Aimia Q2 2026 Earnings Report

Aimia EPS Results

• Actual EPS: C$0.11
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Aimia Revenue Results

• Actual Revenue: $36.40 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Aimia Announcement Details

• Quarter: Q2 2026
• Date: 8/11/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 11, 2026
• Conference Call Time: 8:30AM ET

Aimia (TSE:AIM) (TSX: AIM) is a holding company that makes long-term investments in private and public businesses through controlling or minority stakes. We target companies with durable economic advantages evidenced by a track record of substantial free cash flow generation over complete business cycles, strong growth prospects, and guided by strong, experienced management teams. Headquartered in Toronto, Canada, Aimia is positioned to invest in any sector, wherever a suitable opportunity can be identified worldwide. In addition, we seek investments that may efficiently utilize the Company's operating and capital loss carry-forwards to further enhance stakeholder value.

Aimia Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Bozzetto sale generated CAD 270 million in net proceeds and a CAD 21.7 million gain, while capital-loss carryforwards avoided approximately CAD 45 million in taxes.
• Positive Sentiment: Aimia’s net book value per share increased 22% to CAD 3.74, and the company renewed its share-buyback program for up to 5 million shares through June 2027.
• Neutral Sentiment: After repurchasing CAD 131.4 million of 2030 Senior Notes, pro forma liquidity was CAD 173.2 million and only CAD 11.2 million of those notes remained outstanding, materially reducing interest costs but also lowering cash available for investment.
• Positive Sentiment: Management expects Cortland to improve in the second half of 2026 as delayed customer orders return, pricing actions support margins, and sales and operational changes begin to take effect; it is also considering self-funded bolt-on acquisitions.
• Neutral Sentiment: Aimia has begun deploying capital into marketable securities and is evaluating investment targets in Canada, the U.K., and other Western markets, emphasizing discounted or overlooked assets and the future use of its substantial tax-loss attributes.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the Aimia Incorporated Second Quarter 2026 Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, August 11, 2026. I would like to turn the conference over to Joe Racanelli. Please go ahead.

[Joe Racanelli, VP of Investor Relations at Aimia]

Thank you, operator, and good morning, everyone. Joining me on today's call are Rhys Summerton, Aimia's Executive Chairman, and Steven Leonard, the company's President and Chief Financial Officer. Before we begin with our prepared remarks, I do want to point out that we issued our final financial results for the second quarter earlier this morning. All of our materials, including the news release, MD&A, and financial statements, are available from our website as well as from our profile page on SEDAR+. We will be using a presentation today, and for those listening to our discussion by phone, a copy is available on the IR section of our website. Most importantly, some of the statements made on today's call may contain forward-looking information, and future results may differ materially from what we discuss.

[Joe Racanelli, VP of Investor Relations at Aimia]

Please refer to the risks and uncertainties that may affect our future performance referenced in our presentation, as well as in the MD&A. In addition, we will be making note of GAAP and non-GAAP financial measures. Reconciliation of these items is provided in the appendix of our presentation. Following today's presentation, please reach out to me if you have any outstanding questions or require any clarification of the items that we discuss today. Please go ahead, Rhys.

[Rhys Summerton, Executive Chairman at Aimia]

Thanks, Joe. Good morning, everybody. Thank you for joining us. Before we head over to questions on this call, Steve and I will briefly discuss some of the salient highlights of the second quarter. Just to kick off with, we were especially active this quarter. We're kind of getting used to being especially active. We've completed several objectives that we set out for in the year. In particular, we closed the sale of Bozzetto, which generated net proceeds of CAD 270 million. We grew our net book value by 22% to reach CAD 3.74 per share. We completed a tender offer to purchase Senior Notes due in January 2030, reducing our interest cost materially.

[Rhys Summerton, Executive Chairman at Aimia]

We took action to improve Cortland's ability to capitalize on the opportunities, and we're quite excited about this, which we'll elaborate on more in the presentation, and also to grow market share in Cortland. Importantly, we started to deploy capital in some investment opportunities consistent with our strategy, and we renewed our buyback program to buy up to 5 million common shares, which will take us through to June 2027. Our performance and milestones completed in the quarter provide clear evidence that we are making progress against our strategy. We have a lot more that we would like to report in the future, and we look forward to doing that. I'll expand on the outlook and priorities as we go through the presentation. But first, I will ask Steve to review our financial results.

[Rhys Summerton, Executive Chairman at Aimia]

Before Steve gets going, though, we want to congratulate him for becoming a granddad in the early hours of this morning and still being dedicated to make the call a few hours later. Steve, over to you, and congratulations.

[Steven Leonard, President and CFO at Aimia]

Thank you, Rhys. Good morning and afternoon, everyone. Before we look at our financial performance in more detail, I wanted to begin my discussion today by reviewing the key highlights of the Bozzetto transaction and its impact on our Q2 results, as outlined on slide seven. First, it's important to understand that Bozzetto was classified as discontinued operations. As a result, Bozzetto's contributions were excluded from Aimia's Q2 results from continuing operations, with the exception of cash flow from operations and net earnings, which are presented on a consolidated basis and include Bozzetto's results. Second, the transaction generated net proceeds of CAD 270 million, including CAD 1.8 million received in July relating to our finalization of the working capital and the debt closing accounts.

[Steven Leonard, President and CFO at Aimia]

Third, the transaction resulted in a net gain of CAD 21.7 million, a total that favorably impacted our EPS and our net book value per share at quarter end. Finally, I should point out that we did not incur any income tax on this transaction, as we offset approximately CAD 45 million of the taxable capital gain by utilizing our capital loss carryforwards. Turning to our financial highlights, as you see from slide eight, our results from continuing operations, that is Cortland and the HoldCo segment, in Q2 were largely in line with the prior year period. Revenue was CAD 36.4 million compared to CAD 37.8 million last year. Gross profit was CAD 8.7 million compared to CAD 8.8 million in Q2 2025. Adjusted EBITDA was CAD 2.3 million compared to CAD 2.8 million last year.

[Steven Leonard, President and CFO at Aimia]

The modest decline to reflect the impact of geopolitical and macroeconomic developments on our rope and netting solutions business. We expect those conditions to improve in the second half of the year. One positive item to note relates to the continued reduction in SG&A expenses at the holding level. The decrease reflects the benefits of ongoing efforts to reduce HoldCo costs for items such as insurance, rent, and professional services. I should point out that our HoldCo expenses, in particular, would have been lower by CAD 600,000 if not for costs incurred relating to one-time strategic initiatives, particularly related to dual listing activities in the U.K. Cortland results for the second quarter are presented on slide nine. In Q2, Cortland generated CAD 36.4 million of revenue, down CAD 3.7 million from last year.

[Steven Leonard, President and CFO at Aimia]

The year-over-year decline was due to lower sales volume, particularly in projects for the offshore energy sector and lower demand across the broader market due to higher selling prices. Cortland revenue decline was partially offset by pricing surcharges implemented in response to the rising raw material and freight costs, which were impacted by the rising oil prices related to the geopolitical events in the Middle East. Cortland's adjusted EBITDA in Q2 2026 was CAD 4.4 million, down from CAD 4.9 million last year. The decline was mainly due to lower sales volume. To capitalize on emerging opportunities, we implemented a number of changes at Cortland aimed at improving sales, strengthening relationships with customers, improving operations, and consolidating leadership. In part of these efforts, Thomas Cherian, a finance leader with more than 30 years of experience, will join Cortland CEO, Wolfgang Wandl, as CFO in our Houston office.

[Steven Leonard, President and CFO at Aimia]

Given the increased focus on growing sales and building customer relationships, we are optimistic that Cortland is primed for a stronger second half of the year, pending the easing of tensions in the Middle East. We ended the quarter with CAD 294.5 million of cash on a consolidated basis, up from CAD 100.3 million at the end of March. Slide nine shows a waterfall of cash movements in the quarter. The key driver in the increase in liquidity was CAD 268.2 million of cash proceeds from the Bozzetto transaction. As I mentioned earlier, we received another CAD 1.8 million in July related to the closing the working capital and the debt balances. Other increases in Q2 include CAD 2.7 million of cash flow from operations.

[Steven Leonard, President and CFO at Aimia]

The increase in liquidity was offset by an outflow that included CAD 22.6 million of principal repayments on the Bozzetto credit facilities prior to closing, CAD 25 million of Bozzetto's cash at closing, CAD 7.5 million of interest payments, CAD 4.3 million in investments in property, plant, and equipment, CAD 1.8 million towards the buyback of shares, and CAD 11.8 million in net marketable security investments. Looking at our liquidity more closely on slide 11, you see a breakdown of our cash position by segment at the end of June. Our consolidated liquidity includes CAD 268.8 million of cash held at the holdings segment and CAD 7.7 million at Cortland. Looking ahead, we plan to deploy the capital towards investment opportunities consistent with the strategy outlined previously. Over the next 12 months, we anticipate that HoldCo expenses will approximate CAD 7 million.

[Steven Leonard, President and CFO at Aimia]

Earlier, we mentioned the key development in Q2 was the completion of the offer to purchase our 2030 Senior Notes that mature in January 2030. The purchase offer was triggered by the sale of Bozzetto. The offer expired on June 26th, and we made a payment of CAD 131.4 million for validly tendered notes and interest owing on July 3rd after our reporting period. In the interest of transparency, slide 12 illustrates the impact of the tender offer on our liquidity on a pro forma basis. When taking into account the Senior Notes repayment, our pro forma liquidity was CAD 173.2 million, which consisted of CAD 163.1 million of cash, CAD 12 million of marketable securities, less CAD 2 million of other current borrowings. Post paydown of the notes tendered, we have a balance of CAD 11.2 million in principal notes outstanding through the maturity in January 2030. That concludes my prepared remarks.

[Steven Leonard, President and CFO at Aimia]

I'd like to turn the call back to Rhys for his closing remarks. Rhys?

[Rhys Summerton, Executive Chairman at Aimia]

Yeah. Thank you, Steve. Well done. Going to slide 14. Previously, I mentioned that one of our strategic objectives was to grow intrinsic value, and it's up to each investor and those that are interested to calculate the intrinsic value of Aimia. But the net book or net asset value per share does indicate the trajectory of it. If you measure net asset value per share, you'll notice that we increased this by 22% to CAD 3.74 after the sale of Bozzetto. We don't expect similar gains to come through regularly or on a quarterly basis. Obviously, this was episodic. There will be some lumpiness in the periods ahead.

[Rhys Summerton, Executive Chairman at Aimia]

As I wrote in the chairman's letter, what you should expect over time is that this net book value, per share, should appreciate if we make the right decisions. We would hope that that would outperform any of the benchmarks that are out there, like the S&P 500. That's what we regard as what would be par. We want to do a bit better than that over the long term, and that will benefit all shareholders. Going on to slide 15. As you have heard on this call, the second quarter was particularly active. As I said, I think that's something that we're getting used to. We will be active going forward. Our focus on the coming months will be to continue this momentum.

[Rhys Summerton, Executive Chairman at Aimia]

In particular, our priorities in the near term will center on continuing and following through on the improvements that we are seeing at Cortland from both a sales point of view and operations. That is starting to already bear fruit. We continue to identify and work very hard at identifying target investment opportunities. We are deploying the capital in a very disciplined way, with the ultimate goal, as always, to enhance shareholder value. Finally, we will complete the listing in the U.K., which will be a secondary listing on AIM. Over the longer term, which is really the important part, our focus will be, as I said, to grow the net book value or net asset value per share, which will benefit all of us. With that, thank you for your time thus far. We will open to questions. Joe?

[Operator]

Thank you. Ladies and-

[Joe Racanelli, VP of Investor Relations at Aimia]

Or the operator.

[Operator]

Apologies on that. Ladies and gentlemen, we will now begin the question and answer session. If you have any question, please press star followed by the number one on your touch tone phone, and you will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the number two. Your first question comes from the line of Surinder Thind of Jefferies. Please go ahead.

[Surinder Thind, Analyst at Jefferies]

Thank you. A few different questions in a few different areas. I'd like to start with Cortland. Given the changes that you guys are making at this point, from your perspective, what would constitute success over maybe the next 12-24 months? Is the idea the focus on the top line, the margin component or anything else? What is the timeframe that we should be thinking about that you're trying to benchmark yourself over so that the changes that you're making are kind of visible to the front?

[Rhys Summerton, Executive Chairman at Aimia]

Yeah, I'll take that, and Steve might want to add on afterwards. Let me just give you some context around Cortland, which might be useful. When I got involved in Aimia just over a year ago, we reviewed the portfolio of investments. Since I've been involved, there have been multiple opportunities where we could have taken the opportunity to exit Cortland, and turn that into cash and raise a lot of money from it. It's been my decision to turn that down. The reason is that I see a lot of opportunity to make Cortland into a long-term kind of serial acquirer growth platform, if you like. The building blocks that we've put in place thus far are just the start. I appreciate you kind of want a time horizon about when you will start to see the turnaround and how to quantify it.

[Rhys Summerton, Executive Chairman at Aimia]

I'll get there. What I would say is that there's such low-hanging fruit to improve Cortland that the changes that we've made, even just in this very early stage, are easy things to do, and you'll start to see the improvement, we believe, in the second half of this year already. So we're not asking you to look even 24 months down the road for that improvement. We think you will start to see them already. We've been kind of seeing that coming through in the forward load and in the numbers on a weekly basis. Now, we want to make sure that that's sustainable, and that's the important part. I think it's very likely barring some geopolitical issue that you will see the improvements coming through. Now, over the longer term, what's the opportunity for Cortland?

[Rhys Summerton, Executive Chairman at Aimia]

This is where it gets really exciting, is if you take all the opportunities around where Cortland perhaps doesn't have a presence or could be enhanced with local on-the-ground participation, you'll start to see that there's opportunities for Cortland to grow. So we have world-class manufacturing out of India. We can improve distribution. We're improving sales already. We can improve the product delivery around all of that. If you put all those points together, I think that you will see, both in the short term and the longer term, a vastly improved Cortland as a group. Will it require us to make some bolt-on acquisitions along the way? Definitely. I think what those acquisitions do is they're small, but they improve our geographic coverage, and they also make the overall business less reliant on a few key markets.

[Rhys Summerton, Executive Chairman at Aimia]

We want to be a global player in this, and I think there is a real opportunity for Cortland to get there. To answer your question, short term, we think you will see an improvement. Longer term, I think you will see that Cortland becomes a very important part of Aimia going forward.

[Surinder Thind, Analyst at Jefferies]

That is helpful. Then maybe could you expand upon the near-term outlook in the sense of, as you expect things to get better, is that primarily a reflection of the macro getting better? Or maybe what are the conditions you are assuming that are leading to things getting better in the near term, in the back half of 2026?

[Steven Leonard, President and CFO at Aimia]

I think, Surinder, that

[Rhys Summerton, Executive Chairman at Aimia]

Sometimes that

[Steven Leonard, President and CFO at Aimia]

Sorry. Okay, go ahead, Rhys. No.

[Rhys Summerton, Executive Chairman at Aimia]

No. You go, Steven. You go.

[Steven Leonard, President and CFO at Aimia]

No, I think what we are seeing is what happened as we came into 2026, what happened coming mid Q1 to end of Q1 with what happened in the Middle East and impact on oil, that rippled through the cost structure. We made some changes, as you have seen in our prepared remarks, on adjusting our selling prices. This was not just Aimia or sorry, Cortland. This was other competitors as well doing that. Some of the downstream users of these products were making decisions on drawing down inventories and delaying purchasing decisions with an expectation that things would improve. We have seen some of that happen, as it depends on the week or the day, what is going on with the geopolitical events. But we are seeing, as Rhys said, stronger orders in the second half. So we are seeing some of that.

[Steven Leonard, President and CFO at Aimia]

Ultimately, these downstream users of these products still need them. The delays that they made in the second quarter are starting to get pulled through in the second half. That is one thing we are seeing. Then obviously, another area that we expect to be improving is on the margin side, both on gross margin and EBITDA. So you should see an improvement of that in the second half.

[Surinder Thind, Analyst at Jefferies]

That's helpful.

[Rhys Summerton, Executive Chairman at Aimia]

I'll just add there.

[Surinder Thind, Analyst at Jefferies]

Yep.

[Rhys Summerton, Executive Chairman at Aimia]

Sorry. If I could just add. The way to look at Cortland in the past, and we see this a lot with different businesses. You get businesses that are simply accident-prone. What do I mean by that? I mean that whatever event happens in the world, it seems to have a negative impact on them. What that really means is that a business isn't resilient. There's no backup. It doesn't have this built-in resiliency that we want. The changes that we've made in Cortland is to make it a lot more resilient and defensive against macro events that happen. We don't want to be necessarily exposed each and every time there's some kind of issue in the world. Cortland needs to stand on its own and to be able to deliver good results almost in spite of the environment around it.

[Rhys Summerton, Executive Chairman at Aimia]

The way we're going to get there is by diversifying where we get the revenues from a lot more and relying on the management team, which are now in place and operating very well, to deliver.

[Surinder Thind, Analyst at Jefferies]

Thank you. Then maybe I'll sneak in one more. When we look back at maybe the Bozzetto acquisition, can you maybe talk about the lessons learned there or maybe how this is going to influence the future acquisition framework. Any color there would be helpful. Then maybe any areas that maybe are off-limits from an industry perspective and areas that you're definitely interested in.

[Rhys Summerton, Executive Chairman at Aimia]

Yeah, that's a good question. Obviously, Bozzetto was before my time. When I reviewed what was in Aimia, obviously we knew what was in Aimia before we even got involved. What we realized about Bozzetto is that it was an asset that had really good management. It was operating as well as it possibly could be operating. But it lacked one crucial thing for Aimia as a permanent capital vehicle. There would be a struggle, and it would be the wrong thing to take cash away from Bozzetto and to use that cash to pay down debt all the time. I would say the mistake that was made, at least from an outsider's point of view, is that the gearing was too high on Bozzetto at an Aimia level.

[Rhys Summerton, Executive Chairman at Aimia]

It meant that we were then having this 9.75% debt at the whole co level, which needed to be serviced. You were starving Bozzetto of cash that it could use to make acquisitions and grow, simply because you were trying to fuel a HoldCo in Aimia. The key lesson, I think is, and obviously we all know this, is when we look for acquisitions, we are looking for things that are not going to take up large amounts of funding. Everything that we've looked at thus far has got net cash on the balance sheet, and we now have cash at the center, and we will deploy it into opportunities where we will enhance our cash balance rather than reduce our cash balance. We really don't want to get into the game of taking on big debt at the Aimia whole co level.

[Rhys Summerton, Executive Chairman at Aimia]

If I had to say what was the key takeaway, that would be the primary one. The secondary one is that anything we buy, we have to make sure that the management teams that we acquire understand that we will make the capital allocation decisions. We will allocate the capital that they generate. It's not up to them to allocate the capital. Those are really good points that I guess Aimia has learned. I would also probably say that the motivation to do some of those acquisitions in the past is not the same motivation as today. Today, I'm a significant shareholder, directly, indirectly. The board of Aimia has, I don't know, close to 45% of the shares. Every acquisition we do is reviewed by the board. Even before we buy 1% of it gets reviewed by the board. There's a lot of alignment.

[Rhys Summerton, Executive Chairman at Aimia]

We're not trying to rush to do any acquisitions. But we're very excited about all the acquisition potential that's out there because there's just so many. So, we're very excited about the opportunity set.

[Joe Racanelli, VP of Investor Relations at Aimia]

Rhys, before we go on to other-

[Surinder Thind, Analyst at Jefferies]

That's really helpful. I appreciate that. Thank you.

[Joe Racanelli, VP of Investor Relations at Aimia]

Good. Thank you. Rhys, before we go on to other callers with questions, I have received a couple of emails since the start of our presentation. So one question to you in particular. You mentioned that you're excited about Cortland's opportunities for growth. How much of Aimia's cash are you willing to deploy towards funding its growth instead of investing in new companies?

[Rhys Summerton, Executive Chairman at Aimia]

That is also a good question. I would say that bear in mind that Cortland is cash flow generative already. We think that the bulk of acquisitions that we would look at in Cortland would be self-funded by the business. Also, Cortland has some cash and has no debt. There is a potential to take on some gearing in Cortland if the acquisition opportunity presented itself. But the opportunities that we have looked at so far wouldn't require cash from, or significant cash from Aimia, from the whole total. We would try and self-fund it from the Cortland level.

[Joe Racanelli, VP of Investor Relations at Aimia]

Should we be using net book value as the main metric to measure Aimia's progress?

[Rhys Summerton, Executive Chairman at Aimia]

I think that net book value per share, it is important to stress the per share part because we do have a share buyback program, which executes virtually daily. Net book value per share would indicate the direction of travel of the intrinsic value. There are some swings and roundabouts, there are some positives and some negatives to what I would perhaps estimate intrinsic value is, but that is not something we will share. For investors, it might be a good heuristic to use net book value per share, and certainly the change in net book value per share, I think would be a very useful metric to measure Aimia's success on. In fact, I would think it would be unlikely that net book value per share would grow and intrinsic value per share would not grow along the same kind of path as the book value per share.

[Rhys Summerton, Executive Chairman at Aimia]

It is a useful metric. It is one of the useful metrics, but obviously every investor must decide for themselves what metric they use.

[Operator]

Your next question comes from the line of Rob Byde of Zeus Capital. Please go ahead.

[Rob Byde, Analyst at Zeus Capital]

Hi there, everybody. Two from me, please. Can you talk a little bit more about the reasons for the further listing in the U.K.? Perhaps give a little bit more color on the sectors or industries you are going to be focusing on. Is this just U.K. or are you going to be looking at the wider European market? My second one was, I guess, closer to home, just on Cortland. You talk in your statement about price surcharges. Could you talk a bit about how frequently you can adjust prices? Is this a quarterly or annual process? Thank you.

[Rhys Summerton, Executive Chairman at Aimia]

Thanks. I will take the first one and, Steve, I do not know if you want to answer the second one now, then I can revert back to the first question.

[Steven Leonard, President and CFO at Aimia]

Yeah, I will do that, Rhys, then you can come back. Cortland has a dynamic pricing model with its clients where, with the implementation or the impact on the input pricing, mainly on raw materials, they were adjusting their pricing. That is not daily and it is not annually. It is more on a more frequent, two or three times a month that they are looking at this, in terms of pricing.

[Rhys Summerton, Executive Chairman at Aimia]

Yeah. On your first question, most of the opportunities that we are looking at are in the U.K. It does make sense to have a listing in the U.K. for opportunities that might present themselves. I think we've discussed this on prior calls as well, but we're certainly not going to have listings in every place that we want to make acquisitions. But where the bulk of the acquisitions may sit, we'll probably have a listing there. But I would say that, if you had to look at Aimia maybe 10 years from now, I would expect the primary listing to be in the U.S. and not anywhere else. That's kind of the direction of travel. How we get there, we'll have to do a little bit of an excursion into the U.K. And obviously we do have a listing on the JSE as well.

[Rhys Summerton, Executive Chairman at Aimia]

The opportunities that we see in the U.K., there are so many and so attractive that we don't really see a need to look at Europe. We're kind of not fans of socialism that much. We've avoided Europe. We've actually exited Europe with the sale of Bozzetto. To go back there would be pretty interesting, and it would have to really be attractive. But just to give you some flavor about the opportunities that we've looked at and are looking at, we are looking at things in Canada, the U.K., and other markets, other kind of Western countries as well. It's really driven by where we see the most value. And, we are completely agnostic. Now, eventually, though, and we don't want to take too much time with getting to the eventually, we want to utilize the tax losses because that's where there's real value.

[Rhys Summerton, Executive Chairman at Aimia]

The sooner we get to utilize those losses, the better. Now, we utilized a little bit of that with the sale of Bozzetto and we'll utilize a little bit more in the third quarter. But where we want to get to is to be able to utilize those tax losses, having made good acquisitions along the way, that will generate lots of free cash flow for Aimia to continue compounding.

[Rob Byde, Analyst at Zeus Capital]

Thanks, Rhys. Thank you.

[Rhys Summerton, Executive Chairman at Aimia]

Thank you.

[Operator]

As a reminder, if you wish to ask a question, please press star one to join the queue. We have another question.

[Joe Racanelli, VP of Investor Relations at Aimia]

Sure. Rhys, we have received a couple other email questions. One relates to Clear Media. What are your plans for Aimia's investment in Clear Media?

[Rhys Summerton, Executive Chairman at Aimia]

Clear Media is turning around. The results are definitely improving year-on-year. I still think there is a long runway to go with that business, and this would be the wrong time to monetize that investment. At the right time we will obviously have something to report back to our investors. For now, it is turning around and the results are improving. We are kind of happy sitting with that, going along for the journey to recovery.

[Joe Racanelli, VP of Investor Relations at Aimia]

Great.

[Rhys Summerton, Executive Chairman at Aimia]

Sorry, Joe, was there another question?

[Joe Racanelli, VP of Investor Relations at Aimia]

One more question, and I noticed there's somebody else in the queue. Can you talk or explain the process that you're using to identify investment targets?

[Rhys Summerton, Executive Chairman at Aimia]

Yeah. That's a good one. Where can Aimia compete? That's the real question. At the moment, you're finding a lot of companies are getting acquired by private equity. They're obviously looking at the same kind of companies that we are. But Aimia can compete in a slightly better way, I would say. That is that if you take an average sort of competitor of Aimia or somebody else looking for opportunities or acquisitions, they're going to screen the market, start doing due diligence and knock on the company's door and make an offer. What we try to do is look for hidden value that might be in some of these companies that the rest of the market hasn't seen. So far we've been able to identify situations that really are neglected by the market. There might be very low interest from existing investors.

[Rhys Summerton, Executive Chairman at Aimia]

You can kind of see that with AGM turnouts. You can see that some shareholders are kind of suffocated in their share register and that they might want to get out for whatever reason, but they can't. We can help them raise liquidity by buying their shares. It gives us the opportunity to actually buy into these companies at far more attractive prices than what private equity can buy into these companies at. Private equity sort of makes these premium offers and then sees what happens afterwards. With us, we can build equity stakes beforehand, which may or may not lead to an offer, depending on what happens to the share price. The other thing that is in our favor is if we start building a position in an investment or a target, there's nothing stopping us from reversing course and exiting that investment.

[Rhys Summerton, Executive Chairman at Aimia]

So, for example, if we buy into a company and the share price rallies, and we no longer think it's all that attractive, we can then exit that investment at a realized profit. So there's multiple reasons why we should be able to execute better than what our competitors are doing. When it comes to actually screening the market for ideas, I don't think there's any substitute for hard work. We are visiting companies, meeting with companies, reading annual reports, doing all the things that just the basic due diligence would require.

[Rhys Summerton, Executive Chairman at Aimia]

To develop a framework and find opportunities. Like I said earlier, there are multiple opportunities that we are looking at.

[Operator]

Your next question comes from the line of Conrad Scheurkogel of Goldman Sachs. Please go ahead.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

Thank you for the opportunity. The Bozzetto transaction is interesting because it's Italian-based and despite that, maybe Steve or Rhys, you can give me a bit of an accounting lesson. When the transaction was finalized, you were able to utilize the tax losses, the capital loss carryforwards. How did that come about? Linked to that, and also linked to your previous response, Rhys, where you said if you make an investment and there's a capital gain or if the stock remains listed, I would assume, has moved beyond intrinsic value and you exit.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

Will you always structure your transactions in such a way that in the back of your mind, because this capital losses now has become alive, it is a real number we can look at because it has been utilized, that that can be utilized or it is going to be very rule-based depending on geographies where you make your investments. I bring back a previous questioner's, the question about a U.K. listing. Is that part of it is to be structured in such a way that if you upstream dividends or cash flow again, that these tax losses can be utilized? That is my one question. The second question is just on, I noticed that there is CAD 12.1 million of securities that has come about, if you can give us a little bit of detail on that. Thank you.

[Steven Leonard, President and CFO at Aimia]

I will answer the tax question, Rhys.

[Rhys Summerton, Executive Chairman at Aimia]

You can answer the first.

[Steven Leonard, President and CFO at Aimia]

Yeah.

[Rhys Summerton, Executive Chairman at Aimia]

Yeah, you go for it.

[Steven Leonard, President and CFO at Aimia]

Yeah. Aimia, as we have disclosed in our notes on the tax losses, the capital losses which represent about half of our losses that we have quoted, so about CAD 500 million. Those losses are held by the Canadian Aimia Inc. company in terms of the structure. So when we are placing investments or doing certain activities on the investing side, our preferred approach in the structure, unless there is other good reasons to do it differently, but in the case of Bozzetto, we held the Italian business under the Canadian company parent, which had the taxable losses, capital losses. So when we realized the taxable capital gain, even though the business is located in Italy, the owner of the business of that 94% in Bozzetto was Aimia. So the taxable gain would be mitigated by the utilization of the capital losses.

[Steven Leonard, President and CFO at Aimia]

That is we applied CAD 45 million of our capital losses against the Bozzetto gain. That was the tax gain on the transaction. On the investments that we are making, it is a similar scenario where in the first course, we will invest through the parent company that has the capital losses. Then subsequently, when we sell those businesses, we would use those losses against taxable gains. I hope that answers your question on the tax piece.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

If you can just expand on dividends and cash flow that is being upstreamed.

[Steven Leonard, President and CFO at Aimia]

Yeah. There are different elements tied to certain sources of income. Dividends, we would look to use the operating side of the. So again, the Canadian business HoldCo has Canadian operating losses that we can mitigate. Likewise, if we put a downstream loan into one of the businesses, that is another way where you have interest income coming up to the parent company, and you can mitigate. So there are different ways you structure things, in terms to utilize your tax attributes efficiently, and we look at all of those when we are looking at our structures.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

Perfect. Thank you.

[Rhys Summerton, Executive Chairman at Aimia]

Yeah. It's a good point because when people talk about serial acquirers and what makes a good serial acquirer, they always mention it's the sort of autonomous management structure, then they go next and talk about this long runway of potential acquisitions, et cetera. But one of the real things that you need to look for in a serial acquirer is having an advantaged tax base. That's what Aimia has, which really is why it's such an attractive business for me to look at. We're running NOLs of CAD 1.1 billion, which we can utilize through different ways. One will be utilizing them for acquisitions that we make eventually in Canada and the U.S., also through any other profitable transactions we enter into in the rest of the world.

[Rhys Summerton, Executive Chairman at Aimia]

Rest assured, we will utilize it and it's a real strength of Aimia as a serial acquirer. I think your other question was about the CAD 12.1 million in marketable securities.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

Very scary.

[Rhys Summerton, Executive Chairman at Aimia]

And obviously, we're not going to talk about that. These are investments that we've made and it's a little bit like getting your toes wet with your socks on. They're really preliminary investments in companies that we think are very attractively priced and ones that potentially we would love to own eventually. That very much depends on the price. Or that we're able to acquire those companies. If the share prices rally away from the price that we paid, clearly they're not as attractive as they were. We will reevaluate each time. That's why I say we have enormous flexibility and that's something that we must never lose in Aimia. We must maintain and even enhance the flexibility we have to be able to pursue transactions.

[Rhys Summerton, Executive Chairman at Aimia]

I would caution against trying to work out what Aimia is wanting to do next with the investments that we make because we might swing around and change given price changes. I would say, though, that there are really good opportunities which we are starting to deploy the capital into. I think each one of them, each one of the core ones I'm very excited about. I just hope we can execute on it.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

Okay. Thank you very much. But in essence, I'm not after names. It was more sort of see that you now start to live one of the core parts of the strategy, the underlying investments in undervalued assets.

[Rhys Summerton, Executive Chairman at Aimia]

Absolutely right. Yeah. They're in marketable securities so that's very much the strategy to build stakes without paying premiums. That's really why I caution against trying to work out what we might, may or may not do because we don't want to be paying premiums if we do decide to buy out a company. Investors are way better off being invested in Aimia, I think because that's where the benefit should ultimately flow into. It's not going to flow into the private equity model of 30%-40% premiums on an acquisition.

[Conrad Scheurkogel, Analyst at Goldman Sachs]

Perfect. Thank you. Thank you, Rhys.

[Rhys Summerton, Executive Chairman at Aimia]

Thank you.

[Operator]

There are no further questions at this time. I will now turn the call over to Joe Racanelli. Please continue.

[Joe Racanelli, VP of Investor Relations at Aimia]

Thank you everyone for joining us today. As I mentioned earlier, if you do have any follow-up questions or if we didn't address any issues that you would like for us to expand on, please do reach out to me. We'll make ourselves available. Have a good day, everyone.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.

Participants

Executives

• Joe Racanelli, VP of Investor Relations
• Rhys Summerton, Executive Chairman
• Steven Leonard, President and CFO

Analysts

• Surinder Thind, Analyst at Jefferies
• Rob Byde, Analyst at Zeus Capital
• Conrad Scheurkogel, Analyst at Goldman Sachs