Slide 1: Proprietary and confidential. © 2018 Aimia. All rights reserved.
Proprietary and confidential. © 2018 Aimia. All rights reserved. 1
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 Six Months Ended June 30, June 30, (in millions of Canadian dollars, except per share information) 2018 2017 2018 2017 Operating loss (16.5) (36.7) (3.8) (36.1) Depreciation and amortization 13.7 9.6 27.6 19.1 Amortization of Accumulation Partners'
Slide 5: Q2 2018 Income Statement
Q2 2018 INCOME STATEMENT Three Months Ended Six Months Ended June 30, June 30, (in millions of Canadian dollars, except per share amounts) 2018 2017 2018 2017 Revenue 375.4 361.3 781.4 763.7 Cost of sales Cost of rewards and direct costs 222.0 212.0 468.7 441.6 Depreciation and amortization 13.7 9.6
Slide 6: ROIC Reconciliation
ROIC RECONCILIATION* Twelve Months Ended June 30, (in millions of Canadian dollars unless otherwise noted) 2018 2017 Calculation of adjusted operating income after taxes Operating loss (26.8) (139.7) Depreciation, amortization & impairment charges 214.3 230.0 Operating income excluding depreciation,
Slide 7: Q2 2018 vs 2017 Financial Summary
Q2 2018 VS 2017 FINANCIAL SUMMARY Three Months Ended June 30, Coalitions ILS Consolidated 2017 YoY % 2018 2017 2018 2017 2018 2017 (excl. Other YoY % (excl. Other Businesses)(1) Businesses)(1) Gross Billings 326.3 336.8 40.7 47.8 366.8 396.0 384.2 -7.4% -4.5% Total revenue 341.7 310.6 33.9 40.2 375.
Slide 8: Q2 2018 Highlights
Q2 2018 HIGHLIGHTS August 3, 2018 Proprietary and confidential. © 2018 Aimia. All rights reserved. 8
Slide 9: Today's Speakers
TODAY’S SPEAKERS Jeremy Rabe CEO Mark Grafton Chief Financial Officer Proprietary and confidential. © 2018 Aimia. All rights reserved. 9
Slide 10: Agenda
AGENDA ▪ Strategy update ▪ Q2 operational and financial highlights ▪ Key takeaways Proprietary and confidential. © 2018 Aimia. All rights reserved. 10
Slide 11: Strategic Update
STRATEGIC UPDATE Jeremy Rabe Proprietary and confidential. © 2018 Aimia. All rights reserved. 11
Slide 12: Opportunity to Capitalize on Growing Travel Market
OPPORTUNITY TO CAPITALIZE ON GROWING TRAVEL MARKET Opportunity to Operational expertise reset, rebuild and refresh our partner relationships and embark on a new World class Technology Strategic partnerships path Strong brand The key determinants of the success of any coalition program are partner re
Slide 13: Priorities
PRIORITIES Opportunity Setting out clear strategy against which to exists to go progress key Aeroplan partnerships and member offering further and move faster Ongoing business simplification and acceleration of cost reduction initiatives Preserving a strong cash and liquidity position Maximizing val
Slide 14: PLM Investment
PLM INVESTMENT Gross Billings(1) (USD$ M) and AE margin Members enrolled (M) 34.5% % 34.6% 120 35.0% 12% 100 33.7% 30.0% 20% YoY YoY 25.0% 80 5.7 20.0% 60 15.0% 5.1 40 10.0% 20 5.0% 53.3 63.7 0 0.0% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 (1) G
Slide 15: Aeroplan Offering
AEROPLAN OFFERING 1 Increased flexibility 2 Great value 3 Improved member experience Proprietary and confidential. © 2018 Aimia. All rights reserved. 15
Slide 16: Aeroplan: Making Air Rewards More Flexible
AEROPLAN Making air rewards more flexible Air rewards A valuable air reward proposition is the core will remain of what members want and will continue to be a core differentiator for Aeroplan our core differentiator But the differentiation will go further: ▪ Type and class of air reward ▪ Redemption
Slide 17: Aeroplan: Demonstrated Demand for Flexibility
AEROPLAN Demonstrated demand for flexibility Total Air Rewards Issued (million) Member desire for convenience and flexibility driving strong growth in demand Shift for fromFare Market fixed Flightprice to Rewards market fare since 2013 4% Market Fare Flight CAGR Rewards has Demand for Fixed grown 9x
Slide 18: Aeroplan: Based Around Where Members Fly Today
AEROPLAN Based around where members fly today Members used their miles to fly and booked over 2.0 million rewards, with the average member booking once every two years for leisure travel Top 120 routes account for around 80% of rewards Within Canada, most popular routes booked account for ~50% of re
Slide 19: Aeroplan Offering
AEROPLAN OFFERING 1 Increased flexibility 2 Great value 3 Improved member experience Proprietary and confidential. © 2018 Aimia. All rights reserved. 19
Slide 20: Committing to Continued Value for Members
AEROPLAN Committing to continued value for members Committed to offering the following economy round-trip flights beginning at the following Aeroplan Miles: ▪ North American short-haul: 15,000 ▪ North American long-haul: 25,000 ▪ Mexico and Caribbean: 40,000 ▪ European destinations: 60,000 ▪ Asia de
Slide 21: Leveraging Aeroplan Capabilities and Assets
AEROPLAN Leveraging Aeroplan capabilities and assets Distinct capabilities to Data and 1 Scale 2 buying airline analytics seats in ways that other loyalty programs cannot, Proprietary Personalized 3 4 distribution providing a high marketing channel perceived value per mile at a manageable unit cost
Slide 22: Cost of Rewards Today
AEROPLAN Cost of rewards today Around half of Cost of rewards (CAD$ M) the 2.0 million flight rewards $117 issued in 2017 $137 $121 were purchased at market fare or from airlines $688 $686 $723 other than Air Canada, representing two-thirds of 2015 2016 2017 the expense Aeroplan Cost of Rewards (Non
Slide 23: Driving Mutual Benefit for Airlines
AEROPLAN Driving mutual benefit for airlines Aeroplan purchasing Unlocking differentiated discounts benefits airlines for Aeroplan ▪ Purchases a lot of seats and distributes them through a Cumulative % of redemptions by days prior to departure proprietary distribution channel ▪ Fills seats that woul
Slide 24: Redemption Seasonality Will Inform Choice
AEROPLAN Redemption seasonality will inform choice Program scale Redemption Seat Demand and rich member 600 Summer break Number of seats data on travel 500 400 patterns enable 300 200 Aeroplan to 100 0 optimize 01-Jan 01-Apr 01-Jul 01-Oct inventory for better Redemption Seat Demand leisure-oriented
Slide 25: Aeroplan Offering
AEROPLAN OFFERING 1 Increased flexibility 2 Great value 3 Improved member experience Proprietary and confidential. © 2018 Aimia. All rights reserved. 25
Slide 26: Building on Aeroplan
BUILDING ON AEROPLAN Tiers and sophisticated CRM and user interfaces New travel rewards platform provide members with flexibility to pay in miles and cash for all their travel – including flights Proprietary and confidential. © 2018 Aimia. All rights reserved. 26
Slide 27: Transforming Aeroplan
TRANSFORMING AEROPLAN To be the best travel loyalty program We will guarantee ▪ Based on listening to members flexibility and the data we have about them with more airlines ▪ Based on what we think at great value; can add value to banks with access to ▪ Based on how we think dynamic economy and pric
Slide 28: Q2 Operational and Financial Highlights
Q2 OPERATIONAL AND FINANCIAL HIGHLIGHTS Mark Grafton
Slide 29: Q2 2018 Highlights
Q2 2018 Highlights* (CAD$ M) Consolidated (excl. Coalitions Other Businesses)(1) $ YoY % $ YoY % Gross Billings 366.8 -4.5% 326.3 -3.1% Revenue 375.4 7.1% 341.7 10.0% Adjusted EBITDA 46.2 -1.7% 57.3 6.1% AE margin % 12.6% 40 bps 17.6% 160 bps Adjusted EBITDA excluding restructuring 56.3 8.1% 66.8 15
Slide 30: Coalitions Gross Billings
COALITIONS Gross Billings* (CAD$ M) Strong AMEX (3.1)% YoY performance and increased $336.8 credit card $326.3 spend offset Air Canada up 1% and non-air by lower active travel + retail card base down (16)% Financial card YoY growth of (4)% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Aeroplan - F
Slide 31: Coalitions - Aeroplan Financial Card Trends
COALITIONS - AEROPLAN Financial card trends Aeroplan co-brand average spend vs. active base(1) Members continued 120 110.3 1,800 to re-engage 100.0 1,600 and spend 100 1,400 80 1,200 1,000 60 800 40 600 400 20 200 0 0 FY FY FY FY FY Q1 Q2 2013 2014 2015 2016 2017 2018 2018 Aeroplan average active Ae
Slide 32: Coalitions Adjusted EBITDA Margin
COALITIONS Adjusted EBITDA margin* (CAD$ M, except percentages) 200.0 22.2%(1) 180.0 22.0% 20.5%(1) 21.0% 20.0%(1) 19.9%(1) 160.0 19.0% 140.0 17.2%(1) 19.0% 17.6% 17.6% 17.0% 120.0 15.2%(1) 16.0% 15.0% 100.0 15.1% 80.0 13.0% $57.3 60.0 $54.0 11.0% 40.0 9.0% 20.0 (1) Excluding divisional restructurin
Slide 33: Actual and Forecast Redemption Volumes
COALITIONS - AEROPLAN Actual and forecast redemption volumes Redemption volume (billion miles) 30.0 2018 guidance +8.0% TTM assumes 25.0 slower pace of redemption 20.0 growth against elevated levels 15.0 in Q3 and Q4 last year 10.0 5.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016A 2016A 2016A 2016A
Slide 34: Redemption Expense Breakdown
COALITIONS - AEROPLAN Redemption expense breakdown (CAD$ M) Take-up of 5.8% YoY increased capacity was $12.3 ($0.3) the main driver of Q2 2018 redemptions $207.4 $219.4 Q2 2017 Incremental Other Q2 2018 redemption capacity redemption expense increase expense Proprietary and confidential. © 2018 Aimi
Slide 35: Insights and Loyalty Solutions Adjusted EBITDA Margin
INSIGHTS AND LOYALTY SOLUTIONS Adjusted EBITDA margin* (CAD$ M) 0.0 10.0% Focused on 0.0 0.0% reducing 0.0 (12.3)%(1) -10.0% operating costs in the 0.0 (25.8)%(1) -20.0% business 0.0 (14.9)% -30.0% YoY to better align $47.8 0.0 $40.7 -40.0% profitability 0.0 -50.0% 0.0 -60.0% 0.0 -70.0% 0.0 -80.0% 0
Slide 36: Q2 2018 Operating Expenses
Q2 2018 Operating expenses* Consolidated OPEX excluding Other Businesses (normalized)(1) Reduced OPEX in Q2 and YTD 2018 (CAD$ M) benefitting from operational efficiency related to lower 300 headcount, timing 250 of marketing, and reduced spend on 200 IT and consulting. 150 Down Down $220.5 (13.7)%
Slide 37: Q2 2018 GB to FCF - Continuing Operations
Q2 2018 GB to FCF - Continuing operations*(1) Positive FCF generation in the quarter (CAD$ M) ($229.5) $366.8 ($107.2) $4.4 ($0.8) ($7.5) ($7.4) $1.2 $20.0 Gross Billings Cost of rewards OPEX before Distribution from Cash Net cash Capex Working capital Free Cash and direct costs (2) share-based equi
Slide 38: Building Financial Flexibility
Q2 2018 Building financial flexibility (1) As of June 30, 2018, Aimia had a CASH & INVESTMENTS (CAD$ M) June 30, 2018 $208.0 million revolving credit facility maturing on April 23, 2020. Interest Cash and cash equivalents 249 rates on this facility are tied to the Corporation’s credit ratings and ra
Slide 39: Maintaining 2018 Guidance
Q2 2018 Maintaining 2018 guidance* Guidance is based on current CAD$ M 2017(1) 2018 guidance expectations around redemption expense at Aeroplan and is on an IFRS Coalitions 15 basis. The guidance excludes the $1,341 Around $1.3 billion impact of taxes and restructuring and Gross Billings costs that
Slide 40: Key Takeaways
KEY TAKEAWAYS JEREMY RABE Proprietary and confidential. © 2018 Aimia. All rights reserved. 40
Slide 41: Key Q2 Takeaways
KEY Q2 TAKEAWAYS Opportunities exist to move faster in a streamlined organization with a clear strategy Clear plan for Aeroplan Execution against cost savings More to follow in and simplification of the business 2018 driving margin improvement and positive cash generation Balance sheet remains stron
Slide 42: Q&A
Q&A Proprietary and confidential. © 2018 Aimia. All rights reserved. 42
Slide 43: Aeroplan Gross Billings
AEROPLAN Gross Billings Aeroplan Gross Billings (CAD$ M) Gross Billings (3.4)% YoY down versus 350.0 35.0 prior year 337.4 Aeroplan Gross Billings (CAD$ M) 340.0 Miles Issued (billion miles) driven by 330.7 329.9 30.0 330.0 328.0 reduced 321.0 319.6 319.6 financial sector 320.0 25.0 -4.9% and lower
Slide 44: Aeroplan Accumulation Pattern
AEROPLAN Accumulation pattern Miles accumulated y/y% Miles FY 2016: 2.4% accumulated FY 2017 1.8% Ex-promo: 1.7% Ex-promo: 3.3% lower from reduced 4.1% 4.8% 5.4%5.6% promotional 3.9% 1.9% 2.9% 2.0% 3.3% miles 1.5% 1.2% 1.6% 0.8% -0.1% -0.4% -0.9% -0.8% -2.8% -2.5% -4.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 45: Aeroplan Redemption and Unit Cost Trends
AEROPLAN Redemption and unit cost trends Mileage burn and unit cost Favourable cost per mile trend Average unit cost 1.04 1.03 1.03 1.02 down from 15.0% 1.01 1.02 1.00 1.00 13.0% 0.98 0.98 favourable 11.0% impact of 9.0% 9.9% 9.6% foreign 7.0% 7.7% 5.0% exchange and 3.0% 4.9% 4.2% 3.9% 4.7% product
Slide 46: Aeroplan Redemption Trends
AEROPLAN Redemption trends Weekly redemptions cash impact vs. prior year 2018 (CAD$ M) cumulative cash impact $30M cash impact vs prior year up 7% YTD YTD June 2018 Proprietary and confidential. © 2018 Aimia. All rights reserved. 46
Slide 47: Aeroplan Burn/Earn Ratio
AEROPLAN Burn/earn ratio Burn/earn ratio Improving accumulation trend FY 2016: B/E 86% FY 2017: B/E 88% 120% 110% 109% 100% 98% 97% 95% 90% 86% 87% 80% 84% 84% 84% 79% 70% 60% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Proprietary and confidential. © 2018 Aimia.
Slide 48: Aeroplan Revenue
AEROPLAN Revenue CAD$ M Q2 2018 Q2 2017 Miles Revenue 291.1 263.1 Breakage Revenue 34.8 32.5 Other Revenue 9.1 8.8 Total Revenue 335.0 304.4 Proprietary and confidential. © 2018 Aimia. All rights reserved. 48
Slide 49: Q2 2018 AE to FCF - Continuing Operations
Q2 2018 AE to FCF - Continuing operations* (CAD$ M) ($14.0) $2.3 ($0.8) ($7.5) $46.2 ($7.4) $1.2 $20.0 Adjusted Change in Stock-based Cash Net cash Capex Working capital Free Cash EBITDA FRC compensation taxes interest paid and other Flow Q2 2017: $29.5 $10.6 ($9.5) ($2.0) ($12.7) ($11.0) $27.7 $32.
Slide 50: Q2 2018 Working Capital Trends
Q2 2018 Working capital trends - Continuing operations* (CAD$ M) $27.0 $27.7 $14.6 $1.2 $(5.1) $(21.6) Q1 Q2 Q3 Q4 Q1 Q2 2017A 2017A 2017A 2017A 2018A 2018A *THIS SLIDE CONTAINS NON-GAAP FINANCIAL MEASURES. PLEASE REFER TO SLIDE 3 FOR A DETAILED DESCRIPTION OF SUCH NON-GAAP FINANCIAL MEASURES AND SL
Slide 51: Q2 2018 Financial Highlights - Coalitions
Q2 2018 FINANCIAL HIGHLIGHTS* Coalitions Periods ended June 30, Three months ended CAD$ M 2018 2017 Reported Reported Gross Billings Aeroplan 319.6 330.7 Loyalty Services & Other 9.1 8.6 Intercompany eliminations (2.3) (2.5) Total revenue Aeroplan 335.0 304.4 Loyalty Services & Other 9.0 8.6 Interco
Slide 52: Q2 2018 Adjusted EBITDA Trends
Q2 2018 Adjusted EBITDA trends* Consolidated excluding Other Businesses(1) AE margin % 0.0 (CAD$ M) 25.0% 0.0 23.0% 0.0 21.0% 0.0 19.0% 17.1%(2) 17.3% 0.0 17.0% 0.0 15.0% 13.3%(2) 12.2%(2) 12.6% 0.0 13.0% 11.1%(2) 0.0 11.0% (1) Consolidated results excluding Other Businesses. Other Businesses includ
Slide 53: Aeroplan Positive Free Cash Flow Generation
AEROPLAN Positive Free Cash Flow generation* Free Cash Flow before Dividends Paid – Continuing operations (CAD$ M) Positive FCF 70.4 generation in 54.1 the quarter 48.4 42.9 36.3 32.6 25.1 28.8 20.0 7.7 2016 2017 2018 2016 2017 2018 2016 2017 2016 2017 Q1 Q2 Q3 Q4 *THIS SLIDE CONTAINS NON-GAAP FINAN
Slide 54: Aeroplan Gross Billings by Major Partner
AEROPLAN Gross Billings from sale of loyalty units by major partner Other Other CIBC Other 12.2% CIBC CIBC 13.4% 19.9% 19.7% Air Air Canada Sainsbury’s Canada 19.6% 20.5% Air Canada Q2 2017 Q2 2018 $334.8 $321.0 TD TD AMEX 32.8% 30.8% AMEX AMEX TD 14.5% 16.6% Proprietary and confidential. © 2018 Aim
Slide 55: Foreign Exchange Rates
FOREIGN EXCHANGE RATES Q2 2018 Q2 2017 % Change AVERAGE AVERAGE PERIOD END AVERAGE AVERAGE PERIOD END AVERAGE AVERAGE PERIOD END QUARTER YTD RATE QUARTER YTD RATE QUARTER YTD RATE £ to $ 1.7565 1.7570 1.7355 1.7191 1.6791 1.6890 2.2% 4.6% 2.8% AED to $ 0.3513 0.3476 0.3592 0.3662 0.3633 0.3545 -4.1%
Slide 56: Accounting: Key Things to Remember
ACCOUNTING: Key things to remember* Gross Billings from the sale of Loyalty Units: Revenue Recognition: ▪ Recognize upon issuance of Loyalty Units ▪ Recognize upon redemption of Loyalty Units ▪ Key indicator of top line growth Breakage Recognition: Liabilities Recognition: ▪ Recognize upon redemptio
Slide 57: Contact
CONTACT Karen Keyes Senior Vice President / Investor Relations T +1 647 459 3506 E karen.keyes@aimia.com Proprietary and confidential. © 2018 Aimia. All rights reserved. 57
Slide 58: Proprietary and confidential. © 2018 Aimia. All rights reserved.
Proprietary and confidential. © 2018 Aimia. All rights reserved. 58