Alaris Equity Partners Income Trust (AD-UN) Q2 2025 earnings summary

Executive summary

• Q2 showed strong operational performance across most partners, with revenue and operating income up 21% year-over-year to CAD 34.5 million, driven by nine partners, but offset by a CAD 14.6 million write-down at FMP due to lost U.S. federal contracts.

• Net book value per unit fell to CAD 23.57 at June 30, 2025, down CAD 0.77 from Q1, mainly due to a CAD 0.98 per unit unrealized FX loss and quarterly distribution of CAD 0.34 per unit.

• Earnings and comprehensive income for the quarter were a loss of CAD 17.9 million, compared to a gain of CAD 31.7 million last year, mainly due to a CAD 44.8 million unrealized FX loss.

• Year-to-date, CAD 154 million was invested into new and current partners, including a US$21.5 million follow-on in The Shipyard, LLC.

• 352,500 units were repurchased and cancelled in the first half of 2025, adding CAD 0.04 per unit to net book value.

Financial highlights

• Net distributable cash flow was CAD 17.9 million, down from CAD 26.3 million in Q2 2024, mainly due to higher cash taxes and transaction costs.

• Run-rate revenue reached CAD 183 million, up 12.5% year-over-year and from CAD 178 million last quarter.

• Cash from operations before working capital changes was negative CAD 63.1 million in Q2 2025, compared to positive CAD 13.4 million in Q2 2024, due to senior debt repayment funded by convertible debenture proceeds.

• Actual payout ratio for the six months ended June 30, 2025, was 65%.

• Weighted average basic units outstanding were 45,513 at June 30, 2025.

Outlook and guidance

• Q3 partner revenue expected at approximately CAD 56.9 million, up from Q2, driven by incremental common distributions.

• Run-rate payout ratio remains in the 60%-65% range based on current revenue, expenses, and capital structure.

• Several new and follow-on deals expected to close in the second half of the year.

• Redemptions likely in the first half of 2026, expected to generate significant common equity gains.

• Every CAD 50 million deployed at 14% adds CAD 2.6 million after-tax; every 1% SOFR increase reduces cash flow by CAD 2.7 million; every CAD 0.01 USD/CAD change impacts by CAD 0.9 million.