AIMIA REPORTS SOLID SECOND QUARTER 2024 RESULTS, REITERATES GUIDANCE, AND OUTLINES NEAR-TERM PRIORITIES FOR VALUE CREATION
SENIOR LEADERSHIP COMMENTARY
"Consistent with the commitments we made earlier in the year, we focused our efforts in the second quarter on a two-pronged strategy aimed at improving the operational performance of each of core holdings and unlocking shareholder value," said
"Despite some macro-economic headwinds, we are re-iterating our guidance for 2024 given our performance year-to-date," said
- Reported consolidated revenue of
$122.4 million , up from$122.1 million generated in Q1 2024. Second quarter results sustained the momentum established at the Company's core holdings since the start of 2024 but were impacted by several macro-economic factors, including global shipping disruptions and the effects of high inflation that softened customer demand. - Reported consolidated Adjusted EBITDA of
$12.3 million , up 83.6% from$6.7 million generated in Q1 2024. The improvement was driven by a number of developments, including the reduction in selling, general and administrative (SG&A) expenses (excluding share-based compensation and costs associated the termination of the Paladin agreements) at the Holdings segment by$6.4 million . - Reported a consolidated net loss of
$4.6 million or$0.10 per common share. - Ended Q2 with a total liquidity of
$114.6 million , comprised of$112.8 million in cash and cash equivalents and$1.8 million of marketable securities. - Launched a normal course issuer bid to purchase for cancellation up to 7,009,622 common shares, or 10% of the Company's public float as at
May 28, 2024 . As atAugust 12, 2024 ,Aimia had purchased for cancellation 1,778,800 common shares or 25.4% of allowable purchases. - Received
$32.9 million in cash related to the earn-out associated with the Company's divestiture of its 48.9 percent equity stake in PLM Loyalty to Aeromexico in 2022. - Received overwhelming shareholder approval at its annual general meeting for its slate of directors and strategic plan to unlock value and return capital to investors.
HIGHLIGHTS SUBSEQUENT TO QUARTER END
- Announced leadership appointments aimed at fast-tracking the rollout of the Company's strategy endorsed by shareholders at
Aimia's annual general meeting, namingJames Scarlett as Chair of the recently formed Strategic Review Committee andSteven Leonard as President and Chief Financial Officer.Aimia's strategy and near-term priorities are focused on unlocking value and returning capital to investors in a responsible and expeditious manner. - Entered into an agreement with
Milkwood Capital (UK) Ltd. ("Milkwood") to purchase for cancellation 1.3 million common shares owned by Milkwood. The common shares were purchased at price of$2.53 per common share, representing an approximate aggregate price of$3.3 million .
CONSOLIDATED FINANCIAL HIGHLIGHTS
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(in millions of dollars except for margin and per share data) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
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Revenue |
122.4 |
122.1 |
74.8 |
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Gross Profit |
32.5 |
34.6 |
19.1 |
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Gross Margin |
26.6 % |
28.3 % |
25.5 % |
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Operating Expenses |
(38.5) |
(35.0) |
(31.8) |
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Operating Income (loss) |
(6.0) |
(0.4) |
(12.7) |
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Adjusted EBITDA1 |
12.3 |
6.7 |
5.5 |
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Net earnings (loss) |
(4.6) |
(4.2) |
(74.5) |
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Earnings (loss) per share diluted |
(0.10) |
(0.09) |
(0.93) |
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1 Adjusted EBITDA is a non-GAAP measure. |
Balance Sheet and Liquidity
As at
The quarter over quarter increase in
Of
Cash Flow from Operations
Available Tax Losses
As at
Dividends
With the reset of the annual dividend rate for Series 3 Preferred shares and the introduction of Cumulative Floating Rate Series 4 Preferred Shares,
SEGMENT RESULTS
Bozzetto
Bozzetto2 |
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(in millions of dollars expect for margin data) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
Revenue |
87.4 |
88.1 |
45.9 |
Gross Profit |
25.6 |
26.8 |
13.7 |
Gross Margin |
29.3 % |
30.4 % |
29.8 % |
Operating Expenses3 |
(20.9) |
(17.1) |
(20.5) |
Operating Income (loss) |
4.7 |
9.7 |
(6.8) |
Earnings (loss) before income taxes |
0.7 |
5.9 |
(25.7) |
Adjusted EBITDA4 |
15.1 |
15.5 |
8.5 |
Adjusted EBITDA margin |
17.3 % |
17.6 % |
18.5 % |
- Bozzetto generated revenue of
$87.4 million in the second quarter of 2024, largely flat with the$88.1 million generated in Q1 2024. The modest quarter-over-quarter decline was driven by a number of macro-economic factors, including disruptions to global shipping and the impact of high inflation that weakened customer demand across various segments. These developments were partially offset by stronger demand for Bozzetto's textile solutions inAsia . - Adjusted EBITDA for Q2 2024 was
$15.1 million , which represents a margin of 17.3%. These compare to$15.5 million and 17.6%, respectively, for Q1 2024. The variance was due to factors already cited. - In anticipation of continued strong demand for its textile solutions in
Asia , Bozzetto is increasing its use of local suppliers for raw materials while preserving margins.
__________________________________________ |
2 Bozzetto's results for Q2 2024 and Q1 2024 include contributions from its acquisition of |
3 Operating expenses for the three months ended |
4 Adjusted EBITDA is a non-GAAP measure. |
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(in millions of dollars except for margin data) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
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Revenue |
35.0 |
34.0 |
28.9 |
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Gross Profit |
6.9 |
7.8 |
5.4 |
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Gross Margin |
19.7 % |
22.9 % |
18.7 % |
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Operating Expenses5 |
(9.6) |
(7.0) |
(4.1) |
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Operating Income (loss) |
(2.7) |
0.8 |
1.3 |
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Earnings (loss) before taxes |
(1.5) |
(1.5) |
(2.3) |
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Adjusted EBITDA6 |
3.6 |
4.0 |
4.6 |
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Adjusted EBITDA Margin |
10.3 % |
11.8 % |
15.9 % |
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- Cortland generated revenue of
$35 million for Q2 2024, up 2.9% from$34 million generated in Q1 2024. While revenue grew, sales in the second quarter were lumpy and impacted by global shipping disruptions and delayed customer deliveries due to limited availability of shipping containers. - Adjusted EBITDA for Q2 2024 was
$3.6 million , representing a margin of 10.3%. This included$1.2 million of advisory fees in the quarter relating to business transformation and operational improvement initiatives aimed at enhancing Cortland's performance. - Excluding these advisory fees, Adjusted EBITDA for Q2 2024 totaled
$4.8 million , representing a margin of 13.7% and an increase of$0.8 million over Q1 2024. The increase was largely driven by lower selling, general and administrative expenses and higher revenue, partially offset by higher cost of sales. - As result of a business transformation initiative, Cortland developed a strategic roadmap to build market share, strengthen its salesforce and launch the new products. The benefits of the strategic roadmap are expected over the coming quarters.
Holdings Segment
The Holdings segment includes
Holdings Segment |
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(in millions of Canadian dollars) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
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Operating Expenses |
(8.0) |
(10.9) |
(7.2) |
|
Earnings (loss) before taxes |
(1.0) |
(5.8) |
(39.4) |
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Adjusted EBITDA 7 |
(6.4) |
(12.8) |
(7.6) |
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- Operating expenses for the Holdings segment in Q2 2024 included
$2.9 million of expenses related to shareholder activism,$0.8 million of share-based compensation expenses driven by new grants and an increased share price in the quarter, and$0.8 million of legal and advisory fees related to the termination of the Paladin agreements. - Adjusted EBITDA in Q2 improved by
$6.4 million largely due to a decline in shareholder activism expenses and employee separation payments.
____________________________ |
5 Operating expenses for the three months ended |
Outlook and Guidance
Given performance on a year-to-date basis and the impact of one-time expenses relating to the termination of the Paladin agreements,
(in millions of Canadian dollars) |
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Guidance for |
Year-to-date |
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Adjusted EBITDA at Bozzetto and Cortland on a Combined Basis |
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Holding Company Costs |
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_______________________________ |
8 Excludes |
Quarterly Conference Call and Audio Webcast Information
About
Non-GAAP Financial Measures and Reconciliation to Comparable GAAP Measures
"GAAP" means Canadian Generally Accepted Accounting Principles (which are in accordance with the International Financial Reporting Standards).
Adjusted EBITDA
Adjusted EBITDA is not a measurement based on GAAP, is not considered an alternative to net earnings in measuring profitability, does not have a standardized meaning and is not directly comparable to similar measures used by other issuers. Adjusted EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statements of cash flows. A reconciliation to operating income (loss) is provided.
Adjusted EBITDA is used by management to evaluate the performance of its Bozzetto,
Adjusted EBITDA is operating income (loss) adjusted to exclude depreciation, amortization, impairment charges related to non-financial assets, cost of sales expense related to inventory fair value step up resulting from purchase price allocation, share-based compensation, costs related to the termination of the Paladin agreements, as well as transaction costs related to business acquisitions.
For a reconciliation of Adjusted EBITDA to operating income (loss), please refer to the tables below.
BOZZETTO |
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(in millions of Canadian dollars) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
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Reconciliation of Adjusted EBITDA |
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Operating income (loss) |
4.7 |
|
9.7 |
(6.8) |
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Depreciation and amortization |
5.3 |
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5.1 |
2.9 |
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Cost related to the termination of Paladin agreements |
4.9 |
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— |
— |
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Transaction related costs |
0.2 |
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0.7 |
12.4 |
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Adjusted EBITDA |
15.1 |
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15.5 |
8.5 |
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Adjusted EBITDA margin |
17.3 % |
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17.6 % |
18.5 % |
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CORTLAND INTERNATIONAL |
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(in millions of Canadian dollars) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
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Reconciliation of Adjusted EBITDA |
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Operating income (loss) |
(2.7) |
|
0.8 |
1.3 |
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Depreciation and amortization |
2.9 |
|
3.0 |
2.3 |
|
Cost of sales expense related to inventory fair value step up resulting from purchase |
— |
- |
— |
0.7 |
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Costs related to the termination of Paladin agreements |
1.5 |
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— |
— |
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Transaction and transition related costs |
1.9 |
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0.2 |
0.3 |
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Adjusted EBITDA |
3.6 |
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4.0 |
4.6 |
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Adjusted EBITDA margin |
10.3 % |
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11.8 % |
15.9 % |
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HOLDINGS |
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(in millions of Canadian dollars) |
Q2 2024 |
Q1 2024 |
Q2 2023 |
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Reconciliation of Adjusted EBITDA |
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Operating income (loss) |
(8.0) |
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(10.9) |
(7.2) |
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Share-based compensation |
0.8 |
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(1.9) |
(0.4) |
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Cost related to the termination of Paladin agreements |
0.8 |
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__ |
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Adjusted EBITDA |
(6.4) |
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(12.8) |
(7.6) |
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Six Months |
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2024 |
Holdings segment Selling, general and administrative expenses |
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18.9 |
Shareholders activism related expenses |
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(9.8) |
Share-based compensation (expense) reversal |
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1.1 |
Separation payments related management changes |
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(1.6) |
Costs related to the termination of Paladin agreements |
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(0.8) |
MIM wind-down expenses |
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(0.4) |
Other one-time professional fees |
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(0.6) |
Holdco Costs |
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6.8 |
Forward-Looking Statements
This press release contains statements that constitute "forward-looking information" within the meaning of Canadian securities laws ("forward-looking statements"), which are based upon
Forward-looking statements in this press release include, but are not limited to,
Forward-looking statements, by their nature, are based on assumptions and are subject to known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the forward-looking statement will not occur. The forward-looking statements in this press release speak only as of the date hereof and reflect several material factors, expectations and assumptions. Undue reliance should not be placed on any predictions or forward-looking statements as these may be affected by, among other things, changing external events and general uncertainties of the business. A discussion of the material risks applicable to the Company can be found in
SOURCE