlook Management expects Total Partner revenue (9) of approximately $69 million in Q3 2026, reflecting seasonal timing of common distributions. Expected revenue includes approximately $20.4 million of common distributions, including US$13.8 million recorded and received from Fleet Advantage, LLC ("Fleet") subsequent to June 30, 2026. Actual results may vary based on the timing and amount of common distributions declared by Partners. Estimated Run Rate Revenue (6) for the next twelve months increased to approximately $208.4 million, based on current contractual terms. Management expects the Run Rate Payout Ratio (8) to remain between 60% and 65%, excluding the impact of potential future investments.
Page 3
Amount ($) $ / Unit Run Rate Revenue, Partner Distribution revenue $ 208,400 $ 4.57 General and administrative expenses (20,500) (0.45) Third party Interest and taxes (78,800) (1.73) Net cash from operating activities $ 109,100 $ 2.39 Distributions paid (69,400) (1.52) Run Rate Cash Flow $ 39,700 $ 0.87 Other considerations (after taxes and interest): New investments Every $50 million deployed @ 14% +2,790 +0.06 Interest rates Every 1.0% increase in interest rates -3,500 -0.08 USD to CAD Every $0.01 change of USD to CAD +/- 990 +/- 0.02 Run Rate Cash Flow $ thousands except per unit Alaris’ financial statements and MD&A are available on SEDAR+ at www.sedarplus.ca and on our website at www.alarisequitypartners.com. Earnings Release Date and Conference Call Details Alaris management will host a conference call at 9am MT (11am ET), Friday, August 7, 2026 to discuss the financial results and outlook for the Trust. Participants must register for the call using this link : Q2 2026 Conference Call. Pre-register to receive the dial -in numbers and unique PIN to access the call seamlessly. It is recommended that you join 10 minutes prior to the event start (although you m ay register and dial in at any time during the call). Participants can access the webcast here: Q2 Webcast. A replay of the webcast will be available two hours after the call and archived on the same web page for six months. Participants can also find the link on our website, stored under the “Investors” section – “Presentations and Events”, at www.alarisequitypartners.com. An updated corporate presentation will be posted to the Trust’s website within 24 hours at www.alarisequitypartners.com . About the Trust: Alaris’ investment and investing activity refers to providing, through the Acquisition Entities, structured equity to private companies (“Partners”) to meet their business and capital objectives, which includes management buyouts, dividend recapitalization, growth and acquisitions. Alaris achieves this by investing its unitholder capital, as well as debt, through the Acquisition Entities, in exchange for distributions, dividends or interest (collectively, “Distributions”) as well as capital appreciation on both preferred and common equity. The principal objective is to generate predictable cash flows for distribution payments to its unitholders while growing net book value through returns from capital appreciation. Distributions, other than common equity Distributions, from the Partners are adjusted annually based on the percentage change of a “top- line” financial performance measure such as gross margin or same store sales and rank in priority to common equity position. Non-GAAP and Other Financial Measures The terms Net distributable cash flow, Net book value, Earnings Coverage Ratio, Run Rate Payout Ratio, Annualized distribution yield on preferred capital invested and total capital invested, Payout Ratio, Run Rate Revenue, Run Rate Cash Flow, and Per Unit amounts (collectively, the “ Non-GAAP and Other Financial Measures”) are not standardized financial measures under International Financial Reporting Standards (“ IFRS”). Management believes these measures provide useful supplemental information to investors . The Trust’s method of calculating the Non- GAAP and Other Financial Measures may differ from the methods used by other issuers. Therefore, the Trust’s Non-GAAP and Other Financial Measures may not be comparable to similar measures presented by other issuers. Readers are encouraged to review the Trust’s financial statements and MD&A, complete versions of which available on SEDAR+ at www.sedarplus.ca. (1) “Alaris net distributable cash flow” A Non-GAAP financial measure management uses which represents total external revenue generated by both the Trust and the Acquisition Entities, less: • general and administrative expenses, • third-party interest expense, and • cash taxes paid (or received).
Page 4
This metric aligns most closely with Cash from / (used in) operations, prior to changes in working-capital, but includes the net cash flow of the Acquisition Entities. Investors use this measure to provide a comprehensive view of cash available for distributions, debt repayment, or reinvestment. Three months ended June 30 Six months ended June 30 $ thousands except per unit amounts 2026 2025 % Change 2026 2025 % Change Cash from / (used in) operations, prior to changes in working capital $ 23,477 $ (63,145) n/a $ 43,908 $ (43,328) n/a Add back: Net invested / (return of) capital in Acquisition Entities (4,866) 78,675 (6,884) 73,691 Changes in working capital, Income tax payable and receivable (660) (2,308) (109) (2,282) Cash interest paid (6,831) - (8,861) (2,031) Distributable cash flow included in Net gain on Corporate Investments: Partner distribution revenue - preferred 49,065 39,549 93,717 80,128 Partner distribution revenue - common 863 2,222 4,089 4,615 Operating costs and other (1,240) (649) (2,408) (1,515) Transactions costs (1,782) (2,148) (2,808) (4,017) Finance costs and senior credit facility (7,693) (7,697) (14,588) (14,308) Acquisition Entities cash taxes paid (347) (7,170) (62) (5,182) Management and advisory fees paid to Trust (5,682) (4,789) (11,382) (9,395) Interest on intercompany loans (5,918) (3,051) (11,717) (6,244) Acquisition Entities dividends paid to Trust (12,385) (11,047) (24,370) (21,574) Realized loss on foreign exchange contracts (591) (522) (448) (522) Alaris net distributable cash flow $ 25,410 $ 17,920 +41.8% $ 58,077 $ 48,036 +20.9% Alaris net distributable cash flow per unit $ 0.56 $ 0.39 +43.6% $ 1.28 $ 1.06 +20.8% (2) “Annualized distribution yield on preferred capital invested” A supplementary financial measure calculated by dividing Partner distribution revenue – preferred, annualized for the period by the weighted average total capital invested during the period. Management uses this measure to monitor preferred investment distributions over time relative to the current investment base, making it a useful tool for investors to track the cash yield of preferred Partner investments. (3) “Earnings Coverage Ratio (“ECR”)” A supplementary financial measure calculated as each Partner’s EBITDA divided by the sum of its debt servicing (interest and principal), unfunded capital expenditures, and distributions to Alaris. ECR assesses a Partner’s ongoing ability to meet its contractual obligations to Alaris. ECR is a useful metric for investors as it provides an indication of a Partner’s financial health and sustainability. (4) “Net book value” and “net book value per unit” A supplementary financial measure equal to total equity. The per unit figure divides that amount by the weighted average basic units outstanding. These metrics measure growth in equity value, net of distributions, and enable period- over-period comparison of value creation. Investors find this metric useful because it provides a clear indication of the underlying value of the Trust attributable to unitholders and the period over period value generated. 30-Jun 31-Mar 31-Dec 30-Jun $ thousands except per unit amounts 2026 2026 2025 2025 Total Assets $ 1,481,871 $ 1,452,372 $ 1,421,000 $ 1,251,338 Total Liabilities $ 302,873 $ 304,112 $ 296,829 $ 178,515 Net book value $ 1,178,998 $ 1,148,260 $ 1,124,171 $ 1,072,823 Shares outstanding 45,641 45,361 45,339 45,513 Net book value per unit $ 25.83 $ 25.31 $ 24.79 $ 23.57
Page 5
(5) “Payout Ratio” A Non-GAAP financial ratio used by management which represents total cash distributions paid to unitholders during the period, divided by Alaris net distributable cash flow for the same period. This metric is useful to investors as it reflects the proportion of available cash used to pay distributions and indicates the capacity for reinvestment or debt repayment. (6) “Run Rate Revenue” A forward-looking supplementary financial measure estimating expected revenue over the next twelve months based on current Partner contracts and known management or transaction fees, excluding potential Partner redemptions. It may include estimated common dividends or distributions based on historical practice. Run Rate Revenue provides investors with an indication of forward annualized revenue potential. Forward-looking Non-GAAP measures reflect management’s current expectations and are subject to the risks and assumptions described under Forward-Looking Statements. (7) “Run Rate Cash Flow” A forward-looking supplementary financial measure that outlines the net cash from operating activities, net of distributions paid, that Alaris is expecting to have after the next twelve months. This measure is comparable to N et cash from / (used in) operating activities less distributions paid, as outlined in Alaris’ consolidated statements of cash flows. Investors find this measure useful because it provides insight into the expected cash available for reinvestment, debt repayment, or other corporate purposes af ter distributions. Forward-looking Non-GAAP measures reflect management’s current expectations and are subject to the risks and assumptions described under Forward-Looking Statements. (8) “Run Rate Payout Ratio” A forward-looking supplementary financial measure that refers to Alaris’ distributions per unit expected to be paid over the next twelve months divided by Alaris net distributable cash flow per unit calculated in the Run Rate Cash Flow table. Run Rate Payout Ratio is a useful metric for management to track and to outline as it provides investors a summary of the percentage of the net cash from operating activities that can be used to either repay senior debt during the next twelve months and/or be used for additional investment purposes. Forward-looking Non-GAAP measures reflect management’s current expectations and are subject to the risks and assumptions described under Forward-Looking Statements. (9) “Total Partner Distribution Revenue” A supplementary financial measure summing Partner distribution revenue – preferred and Partner distribution revenue – common, which are components of Net gain on Corporate Investments as disclosed in N ote 3 of the accompanying financial statements. Management believes this measure provides useful information for investors on the total cash yield from Partner distributions during the period. (10) “Per Unit” values, other than earnings per unit, refer to the related financial statement caption as defined under IFRS or related term as defined herein, divided by the weighted average basic units outstanding for the period. Forward-Looking Statements This news release contains forward-looking information and forward-looking statements (collectively, “forward-looking statements”) within the meaning of applicable securities laws, including any applicable safe harbor provisions. Statements other than statements of historical fact contained in this news release may constitute forward- looking statements, including, without limitation, management’s expectations, intentions and beliefs concerning the growth, results of operations, performance of the Trust and the Partners, the future financial position or results of the Trust, and the business strategy, plans and objectives of or involv ing the Trust or the Partners. Forward-looking statements may be identified by words such as “believe”, “expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar expressions, including the negative thereof. Specific Forward-Looking Statements In particular, this news release contains forward-looking statements regarding, among other matters: • the anticipated financial and operating performance of the Partners; • the attractiveness of Alaris’ capital offering; • the Trust’s total Partner revenue, Run Rate Payout Ratio, Run Rate Cash Flow and Run Rate Revenue; • the impact of recent new investments and follow-on investments; • expectations regarding the receipt and amount of any common equity distributions or dividends from Partners in which Alaris holds common equity, including the impact on the Trust’s net cash from operating activities;
Page 6
• the amount and impact of future capital deployment and the Trust’s ability to deploy capital; • expected gains on common equity investments and future exits; • the yield on the Trust’s investments and expected resets on Distributions; • changes in interest rates and foreign exchange rates; • the impact of deferred distributions and the timing of repayment thereof; • the Trust’s return on its investments; • Alaris’ expenses for the next twelve months; and • Expected growth in Alaris’ distribution to its unitholders. Financial Outlook and Future-Oriented Financial Information To the extent any forward- looking statements herein constitute a financial outlook or future- oriented financial information (collectively, “FOFI”), including estimates regarding revenues, D istributions from Partners (including restarting full or partial distributions and common equity distributions), Run Rate Payout Ratio, Run Rate Cash Flow, net cash from operating activities , expenses and the impact of capital deployment, such information has been approved by management as of the date hereof and has been included to provide readers with an understanding of Alaris’ expected financial performance. Such information may not be appropriate for other purposes and is subject to the same risks, uncertainties and assumptions described herein. There can be no assurance that the plans, intentions or expectations upon which these forward- looking statements are based will occur. Assumptions Underlying Forward-Looking Statements Forward-looking statements require Alaris to make assumptions and are subject to inherent risks and uncertainties. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that performance may affect Alaris’ business and that of its Partners (including, without limitation, the impact of global health crises such as COVID -19 and global economic and political factors, including new and ongoing conflicts in Europe and the middle east) are material factors considered by management when establishing expectations for the Trust. Key assumptions include, but are not limited to, assumptions that: • the Russia/Ukraine conflict, the Iran conflict, other conflicts in the Middle East and other global economic pressures will not materially impact Alaris, its Partners or the global economy; • interest rates and tax rates will not rise materially different from prevailing market expectations over the next twelve months; • global health crises such as COVID-19 or variants thereof will not materially impact the economy or the operations of the Partners over the next twelve months; • the businesses of the majority of the Partners will continue to grow; • more private companies will require access to alternative sources of capital; • the businesses of new Partners and existing Partners will perform in line with Alaris’ expectations and diligence; and • Alaris will have the ability to raise required equity and/or debt financing on acceptable terms. Management has also assumed that the Canadian and U.S. dollar exchange rate will remain within approximately plus or minus 15% of the current rate over the next six months. In determining expectations for economic growth, management considers historical economic data provided by Canadian and U.S. government agencies as well as prevailing economic conditions at the time of such determinations. Risks and Uncertainties Forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. Actual results of the Trust and the Partners could differ materially from those anticipated as a result of various risk factors, including, but not limited to: Economic and External Risks • global health crises such as COVID-19 or variants; • global economic factors including the Russia/Ukraine conflict, the Iran conflict, other conflicts in the Middle East, inflationary pressures and global supply chain disruptions; and • tariffs and international trade disputes affecting the Trust or the Partners. Partner and Portfolio Risks • dependence of Alaris on the Partners;
Page 7
• risks relating to the Partners and their respective businesses; • material changes in the operations of a Partner or the industries in which they operate; • changes in the ability of Partners to continue to pay Distributions or restart Distributions (in full or in part); and • failure to collect deferred Distributions. Financing and Structural Risks • leverage and restrictive covenants under credit facilities; • failure to complete or realize the anticipated benefits of financing arrangements with Partners; and • inability to close additional Partner contributions or collect redemption proceeds on anticipated terms. Operational and Regulatory Risks • reliance on key personnel; • failure to obtain required regulatory approvals on a timely basis or at all; • changes in legislation, regulations and their interpretations; • failure to settle outstanding litigation on expected terms or at all; • risks associated with unaudited information provided to the Trust by the Partners; and • cybersecurity risks or risks associated with the implementation of artificial intelligence. Additional risks that may cause actual results to vary from those indicated are discussed under the headings “Risk Factors” and “Forward-Looking Statements” in Alaris’ Management Discussion and Analysis (“MD&A”) and Annual Information Form (“AIF”) for the six months ended June 30, 2026 , which is or will be (in the case of the AIF) available under Alaris’ profile at www.sedarplus.ca and on the Trust’s website at www.alarisequitypartners.com. Caution Regarding Reliance Readers are cautioned that the assumptions used in the preparation of forward- looking statements, including FOFI, although considered reasonable at the time of preparation, may prove to be inaccurate. Accordingly, undue reliance should not be placed on forward-looking statements. Except as required by applicable law, Alaris undertakes no obligation to update or revise any forward- looking statements. For more information please contact: Investor Relations Alaris Equity Partners Income Trust 403-260-1457 ir@alarisequity.com