Aimia Inc. (AIM) Earnings Call Transcript & Summary

Hi, I'm Joe Racanelli, Vice President of Investor Relations with Aimia. Heading into our AGM, we've spoken with a number of shareholders, providing updates on recent developments and outlining our strategy for unlocking value. A number of questions have come up and we've put this video together to help you make an informed decision on how do you vote your proxy. With me are Tom Finke, our Executive Chairman; and Steven Leonard, our Chief Financial Officer.

Aimia's plan for creating value is very straightforward. We are going to launch a strategic review that focuses on unlocking shareholder value. We've already begun part of that process by monetizing noncore assets, and we're going to look at our core assets and our corporate structure to determine the best path forward for returning value to shareholders, and everything is on the table. That could mean spin-outs, that could mean a sale of certain core assets. But we're going to focus in the end on making sure we get the value out of this company in the benefit of the shareholders.

We've already taken action on some of those fronts. We've taken over $2 million in corporate compensation out with the changes in management. We've been selling down our shares in Capital A for over $20 million in proceeds, and we took the proceeds from the earnout of PLM and launched our NCIB.

What the strategic review means is we are going to look at everything. How we're structured? We have a holding company that has a level of preferreds and costs with those as very high. And we're going to look at our core assets. The goal is to determine what's going to structure for owning these assets, and/or should we look at monetizing a portion or all of the core assets. In the end, the goal is optimizing and unlocking value for shareholders and returning that value. What the strategic review will not do, one, buying a third wholly-owned subsidiary; two, investing in noncore assets any further; and three, investing in any new noncore assets. The sole goal of the strategic review is to unlock the value in the best form possible for shareholders. Paladin deal was something that not only I thought was bad deal for Aimia ultimately, but our shareholders told me the same, including our largest shareholder, Mithaq. So it was a priority to look at that deal and unwind it for a number of reasons. One is economic. It would cost us more as the years went on. The other is practical. There was a third party in the room as we looked to manage our core holdings, and that was inefficient.

What's important to understand about the Paladin deal is we removed a $20 million liability from our balance sheet and future advisory fees of over $1 million per year. And that liability and those obligations were going to grow in the future, and we thought this was the right time to remove those liabilities. Not only have we talked about it, we've launched an NCIB. We started purchasing shares of up to 12,000 per day, which is our maximum daily limit, and we can purchase up to 7 million shares over the next 12 months, which is exactly what we intend to do.

I took on the role of Executive Chairman for several reasons. First and foremost, I'm an investor, and I've bought more shares recently in the company, because I believe in the strategy that we are unfolding now and going forward. The other reason is, I knew we had a great team with Steve and the Aimia team that is here. And together, we've made a lot of progress over the last 2 quarters. And so it was a simple decision. I wanted to help out. I wanted to see value creation for all investors, and I wanted to support this team. We haven't been able to resolve the dispute with Mithaq, I think, for a number of reasons. We have listened to them, and we have acted on a lot of their issues. We've replaced management, we've dealt with the Paladin transaction, but ultimately, there is a difference in opinion on the way forward, the strategic process going forward. We believe we need to optimize and monetize assets and return that value to shareholders. They would like to monetize those assets and invest it as a hedge fund. We think that plan doesn't work. So when you had a fundamental difference in opinion like that, it's hard to come together. We've tried. We've offered accommodations to them, but so far, we haven't been able to agree.

The main differences in our dispute with Mithaq really boil down to strategy. We want to optimize the value of the underlying assets and return value to shareholders. they want to liquidate assets as soon as possible and invest the money as a hedge fund. We do not believe that's a good strategy and that will destroy value versus create value for shareholders. I think the other difference really is the expertise of our Board. We recently had Jamie Scarlett, a seasoned legal and M&A professional, join our Board and joining a group that has significant executive management, operating management, investment management and financial expertise. Mithaq's Board lacks that and lacks in depth in running a public company. So I think experience and strategy are the key differences between Aimia's Board and Mithaq. When will Cortland reach its financial targets promised? We're working with the Cortland team on integration. This has been, over the last 12 months, a combination of 2 businesses, Tufropes and Cortland industrial. And the key to extracting the value is optimizing the target operating model as well as the operational efficiencies of the 2 businesses. We've brought in an advisory group to accelerate achieving that objective, and we're expecting to give shareholders news of that in the next quarterly disclosure. Combined with Bozzetto, we gave guidance of $80 million to $85 million in EBITDA, and we feel confident we'll achieve that for 2024. Corporate costs, as Tom said, everything is on the table. We're looking at all costs. We took out over $2 million in management compensation costs, but that's not the end. We're looking at all of our cost structure. And obviously, it's a focus of the management team and the Board.

Shareholders should vote for Aimia's slate of nominees for 2 reasons. First and foremost, our Board is united around the strategic plan to unlock value for shareholders. The second is the depth of experience on our Board to actually execute that plan from executive leadership, M&A leadership, legal, operational leadership, we will make sure that we're able to not only unlock value for all shareholders, but for ourselves as well, as we are investors in this company aligned with you. I would just like to close by saying thank you to our shareholders for your support today. In particular, your feedback that I've heard directly from you over time. I'd also like to point out that I truly believe, as an investor, we have a strong plan backed by an experienced Board and a strong management team to execute, unlocking value for all investors. It's our commitment to do that. We hope that you will vote your proxy in support of our plan and our team.