Q & A Highlights

Q: What would constitute success for Courtland over the next 12 to 24 months, and what is the timeframe for visible improvements? A: Rhys Summerton (Executive Chairman) stated that the changes at Courtland are already bearing fruit, with improvements expected to be visible in the second half of this year, not requiring a 24-month wait. The short-term goal is to make the business more resilient and defensive against macro events by diversifying revenue streams. Longer-term, the vision is to transform Courtland into a global, serial-acquirer growth platform through small bolt-on acquisitions that improve geographic coverage and reduce reliance on key markets.

Q: How much of Aimia's cash are you willing to deploy towards funding Courtland's growth instead of investing in new companies? A: Rhys Summerton (Executive Chairman) explained that Courtland is already cash-flow generative and has no debt, so the bulk of its acquisitions would be self-funded at the Courtland level. The opportunities reviewed so far would not require significant cash from the Aimia holding company, preserving central capital for other investments.

Q: Can you elaborate on the reasons for the further listing in the UK, the sectors you will focus on, and whether you will look at the wider European market? A: Rhys Summerton (Executive Chairman) noted that most of the opportunities being evaluated are in the UK, making a secondary AIM listing logical. He stated that the company is agnostic to geography and is looking at targets in Canada, the UK, and other Western countries. He added that they have exited Europe with the sale of Bozzetto and would need a very attractive opportunity to return, but the long-term direction of travel is to eventually have a primary listing in the US.

Q: What are the lessons learned from the Bozzetto acquisition, and how will this influence the future acquisition framework? A: Rhys Summerton (Executive Chairman) identified the primary lesson as the mistake of high gearing on Bozzetto, which forced the holding company to service a 9.75% debenture, starving the business of cash for growth. Going forward, Aimia will focus on acquiring companies with net cash on their balance sheets and will avoid taking on significant debt at the holdco level. He also emphasized that management teams of acquired companies must understand that capital allocation decisions rest with Aimia's board, which holds nearly 45% of shares, ensuring strong alignment.

Q: Can you explain the process you are using to identify investment targets? A: Rhys Summerton (Executive Chairman) described a strategy of looking for hidden value neglected by the market, such as companies with low investor interest or shareholders seeking liquidity. By building equity stakes beforehand, Aimia can buy into companies at more attractive prices than private equity, which typically pays premiums. He stressed that the process relies on hard work, including visiting companies and reading annual reports, and that Aimia retains the flexibility to exit investments if share prices rally beyond intrinsic value.

Q: How did Aimia utilize capital loss carry-forwards in the Bozzetto transaction, and will future transactions be structured to utilize these tax losses? A: Steven Leonard (President and CFO) explained that the capital losses are held by the Canadian parent company, Aimia Inc. Since the Italian business was held under this entity, the taxable capital gain from the sale was offset by applying $45 million of capital losses. For future investments, Aimia will structure transactions through the parent company to utilize these losses against taxable gains when businesses are sold. Rhys Summerton added that Aimia has $1.1 billion in NOLs, which is a key advantage for a serial acquirer, and they will be utilized through acquisitions in Canada, the US, and other profitable transactions.

Q: What are your plans for Aimia's investment in Clear Media? A: Rhys Summerton (Executive Chairman) stated that Clear Media is turning around with results improving year-over-year, but there is still a long runway for growth. He believes it would be the wrong time to monetize the investment and that Aimia is happy to continue along for the journey to recovery, with a report to investors expected at the right time.

Q: Can you provide details on the $12.1 million in marketable securities? A: Rhys Summerton (Executive Chairman) described these as preliminary investments in companies that are attractively priced and potentially ones Aimia would love to own eventually. He cautioned against trying to predict next moves, as the company maintains flexibility and will reevaluate if share prices rally. He emphasized that these investments are part of the strategy to build stakes without paying premiums, which ultimately benefits Aimia shareholders rather than a private equity model.

Q: Is the near-term improvement at Courtland primarily a reflection of the macro environment getting better? A: Steven Leonard (President and CFO) explained that the improvement is driven by a combination of factors. The geopolitical events in the Middle East caused downstream users to delay purchasing decisions and draw down inventories, but these users still need the products, and orders are starting to pull through in the second half. Additionally, pricing surcharges implemented in response to rising raw material costs are expected to improve gross margins in the second half of the year.

Q: Should investors use net book value as the main metric to measure Aimia's progress? A: Rhys Summerton (Executive Chairman) affirmed that net book value per share is a useful heuristic to measure success, stressing the "per share" part due to the active buyback program. He noted that while there will be lumpiness in periods ahead, the trajectory of net book value per share should appreciate over time if the right decisions are made, and it is unlikely that book value would grow without intrinsic value following a similar path.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .