Alaris Royalty’s Record-Setting Q3 2025 Earnings Call

Alaris Royalty (($TSE:AD.UN)) has held its Q3 earnings call. Read on for the main highlights of the call.

Alaris Royalty’s recent earnings call painted a picture of a company experiencing a record-setting quarter, marked by robust revenue growth and strong capital deployment. Despite facing some challenges, such as decreased net distributable cash flow and issues with GWM, the overall sentiment was positive, with a strong outlook for the future.

Record Quarter Performance

Alaris delivered an impressive performance in Q3 2025, achieving a record net book value per unit increase of 6% from the last quarter, reaching $25.10. This milestone was supported by a 7.8% rise in total revenue and operating income compared to Q3 2024, driven by a $47.9 million net unrealized fair value gain across nine investments.

Strong Capital Deployment

In Q3 2025, Alaris successfully deployed $32.2 million, including a significant USD 27 million investment in McCoy and a USD 5.2 million follow-on investment in Carey. Post-quarter, an additional USD 20.5 million was invested into Cresa, highlighting the company’s commitment to strategic growth.

Robust Portfolio Fundamentals

Alaris’ portfolio fundamentals remain strong, with a weighted average earnings coverage ratio of 1.5x. Notably, 13 of 21 partners maintain either no debt or less than 1x senior debt to EBITDA, setting a positive tone for future deployment prospects heading into 2026.

Positive Developments at Edgewater

Edgewater reported a USD 18.5 million fair value gain, attributed to a transformational contract win and reduced discount rates. The nuclear space’s strong performance is contributing to high valuations, bolstering Alaris’ portfolio.

Decrease in Net Distributable Cash Flow

Alaris faced a 26% decrease in net distributable cash flow in Q3 and a 14% decrease year-to-date. This decline was primarily due to variability in common distributions, timing of cash tax payments, and transaction costs.

Challenges with GWM

GWM has been impacted by a lower ad spending environment and new entrants in the programmatic media space. The presence of debt on their balance sheet adds to the conservativeness in the company’s guidance.

FMP Payments Affected by U.S. Government Shutdown

The U.S. government shutdown affected payments from FMP, prompting Alaris to evaluate the impact on FMP’s operations and cash flows.

Decrease in Fleet Common Distributions

Fleet’s common distributions saw a decline, with $10.3 million this quarter compared to USD 14.7 million last year, reflecting the Board’s variability in common distribution decisions.

Forward-Looking Guidance

Despite a decrease in net distributable cash flow, Alaris maintained a low payout ratio of 48%, providing flexibility for reinvestment. The company anticipates Q4 partner revenue of approximately $43.5 million and plans to leverage its unique business model to capitalize on deployment opportunities, expecting further growth in book value through potential exits and new investments.

In summary, Alaris Royalty’s earnings call highlighted a strong quarter with record-setting achievements, despite facing some challenges. The company’s strategic investments and robust portfolio fundamentals set a positive outlook for continued growth and success in the coming quarters.