Aimia Inc. · TSX:AIM
Aimia — Q1 2019 Earnings Presentation
38 slides from Aimia's earnings presentation, May 14, 2019
Slide 1: Aimia
Slide 2: Forward-looking and cautionary statements
FORWARD-LOOKING AND CAUTIONARY STATEMENTS Forward-looking statements are included in this presentation. These forward-looking statements are typically identified by the use of terms such as “outlook”, “guidance”, “target”, “forecast”, “assumption” and other similar expressions or future or condition
Slide 3: Non-GAAP financial measures
NON-GAAP FINANCIAL MEASURES Aimia uses the following non-GAAP financial measures which it believes provides investors and analysts with additional information to better understand results as well as assess its potential. GAAP means generally accepted accounting principles in Canada and represents In
Slide 4: GAAP to non-GAAP reconciliation
GAAP TO NON-GAAP RECONCILIATION* Three Months Ended March 31, (in millions of Canadian dollars, except per share information) 2019 2018 Continuing operations Operating loss (19.0) (15.4) Depreciation and amortization 0.2 3.8 Amortization of Accumulation Partners' contracts, customer relationships an
Slide 5: Q1 2019 income statement
Q1 2019 INCOME STATEMENT Three Months Ended March 31, (in millions of Canadian dollars) 2019 2018 Revenue $ 34.7 $ 45.0 Cost of sales Cost of rewards and direct costs 2.0 4.3 Depreciation and amortization 0.2 3.8 Amortization of accumulation partners' contracts, customer relationships and technology
Slide 6: 2018 historical financials
2018 HISTORICAL FINANCIALS (in millions of Canadian dollars) Q1 2018 Q2 2018 Q3 2018 Q4 2018 FY 2018 Revenue from Loyalty Units 4.3 3.8 3.7 0.7 12.5 Revenue from Loyalty Services and Other 40.7 39.0 38.8 36.1 154.6 Total revenue 45.0 42.8 42.5 36.8 167.1 Cost of rewards and direct costs 4.3 5.1 4.8
Slide 7: Q1 2019 highlights
Q1 2019 highlights MAY 14, 2019
Slide 8: Today's speakers
TODAY’S SPEAKERS JEREMY RABE STEVEN LEONARD Chief Executive Officer Chief Financial Officer © 2019 Aimia. All rights reserved. 8
Slide 9: Agenda
AGENDA Q1 2019 Financial highlights highlights © 2019 Aimia. All rights reserved. 9
Slide 10: Q1 2019 highlights
Q1 2019 highlights JEREMY RABE
Slide 11: 2019 Q1 highlights
2019 Q1 HIGHLIGHTS ◼ Accretive long term strategy as a consolidator in the loyalty and travel sub-sectors announced Boost in PLM ◼ Exceptional $18.9 million distribution by PLM drove the distribution led positive Adjusted EBITDA performance in the quarter to positive ◼ Consolidated normalized operat
Slide 12: Changing shape of the business
CHANGING SHAPE OF THE BUSINESS Streamlined global presence Loyalty Solutions Loyalty Solutions Revenue(1) Other (CAD$ M) 8% Canada continues to Australia 23% support a broad 13% set of global Q1 2019 U.S. $34.7 clients from key 16% U.K. 24% hubs and well on U.A.E track with our 16% transformation #
Slide 13: Air Miles Middle East coalition
AIR MILES MIDDLE EAST COALITION HSBC renewal solidifies long term prospect of the program Positive Terms of the renewed contract: commercial win ◼ Move to a services-based contract to manage HSBC’s from contract participation in the Air Miles Middle East program on a fee-for- services basis away fro
Slide 14: Financial highlights
FINANCIAL highlights STEVEN LEONARD
Slide 15: Q1 2019 financial highlights
Q1 2019 FINANCIAL HIGHLIGHTS* Continuing operations Consolidated normalized (CAD$ M) Q1 2019 Q1 2018 YoY % Revenue 34.7 45.0 (22.9)% Operating Expenses(1) (45.4) (51.2) (11.3)% PLM Distribution 18.9 4.4 n.m. Adjusted EBITDA(1) 6.2 (6.1) n.m. (1) Refer to slides 33 and 34 for a reconciliation of FCF
Slide 16: PLM Gross Billings
PLM Gross Billings* Established PLM Gross Billings from loyalty units (million USD) coalition loyalty Q1 2019 $59.5 (+6.6% YoY) program in Mexico with 55.8 63.7 61.3 63.3 59.5 engaged base World class Technology of 6.3 million Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 members; strong Gross Billings gr
Slide 17: PLM Adjusted EBITDA and distributions
PLM Adjusted EBITDA and distributions* Adjusted EBITDA PLM Adjusted EBITDA(1) (million USD) Q1 2019: $20.4 (+19.3% YoY) margin at 33.0% in Q1 2019; full year distributions 20.2 19.1 22.0 20.4 17.1 expected to total CAD$37 million (2) (2) Q1 2018 (2) Q2 2018 Q3 2018 (2) Q4 2018 Q1 2019 (1) PLM’s defi
Slide 18: Continuing operations: Loyalty Solutions
CONTINUING OPERATIONS Loyalty Solutions Revenue and normalized operating expenses(1) (CAD$M) Loyalty Solutions OPEX would have been Includes IFRS 16 narrowing the gap 45.0 $3.3M higher had platform favourable impact $0.2M development been treated on profitability; 34.7 the same way in 2018 normalize
Slide 19: Continuing operations: Corporate and Other
CONTINUING OPERATIONS Corporate and Other Reduced Normalized operating expenses, income, and Adjusted EBITDA(1) (CAD$ M) headcount Includes Includes share-based $14.5 M Increase in share-based compensation $1.1M PLM distribution and lower rent compensation and IFRS 16 favourable credit $(2.1)M impac
Slide 20: Movement in FCF before dividends paid
CONTINUING OPERATIONS Movement in FCF before dividends paid* (CAD$ M) Prepaid rent in the U.K. last year driving Higher interest as favourable working a result of Q1 capital movement debt repayment (1) (2) (1) Variance in operating expenses, excluding share-based compensation and restructuring expen
Slide 21: Balance sheet: available cash provides flexibility
BALANCE SHEET Available cash provides flexibility to execute on strategy (CAD$ M) Movement in available and unrestricted cash and investments* Subject to CRA Subject to common reassessment shares tendered Around Q1 Free Cash Flow 400M Aeroplan transaction and other related items (1) (1) $10.9 millio
Slide 22: Q1 Conclusion
Q1 Conclusion JEREMY RABE
Slide 23: Progress on strategy and team
PROGRESS ON STRATEGY AND TEAM Pipeline currently driven by incoming Investment Committee formally established and will focus on opportunities where we can interest; 1 deliver synergies being refined to Identifying exclude opportunities To date, good outside loyalty, inbound interest 2 building a ear
Slide 24: Returns to shareholders
RETURNS TO SHAREHOLDERS There remains room ◼ SIB launched on April 8th, 2019 and expected to close on May 21st, 2019 for returning cash to shareholders while ◼ Outstanding dividends of $61 million paid to common and preferred shareholders at the end of still giving us March 2019 sufficient financial
Slide 25: Conclusion
CONCLUSION Significant ◼ Achieving a significant reduction in underlying operating expense in Q1 transformation ◼ On track to deliver profitability during 2020 and share price ◼ Accretive longer term strategy supported by substantial appreciation since assets, with a growing pipeline of opportunitie
Slide 26: Questions
Questions . © 2018 Aimia. All rights reserved. 26
Slide 27: Bridging 2019 improvement in Free Cash Flow
CONTINUING OPERATIONS Bridging 2019 improvement in Free Cash Flow* Transforming the existing loyalty solutions businesses to be simpler, more (78.4)(1) efficient and focused • Net interest income benefit Other on our core • Increased PLM 2019 Free Cash Flow before technologies and distribution Divid
Slide 28: Q1 2019 Adjusted EBITDA to Free Cash Flow walk
CONTINUING OPERATIONS Q1 2019 Adjusted EBITDA to Free Cash Flow walk* (CAD$ M) Exceptional PLM Q1 debt 1st quarter of distribution repayment new IFRS 16 Impact from prior lease accounting period rent treatment prepayment in the UK(1) (57.0) Adjusted EBITDA and Free Cash Flow improved significantly o
Slide 29: Working capital trends
CONTINUING OPERATIONS Working capital trends Favourable movement (CAD$ M) Change in net operating assets in working capital mostly related to $11.2M favourable variance mostly related to the impact of the rent prepayment related impact of the rent to a London office space in Q1 2018 prepayment in th
Slide 30: New accounting standard IFRS 16
NEW ACCOUNTING STANDARD IFRS 16 ◼ IFRS 16 – Leases, a new IFRS accounting standard, require lessees to No material recognize right-of-use assets and lease liabilities for qualifying leases impact to ◼ Operating lease expense replaced by depreciation & amortization and interest expense. Results in hi
Slide 31: Strong balance sheet
STRONG BALANCE SHEET At March 31, 2019 CASH & INVESTMENTS (CAD$ M) Mar 31, 2019 Cash and cash equivalents 280.1 Strong balance Restricted cash(1) 129.7 sheet with no Short-term investments 68.8 financial Long-term investments in bonds 154.3 indebtedness Cash and Investments 632.9 and attractive capi
Slide 32: Summary of quarterly results
SUMMARY OF QUARTERLY RESULTS 2019 2018 2017 (in millions of Canadian dollars, except per share amounts) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Revenue 34.7 36.8 42.5 42.8 45.0 47.3 45.6 59.3 Cost of rewards and direct costs (2.0) (3.1) (4.8) (5.1) (4.3) (4.1) (3.8) (6.9) Gross margin before depreciation and amorti
Slide 33: Q1 2018 and 2019 normalized figures
CONTINUING OPERATIONS Q1 2018 and 2019 normalized figures* (CAD$ M) 2019 2018 2019 2018 2019 2018 Loyalty Solutions Corporate and Other Continuing Operations Revenue 34.7 45.0 - - 34.7 45.0 Total operating expenses (42.7) (44.3) (8.0) (7.3) (50.7) (51.6) Less: restructuring expenses 5.3 0.2 - 0.2 5.
Slide 34: Reconciliation of consolidated OPEX, AE, and FCF
CONTINUING OPERATIONS Reconciliation of consolidated OPEX, AE, and FCF* (CAD$ M) 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenue 45.0 42.8 42.5 36.8 34.7 - - - Total operating expenses (51.6) (72.8) (50.3) (93.4) (50.7) - - - Less: impairments - 8.0 - 30.4 - - - - Less: restructuring expenses 0.4 6.9 0.7
Slide 35: Restructuring expenses and payments
CONTINUING OPERATIONS Restructuring expenses and payments (CAD$ M) Restructuring Expenses Restructuring Payments Loyalty Corporate Cont. Disc. Loyalty Corporate Cont. Disc. Reported Reported Solutions and Other operations operations Solutions and Other operations operations Q1 2018 0.2 0.2 0.4 1.0 1
Slide 36: Cardlytics
CARDLYTICS AIMIA OWNS Cardlytics closing share price performance since IPO (US$) 3.0M $28.00 Cardlytics $26.00 shares $24.00 May 10th MARKET VALUE $22.00 close $21.25 AT MAY 13th (1) $20.00 C$84.8M $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19 (1) Calculated as A
Slide 37: Contact
CONTACT Karen Keyes Senior Vice President / Investor Relations T +1 647 459 3506 E karen.keyes@aimia.com
Slide 38: . © 2018 Aimia. All rights reserved.
. © 2018 Aimia. All rights reserved. 38