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 Six Months Ended June 30, June 30, (in millions of Canadian dollars, except share and per share information) 2019 2018 2019 2018 Continuing operations Operating loss (21.7) (39.5) (40.7) (54.9) Depreciation and amortization 0.3 3.7 0.5 7.5 Amortiza
Slide 5: Q2 2019 income statement
Q2 2019 INCOME STATEMENT Three Months Ended Six Months Ended June 30, June 30, (in millions of Canadian dollars) 2019 2018 2019 2018 Revenue $ 31.0 $ 42.8 $ 65.7 $ 87.8 Cost of sales Cost of rewards and direct costs 2.2 5.1 4.2 9.4 Depreciation and amortization 0.3 3.7 0.5 7.5 Amortization of accumu
Slide 6: Summary of quarterly results
SUMMARY OF QUARTERLY RESULTS 2019 2018 2017 (in millions of Canadian dollars) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Revenue 31.0 34.7 36.8 42.5 42.8 45.0 47.3 45.6 Cost of rewards and direct costs (2.2) (2.0) (3.1) (4.8) (5.1) (4.3) (4.1) (3.8) Gross margin before depreciation and amortization 28.8 32.7 33.7 37.7
Slide 7: Q2 2019 highlights
Q2 2019 highlights AUGUST 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 Q2 2019 Financial highlights highlights © 2019 Aimia. All rights reserved. 9
Slide 10: Q2 2019 highlights
Q2 2019 highlights JEREMY RABE
Slide 11: Progress on strategy
PROGRESS ON STRATEGY • New capabilities added to the Board and management team to execute on strategy in becoming a loyalty and Positive travel consolidator momentum on • Positive momentum in Loyalty Solutions business with long term new client wins strategy and • 38% improvement in narrowing normal
Slide 12: Progress on M&A strategy
PROGRESS ON M&A STRATEGY Active discussions with potential targets Robust capital Board oversight strengthened with new additions allocation process 1 provides disciplined Identifying approach to accepting accretive Active 2 discussions only M&A targets underway with a number of Acquiring potential
Slide 13: Loyalty Solutions new wins and pipeline
LOYALTY SOLUTIONS NEW WINS AND PIPELINE Positive momentum in operating business • Good visibility of 2019 revenue from existing client 2019 revenue contracts largely secured and signing new multi-year client • Loyalty Solutions client wins: wins • Extending work with an existing leading consumer goo
Slide 14: Cost structure
COST STRUCTURE Significant progress on cost transformation Jan Jun Jan Jun Dec Cost savings 2019 2019 2020 2020 2020 initiatives in 2019 PEOPLE expected to 750 560 reduce quarterly FTEs FTEs run rate TECHNOLOGY beginning in Transition Services Agreement 2020 New contract with largest IT supplier Pos
Slide 15: Strategic investments
STRATEGIC INVESTMENTS Solid performing investments PLM Valuable • Solid performing investment delivering US$83 million Adjusted investments in EBITDA during past 12 months PLM and • CPSA with Aeromexico runs to 2030 with long term co-branded Cardlytics credit card agreements • Aimia has strong right
Slide 16: Financial highlights
FINANCIAL highlights STEVEN LEONARD
Slide 17: Q2 2019 financial highlights
Q2 2019 FINANCIAL HIGHLIGHTS* Continuing operations Consolidated normalized(1) (CAD$ M) Q2 2019 Q2 2018 YoY % Revenue 31.0 42.8 -27.6% Operating Expenses(2) (44.4) (57.9) 23.3% PLM Distribution 5.8 4.4 31.8% (1) Refer to slides 33 and 34 for a reconciliation of reported to normalized operating expen
Slide 18: PLM Adjusted EBITDA and distributions
PLM ADJUSTED EBITDA AND DISTRIBUTIONS* Q2 PLM Adjusted EBITDA up 5% Adjusted EBITDA PLM Adjusted EBITDA(1) (million USD) Q2 2019: $21.3 (+5.4% YoY) margin at 31.0% in Q2 2019; full year distributions 20.2 19.1 22.0 20.4 21.3 17.1 expected to total CAD$37 million (2) (2) Q1 2018 (2) Q2 2018 Q3 2018 (
Slide 19: PLM gross billings
PLM GROSS BILLINGS* Continued growth despite headwinds Largest coalition PLM Gross Billings from loyalty units (million USD) loyalty program Q2 2019 $65.9 (+3.5% YoY) in Mexico with 65.9 engaged base 55.8 63.7 61.3 63.3 59.5 of 6.5 million World class Technology members; Q1 2018 Q2 2018 Q3 2018 Q4 2
Slide 20: Continuing operations: Loyalty Solutions
CONTINUING OPERATIONS: LOYALTY SOLUTIONS Operating expense down 17% (CAD$M) 16.9%YoY -25.2% YoY Revenue improvement in -27.6% YoY 87.8 65.7 normalized Loyalty 42.8 31.0 Solutions OPEX Q2 2018 Q2 2019 1H 2018 1H 2019 excluding restructuring charges Normalized operating expenses(1) and prior year peri
Slide 21: Continuing operations: Corporate and Other
CONTINUING OPERATIONS: CORPORATE AND OTHER Operating expense down 45% (CAD$M) 44.8% YoY Normalized operating expenses(1) improvement in 44.8% YoY 24.9% YoY normalized Q2 2018 Q2 2019 1H 2018 1H 2019 corporate OPEX, (7.4) (2) (2) (13.4) (15.4) mainly driven by (20.5) head count reduction and reducing
Slide 22: Q2 2019 Adjusted EBITDA to Free Cash Flow walk
CONTINUING OPERATIONS Q2 2019 Adjusted EBITDA to Free Cash Flow walk* (CAD$ M) (57.0) Unfavourable movement in working capital due to one-time payments and timing of cash receipts (1) Q2 2.0 (0.2) (7.5) (22.7) (1.6) - 1.8 (28.2) - (28.2) 2018 *THIS SLIDE CONTAINS NON-GAAP FINANCIAL MEASURES PLEASE R
Slide 23: Balance sheet
BALANCE SHEET Available cash provides flexibility to execute on strategy (CAD$ M) Movement in available and unrestricted cash and investments* Around 340M $150.5M SIB and $11.6M NCIB Initial amount $19.7M working purchasing paid out with capital at end of remainder to adjustment June 2019 be paid in
Slide 24: Free Cash Flow improvement expected in second half
CONTINUING OPERATIONS Free Cash Flow improvement expected in second half (CAD$ M) Improvement expected in normalized FCF in • Post Aeroplan • Lower OPEX IT transition second half 2019, from costs ($10M) • Working capital lower OPEX, interest benefit 2H 2019 (21.5)(1) normalized income benefit, and •
Slide 25: Q2 Conclusion
Q2 Conclusion JEREMY RABE
Slide 26: Conclusion
CONCLUSION Significant upside • Strengthened Board and management team to support to current share execution of strategy price if we • Substantial progress in reducing underlying operating successfully expense • On track to becoming profitable during 2020 execute on the • Active discussions underway
Slide 27: Questions
Questions . © 2018 Aimia. All rights reserved. 27
Slide 28: Balance sheet at June 30, 2019
BALANCE SHEET At June 30, 2019 CASH & INVESTMENTS (CAD$ M) Jun 30, 2019 Cash and cash equivalents 119.7 Flexible balance Restricted cash(1) 102.4 sheet with no Short-term investments 96.6 financial Long-term investments in bonds 77.6 indebtedness Cash and Investments 396.3 and attractive capital str
Slide 29: 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 30: FCF before dividends paid
CONTINUING OPERATIONS: FCF BEFORE DIVIDENDS PAID* Significant improvement in first half 2019 32% improvement 1H 2019 $(38.5) (+32.3% YoY) in normalized FCF before Dividends Movement in Free Cash Flow Paid in 1H 2019, before Dividends Paid (CAD$ M) from higher PLM distribution, lower interest paid of
Slide 31: 1H 2019 Adjusted EBITDA to Free Cash Flow walk
CONTINUING OPERATIONS 1H 2019 Adjusted EBITDA to Free Cash Flow walk* (CAD$ M) Unfavourable movement in (57.0) working capital related to one-time payments and timing of cash receipts (2) (1) 1H - (7.0) (29.2) (0.2) (4.9) - (23.5)(1) (64.8) - (64.8) 2018 *THIS SLIDE CONTAINS NON-GAAP FINANCIAL MEASU
Slide 32: Working capital trends
CONTINUING OPERATIONS Working capital trends Unfavourable (CAD$ M) movement in working Change in net operating assets capital related to one- $(21.1) million time payments and unfavourable movement timing of cash receipts moving out 15.8 of the second quarter and into July 2019 1.8 (5.6) (14.1) (1)
Slide 33: Q2 2018 and 2019 normalized figures
CONTINUING OPERATIONS Q2 2018 and 2019 normalized figures* (CAD$ M) 2019 2018 2019 2018 2019 2018 Loyalty Solutions Corporate and Other Continuing Operations Total operating expenses (38.3) (53.1) (11.1) (19.7) (49.4) (72.8) Less: restructuring expenses 1.3 0.6 3.7 6.3 5.0 6.9 Less: impairments - 8.
Slide 34: Reconciliation of consolidated OPEX, AE, and FCF
CONTINUING OPERATIONS Reconciliation of consolidated OPEX, AE, and FCF* (CAD$ M) 2018 2019 CAD $M Q1 Q2 Q3 Q4 Q1 Q2 Total operating expenses (51.6) (72.8) (50.3) (93.4) (50.7) (49.4) Less: restructuring expenses 0.4 6.9 0.7 6.3 5.3 5.0 Less: impairments - 8.0 30.4 - - Normalized operating expenses (
Slide 35: Restructuring expenses and payments
CONTINUING OPERATIONS Restructuring expenses and payments (CAD$ 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: Contact
CONTACT Tom Tran Director, Investor Relations T +1 416 352 3728 E tom.tran@aimia.com
Slide 37: . © 2018 Aimia. All rights reserved.
. © 2018 Aimia. All rights reserved. 37