Aimia Inc. · TSX:AIM
Aimia — Investor Presentation (August 2017)
30 slides from Aimia's investor presentation, August 2017
Slide 1: Aimia - Inspiring Loyalty
/\IMI/A INSPIRING LOYALTY
Slide 2: Investor Presentation August 2017
Investor Presentation August 2017
Slide 3: 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 4: 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 5: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION* Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Operating income (loss) (34.9) (17.1) (29.4) (26.0) Depreciation and amortization 12.1 15.2 23.5 28.1 Amortization of Accumulation Partners' contracts, customer relationships and 36.2 32.5 62.0
Slide 6: Q2 and YTD 2017 Income Statement
Q2 AND YTD 2017 INCOME STATEMENT Three Months Ended Six Months Ended June 30, June 30, (in millions of Canadian dollars, except per share 2017 2016 2017 2016 amounts) Revenue 470.5 525.4 $ 995.3 $ 1,095.5 Cost of sales Cost of rewards and direct costs 300.7 331.3 632.1 700.8 Depreciation and amortiz
Slide 7: ROIC Reconciliation
7 ROIC RECONCILIATION* Twelve Months Ended June 30, (in millions of Canadian dollars unless otherwise noted) 2017 2016 Calculation of adjusted operating income after taxes Operating loss (89.8) (76.7) Depreciation, amortization & impairment charges 241.2 209.4 Operating income excluding depreciation
Slide 8: Aimia Investor Presentation
AIMIA INVESTOR PRESENTATION
Slide 9: Q2 2017 Financial Highlights
9 Q2 2017 FINANCIAL HIGHLIGHTS* (in millions of Canadian dollars) As Reported Q2 2017 Q2 2016 Gross $520.3 $560.7 Billings (7.2%)(1) (1)(2) (6.3%) in c.c. Operating $156.4 $163.5 Expenses Adjusted $41.7 $54.6 EBITDA 8.0% margin 9.7% margin Capital $12.8 $14.4 expenditures FCF before dividends paid $
Slide 10: Q2 2017 Gross Billings and Operational Highlights
Q2 2017 GROSS BILLINGS AND OPERATIONAL HIGHLIGHTS* (in millions of Canadian dollars and Q2 operational highlights reported YoY variance (%) ) Americas Coalitions $338.5 • Aeroplan Gross Billings up 3%(2), 66% of core +1.2% Gross Billings contributing to divisional AE 19.0% AE margin improvement of 1
Slide 11: Q2 2017 Key Takeaways & Areas of Focus
Q2 2017 KEY TAKEAWAYS & AREAS OF FOCUS Key Takeaways 1. Actively working on future Aeroplan member offering 2. Aeroplan accumulation up in Q2, with no material change to redemption trends 3. 2017 guidance maintained Key Areas of Focus • Preserving a strong cash and liquidity position • Ongoing busin
Slide 12: Building Additional Financial Flexibility
BUILDING ADDITIONAL FINANCIAL FLEXIBILITY (in millions of Canadian dollars) Strong financial position with over half a Increasing financial flexibility billion dollars on the balance sheet beyond 2017 Common dividend suspension 1 increases retained cash $567 million in cash and Future FCF generation
Slide 13: Club Premier Overview
CLUB PREMIER OVERVIEW • Aimia owns 48.9% of PLM Premier, S.A.P.I. de C.V (PLM), which operates Club Premier. • Club Premier is the leading coalition program in Mexico with a growing member base and over 100 partners, and the operator of Aeromexico's frequent flyer program. • Members enrolled at June
Slide 14: Financing Structure
FINANCING STRUCTURE Aimia financing structure (in millions of Canadian dollars) Maturity profile Sept 30, 2016 extended to $1,000 2020 with early $900 redemption of $300 2018 senior $800 (undrawn) secured notes $700 Debt/Adjusted June 30, 2017 $600 EBITDA* below 2x $500 $200 Effective interest $400
Slide 15: Streamlining the Operating Model
STREAMLINING THE OPERATING MODEL Aimia David Johnston, Group Chief Streamlining the Executive business into two operating units will drive significant cost Divisions Functions savings Coalitions Finance Vince Timpano Mark Grafton Sources of savings coming from corporate costs and Talent and Culture
Slide 16: Delivering Operational Savings
DELIVERING OPERATIONAL SAVINGS OPEX savings (in millions of Canadian dollars)(1) • Previously announced $70 million cost savings initiatives have been accelerated with the benefits expected to be delivered earlier than anticipated 31.0 • Savings expected to ramp from FY 2016A FY 2017E FY 2018E FY 20
Slide 17: Aeroplan Fundamentals
AEROPLAN FUNDAMENTALS • Our TD, CIBC credit cards portfolio • On average, members have been with (excluding frequent fliers) the Aeroplan program for 10 years and accounted for 9% of Canadian redeem once every two years, credit purchase volume in 2016, predominantly for flights. Our most and more th
Slide 18: Key Coalition Partners
KEY COALITION PARTNERS % of Consolidated Gross Billings* - FY 2016 18% TD (10yr) 11% CIBC (10yr) CIBC (10yr) Contracts run between 4 and 15 years, with three top contracts 11% Air Canada (15yr) successfully renewed since 2005 9% AMEX (>5yr) AMEX (4yrs+1) 15% Sainsbury’s (5+5yr) Sainsbury’s (7yr) 200
Slide 19: Aeroplan Financial Card Trends
AEROPLAN FINANCIAL CARD TRENDS One month average actives (1) (Aeroplan TD + CIBC credit cardholders) 2013-2017 CAGR = 5% Active base up 2010 to 2013 CAGR = 1% 5% YOY in the quarter(3) Slowing new card acquisition post early campaigns but improved attrition in the quarter 2010 2011 2012 2013 2014 201
Slide 20: Aeroplan Accumulation Pattern
AEROPLAN ACCUMULATION PATTERN Miles accumulated y/y% Q2 2017: 1.2% Accumulation grew in the quarter up 1.2% 5.4% 4.1% 4.8% 3.8% driven by 0.8% 0.5% 1.0% Financial cards and Air Canada -0.1% -0.5% -5.6% -10.0%-10.5% -9.7% Accumulation trending in-line Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Apr May Jun Jul as exp
Slide 21: Aeroplan Redemption and Unit Cost Trends
AEROPLAN REDEMPTION AND UNIT COST TRENDS Q2 2017: 1.02 Mileage burn and unit cost 1.06 1.05 1.05 1.04 1.03 1.03 1.04 25.0% 1.02 1.01 1.02 1.00 Mileage burn up 0.98 20.0% 1.8% YoY driven Q2 2017: 1.8% 15.0% by higher Market Fare Flight 10.0% rewards and non- 5.0% 2.4% air rewards 3.6% 2.1% 4.9% 4.2%
Slide 22: Redemption Impact Post AC Announcement
REDEMPTION IMPACT POST AC ANNOUNCEMENT (in millions of Canadian dollars) Redemptions cash impact vs. prior year Redemption expense increased in the days post the Cumulative Air Canada non-renewal cash impact of announcement but this has $9 million above since moderated prior year represents 1% of to
Slide 23: Future Redemption Behaviour
FUTURE REDEMPTION BEHAVIOUR Proportion of outstanding miles liabilities Key Considerations to redemptions Supply considerations • Best value Fixed Price fares well utilized and booked in advance • Availability of Market Fare seats limited by available capacity • Non-air rewards provide the most flex
Slide 24: Aeroplan Cost Structure
AEROPLAN COST STRUCTURE Cost of rewards (in millions of Canadian dollars) 1.9m flight $819 $777 rewards $659 issued in $698 2016 $131 $140 $125 $127 $656 $685 $682 $477 50% of flight rewards are MFFR or purchased from Star partners; 2013 2014 2015 2016 the remaining 50% are Fixed Price, representing
Slide 25: 2017 Guidance
2017 GUIDANCE* (in millions of Canadian dollars) 2016 2017 Guidance(5) (1)(2) (4) Gross Billings (core business) $2,142 Core business broadly stable Gross Billings $2,340 around $2.1 billion (1) Adjusted EBITDA $239 (4) (1) Core business around 12.0% and margin 11.2% margin Free Cash Flow before Div
Slide 26: Conclusion
CONCLUSION • Progressing key strategic and commercial partnership Focused on a simpler business with an discussions and Aeroplan streamlined operating member offering model, a supportive balance sheet and a reimagined Aeroplan • Ongoing business based on key simplification and acceleration partnersh
Slide 27: Thank You
AIMIA INSPIRING LOYALTY
Slide 28: A Robust Balance Sheet
A ROBUST BALANCE SHEET DEBT Interest June CASH & INVESTMENTS June (in millions of Canadian Rate Maturing 30, 2017 (in millions of Canadian dollars) 30, 2017 dollars) Revolving Facility(1) 3.08% Apr. 23, 2020 200.0 Cash and cash equivalents 273 Senior Secured Notes 5 4.35% Jan. 22, 2018 - Restricted
Slide 29: Q2 & H1 2017 Gross Billings to Free Cash Flow Walk
Q2 & H1 2017 GROSS BILLINGS TO FREE CASH FLOW WALK* (in millions of Canadian dollars) Q2 2017 Q2 2016 H1 2017 H1 2016 Gross Billings 520.3 560.7 1,045.5 1,133.7 Less: Cost of rewards and direct costs (300.7) (331.3) (632.1) (700.8) Less: Operating expenses (excluding share-based (165.9) (161.0) (312
Slide 30: Gross Billings and Adjusted EBITDA Margin by Division
GROSS BILLINGS AND ADJUSTED EBITDA MARGIN BY DIVISION* (FY 2016, in millions of Canadian dollars) Aeroplan Gross Billings from Gross Billings from sale of Americas Coalitions Loyalty Units sale of Loyalty Units $1,326.8 $1226.1 32% TD 21% CIBC 18.5% AE margin(2) 57% of total Gross Gross Billings fro