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CROWN CAPITAL PARTNERS INC.TSX: CRWN
Investor presentation
September 2017
Forward looking statements
This presentation contains certain “forward looking statements” and certain “forward looking information” as defined under
applicable Canadian securities laws. Forward-looking statements can generally be identified by the use of forward-looking
terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “continue”, “plans” or similar
terminology. Forward-looking statements in this news release include, but are not limited to, statements with respect to
Crown’s future cash flows and earnings, future dividends, transaction pipeline, and the Corporation’s business plans and
strategy. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable
and assumptions that while believed by management to be reasonable, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and
uncertainties concerning the specific factors identified in the Crown’s periodic filings with Canadian securities regulators. In
addition, Crown’s dividend policy will be reviewed from time to time in the context of the Company’s earnings, financial
requirements for Crown’s operations, and other relevant factors and the declaration of a dividend will always be at the
discretion of the Board of Directors. Shareholders will be entitled to receive dividends only when any such dividends are
declared and there is no entitlement to any dividend prior thereto. Crown undertakes no obligation to update forward-looking
information except as required by applicable law. Such forward-looking information represents management’s best judgment
based on information currently available. No forward-looking statement can be guaranteed and actual future results may
vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.
2
3
There is a major funding gap in Canada’s middle market
Canadian
companies
6,000Canadian
companies
6,000
bank debt
Dilutive
Ownership control
public / private
equity
Poorly structured to service mid-market
Less active due to increased regulation
& capital requirements
Canada’s mid-market: The unsung hero of our economy
4
6,000Canadian companies
The middle market has significantly outpaced the growth of large cap companies
31%
1.9mm
$670B
of Canada’s
GDP
Canadian
jobs
annual
sales
$
Fast growing and capital constrained
Dilution averse
Need flexibility and customization
Want a financial partner that understands
their business
5
Customized solutions for the mid-market
We understand businesses and embrace complexity
Their situation
Our solution
Minimal to no dilution
Customized transactions
Owners retain vast majority of economic
rewards, plus operating control
Tax-efficient solutions
6
Crown Capital Partners: Financing Canada’s middle market
16 42 $600 year track
recordtransactions million in loans
to date
+
How we choose investments
7Great companies, great pricing drives our model
Successful Companies
Premium Pricing
Asset Rich
Market allows
2 3of
Our simple strategy
8
=
Greatly limits default risk
Debt levelsEnterprise
valueCash flow =
Double impact on
Loan to Value
Equity upside
Alternative capital for mid-market companies
9
Type Special situations Long term
Form Senior / subordinated debentures
Fixed rate long-term loans / participating
loans / perpetual debt structures / recurring
revenue structures
Duration <5 years >5 years
Prepayment
costLow Medium to high
Bonus
featureYes No
Target cash
yield 10-14% 12-16%
Target gross
yield 12-18% 12-16%
Transitory capital with
high returns
High-value portfolio comprised of
stable, sustainable cash flows
Crown’s solutions at work: Medicure Inc.
10Company poised for strong growth
About
Specialty pharmaceutical company
focused on cardiac therapeutics for
U.S. hospital market
Lead product is Aggrastat® for non-
ST elevation acute coronary
syndrome (40% share of U.S.
market)
Revenue and EBITDA have grown
significantly
Interest in Apicore US, a fast-
growing Active Pharmaceutical
Ingredient manufacturing service
provider
Situation
Option to increase interest in Apicore
Dilution sensitive
Priority on certainty and speed of execution
Solution
$60.0 million, 4-year term loan
9.5% coupon, 900,000 warrants @ $6.50
$30.0mm syndicated to Ontario Pension Board
Proceeds used to purchase additional 60% of Apicore
2-week execution
Crown’s solutions at work: Bill Gosling Outsourcing
1120%+ increase in EBITDA in 2016
Situation
Capitalizing on shift to outsourcing in BPO
Company expanding operations in Philippines to meet
expected growth
Need to refinance maturing convertible debenture and
provide liquidity for retiring shareholders
Dilution sensitive
Solution
$15.0 million, 5-year term loan
12% coupon, bonus based on phantom equity formula
Proceeds used to refinance convertible debentures, now
wholly owned by management
About
Founded in 1955; Global
provider of contact solution
services
Nine call centers in Canada, the
U.S., the U.K. and Philippines
Blue-chip clients, including
Fortune 100 and Fortune 1000
companies
Strong financial track record
Crown’s solutions at work: Source Energy Services
12
Situation
Currently supplies approximately 50% of the proppant
market in Western Canada
Well positioned to capitalize on intensification of usage
of frac sand as well as increased drilling activity
Solution
$15.0 million investment in $130 million 5-year senior
secured first lien notes
10.5% coupon, right to equity participation
Proceeds used to refinance existing syndicate of senior
lenders
About
Leading supplier of frac sand to
key oil and gas producers in
Western Canada
Vertically integrated operations,
including one frac sand mine and
eight transload terminals
Company’s logistical network
offers access to customers
operating in key areas located in
Western Canada and North
Dakota
Completed $175 million Initial Public Offering in April
0
2
4
6
8
10
12
14
16
<0% 0-10% 10-20% 20-30% >30%
Established track record of success
13
Range of IRR
32
6
8
15
Num
be
r o
f in
ve
stm
en
ts
Consistent strong returns
with low volatility
Average IRR of ~15%
Hybrid business model
Direct Investor(Long-Term Financing)
Fund Manager & Co-Investor(Special Situations Financing)
100% owned, on balance sheet
$25mm currently invested
Long-term, recurring cash flows
Up to $300mm in
committed capital
Crown owns
36.5% stake
CCF IV Future FundsInstitutional
Investors/LPs
Management Contract
Effective combination of high fee revenue and long-term, recurring cash flows 14
Current portfolio
15
$15.0 million
Refinancing
May 2016
$25.0 million
Growth Financing
December 2015
$30.0 million
Refinancing
May 2017
$15.0 million
Refinancing
November 2016
$15.0 million
Growth Financing
February 2017
$30.0 million
Acquisition Financing
November 2016
$15.0 million
Refinancing
December 2016
$25.0 million
Refinancing
May 2017
[long term]
$25.0 million
Refinancing
June 2017
Broad sector experience and diversification
16
12%
52%15%
21%
CompanyLoan Amount
($MM)Industry Province Fund / Direct
Bill Gosling $15.0 Business Services Ontario CCF IV
Touchstone $15.0 Energy Alberta CCF IV
Marquee $30.0 Energy Alberta CCF IV
Source $12.5 Energy Services Alberta CCF IV
Ferus $25.0 Energy Services Alberta CCF IV
Medicure $30.0 Healthcare Manitoba CCF IV
Petrowest $15.0 Infrastructure Alberta CCF IV
Petrowest $10.0 Infrastructure Alberta CCF IV
PenEquity $25.0 Real Estate Ontario Direct
Solo Liquor $15.0 Retail Alberta CCF IV
$192.5
Outstanding loans by industry
23%
20%
16%
13%
13%
8%
8%
Energy - 23% Energy Services - 20% Healthcare - 16%Infrastructure - 13% Real Estate - 13% Retail - 8%Business services - 8%
Proven team delivering results
17
Chris Johnson CFA
President & CEOResponsible for directing Crown Capital’s
investment functions including origination,
underwriting and portfolio management,
along with client relations
Brent Hughes CFA
EVP, Chief Compliance OfficerBusiness development with a focus on
the capital markets channel
Tim Oldfield CA, CPA, CFA, CBV
SVP, CIOResponsibility for investment underwriting
and portfolio management
George Fowlie Chairman of the Board
Former Deputy Chairman & Head of
Investment Banking, Westwind Partners
Former Partner, Edgestone Capital Partners
and Managing Director, First Marathon
Robert GillisCOO Thornridge Holding
Chairman & CEO Hawthorne Capital
Glen RoaneChair, Badger Daylighting
Director, Enerplus and GBC American
Growth Fund
Alan RoweCo-founder of Crown Capital;
served as Partner from 2002 to 2010
Former CFO, Crown Life Insurance Company
Peter SnucinsPresident & CEO, Polycorp
Former President of Clairvest Group and a
founding shareholder and Director of CCFL
Chris Johnson
Board of DirectorsSenior Management
Michael Overvelde CA, CPA, CFA
SVP, Finance & CFOFinancial reporting and capital markets
Specialists in the core fundamentals
18
Robust
origination
Disciplined
underwriting
Proven portfolio
management
Extensive experience and
broad contact base across
Canada and the U.S.
Sourced through referral,
brokers or contact initiated
directly
Offices in Toronto and
Calgary
~12-week process
Due diligence results serve as
input to proprietary credit
score
Portfolio risk minimized
through close working
relationships and rigorous
reporting requirements
In the event of
underperformance, Crown’s
primary objective is to assist the
financing client in restoring
performance
How we make money
19
Interest Bonus features Fees
IR>14%
IR 10-12%
IR<10%
IR 12-14%
Cash flow diversification
Warrants
Additional
Interest
Phantom
Equity
Gifted Equity
No Kicker
Deal fees
Base management fees
Performance fees
80% 10% 10%Targeted % of total revenue
20
Growing revenue base
Portfolio expansion driving recurring interest revenue
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
Mill
ion
s
Total Revenue Interest Revenue Net Income
Q2 2017 highlights
Increased funding capacity; $50mm raised
in CCF IV, bringing capital committed to
$225mm
3 new transactions – over $65mm of
capital deployed
2 successful repayments with strong IRRs
Increased dividend to $0.13/share
21
$7.7mmTotal revenue
$3.1mmAdjusted EBIT
$1.8mmNet income
$0.19Income per share
Total equity per share increased to $10.86 at end of Q2 2017
Q2 2017 Financial Highlights
Delivering returns for Crown shareholders
80%
Regular dividend increases
Growth Yield
$100MM
Grow portfolio/book value
Grow capital base
Grow distributable cash
Portfolio growth and diversification drive valuation re-rating
annual
deploymentstarget payout
ratio
22
23
Compelling valuation
Source: Thomson Reuters, September 2017
Small-Cap Canadian Alternative Lending / Specialty Finance Issuers
Company Ticker Market Cap (mm) Dividend Yield Price/Book
Alaris Royalty AD $764 7.7% 1.2
Callidus Capital CBL $548 11.1% 1.4
Timbercreek Financial TF $696 7.4% 1.1
goeasy GSY $368 2.6% 1.8
Atrium MIC AI $360 7.4% 1.2
Firm Capital FC $295 7.7% 1.2
Diversified Royalty DIV $289 8.2% 1.4
Chesswood CHW $204 6.8% 1.5
Dealnet Capital DLS $47 - 0.8
Peer Average 1.3
Crown Capital CRWN $95 5.2% 0.9
Market facts
24
Ticker CRWN
Market cap ~$95 million
52-week
high / low$11.90 – $8.55
Shares
outstanding
(FD)
9.5 million
(9.9 million)
Quarterly
dividend$0.13 per share
Yield ~5.2%
Analyst
coverage
Chris Murray
Stephen MacLeod
Scott Chan
Jeff Fenwick
Stephen Boland
Trevor Johnson
Brenna Phelan
TSX: CRWN
ContactCraig [email protected]