Slide 1: Inspiring Loyalty
/\IMI/A INSPIRING LOYALTY
Slide 2: Q1 2017 Highlights
Q1 2017 HIGHLIGHTS May 10, 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 Mar 31, (in millions of Canadian dollars, except per share amounts) 2017 2016 Operating income (loss) 5.5 (8.9) Depreciation and amortization 11.4 12.9 Amortization of Accumulation Partners' contracts, customer relationships and 25.8 32.8 technolog
Slide 6: Q1 2017 Income Statement
Q1 2017 INCOME STATEMENT Three Months Ended March 31, (in millions of Canadian dollars, except per share 2017 2016 amounts) (unaudited) (unaudited) Revenue 524.8 570.1 Cost of sales Cost of rewards and direct costs 331.4 369.5 Depreciation and amortization 11.4 12.9 Amortization of accumulation part
Slide 7: ROIC Reconciliation
ROIC RECONCILIATION* Twelve Months Ended March 31, (in millions of Canadian dollars unless otherwise noted) 2017 2016 Calculation of adjusted operating income after taxes Operating loss (72.0) (36.3) Depreciation, amortization & impairment charges 240.6 208.0 Operating income excluding depreciation,
Slide 8: Q1 2017 Financial Highlights
Q1 2017 FINANCIAL HIGHLIGHTS* (in millions of Canadian dollars) As Reported Q1 2017 Q1 2016 Gross $525.2 $573.0 Billings (8.3%)(1) (1)(2) (4.3%) in c.c. Operating $150.7 $163.8 Expenses Adjusted $58.8 $48.7 EBITDA 11.2% margin 8.5% margin Capital $12.1 $19.5 expenditures FCF before dividends paid $(
Slide 9: Quarterly Highlights
QUARTERLY HIGHLIGHTS DAVID JOHNSTON
Slide 10: Update on Air Canada
UPDATE ON AIR CANADA • Air Canada and Aeroplan have had a powerful and successful partnership pairing one of the best airlines with one of the best loyalty providers since 2002 • Aeroplan offers value, flexibility, and availability that differentiate our program for 5 million members • Aeroplan is A
Slide 11: Q1 2017 Financial Highlights
Q1 2017 FINANCIAL HIGHLIGHTS* (in millions of Canadian dollars) Q1 2017 Q1 2016 Gross Coalition Gross $492.0 $531.1 Billings(6) decline of Billings(3) (7.4%)(1) 2% on a constant (1)(2) Adjusted EBITDA (3.2%) in c.c. currency basis margin benefitting Operating from operational Expenses(4) $119.9 $132
Slide 12: Q1 2017 Gross Billings and Operational Highlights
Q1 2017 GROSS BILLINGS AND OPERATIONAL HIGHLIGHTS* (in millions of Canadian dollars and Q1 operational highlights reported YoY variance (%) ) Americas Coalitions $319.6 • Aeroplan Gross Billings up 5%(2), 65% of core +3.3% Gross Billings contributing (alongside lower unit 19.7% AE cost and lower ope
Slide 13: Returns to Shareholders
RETURNS TO SHAREHOLDERS* FCF per Common Share before Dividends Quarterly Dividend per Common Share Paid(1) and FCF Yield(2) and FCF Payout Ratio(3) $1.40 12.7% 14.0% $0.22 109% 120% $1.20 11.2% 12.0% $0.20 85% 100% $1.00 10.0% Around 20% $0.18 70% 80% $0.80 8.0% 5.4% increase in $0.16 60% $0.60 6.0%
Slide 14: Q1 2017 Consolidated Gross Billings
Q1 2017 CONSOLIDATED GROSS BILLINGS* (in millions of Canadian dollars) $10.2 ($45.2) $33.2 Americas ($4.2) $531.1(2)(3) Coalitions International Global $525.2 Non-core Coalitions Loyalty $492.0(2)(3) Solutions • Aeroplan • Nectar Loyalty Loyalty Units Units decline of Gross Billings • Underlying $23
Slide 15: Aeroplan Gross Billings
AEROPLAN GROSS BILLINGS* (in millions of Canadian dollars) 5.0% 350.0 35.0 $308.9 $294.1 300.0 30.0 Aeroplan Gross Aeroplan Gross Billings 250.0 5.4% 25.0 Billings up 5% YoY YoY driven by strong (billion miles) (million CAD) Miles Issued Growth* * financial cards and 200.0 20.0 Air Canada 5.7% YoY u
Slide 16: Aeroplan Financial Card Trends
AEROPLAN FINANCIAL CARD TRENDS One month average actives (1) (Aeroplan TD + CIBC credit cardholders) 2013-2017 CAGR = 5%(2) 2010 to 2013 CAGR = 1%(2) Active base up 7% YOY in the quarter(3) as a result of card acquisitions and improving card attrition 2010 2011 2012 2013 2014 2015 2016 Q1 2017 (1) O
Slide 17: International Coalitions Gross Billings
INTERNATIONAL COALITIONS GROSS BILLINGS* (in millions of Canadian dollars) (27.1)% YoY; (14.4)% YoY in c.c** 250.0 30,000 $166.8 $121.6 Gross Billings 25,000 down 14% on a 200.0 constant currency 20,000 basis 150.0 15,000 100.0 (20)% 10,000 YoY 50.0 5,000 Nectar issuance down 20% YoY 0.0 0 due to th
Slide 18: Phasing of Sainsbury's Campaigns
PHASING OF SAINSBURY’S CAMPAIGNS Sainsbury’s points issuance Phasing of promotional campaigns driving lower points issuance in Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 and strong 2016A 2017A 2016A 2017E 2016A 2017E 2016A 2017E expected issuance in Q4 Significant 10x campaign in market in May 18
Slide 19: Global Loyalty Solutions Gross Billings
GLOBAL LOYALTY SOLUTIONS GROSS BILLINGS* (in millions of Canadian dollars) (7.6)%; (5.6)% in c.c.** Continued transition out of rewards fulfillment $55.1 contract with a UK $50.9 rewards client Platform-based recurring sales continued to grow, accounting for around 14% of Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 20: Q1 2017 Consolidated Adjusted EBITDA
Q1 2017 CONSOLIDATED ADJUSTED EBITDA* (in millions of Canadian dollars) $0.4 ($0.9) $13.0 ($3.5) $0.4 International Global Corporate Non-core Coalitions Loyalty and Other Solutions Americas Coalitions • Lower • Higher $49.4(1) • Higher operating share-based spend on expenses IT and compensation $58.
Slide 21: Aeroplan Redemption and Unit Cost Trends
AEROPLAN REDEMPTION AND UNIT COST TRENDS Favourable cost per mile trend Mileage burn and unit cost Mileage burn up 1.06 1.05 1.05 1.04 3.9% YoY driven 5.0% 1.02 1.03 1.03 1.01 0.98 by higher Market Fare Flight 3.0% 4.9% rewards in the 3.6% 4.2% 3.9% quarter 1.0% 2.1% (1.3%) (0.7%) -1.0% (1.6%) (3.6%
Slide 22: Aeroplan Burn/Earn Ratio
AEROPLAN BURN/EARN RATIO* Improving accumulation trend Seasonally normal burn earn Burn/Earn Burn/earn ratio in line with normal 102% seasonal 98% patterns 97% 93% 89% (inverse of 11% breakage) 83% 84% 84% 84% 80% 79% 77% 74% 72% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2014 2014 2014 2015 2015 2
Slide 23: Club Premier Overview
CLUB PREMIER OVERVIEW • Through its joint venture with Aeromexico, Mexico's flagship airline, 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 opera
Slide 24: Progress on Operating Expenses
PROGRESS ON OPERATING EXPENSES* (in millions of Canadian dollars) $26.6 ($6.9) ($9.2) $1.8 $1.4 Americas Coalitions Corporate Non-core International Global Loyalty and Other Coalitions Solutions $132.7(1)(2) • Operational • Higher share- • Increased $146.5(1) efficiencies, • Lower based spend on IT
Slide 25: Free Cash Flow in Line with Seasonal Patterns
FREE CASH FLOW IN LINE WITH SEASONAL PATTERNS* Normalized FCF before Dividends Paid (10) Seasonal redemption (3) patterns driving (6) (2) (8) FCF outflow in (9) Q1 (4) (5) (7) ($20.1) (11) (1) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016 2017 *THIS SLIDE CONTAINS NON-GAAP FINANCIAL MEASURES
Slide 26: Working Capital Quarterly Trends
WORKING CAPITAL QUARTERLY TRENDS* (in millions of Canadian dollars) $122.7 $76.4 Timing of working capital $35.6 $7.4 $22.9 in 2016 driving unfavourable ($19.7) ($15.6) ($40.2) ($33.0) ($31.4) variance ($46.1) ($63.0) ($58.8) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2014 2014 2014 2015 2015 2015
Slide 27: Capital Expenditures
CAPITAL EXPENDITURES (in millions of Canadian dollars) FY 2015: $93.6 Capex down FY 2014: $81.5 c.40% in the quarter FY 2013: $54.4 $30.0 $29.4 FY 2016: $68.2 $23.7 $21.9 $21.6 $20.5 $20.0 $19.5 $18.1 $18.2 $16.1 Focus on $14.4 delivering $11.2 $12.2 $11.8 $12.1 $9.1 improving returns and driving ca
Slide 28: Financial Position at March 31, 2017
FINANCIAL POSITION AT MARCH 31, 2017* (in millions of Canadian dollars) As of March 31, 2017 Cash + Restricted Cash + Investments $557 Investments including Aeroplan Reserve + Restricted Cash $327 Other reserves $108 Excess cash (ROIC basis) c.$120 Working capital c.$60 to $90 Available cash c.$30 t
Slide 29: Strategic Update
STRATEGIC UPDATE DAVID JOHNSTON
Slide 30: Strategic Progress
STRATEGIC PROGRESS 1. Key partnerships Simplified and cash 2. Aligning our operating model generative business 3. Supportive financing profile 4. Returns to shareholders 30
Slide 31: 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 32: Aeroplan Value to Members
AEROPLAN VALUE TO MEMBERS 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, representi
Slide 33: Improvements in Aeroplan Availability
IMPROVEMENTS IN AEROPLAN AVAILABILITY 97% 96% 91% Aeroplan 2016 88% 79% 79% Aeroplan 2013 Improved 72% 70% availability that differentiates 58% Aeroplan from 50% frequent flyer programs June July August September October Aeroplan 2016 Market 2016 Aeroplan 2013 Market 2013 Sources: • IdeaWorks Compan
Slide 34: Operating and Financial Highlights
OPERATING AND FINANCIAL HIGHLIGHTS TOR LØNNUM
Slide 35: Aligning Our Operating Model
ALIGNING OUR OPERATING MODEL • Measures already being taken which are expected to underpin 12.0% Adjusted EBITDA margin for 2017 – $5 million in operating efficiencies achieved in the quarter driving core OPEX down to $119(1) million (vs $131(1) million in Q1 2016) – FTEs down by around a third sinc
Slide 36: Introduction of a ROIC Metric
INTRODUCTION OF A ROIC METRIC* Adjusted EBITDA (Reported) Return = - Depreciation ROIC of 6.3% at Adjusted operating - Tax the end of Q1 income after taxes 2017 (TTM) Equity Invested Capital + Accumulated Focus on (Average) amortization of partner improving ROIC contracts and customer longer term re
Slide 37: Capital Structure and Financing
CAPITAL STRUCTURE AND FINANCING Aimia capital structure (in millions of Canadian dollars) Maturity profile March 31, 2017 extended to June 2017 $2,500 2020 with early (forecast) $300 redemption of (undrawn) 2018 senior $200 secured notes $2,000 (drawn) Debt/Adjusted $450 $250 EBITDA* maintained at $
Slide 38: 2017 Guidance
2017 GUIDANCE* (in millions of Canadian dollars) 2016 2017 Guidance (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 Divide
Slide 39: Quarterly Dividend
QUARTERLY DIVIDEND • Board has declared a quarterly dividend of $0.20 per common share • Reflects a payout of 55% of the annual Quarterly Dividend Per Share $0.22 Free Cash Flow before Dividends Paid* on $0.20 the basis of current guidance $0.18 $0.16 • New dividend policy and dividend level $0.14 r
Slide 40: Concluding Remarks
CONCLUDING REMARKS DAVID JOHNSTON
Slide 41: Conclusion
CONCLUSION • Solid start to Q1 • Reconfirming 2017 guidance with normal seasonality expected in the second half A simpler, more • Strategic decisions being taken to reinforce focused business with financial flexibility; key coalition partnerships, a an aligned operating strongly aligned operating mo
Slide 42: Aimia: Inspiring Loyalty
AIMIA INSPIRING LOYALTY
Slide 43: Why Invest in Aimia?
WHY INVEST IN AIMIA?* Aeroplan • >80% of Gross Billings • 5 million active members from Americas and • Partners include: TD bank, CIBC, Europe(1) Air Canada, AMEX, and Esso Pure play marketing Strong retail, • c.80% of Gross Billings and loyalty financial and Nectar from coalitions and • 20 million
Slide 44: Progress on Strategy
PROGRESS ON STRATEGY SIMPLIFY AND FOCUS Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 • Exited Nectar • Exited the • Completed the • Investment in China • Exited investment in Italia and Cardlytics UK sale of Enhancement Rewards written down Travel Club and presence LATAM presence card-linked Services to
Slide 45: Balance Sheet
BALANCE SHEET DEBT Interest March CASH & INVESTMENTS March (in millions of Canadian Rate Maturing 31, 2017 (in millions of Canadian dollars) 31, 2017 dollars) Revolving Facility(1) Apr. 23, 2020 - Cash and cash equivalents 230 Senior Secured Notes 5 4.35% Jan. 22, 2018 200.0 Restricted cash 21 Senio
Slide 46: Quarterly Consolidated Cost of Rewards Trend
QUARTERLY CONSOLIDATED COST OF REWARDS TREND (in millions of Canadian dollars) $200 $301 $287 $182 $258 $152 $106 $174 $145 $129 $164 $144 $120 $223 $231 $218 $225 $181 $201 $202 $189 $197 $192 $193 $196 $195 Q1 Q1 Q1 Q1 Q2 Q2 Q2 Q3 Q3 Q3 Q4 Q4 Q4 2014 2015 2016 2017 2014 2015 2016 2014 2015 2016 20
Slide 47: Increasing Adjusted EBITDA Margin
INCREASING ADJUSTED EBITDA MARGIN* EXCLUDING SEVERANCE COSTS (in millions of Canadian dollars, FY 2016: 10.4%(4) 150 percentages) except FY 2015: 9.5%(2)(3) 14.0% FY 2014: 8.1%(1) 130 11.4%(5) 12.0% 11.0%(3) 11.2%(4) 10.5%(4) 10.1% 10.2%(2) 10.0%(4) 110 9.1% 10.0% 8.8% 8.5%(3) 8.8%(4) 8.7% 90 8.0% 7
Slide 48: Q1 2017 Adjusted EBITDA to Free Cash Flow Bridge
Q1 2017 ADJUSTED EBITDA TO FREE CASH FLOW** BRIDGE* (in millions of Canadian dollars) $58.8 ($8.4) $4.2 ($3.4) ($4.1) ($12.1) ($58.8) Non-cash items ($23.8) Adjusted Change in Stock-based Cash Net cash Capex Working capital Free Cash EBITDA FRC compensation taxes interest paid and other Flow Reporte
Slide 49: Q1 2017 Free Cash Flow Bridge
Q1 2017 FREE CASH FLOW BRIDGE* (in millions of Canadian dollars) $7.4 ($25.8) ($18.9) ($23.8) $6.2 $15.2 $2.0 ($0.2) Capital expenditures ($47.8) Income Net Distributions from equity- taxes (paid) / cash Q1 2016 $38.1 accounted received, interest Reported investments net paid Working Q1 2017 OPEX ca
Slide 50: Q1 2017 Gross Billings to Free Cash Flow Walk
Q1 2017 GROSS BILLINGS TO FREE CASH FLOW WALK* (in millions of Canadian dollars) Q1 2016 Q1 2017 Gross Billings 573.0 525.2 Less: Cost of rewards and direct costs (369.5) (331.4) Less: Operating expenses (excluding share-based Operational discipline driving (161.7) (146.5) compensation and impairmen
Slide 51: Americas Coalitions Gross Billings
AMERICAS COALITIONS GROSS BILLINGS* (in millions of Canadian dollars) 3.3% 360 50.0 350 $309.4 $319.6 45.0 340 40.0 330 35.0 Americas 320 30.0 Coalitions Gross 310 25.0 Billings up on the 300 5.4% 20.0 back of Aeroplan YoY 290 5.7% 15.0 growth 280 YoY 10.0 270 5.0 260 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 52: Drivers Impacting Gross Billings and Redemptions
DRIVERS IMPACTING GROSS BILLINGS AND REDEMPTIONS Consumer debt continues to rise Canadian Household Consumption Expenditure Final (HCE)* and impact 3.0% 2.7% 2.6% spend through 2.5% 2.3% 2.1% 2.2% 2.1% 2.0% the year 2.0% 1.7% 1.5% 1.0% 0.5% Canadian FX 0.0% expected to Q1-16 (A) Q2-16 (A) Q3-16 (A)
Slide 53: A Mutually Beneficial Relationship
A MUTUALLY BENEFICIAL RELATIONSHIP Gross Billings from Payments from Air Canada*† Aeroplan to Air Canada Q1 2017: FY 2016: >2x AC up 8% YoY Gross Billings FY 2016: FY 2016: Incremental c.$185 c.$250 million million(1) Relationship continues to drive Gross Billings from Air Canada and Aeroplan purcha
Slide 54: Q1 2017 Financial Highlights – Americas Coalitions
Q1 2017 FINANCIAL HIGHLIGHTS – AMERICAS COALITIONS* Three Months Ended Mar 31, (in millions of Canadian dollars) 2017 2016 Reported Reported % Gross Billings Aeroplan 308.9 294.1 5.0% Loyalty Services & Other 19.8 37.7 -47.5% Intercompany eliminations (9.1) (22.4) Total revenue Aeroplan 324.7 309.5
Slide 55: Aeroplan Revenue
AEROPLAN REVENUE (in millions of Canadian dollars) Q1 2017 Q1 2016 Miles Revenue $280.6 $266.6 Breakage Revenue $34.7 $32.9 Other Revenue $9.4 $10.0 Total Revenue $324.7 $309.5 55
Slide 56: Focusing on Core Assets
FOCUSING ON CORE ASSETS* • c.($20) million Enhancement Americas Americas Coalitions Services Coalitions $1,296 million (57%)(1) • c.($150) million US Channel • Coalitions (Aeroplan) $1,495 million (64%) and Employee Loyalty Assets • Canada Rewards held for sale International Coalitions 2016 $618 mil
Slide 57: 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
Slide 58: Gross Billings from Sale of Loyalty Units by Major Partner
GROSS BILLINGS FROM SALE OF LOYALTY UNITS BY MAJOR PARTNER* Other CIBC Other CIBC Other CIBC 16.0% 15.2% 17.6% 14.7% Air Sainsbury’s Air Sainsbury’s Sainsbury’s Canada Canada 15.4% 14.2% Air Canada Q1 2016 21.9% 16.4% Q1 2017 $425.2M $397.9 AMEX AMEX AMEX TD 12.0% TD 13.2% TD 23.8% 19.6% *THIS SLIDE
Slide 59: 2016 Quarterly Gross Billings and Adjusted EBITDA
2016 QUARTERLY GROSS BILLINGS AND ADJUSTED EBITDA* (INCLUDING AND EXCLUDING CEL AND ES BUSINESSES) Business segmentation reflecting Business segmentation reflecting CEL and ES businesses CEL and ES businesses classified under Corporate and Other classified under Americas Coalitions Gross Billings Gr
Slide 60: Foreign Exchange Rates
FOREIGN EXCHANGE RATES Q1 2017 Q1 2016 % Change Average Average Period end Average Average Period end Average Average Period end quarter YTD rate quarter YTD rate quarter YTD rate £ to $ 1.6387 1.6387 1.6593 1.9691 1.9691 1.8744 -16.8% -16.8% -11.5% AED to $ 0.3603 0.3603 0.3627 0.3740 0.3740 0.3545