Aimia Inc. (AIM) Earnings Call Transcript & Summary

Good morning, and thank you to everyone to join us, both in person and those connecting via webcast. We sincerely appreciate your presence. My name is Albert Matousek, Head of Investor Relations and Communications at Aimia. On our agenda today, we have presentation from Aimia's executives as well as insightful discussions from the management teams of 4 of our portfolio companies. If you're joining us remotely, the full presentation is available on our website, and you can also follow along through the webcast interface. After each presentation from our portfolio companies, there will be an opportunity for a brief Q&A session. I will host a more comprehensive Q&A segment at the very end. For those on the webcast, you're welcome to submit any questions at any point using the platform. While these questions will only be visible to us here at the company, we kindly request that you log in with your full name, should you wish to submit any questions. A heads up for everyone. Our speakers today may provide forward-looking statements with respect to Aimia and its portfolio companies. These forward-looking statements are based upon our current expectations, beliefs and assumptions and are subject to known and unknown risks and uncertainties. For more details, please refer to the forward-looking and cautionary slides in our various presentations. Additionally, our speakers today may provide non-GAAP financial measures. Please refer to the non-GAAP financial measures slides included in our various presentations. Without further ado, I'm honored to introduce our first presenter, CEO, Phil Mittleman.

Hi, everyone. Welcome to our first Investor Day. We appreciate everyone who came here in person, some of you came long distances to get here. We appreciate that, and welcome to everyone on the webcast. So today, you're going to hear an update from Aimia on our first Investor Day. And more importantly, you're going to hear from our portfolio companies directly. Our CEOs and CFOs are all here in person to speak to you and to answer your questions directly and to explain to you what's going on with these companies directly so that you can share the level of excitement that we have -- that we've been trying to convey to you. And while our stock sits here at a near 52-week low, our excitement level and our confidence in these investments is at a 52-week higher and all-time high. And we hope that by the end of today, you're going to share that feeling. Our key objectives today are, we're going to give a much deeper dive into the value of our companies. We hope that by the end of the day, you're going to understand what these companies are worth. We know it's difficult sometimes to value especially the minority stakes, but you'll be hearing from them directly. And I think you'll share our level of excitement and confidence in them. And we're going to be providing guidance for the first time for some of our companies. And you're going to hear from our recent large acquisitions, the operating businesses, and I think you're going to have a lot more clarity and color and confidence in them as well. You're going to see how we're executing our strategy and seeing early momentum, and we're going to get into a lot of detail there. You're going to see how we're strengthening our corporate governance, our expertise at the Board level, and we are aligning ourselves with investors and trying to resolve the thing that everyone cares about most, which is getting our stock price to close the gap between where it is today and what it's worth, which is significantly higher than it's trading at. And then last but not least, we're talking about capturing and sustaining value. We're going to explain to you how we are doing that at both the minority stakes and our control stakes. Our strategic vision, as we've stated, is to build a portfolio of investments that are going to deliver long-term value for shareholders. We're not here to make a $3 stock a $4 stock or $5 stock. We're here to double, triple, quadruple the value of these investments and have a $30 stock or $40 stock, so that's our goal. Our focus currently is to maximize the value of our portfolio holdings. So obviously, we constantly strive to improve and maximize the value of the things you already own. And we're focused on the future, which is building these 2 verticals. You've seen us acquire possibly adding a third, and we're prioritizing liquidity events at the minority holdings. That doesn't mean we're forcing sales or doing anything that -- with an artificial time horizon. But we are focused on doing what I think shareholders want, which is being able to value our holdings clearly, and that means not having small stakes in companies that maybe they don't have the same information access, and we can't control providing the kind of granularity that you need to value them. So going forward, you'll see less minority stakes, more controlling stakes, bigger controlling stakes and 2 or 3 large holdings. And that's our strategic direction as well as you're going to see companies that you can clearly value. The cash flows are going to be running through our balance sheet. You're going to see them. Clearly, you can be confident in valuing them, and that will reflect in our stock price because you can obviously pay a price that you're confident is a significant discount to what they're worth. This is a little history on the transformation of Aimia. This has actually been a very complex and difficult journey. And one of the main reasons is that when you own a airline loyalty company or your partners in airline, there's only one buyer really, and that's the airline. Airline is a very volatile business. They have to be willing and able to buy your stake and you have to be willing to take the price they're willing to pay. So it's very difficult to navigate through those sales, but we have done, I think, an incredible job of transitioning to where we are today. And just some of the highlights are when I joined the Board, there was a contentious battle with airplane. There was talk of selling it for $1 with the assumption of debt, we end up getting over $500 million for that. We've moved on when we took control of the company and management, we made a lot of significant moves, including merging our loyalty assets into Kognitiv. We had a 20% stake in AirAsia's loyalty program. At the depths of COVID, we made a great transaction with them, whereby they purchased that holding for stock, and we put some cash into a rights offering side-by-side with management, and that's yielded a really exciting investment. That's now a 3% stake in Capital A, the holding company. We then, as recently as last year, late last year, we sold PLM, which is the loyalty company for Aeromexico. Aeromexico going into bankruptcy, making it even more difficult. And in spite of the fact that we were a team of 3 fighting [indiscernible] in bankruptcy. We managed to not only save the airline by using PLM's balance sheet to loan $100 million to Aeromexico when they didn't have a dip financing, but we actually yielded a tremendous outcome, over $500 million in tax free cash, to utilize $130 million of our tax losses. We'll get into more of that later. And then we quickly reinvested a lot of that capital, buying our first 2 large verticals, which was Tufropes and Bozzetto. We quickly thereafter our first tack on for Tufropes, which is called Cortland. We'll get into more detail on that later. But this is all -- just to remind everybody, this happened very -- it feels when your stock at its low, it feels time goes slowly. But this has all happened in 6 to 8 months. So it's been a very rapid transition. And we haven't even owned these companies for 2 full quarters that we've reported. So I think coming -- this coming quarter, for the first time, you're going to see a clean representation of what Aimia owns and the type of cash flows and revenues and EBITDA that's flowing through our balance sheet without any of these onetime charges and all the different things that have been obscuring that value in the past. Our portfolio today is Tufropes and Cortland, which we're going to be rebranding as Cortland Industries. I think we will not be losing any of the brand equity that Tufropes has, but the parent company will be named Cortland Industrial rebranded. It's a universally known name in the business. And so we think that after -- when we bought Tufropes, for some reason, people had a negative take on India. And so you bought an Indian company. In reality, Tufropes is a company that manufactured in India, but over 70% of their sales were outside of India. They're a worldwide company. Cortland is a U.S.-based company. Both of them utilize or will utilize our NOLs or operating losses. We immediately redomicile Tufropes to Canada, where we now run all the exports through Canada. So we get to shelter those that income with our operating losses. And Cortland will allow us to utilize some of our U.S. NOLs, which are significant as well. We acquired the Bozzetto Group, which is a 100-year-old company, a leader in the chemical solutions space, incredibly well managed, great company. They have navigated difficult times incredibly well, as you'll see and hear from them directly. And they too are on the verge of completing their first tack-on acquisition, which is going to provide them both an accretive transaction that we're excited about, but also provide them a new platform, which will allow them to sell into the Americas for the first time in their company's history, which we think is a game changer. And I can tell you they think is a game changer because they put 6% of the money up personally side-by-side Aimia with us in the transaction to underscore their commitment and belief in this -- in what's happening at Bozzetto going forward. Kognitiv is something that many shareholders have written off for debt more than once, and it's become one of the more exciting holdings we have, and I think you're going to be blown away by what they're doing and how they're doing it. They went from a company burning $50 million a year in cash to a company that's on the verge of profitability. And the phone has started ringing with potential acquirers. And it's a much different time than it was a couple of years ago. And Tim and his team have done an incredible job, our new CEO there and CFO sitting here as well, Julia, a fantastic job turning this company around. You'll hear from them as well. Capital A, we touched on. We own a little under 3% of that holding. Stock is hitting new highs. The business is hitting new highs. We did that deal alongside management. They put up a lot of the money with us. And so they put their money where their mouth is, and that's paying off, and we are right to make that bet. Clear Media, a fantastic business. It was difficult timing for us because we invested at the depths of COVID and we thought we were geniuses in terms of the timing. We didn't know that they were going to shut the country for another 2 years for 0 COVID. So that's been a delayed outcome. We feel the same level of confidence we felt before. In some ways, they've strengthen the company during this period as did a lot of companies that endured paying like even Capital A at the depths of COVID, they renegotiated leases. They shed different types of burdens and financial elements that are akin to kind of a prepackaged bankruptcy without having to do that. Clear Media has renegotiated leases. They've shut down unprofitable panels, but we basically have a partnership there with the leading outdoor advertising firm in the world, JCDecaux, jack Ma's Company and Financial, who's obviously strong ties in China and in Asia. And the Chinese government themselves are our partners. So this is something that is going to become a very exciting investment. They're going to digitize these panels, and it's going to go from kind of the 10x multiple that we thought it was due. We paid 5x normalized EBITDA when we bought it to a higher multiple kind of sexy tech play that is backed by some of the top people in the area, and we think has a strong likelihood of being an IPO on the A-share market within a couple of years. TRADE X is doing a lot of unique things. You're going to hear from them today. They had a couple of missteps along the way, hiccups as they grew too fast, acquired too much inventory. They spent the last 6 months refocusing their model into what it is today, which is an inventory-free match what they really should have been doing originally, frankly, which is just matching buyers and sellers into very unique trade corridors that no one else is doing this. So and they're on the verge of some significant transactions that I think you'll all be excited about. We've, -- as I mentioned, we've been strengthening our governance. We added 3 new board members. Kristin is sitting in front of us. She's fantastic. She was the Head of IR at BlackRock, and she's been a great addition to our Board. Linda is fantastic, specializing in international finance. And Tom recently joined just a fantastic all-around operator and board members. So we're strengthening our Board. We continue to actively do so. There'll be more news to come on this front. And we're really excited about the changes that are happening at the Board level as well. So we're going to touch on these in different slides, but we have a disciplined investment criteria. We treat the money like it's our own. We're very careful about what we buy and how we invest. We're very opportunistic. You're going to hear that every investment we've made has been -- it would be difficult for a large entity to do. For example, when we bought Cortland, there were 3 other suiters, large industry players that we're pursuing them. We met them and 30 days later, we closed all cash. And before the competitors knew what it happened, we owned it. So it's very difficult for anyone to be that nimble and quick, but that's the way we are. We're a team of 3 people. And we are with the help of Paladin, who's our partner on these transactions and Eric Hauser, who's here, who's done incredible work on the M&A side. And we're grabbing these companies before people can finish their diligence. We've -- we get in there, we dive in. We spent 20-hour days, and we're very opportunistic in the things we do. And we're also brave when people are scared, we bought Bozzetto. Their fund was shutting down, checkers that own them, and they had to auction that company and the world ended. The debt markets went crazy, raw materials were skyrocketed. The supply chain was in disarray. And we said perfect, let's go. And we went in and we bought it. We paid -- we didn't even have a debt contingency, went in. We committed all cash, and we bought that company. And by the time we had closed, things that already started to normalize. And I can assure you right now that if Bozzetto was for sale today, they would be getting a much higher price than we paid. We have an effective portfolio strategy. We'll get into more detail about that today. But obviously, the proof is in the pudding. And we have a lot of structural advantages. Our company is a holding company structure now, we have significant tax losses, both operating and capital losses. And just for those of you who may not know what that is, operating losses shelter income from our companies and our capital loss is shelter any gains we make in the portfolio. Anywhere in the world, if we sell something, we will shelter with those capital losses. A good example is PLM. Last year, we burned $130 million of our losses to make that a tax retransaction. Had we not done that, shareholders would have paid taxes on $130 million, which is a significant amount of money. This is just kind of the disciplined criteria that we follow. Companies have to have durable economic advantages. We want to make sure that they have survived full economic cycles. We want to have a long track record of that, and we have that in both of the companies we just acquired. We want strong management teams. We're not here to run the companies. We help in every way we can, but we really want a management team that is both capable of running the company, is aligned with us in terms of ownership stakes, upside in the business and obviously, that we trust. We have a lot of growth opportunities at all these companies, both organic and M&A, and you can only do so much organically, but we have seen these companies transform via M&A, and we're going to continue to focus on what is a very fragmented industry for Tufropes. We're the second largest player with 5% of the business. The largest player has 20%. So it's a highly fragmented business, a lot of accretive acquisitions out there. Bozzetto has done incredibly well in the past by doing smart M&A and this deal that we are doing now has been long in the working, but it is transformative to allow them to sell into new markets, especially in the Americas is a game changer for them. And obviously, they agree because they wrote checks personally for as much as they could, and they wanted to invest more, honestly, but we capped it at 6%. We have a permanent capital approach. We don't have an artificial time line. We don't have any gun to our head. We have no debt maturities. We are -- that permanent capitalability is a huge benefit because, for example, if checkers could have waited a year instead of sold Bozzetto when they did, they probably would have gotten 2 or 3 turns higher in terms of the multiple that they got. And there would have been a lot more buyers because they could have waited until the smoke cleared. So that's very important that you can be patient when you want to be. We invest globally. There's a lot of opportunities out there. You never know where they're going to come from. We thought originally, we'd be buying in the U.S. and Canada. We went up originally buying a company that was primarily based in India and then one in Italy did not anticipate that, but those are where the opportunities arose. And we utilize tax losses wherever possible. In the case of Tufropes, we immediately, as I mentioned, redomiciled in Canada, utilizing them there. Bozzetto, we don't use any tax losses other than sheltering gains there with our capital losses. And that's because we had to weigh -- is it better to wait for a company that could utilize these or take advantage of an opportunity for such a discounted price, of such a great company and it weighed heavily towards take the opportunity and buy Bozzetto, which we did. You can see here that Bozzetto and Tufropes in Cortland both check all the boxes. Cortland, as I mentioned, is the first acquisition we did. It's accretive. We paid about CAD 26 million. It allows a lot of opportunities for both companies to cross-sell. The first day that we introduced these companies, and we had a town hall. The first question I got was from a sales at Cortland saying, can I sell these 2,000 products to my customers? And the answer obviously was yes and vice versa. So there's a trend as you're going to hear from both these companies, and you're going to hear tremendous opportunities that are there. This is a textbook acquisition. It's a really exciting one, and we've already seeing the fruits of that bear as we speak and as you'll hear about. We're opportunistic. I mean we look at everything as day 1, what's the best place to put our money today? Is it in the new acquisition? Is it a tuck-in? Is it a buyback? Right now, we're seeing the best opportunities in our tack-ons, but we remain committed to buybacks. I always have. We bought back over 45% of our stock over the past few years. So it's something that we obviously are committed to, but also long-term cash flow and value creation for our shareholders is the most important thing and most likely the biggest creator of value. But we will continue to aggressively buy back our shares when we can. As I mentioned, we've repurchased over 45% of our stock. We utilize the NCIB, which allows us kind of a more nimble and aggressive targeted way to repurchase shares. And in the event that we fully tap that, we would utilize other types of things like I said, a substantial issuer bid, things like that. So on the longer term and hopefully not that longer term once the smoke clears, and we're confident and shareholders see the cash flows that are coming through in a consistent basis, we intend to start a longer-term regular dividend. So that's something that is on the list as well. I think will help narrow the gap also between our share price and our NAV. So one of the things you're going to hear today is not just about our companies, but how do we plan on narrowing that gap? It's unfortunate, but it is the way the world is that people, for some reason, don't want to buy a stock that's low. They think something's wrong with it. They prefer to pay for stocks that are hitting highs and it just makes them feel better. But obviously, it should be the opposite. But I think by the end of today, you realize that there is not only nothing wrong, but our stock is trading at a price that is just inexplicably low. I mentioned we focus on businesses with proven track records. We're not going to hold these forever. We know that shareholders want us to monetize things that we will, I would say, we share a similar view private equity has 3 to 5 years is kind of the likely outcome for some of these larger investments. We are focused on growing these as quickly as we can. And like I said, we're focused on making 2, 3, 4, 5x our money on these. And when you do the math on the equity with some debt on them, that's how you get a stock that's closer to $30 and $3. And that's what we're focusing on. As I mentioned, we're prioritizing liquidity events at the minority holdings. So as companies mature and get to the point where we think we can get really good prices for them, we will. And you'll see that cash reinvested into the larger stakes and into things like buybacks. We've generated over $1.3 billion in the past few years from legacy positions, and we have reinvested a lot of that capital whether it be through acquisitions or buybacks, and we should expect to see more in the coming year or 2, especially from our minority stakes. Each investment we make is a ring-fenced entity. So if you had a disaster at one of the subs, it wouldn't reach the holding company. We only put that at the subsidiary level. So each entity borrows money. And again, that's secured just by the entity itself and doesn't reach beyond that. We're conservative with leverage. Our target is usually 3, maybe at most 4x, but we target 3x. And if we went higher, it would be really for just very accretive opportunities. And things that we are confident would not put that entity in jeopardy. We invest in companies with strong management teams. We don't want to run these companies, but we do provide regular assistance to them. We at least weekly talk to all the management teams. We get reports back not to be intrusive, but to be productive and helpful. We are constantly providing strategic oversight and guidance. We make sure that everything is heading in the right direction. We are very involved in capital allocation decisions, whether it's direct or indirect, it's our money, so -- and to shareholders' money. So make sure that the money is spent on the right thing and something that's going to provide the best return for shareholders. We provide access to new opportunities in combination with our partner, Paladin and we have found many M&A opportunities. Eric at Paladin here has himself brought us Cortland. This was an opportunity we would not have heard of. It wasn't for sale. It wasn't public. It was sold from a public company that was quietly trying to unload it. As I mentioned, with numerous competitors coming after it. So we provide these opportunities, and we make sure that the companies are aligned with us, we're not going to jam something down that there they disagree with. But we have a lot of a laundry list for each company of targets, and you're going to see more of the same going forward. And we provide access to capital, which is very important when -- for example, with Cortland to close in 30 days, and to wire that money in and not have to go to a bank or to raise debt or to go to 32 different committees. And we moved -- we were done with that within 30 days where it closed and made an acquisition that we very quickly heard from other people [indiscernible] we wanted that. Can't believe you guys got that, a great company. So that's an important thing to have access to. And we always do efficient tax structuring. So whether it's the way we structure it in terms of tax treaties or things like that or making sure that we can utilize our NOLs and always, obviously, our capital losses. We talked a little about this, but we are a permanent capital vehicle, no debt at the holdco level. We have perpetual preferred equity, and that's important, especially nowadays as rates skyrocket. Because it's not just about the rate you're paying, it's about when the money is due and the money is never due for us. So that's a very rare thing to have. It's valuable. It's why we don't buy them back, because there's no due date and that pressure can cause you to make business decisions that could be wrong. They could force you to prematurely do things to anticipate those due dates. So it's really nice not to have those very valuable asset for Aimia. And as I mentioned, we have a very sizable tax losses. So we're going to be sheltering a lot of our income on both operating and the capital side. Over $660 million remain. There's $130 million we used last year to repatriate the PLM assets that are valuable for our shareholders, and you should see more of that in the future as well. So we ask ourselves, what are the challenges we're facing. We're still in the early stages of our transformation as much as I get complaints all day about the stock price. I try to remind people that we just sold PLM late last year and got the cash. We just made our first acquisitions a few months ago, and it's a tough market for value stocks in general. I mean you can point fingers all over the place, but we just have to keep -- continue to execute on our strategy. And I think the stock price we'll always follow the value one way or another. It's a question of when and how. I can't tell you many times I've suffered in stocks that I knew were worth triple what they were trading at. And sometimes it happens in a week, sometimes it happens at a month, sometimes you have to wait for 3 years. But when the value comes -- when the value is there, you'll get the stock price. So we're just going to continue to execute on this, and we're not just assuming that the stock will follow. We're doing everything we can to proactively help it follow, but it's most important that we execute on the strategy. People have said it's difficult to value our holdings. So you're going to hear a lot today from companies more than you've ever heard before, especially from a minority stakes. But we're trying to provide you with more KPIs and details for those companies, so you can value them. It's very important in terms of our stock price that you can buy the stock knowing without question what it's worth, at least in your mind and be able to value it because it's both difficult and annoying to just hear it from me all the time. So today, it's going to be refreshing to hear from the CEOs and CFOs directly. And hopefully, that will help you feel the level of confidence that we feel at the company and about these holdings. We're always aligned with shareholders. I mean, we've done nothing with inside or buy stock and bulk of our liquid networks are in the stock, and we obviously are aligned there. But we have to get new investors in the stock. It doesn't take a lot. Our stock is relatively illiquid, especially during good times when people are trying to buy. But at the bottom is usually when the most supply is available. Again, this is the way the world is. And so we are actively recruiting and getting new investors in the stock. And I think you'll see the results of that in the pretty near term. I also think that once you see somebody decide. It could be somebody in this room that says I want to buy a few million shares. And that's all it takes. And next you know people are fighting over stock, there's nothing offered and instead of $3 you're at $5 and it's a whole different program. So we think that will happen, and we're doing everything we can to help that happen. And then we're trying to help in terms of the liquidity of the shares. Right now, we are listed on TSX and we're on the pink sheets in the U.S. In the U.S., we intend to ultimately wind up with the dual listing. But because of [indiscernible] requirements and a lot of complexities there with our new operating businesses, we are in late-stage approval process to uplist to the OTCQB. So it's a step-up -- a significant step-up from the pink sheets, but it's a stepping stone towards a dual listening. These are, as I mentioned, our companies here. And I just -- as though we've touched on them all, and I want you to hear from them directly. I wanted to just give you just a short little blurb on each of these things and how we got them. Tufropes and Cortland, we acquired. Tufropes wasn't for sale. It was a company that our partner Paladin had nurture relationship for a few years. They were talking about buying them at 14x EBITDA. And the lead competitor [indiscernible], trades at 25x EBITDA, and we want to getting it for a little under 10x. But again, that never hit the market. This wasn't an auction. This wasn't something that other private equity firms ever got to see. So that's the kind of thing that we can opportunistically do. Others can't. Bozzetto as I mentioned, was going to be an auction. They put it off because of what was happening in the markets, we swept in and bought that. And it was just an incredible opportunity at the right place at the right time, in the right business, an incredible management team that you'll hear from as well. Kognitiv, people have been very skeptical in Kognitiv and it's not really their fault because we had merged 2 significant cash burning loyalty companies into them when they started and that required a lot of rightsizing and it required a lot of work to get to where they are today. That wasn't entirely they're doing. So they've done an incredible job of getting there. And from a huge cash burner to something that's on the verge of profitability with new products, AI-powered and not just saying that to use the buzzword AI, they really are doing incredible things there. And you'll hear how it works. And what they're doing. But that's something that very few people give any value to. And I think that's a big mistake. Capital A, we think it's worth significantly more than it's trading at, but it is rising. This is the kind of holding that if you had to gauge what would be sold first, this is kind of in the front just because we're not long-term investors in airlines. This is a unique situation. It's a holding company. It's not just an airline. Tony Fernandez is a fantastic CEO, who put his money where his mouth is, put up 30% of the money personally when we did the rights offering. So this is -- it's an opportunistic unique situation, and it's a holding that we think is going to yield even more gains for us than we've already achieved. And also, this will be a tax-free opportunity because we will be selling and utilizing our capital losses when we sell it. Clear Media is delayed. I think that it's -- we're starting to see improvement now. You'll see some -- although they're not here, they did provide us with the video, and you're going to hear some of the financial statistics and how we're starting to see things turn around there. But it is tied to the Chinese economy. So we're kind of a prisoner to that. But I wouldn't bet against them over the country or I wouldn't bet against this investor group. So we think this is going to be a great outcome for EMEA, and it's something that is again being discounted to numbers that don't make any sense. TRADE X, you're going to hear from as well. they have refocused their model, and they're doing a lot of exciting things. And we think they're on the verge of some significant developments that will be game changers for them, and you'll hear a little bit from them about that as well. Now I want you guys to hear from the companies themselves. So Mike [indiscernible] up and introduce them, thank you.

Great. Thanks so much, Phil. Good morning, everyone. My name is Michael Lehmann, I'm President of Aimia. Welcome to our 2023 Investor Day, and thank you so much for your interest in Aimia. We're now going to start hearing from the management teams from a portfolio companies. So let's get to it. First up is Kognitiv who is going to tell us about how they inspire loyalty with world-class global brands. I'd like to welcome Tim Sullivan, Jisun Hahn and Julia Wehmeyer. Welcome, everyone. [Presentation]

Good morning. Kognitiv provides innovative software and services to design, build and manage loyalty. The work that we do with global brands, some of them including Nordstrom, PetSmart, HSBC, Avis Rental Car means that many of you have interacted with our technology already. We design and manage some of the best loyalty programs on the planet. And our technology is underpinned by powerful artificial intelligence and machine learning models that drive optimization and automation. They remove the complexity of managing large global programs that are multi-region, multipartner, multicurrency. The brands we work with continue to partner with us year after year after year because we're able to drive value for them. What we bring to them is not a quick hit revenue promotion. We drive customer lifetime value over many years for them. And because of that, many of our brands that we work with are recognized as leaders in their industry. Some highlights on the company, where our addressable market is global, and it's growing. Forecast to reach $23 billion over the next few years. We have proven product market fit. We have a strong foothold in that market with the global brands that we work with, with incredibly high retention rates, 100% renewal rate in the first half of 2023, which means our core product is sticky. They also stick around a long time. Once we get in and we start adding value, they continue to renew year after year. Our average tenure of our customers is over 9 years. So we have a very strong foundation to build upon and now that we're delivering on an innovative AI machine learning product road map, it's unlocking incredible growth opportunities, both from our current customer base as we upsell and expand our footprint with them, but also attracting new logos into the business. And all of this is being managed by a world-class highly experienced executive management team. And it's starting to have an impact. We've had incredible progress in 2023, as Phil mentioned. In Q2, we closed with $12 million in revenue, and that contributed to our $42 million recurring revenue run rate and growing. And with a new opportunity sales pipeline of $23 million, we will continue to add to that run rate in the coming quarters. On the cost efficiency side of the business, we've made incredible progress with a 48% improvement year-over-year of our EBITDA and an incredible 12-point increase in our gross margin. We're a global company. We have a global footprint. We're headquartered here in Toronto, Canada. We have operations in North America, EMEA and APAC. And we're global because our customers are global. They demand a loyalty provider that can provide global solutions, and this is just a handful of incredible 70-plus blue-chip global brands that we work with. They work with us; a, because we're very good at what we do, and we've been doing it for a while. We know our stuff, but they trust us because we can deliver advanced loyalty at scale. We're currently serving over 28,000 stores in locations with 230 million members. And the advanced technology that we provide for customer segmentation and intelligence that drives highly personalized experiences to those 230 million members, equates to a $20 billion revenue impact for our customers each year. And that's one of the reasons why they're recognized as leaders in their industry. Two of our long-time customers, Nordstrom and PetSmart were named the best loyalty programs in America by Newsweek in 2023. I'm relatively new to this role. I'm just finishing up my ninth month in the CEO role at Kognitiv. And I was attracted to this opportunity for a number of reasons. The company is filled with very talented, committed people, a few who you're going to meet in just a moment. We have great product market fit. We have a blue-chip customer base with enviable renewal rates. But as importantly, based on my background and my experience, I believe that I could add value. I could have an impact here. I've been in technology for my full career almost 3 decades. The past 20 years, I've been focused on B2B enterprise SaaS in sales and marketing leadership roles. And this company had all this great foundational work, it really needed to get back to growth. In my last role, when I joined the C-suite as CRO, over a 3-year period, my team and I increased our annual recurring revenue by 80%, which was instrumental in attracting growth private equity to the business and a majority takeover, at which point I became CEO of the company. And over the next 3 years, we proceeded to double the revenue, both through organic growth and strategic mergers and acquisitions. So very similar to the trajectory that Kognitiv is on and I felt by taking this role, I could have a real impact at the company. Now all of those results were only made possible by having an incredibly strong executive management team. I believe my probably #1 job as CEO is to make sure that we have the right people in the right seats to execute on our plan, and we have an incredible executive management team, world-class. Decades of experience at many of the leading companies in our space and everybody is 100% focused on delivering cost efficiencies, driving EBITDA margin expansion and most importantly, profitable revenue growth. When I started in January, we got this team together, and we got very focused on how do we win and what do we do best? And that is to deliver innovative software and services to design, build and manage loyalty, full stop. Anything that didn't fit that vision we've decided we're not going to do when we've proceeded to take that approach. It resulted in the divestiture of legacy assets, the rationalizing and rightsizing of our cost structure, the implementation of a SaaS operating model, Software-as-a-Service operating model from what was traditionally an agency model at the company. But as importantly, also protecting our mission-critical investments in our AI machine learning-driven product road map and in rebuilding our commercial team and our go-to-market acceleration so we could get the company back to growth. That all started with the recruiting and hiring of an incredible Chief Revenue Officer named Jon Ott. He started with us in May, 20 years' experience in the industry, spent a decade at Salesforce, selling Marketing Cloud and their data management platform. Most recently, who's had a customer data management platform company named Amperity. Incredible guy within 30 days of starting, he had the full North American teams fully staffed with high-performance sellers who followed him to Kognitiv because he'd worked with them before. We also brought over Dena Escobedo to manage our global account management team, and she's done an incredible job of focusing that team on revenue retention and expansion as she's transformed our account management organization. These folks are having an impact already in Q3 alone. We closed a global luxury automobile manufacturer on our entire platform, and we were able to sign on a current customer and a new logo customer to our first launched AI-driven product, PULSE, which you're going to hear about more in just a minute. At the same time, we're focused on protecting our base and expanding our base, 100% renewal rate in the first half of 2023. These are multiyear renewals with price increases, and we have 15 active opportunities within our base to upsell to our AI-native Kognitiv PULSE product. I'm also really happy to announce that today, we are launching the next product in that suite. It's called Ignite. Again, another AI native product, and that will just continue to expand our upsell, cross-sell opportunity within our amazing customer base. So without further ado, I'm going to turn it over to Jisun Hahn. She's our Chief Strategy Officer. She's going to take a few minutes and take you deeper into our platform, and why we're so excited about it and why it's resonating with our customers and with our target market.

Thank you so much, Tim. So excited to be here. And I'm going to take a few minutes right now and talk about the broader market in which we operate, which is essentially the loyalty management market. What's interesting about this industry, now it's been around for a really long time. However, there's a ton of growth and opportunity anticipated within the sector. And if you really sort of think about why that is, it's actually quite simple, right? Brands are always trying to find ways to connect with customers. And oftentimes when brands are looking for ways to connect with customers, what do they look for? They look for loyalty solutions. And essentially, that's what we do. We deliver loyalty solutions. With interesting, however, is I think we're at a very important inflection point within loyalty. For those of you who've been operating in this market, you will know, right, there's a ton of noise in terms of what's worked in the past no longer works for the future. And I think we've been in a very privileged position because we've had a front seat and being able to observe what these challenges are. And we strongly feel that we are in a position to capitalize on the growth that is going to happen within this sector because we have a platform, and I'm going to take you through that shortly, that can really solve the challenges that the market is actually facing, including a lot of our clients. Bottom line, we feel very strongly at Kognitiv that the loyalty market, the way it's operated, has to evolve. And what we mean by that is it can no longer just be about delivering a loyalty program, it has to be about driving loyalty outcomes. And I'm going to take you through exactly what we mean. Before I go a little bit deeper into our suite of products and services in our platform, I think it's important to just to understand the why we exist. We exist because we're essentially here to help brands build deeper relationships with their customers. And how we do that is very simple, and Tim mentioned this, and that's by delivering software and services to design, build and manage loyalty. That is the lever through one singular platform with the suite of software and enablers across 3 core categories: advanced loyalty, data activation and partner collaboration. Now for those of you who may not be as intimate around the -- how you manage the loyalty program or the inner workings of how you design and build one. I'm sure many of you are familiar with the Starbucks Rewards program, right? And many of you would have every day you wake up and you commute to the office, you get your Grande Americano, you earn a few stars and eventually, you have enough to be able to redeem for free one. That is essentially the rules of engagement that you set when you manage a program. And one of our solutions under advanced loyalty does just that. It delivers on a loyalty management program itself. Imagine, if you will, that program owner who is responsible for delivering that program also has at her fingertips a real-time insights and activation tool that can tell her that customer A, let's call them, Stewart, who used to go into Starbucks every single day and buy his Grande Americano with a shot of hazelnut. Suddenly he decided, I need to cut back on caffeine, like this is not working for me, I gotta go decaf. Historically, what a marketer would do, they would work with their data teams, they would negotiate getting the data file pulled. By the time they discovered what that key insight was that Stewart no longer drinking Grande Americano. By the time that marketer got organized and send out those communications, Stewart realized he made a huge mistake. He needs caffeine in his life, and now he's back to drinking Grande Americano. And wondering why is Starbucks sending me these offers for herbal teas makes no sense. I love my caffeine. This is what we have to change, and this is what we mean by redefining loyalty, right? It's going beyond just delivering on these programs, but giving the marketers tools to understand when these consumer behaviors are shifting. And not just understand how they're shifting, but how the needs are going to shift in the future. Enabling all this is the middle layer in our platform, which is cognition, our artificial intelligence and machine learning engine as well as our Data Hub. Now these are -- this is a really important component of our platform. It's the brains, if you will, behind our products. And a lot of organizations are talking about having AI as a part of what they do, it is embedded in what we do. And that is why our products are AI native, as Tim had mentioned. And lastly, for our clients, they need a little bit of extra support. We also have services that help bring some of our technology solutions to life. I'm going to take a second and just dive a little bit deeper into the platform. We have the first all-in-one omni-audience, omni-channel loyalty platform. I'm going to unpack that a little bit. When we say omni-audience, really what that means is all of our tools help our clients go beyond speaking to their best. A lot of brands are really good at that. It's very easy to identify your best customers, it's very easy just to speak to them. Our tools help our clients understand who else to prioritize. It might be harder to find them, but the insights will help them identify where to go. From an omni-channel standpoint, what we're talking about is helping our clients not just activate on those insights within their own channels like e-mail and mobile, but to go beyond their own walls to pay channels like social. We talked a little bit about loyalty management software. The other product that Tim had alluded to that we're really excited to demo for you this afternoon. So hopefully, I'll see you at the booth later on today is Kognitiv Pulse. This is a real-time insights and activation tool that we launched earlier this year. We're really excited about this product and really want to spotlight this for you today because this is a great testament to how we listen to not just what our clients are struggling with, but what we know the market is struggling with. Our clients have been saying to us, and we also have a ton of partners within the industry that speak to brands all the time. And the common statement or the struggle is, look, we have a ton of data, we have many data sources across the organization, but we have no idea how to harvest it in one place, and we have no idea how to leverage it for the right insights to deliver personalized experiences. I am struggling with not just understanding where customers are today and what they're doing, but how those behavior changes shift over time. I can't predict how much revenue is actually at risk if I don't understand how behavior is going to change. And most importantly, and this is something that I've heard for probably the better part of a decade, it's costing me too much to acquire new customers. And I don't really know where to focus. That's why we created Kognitiv Pulse. This tool is self-serve. We put it in the hands of marketers. They can monitor the health of their customer base. They can track how it changes over time. And this is the part that I'm really excited about. It actually predicts where the customer is going to go next. This essentially uncovers opportunities, identifies risks, and this is also the part that I'm very excited about is we then link back those insights to what you should do with those insights and link it back to the predefined business outcomes. And again, ultimately, what this does is it allows a lot of clients to go from incomplete data sets to daily updated records to rule-based decisioning to customer-level modeling, and to go from generic reporting to prescriptive actionable insights. Our new clients can be up and running within 7 days, and they're generating intelligence at their fingertips within 24 hours. And what we're also excited about with this product is it allows marketers to do what they love to do best, right, be creative, be strategic, drive innovation. And bottom line for organizations, that means an increase in revenue, improving customer lifetime value and minimizing churn. So again, please join me this afternoon, and I will show you the product in action. And at this point, I would love to welcome our CFO, Julia Wehmeyer, and she's going to take you through our financials.

Thank you, Jisun. This is very exciting. I'll take you through our financials. So over the last 18 months, as Tim alluded to it, we're focused on rightsizing of our organization, cost containment, efficiencies and process simplification. One of the most important initiatives was divestiture of our non-core assets being travel operations and Total technology businesses. I'm pleased to say that both of these deals closed earlier this year, first one in Q2 and the second one just early in Q3. The divestiture of these assets generated immediate cash proceeds of over $9 million. It cut our EBITDA by $3 million and reduced our head count by 100 employees. All the results that you see on screen that I'll present today are on a continuing basis and do not include the results of our divested assets. So we also focused on stabilizing our revenue from the existing customers. We retain a majority of our customers and renewed contracts for our top 2 clients, both large financial institutions each on a 3-year contract. We signed another large 3-year deal with a leading cannabis business as well. So recurring revenue represents approximately 90% of our total revenues. It includes revenue from our SaaS products, enterprise customers and professional services on long-term contracts. Our strategic focus, as both Jisun and Tim talked about earlier is on growing SaaS ARR. Our projections have SaaS at over 75% of total revenues in 2025 with our total recurring revenues at over 95% in 2025. And so in addition to the divestitures, we executed on a number of rightsizing initiatives, as I mentioned. On a continuing basis, we cut over 20% in our adjusted operating expenses year-over-year in the first half of this year. With that, in Q2, our adjusted EBITDA was 48% better than the same time last year, and we're targeting profitability by the end year. By 2025, we're targeting sustainable EBITDA margin of 15% to 20% based on revenue growth and continuous improvement in our operating efficiencies. Rule of 40 is a goal for long term for our business with revenue growth of 25% and EBITDA margins of 15% to 20%. So this year is a year of a rebuild and laying the foundation for us. At the beginning of the year, we made a decision to take advantage of a lower cost region in Sri Lanka and relocate some of our IT services to Sri Lanka. We set up a new center of excellence there, and we're now well on our way to substantial savings in IT costs. We have already realized $2.9 million in the first 6 months of the year in savings and are targeting $7 million in savings for the full year. As a result of this, we've improved our gross margins considerably. Our adjusted gross margin in Q2 was 62%, which is 12 points better than the same time last year. And for the full year, we're targeting 65% in adjusted gross margin. Over the next couple of years as our revenue mix shifts to more SaaS ARR with higher margins, we're going to expand our margin to 70%. As I mentioned earlier, we made significant progress in our cost structure in the last 18 months. And I mentioned that our OpEx was already 20% better year-over-year. Aside from relocation of IT services, we also simplified our processes and carried out a number of organizational structural changes. All of this resulted in significant savings to our operating model. We're estimating our adjusted OpEx to be 85% of revenue by the end of this year. And it's estimated to fall to 55% of revenues by 2025 on the significant progress of all of these improvements over the last 3 years. And this is all down from 120% just a year ago. So all of this is key to our goal of Rule of 40 by 2025 and beyond. So in summary, we've made a number of foundational accomplishments with substantial savings in our cost structure and head count this year. We've completed the sale of our non-core assets. We've moved our IT services to Sri Lanka, which added double-digit points to our gross margin so far. And we have a new CRO in commercial team that are laser focused on the growing SaaS ARR. Our divestitures brought in over $9 million in cash proceeds this year. However, to achieve our operating plan for the year and to achieve profitability before the end of the year, we are raising more funds. We're currently holding a capital raise for newly created B1 preference shares. So far in the process, we've raised over $4.5 million in cash and converted over $15 million in debentures to equity on the same valuation as the cash raise. These [indiscernible] shares are attractively priced in this current market and would be happy to provide any more information to any interested parties at a later time. And now I'll pass it back to Tim to close this off. Thanks.

Thank you, Julia. Thank you, Jisun. So look, I think you can start to get a sense of why we're so excited about where we are with this company. We have the right team. We have the right products. We have the right plan. We know how we win and we're laser focused on what we do best, adding value to our customer base. Being focused has allowed us to stop anything that does not meet our core vision and our focused strategy, which includes divesting of the legacy assets, but also stopping outdated processes and ways of doing business that don't align to our go-forward strategy. That's all allowed us to rationalize and rightsize our cost structure, while at the same time, most importantly, protecting the investment we made in our future, which is our artificial intelligence and machine learning-driven product road map while also bringing on the right commercial team to sell those products both into our base and into new logo expansion. All of this is happening on top of a very stable and predictable revenue retention from our blue-chip customer base, and we just grow from there. So we've never been more excited about the company. We're excited to be here today. We're proud to be Aimia portfolio company. I want to thank Phil and Mike and Steve for their guidance and leadership as we continue to drive Kognitiv into the future. Thank you for giving us the time to tell you a little bit more about our business.

Thanks so much Tim, Jisun and Julia, that was just wonderful. So we have some time for Q&A after each of our portfolio companies' presentations. So I would like to turn to that now. I'd like to remind everybody, everybody online, if you have a question, please type your question into the text box. One of the colleagues here will get it to us. And anybody with questions from the audience, please raise your hand, and one of our colleagues will bring you the microphone. Please wait for the microphone for it to get to you.

So the first question from online is what does Kognitiv need to do to reach EBITDA positive by the end of this year? Juli, do you want to answer that?

Look, we need to continue delivering on the initiatives that I've spoken about. They're all in flight, and we need to deliver IT services from Sri Lanka and organizational structure changes than already in flight. We also have some revenue growth that's coming that's backed by $23 million in the sales pipeline. And so largely, all of that is already implied to get to EBITDA positive.

Great. Thank you. Question from the audience? .

This is Logan Shu with Jefferies. So you guys have a pretty high renewal rate. And I was just wondering how significant are switching costs for your clients, and how does that impact your ability to win clients that are maybe on other platforms?

Yes, I can take that one. Thank you. A great question. Switching costs are pretty significant within our space. Once you design and roll out in our managing global program, they're fairly complex programs. So we get in there, and we're adding value, driving those programs to expand globally. Some of these programs have tens of millions of members in them. So they're big scale. On the flip side of that, as you mentioned, so that makes it harder to come in and unseat someone. What's so brilliant about our product strategy, and we have an incredible Chief Product Officer, Anthony Wintheiser who's driving our AI road map, is that we're building these lightweight, easy-to-install module or products that sit on top of our established loyalty management product. Now we can be agnostic in that sense. So we have great expansion opportunity. We can go into a customer. We're not coming in saying we have to rip and replace everything that you've already invested in. We are additive, we can come in. We play with all of the tech companies in our space. We have connections to Salesforce, Adobe, [indiscernible] Shopify, we can connect to that. You don't have to take it out. We're just going to add intelligence there. So with a lightweight, lower-cost product, it's a land-and-expand opportunity to come in, show value and then continue to build that relationship over time. So when that loyalty renewal does come up in 3 or 5 years, we're in a great position to be providing more modern tech and a more modern point of view on how they should be addressing the market.

Great. Thanks for that question. Next question from online. As you've spoken today about Kognitiv's innovative products, but revenue remains flat. Can you start -- when will you start to see an acceleration of revenue? And maybe you can talk a little bit about your pipeline?

Sure. We're seeing an acceleration of revenue now. Yes, we have been flat over the past few years. I think I mentioned in my talk, when I came into the opportunity, it's like we have this great team. We have great products. We have great customers, but we're not growing. So job #1 was to get us back into a growth posture. That doesn't happen overnight. We hired a great Chief Revenue Officer. He's hired a great team just because you put a salesperson in a seat doesn't mean revenue flows in the next day. So we will see that continue to ramp over the next quarters. And you saw some of our forecasts for 2024. This was really a foundational rebuilding year for us to get that team in place, which is setting us up for outsized growth in 2024.

Great. Another question online. Can we get a bit more clarity on the capital raise? How much have you raised? I think Julie spoke to that a bit. And has Aimia converted some of his debt to equity and what is the valuation pre-money that you've raised?

Yes. I mean, as Julia said, we've raised over $4.5 million to date. We converted over $15 million in debt, Aimia did convert some of their convertible notes in that process. Look, the shares are attractively priced in this current market. If anybody's been paying attention, it's been kind of a tough year or so for technology companies in this space. The valuation, we don't have a qualifying transaction right now, really, but based on recent comps in our space of what B2B enterprise SaaS companies are trading at and current market conditions, we kind of peg the enterprise value anywhere from $125 million to $175 million. In a healthier market as we hit profitability and our growth curve starts to have an impact, we see that going up significantly in the next 12 to 18 months.

Great. Thank you very much, everyone. Thank you. Thank you very much, Kognitiv. That was terrific. Thanks for kicking it off for us. Next up is our first major acquisition of the year, Global Ropes and Nets leader, Tufropes. I'd like to introduce Jack Wang, Stuart Janke and Brian Pettipas. Next up.

Good morning, everyone. My name is Jack Wang, and I'm the Chief Executive Officer of Tufropes and Cortland. I'm joined by my colleagues, Brian Pettipas, who is our Chief Financial Officer; and Stuart Janke, who is our Chief Commercial Officer. We're here to present the exciting business of Tufropes and Cortland. Have you ever noticed the many applications of ropes and nets in our daily lives. And did you know that synthetic ropes can be stronger than steel. By the end of this presentation, you will know why the ropes and nets industry presents a fantastic opportunity for growth and investment. A quick overview of who we are. Our combined business has extensive market reach serving over 400 customers from world-class facilities in India and North America. We boast a diverse product range, targeting applications in growing sectors such as marine and shipping, offshore energy and fishing and aquaculture. We're well positioned as market leaders to deliver strong financials and healthy cash flows. When we study the industry, we found that it was fragmented with regionalized players, and we saw that an opportunity existed to create a strong global leader. First, we acquired 5 modern, highly automated facilities in India, and then we added one of the industry's premier brand names, Cortland. Leveraging this multinational platform, we're targeting strong growth in several end markets driven by secular tailwinds. The team is working to develop innovative products and enhance processes with the aim to provide excellent value proposition with great customer service. We're confident that we will accelerate the growth and deliver attractive returns. In our Tufropes business, we have 5 highly efficient facilities certified by global accreditation bodies, such as ISO and DNV. We supply world-class product to customers in over 70 countries, and as a testament -- and we have a long track record of customer-driven product developments. As a testament to our capabilities, we have a large proportion of our customers have been with us for more than 10 years. In our facilities, we have the ability to continue to grow as we have more than 30% capacity that we'll be able to leverage to customers around the world as well as for our Cortland business. Moving on to our Cortland business. This is an opportunistic acquisition, which is a perfect fit for Tufropes, and it is consistent with Aimia's value creation strategy. We completed the acquisition in July, and we're making good progress in integrating the business. And the Cortland business not only brings a leading brand renowned for technical leadership and engineering expertise, it also brings us an enthusiastic team across 2 manufacturing sites in the U.S. Together, Tufropes and Cortland make a fantastic combination, in terms of people, product and capabilities. Tufropes brings quality and efficiency at scale, while Cortland brings premium performance for the most demanding applications. We are perfectly positioned for exponential growth across multiple markets globally. To provide a view of our global reach from our headquarters here in Toronto, our senior management team oversees 7 facilities in the United States and India. Our geographic spread is strategically positioned to serve customers all over the world. We have strong customer relationships across the key markets of North and South America, Europe, across Asia and into Oceania. Our team possesses solid supply chain experience to deliver goods to every region. And we believe there are still significant share to capture in the primary markets of the Americas, Europe and Asia. To give you a perspective on the size of the global ropes market, it is a $12 billion industry consisting of steel wire and synthetics. And looking specifically at the global synthetic ropes market, it is a $2 billion segment consisting of standard fiber and high-performance fiber ropes. Our combined business offers the full range of synthetic products targeting specific high-value end markets, and we are well poised to substantially accelerate growth in the years to come. So why do many customers choose synthetic ropes over traditional steel wire? While on the same weight basis, it is 7x to 9x stronger. And it also provides improved safety and increased durability given proper usage and inspection procedures. It also offers additional efficiencies and labor savings by being lightweight and easy to handle. All of this leading to a lower total cost of ownership. And we believe that high-performance ropes will continue to display steel wire across a number of applications and further grow its share, and we are very well positioned as global leaders to capitalize on this trend. As part of our growth strategy, we're particularly excited to target specific end markets projected to grow significantly. In Marine & Shipping rising global trade is expected to drive underlying demand. In aquaculture, increasing population, and higher demand for sustainable food sources are being served through fish farming. While in offshore energy, traditional oil and gas industry is pivoting to renewable energy with a lot of government support and significant investment from private sectors. With ropes and nets being used across all of these exciting sectors, we believe successful execution will accelerate the growth at Tufropes and Cortland. Now I'll hand over to Stuart to provide more details on end markets as well as the innovations.

Great. Thank you, Jack. Good morning. Marine & Shipping is an extremely attractive market, particularly for the combined business of Tufropes and Cortland. The industry continues to evolve increasing cargo capacity volumes to meet the global demand. Vessels now need larger and more technically suitable high-performance ropes to safely more the vessels as well as maneuver them in and out of the busy ports. LNG and other fuel carriers have set the bar in terms of safety, which include detailed rope specifications as well as inspection and retirement criteria. Tufropes sells Class 1 ropes, along with the relevant certifications into the mooring segment of this market, and Cortland sells high-performance ropes into the tugging side of the market. What is really exciting about this combination is that we now have the combined portfolio of certifications and track record to expand the business in this market. The next exciting market for us is within the Offshore Energy segment and focuses on offshore wind. The global momentum focused on developing floating offshore wind has certainly picked up over the last several years. To meet global targets for renewable energy generation, floating wind has to move to deeper waters for larger scale. Since these structures will be floating instead of fixed to the sea floor, it presents significant opportunities for us. Synthetic products will be needed to tow and transport the structures to the field. Ropes will also be needed to assemble the structures onshore, offshore or in place. Ropes will also be needed to secure the power cables from the turbines that run down to the sea floor to the power substations. And here's where the opportunity really starts to get big. Each of these structures are going to need to be more to the seafood, which presents a very large opportunity for synthetic marine ropes. All of these applications will be able to utilize Cortland's experience in both oil and gas and offshore wind along with Tufropes providing scale and access to global markets, which was previously difficult for Cortland to serve. To give a sense of the scale of the mooring line opportunity, what this would look like to achieve 46 gigawatts of electricity by 2035. If we use an estimated water depth or an average water depth of about 60 meters for each wind turbine, and we estimate the number and size of high-performance mooring ropes that would be required for each of these turbines. We get a total market value of about -- total volume of about 4.6 million meters of rope that would be needed to moor these turbines, which has a market value of USD 140 million to USD 180 million. This is another opportunity to leverage Tufropes scale and Cortland's experience to capture this market share, not only with the mooring lines, but all of the ancillary synthetic products that will be required for this market. In addition, we're fortunate enough to have a Board member who has extensive mooring experience in the oil and gas industry. He's now currently the CEO of a Floating Wind Technology company and is helping us navigate entrance into this really exciting market. Turning from transportation and energy, we now look to aquaculture and sustainable food supply that's going to be needed to meet the growing demand. Clearly, global consumption of fish is growing. Everywhere you look, you see salmon in restaurants at the grocery stores, whether it's [indiscernible], smoked salmon, can salmon or sushi, even though fish farming has been around for a while, technology continues to adapt to overcome the challenges associated with this activity to improve both fish quality and output. For us, improvements in netting are related to materials and construction. These improvements help the cages withstand changing -- withstand the changing ocean conditions of both above and below the sea surface, particularly these cages go deeper. High-performance fibers used in the nets help to repel predators and other damaging organisms as well as protect the fish and minimize damage to the fish as they come into contact with the nets. Looking at the graphic here, you can see this will give you a good idea of how much of our product goes into a typical aquaculture cage. From the suspension ropes, to the mooring ropes, to the sea lice nets as well as the bird nets. Each one of these nets has a specific function which requires different materials and different constructions. Bringing in the use of high-performance materials in combination with new partners and channels into this market provide great opportunities to both double revenues and allow for EBITDA expansion. As we look at the market to achieve this growth, we're going to be focusing our areas in the areas where high-volume aquaculture markets are. These are going to include the major salmon producing countries of Norway, Scotland, Chile and Canada, which represent over 85% of the global salmon production. In addition, we'll be focusing our areas in the Mediterranean region were most fish are either going to be sea bream or sea bass. And this is also a market that we currently serve with our existing netting products. We're well known in the industry for our quality and service and are working on opportunities to improve our position, taking advantage of the fragmentation that exists in the market. We're already in discussions to establish partnerships with multiple system integrators. These are going to be companies who design and make the complete cage systems for their own farms or sell them to other farmers. We are looking to execute this leveraging regional resources as well as the technical capabilities of the newly combined businesses. Moving from markets to innovation and what this means for the combined business. Along with a 40-year history, Cortland brings an extremely experienced technical team with a deep understanding of fiber technology as well as end-user applications. When it comes to high-performance products, we have developed a Plasma 12 x 12 high-performance rope, which utilizes a fairly unique manufacturing process. This is easily identifiable by our purple color and has set industry standards for high-performance ropes. We're also the only company to a patented a rope, which has overcome the challenges of switching from steel to synthetic and is operating in 3,000 meters of water depth on a regular basis. This rope has been actively used in Brazil allowing them to be able to do deepwater construction for over 10 years. Part of our capability also lies in designing hooks and other hardware that interface well with our synthetic products. This allows us to provide highly technical solutions that allow our customers to overcome unique operational challenges, particularly subsea. Accurately determining the condition of a synthetic rope has been the single most sought-after technology for end users in applications ranging from utility constructions to vessel mooring. This can be achieved through multiple means, which include digital sensors, which monitor both the elongation and/or compression and relay data back to the end users indicating usage and wear. In addition, proprietary inspection technology using cameras, physical inspections, testing, help develop AI that provides information on ropes condition and make sure the information is easily accessible via applications or other technical interfaces. Our teams are working to help implement this technology together with some of our partners. In addition, Cortland has developed IP that accurately determines the health of a high-performance rope at any point in its length and it can be done in real time. This is the type of technical capability that with investment, scale and expanded access to markets has the potential to provide significant organic growth in our targeted markets. Jack?

Thanks, Stuart. All of the aforementioned strengths come together to provide strong value proposition. In parallel, with elevating the customer experience above our competition, we are well poised for growth, both organically and strategically in this fragmented industry. Turning to financials. We have successfully integrated the Tufropes business. Tufropes has a long history of stable profitability and demonstrated resilience through challenging periods such as the 2008 financial crisis and most recently through COVID. We are on track to delivering a strong second half in 2023. And going forward, we're aiming to achieve over 20% EBITDA from executing our growth strategy. At this point, we're still integrating the Cortland business, and we have not prepared consolidated financials at this time. I would like to highlight that Cortland did not receive much attention from the prior ownership. And we saw an opportunity to buy a non-core underappreciated business from a large corporation. And we will be giving it the full attention and make investments to unlock its full value as a key piece of our global platform. In summary, we are very positive about the growth prospects and we're confident on our ability to deliver. The team will be working hard to exponentially grow this business to at least double the EBITDA as well as add on accretive acquisitions to increase shareholder value. Thank you very much. And for those who are attending in person, I'd invite you to go over to our booth to really touch and feel our products. Thanks.

Thank you very much, Jack, Brian. Stuart, that was terrific. Again, we have questions. Time for some Q&A. Anyone in the audience, please raise your hand. I know we have a few questions that have been sent in online, so we'll start there.

What do you expect to extract in terms of financial impact related to synergies with Cortland, and can you provide any examples of the synergies that you're seeing, expense, top line, you name it.

I'll ask Brian as well as Stuart to expand on operations as well as the sales side synergies that we have identified.

Sure. I'll let Stuart handle the sales side of it. But I think on the operations side, I mean, it is still early days for us, and we're still putting our plans together and quantifying kind of the impact of those. But in terms of areas that we have identified, I think a key one for us is combined raw material sourcing. This would be in terms of access to certain kinds of materials and fiber we're looking for use in our production, availability by having more than one vendor supplying us and then obviously in terms of pricing and terms. So that's a really important one for us that we're quite focused on at the moment. Another operational item, I suppose, would be for Cortland to have access to expanded fabrication capacity and capabilities. Just a really quick example there would be -- there's a product that we make in India called Baylor Twine. This is something that Cortland, if they required that as an input in their process in the past. Typically, they would buy that from a third party. But now that we've got access to the excess capacity in India, is something that we can provide to Cortland at a much lower cost. Then I think in terms of back-office functions, certainly, we do think that there are some synergies to be had in the typical areas you'd expect finance, IT, legal and HR, but perhaps for us, I think and the team on the stage here, one of the more exciting things is being able to bring together the R&D teams from both of these businesses and together already, we've had some meetings kind of run by Stuart actually. So I don't mean to steal your thunder there. But they've come up with some really exciting ideas. And just with different backgrounds and different levels or areas of expertise, I think that we've got a lot of very exciting new product innovations under development and expect to continue with that. So with that, Stuart, if you want to talk about the sales side.

Sure, on the sales side, there's actually quite a few opportunities for us to work through synergies. As Phil mentioned, literally on day 1 of the integration, our top marine salesman was ready to sell every item that Tufropes makes out of India into the market. So we certainly have opportunities there on the cross-selling side to add Tufropes products to the Cortland products in certain markets and actually reengage and win back some business that we may have lost from U.S. manufacturing with some of the Indian manufactured products. In addition, we've also got an opportunity to leverage some of the sales channels from India with the Cortland products into the international markets that have been fairly hard for us to serve just as Cortland on our own. The other side is there's some quick wins that we've identified, which is really starting to manufacture some of these products for Cortland branded products out of India. So the list is quite extensive and continues to grow every time we have a discussion and talk to some of our customers about what it is that we want to do. But these are the ones that we really identified as some early on pieces.

Great. Thank you, guys. A question from the audience.

Yes, Brian Morrison, TD. Two operational questions, maybe 2 financial questions. So does Cortland have an installed base in the deepwater wind market right now? And maybe secondly, in the aquaculture market, what percentage of the concentrated customer base do you currently have relationships with?

So maybe I'll answer the first one. Cortland doesn't currently sell to an offshore wind company. However, we have extensive experience in the oil and gas industry, which a lot of these capabilities extend over to and we're in discussions with a couple of the offshore wind energy providers. A lot of them are still sort of testing their platforms, rolling out their designs, improving their designs, but we're definitely working and discussing developments with them. And sorry, second -- your second question?

Just in terms of the aquaculture market. It says it's very concentrated. I'm wondering what percentage of the top 10 customers you currently have relationships with?

Yes. So in terms of the top 10 customers, we work with our partners to access -- to sell to these end customers, the people who actually farm the fish. And I would say that through our partners, we have access to more than 6 or 7 of these top fish farmers that operate not only in Norway and the North Sea, but also globally, for example, down in Chile as well as in the Mediterranean.

And then maybe just on the financial side. In terms of your free cash flow, will this all be kept in-house for capital allocation? Or will any of it be repatriated back to Aimia? And then secondly, where do you stand in the process of placing leverage upon the balance sheet?

I'm sorry, what was the second part of the question?

Yes, I'll start with that one. So we think -- and we've always thought that this is a highly financeable transaction. We've got a great story here. Hopefully, you'll agree with that after seeing the presentation today. We've got strong financials. It's a decent-sized business. It's got good margins. We've got a new professional management team in place. And so we would expect to be able to achieve at least a 3x EBITDA leveraging on this business, and that's what we'd be looking for. I think -- I hope I'm not speaking out of turn fill here, but I think earlier this year, the activist shareholder actions that were taking place made some people nervous. I think lenders want to know who the actual sponsor is, at the end of the day, the owner behind this. And I think if we're able to put that behind us, we'll be right back in the market looking to leverage the business. .

Yes. And for the first part, I think that's probably more appropriate for when -- the Aimia senior team when they come on to answer questions later on.

I can get a little bit to that. For the most part, the cash flow and free cash flow is going to remain at the subsidiary levels to grow. We see a tremendous amount of synergies. We see a lot of pipeline with regard to accretive acquisitions. So the cash flow is going to stay there for the time being. Another question in the back, please?

In Phil's presentation here, I think it's on Slide 20, it as Tufropes, exports rerouted through Canada enables use of Canadian tax losses. It seems rather awkward way to be running your shipments. Can you explain that?

Yes. So Tufropes, exports about 70% of our revenue from India. So a lot of those transactions that was previously invoiced from India, we have simply set up the invoicing through our Canadian entity and converted many -- all of our international customers over to doing business directly with our Canadian entity rather than through our Indian subsidiary.

So essentially, what we've done is we've redomiciled the management of Tufropes to Canada. We're running with the executive team within Canada. We have the sales force concentrated there and globally. So we're near-shoring our sales and marketing folks to exactly where are the lifting in the aquamarine netting and rope customers are. And we're keeping our manufacturing in Anacortes, Washington, Houston, Texas, with regard to Cortland and the 5 facilities within India. So you can think about it as manufacturing in India and the operations and the executive management team within Canada. And that enables us to utilize some of our tax losses. I think one more question online, I can see. Can you explain how synthetic ropes and nets have a positive ESG impact?

Yes. So synthetic ropes and nets have a distinct advantage of being much lighter weight and easy to handle, as I have highlighted in the presentation, and this lighter weight in terms of either marine vessels or any of the applications that carry these ropes and utilize these roles for lifting or for any of these -- any of the connection purposes, essentially just by the fact that we are utilizing less energy and thereby less -- a lower carbon footprint to carry and to utilize these ropes. We end up with a much lower -- much better and lower an ESG impact.

Great. Any other questions? Wonderful. Thank you very much. We're now going to take a slight break. We're going to pause here. We're going to take, I think, a 10-minute break. So we're going to come back at 10:50. For those that are joining in person, we encourage you to speak with the portfolio companies in the adjacent room where they're demonstrating many of their products. And those of you dialing in will begin at 10:50. Thanks very much.

Good morning again, everyone, and welcome back from break. 2 of our portfolio companies were not able to be with us today in person, Clear Media and Capital A, but they were gracious enough to put together some videos for us that help illustrate the value at each company. Clear Media operates the most extensive bus shelter advertising network in all of Mainland China. The company has over 70,000 advertising panels covering 22 of the largest cities in China. They have digitized almost 600 of these panels to date. And as the Chinese economy regains its footing, the company will continue on its digitization plan. While Zero-COVID has certainly put a damper on the Chinese economy, Clear Media continues to report improving revenue both year-over-year and sequentially. As many as you will know, the southeastern part of China accounts for 50% of the land mass, but it represents an amazing 95% of the population in the GDP. And this is exactly where virtually all of Clear Media's advertising panels are located. Further illustrating Clear Media's dramatic footprint. This is the list of the largest cities in China. As you see, they have the most dominant market share of each of these cities, ranging from 54% in Shenzhen to 100% in Shanghai and Nanjing. Clear Media has a long history of substantial growth in panels, revenue and cash flow. Even during the past 2 years, as the country was marred by COVID and COVID-related shutdowns, the number of advertising panels were able to increase from 58,000 to 70,000, an increase of 20%. A core tenet of our investment thesis is the conversion of many of these panels to digital panels that you can see on the right-hand part of your screen. Digital panels generate considerably greater value per panel, often over 2x revenue and a substantial jump in EBITDA margin. The company's digital panels have increased from 150 at the first time of our investment to 600 today. Let's pause there and see what the world looks like as the company continues on its digitization plan. [Presentation]

We continue to see a tremendous amount of value at Clear Media, and we remain highly focused on the continued digitization plan of their panel portfolio. The transformation from Aimia Loyalty to Aimia Holding company wouldn't be complete without a discussion of Capital A. The Holding company formerly known as AirAsia. When we first arrived at Aimia about 3 years ago, Aimia owns 20% of Capital A's loyalty program, Big Life. The company was growing nicely, but we were a bit trapped. We owned a minority stake in a subsidiary of a holding company. We had few shareholder rights, and we felt that we had an even smaller probability for a value crystallizing event. But along with COVID, came an opportunity for us to help recapitalize and revitalize AirAsia through a combination of new equity and by contributing our ownership stake in Big Life for a 3% position in the public shares of Capital A. This is a terrific transaction that put us in a strong position to win in the future. Fast forward a bit in all 4 of Capital A's businesses are thriving. AirAsia, the aviation business is Southeast Asia's #1 airline by market share. They recently won the award for world's best low-cost airline for the 14th year in a row, which is just amazing. This quarter's revenue was 95% of pre-COVID levels, and they were able to accomplish this by flying only 70% of their planes. And as travel is stormed back, they're finally starting to see the light at the end of the tunnel, and they now have a plan to get all of their planes back into service. Within Aviation Services, ADE is its maintenance repair business in Santen, it's food catering arm. Each are having record years, showing growth of over 100% year-over-year and a very healthy 24% EBITDA margin. ADE also recently raised outside financing of USD 100 million to dramatically expand its MRO business. Maintenance repair is a terrific business, very sticky, great customers, and we're very much looking forward to the substantial expansion. Teleport, its logistics and cargo business is now #1 in Southeastern Asian cargo shipments with a 15% market share. This is up from just 2% 2 years ago. And Move is Capital A's digital offering, which includes its Super App, which enables cross-selling of things like flights and hotels, food and travel and BigPay, their FinTech app, which enables banking all across their spectrum. Lastly, we anticipate that Capital A is working with its long-haul airline partner, AirAsia X, which it owns 13% of and maybe evaluating a combination of these 2 aviation businesses. Before we turn to the video, just note that the numbers used in the video are from Q1. Now let's see what they have to say. [Presentation]

As you can see, Capital A is no longer just an airline. It has grown into a dynamic investment holding company. And with that, let's get back to hearing from our portfolio companies. Next up, we're going to hear about the world of automotive trading. I'm very pleased to announce Eric Gosselin, CEO of TRADE X; Eric Wells, Chief Sales Officer are here to talk to us. Thanks very much. Oh, I'm sorry, Brent Sawadsky, the CFO, is also here.

All right. Thank you, everybody, for coming to the Aimia Investor Day, and thank you, Aimia's team for us to present TRADE X. We're super excited to be here. So first of all, I'll go over the structure, the TRADE X structure. So for a TRADE X group of companies, first of all, there's TRADE X, it's a global trading company. There's also Techlantic. Techlantic is a pioneer Canadian enterprise who facilitate all the transactions that TRADE X is doing. It can be logistics, finance, cash letter of credit. And there's Wholesale Express. Wholesale Express is auction platform, mainly operate in Maritimes, Quebec and Ontario. So here's the revenue breakdown by company. So you will see in 2020 and '21, there is no revenue almost for Wholesale Express and Techlantic, because they have been acquired late 2021. And you can see the revenue decrease from year-end because we change our business model to really focus on profit and revenue. So we decided to pivot -- do a strategic pivot with TRADE X. So we decided to sell Wholesale Express, and it's expected to close by Q4 2023. So the transaction, it's a $40 million sale. So there's a $30 million in cash, and $10 million in VTB and noncash consideration. So for TRADE X, it's a really nice return because there's a 25% return on the sale of this asset. So who we are. First of all, there's Ryan Davidson, who is the founder. He would love to be here, but there's an important meeting that he cannot miss for a big partnership that we are working on. So Ryan, as was doing those transactions from Canada to China, and the idea was to create a platform that can support all those corridors, but on a scale. So that's why it creates a TRADE X. So for me, I'm Eric Gosselin. I'm the Founder of Wholesale Express, I started from scratch in 2012, expanded and sold it to TRADE X in 2021. I moved from Wholesale Express to TRADE X in 2022 in July as VP Business Development. I took on the operation in January '23, became the CEO of TRADE X in March and now since June, I'm the CEO of TRADE X. So Eric, if you want to introduce yourself?

Thanks, Eric. Good morning. I'm Eric Wells, I'm the Chief Sales Officer at TRADE X, I have 25 years of experience in the automotive industry. I have spent 15 years at Enterprise Rent-A-Car, EHI Holdings. And then I was at Copart for 8 years, another global company, much like Enterprise and I was part of their senior leadership team for Canada. I came to TRADE X just under 2 years ago, and I started as the VP of Global Corporate Sales were really my primary focus was on opening up Caribbean market with rental car companies, dealers, et cetera, and became the Chief Sales Officer in April of 2023. Introduce Brent?

Good morning, everybody. My name is Brent Sawadsky. I am with TRADE X for approximately 1 year. My background is in automotive, retail, automotive, structured finance, [indiscernible] tax consulting and non-prime lending. Those pieces all add up quite nicely to support the TRADE X team and help them move forward with their new endeavors.

Thanks, Brent. So we'll take a look at TRADE X at a glance. We are the first global cross-border B2B automotive marketplace. So really, we're connecting buyers and sellers, so buyers that are in an underserved market to sellers that would have surplus of inventory. And we're also able to solve the complexities of this type of trade, cross-border trade in a seamless process. So we're able to operate in a home currency. We break down the trust issues that may exist there as well as language restrictions.

And why TRADE X exists, it's mainly to secure the transaction because we're doing cross-border transactions. So for example, you have a buyer in Africa and you have a seller in Canada, the buyer in Africa doesn't want to send his money in Canada without knowing who the seller is. So all the buyers and all the sellers are dealing with TRADE X and we secured their money handling logistics and make sure that we have a secured transaction.

So take you through some company milestones for us. In 2018, we were founded by Ryan Davidson. We went through a $3 million seed round, 2019 transactions we're starting through beta testing. 2020 was an important year because we opened up our Canada to U.S. corridor. In 2021, $25 million in convertible notes as well as $45 million in Series A funding open up another couple of corridors. 2 major events that occurred in 2021 was the acquisition of Techlantic and also the acquisition of Wholesale Express. In 2022, U.S. -- sorry, $12 million in Series B funding as well as $9 million in convertible notes, continue to expand globally, opening up new corridors. And then in 2023, we focused a little bit more on the Caribbean market, just with our relationships with rental car as well as some of the dealers there. And also Wholesale Express is expected to be sold or will be sold. So our global reach, this is a great illustration of the countries we operate in and do business in. It's really represents import, export or demand in supply countries. We're able to service these countries and the dealers, rental car companies, et cetera, that are in them through right-hand drive and left-hand drive opportunities. So really, some markets themselves could be a supply country. They could also be a demand country. But we see that really in Canada and U.S. and the UAE where we see both the supply and demand being in those countries. We have 3 specific target audiences. Retail and automotive dealers, that would be a franchise dealer, independent dealer, online retailer. We have another institutional consignment, which would be rental car companies, OEMs, original equipment manufacturers like Stellantis, Ford, GM, some of the import mix as well and then fleet and leasing companies. We utilize auction and Wholesale platforms to not only procure cars in certain situations, but also sell some cars.

And if I can add something on it, because we have our footprint globally, we start dealing with government. And the government trust us. We've been there for so many years. And you can see later in the slide that we have already MOU signed with government, so that's a really good target for us. And in the future, we'll keep going after government contract.

Yes. So we provide a full inventory -- our full solution, full circle solution inventory. We're maximizing pricing by moving vehicles that are surplus in one country into another country that's underserved, trying to minimize the loss of countries that have surplus of vehicles. So we're not creating a saturation point there. We're moving those vehicles to underserved countries. We're increasing the turnover. So end-of-cycle inventory, preserve residual values in that source market, and then just automotive sourcing overall. Platform capabilities for us. We have the TRADE X brain. Really, that is helping us -- it's run really through machine learning and AI-driven technology. And so what that's doing is that is allowing us arbitrage opportunities that exist through filters, previous procurement activities, and we're able to ensure that there's a secure trading environment in there. The TRADE X marketplace is really what we're using to connect buyers and sellers. Again, we do provide some financial support in the event that a seller or a buyer needs help just dropping a deposit and then we would finance the rest of the money and then collect that 80% remaining through financial support. So getting into our business model, our original model is on the left side of my screen. And really what we were doing in our original model is we were selling vehicles on speculative -- buying vehicles on speculation. So they didn't have a home. We were buying distressed inventory if were presented with opportunities to buy vehicles in large quantities, we are taking advantage of that. We're using that inventory to open up new markets internationally and what that would be as a DDP type model, which is delivered duty paid. So we would procure the car. We would then export the car. We would import the car. We keep the car at a warehouse that would be one of our entities, and then we would sell the car. So the car wasn't actually sold when we were buying it. And what we were able to do is really expand internationally using that model. However, it really -- we're only really able to do a minimum 6% take per rate per transaction. On our revamped model, which is our model that we've just pivoted to, is that any car that we're buying is going to be presold. And so it's more of a CIF model, which means that it's cost insurance and freight. So we're eliminating that overhead expenditure of having an entity in a country and having 10s of 20s of support staff in that entity, whether it be legal, accounting, territory managers. And we're able to then use one market expert, a territory account manager in that market that could go in effectively go door-to-door to dealers, rental car companies, we then utilize a centralized inside sales team. The inside sales team is then creating more stickiness with that customer and being able to really [ susate ] what they're looking for and paint the picture from an inventory standpoint. And that's what would generate an instant request on our end so that we could go out, use the brain to identify arbitrage opportunities in order to buy a car, help control our profitability and then sell the car essentially to the end user. So using a fully offline sales approach as well as what we're doing is we're taking a 20% deposit from that buyer and then we're financing the remaining 80%, shipping the car, that remaining 80% is paid 10 days before the vehicle arrives at the port. So in North America, when we're doing a transaction within North America, it's a 7% minimum return, gross profit. And then when we're in our global corridors, we're using a 10% minimum return.

And if I can add something on the original model, during COVID, it makes sense to buy inventory because the demand was super high and the supply was super low. So during the time that you buy the inventory, move it to the country, your inventory was gaining in value. But in the market like last year when everything has changed, that the demand is lower and the supply is higher all the inventory that you support lost in value. So a lot of business lost money on their inventory. So that's why we need to change our model to really focus on presale and not supporting any inventory moving forward.

So these are 4 great examples of arbitrage opportunities that were presented, where we were able to take advantage of the situation to control the profitability of it. Using a market that was identified through an instant request. We found a seller, we were able to buy the car and actually hit home runs on these ones.

And how we can define arbitrage is quite simple because as a buyer, even if you're buying from U.S. or Africa or Europe, you always base your price on MMR with the U.S. market. And the brain when you have an instant request, the brain will tell you, for this type of car, you need to buy this car in, for example, in South Korea. And on the buy side, it's all based on MMR. And on the seller side, the brain will tell you where to buy those cars as cheap as possible to bring more revenue into TRADE X.

So a typical transaction journey would be a seller connecting with a buyer. And so this is where an instrument request would help us identify the seller, find the car, we would make sure that we had a condition report for it to eliminate any issues on the back end. It's going to go through if there's any homologation processes that are involved to make it right for that market for admissibility standards, connect with the buying dealer confirm it. We're going to do a 20% deposit. If they need that, they can, of course, pay upfront if they wanted to, but we take a 20% deposit with finance rate and then we collect that other 80% before the vehicle arrives there. We prepped the vehicle for export. We have an extremely amazing logistics team that's able to handle licensing requirements, homologation as well as getting the vehicle prep to ship. When it's being prepped for import, we're supplying the buyer with any of the important documents that they would need to clear the car at their port and then they're paying us the 10 days prior to that arriving at port. So we're not clearing the car. As we mentioned before, we're able to, in the revamped model, eliminate any of that overhead expenditure and just have one territory account manager who's familiar with the market, going to dealers hand-to-hand combat. Signing the dealer up or the rental car company, and then we have the inside sales team helping to build the stickiness, generate an instant request that starts the whole process with the selling dealer and connecting the buying dealer. KYC. This is an important, Know Your Customer. It's an important part of our -- when we're uploading or onboarding a dealer or a rental car company. We want to make sure that we're screening them. We're getting them to upload documents. And then this is helping to protect us against corruption, anything that would be -- that would open up to illegal activities. And not only do we screen them, but we're continually checking in the background. So if there is something that pops up down the road, we're able to circle back with that customer and deal with it.

So we did some analysis just to make it clear. Because there's a lot of people who ask me, so you guys are like Carvana. And I just want to show you on the screen that Carvana is dealing with consumer and TRADE X, is only B2B. It's a retailer. So they are buying inventory. And on our new model, there's no inventory that we need to support. There's a KYC instant request, so it's a totally different thing. But we just want to make sure that you understand what TRADE X is doing. And there's a AutoOne group. It's a platform in Europe. And they're not dealing with instant requests. They're selling to consumer and they're dealing only with left-hand drive. So as you can see, TRADE X is handling everything from start to the end. It's a complete service.

So there's some unique capabilities and relationships that exist through our ability to open up new international markets. And so what we're really good at on the back end or on the front end is the licensing requirements, our ability to ship vehicles, homologation matching vehicles to criteria, knowing admissibility of certain countries because it may be one thing to identify a buyer and seller, it's a whole other thing to be able to get the car that would meet the miscibility requirements of that country. So as we evolve and continue to grow in different markets globally, we're using relationships that are already established with auto dealers, manufacturers, national and local governments, which we've been invited to RFP on, transportation companies, again, logistics being partly a logistics company. We have to always be checking our freight forwarders to make sure that the rates are competitive, so we can help control costs on that part because the moment you start shipping a car, there are certain things that are out of your control, weather events. However, the things that we can't control, we want to make sure that they're buttoned down, and that includes costing of freight forwarders.

And then there's a new venture that we are really excited to talk about it today. It's -- 2 of the biggest company in China, one of the biggest battery company do a JV with the biggest commercial manufacturer altogether to deliver the best commercial electric vehicle possible on the market. So we already started working on proof of concept. We have LOI signed with a couple of government in Africa. And it will have an impact on our revenue in 2024. So it's a really exciting project for TRADE X and we've been working on it for a few months. And because we have a footprint globally, we can have access to the government, and we use our connection globally to leverage this project.

So some key takeaways. We've talked about our international footprint. We're going to continue to evolve that. However, we're going to have a better handle on our profitability, meaning that we're not having those huge overhead expenses. We have one territory account manager to open up a market. We also have a key auto sector and regulatory relationships worldwide and a deep understanding of logistics and how to get vehicles from one place to another with the miscibility being taken care of. Obviously, we've just talked about an exciting new venture that we're looking into. So there's -- those types of things we'll explore in the future. And obviously, as we grow, we're going to have more exposure to these types of opportunities. So I just -- on behalf of myself, Eric, Brent, everybody at TRADE X, just wanted to thank Aimia, obviously, for the opportunity to be here. Phil, Mike, Steve, everybody else. Thank you very much for allowing us to come and talk to you about TRADE X, and we look forward to any questions you may have as a result of our presentation.

Okay. Any questions from the audience or we can wait until some questions are posted online.

[indiscernible] with Jefferies again. So over the next 3 to 5 years, how many corridors do you think are feasible for you guys? And then what does the long-term operating margin profile look like?

So I'll take this question. So with our new business model, it's really scalable, and we can open as many countries as we can. So we're targeting at least one country per month. And yes, it's a lot. And it's more about, before we open in a country, we have our compliance team who's making sure that, first of all, there's an arbitrage and it makes sense to open this country. So we don't want to hire someone and open this corridor just to open a corridor. We just want to make sure that it brings revenue to TradeX as fast as possible. But one country per month, it's doable. And for the margin, because it's globally, we're looking for a 10% gross profit per transaction because if not, we're not doing the deal.

Questions from online are not showing up here. Maybe if you can hand them to me.

Just walk us down from gross profit to operating margin when fully scaled.

So like the gross profit margin, it's always when we buy the car, for example, in South Korea for -- I'll just talk to you in USD. So we're buying it for $20,000, and we know that we can sell it for $22,000. Our logistics team will give us the breakdown, what's the cost to ship it there? And so we're just -- if we're not making $2,000 profit on the transaction, we're just not doing the deal. So we will go to the buyer saying like we can sell it for $22,000 plus shipping is X number. So -- and we'll have the green light from the buyer, yes or no, and we can do the transaction.

Also, there's an opportunity there with logistics. So if it cost $5,000 for a container, you've got 2 cars in there. You can also add a little bit of profit on that as well, a smaller amount to $200, $300. So there is an opportunity when you ship the vehicle to make a little bit of extra money there, too.

Okay. Great. Next question. Can you expand a bit on the electric vehicle opportunity?

Yes, of course. So as I said, the biggest battery manufacturer in China did a JV with the biggest commercial manufacturer. So what, we do we start doing a proof of concept with a different government in Africa. So -- and why Ryan is not able to join them because he flew with 2 government in Africa to China to show them like what's the model, what we can offer them. And so this is end-to-end with the government. I cannot go over like the details for which government it is, but it's a really exciting project for us.

Great. Thank you. Why are you selling Wholesale Express?

Because we really want to focus on the core business. And the core business is global trade. So -- and as you know, Wholesale Express, we mainly operate in Maritime, Quebec and Ontario. So that's the reason why we are selling this asset and really focus on global transactions.

Great. And last question, are you fully funded for profitability now?

For -- we'll be profitable by 2024 with all the new business model and reducing our overhead by changing the structure. 2024, it's a profitable year.

Wonderful. Any other questions? Great. Thank you very much, gentlemen. Really appreciate it. And for a final presentation this morning, we're pleased to have Roberto Curreri and Stefano Risso from our Chemical Solutions business, Bozzetto Group and from Milan to talk about Bozzetto. Welcome guys.

Good morning, everybody. I'm Roberto Curreri, I'm the CEO of Bozzetto Group. Today with me there is Stefano Risso, CFO of the group. We are very excited to have this opportunity to explain to you and to give an introduction into our company and the way we make business. Let's have a quick recap at some key facts and figures that you have seen in this introductory video. We have over 100 years of history, which we believe is something unique for a European-based company in the chemical industries. Today, we think we are well positioned to be considered one of the leaders, especially in the ESG and some selected [ niches ] of textile, dispersion and water, and I will come into that in a few minutes. And we do it through 600 employees, out of which over 10% of the workforce is fully dedicated to research, development and innovation. And we serve 90 countries with over 2,300 products, and over 50% of our turnover and margin comes from ESG-focused products. A quick look at our history, born in 1919 in north part of Italy in an area that is still considered as a reference for the textile industry. This company during the '70s, goes into its diversification in the surfactants world. And during the '90s, goes through its first international expansions. 2002, 2008, the first M&A. But then there is a period between 2008 and 2013, where the company is living a kind of sluggish mood, delivering top-quality products, but being -- having a profit that is not the one it serves. So with a great deal of courage, there's a change in top management, major investment in R&D, supply chain and especially business where in 2013, we started our ESG story. And I think we have been kind of first mover in this respect. Then we have had the fortune to be -- to work with the financial shareholders, which for us is our best fit. And we had the opportunity to restart making inorganic acquisitions and to have a faster penetration in our markets. If you look at this slide, in 2020, in the middle of COVID, we completed our largest acquisition of our history with buying ASUTEX. And in 2022, we consolidated our global leadership position in viscose fibers, buying the business from Levaco. In 2023, we had the pleasure to welcome Aimia as our main financial shareholders. And we are particularly grateful to them because they gave us the opportunity to invest 6% -- in total, 6% of the share, the conditions. Going forward, how do we ensure the global presence? Global presence is not just about a single site. So we have a capillary presence with 6 fully owned assets in 4 JVs and a bunch of commercial offices and collaboration with distributors. But the good thing is what I want to draw your attention on is that the main plant, the main [indiscernible] is still in Italy today. Why? Because this is where we want to control and make sure that we engineer the best products and technologies that then are exported globally at each of our sites, because we have to ensure in order to have a responsive service that is still top quality, we have to assure that these European standards are applied everywhere. You might have noticed that there is a gap in the Central and North America, something that Phil anticipated. We are very excited that we are going to sign and we're going to announce in the coming days, a major acquisition, probably the second largest of our history, which is going to fill this gap in Central and North America. What is this bringing this acquisition to us is the possibility to have an industrial platform over there to implement our technologies, to implement our ESG value proposition in a market like Central America that is the fastest growing in this respect and to have the possibility to have a faster penetration in this market, something that would be very difficult if we have to cruise the ocean to deliver our products. We said this company changed a kind of its skin given the first look from 2013. So let's have a look how this went from the financial point of view. This graph show EBITDA and sales revenue development. In 2013, this company was generating only EUR 10 million EBITDA, which is not at the level that this company deserves. So all this implementation of the ESG story together with the careful yield management and cost control, led us in 2022 to have our world record history in EBITDA with over EUR 31 million with a continuous growing pattern. And this positions us in the Specialty Chemicals, because we -- this is about 14% EBITDA margin. I want to focus now on what happened between 2018, 2019 and 2022. We managed to have a CAGR growth rate of about 14% in a period, given our complexity that you have seen globally, so as fighting against COVID. Maybe the worst raw material and logistic crisis I've seen in my entire life and then energy spikes, the Ukrainian war, which is impacting any European company and last but not least, inflation that we imported and a recession outlook. Despite all this, the company managed to grow nicely in this way. Going forward, a quick look at current trading. Today, at the moment, we are leading a very difficult situation for European companies. There's a -- macroeconomical environment does not help. The confidence of consumers is limited and also the liquidity, the interest rates and the inflation limits also the liquidity available for companies to invest. So we are, at the moment, having a EBITDA, we expect exceed the EBITDA that we generated last year or to be at least as good as last year in such a macroeconomic environment. Going forward, we have presented to our shareholders a business plan that says that we're going to have a CAGR growth rate between 6% and 8%. This is something that is lower than what we have already achieved. But this growth rate does not include current and future M&A initiatives. So if we and when we implement the acquisition I'm talking about, we will be well positioned to be -- to exceed these figures. So it's a resilient model. We have demonstrated it, but how do we do it? Using our 5 pillars, what we have built over time and over the next -- the last decade. First of all, we clearly choose our strategic market downstream. We focus on ESG, and I will come to that in a minute of what this means for us. And we focus on that portion of which market depend regardless where you are in terms of it and market application that is aligned to our value proposition that is able to understand and eventually to pay a premium for this. And we target lots of good segments that have a very high sustainability, not only from an environmental point of view, but in terms of also growth rate and margins. Of course, second pillar is diversification, which is common to any industry and any company that wants to faster penetrate markets and reduce the risk. But we have to be careful, and we want to do it. We're finding a good compromise between a very strong Italian branded entity, which is a factor, especially in [ Texel ], I can tell you and the need to delocalize in order to have a very responsive service in proximity source logic. But if you want to serve 90 countries and you want to serve over 2,000 customers with over 2,000 products you have an issue, you have to manage complexity. And the way you can do it is to design a supply chain, a buy-make-and-delivery process that is able to take full control of every single chemistry and every single product that is produced in order to ensure saturation, lower industrial costs as much as possible and maximize profit. And this is what we have done. You cannot do it in a chemical company without a very strong and dedicated R&D team, not just looking at innovation, but being hands on and looking to give a top quality service to the market and to collaborate with the purchasing team also in selecting the best raw material available in the world. Last but not least, we need a capillary management informational system that allow us and today, we're able to do it not only to monitor the profitability at product customer level, but also a chemistry level and at asset level in order to take the best decision on a weekly basis on which market to push and which market to step it back. ESG, there are a number of companies talking about ESG. I've put in the 3 boxes on the left-hand side, the 3 macro trends of ESG. The remaining 2 are the increasing use of biological polymers, something we are working on and also anything related to circular economy. These are, at the moment, in my opinion, more of a blue sky projects, where we are focused on, on the last decade is especially the first box, developing products and processes, not only for our company but also for all the downstream industries that go into the direction of water, energy and absorbs chemical reduction. Why? Because the urgency was there. This is where there was a tangible possibility to do something tangible in terms of ESG. ESG is not just an internal claim. We have invested millions of euros. And it gets the recognition of the international leading bodies in terms of certification. We very often on a yearly basis, conducts rigorous audits at each of our plants, checking everything from an environmental point of view. And this, as you can see on the right-hand side, led us to have over 1,000 ESG products today in our portfolio and especially the contribution that this gives to the profit was 39% in 2018 and is as high as 71% and growing in 2022. A quick look now at the market. My intention is to make you understand where our differential advantage is. Quick snapshot, we textile say, textile dispersion and water solution. Textile account for about EUR 120 million with 18% gross profit and a geographical balance in terms of sales, it is well balanced between 50% of Asia and 50% in the rest of the world. The Americas is going to grow significantly as we will make the acquisitions. Especially in water solution at a bit more of an M&A story because of historical reasons and because of the nature of the business itself, because it's more European and Middle East based. They account, respectively, for EUR 78 million and EUR 26 million revenue and they bring a higher margin in terms of percentage, 26% and 35%. Textile, I could say a lot of things of textile, but just to set the scene, ESG, in terms of water, hazardous chemical and reduction and energy is what we have targeted among the macro trends. There is a difference in the value chain of textile about perception of the green pressure. If we synthesize big 3 cluster, the textile mills, the brands and the consumers, we can clearly say that the green urgency at the consumer level is nearly 0. When you move up to the brands, it's a completely different story. They have lived with an enormous pressure from the green market, so much that some of them have decided to launch their own campaign in terms of 0 discharge policy, in terms of elimination of contamination or tracking of the contamination system at the supply chain. This is where we step in because the [indiscernible] campaign, they've launched it, but they need a chemical partner in order to develop. In our latest development with [ Nike, ] with Unico, with Stone Island, with [ Diesel, ] just to mention, if you go into this direction and creating some bonds. And at the end of the day, what is good news for us is they create the drive demand going back to the textile mills. When we got to the textile factors, the one supplying the brands is, again, a different story because, okay, they've got the green pressure from the brands. But at the end of the day, for them, it's just about lowering cost. They have an enormous usage of water, energy and consumption of chemicals and hazardous chemicals. They want to go into this direction. They didn't know how to do it. So this is where we step in, designing products and processes and stepping in into their processes in order to decrease their environmental profile in improving the product quality and improving the efficiency. And this, at the end of the day, as they affect the nice effect to move their perception from a price-sensitive market into analystic approach at cost and they accept the premium price for us -- from us. How do we do it with a combination? First of all, as you can see on the left-hand side, we are present in every single step of the textile market from fibers up to -- down to garment treatment. We do it with the broadest -- one of the broadest portfolio in the market with over 1,000 CSG products, and with the technical server with customized solution, depending on which is your need and where you are in the value chain of the textile and with the technical department and with a technical service team that have, on average, more than a decade of experience in our customer plants. So [indiscernible] that can work with them and develop solution. Dispersion. Let me in a quick summary, a dispersion particle is a substance that usually maximize -- minimize the dosage and maximize the performance of active particles, just to make a long story short. As you can imagine, the dispersion chemicals can find a variety of application in many industries. This is -- we started here from building on our heritage. Historically, we have a dominant position in terms of industrial platform in Europe and Turkey. And we were selling nicely in plasterboard and concrete, having some differential advantage already. But a game changer, a step change was when a few years ago, customers like now Saint-Gobain, so the global leader in plasterboards came to us and said, "Look, we have an urgency to eliminate from our products for [indiscernible] and other nasty chemicals present today, we cannot live without this. So we made major investments in terms of technology in our plants and in the chemistry. And we developed the lowest -- the highest environmental impact in terms of technology and products. Today, our products have only few PPMs of amaldehyde. So we increased our gap versus competitors and created bonds with the global leader of the market. Today, we are the only one registered for example. Also the versatility of chemistry, and this is the beauty of chemistry, open up the opportunities in crop protection in the world in agriculture. So we engaged -- using the same logic, we engaged into collaboration with guys like Bayer, BASF and [indiscernible], and we managed to enter into the crop protection business and to move from being just an ingredient supplier with top-quality products to a partner for them that intervenes and steps in when deciding formulation and application and at the end of the day, the preferred partner. The story on water is similar to dispersion that is moving from ingredient to a formulation supplier but is a pure chemistry and pure innovation this time. Historically, we have supplied -- needless to say that the market trends on water go into the quality of the wastewater and its reusability. This is a need of the market. Historically, we have been suppliers in the water chemicals of anti-scaling products working as anti-scaling or corrosion inhibitors, supplying Procter & Gamble, Unilever [indiscernible]. What happened if you are locked in with those customers, they try to put you in the press work in terms of pressure with global tenders every year. So what we did is we intercepted a need of the market to develop one of the lowest [ first ] content in terms of anti-scaling agents. And we engineered this time, it's pure chemistry. We engineered chemistry that has been patented, and it put us at the top of the level in terms of technology leader. So today, we enjoy a long-term relationship. We are #3 supplier in Europe in terms of phosphorus-based anti-scaling agents, and we have this technological leadership that nobody has that is going to be deployed. Another nice thing about this is that it allow us to develop in any other segments where all these problems are. One of those is, for example, personal care that I listed there where we are developing, and we have developed the market. It's still early stage on skin care and hair care, using, again, the same logic and the same versatility of our chemistry. And this market, for example, brings gross profit that is an order of magnitude higher than the others. So the potential is already there. You've seen the margin is one of the highest, but in terms of future opportunities is never ending actually. How do we manage complexity? Before talking about supply chain, let's have a look at the chemistries. When I joined this company, find a big variety of chemistry being handled. This is not necessary in our company. Because at the end of the day, our customers buy combination. Our product is a combination of 5 to 10 ingredients. Customers don't know what they're buying. So what we did is we rationalized the building blocks of chemistries that then drills down into a number of SKUs. And today, we can say that with 20-30 chemistries, we can handle all the products. And if you think that textile dispersion and water solution have nothing to do to each other in terms of chemistries involved and in terms of assets, this is not the case. This line shows that some of the chemistries overlap and can be used in dispersion and water or in textile. And we have made investments in our plan and all our plans in order to increase the flexibility and to make sure that all our plants and our assets are able to produce any grades in any of those divisions regardless of conditions. Supply chain, efficiency and effectiveness, a wrap up is, today, we are able on a weekly basis to control the supply chain globally and to establish which product is going to be produced in which plant. So this allow us basically to cruise over any turbulence upstream and downstream in the market and at the end, to pick the best and most profitable market for that in that moment. And maximize not only the contribution margin per product but also per chemistry and per asset. And then I talked in the last slide about the rationalization of the chemistries, but also I need to mention the quality consistency and upstream market scouting. We have built a global market intelligence that allow us, and this was thanks to the purchasing department, but thanks also to the collaboration with R&D that allow us to cherry-pick, who is the best supplier at the moment depending also on the macroeconomical situation. Today, for example, it's very convenient for us to buy from China for a number of reasons. In 2021, '22, it was the other way around. We were preferring European supplier. Of course, our suppliers have to comply to the best standards in terms of environmental profile. And this is a plus, I think we have versus our global competitors. I talked already about the importance of R&D in upstream. I will not touch into this. Having an R&D that is able to work both, on synthesis and formulations, give us enormous flexibility and increase the know-how of the company, because most of our competitors just do formulations, they mix ingredients. But last but not least, on the downstream side in the market, we have applicative laboratory at each of our sites that not only give a responsive service to the market, but they are able to replicate under industry-like conditions, what is going to happen at our customer level in our customer industry? Technical service. Last but not least, we don't have salespeople, we have technical salespeople. We do basically implement ourselves on a technical basis with people working in our customer plans and developing their solutions for them. When you do this, the sales is there, and the margin is there. If everything works fine, then you have a growing pattern in terms of sales revenues, in terms of gross profit and in terms of EBITDA. And you can see that the EBITDA over the last 5 years has grown at a higher rate of the sales revenue. Going forward, today, current trading, I just mentioned, we're going to be at least as good as, but my ambition is to be better, than last year. And this is thanks to an increased margins in a market that has been in terms of demand very, very sluggish. Consider that our competitors are seeing a situation where they are between 15% and 20% down in sales. Last but not least, I want to give you an overview of our priorities going forward. Of course, we're not -- we think that we are on the right track. We will continue the geographical expansion, both organically and inorganically. We thank Aimia, we are grateful to Aimia, because they are supporting us into the acquisition, because acquisition allows a faster penetration in the strategic market we want to address. We will continue to be the ESG solution provider. If anything, apart from the nice environmental profile, it gives us the opportunity to always apply a premium to the market that we have selected in terms of price and margins. As we go forward, especially when we make acquisition, and we know this because we have made the recent acquisition and integration, it's very important to keep this agility of their supply chain and to integrate companies into our platform and keep this possibility to choose on a weekly basis, which product to produce and continue to invest on the versatility of our assets. Last but not least, we do not compromise. We don't want to compromise on our reputation because at the end of the day, this is a recognition in the market that we have gained, and we want to protect, because it has led to outstanding results. My presentation now is over. I want to leave you with the last another video. If I'm asked today, what is the -- without the segments within the textile industries that have a massive consumption of water, say, cotton, denim and dyeing process. In Denim, we have launched last year with a collaboration with Uniqlo, something unique in the market, the possibility to have a strong wash effect without the usage of water. Some of you might be familiar. Today, I'm going to present our waterless dyeing process. This is something we launched in the trade show. A number of companies have tried to do this. We were the first one to do it, and we are patenting. I think the video is self explanatory. Thanks for your attention. [Presentation]

Thank you, both. We have time for questions now. That was absolutely terrific. Anyone in the audience, please raise your hand, and we're happy to get to your questions. Logan?

Logan Schuh from Jefferies again. Could you just touch on like how much of a headwind, the current macro environment is for organic growth? And then also, could you touch on the cyclicality of the business in terms of growth maybe outside your 6% to 8% target?

Okay. I mentioned already in my presentation that the macroenvironment we are living at the moment is maybe the most difficult, okay? I split the world at the moment in 2 clusters, the Western part, especially Europe, where you have high inflation and interest rates. This is creating problems to the consumers, because it's decreasing their buying power and to companies, because it's limiting the availability to credits and as a matter of fact, investing and to create value. On top, we have laid a very difficult situation in terms of energy over the last years for a number of reasons. In China -- in Asia, the situation is different. Asia is influenced heavily by China situation. And China is living a deflation. Domestic market is down. And if this gives us tremendous opportunity in terms of growth and in terms of especially exploiting the [ raw tier ] supplier is influencing all the rest of the market. But at the end of the day, this is not going to impact our growth organically and inorganically, because this is what has happened over the past 5 years. And I think we have demonstrated our resilience in this respect. And this is the beauty of positioning at the high-end level of the market. We are not into any price wars. We honestly think we're going to exceed CAGR that I put on the slide, both organically and inorganically, especially the acquisition that we're about to announce will give us a boost and an incredible immediate value and incredible opportunity to grow.

Great. Thank you. Next question from -- in the audience. Brian?

Sorry, can you just explain to me with your manufacturing facilities based in Europe, how you were able to maintain your EBITDA and your margins with such major headwind with respect to energy prices in Europe with the war in Ukraine? And then secondly, can you maybe address, I think there was an announcement this morning that all plastics will be banned from personal care and cosmetics products by 2030. I'm wondering if that's going to be a big boost for you.

Okay. First question, thanks for asking. It was the same question that [ Anya ] asked when we started talking about this the possibility for them to buy us. When it comes to energy, 80% of energy consumption is in our Italian plant. This is the way we have designed. We have a capillary controlled thanks also to this guy and his team, we are able to track what is the energy impact in every single reactor in every single reaction and in every single chemistry? Our salespeople on a weekly basis, end of 2022 on a daily basis were informed by our controlling department and they could decide which part of the cost to pass through to the market to kick the margins. And the beauty is that if you focus on the high-end part of the market, which I hopefully have been able to explain why, they don't really care about other things. They care about the product quality, the care about the environmental profile. And they care about the impact that you have on the cost. I mentioned the fact that you managed basically to move away from a price war mechanism at the low end of the market and to convince them about an holistic approach to the cost. There is one example where we collaborated with one of the world leader of the [ Amrit ] Fibers, the way buying benzyl alcohol, which is one of the masses chemicals, you can find. We managed to sell them a replacement that is 3x as much in terms of pricing. Why we did this? Because we went there. We analyzed the wastewater treatment plant. We analyzed with them all their plans and their supply chain in India and Salvador in Europe, in China. We send our experts and we basically convince them and manage with them to lower their cost, even though they pay the price that it was 3x as much. This is the way we do it.

If I can [indiscernible] like any other raw material we managed because raw material represents more or less from 55% to 60% of the total of our costs and so basically, by having this capillary way of measuring things and being placed in many markets on the high and combination of both allow us to pretty much pass through those energy costs. In parallel, we also put in place some major save cost to increase our efficiencies from an operational side and also with some small CapEx investments.

On the second question, of course, cosmetics is an opportunity, but I have to say that on cosmetic, we are still a small player. And I'm actively looking with Aimia hopefully help with the possibility to add inorganic growth in this respect. Because as I said, using the versatility of our chemists, at the moment we start selling in cosmetic with the margin that is in order of magnitude higher than business. It's not the lead, but you've got to be there. You're going to have a critical mass presence. You've got to build your brand name, we can do this with acquisition. In my opinion, the value will come from [indiscernible] in cosmetics.

Great. Speaking of acquisitions, there are several questions about -- speaking about how attractive the acquisition sounds that you referred to. And if you can add talk to the timing, valuation impact of the Central American or Americas acquisition.

Timing is pretty much immediate. It will be announced in the coming days or weeks. We're about to finalize, it will be signed. On the valuation, you will discover what I can say that there is an immediate value added an increase of value of the company by the fact that this leading company is incorporated into the rest of the world. But the opportunities that this acquisition is giving us in a market like Central America and U.S. at the moment when we want to serve, you have to cruise the ocean is absolutely never ending. So in my opinion, will be one of the game changers for our company.

Great. And who are your major competitors? How do you differentiate versus your competitors?

It depends on the business we're talking about. In textile, I can mention a few global competitors. I can mention, CHD, Rudolf, [indiscernible] maybe, in some cases, Deister, but it depends on which geographical location we are. The way we differentiate by targeting the high-end part of the market and targeting the ESG, of course, someone might say that we reduce the possibility of a wider textile market. But with this combination and the service level, we eliminate immediately the low-end part of the market. It's just not us. It's not our market and it's not their market. Differentiation, in my opinion, versus global competitors is something that I know by heart, because before Bozzetto, I was working in 3 global players, ICI DuPont, LyondellBasell and I know about their strengths, but I also about their vulnerability, and it's all about agility, being quick, speed of response. The fact what I described, hopefully, well about our supply chain is something that you don't find in these global players. And then the level of service, of course, that we provide something that global players do not want to provide anymore. Just want to look at big deals with very few customers buy big volumes and accepted the limit of the service. In dispersion and water, again, it's different in dispersion, our competitors are a few European players in building and some Turkish. In Agrochemicals, I can mention [indiscernible] contacted us in order to supply them here in U.S. But at the moment, we have a bottleneck capacity which will unbottleneck next year. So will be possible. In the water chemical, we are #3 in Europe [indiscernible]. But with this step-up in chemistry and product portfolio, we target that and we are going to catch up.

Wonderful. And finally, EBITDA growth has been pretty substantial over the past 5 years. Can you talk about the free cash flow conversion and how much CapEx is required in the business?

The cash conversion, and so the ability to generate cash, it pretty much depends in our case from the level as our EBITDA as CapEx historically range 2% to 3% of revenues. Taxes are 24%, 25% and interest rate at the moment are between 7% and 8%. And I mean if we grow the first line with the right profitability, we will be able to continue to deliver what we have delivered so far.

Any other questions from the audience or online? We thank you very much for your time, gentlemen. It's wonderful. Phil, would you like to join me up here for closing remarks?

Thank you, everyone, for your presentations. I hope that everybody can see now how excited we are and why we're so excited about these holdings. This has been -- these have been recent developments. And I know we've owned these companies for a few months. So we've come right out of the gate as you've seen in tough roads, we've already done a tuck-in acquisition. We have yet to see a quarter where we've owned both of these companies for a full quarter. So that's how early stage it is. So it's understandable that people have a hard time valuing us and the disconnect between our stock price and the real value of these companies is significant. And I hope been underscored today by the confidence you should have in these businesses and that we share and the excitement we have going forward. We're not just here to buy companies at good prices and hold them and hope for the best. We are actively on a daily basis, looking to turbocharge these businesses to accelerate their growth and increase value for our shareholders. It doesn't take a lot to move the needle on a company like ours. We're small, there's not a lot of shares outstanding. And moving these companies forward the way that we are, should have a profound and meaningful effect on the stock price. And we hope that you get to enjoy it. That's kind of an early look into what I think people should see, but they don't. People don't like to do the work. They don't like to dig in, they don't like to fly to Investor Days like some of you have done from other countries and listen to this. But once you hear it and you see it and you experience it and you hear from our incredible CEOs and CFOs and management teams, I think you should leave here with incredible confidence about being an investor in Aimia. Just some of the highlights we've gone through, I think, just to quickly run through them. I think you agree, we have a portfolio of really exciting assets, each one exciting on its own, each one capable of representing the entire market cap today. So there's a lot of those. And I think you should have heard today, and we all agree that they're very exciting. We have an accretive growth strategy. We're going forward. We're going to be acquiring control positions in these companies. We may have a third leg. Right now, we have 2. You're going to see us focusing on growing those. We have an exciting permanent capital structure, as I mentioned. It's no debt at the Holdco, sizable tax losses, the perpetual preferred equity and that enables us to also enhance our returns to shareholders. We have an experienced management team. We're completely aligned with you. Our entire focus is creating shareholder value. That's all we do every day, and that's all we focus on. We've recently deployed $450 million into these investments. It was less, I would say, a little over a year ago, our stock hit [ 650 ] and today it looked like the market was starting to realize the value of our holdings. And I ask myself what has changed since then? And we've made better investments, new investments. We have cash flowing investments that you can touch and taste, and the drop from [ 650 ] to where the stock is today, there is no explanation other than optics. People not understanding the value here. So this is an incredible opportunity. These things don't come along every day. I've been a value investor for a long time. And it's rare that it can be so obvious and so clear, and there's such a large margin of safety as we have in Aimia today. And with that, I think we can -- what you can expect for us in the next year? You're going to see organic and M&A growth at both of our companies. You've heard of some of the acquisitions we've done and have been planning, but there are also others. You're going to see that continue. You're going to see accretive acquisitions that are not just accretive on a cash flow basis, but provide platforms and opportunities for the company to grow, just like [indiscernible] did for Tufropes and the upcoming acquisition that we've referenced for Bozzetto. You're going to see increased transparency. We're focused on letting you guys see as much as we can. We can't control all the minority holdings and what we can see companies like Fair Media, we involved with, but we can only reveal certain things. So we're trying to get you guys increased KPIs and transparency in both the subsidiaries and being completely transparent, obviously, through the operating companies, because those are some of the things to run through our balance sheet, and you're going to see every dime coming in. You're going to see the cash generation, you're going to see the EBITDA generation and the growth. So with that, I think we can turn it over to Q&A.

Great. Thank you, Phil. For our final Q&A session, you -- everyone will have the opportunity to ask the Aimia team as well as any of our portfolio holding company management teams, any additional questions. Questions from the audience? Yes, sir?

It was great to see the components of Aimia, but the elephant in the room is probably your bun fight with the distant shareholders and one explanation if you move from $6.5 down to below $3, is that fight. Can you give us a little color on that, please?

Yes. It's an unfortunate distraction. It's been an expensive distraction. But we try to -- well, obviously, we hope on an amicable resolution, and we'd like to do it as quickly as we can, obviously. But in the meantime, we just focused on executing our strategy. I mean through that noise, you've seen multiple acquisitions. We've been very active and propelling our business model forward. I always believe that the stock will follow the value at some point. And obviously, you don't want that point to take too long, but we can't control the behavior of shareholders or the noise around it. All I can say is that we are trying our best to both, execute on our model and to resolve that situation as quickly and as amicably as we can.

We have a question from online: With Aimia's stock price below $3, are you not repurchasing every share right now?

Yes. We've been obviously very active with share repurchases. Last year, we maxed out [indiscernible] about a little over 8 million shares. We bought over 45% of the shares over the last 3 years. We planned on a very aggressive buyback. It was required for us to complete a Tufropes financing, which is approximately $100 million that we had, we're about to close. The increased activity with the activism raised concerns with the lenders because they want to know who's controlling the asset. So that kind of set that aside, which unfortunately set aside our ability to buy back shares. Because as Mike alluded to earlier, and I think, Brian, you asked the question, in terms of cash and available cash, we have to budget for and we always have budgeted our companies to have at least 2 years without us needing to take cash out of them. And obviously, there's -- even the banks require that to a certain extent in terms of their amortization schedules, et cetera. So we don't want to -- we don't want those companies to have to be burdened by our cash needs. So unfortunately, we have to hold off on our buybacks until we facilitate a financing transaction at Tufropes. As Tufropes mentioned, it's a very financeable entity, and we think that will happen as soon as we can resolve some of the noise around the negative stuff.

Great. Yes, Brian?

Earlier in the day, you said your phone was ringing off the hook with respect to cognitive the presentation today and their success in moving towards profitability. I'm wondering what the potential avenues are and what you're holding is or what you think the path is with going forward with Kognitiv.

Sure. I mean it's obviously early, but in the last week, I received 3 different serious expressions of interest in acquiring them. Obviously, there's a long road of diligence and discussions ahead, but it's very different than the phone calls I used to get, which were -- is Kognitiv going out of business and why do you keep holding Kognitiv and why do you keep putting money in it and supporting it? And I think that question has been answered. And now this is the fun part, which is growing the business and fueling those type of e-mails and calls. I think, as Tim told you, this is a growing sector. And the client base that Kognitiv has is incredibly valuable, and they're all blue chip customers. You can't get in, in their doors, without years of courting and going through all kinds of processes and 6,200 committees. And when you buy Kognitiv, you're right in the door. And that allows huge cross-selling opportunities. One of the potential buyers told us that they think they could triple Kognitiv's revenues just by cross-selling their own products to those customers. So huge value there. We own half the company. I think that there's a great opportunity here to create value where no one really expects it. And I think what you've seen from Kognitiv is we'll explain and justify where interest is coming from.

Next question from online is: What keeps you up at night?

Honestly, I'm kept up by excitement. I just lay in bed, and I'm just thinking about all these things that we're doing, and it's so exciting to me. And then I remember where our stock price is, and it makes me a little sad, but I know that that's going to change, but the things that we're doing, I would expect in a perfect world to be hitting a new high every day. And I know you don't focus too much on stock price, but I feel the pain. And when I look at our stock, I feel physical anguish, really just -- I just don't understand how it can be there, but it is what it is. But it's an opportunity, and all you can just take advantage of that, whether it be by getting investors like yourself to take advantage of it, allow you the opportunity flow or it's buying back stock or insider buying. I just did couple of months ago again. So it's a combination of getting excitement about executing on these deals. I don't feel -- you always have a healthy fear of anything going wrong in your companies. But right now, I don't fear anything for the companies. I see nothing but green sky -- blue sky ahead, green in our pockets, hopefully. And I am just cognizant of having our job as to just not only execute, but to make money for people. I mean you guys are here for the stock price to go up, that's what you want. It's not something that drives the bus, but it has to eventually. So it's a focus for us. It's very frustrating. But I think you'll be happy with some of the stuff we're doing to create that and manifest that. And we're not just sitting around saying the stuff will work itself out. We understand that we want to catalyze that and help it and do whatever we can. So part of it is this, talking to other significant investors who want to take large positions in the stock, like it just takes one of those as I said, and changes the whole dynamic. So we're hard at work on all that. It does keep me up pretty late. I do take some sleeping pill sometimes, and -- but it's from excitement.

Great. Thank you. I think this one is for Steve. You previously said Tufropes and Bozzetto would generate approximately $70 million of EBITDA annually. The numbers shown today are in local currency, USD and euros. Help me reconcile these.

Yes. So you saw in the Tufropes presentation, I think they gave somewhere landing between USD 16 million and USD 17 million for the year, and Bozzetto holding around where they delivered last year around EUR 31 million. When we disclosed the [ CAD ] 70 million, the Canadian dollar was a little weaker, that's always going to impact our Canadian reported results, but we're holding to the numbers that we originally projected. We're just getting a little stronger Canadian dollar is going to have a little bit of impact on that number, maybe just below [ CAD ] 70 million, but in the neighborhood.

Next question is about the NAV. Are you ever going to publish your NAV?

So we have an internal NAV. It's conservative. We always look at kind of the worst case scenario. Our worst case scenario would be very exciting to you. We don't reveal it because it's really just for competitive advantages, you don't want to say you're valuing something at something and then you try to sell it for 3x that people point to what you just published. So we don't publish it, but we do obviously follow it. And our most conservative estimate of NAV is more than a multiple higher than where the stock is with significant upside beyond that. And as I've said, our goal is not to make a $3 stock or $5 stock, is to make this a $30 or $40 or $50 stock. And that sounds crazy, and it sounds hard from $3, but it doesn't take that much to move that needle. You can do the math on these acquisitions. You double or triple the equity value, one of them, and you're talking about $10 share increment. So that's the focus, and that's what makes me so excited, and we're doing it. And there's a clear path to executing it. This isn't figuring out as we go, there's a road map. It's just a matter of how quickly we execute it and just getting there, but it's all coming.

Another online question: Recently, the share buyback stopped and focus has been on investments, how does management think about this aspect?

Well, every day is a reevaluation of where to put money. What's the best place to put capital? And one day, it may be into tuck-in acquisitions. Another day, it may be into buybacks. And someday, we hope that there's enough excess cash flow to do a regular dividend as I mentioned. So it's just a daily thing. We see opportunities all the time. We just look for the highest return of capital that we can find the best thing for shareholders in a given moment. And we focus on that. Today, we have a large group of potential acquisitions that we are pursuing for both entities. We see a situation where if things work out on the liquidity front and we resolve our [indiscernible] situation, that we can get the Tufropes financing done, we could see a path to a third leg of the stool in a control position. We are evaluating some of those opportunities as well. So it's case by case. I would expect I could tell you that if our stock is anywhere near where it is now. And we complete our financing, you will see very aggressive buybacks of shares, and I'll buy reshare that is available to me as fast as possible.

If I could just add to that. Our investment strategy has been very clear from the get-go. When we arrived at Aimia 3 years ago, there were a host of legacy assets. This was not where Aimia was going. It's where -- what Aimia was. We set forth a path to -- as diligently and appropriately as possible to monetize the legacy assets, to ring-fence assets that were perceived liability and actual liability. And once we got through the process of monetizing the primary asset PLM, obviously, we were in the market to go shopping and to create the foundation, the fundamental nature of what Aimia holding company was going to be. And we've made several investments now. And over the past year, we've made 3 sizable and substantial foundational investments, and that is who Aimia is today. And as Phil mentioned, and Roberto commented on, we have another acquisition that is in the later stages. We think that we'll be able to execute on. That again, it expands the foundation and the platform of this wonderful company. It's a company that has focused geographically over the past 10, 20, 100 years actually. And their products and their product set are such that there is a terrific opportunity to distribute their products to different geographic regions, and we're going to take advantage of that. And there's already exceptional demand within the Americas for the products that they make every day. It's just getting them here. As Roberto said, traveling the ocean, well, we're not going to travel the ocean. We're going to acquire an asset and we're going to grow that asset into the Americas. So that's the next step of who Aimia is, and we're there. Next question: Which of your portfolio holdings do you feel are closest to potential monetization?

Well, it's hard to handicap always that question. But I would say that the Tufropes and Bozzetto the furthest away. I can assure you that. We've got building to do there. We are going to apply private equity mentality to those and target a 3- to 5-year exit. We're not planning on holding everything forever. We know people want to make money. So our plan is to aggressively grow those. In terms of the minority stakes, if you have to handicap those, I would say, first on the list is probably going to wind up being Capital [indiscernible] because it is in full growth mode, stock price reacting mode. There's a lot of upside and they're executing and it's liquid. So that's probably up there. And then it's just kind of a question I would say. Clear Media is low in the list today because you don't want to sell something at a depressed valuation when the market has not recovered yet. As we've seen in China, there's a very quick recoveries that have happened there before. It happened originally after COVID before they zero [indiscernible] again. So I think you could see a rapid recovery there. So hard to handicap the others, except to say that while we're not pushing or forcing it. Our focus and our priority is to create liquidity events in those minority holdings and recycle that capital into the larger stakes and the controlling stakes through other acquisitions.

That was terrific. Thank you. Next question: If you achieve your 15% pretax, your 15% goal of pretax returns, my long-term returns as an investor would be less than 10%. Is this a topic that you can address directly?

Sure. We're not looking to lock in a certain rate of return. We are making sure that we have a minimum rate. We're trying to make sure that there's a bar that our goal is significantly higher than that. We're just not going to come out and say how high it is, but that's a minimum return. And that's just to make sure that we're not buying something that's not going to create a decent return to shareholders in this environment, but our goal is much higher than that.

Next question: Will you continue to deploy capital to public equities, or are you going to focus on private?

I would say, listen, we're opportunistic. I never say never, but if there was an incredible opportunity in the public markets, we have made significant profits in that area over the past few years when opportunity arose. If there was a new pandemic and the world ended and stocks dropped hugely, we would consider it. But I think investors are not here to watch us be a mutual fund and you can replicate our stocks and you can replicate that type of strategy. You don't need to own Aimia stocks. So we want Aimia stock to be something that has unique holdings as you've seen we have that you have to own Aimia to own it. And so while never say never, it's a very low probability, you'll see us engaging in public market activity unless it's a focus to make a full acquisition or initial purchase that leads to an acquisition.

And as you've seen, we are opportunistic. We want to be opportunistic value investors at heart. We want to buy assets that are either undervalued, or we see a substantial path to increasing value dramatically. That's what we've done. That's our -- in our pedigree. So that's what we're going to look for going forward. I think what you're hearing from today, from not only Aimia, but from all of our management teams is we have a terrific pipeline of capital asset allocation that well exceed 15% targets. And those are the companies that we're -- the investments that we're evaluating currently. But capital allocation is all about deciding to allocate that capital, risk-adjusted and with appropriate targets. And that's what we do every day. That's what we feel our job is to increase shareholder and stakeholder value. Next question: How does Aimia plan to address valuation discount from some of the parts to the market price?

I mean I touched on that a little. I think it really comes down to increasing the shareholder base by increasing your confidence in the stock behind the stock. It just takes one or two people that come in that want to take a significant stake to turn this around. So we're actively talking to people, getting the story out and hopefully events like this help do that, but we're actively working to close that gap, so you don't have to suffer and stay up at night like I do, thinking about the stock price.

And with that, we're out of questions. Thank you, everyone, for your questions and taking the time to learn more about Aimia and our portfolio management companies. Thanks again to all the presenters. People have traveled near and far, so thank you very much for your time and commitment. We hope everyone has found the presentations informative, learned something about each of the holdings. Hopefully, we've given you enough information to further not only understand them, be able to value them. Ask us tons of questions about them, we're an open book. And if we didn't get to some of your questions today or if you think about questions afterwards, please reach out to IR or to Steve, Phil or I, and we're happy to answer any questions always. And for those in the room that can stay a little bit longer, we have lunch available. And of course, our portfolio holding companies are going to be outside, presenting all of their products. So stick around and mingle. Thank you very much.