- Alaris Royalty (TSX:AD) has, among other initiatives, moved from monthly to quarterly dividend distribution
- The company says that reduced dividend regularity will offer more breathing room to formulate appropriate strategies
- Alaris added that its diversified business model provides a more resilient position to weather the COVID-19 storm
- With the US dollar performing well, the company is expecting to be supported by its vast US-based holdings
- Alaris Royalty (AD) is currently up 10.84 per cent, with shares trading for C$8.18 and a market cap of $299.55 million
Alaris Royalty (TSX:AD) has, among other initiatives, moved from monthly to quarterly dividend distribution.
The decision comes as COVID-19 continues to render global markets volatile and unpredictable.
A dividend of 13.75 cents per share has been declared for March 2020, representing C$1.65 on an annualized basis. The dividends will be payable on April 15.
Following this, Alaris Royalty’s board has elected to move to a quarterly payment structure, with the next dividends to be declared in June and paid in July this year.
The company said that the next 30 to 60 days will bring a better understanding of the short and long-term impacts inflicted by the virus. Dividends for the second quarter of the year will then be based on those findings.
Steve King, President and CEO of Alaris, said that the company’s core focus is on preserving long-term value for shareholders.
“We’re fortunate that, other than in cases of government mandated shutdowns, our portfolio is performing well given the profound economic impact the required measures taken by businesses and governments are having.
“The quarterly dividend will allow for decisions to be made with more accurate information since so much continues to change on a daily basis,” he said.
With a diversified business model, Alaris Royalty is in a uniquely resilient position to weather the COVID-19 storm. Its investments are both geographically and industrially varied, and the impact of current market volatility is expected to differ immensely across its portfolio.
The company also pointed out that more than 80 per cent of its revenue is based in US dollars. With the currency performing well at the moment against the Canadian dollar, Alaris is expecting favourable results.
Its four US IT and service-based investments, Unify Consulting, Stride Consulting, Accscient and GWM Holdings, are currently working remotely. As such, they have experienced a limited impact to their operations.
Collectively, the four companies represent $20.7 million, or 21 per cent, of Alaris Royalty’s annualized revenue, with monthly payments of $1.7 million.
However, it’s not all good news. PF Growth Partners has been forced to temporarily close all of its 67 locations. The business contributes $12.5 million, or 13 per cent, to Alaris Royalty’s revenue, with $1 million in monthly payments.
In addition, Body Contours Centers, C&C Communications, Heritage Restorations Holdings and M Rhine Holdings have all had to shut down portions of their operations to varying degrees.
Alaris also drew attention to its strong balance sheet. As of March, the company had approximately $20 million in net cash on hand. It also had roughly $200 million in available capital on its credit facility.
“The defensive nature of our portfolio and our strong balance sheet will allow us to come out of this period in a position to take advantage of opportunities that will exist,” Steve said.
Alaris Royalty (AD) is currently up 10.84 per cent to $8.18 per share at 11:00am EST.