Q2 2026 Alaris Equity Partners Income Trust Earnings Call

August 7, 2026

Operator: Good day and thank you for standing by. Welcome to Alaris' Q2 2026 Earnings Release Conference Call. At this time, all participants are on a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Amanda Frazer, Chief Financial Officer. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Amanda Frazer, Chief Financial Officer.

Speaker #1: Please go ahead.

Amanda Frazer: Thank you, Livia. Good morning and thank you for joining us today to discuss our Q2 2026 financial results. I'm joined on the call by Steve King, President and CEO. Before we begin, I'd like to remind everyone that all financial figures discussed are in Canadian dollars unless otherwise indicated. Please note that some comments made during this call may include forward-looking statements. These statements are based on current assumptions and involve risks and uncertainties, actual results may differ materially. For more detailed information on the factors, assumptions, and risks involved, please refer to our press release issued last night and the MD&A under the headings "Forward-Looking Statements" and "Risks and Uncertainties," available on SEDAR at sedarplus.ca and on our website. We will also be referencing certain non-IFRS financial measures which may be presented differently than similar measures by other companies.

Speaker #2: Thank you, Livia. Good morning, and thank you for joining us today to discuss our Q2 2026 financial results. I'm joined on the call by Stephen King, President and CEO.

Speaker #2: Before we begin, I'd like to remind everyone that all financial figures discussed are in Canadian dollars unless otherwise indicated. Please note that some comments made during this call may include forward-looking statements.

Speaker #2: These statements are based on current assumptions and involve risks and uncertainties, so actual results may differ materially. For more detailed information on the factors, assumptions, and risks involved, please refer to our press release issued last night and the management's discussion and analysis under the headings “Forward-Looking Statements” and “Risks and Uncertainties.” These are available on SEDAR at sedarplus.ca and on our website.

Speaker #2: We will also be referencing certain non-IFRS financial measures, which may be presented differently than similar measures by other companies. Additional information and reconciliations related to these measures can be found in the press release and MD&A.

Amanda Frazer: Additional information and reconciliations related to these measures can be found in the press release and MD&A. Overall, Q2 was another strong quarter for Alaris, reflecting the ongoing benefit of the capital we deployed over the past 18 months. We delivered partner revenue ahead of guidance, record net book value, strong growth in revenue and distributable cash flow, expanded the portfolio to a record 25 partners, and continued deploying capital into attractive new investment opportunities. There are four main takeaways this quarter. The first, portfolio income continued to grow. Total partner revenue of CAD 50.6 million came in 5.6% ahead of guidance, including CAD 49.9 million of partner distributions and CAD 700,000 of third-party fees. Total revenue and operating income increased 25% compared to Q2 of last year, while partner distribution revenue increased nearly 20%.

Speaker #2: Overall, Q2 is another strong Q4 Alaris, reflecting the ongoing benefit of the capital we deployed over the past 18 months. We delivered partner revenue ahead of guidance, record netbook value, strong growth in revenue, and distributable cash flow, expanded the portfolio to a record 25 partners, and continued deploying capital into attractive new investment opportunities.

Speaker #2: There are four main takeaways this quarter. The first: portfolio income continued to grow. Total partner revenue of $50.6 million came in 5.6% ahead of guidance, including $49.9 million of partner distributions and $700,000 of third-party fees.

Speaker #2: Total revenue and operating income increased 25% compared to Q2 of last year, while partner distribution revenue increased nearly 20%. On a year-to-date basis, total revenue and operating income are up 13%, with partner distribution revenue up 15% over the first half of last year.

Amanda Frazer: On a year-to-date basis, total revenue and operating income are up 13%, with partner distribution revenue up 15% over H1 of last year. Preferred distributions increased 24%, reflecting contributions from investments completed throughout 2025. Our investment in Cubic during the quarter, an annual contractual distribution reset. Preferred distributions are up 17% year to date, and the annualized yield on our Preferred capital rose to 12.8% from 12.2% a year ago. Common distributions were below the prior year, largely a timing matter, as Q2 is typically our lightest quarter for common distributions. Subsequent to quarter end, we received $14.8 million US of common distributions, which included a $13.8 million US distribution from Fleet. Second, distributable cash flow continued to accelerate. Net distributable cash flow increased 42% compared to Q2 of last year, driven by higher Preferred Partner distributions together with lower taxes paid by the acquisition entities.

Speaker #2: Preferred distributions increased 24%, reflecting contributions from investments completed throughout 2025, our investment in Qubic during the quarter, and annual contractual distribution resets. Preferred distributions are up 17% year-to-date, and the annualized yield on our preferred capital rose to 12.8% from 12.2% a year ago.

Speaker #2: Common distributions were below the prior year, largely a timing matter, as Q2 is typically our lightest quarter for common distributions. Subsequent to quarter-end, we received $14.8 million US of common distributions, which included a $13.8 million US distribution from Fleet.

Speaker #2: Second, distributable cash flow continued to accelerate. Net distributable cash flow increased 42% compared to Q2 of last year, driven by higher preferred partner distributions, together with lower taxes paid by the acquisition entities.

Amanda Frazer: For the H1, net distributable cash flow was up 21%, even after absorbing the higher interest costs from our 2025 convertible debenture financing. Our payout ratio for the H1 of the year was 58%, compared to the 65% in the prior year period. Even after the recent distribution increase, our pro forma payout ratio remains approximately 59%, comfortably below our long-term target range of 65% to 70%. This continues to provide meaningful flexibility to fund future investments while supporting distribution growth. Third, the underlying value of the portfolio continued to increase. Net book value per unit increased another CAD 0.52 during the quarter to a record CAD 25.83 per unit. This brings the year-to-date increase to a CAD 1.04 per unit.

Speaker #2: For the six months, net distributable cash flow was up 21%, even after absorbing the higher interest costs from our 2025 convertible debenture financing. Our payout ratio for the six first six months of the year was 58%, compared to the 65% in the prior year period.

Speaker #2: Even after the recent distribution increase, our pro forma payout ratio remains approximately 59%, comfortably below our long-term target range of 65% to 70%.

Speaker #2: That continues to provide meaningful flexibility to fund future investments while supporting distribution growth. Third, the underlying value of the portfolio continued to increase. Netbook value per unit increased another 52 cents during the quarter to a record 2583 per unit.

Speaker #2: That brings the year-to-date increase to $1.04 per unit. For the quarter, the 52 cents was driven by 92 cents per unit of earnings and comprehensive income, including roughly 46 cents of unrealized foreign exchange gains, net of our 38 cents quarterly distribution.

Amanda Frazer: For the quarter, the CAD 0.52 was driven by CAD 0.92 per unit of earnings and comprehensive income, including roughly CAD 0.46 of unrealized foreign exchange gains, net of our CAD 0.38 quarterly distribution. During the quarter, we recorded net unrealized fair value gains of CAD 10.8 million. Fleet continued to perform well, contributing an $8.1 million US increase in fair value during the quarter, bringing the year-to-date increase to more than $18 million US. Cubic also contributed a fair value increase following its strong operating performance and backlog conversion during the H1 of the year. These gains were partially offset by a modest fair value decrease at McCoy, reflecting a quieter storm season in the H1 of the year. Lesser movements across six other partners rounded out the quarter.

Speaker #2: During the quarter, we recorded net unrealized fair value gains of $10.8 million. Fleet continued to perform well, contributing an $8.1 million US increase in fair value during the quarter, bringing the year-to-date increase to more than $18 million US.

Speaker #2: Qubic also contributed a fair value increase, following its strong operating performance and backlog conversion during the first half of the year. These gains were partially offset by a modest fair value decrease at McCoy, reflecting a quieter storm season.

Speaker #2: In the first half of the year, lesser movements across six other partners rounded out the quarter. Year-to-date, we also realized a $4.9 million gain through partial redemptions, including 3E, which we covered last quarter.

Amanda Frazer: Year to date, we also realized CAD 4.9 million gains through partial redemptions, including 3E, which we covered last quarter, and redeployed that capital into the new investment. Earnings and comprehensive income also increased year-over-year, largely on that foreign exchange swing, a non-cash item that, as we've discussed previously, moves reported earnings without affecting the underlying operating performance of the business. Finally, we continue to execute on our growth strategy. During the quarter, we completed our CAD 75 million investment in Cubic, and subsequent to the quarter end, we completed our $35 million US investment in TESCO. Together with other activity that brings total capital deployed in 2026 to CAD 126 million, expanding the portfolio to a record 25 partners. The portfolio continues to perform well.

Speaker #2: They re-deployed that capital into new investments. Earnings and comprehensive income also increased year over year, largely due to that foreign exchange swing—a non-cash item that, as we've discussed previously, moves reported earnings without affecting the underlying operating performance of the business.

Speaker #2: And finally, we continue to execute on our growth strategy. During the quarter, we completed our 75 million investment in Qubic and subsequent to the quarter, we quarter-end, we completed our 35 million US investment in Tesco.

Speaker #2: Together with other activity that brings total capital deployed in 2026 to 126 million, expanding the portfolio to a record 25 partners. The portfolio continues to perform well, our weighted average earnings coverage ratio remains approximately 1.5 times, and 84% of our contractual preferred distributions come from partners with coverage ratios above 1.2 times.

Amanda Frazer: Our weighted average earnings coverage ratio remains approximately 1.5x, and 84% of our contractual Preferred Equity distributions come from partners with coverage ratios above 1.2x. In addition, 16 of our 25 partners maintain senior debt at or below 1x EBITDA, highlighting the conservative financial profile of the portfolio. Looking ahead, we expect Q3 partner revenue of approximately CAD 69 million, reflecting the seasonal concentration of common distributions in the Q3. Our estimate run rate revenue for the next 12 months has increased to approximately CAD 208 million, reflecting recent investments in contractual distribution resets. This marks a third consecutive increase from CAD 200 million at the end of last year to CAD 203 million at the end of the Q1, and puts us approximately 14% above the CAD 183 million estimate a year ago.

Speaker #2: In addition, 16 of our 25 partners maintain senior debt at or below 1 times EBITDA, highlighting the conservative financial profile of the portfolio. Looking ahead, we expect Q3 partner revenue of approximately $69 million, reflecting the seasonal concentration of common distributions in the third quarter.

Speaker #2: Our estimated run-rate revenue for the next 12 months has increased to approximately $208 million, reflecting recent investments and contractual distribution resets. That marks a third consecutive increase, from $200 million at the end of last year to $203 million at the end of the first quarter, and puts us approximately 14% above the $183 million estimate a year ago.

Amanda Frazer: We ended the quarter with CAD 127 million of undrawn capacity on our credit facility, and our forward run rate pay ratio sits at 60% to 65%, both consistent with continued investment and distribution growth. With that, I'll turn it over to Steve.

Speaker #2: We ended the quarter with 127 million of undrawn capacity on our credit facility, and our forward run rate pay ratio sits at 60 to 65 percent, both consistent with continued investment and distribution growth.

Speaker #2: And with that, I'll turn it over to Steve.

Steve King: Great. Thanks, Amanda. Our Q2 showed gains in almost every meaningful category as record levels of investments that we've made over the last 12 months have started to contribute to our results. Amanda's already detailed the numbers, so I'll focus more on the deployment, both past and future. Our investment in Cubic during the quarter is really a perfect example of what makes Alaris so unique in the marketplace. A wonderful company that's been succeeding for 40 years, had a large capital need to take out one of the founders who retired from the business years ago. In this case, it was the founder's younger brother, along with the professional management team, that were the buyers.

Speaker #1: Great, thanks, Amanda. Our second quarter showed gains in almost every meaningful category, as record levels of investments that we've made over the last 12 months have started to contribute to our results.

Speaker #1: Amanda's already detailed the numbers, so I'll focus more on the deployment, both past and future. Our investment in Qubic during the quarter is really a perfect example of what makes Alaris so unique in the marketplace.

Speaker #1: A wonderful company that's been succeeding for 40 years, had a large capital need to take out one of the founders who retired from the business years ago.

Speaker #1: In this case, it was the founder's younger brother, along with a professional management team, who were the buyers. With Alaris's preferred equity, along with a small amount of common, the buyers were actually able to increase the percentage of the business that they owned going forward and enjoy more of the upside, all while preserving the culture that they built over the last 40 years.

Steve King: With Alaris' Preferred Equity, along with a small amount of common, the buyers were actually able to increase the percentage of the business that they own going forward and enjoy more of the upside, all while preserving the culture that they've built over the last 40 years. Because the buyout was negotiated between the two brothers, we were able to get in at a very attractive multiple. Between that valuation and the growth that the company's already displayed since closing, we're already sitting on a nice unrealized gain on our common equity portion of the investment. We are also proud to have added our 25th partner just after the quarter ended. $35 million US investment into TESCO, who's in the electrical metering industry throughout the US.

Speaker #1: Because the buyout was negotiated between the two brothers, we were able to get in at a very attractive multiple. Between that valuation and the growth that the company has already displayed since closing, we were already sitting on a nice unrealized gain on our common equity portion of the investment.

Speaker #1: We were also proud to have added our 25th partner just after the quarter ended. 35 million US investment into Tesco, who's in the electrical metering industry, throughout the US.

Steve King: Obviously, the entire electrical industry is a rapidly growing and popular place to invest, with the massive growth in demand for electricity with electric vehicles and AI. We're very pleased to add such a sought-after asset. I should say that almost all of these assets that we're adding are in extremely competitive situations. TESCO had actually dozens of bidders trying to get that deal. Looking forward, our deployment pipeline continues to gain momentum. Our team is busy working on several new partnerships as well as multiple follow-on acquisitions for our current partners. We expect the last five months of this year to be quite active in terms of both deployment and also potentially some exit opportunities that would crystallize some very good gains within our portfolio. I would be remiss if I didn't mention the continued success of our partner in Florida, Fleet Advantage.

Speaker #1: Obviously, the entire electrical industry is a rapidly growing and popular place to invest, with the massive growth in demand for electricity with electric vehicles and AI.

Speaker #1: So, we're very pleased to add such a sought-after asset. I should say that almost all of these assets that we're adding are in extremely competitive situations.

Speaker #1: Tesco actually had dozens of bidders trying to get that deal. Looking forward, our deployment pipeline continues to gain momentum. Our team is busy working on several new partnerships, as well as multiple follow-on acquisitions for our current partners.

Speaker #1: We expect the last five months of this year to be quite active in terms of both deployment and also potentially some exit opportunities that would crystallize some very good gains within our portfolio.

Speaker #1: I would be remiss if I didn't mention the continued success of our partner in Florida, Fleet Advantage. The management team there has done an incredible job of diversifying their customer base, winning incremental contracts.

Steve King: The management team there has done an incredible job of diversifying their customer base, winning incremental contracts. A common dividend paid out in July of USD 13.8 million, bringing our total common dividends paid by Fleet to over USD 50 million on an investment of USD 8 million is obviously a phenomenal story. While that kind of result is unusual, the combination of partnering with entrepreneurs who do not want to sell their business, along with the capped nature of our Preferred Equity magnifying the returns on the common, puts us in a very good position to experience these kinds of wins.

Speaker #1: A common dividend paid out in July of 13.8 million dollars US, bringing our total common dividends paid by Fleet to over 50 million dollars, on an investment of 8 million dollars, is obviously a phenomenal story.

Speaker #1: While that kind of result is unusual, the combination of partnering with entrepreneurs who don't want to sell their business, along with the capped nature of our preferred equity magnifying the returns on the common, puts us in a very good position to experience these kinds of wins.

Steve King: With a common equity portfolio now of over CAD 800 million, providing significant upside, a base of over CAD 200 million a year of low volatility revenue that stood the test of time over 22 years, a payout ratio that is below our 65% target, and access to both debt and equity markets, we are in a really excellent position to capitalize on our opportunities going forward. Olivia, I will open it up to questions if there are any.

Speaker #1: With a common equity portfolio now of over 800 million dollars, providing significant upside, a base of over 200 million dollars a year of low volatility revenue that stood the test of time over 22 years, a payout ratio that's below our 65% target, and access to both debt and equity markets, we're in a really excellent position to capitalize on our opportunities going forward.

Speaker #1: So Olivia, I'll open it up to questions if there are any.

Operator: Thank you. Ladies and gentlemen, if you have a question at this time, as a reminder, please press star 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question coming from the line of Matthew Lee with Canaccord. Your line is now open.

Speaker #3: Thank you. Lisa and gentlemen, if you have a question at this time, your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster.

Speaker #3: Our first question coming from the line of Matthew Lee with Canaccord, your line is now open.

Matthew Lee: Hi. Good morning. Thanks for taking my questions. Maybe just start with TESCO. The company did enter the portfolio at a 1.0 to 1.2 ECR. Just give us some color as to what gives you comfort around underwriting it at that level, and maybe what is embedded in your expectations for the coverage to improve from here.

Speaker #4: Hi. Good morning. Nice seeing my questions. Maybe just start with Tesco. The company does enter the portfolio at like a 1.0 to 1.2 ECR.

Speaker #4: I'll just give us some color as to what gives you comfort around underwriting at that level, and then maybe what's embedded in your expectations for the coverage to improve from here.

Steve King: Yeah, I think with TESCO and several companies in our portfolio where you're using historical data to report the ECRs, it also includes CapEx. You can have some situations where a company that's growing quickly and is putting their excess capital into CapEx will have what appears to be a tight ECR, but a good chunk of that would be discretionary at the board's discretion to fund growth. ECR is a great tool for broadly gauging the health of a portfolio company, but some of those things can be discretionary, and so it can be more comfortable than what it appears.

Speaker #1: Yeah. I think with Tesco and several companies, in our portfolio, where you're using historical data to report the ECRs, it also includes capex. So you can have some situations where a company that's growing quickly and is putting their excess capital into capex will have what appears to be a tight ECR, but a good chunk of that would be discretionary at the board's discretion to fund growth.

Speaker #1: So ECR is a great tool for kind of broadly gauging the health of a portfolio company, but it's some of those things can be discretionary.

Speaker #1: And so, it can be more comfortable than what it appears.

Matthew Lee: Okay, that's fair enough. Kind of growing into its investment. Maybe on divestitures. You've had a couple partial realizations now. Just talk about the current environment you're seeing for partner exits and what makes you confident that we'll be seeing activity in the back half of this year.

Speaker #4: Okay. That's fair enough. So kind of growing into its investment. Maybe on the investitors then, you've had a couple of partial realizations now. Just talk about the current environment you're seeing for partner exits and what makes you confident that we'll be seeing activity in the back half of this year.

Steve King: Yeah, it's a good market, particularly for kind of the older economy, more steady, required service businesses that we specialize in. As I think I mentioned last quarter, we've seen a real shift in the private equity marketplace away from SaaS companies and things that could be negatively impacted by AI and a greater interest in our types of companies. We think it is a good market. Obviously, any sale process is a lengthy one. Typically, you're looking at about six to nine months from start to close. We do see some companies in process and seem to be doing well, so that's what gives me the confidence.

Speaker #1: Yeah. It's a good market, particularly for kind of the older economy, more steady required service businesses that we specialize in. As I think I mentioned last quarter, we've seen a real shift in the private equity marketplace away from SaaS companies and things that could be negatively impacted by AI.

Speaker #1: And kind of a greater interest in our types of companies. So we think it is a good market. Obviously, any sale process is a lengthy one.

Speaker #1: Typically, you're looking at about six to nine months from start to close. So we do see some companies in process and seem to be doing well.

Speaker #1: So that's what gives me the confidence.

Matthew Lee: All right, thanks for the color. I'll pass the line.

Speaker #4: All right. Thanks for the color. I'll pass the line.

Steve King: No problem. Thanks, Matt.

Speaker #1: No problem. Thanks, Matt.

Operator: Thank you. Our next question coming from the line of Gary Hall with Desjardins Capital Markets. Your line is now open.

Speaker #3: Thank you. Our next question comes from the line of Gary Howard at Zarden Capital Markets. Your line is now open.

Gary Hall: Thanks. Good morning.

Gary Ho: Thanks. Good morning.

Steve King: All right.

Speaker #5: Thanks. Good morning. Maybe first question—yeah, Steve, just on the deployment side. So you mentioned $126 million deployed so far this year, and you hinted at a very robust second half pipeline.

Gary Hall: Maybe first question, yeah, Steve, just on the deployment side. You mentioned CAD 126 million deployed so far this year, and you hinted at very robust H2 pipeline. At what point do you need redemption proceeds or other capital to sustain that historical annual pace?

Gary Ho: Maybe first question, yeah, Steve, just on the deployment side. You mentioned CAD 126 million deployed so far this year, and you hinted at very robust H2 pipeline. At what point do you need redemption proceeds or other capital to sustain that historical annual pace?

Speaker #5: So at what point do you need redemption proceeds or other capital to sustain that historical annual pace?

Steve King: As mentioned by Amanda, we've got CAD 126 million available, anything over that will require either redemption proceeds, equity, or expanding our debt. As I mentioned, I think we have all three of those options available to us, in the short, medium, and long term. We're very comfortable with where we're sitting. In our 22 years, we've never said no to a deal because of not being able to raise the money, and I'm probably more confident about that now than I ever have been.

Speaker #1: Yeah. As mentioned by Amanda, we've got $126 million available, so anything over that will require either redemption proceeds, equity, or expanding our debt. So I think, as I mentioned, we have all three of those options available to us in the short, medium, and long term.

Speaker #1: So we're very comfortable with where we're sitting. In our 22 years, we've never said no to a deal because of not being able to raise the money.

Speaker #1: And I'm probably more confident about that now than I ever have been.

Gary Hall: Okay, great. I think you mentioned for TESCO there were a bunch of other competitive bids. Maybe go back and chat about what make your bid successful, what you offer and bring to the table in this one, or is it pretty much the same versus historicals?

Gary Ho: Okay, great. I think you mentioned for TESCO there were a bunch of other competitive bids. Maybe go back and chat about what make your bid successful, what you offer and bring to the table in this one, or is it pretty much the same versus historicals?

Speaker #5: Okay. Great. And then I think you mentioned for Tesco there were a bunch of other competitive bids. Maybe just go back and kind of chat about what made your bid successful, kind of what you offer and bring to the table in this one, or is it pretty much the same versus kind of historicals?

Steve King: It's a recurring theme. For 22 years, the entrepreneurs that choose us are ones that don't want to sell their business. They want to keep more of the upside because they believe in their business and believe that the returns of their business is better than anything else they can do with capital. When we get a package from an investment bank, it always has a fancy 5-year forecast to it, just like everything that you guys see in the public markets too. We'll do a side-by-side model that shows, if they hit their numbers over that 5-year period, here's what their equity is worth today versus what they could do by selling the company today.

Speaker #1: It's a recurring theme for 22 years. The entrepreneurs that choose us are ones that don't want to sell their business. They want to keep more of the upside because they believe in their business and believe that the returns of their business is better than anything else they can do with capital.

Speaker #1: So, when we get a package from an investment bank, it always has a fancy five-year forecast attached. Just like everything that you guys see in the public markets, too.

Speaker #1: And so we'll do a side-by-side model that shows if they hit their numbers over that five-year period, here's what their equity is worth today versus what they could do with by selling the company today.

Steve King: Typically those models show a pretty massive win for the entrepreneur if they choose us because most of the capital we're putting in is in the form of the preferred shares, which are capped on their annual growth, capped on the exit. If someone believes in their business, they will choose us. If someone would rather maximize proceeds right at this transaction, then they'll choose somebody else. That's what keeps us out of trouble. If someone doesn't believe in their numbers, they're going to choose somebody else. If they do believe, they choose us, and I want to be invested in people that believe. It's been the same for 22 years.

Speaker #1: And typically, those models show a pretty massive win for the entrepreneur if they choose us because most of the capital we're putting in is in the form of the preferred shares, which are capped in their annual growth, capped on the exit.

Speaker #1: So if someone believes in their business, they will choose us. If someone would rather maximize proceeds, right at this transaction, then they'll choose somebody else.

Speaker #1: And that's just that's what keeps us out of trouble. If someone doesn't believe in their numbers, they're going to choose somebody else. If they do believe, they choose us.

Speaker #1: And I want to be invested in people that believe. So, it's been the same for 22 years.

Gary Hall: Okay. Great. If I can sneak one more in, just on the ECR, did see a handful of ECRs tick down in the quarter. Maybe you can just talk about the two larger ones, DNT and Ohana, and when do you expect them to revert higher?

Gary Ho: Okay. Great. If I can sneak one more in, just on the ECR, did see a handful of ECRs tick down in the quarter. Maybe you can just talk about the two larger ones, DNT and Ohana, and when do you expect them to revert higher?

Speaker #5: Okay. Great. If I can sneak one more in, just on the ECR, did see a handful of ECRs kind of tick down in the quarter.

Speaker #5: Maybe you can just talk about the two larger ones, DNT and Ohana, and when do you expect them to revert higher?

Steve King: Do you want to talk about DNT?

Speaker #1: Do you want to talk about DNT?

Amanda Frazer: I would be surprised if DNT ticked down. Why don't we talk about Ohana?

Speaker #6: I would be surprised that DNT ticked down. Why don't you talk about Ohana?

Steve King: Well, both companies are doing well, Gary. Yeah, DNT continues to excel. They've come up a record year. Ohana, we've talked in the past about that click-to-cancel situation with their head office. Did have an impact on memberships in the short term. We're seeing no issues there. Neither of those companies are even close to any form of jeopardy.

Speaker #1: Well, both companies are doing well, Gary. So yeah, DNT continues to excel. They've come up a record year. And then Ohana we've talked in the past about that click to cancel situation with their head office.

Speaker #1: Did kind of have an impact on memberships in the short term. But we're seeing no issues there neither of those companies are in any even close to any form of jeopardy.

Gary Hall: Okay. Great. Okay. Those are my questions. Thank you.

Gary Ho: Okay. Great. Okay. Those are my questions. Thank you.

Speaker #5: Okay. Great. Okay. Those are my questions. Thank you.

Steve King: Thanks, Gary.

Speaker #1: Thanks, Gary.

Operator: Thank you. Our next question is coming from the line of Jeff Fenwick with ATB Cormark Capital Markets. Your line is now open.

Speaker #3: Thank you. Our next question in queue coming from the lineup. Jeff Fenwick with ATB Cormorant Capital Markets. Your line is now open.

Jeff Fenwick: Hi, good morning, everyone. I think Gary took a bit of my question there, because we did see the ECRs tick down on a number of them, which is sort of the first time we've seen that, I think, in a few quarters. It sounds like things are still generally good. Are you seeing any change just in the overall market in the US or anything there that might be accounting for that? Are these just maybe things at the margin in terms of some of the movements within these individual businesses that would account for that difference?

Speaker #7: Hi. Good morning, everyone. And I thank Gary kind of took my a bit of my question there, but because we did see the ECRs tick down on a number of them, which is sort of the first time we've seen that, I think in a few quarters.

Speaker #7: So it sounds like things are still generally good. But are you seeing any change just in the overall market in the US or anything there that might be accounting for that, or are these just maybe things that the margin in terms of some of the movements within these individual businesses that would account for that difference?

Steve King: Yeah, we were going through this with the board yesterday, really what we're seeing is pretty broad strength in the US economy. There are some regions within the US that are doing better and worse than others. We've got a couple of our portfolio companies in the Boston region, that region seems to be soft. There's a few things that have happened politically within Massachusetts that have led to softer demand, especially on construction-related activities within the Boston area. We've seen some kind of geographic things like that, in a portfolio that's diversified as well as ours is, you are going to have different pockets here and there, just geographically and industry related, that'll be going up and down at various times. That's all we're seeing, Jeff.

Speaker #1: Yeah. We were going through this with the board yesterday, and really what we're seeing is pretty broad strength in the US economy. But there are some regions within the US that are doing better and worse than others.

Speaker #1: And we've got a couple of our portfolio companies in the Boston region. And that region seems to be soft. There's a few things that have happened politically within Massachusetts that have led to kind of softer demand especially on kind of construction-related activities within the Boston area.

Speaker #1: So we've seen some kind of geographic things like that. And in a portfolio that's diversified as well as ours is, you are going to have different pockets here and there just geographically and industry-related that'll be going up and down at various times.

Speaker #1: So that's all we're seeing. Jeff, I'd say as a whole, there's pretty broad strength in the U.S. market from what we see in the numbers from our companies.

Steve King: I'd say as a whole, there's pretty broad strength in the US market from what we see in the numbers from our companies.

Jeff Fenwick: Okay. You had a couple of partners that have been deferring payments. Maybe just any update there. I think I thought GWM, actually both GWM and FMP, there was something at your end that you might see some recommencement of payments over the course of the back H2 of this year. Where does it stand currently?

Speaker #7: Okay. And you had a couple of partners that are have been deferring payments. Maybe just any update there. I think I thought GWM actually, both GWM and FMP, there was some thing at your end that you might see some recommencement of payments over the course of the back half of this year.

Speaker #7: Where does it stand currently?

Steve King: Yeah. GWM paid us in July. They are right on that GWM throughout the rest of this year and hopefully full in 2027 and catching up on the amounts that they've deferred as well. Yeah, they are current in July, but we do expect some hiccups there from month to month with GWM. FMP is growing, they are paying us what we set them out to pay in this year. They're paying that in full. Then as they build back their business, which definitely is happening, that number will get bigger and bigger until they get to their full amount. We're easing our way back to full payments with FMP as they recover from the hit they took from the DOGE process. Yeah, as I mentioned, there's several other contracts that were completely cut under DOGE that have now come back.

Speaker #1: Yeah, GWM paid us in July, but they are kind of right on that edge with their bank covenants. So we expect kind of off and on payments from GWM throughout the rest of this year.

Speaker #1: And hopefully, full in '27 and catching up on the amounts that they've deferred as well. So yeah, they are current in July, but we do expect some hiccups there from month to month, which EWM.

Speaker #1: FMP is growing. So they are paying us what we set them out to pay in this year. They're paying that in full. And then as they kind of build back their business, which definitely is happening, that number will get bigger and bigger until they get to their full amount.

Speaker #1: So we're kind of easing our way back to full payments with FMP as they recover from the hit they took from the DOGE process.

Speaker #1: And yeah, as I mentioned, there's several of their contracts that we're completely cut under DOGE that have now come back. And so we're seeing some good progress there.

Steve King: We're seeing some good progress there.

Jeff Fenwick: Okay. Maybe one last one here then. I know it was quite small, but there was a redemption from Ohana. It sounds like maybe it was some sort of side vehicle or something that wasn't part of the core shareholder group. Can you just any color there and thoughts on that?

Speaker #7: And maybe one last one here. I know it was quite small, but there was a redemption from Ohana. It sounds like maybe it was some sort of side vehicle or something that wasn't part of the core shareholder group.

Speaker #7: Can you just add any color there, and thoughts on that?

Steve King: Yeah. Our group, Victor and Lynne Brick, who are the founders of Ohana, one of the best-known entrepreneurs in the fitness industry, they were one of the first Planet Fitness franchisees. They were approached to be a part of a group that would start up Planet Fitness Australia. We became a part of that with them. That business grew nicely over the years and it was just sold. Our interest in Planet Fitness Australia was sold, and I think we more than tripled our money on that one. It was obviously a very small immaterial investment, but still a nice little win for us.

Speaker #1: Yeah. So our group, Victor and Lynn Brick, who are the founders of Ohana, one of the best-known entrepreneurs in the fitness industry and they were one of the first Planet Fitness franchisees.

Speaker #1: They were approached to be a part of a group that would start up Planet Fitness Australia. So we And that business, so it's grew nicely.

Speaker #1: Over the years, and it was just sold. So our interest in Planet Fitness Australia was sold, and we made I think we more than tripled our money on that one, but it was obviously a very small kind of immaterial investment, but still a nice little win for us.

Jeff Fenwick: Okay. That's great. That's all I had. Thank you.

Speaker #7: Okay. That's great. That's all I had. Thank you.

Steve King: Thanks, Jeff.

Speaker #1: Thanks, Jeff.

Operator: Thank you. Our next question coming from the line of Bart Ciarski with RBC Capital Markets. Your line is now open.

Speaker #3: Thank you. Our next question coming from the lineup for CRFT with RBC Capital Markets. Your line is now open.

Bart Ciarski: Great. Thanks, Zenda. Good morning, everyone. I wanted to ask around the partner revenue. Strong numbers, strong momentum. You're tracking 6% ahead of guidance, and sounds like your outlook is pretty constructive. I'm wondering what's holding you back from increasing the guidance on that. Thanks.

Bart Dziarski: Great. Thanks and good morning, everyone. I wanted to ask around the partner revenue. Strong numbers, strong momentum. You're tracking 6% ahead of guidance, and sounds like your outlook is pretty constructive. I'm wondering what's holding you back from increasing the guidance on that. Thanks.

Speaker #5: Great, thanks. And good morning, everyone. I wanted to ask about the partner revenue—strong numbers, strong momentum. You're tracking 6% ahead of guidance, and it sounds like your outlook is pretty constructive.

Speaker #5: So I'm wondering what's holding you back from increasing the guidance on that? Thanks.

Amanda Frazer: Sorry, can you just say that one more time? I missed it.

Speaker #8: Sorry, can you just say that one more time? I missed.

Bart Ciarski: The partner revenue is tracking 6% ahead of guidance. It sounds like you're feeling pretty constructive about the outlook. I just wanted to confirm what's holding you back from increasing the guidance.

Bart Dziarski: The partner revenue is tracking 6% ahead of guidance. It sounds like you're feeling pretty constructive about the outlook. I just wanted to confirm what's holding you back from increasing the guidance.

Speaker #5: The partner revenue is tracking 6% ahead of guidance, and it sounds like you're feeling pretty constructive about the outlook. And so I just wanted to confirm what's holding you back from increasing the guidance.

Amanda Frazer: Well, we did increase our guidance this quarter. Some of the beat in guidance was driven by the foreign exchange rate. As that moves from quarter to quarter, there's some delta that's created there.

Amanda Frazer: Well, we did increase our guidance this quarter. Some of the beat in guidance was driven by the foreign exchange rate. As that moves from quarter-to-quarter, there's some delta that's created there.

Speaker #8: Well, we did increase our guidance this quarter. Some of the beat in guidance was driven by the foreign exchange rate, so as that moves from quarter to quarter, there's some delta that's created there.

Steve King: Yeah. We'll also always be conservative on common equity dividends because they are discretionary for each company, whereas the pref distributions are structured. It's a pretty common trend. I think we beat our guidance most quarters.

Speaker #1: Yeah. We'll also always be conservative on common equity dividends because they are discretionary. For each company. Whereas the prep distributions are structured. So we'll it's a pretty common trend.

Speaker #1: I think we've beaten our guidance most quarters.

Bart Ciarski: Okay, thanks. That's helpful. On the Fleet distribution, nice to see that coming in post-quarter. Is that the run rate we should think about over the next couple of years? Maybe just unpack a bit more detail around the Fleet fair value write-up and how you're thinking about that portfolio company longer term in terms of potentially monetizing it. Thanks.

Bart Dziarski: Okay, thanks. That's helpful. On the Fleet distribution, nice to see that coming in post-quarter. Is that the run rate we should think about over the next couple of years? Maybe just unpack a bit more detail around the Fleet fair value write-up and how you're thinking about that portfolio company longer term in terms of potentially monetizing it. Thanks.

Speaker #5: Okay. Thanks. That's helpful. And then on the fleet distribution, nice to see that coming in post-quarter. Is that the run rate we should think about over the next couple of years?

Speaker #5: And then maybe just unpack a bit more detail around the fleet fair value write-up and how you're thinking about that portfolio company longer term in terms of potentially monetizing it.

Steve King: Yeah. Fleet, it is quite a stable business. As I mentioned, they've done a really good job of adding new customers and contracts. We do see that level as sustainable. I always caution people, as I just did on common dividends, they are discretionary. If there's a big growth project that for some reason requires capital, which in this case would be unlikely because Fleet is a very asset-light business. If something like that did happen and the board decided not to pay out the same percentage of their earnings as they currently are, that could change it. Yeah, I think that that level is sustainable. As for the long-term outlook, we do have an entrepreneur that is in his late 60s. I think that one is one that we do see changing hands over the next little while.

Speaker #5: Thanks.

Speaker #1: Yeah. So fleet it is quite a stable business, as I mentioned. They've done a really good job of adding new customers and contracts. So we do see that level as sustainable.

Speaker #1: But I always caution people, as I just did on common dividends, they are discretionary. So if there's a big growth project that for some reason requires capital, which in this case, would be unlikely because fleet is a very asset-light business.

Speaker #1: But something like that did happen, and the board decided not to pay out the same percentage of their earnings as they currently are, then that could change it.

Speaker #1: But yeah, I think that level is sustainable. As for the long-term outlook, we do have an entrepreneur who is in his late 60s. So, I think that one is one that we do see changing hands over the next little while.

Steve King: Obviously, with the amount that they're paying us each year, we're not in any big hurry and neither is Brian. Yeah, certainly within the next couple of years, I would definitely see Fleet selling if the right option came around.

Speaker #1: But obviously, with the amount that they're paying us each year, we're not in any big hurry. And neither is Brian. So but yeah, it certainly within the next couple of years, I would definitely see fleet selling if the right option came around.

Bart Ciarski: Great, thanks. If I could sneak in one more just on Cubic. Nice fair value right up there. It's a recent investment, maybe a bit earlier than expected, but could you unpack what drove that fair value increase? I apologize if I missed it earlier. Thanks.

Bart Dziarski: Great, thanks. If I could sneak in one more just on Cubic. Nice fair value right up there. It's a recent investment, maybe a bit earlier than expected, but could you unpack what drove that fair value increase? I apologize if I missed it earlier. Thanks.

Speaker #5: Great, thanks. And if I could sneak in one more, just on Qubic. Nice fair value write-up there. It's a recent investment, so maybe a bit earlier than expected.

Speaker #5: But could you unpack what drove that fair value increase? I apologize if I missed it earlier. Thanks.

Steve King: Yeah, I did cover that earlier where we got in at probably a below-market valuation on Cubic. That combined with pretty significant growth actually from the time we first signed that deal to -quarter is what spurred on that increase.

Speaker #1: Yeah. I did cover that earlier where we got in at probably a below market valuation on Qubic. And so that combined with pretty significant growth, actually, from the time we first signed that deal to this current quarter, is what spurred on that increase.

Amanda Frazer: That growth is sustained. Their current forecast and backlog supports an ongoing business at that level. That did factor into the DCF on that one.

Speaker #8: And then that growth is sustained their current forecast and backlog supports an ongoing business at that level. So that did factor into the DCF on that one.

Bart Ciarski: Great. Very helpful. Thanks for taking my questions.

Bart Dziarski: Great. Very helpful. Thanks for taking my questions.

Speaker #5: Great. Very helpful. Thanks for taking my questions.

Steve King: Thanks, Bart.

Speaker #1: Thanks, Bart.

Operator: Thank you. Again, as reminded, to ask a question, please press star one one. Our next question in queue coming from the line of Nathan Po with National Bank of Canada. Your line is now open.

Speaker #3: Thank you. And again, as a reminder, to ask a question, please press *11. Our next question in queue, coming from the lineup, is Nathan Poe with National Bank of Canada.

Speaker #3: Your line is now open.

Nathan Po: Morning, guys. Thank you for taking my question.

Speaker #7: Morning, guys. Thank you for taking my question. My first one's going to be on the run rate payout ratio. You guys are pretty comfortably below the 65 to 70 percent.

Steve King: Hi.

Nathan Po: My first one's going to be on the run rate payout ratio. You guys are pretty comfortably below the 65% to 70%. What are your thoughts right now on a dividend hike?

Speaker #7: What are your thoughts right now on a dividend hike?

Steve King: Yeah, I think for us, we do want to stay conservative. As I mentioned, GWM is kind of off and on, so we take a very conservative view on that in our internal analysis of where we should be. Throughout our history, we've done dividend increases on major transactions that have added a lot of new earnings. We did that the last time when we added Cubic. We are at a really good position, even taking a really downside scenario on everything we can in our portfolio. We're very comfortable. I would suggest, probably the next time we do something significant on the deployment side, that would give us the opportunity to consider that.

Speaker #1: Yeah. I think for us, we do want to stay conservative. As I mentioned, GWM is kind of off and on. So we take a very conservative view on that.

Speaker #1: In our internal analysis of where we should be. But throughout our history, we've done dividend increases on kind of major transactions that have added a lot of new earnings.

Speaker #1: So we did that the last time when we added Qubic. And so we are at a really good position even taking a really downside scenario on everything we can in our portfolio.

Speaker #1: So we're very comfortable. So I would suggest probably the next time we do something significant on the deployment side, that would give us the opportunity to consider that.

Amanda Frazer: We do discount the common portfolio just because it isn't contracted and the repeatability of it year to year. We do want to leave some room for flex there. The other thing that's weighing into the payout ratio, especially this quarter, is just the higher exchange rate on our US income. When we're looking at that payout ratio, we're really looking at it with a long-term view of sort of where that FX rate we think will sit.

Speaker #8: We do discount the common portfolio just because it isn't contracted and the repeatability of it year to year. We do want to leave some room for flex there.

Speaker #8: The other thing that's weighing into the payout ratio especially this quarter is just the higher exchange rate on our US income. So when we're looking at that, payout ratio, we're really looking at it with a long-term view of sort of where that FX rate we think will sit.

Nathan Po: Okay. Thank you. It's very helpful. Could I just get some more color on the Tesco transaction? What was the specific catalyst for that?

Speaker #7: Okay. Thank you. It's very helpful. And could we just get some more color on the Tesco transaction? What was the specific catalyst for that?

Steve King: With Tesco, it was a partial liquidity event for the shareholders that had been in for a long time. That's fairly common. You see across the US so many good private companies that have been around 20 to 40 years, where the entrepreneur has literally 100% of their net worth in a private entity, and they're looking to diversify a little bit. The ability to do that on a personal level, but still keep control of the business, when they have a lot of runway ahead of them, is just a super attractive option for an entrepreneur that really, before us, didn't exist. You were either going to sell or you're going to stay. This is kind of that in-between option where you can diversify your estate and keep your business. That's what spurred that one on.

Speaker #1: With Tesco, it was a partial liquidity event for the shareholders that had been in for a long time. And that's fairly common. You see across the US so many good private companies that have been around 20 to 40 years where the entrepreneur has literally 100% of their net worth in a private entity.

Speaker #1: And they're looking to diversify a little bit. But the ability to do that on a personal level, but still keep control of the business when they have a lot of runway ahead of them, is just a super attractive option for an entrepreneur that really, before us, didn’t exist.

Speaker #1: You're either going to sell or you're going to stay. And this is kind of that in-between option where you can diversify your estate and keep your business.

Speaker #1: So that's what spurred that one on.

Nathan Po: All right. Thank you for the color. Moving back to your hot deployment pipeline, would you be able to kind of characterize and break that down into deployments into new partners and deployments into existing partners that may need incremental financing for growth or acquisitions?

Speaker #7: All right. Thank you for the color. And moving back to your hot deployment pipeline, would you be able to kind of characterize and break that down into deployments into new partners and deployments into existing partners that may need incremental financing for growth or acquisitions?

Steve King: Yeah. The vast majority of it is in new partners. We have four or five of our current partners working on acquisitions, but most of them can do those acquisitions on their own without additional capital from us. There's probably two out of those five where we'd be putting in some amount of pref. The rest would be able to do it off their own balance sheet and with equity rolling from the sellers. Yeah, the vast majority of our pipeline is in new partners, which is great for diversification.

Speaker #1: Yeah. The vast majority of it is in new partners. We have four or five of our current partners working on acquisitions. But most of them can do those acquisitions on their own without additional capital from us.

Speaker #1: There's probably two out of those five where we'd be putting in some amount of prefs. The rest would be able to do it off their own balance sheet and with equity rolling from the sellers.

Speaker #1: So yeah, the vast majority of our pipeline is in new partners, which is great for diversification.

Nathan Po: All right. That's great to hear. Just one last one on The Shipyard. What's the status on that and the recouping of business after the customer loss?

Speaker #7: All right, that's great to hear. And just one last one on the shipyard—what's the status on that, and the recouping of business after the customer loss?

Steve King: Yeah. The Shipyard is doing well. This is a very experienced management team. You're going to have in that business from time to time someone shift advertising agencies. Excuse me. Yeah, they're used to that. They've got a long track record of adding customers. They're doing so. They're actually one of the companies looking at an acquisition right now that would be very accretive for them. Yeah, The Shipyard continues to be a very solid investment for us.

Speaker #1: Yeah, Shipyard is doing well. This is a very experienced management team. And so, you're going to have, in that business, from time to time, someone shift advertising agencies.

Speaker #1: Excuse me. So yeah, they're used to that. They've got a long track record of adding customers. They're doing so; they're actually one of the companies looking at an acquisition right now that would be very accretive for them.

Speaker #1: So yeah, Shipyard continues to be a very solid investment for us.

Nathan Po: All right. Thank you. I'll turn it over.

Speaker #7: All right. Thank you. I'll turn it over.

Steve King: Thanks, man.

Speaker #1: Thanks, Nathan.

Operator: Thank you. Our next question coming from the line of Trevor Reynolds with Acumen Capital Partners. Your line is now open.

Speaker #3: Thank you. Our next question, coming from the lineup, is Trevor Reynolds with Acumen Capital. Your line is now open.

Trevor Reynolds: Hey, guys. Most of my questions have been answered, just on the TESCO, are you expecting common distributions on that one?

Speaker #9: Hey, guys. Most of my questions have been answered. But just on the Tesco, are you expecting common distributions on that one?

Steve King: On TESCO, yeah, we are actually. It seems the vast majority of the deals we've just done and are looking at will have a common equity dividend attached to them right away. Obviously, not structured or anything like that, but companies that will just have excess free cash flow that have a track record of paying out common dividends, and given that the owners, that's still common every year is dividends. They want that to continue on post-close, and we obviously get our pro rata share of that. Yeah, I would say TESCO and others will have common to them. We don't include that in our run rate, though.

Speaker #1: On Tesco, yeah. We are actually. So it seems the vast majority of the deals we've just done and are looking at will have a common equity dividend attached to them right away.

Speaker #1: Obviously, not structured or anything like that, but companies that will just have excess free cash flow, that have a track record of paying out common dividends, and given that the owners—that's still a big part of their income every year is dividends—they want that to continue on post-close.

Speaker #1: And we obviously get our pro rata share of that. So, yeah, I would say Tesco and others will have common to them. We don't include that in our run rate, though.

Trevor Reynolds: Got it. Just on the pipeline, your historical five-year average is just over CAD 300 million. Do you still think that's an achievable level for this year?

Speaker #9: Got it. And then just on the pipeline, your historical five-year average is kind of over just over 300 million. Do you still think that's achievable level for this year?

Steve King: I do. Yeah, I do. I think we'll beat that.

Speaker #1: I do. Yeah, I do. I think we'll beat that.

Trevor Reynolds: Great. That's all for me. Thanks.

Speaker #9: Great. That's all for me. Thanks.

Steve King: Thank you.

Speaker #1: Thank you.

Operator: Thank you. Our next question coming from the line of Stephen Boland with Raymond James. Your line is now open.

Speaker #3: Thank you. Our next question coming from the lineup, Stephen Bullen with Raymond James. Your line is now open.

Stephen Boland: Thanks. I'm a little late to the party, but I did hear your comments, Steve, on leverage, that you still have CAD 127 million left on your line, but let's see, you're at 2.4 times. The maximum is three. How close do you want to get to that three if an attractive deal comes in? I presume you don't want to be at 2.9 and get into those discussions with your lenders.

Stephen Boland: Thanks. I'm a little late to the party, but I did hear your comments, Steve, on leverage, that you still have CAD 127 million left on your line, but let's see, you're at 2.4x. The maximum is three. How close do you want to get to that three if an attractive deal comes in? I presume you don't want to be at 2.9 and get into those discussions with your lenders.

Speaker #10: Thanks. I'm a little late to the party, but I did hear your comment, Steve, on leverage—that you still have $127 million left on your line, but you're, let's see, you're at 2.4 times the maximum of 3.

Speaker #10: So how close do you want to get to that 3? If an attractive deal comes in, I presume you don't want to be at 2.9 and get into those discussions with your lenders.

Amanda Frazer: Yeah, we have a lot of flexibility within the syndicate, especially as we're maneuvering bridging to redemption. I don't expect that with line of sight to future redemptions in the quarter, that we would have any trouble negotiating, accessing the accordion feature within that facility or negotiating a short-term extension if the right opportunity comes along.

Speaker #8: Yeah. We have a lot of flexibility within the syndicate, especially as we're maneuvering, bridging to redemption. So I don't expect that, with line of sight to future redemptions in the quarter, that we would have any trouble negotiating accessing the accordion feature within that facility, or negotiating a short-term extension if the right opportunity comes along.

Steve King: Yeah, given the quality of our cash flow, our debt syndicate is obviously very keen on funding us. Yeah, if we needed a bridge from time to time, they've expressed a desire to do that. Yeah, it's just a matter of balancing it, as Amanda said, based on what we see out there for exits and redemption. I think we're in a good spot.

Speaker #1: Yeah, given the quality of our cash flow, our debt syndicate is obviously very keen on funding us. So yeah, if we needed a bridge from time to time, they've expressed a desire to do that.

Speaker #1: And so yeah, it's just a matter of balancing it as Amanda said based on what we see out there for exits and redemption. So I think we're in a good spot.

Amanda Frazer: I should say, we don't forecast going offside of that 3% covenant with anything that we're looking at doing.

Speaker #8: And I should say we don't forecast going offside of that 3% covenant with anything that we're looking at doing.

Steve King: Yeah.

Speaker #1: Yeah.

Stephen Boland: Okay. That's great. That's all I had.

Speaker #10: Okay. That's great. That's all I had.

Steve King: Thanks, Steve.

Speaker #1: Thanks, Steve.

Operator: Thank you. Now, Steve, we have a follow-up question from Nick Tinfo with National Bank of Canada. Your line is now open.

Speaker #3: Thank you. Nancy, we have a follow-up question from Nathan Full with National Bank of Canada. Your line is now open.

Nick Tinfo: Hey, guys. Thank you. Sorry, just one last housekeeping one. How much common dividends are included in your run rate revenue estimate, if you don't mind, other than the CAD 20.4 million that you're expecting in Q3?

Speaker #7: Hey guys, thank you. Sorry, just one last housekeeping question. How many common dividends are included in your run rate revenue estimate, if you don't mind?

Speaker #7: Other than the $20.4 million that you're expecting in Q3.

Amanda Frazer: Well, for the total year?

Speaker #8: Well, for the total year?

Nathan Po: Yeah, next 12 months.

Speaker #7: Yeah. Next 12 months.

Amanda Frazer: It should be around CAD 25 million. If you're looking 12 months out, it probably drops down a bit to about CAD 16, 17 million. Just a more conservative fleet distribution for the year 2027 in that TTM forward. To finish the year, we would expect to be 2026, sort of around that CAD 25 million.

Speaker #8: It should be around 25 million. If you're looking 12 months out, it probably drops down a bit to about 16–17 million. Just a more conservative fleet distribution for the year 2027 in that TTM forward.

Speaker #8: But to finish the year, we would expect to be 2026, sort of around that $25 million.

Nathan Po: Appreciate that, Amanda. Thank you.

Speaker #1: Yeah.

Steve King: A number we always plan to beat, for sure.

Speaker #7: Appreciate the comment. Thank you.

Speaker #1: And it's a number we always plan to beat, for sure.

Operator: Thank you. There are no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Steve King, President and CEO, for any closing comments.

Speaker #3: Thank you. There have been no further questions in the Q&A queue at this time. I will now turn the call back over to Mr. Stephen King, President and CEO, for any closing comments.

Steve King: Great. Thanks, Livian. Thanks, everybody, for tuning in. Obviously, we're excited about our record quarter. We expect more to come, it's really gratifying to see the momentum pick up really throughout our business, from deployment to exits to the performance of our portfolio. We're excited to report back for Q3 next, as always, please feel free to reach out to Amanda and I if you have any further questions. Thank you.

Steve King: Great. Thanks, Livia. Thanks, everybody, for tuning in. Obviously, we're excited about our record quarter. We expect more to come, it's really gratifying to see the momentum pick up really throughout our business, from deployment to exits to the performance of our portfolio. We're excited to report back for Q3 next, as always, please feel free to reach out to Amanda and I if you have any further questions. Thank you.

Speaker #1: Great. Thanks, Livia. And thanks, everybody, for tuning in. Obviously, we're excited about our record quarter. We expect more to come. It's really gratifying to see the momentum pick up throughout our business—from deployment to exits to the performance of our portfolio.

Speaker #1: So we're excited to report back for Q3 next. And as always, please feel free to reach out to Amanda or me if you have any further questions.

Speaker #1: Thank you.

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Q2 2026 Alaris Equity Partners Income Trust Earnings Call

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