Slide 1: Aimia
/\IMIA 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) 2018 2017 Operating income 12.7 0.6 Depreciation and amortization 13.9 9.5 Amortization of Accumulation Partners' contracts, customer relationships and technology 40.6 25.2 I
Slide 5: Q1 2018 Income Statement
Q1 2018 INCOME STATEMENT Three Months Ended March 31, (in millions of Canadian dollars, except per share 2018 2017 amounts) Revenue $ 406.0 $ 402.4 Cost of sales Cost of rewards and direct costs 246.7 229.6 Depreciation and amortization 13.9 9.5 Amortization of accumulation partners' contracts, cust
Slide 6: ROIC Reconciliation
ROIC RECONCILIATION* Twelve Months Ended March 31, (in millions of Canadian dollars unless otherwise noted) 2018 2017 Calculation of adjusted operating income after taxes Operating loss (47.0) (125.2) Depreciation, amortization & impairment charges 199.1 229.3 Operating income excluding depreciation
Slide 7: Q1 2018 vs 2017 Financial Summary (Post IFRS 15)
Q1 2018 VS 2017 FINANCIAL SUMMARY (POST IFRS 15) Three Months Ended March 31, Coaltions ILS Consolidated 2017 YoY % 2018 2017 2018 2017 2018 2017 (excl. Other YoY % (excl. Other Businesses)(1) Businesses)(1) Gross Billings 316.8 315.8 41.6 47.7 358.1 394.6 363.2 -9.2% -1.4% Total revenue 370.9 331.4
Slide 8: Q1 2018 Highlights
Q1 2018 HIGHLIGHTS April 26, 2018
Slide 9: Today's Speakers
TODAY’S SPEAKERS • David Johnston, Group Chief Executive • Mark Grafton, Chief Financial Officer 9
Slide 10: Agenda
AGENDA • Introductions • Q1 highlights • Financial highlights • Key takeaways 10
Slide 11: Q1 Highlights
Q1 HIGHLIGHTS DAVID JOHNSTON
Slide 12: Key Areas of Focus
KEY AREAS OF FOCUS • Progressing key strategic and commercial partnerships for Aeroplan • Ongoing business simplification and acceleration Continuing to of cost savings execute against strategic priorities • Preserving a strong cash and liquidity position 12
Slide 13: Progress in Q1 2018
PROGRESS IN Q1 2018* • Progressing key strategic and commercial partnerships for Aeroplan, with the launch of a member promise campaign and addition of Amazon as a new retailer in the program Continuing to • Ongoing business simplification and acceleration execute against of cost savings, with dispo
Slide 14: Building on Aeroplan Strengths and Assets
BUILDING ON AEROPLAN STRENGTHS AND ASSETS (in millions of Canadian dollars) Strong brand, assets 1 and capabilities Engaged member base with 2 an average 10 year tenure More than 9% of Canada credit 3 card purchase volume(1) on Aeroplan co-branded cards (1) Source: The Nilson Report, March 2018 issu
Slide 15: Member Promise Campaign Launched
MEMBER PROMISE CAMPAIGN LAUNCHED THE FREEDOM TO CHOOSE ANY SEAT 1 ON MORE OF YOUR FAVOURITE AIRLINES THE POWER TO REACH YOUR 2 TRAVEL PLANS FASTER A COMPLETE TRAVEL OFFERING 3 IN ONE PLACE UNMATCHED FLEXIBILITY 4 AND CONVENIENCE A MORE PERSONALIZED 5 JOURNEY AN ALTOGETHER TRANSFORMED 6 USER EXPERIEN
Slide 16: Q1 2018 Highlights
Q1 2018 HIGHLIGHTS* (in millions of Canadian dollars) Consolidated (excl. Coalitions Other Businesses)(1) YoY YoY $ $ variance(1) variance Gross Billings 358.1 -1.4% 316.8 0.3% Adjusted EBITDA 62.0 53.8% 69.6 45.6% AE margin % 17.3% +620 bps 22.0% +690 bps Free Cash Flow before Dividends Paid 25.1 7
Slide 17: Continued Margin Improvement
CONTINUED MARGIN IMPROVEMENT* Consolidated AE margin 17.3% Significant increase in AE 11.1%(1) margin mainly driven by lower costs in the Coalitions business Q1 2017 Q1 2018 *THIS SLIDE CONTAINS NON-GAAP FINANCIAL MEASURES. PLEASE REFER TO SLIDE 3 FOR A DETAILED DESCRIPTION OF SUCH NON-GAAP FINANCIA
Slide 18: Financial Highlights
FINANCIAL HIGHLIGHTS MARK GRAFTON
Slide 19: IFRS 15 Introduction
IFRS 15 INTRODUCTION • Q1 2018 is the 1st quarter of reporting under IFRS 15 • On an IFRS 15 basis, results are impacted as follows: Cost of rewards Free Gross Adjusted Revenue and Cash Billings EBITDA direct Flow costs Coalitions IFRS 15 has no impact on Aeroplan Aeroplan Loyalty Services
Slide 20: Q1 IFRS 15 Impact
Q1 IFRS 15 IMPACT (in millions of Canadian dollars) Q1 2018 Consolidated excl. Other Coalitions ILS Businesses(1) Pre Post Pre Post Pre Post Impact Impact Impact IFRS 15 IFRS 15 IFRS 15 IFRS 15 IFRS 15 IFRS 15 Gross Billings 319.3 316.8 -2.5 66.9 41.6 -25.3 385.9 358.1 -27.8 IFRS 15 impact of $96 mi
Slide 21: Aeroplan Q1 Highlights
AEROPLAN Q1 HIGHLIGHTS • Members continued to engage • Customer satisfaction improved • Redemptions remained manageable and growth A solid Q1 rates expected to slow performance at Aeroplan • Launch of the promise campaign provides platform for member and partner engagement • Evolving business model
Slide 22: Coalitions Gross Billings Broadly Stable
COALITIONS GROSS BILLINGS* BROADLY STABLE (in millions of Canadian dollars) Stable YoY 315.8 316.8 Growth in financial cards Air Canada + retail YoY reflecting decline of (2)% successful conversion Financial card campaign YoY growth of +1% Q1 2017 Q1 2018 Aeroplan - Financial partners Aeroplan - Oth
Slide 23: Manageable Redemption Volumes
MANAGEABLE REDEMPTION VOLUMES Redemption volume (billion miles) Favourable cost per mile trend Increased take- up of air and +6.5% TTM 30.0 non-air and international 25.0 capacity in Q1; TTM redemption 20.0 growth at 6.5% 15.0 2018 guidance 10.0 assumes slower pace of 5.0 redemption growth against 0
Slide 24: Aeroplan Redemption and Unit Cost Trends
AEROPLAN REDEMPTION AND UNIT COST TRENDS Favourable cost per mile trend Mileage burn and unit cost 1.04 1.03 1.03 1.02 15.0% 1.01 1.02 1.00 0.98 0.98 13.0% 11.0% 9.0% 9.9% 9.6% Average unit 7.0% cost down 5.0% slightly driven 4.9% 3.0% 4.2% 3.9% 4.7% by favourable 1.0% 1.8% foreign -1.6% -1.0% excha
Slide 25: Q1 2018 GB to FCF Bridge
Q1 2018 GB TO FCF BRIDGE* (in millions of Canadian dollars) Positive Higher Aeroplan FCF redemption volumes generation in the quarter 358.1 (246.7) Execution on $3M one-off operational sale received in Impact of rent efficiencies the Coalitions prepayment division related the Nectar transaction (94.
Slide 26: Change in Free Cash Flow Seasonal Patterns
CHANGE IN FREE CASH FLOW SEASONAL PATTERNS* (in millions of Canadian dollars) Change in FCF Consolidated Free Cash Flow before Dividends Paid quarterly phasing as a result of the Nectar divestiture 121.6 113.8 40.4 FCF from 86.7 discontinued 54.1 15.3 44.2 51.9 operations 25.1 -18.9 -23.8 FCF from c
Slide 27: Q1 2018 Operating Expenses
Q1 2018 OPERATING EXPENSES* (in millions of Canadian dollars) Operating expenses(1) OPEX down 16% YoY(1) On track to deliver $70M 109.3 cost savings target 92.1 ILS OPEX down 41.6 9% YoY due to 38.0 operational efficiencies Coalitions OPEX down 20% YoY 67.8 including operational 54.1 efficiencies bu
Slide 28: Capex Trends
CAPEX TRENDS (in millions of Canadian dollars) 59.9 37.8 30 - 35 Reorienting capex to new products FY 2016A FY 2017A FY 2018E Coalitions Coalitions ILS other expansion total capex capex capex 28
Slide 29: Nectar Transaction Accounting
NECTAR TRANSACTION ACCOUNTING • Nectar transaction announced on Feb 1, 2018 • Completion accounts process to be finalized in Q2 • Working capital payable triggered by working capital inflows in January which drove high FCF Working capital and cash flow off-set Nectar January FCF generation $16.4 mil
Slide 30: Building Financial Flexibility
BUILDING FINANCIAL FLEXIBILITY (in millions of Canadian dollars) Credit facility paid down by $100M, $800 with further cash sweep expected to Total Cash and investments in bonds $700 reduce drawn amount $600 in Q2 $500 $400 $300 $200 $100 Total cash and investments in $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 b
Slide 31: Update on Investments
UPDATE ON INVESTMENTS • Aimia owns 2.9 million • Members enrolled at Mar 31, 2018: 5.6 million shares of Cardlytics at Feb 2018 Club Premier Adjusted EBITDA and AE margin(1) 30 40.0% • Since its IPO in Feb 2018, 25 33.7% 34.5% 34.7% 35.3% 33.5% 35.0% Cardlytics share price has 20 30.0% $21.2 $20.9 $
Slide 32: Maintaining 2018 Guidance
MAINTAINING 2018 GUIDANCE* (in millions of Canadian 2017(1) 2018 guidance dollars) Coalitions Gross Billings $1,341 Around $1.3 billion Coalitions Adjusted EBITDA $241 Around 18% and margin(1) 17.9% Coalitions Free Cash Flow $214 Between $155 and $175 (pre-tax basis)(1)(2) Consolidated Free Cash Flo
Slide 33: Key Takeaways
KEY TAKEAWAYS DAVID JOHNSTON
Slide 34: Key Q1 Takeaways
KEY Q1 TAKEAWAYS • Aeroplan performance demonstrated continued stability and redemption growth expected to slow • Execution against cost savings and simplification of the business driving margin improvement and positive cash generation Expect continued progress against priorities in 2018 • Balance s
Slide 35: Aimia - Inspiring Loyalty
AIMIA INSPIRING LOYALTY
Slide 36: Aeroplan Accumulation Pattern
AEROPLAN ACCUMULATION PATTERN Miles accumulated y/y% FY 2016: 2.4% FY 2017 1.8% Ex-promo: 1.7% Ex-promo: 3.3% Miles 4.8% 5.4%5.6% 4.1% 3.9% 3.3% accumulated 2.9% 1.9% 1.5% 1.2% 2.0% 1.6% broadly stable 0.8% excluding -0.1%-0.4% -0.9% -0.8% impact of lower -2.8% promotional miles Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 37: Aeroplan Redemption Trends
AEROPLAN REDEMPTION TRENDS (in millions of Canadian dollars) Weekly redemptions cash impact vs. prior year Cumulative $20M cash impact vs prior year cash impact up 9% YoY in Q1 2018 Q1 2018 37
Slide 38: Aeroplan Burn/Earn Ratio
AEROPLAN BURN/EARN RATIO Burn/earn ratio* Improving accumulation trend FY 2016: B/E 86% FY 2017: B/E 88% 120% 110% 109% 100% 98% 97% 90% 86% 87% 80% 84% 84% 84% 79% 70% 60% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Burn earn % 38
Slide 39: Aeroplan Revenue
AEROPLAN REVENUE (in millions of Canadian dollars) Q1 2018 Q1 2017 Miles Revenue 315.5 280.6 Breakage Revenue 37.6 34.7 Other Revenue 10.3 9.4 Total Revenue 363.4 324.7 39
Slide 40: Coalitions Adjusted EBITDA Margin
COALITIONS ADJUSTED EBITDA MARGIN* (in millions of Canadian dollars, except percentages) FY 2017(post-IFRS 15): 16.9%(1) FY 2017 (pre-IFRS 15): 16.8% 200.0 22.0%(1) 22.0% 180.0 21.8% 160.0 19.0%(1) 20.0% 140.0 17.6%(1) 18.9% 18.0% 120.0 16.0%(1) 17.5% 100.0 15.1%(1) 16.0% 80.0 16.0% 15.0% 4.4 4.4 14
Slide 41: Q1 2018 Financial Highlights: Coalitions
Q1 2018 FINANCIAL HIGHLIGHTS: COALITIONS* Periods Ended March 31, Three Months Ended (in millions of Canadian dollars) 2018 2017 Reported Reported Gross Billings Aeroplan 309.3 308.9 Loyalty Services & Other 9.5 9.1 Intercompany eliminations -2.0 -2.2 Total revenue Aeroplan 363.4 324.7 Loyalty Servi
Slide 42: Continued Margin Improvement
CONTINUED MARGIN IMPROVEMENT* (in millions of Canadian dollars, except percentages) 200.0 25.0% Consolidated excluding Other Businesses(1) AE margin % 180.0 23.0% FY 2017 (post-IFRS 15): 13.4%(2) 160.0 FY 2017 (pre-IFRS 15): 12.6% 21.0% 140.0 19.0% 17.1%(2) 17.3%(2) 120.0 17.0% 100.0 15.7% 16.1% 15.
Slide 43: OPEX Q1 2018 vs 2017
OPEX Q1 2018 VS 2017 Q1 2018 Q1 2017 Var ($) Var (%) Total consolidated operating expenses excluding disc. operations 92.1 137.5 -45.4 -33.0% Less: share-based compensation and other performance awards -2.0 4.2 -6.2 n.m. Less: Other Businesses 28.2 -28.2 n.m. Equals: Coalitions + ILS OPEX 94.1 105.1
Slide 44: Solid Cash Position
SOLID CASH POSITION DEBT Interest Mar 31, (in millions of Canadian Rate Maturing 2018 dollars) Revolving Facility(1) 3.58%(5) Apr. 23, 2020 100.0 Senior Secured Notes 4 6.85%(6) May 17, 2019 250.0 CASH & INVESTMENTS Mar 31, Total Long-Term Debt 350.0 (in millions of Canadian dollars) 2018 Less Curre
Slide 45: Gross Billings from Sale of Loyalty Units by Major Partner
GROSS BILLINGS FROM SALE OF LOYALTY UNITS BY MAJOR PARTNER Other Other CIBC Other 12.3% CIBC CIBC 18.9% 12.8% 19.5% Air Air Canada Sainsbury’s Canada 20.9% 20.6% Air Canada Q1 2017 Q1 2018 $310.8 $309.5 TD TD 30.5% 30.3% AMEX AMEX AMEX TD 16.3% 17.9% 45
Slide 46: Foreign Exchange Rates
FOREIGN EXCHANGE RATES Q1 2018 Q1 2017 % Change Average Average Period end Average Average Period end Average Average Period end quarter YTD rate quarter YTD rate quarter YTD rate £ to $ 1.7575 1.7575 1.8081 1.6387 1.6387 1.6593 7.2% 7.2% 9.0% AED to $ 0.3440 0.3440 0.3508 0.3603 0.3603 0.3627 -4.5%
Slide 47: Accounting: Key Things to Remember
ACCOUNTING: KEY THINGS TO REMEMBER* Gross Billings from the sale of Loyalty Units: Revenue Recognition: • Recognize upon redemption of Loyalty Units • Recognize upon issuance of Loyalty Units • Key indicator of top line growth Breakage Recognition: • Recognize upon redemption of Loyalty Units Liabil