Q4 2021 Loyalty Ventures Inc Earnings Call

Speaker 1: Good afternoon and welcome to Loyalty Ventures 4th quarter 2021 earning golf and

Good afternoon, and welcome to the loyalty ventures fourth quarter 2021 earnings Conference call.

Speaker 1: At this time, all parties have been placed on a listen-only mode.

At this time all parties have been placed on a listen only mode.

Speaker 1: Following today's presentation, the floor will be open for your questions.

Following today's presentation the floor will be open for your questions.

Speaker 1: So as a question you will need to rest the start and the one key on your touch down telephone.

To ask a question you will need to press. The Star then the one key on your Touchtone telephone.

It is now my pleasure to introduce MS Lynn Morgen of Advisory partners.

Speaker 1: and a somewhat pleasure to introduce Ms. Glenn Morgana with advisory partners. Ms. Moore.

Morgan the floor is yours.

Speaker 2: Thank you, operator. Happy's of the slides we will be reviewing today and the earnings release can be found on the Investor Relations section of LWIP.

Thank you operator.

<unk> of the slides, we will be reviewing today and the earnings release can be found on the Investor Relations section of our website hosting todays call are Charles Horn, President and Chief Executive Officer go ahead, with your dentures and Jeff Chesnut.

Speaker 2: Hosting today's call, our Charles Horn president and chief executive officer, of the Royal Fugents.

Speaker 2: and Jeff Kessner, Executive Vice President and Chief Financial Officer.

Decorative vice President and Chief Financial Officer.

Speaker 2: Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Loyalty Ventures has no obligation to update the information presented on.

Before we begin I would like to remind you that some of the comments made on today's call with some of the responses to your questions may contain forward looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC lawyer.

Royalty ventures has no obligation to update the information presented on the call.

Speaker 2: Also on today's call, our speakers will reference certain non- GAAP financial measures, which we believe will provide useful information for

Also on today's call our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors reconciliation of those measures to GAAP will be posted on the Investor Relations website at loyalty ventures dotcom.

Speaker 2: Reconciliation of those measures to GAP will be posted on the Investor Relations website at loyaltyventures.com.

Speaker 2: With that, I would like to turn the call over to Charles Horne. Charles?

That I would like to turn the call over to Charles Horn chart.

Speaker 3: Thank you, Lynn. And thank you all for joining us today to review what we accomplished in 2021. And most importantly to discuss our business outlook in roadmap for 2022.

Thank you Lynn and thank you all for joining us today to review, what we accomplished in 2021, and most importantly to discuss our business outlook and roadmap for 2022.

Speaker 3: 2021 was a pivotal year for loyalty ventures as we separated from a long time parents on November 5th and became an independent publicly traded company. We have brought to establish data-driven loyalty solution providers to the market, both of which Cherokee investment strengths, namely, there are leaders and respective businesses have longstanding customer relationships and combined and generate very strong cash flow. These are the attributes that we intend to build upon in the coming years.

2021, which is a pivotal year for loyalty ventures as we separated from a longtime current on November 5th and became an independent publicly traded company.

<unk> brought to establish data driven loyalty solution providers to the market both of which Cherokee investment shrinks, mainly there are leaders in their respective businesses have longstanding customer relationships and combine generate very strong cash flow.

These are the attributes that we intend to build upon in the coming years.

Speaker 3: As you can see on page three, with our spin-off complete, we are now organized exclusively around the clients and consumers of our air models and brand loyalty businesses. Air models and brand loyalty drops sustainable, top-line growth with their clients through their substantial data assets, and the analytics to transform that data into actionable and personalized marketing insights delivered a scale.

As you can see on page three with our spinoff complete we are now organized exclusively around the clients and consumers of our air miles and <unk> businesses.

Hollister brand loyalty drive sustainable topline growth with their clients through their substantial data assets and the analytics to transform that data into actionable and personalized marketing insights delivered a scale.

Speaker 3: During a year, challenge with COVID development since surprising disruptions. Those capabilities helped us create value for our clients while developing new approaches to serve our partners in 2022.

During the year challenged with Covid development since supply chain disruptions those capabilities helped us create value for our clients, while developing new approaches to serve our partners in 2022.

Speaker 3: At Eremals, both revenue and adjusted EBITDA were up slightly compared to 2020. Brand-Oltis revenue and adjusted EBITDA were both down in 2021. As the business dealt with ongoing COVID-related logistics challenge.

At Air miles, both revenue and adjusted EBITDA were up slightly compared to 2020.

Brand loyalties revenue and adjusted EBITDA were both down in 2021. This is a business deal with ongoing COVID-19 related logistics challenges.

Speaker 3: In 2021, Brand loyalty implemented several initiatives to unlock more sourcing alternatives and drive improved performance in 2022. As we look forward, our capital allocation priorities have been established around the goal of transforming our company. We will invest meaningful in these businesses with both the capital to drive innovation and growth, and the commitment to be creative and flexible in our approach to enhancing ROI for our customers.

221 brand loyalty implemented several initiatives to unlock more sourcing alternatives and drive improved performance in 2022 as.

As we look forward our capital allocation priorities have been established around the goal of transforming our company, we will invest meaningful in these businesses with both the capital to drive innovation and growth and the commitment to be creative and flexible in our approach to enhancing ROI for our customers.

Turning to slide four highlights the key financial metrics for the fourth quarter total revenue for the quarter was $239 million adjusted EBITDA was $47 million.

Speaker 3: Turning to slide four, the highlights the key financial metrics for the fourth quarter. Total revenue for the quarter was 239 million, and adjusted the $1.47 million. Revenue increased 3% year-over year, while adjusted the $1.15% year-over year.

Revenue increased 3% year over year, while adjusted EBITDA grew 15% year over year.

Speaker 3: For the quarter, we reported a net loss of $2.27, which included a goodwill in paramount charge of 15 million, transaction-related cost of 18 million, and then the related impact on the provision for income taxes.

For the quarter, we reported a net loss of $2 27.

Which included a goodwill impairment charge of $50 million transaction related costs of $18 million and then the related impact on the provision for income taxes.

Speaker 3: For the full year, revenue total $735 million, adjusted the $160,000 million.

For the full year revenue totaled $735 million and adjusted EBITDA was $166 million.

Speaker 3: In 2021, we reported two main of net income and earnings for sure of seven cents, both of which were exclusive of the effects of the good low impairment, the transaction costs, and the impact on the provision for income tax.

'twenty, one we reported $2 million of net income and earnings per share of <unk>.

Both of which were excluding inclusive of the effects of the goodwill impairment the transaction costs and the impact on the provision for income taxes.

Speaker 3: When excluding the goodwill impairments and the transaction costs, that income and deluded EPS for the fourth quarter would have been 8 million and 34 cents and for the four year 66 million and $2.68.

When excluding the goodwill impairment and the transaction costs net income and diluted EPS for the fourth quarter would have been $8 million and 34 for the full year $66 million and $2 68.

Speaker 3: Slide 5 provides a quick update on several key initiatives that launched in the fourth quarter at Air Mile.

Slide five provides a quick update on several key initiatives that launched in the fourth quarter at air miles in conjunction with the spinoff Earmuff refresh this visual identity, which help to highlight and reinforce the enhancements we introduced the program the.

Speaker 3: In conjunction with the spinoff, AirMiles refreshes visual identity, which help to highlight and reinforce the enhancements we introduced to the program.

Speaker 3: The refresh was a strong success with high level of impressions, digital activations, and positive sentiment among collectors. Our sponsors also appreciated the extra energy and enthusiasm it added to the coalition.

The refreshed with strong success with high level of impressions digital activations and positive sentiment among sectors. Our sponsor's also appreciated the extra energy and enthusiasm it added to the coalition.

Speaker 3: In addition, Air Mouse wants to know new slide booking program in the fourth quarter.

In addition air miles launching all new flight booking program in the fourth quarter.

Speaker 3: Fletters now have more airline partners from which to choose and more ways to pay using both cash and miles, along with more value from miles. As a result, air miles saw a sizable lift and flight redemption before the Omicron variant emerged late in the year.

<unk> now have more airline partners from which to choose and more ways to pay using both cash and miles along with more value per mile.

As a result are muscle a sizable lift in flight redemptions before the omicron variant emerged late in the year.

Speaker 3: AirMiles also rolled out the CardLink offers in Q4. Collectors now can link any Canadian issued MasterCard to their AirMiles account and earn bonus miles at leading retailers.

Air miles also rolled out the card linked offers in Q4.

<unk> now can make any Canadian issue Mastercard to the air miles account and earned bonus miles at leading retailers.

Speaker 3: This limited promotion is a great way for collectors to earn more miles at more locations. We have seen strong collector uptake and engagement from this initiative and will continue to develop and test new ways to enhance collector sentiment and program value.

This limited promotion is a great way for customers to earn more miles and more locations. We have seen strong uptake and engagement from this initiative and we will continue to develop and test new ways to enhance Quaker sentiment and program value.

Okay.

Speaker 3: Slide six highlights select sponsor additions and renewals. During the quarter, we renewed several brands, including Kent Building Supplies, Nova Scotia Liquor Corporation, and Samsung.

Slide six highlights slick sponsor additions and renewals during the quarter, we renewed several brands, including Kent building supplies, Nova Scotia liquor.

Electric Corporation and Samsung.

Speaker 3: In addition, Canadian consumers can now earn air miles supporting small Canadian small businesses through the Air Miles Incentive Shopify app, which we launched in December .

In addition, Canadian consumers can now earn air miles supporting small Canadian small businesses through the air miles incentive Shopify, App, which we launched in December .

Speaker 3: It simply and securely integrates with merchants' existing e-commerce platforms, and the merchants can customize AirMiles offerings to promote specific products, services, or to increase basket size, reduce cart abandonment, and more.

Simply and securely integrates with merchants existing e-commerce platforms, and the merchants can customer air miles offerings to promote specific products services or to increase basket size reduced card abandonment and more the App also merchants offers merchants a simple to use interface along with transaction level reporting analytics, we are.

Speaker 3: The app also offers merchants a simple-to-use interface along with transaction-level reporting analytics.

Speaker 3: We are excited about their returns and look forward to growing in this important channel.

Excited about the early returns and look forward to growing in this important channel.

Speaker 3: As mentioned earlier, we launched our CardLinked offers program in November and collectors can now earn miles at leading retailers including DSW, H&M, Indigo, Sephora, and Subway. We are seeing positive momentum.

As mentioned earlier, we launched our card linked offers program in November and collectors can now earn miles at leading retailers, including DSW <unk> Indigo Sephora and subway.

We are seeing positive momentum in this program.

Speaker 3: We remain focused on growing our sponsor base and providing collectors a multitude of options to earn air miles reward miles across a variety of retail verticals.

We remain focused on growing our sponsor base and providing collectors a multitude of options to earn herbal air miles reward miles across a variety of retail verticals.

Speaker 3: Turning to page seven, it highlights the error models, reward models issuance, and redemption trends over the past nine quarters.

Turning to page 17 highlights the.

Air miles reward miles issuance and redemption trends over the past nine quarters.

Speaker 3: Miles issued increased sequentially in the fourth quarter, boosted by the holiday season, and redemptions improved sequentially as well, though the emergency Omicron variant resulted in fewer flat bookings than would normally be expected. At the same time, merchandise redemptions remained strong and were higher in both the fourth quarter and the full year compared to 2020.

Miles issued increased sequentially in the fourth quarter boosted by the holiday season, and redemptions improved sequentially as well, though the emergence of the omicron variant resulted in fewer flat bookings it would normally be expected.

At the same time merchandise redemptions remained strong.

Higher in both the fourth quarter and the full year compared to 2020.

Speaker 3: As travel restrictions recede, we anticipate higher demand for fly bookings and travel redemptions.

As travel restrictions receipt, we anticipate higher demand for <unk> bookings and travel redemptions are.

Speaker 3: Our Redemption Settlement Assets account had a balance of $735 million at year-end, funded by cash we set aside for future redemptions. We are confident the Redemption Settlement Assets will cover periods of elevated redemptions without any impact on our liquidity or operating cash flow.

Our redemption settlement assets account had a balance of 735 million at year end funded by cash we set aside for future redemptions. We are confident redemption settlement assets will cover periods of elevated redemptions without any impact on our liquidity our operating cash flow.

Speaker 3: Turning to page eight, let's review the key developments for BrandLoyalty in the fourth quarter. As part of the spinoff, BrandLoyalty updated its visual identity and introduced a bold new logo that clearly establishes that loyalty is the foundation for what they deliver to their clients.

Turning to page eight let's review the key developments for brand loyalty in the fourth quarter.

As for the spinoff <unk> updated this visual identity and introduced a bold new logo that clearly establishes that loyalty is the foundation for what they deliver to their clients.

Speaker 3: Brent Loyalty also renewed its relationship with Disney in key regions, enabling us to offer loyalty promotions, including the Walt Disney Company franchises to our retail clients.

Brendan <unk> also renewed its relationship with Disney in key regions, enabling us to offer loyalty promotions, including the Walt Disney company franchises to our retail clients. We believe the Disney relationship will continue to be a key differentiator for <unk> going forward and we were pleased to recommit to this relationship.

Speaker 3: We believe that this new relationship will continue to be a key differentiator for brand loyalty going forward, and we are pleased to recommit to this relationship.

Speaker 3: The emergence of the Omicron variant in the fourth quarter extended the COVID-related supply chain challenges that Brantley-Lafayette has encountered throughout 2021.

The emergence of the omicron variant in the fourth quarter extended the COVID-19 related supply chain challenges that <unk> encountered throughout 2021.

Speaker 3: During the year, the team has worked to develop alternative sourcing options so that reward merchandise can be reliably produced, shipped, and delivered to its clients.

During the year. The team has worked to develop alternative sourcing options. So thats reward merchandize can be reliably produced shipped and delivered to its clients.

Speaker 3: With an emphasis on regional sourcing, new shipping modalities, and pre-built container capacity, we are confident that we are well positioned to navigate potential supply chain constraints in 2022.

With an emphasis on regional sourcing new shipping modalities and pre booked container capacity. We are confident that we are well positioned to navigate potential supply chain constraints in 2022.

Speaker 3: Slide nine illustrates the broad geographic areas that brand loyalty serves. In 2021, these areas were impacted by COVID differently, not only in terms of lockdowns and other restrictions on economic activity, but also in terms of vaccine availability, efficacy, and uptake. As a result, some of these countries and regions will rebound at different times, and with different cadences, and each region will represent a different opportunity for brand loyalty.

Slide nine illustrates the broad geographic curious the brand multi serves in 2021. These areas were impacted by Covid differently not only in terms of Lockdowns and other restrictions on economic activity, but also in terms of vaccine availability FSC and uptake as a result, some of these countries and regions will rebound at different times.

And with different cadences, and each region will represent a different opportunity for brand loyalty.

Speaker 3: With our strong foundation in the EMEA region, we will work to expand that market through more grocery and retail relationships, while also supporting growth in the Americas and APAC. We believe that the current momentum combined with COVID recovery will lead to an expanded footprint and profitable growth in these areas.

With our strong foundation in the EMEA region, we will work to expand that market has been more grocery and retail relationships will also supporting growth in the Americas and APAC. We believe that the current momentum combined with code recovery will lead to an expanded footprint and profitable growth in these areas.

On slide 10, we provide additional detail on the investment roadmap that is designed to drive accelerated growth.

Speaker 3: On slide 10, we provide additional detail on the investment roadmap that is designed to drive accelerated growth.

Speaker 3: Over the past few years, our businesses have been unable to use the free cash flow to invest in their capability set a pace that they wanted. Now that we are in into an accompanying, our new team is committed to putting the earnings from these businesses back into initiatives that will fuel our future growth.

Over the past few years, our businesses had been unable to use the free cash flow to invest in our capabilities at a pace that they want it now that we are an independent company. Our new team is committed to putting the earnings from these businesses back into initiatives that will fuel our future growth.

Speaker 3: Specifically, we plan to invest an incremental 20 to 25 million of capex toward enhancing our collector-facing digital platforms while also upgrading our data and analytics capabilities so we can serve our clients better.

Specifically, we plan to invest an incremental 20 to 25 million of capex toward enhancing our electric facing digital platforms. While also upgrading our data and analytics capabilities. So we can serve our clients better.

These investments are underway in 2022 and will enhance <unk> experienced a sponsor analytics in 2023.

Speaker 3: These investments are underway in 2022, and will enhance our collector experience and sponsor analytics in 2023. To further demonstrate our commitment to enhancing the coalition today, we're investing 20 to 25 million toward improving the collector value proposition in Canada. We believe this will create a virtuous cycle. More engaged and excited consumers will collect more, which will help retain existing partners and attract new ones.

To further demonstrate our commitment to enhancing the coalition today, we're investing 20% to $25 million toward improving the collect your value proposition in Canada. We believe this will create a virtuous cycle more engaged and excited consumers will collect more which will help retain existing partners and attract new ones.

Speaker 3: This change capitalizes on the momentum of a recent spinoff, fulfills our promise to take a new approach, and serves as a bridge until the 2022 CapEx investments are live and in market next year.

This change capitalizes on the momentum of our recent spin off book.

<unk>, our promise to take a new approach and serves as a bridge until the 2022 Capex investments are alive and end market next year.

Speaker 3: We expect to start the transition back to traditional Ibadan margins in 2023.

We expect to start the transition back to traditional EBITDA margins in 2023.

Speaker 3: Collectively, we believe these investments will strengthen our standing as the leading coalition loyalty platform in Canada and position AirMiles for a strong and vibrant future.

Collectively we believe these investments will strengthen our standing as the leading coalition loyalty platform in Canada. In addition to air miles for a strong and vibrant future.

Speaker 3: While the investment focus in 2022 will be concentrated on air miles, we will remain vigilant for opportunistic acquisitions that will help brand loyalty and add clients, suppliers, and capabilities to spur sustainable growth.

While the investment focus in 2022 will be concentrated in air miles, we will remain vigilant for opportunistic acquisitions that will help brand loyalty at clients suppliers and capabilities to spur sustainable growth.

Speaker 3: As we move to slide 11, let's start off with how we plan to elevate consumer engagement across our business.

As we move to slide 11, let's start off with how we plan to elevate consumer engagement across our businesses. It earmarks, we recognize the pandemic has impacted historical redemption patterns by limiting demand for travel rewards and temporarily lengthening the overall commentary Dean.

Speaker 3: At Irmaus, we recognize the pandemic has impacted historical redemption patterns by limiting demand for travel rewards and temporarily linking the overall time to redeem.

Speaker 3: To drive collector engagement, we have added new merchandise, reward options, adjusted certain modest redemption thresholds, and enhanced our tier benefits. We've also started rolling out our real-time checkout platform, which provides sponsors with a streamlined method for instantly awarding their customers with AirMalseryWordMock either in store or online.

To drive customer engagement, we have added new merchandise reward options adjusted certain modest redemption thresholds and enhanced our tiered benefits. We've also started rolling out our real time checkout platform, which provide sponsors with a streamlined method for instantly awarding their customers with air miles reward miles either in store or online.

Speaker 3: Real-time issuance means our collectors can see their updated balances immediately after checkout and have an access to the reward mall sooner and makes redemption opportunities more accessible.

Real time issuance means there are collectors can see the updated balances immediately after checkout and having access to the reward mouth sooner makes redemption opportunities more assessable.

Speaker 3: We believe these changes will help our sponsors engage their consumers and improve the overall collector experience.

We believe these changes will help our sponsors engage their consumers and improve the overall collector experience.

Speaker 3: At Brandlolty, we renewed our exclusive partnership with the Walt Disney Company and key regions, making Brandlolty the only company in the industry that will partner with Disney to offer campaigns featuring Disney branded products.

Brand loyalty, we renewed our exclusive partnership with the Walt Disney Company in key regions, making brand loyalty the only company in the industry. They are a partner with Disney to offer campaigns featuring Disney branded products.

Speaker 3: Disney suite of products resonates with both clients and shoppers, engaging them in ways few other brands can. The brand-oatty team also recognized that the consumers of value and prior past sustainability and their everyday lives. So we have developed and deployed a set of virtual rewards in the form of carbon credit.

<unk> suite of products resonates with both clients and shoppers engaged in ways few of the brands can the.

The <unk> team also recognize it to consumers valuing prior kind of sustainability and their everyday lives. So we have developed and deployed a set of virtual rewards in the form of carbon credits.

Speaker 3: Collectors can consumers can collect and ultimately redeem these credits to have trees planted, which will help offset their personal carbon footprints. These virtual rewards also offer retailers redemption options that bypasses the fiscal supply chain and increases the certainty of a program's on-time launch.

<unk> consumer.

Consumers can collect and ultimately redeem these credits have trees planted which will help offset their personal carbon footprints.

Virtual rewards also offer retailers redemption option that bypasses the physical supply chain and increases the certainty of our programs on time launch.

On slide 12, let's explore how we are focused on digital innovations at air miles, we introduced improvements no travel booking experience, which offer consumers more choice and flexibility when reserving clients with the ability to choose spots anywhere in the world with different Kevin classes and pay with miles for cash the first phase of this new digital one.

Speaker 3: On slides 12, let's explore how we are focused on digital innovations. At AirMiles, we introduced improvements in our travel booking experience, which offer consumers more choice and flexibility when reserving flights. With the ability to choose flights anywhere in the world, with different cabin classes and pay with miles or cash, the first phase of this new digital first self-service platform was rolled out last quarter.

Self service platform was rolled out last quarter.

Speaker 3: We will continue to enhance it throughout 2022. And we believe collectors will appreciate these enhancements even more as travel redemption patterns start to normalize.

We will continue to enhance it throughout 2022, and we believe collectors will appreciate these enhancements even more as travel redemption pattern start to normalize.

Speaker 3: Additionally, we've partnered with Adobe to drive greater personalization and 101 messaging across our marketing and communication channels. We believe enabling tailored conversations at scale between our sponsors and our collectors will drive growth for sponsors and more relevant offers for collectors. We will be developing and deploying these capabilities to more sponsors throughout 2022.

Additionally, we partnered with Adobe to drive great greater personalization and one of them.

One messaging across our marketing and communication channels.

We believe enabling tailored conversations at scale between our sponsors architectures will drive growth of our sponsors and more relevant offers for collectors, we will be developing and deploying these capabilities to more sponsors throughout 2022.

Speaker 3: Brandlotti in turn has seen strong line uptake with this gamified digital lucky solution.

Brand loyalty and churn has seen strong client uptake with this game of five digital loyalty solutions the.

Speaker 3: The new solution for shoppers can win prizes by playing games. Drive traffic to retailers, digital channels, and increases engagement with shoppers through Army Channel campaign activation, increasing monthly active users. Renelolty has also launched a business consumer app with consumers can offer to the carbon footprint through certified projects.

The new solution, where shoppers can win prizes by playing games drives traffic to retailers digital channels and increases engagement with shoppers through Omnichannel campaign activation in.

Creasing monthly active users brand loyalty has also launched a business consumer at where consumers can offset their carbon footprint through certified projects with solution empowers consumers and partners to take corrective action to tackle climate change unique sustainable platform known as club leaf also offers a suite of business to business carbon offsetting services.

Speaker 3: The solution empowers consumers and partners to take collective action to tackle climate change. Unique sustainable platform, known as Club Leaf, also offers a suite of business to business carbon off-setting services.

Speaker 3: Finally, brand loyalty is delivered a new campaign solution in the fast growing e-drochery e-commerce basket. The solution is targeted to build the online ordering habits that are rewarding shoppers for their behaviors.

Finally brand loyalty has delivered a new campaign solution in the fast growing E grocery E. Commerce landscape. This solution is targeted to build the online ordering habits are rewarding shoppers for their behaviors.

Speaker 3: Moving to slide 13, we have highlighted areas of investment in our data and analytics capabilities.

Moving to slide 13, we have highlighted or is the investment in our data and analytics capabilities.

Speaker 3: AirMoz has always used first-party data and insights from consumer behavior to deliver personalized offers. The investments we are making today will allow us to do this with a greater scale and automation. And as these campaigns are in market, AirMoz recording and analytic suites give our partners access to data, insights and dashboards in order to analyze and evaluate performance in real time.

Aramark is always use first party data and insights from consumer behavior to deliver personalized offers the inverse.

Once we were making today will allow us to do this with greater scale and automation and as these campaigns were in market or amongst recording and analytics suite give our partners access to data insights and dashboards in order to analyze and evaluate performance in real time.

Speaker 3: Finally, our machine learning solutions help measure campaign effectiveness and recommend personalized offers.

Finally, our machine learning solutions help measure campaign effectiveness and recommend personalized offers.

Speaker 3: Brinnellity is elevated, it's impact measurement and methodology to predict and measure shopper uplift down to the segment of one, even the way for further personalized communication and campaigns design. The new personalized services are deepening the data flow, ensuring from our retail partners, which ultimately enables Brinnellity to deliver more impactful and relevant campaigns.

Brand loyalty is elevated its impact measurement methodology to predict and measure shopper uplift down to the segment of one paving the way for further personalized communication and campaign design.

New personalized services or deepening the data flow ensuring from our retail partners, which ultimately enables <unk> to deliver more impactful and relevant campaigns as you've heard we've hit the ground running with programs to strengthen our value proposition and build our capabilities to support future growth with that I will turn it over to our CFO Jeff <unk>.

Speaker 3: As you have heard, we've hit the ground running with programs to strengthen our value proposition and build our capability to support future growth. With that, I will turn it over to our CFO , Jeff Sussman.

No.

Speaker 3: Thanks Charles. Slide 14 presents our results for the fourth quarter in the full year of 2021, compared to the corresponding periods of 2020.

Thanks, Charles Slide 14 presents our results for the fourth quarter and the full year of 2021 compared to the corresponding periods of 2020.

Speaker 3: Revenue in the quarter was up 3% primarily due to a strong finish to the year at brand loyalty. Net income and diluted EPS were both down quarter of a quarter as a result of the goodwill impairment. Cost related to the spin-off and the income tax provision.

Revenue in the quarter was up 3%, primarily due to a strong finish to the year with brand loyalty net income and diluted EPS were both down quarter over quarter. As a result of the goodwill impairment costs related to the spinoff and the income tax provision, excluding the impairment and the strategic transaction costs net income and diluted EPS in the fourth quarter would have been $8 million.

Speaker 3: excluding the impairment in the strategic transaction cost net income and diluted EPS in the fourth quarter would have been $8,034,000 per share.

<unk> 34 per share.

Speaker 3: For the full year, revenue declined 4% as a result of the difficult environment that brand loyalty faced in 2021. Both net income and deluded EPS were each down for the full year as they were impacted by those items mentioned above. Excluding the impairment and the strategic transaction costs, net income and deluded EPS for 2021 would have been 66 million and 268 per share.

For the full year revenue declined 4% as a result of the difficult environment that brand loyalty placed in 2021, both net income and diluted EPS were each down for the full year as they were impacted by those items mentioned above excluding the impairment and the strategic transaction costs net income and diluted EPS for 2021 would've been 66.

And $2 68 per share.

Speaker 3: Over the last two years, the continuing impact of the pandemic combined with the global supply chain challenges have disrupted normal operations at brand loyalty. As a result, we determined it was more likely than not that the fair value of brand loyalty was below its carrying value and we performed an interim impairment test. Based on the preliminary results, we recognized a non-cash goodwill impairment charge of 50 million in the fourth quarter.

Over the last two years, the continuing impact of the pandemic combined with the global supply chain challenges disrupted normal operations of brand loyalty as a result, we determined it was more likely than not that the fair value of brand loyalty was below its carrying value and we performed an interim impairment test based on the preliminary results we recognized a noncash goodwill.

Impairment charge of $50 million in the fourth quarter brand.

Speaker 4: Brand Loyalty's Goodwill balance at the end of the year is expected to be 455 million after giving effect to the impairment and the effects impact.

Brand loyalty is goodwill balance at the end of the year is expected to be $455 million after giving effect of the impairment and the FX impact.

Speaker 4: As we will discuss in our outlook for this year, we believe brand loyalty will deliver a strong performance in 2022, and we're proud of how the team has navigated the circumstances of the past two years.

As we will discuss in our outlook for this year, we believe brand loyalty will deliver a strong performance in 2022, and we're proud of how the team has navigated the circumstances of the past two years.

Speaker 4: For full year 2021, the tax rates of the two segments ranged from approximately 25% to approximately 28% and the consolidated tax rate was impacted by several factors. These included Canadian-licholding taxes associated with the payments to the former parent and the currently non-deductible US expenses, such as the Goodwill Environment, Interest Extence, and Corporate Overhead. I'll provide more details on our

For full year 2021, the tax rate for the two segments ranged from approximately 25% to approximately 28% and the consolidated tax rate was impacted by several factors. These included Canadian withholding taxes associated with the payments to the former parent and the currently nondeductible U S expenses, such as the goodwill impairment interest expense and.

Corporate overhead.

I'll provide more details on our results on the next slide.

Speaker 4: Flight 15 presents our segment level results for the fourth quarter and the full year. In the fourth quarter, both Air Miles and Brand Loyalty exceeded their revenues in the year ago period. Air Miles adjusted Ibadal was 13% higher than the fourth quarter of 2020, due to op-ex savings across payroll and marketing. Brand Loyalty suggested Ibadal in the fourth quarter was 18% higher than the year ago period, due to the margin from the revenue growth as well as lower cost associated with key programs.

Slide 15 presents our segment level results for the fourth quarter and the full year.

In the fourth quarter, both air miles and brand loyalty exceeded their revenues in the year ago period Air miles adjusted EBITDA was 13% higher than the fourth quarter of 2020 due to opex savings across payroll and marketing.

Loyalty is adjusted EBITDA in the fourth quarter was 18% higher than the year ago period due to the margin from the revenue growth as well as lower costs associated with key programs.

Speaker 4: For the full year, AirMiles revenue and adjusted EBITDA increased 3% as the segment benefited from favorable exchange rates. Brand loyalty's full year revenue was down 8% and adjusted EBITDA was down 24% due to the ongoing impact of COVID in the markets in which brand loyalty operates.

For the full year air miles revenue and adjusted EBITDA increased 3% as the segment benefited from favorable exchange rate brand.

Brand loyalty is full year revenue was down 8% and adjusted EBITDA was down 24% due to the ongoing impact of Covid in the markets in which brand loyalty operates.

Speaker 4: In particular, brand loyalty experience persistent difficulties in sourcing timely deliveries of the merchandise that uses to reward consumers. And as a result, some retailer loyalty campaigns ran less effectively or were deferred until the product could be reliably sourced.

In particular brand loyalty experience persistent difficulties in sourcing timely deliveries of the merchandize that uses to reward consumers and as a result, some retailer loyalty campaigns ran less effectively over deferred until the product could be reliably sourced.

Speaker 4: Slide 16 provides our financial outlook for the year. Our full year guidance for 2022 reflects enterprise-wide top-line growth of about 7%, and an adjusted Bada Margin of approximately 20% at the midpoint of our revenue guidance range after taking into account the increased spending. We have budgeted it in 2022 to drive accelerated growth in 23 and beyond.

Slide 16 provides our financial outlook for the year, our full year guidance for 2022 reflects enterprise wide topline growth of about 7% and an adjusted EBITDA margin of approximately 20% at the midpoint of our revenue guidance range. After taking into account the increased spending we have budgeted in 2022 to drive accelerated.

Growth in 'twenty, three and beyond.

Speaker 4: Supporting our guidance for 2022 is our expectation for strong performance from BrandLoyalty. The BrandLoyalty team has significantly more contracted and high potential business today compared to a year ago. As a result, we expect double digit top line growth at BrandLoyalty with an improvement in the margin profile from mid single digits to low double digits.

Supporting our guidance for 2022 is our expectation for strong performance from brand loyalty.

Loyalty team has significantly more contracted and high potential business today compared to a year ago.

As a result, we expect double digit top line growth that brand loyalty with an improvement in the margin profile for mid single digits to low double digits.

We expect strong growth of brand loyalty to more than offset lower net revenues at air miles, which reflects the impact of the collective value enhancement initiatives that Charles mentioned earlier overall, we expect air miles to contribute about 70% of companywide adjusted EBITDA before corporate expenses.

Speaker 4: We expect strong growth of brand loyalty to more than offset lower net revenues at AirMiles, which reflects the impact of the collector value enhancement initiatives that Charles mentioned earlier. Overall, we expect AirMiles to contribute about 70% of company-wide adjusted EBITDA before corporate expenses.

Speaker 4: In fiscal 22, we expect the tax rates for the two segments to range from about 25% to about 28%.

In fiscal 'twenty two.

We expect the tax rate for the two segments to range from about 25% to about 28%.

Speaker 4: After considering the currently non-deductible US expenses, we forecast the consolidated tax rate will be about 50% and we expect cash taxes for 2022 to range from 30 to 37 million. We are focused on reducing the consolidated tax rate and initiatives are underway. The leverage or redistribute the currently non-deductible US expenses.

After considering the currently nondeductible U S expenses, we forecast the consolidated tax rate will be about 50% and we expect cash taxes for 2022 to range from 30% to $37 million.

We are focused on reducing the consolidated tax rate and initiatives are underway to leverage or redistribute. The currently nondeductible U S expenses.

Speaker 4: As we undertake the investments discussed today, we are mindful of our liquidity and our cash flow. Slide 17 highlights that our liquidity is strong at over $300 million at year end, and our free cash flow is $161 million. We have ample liquidity to support the strategic objectives we've outlined with capacity to react quickly on inorganic opportunities as appropriate.

As we undertake the investments discussed today, we are mindful of our liquidity and our cash flow slide 17 highlights that our liquidity is strong at over $300 million at year end and our free cash flow to $161 million, we have ample liquidity to support the strategic objectives, we've outlined with capacity to react quickly.

On inorganic opportunities as appropriate.

And we are confident that the strategic priorities, we outlined today will enable us to strengthen the leadership positions of both air miles and brand loyalty by building upon our relationships with existing clients, attracting new sponsors and clients and driving enhanced collector and consumer engagement with our loyalty programs.

Speaker 4: We are confident that the strategic priorities we outlined today will enable us to strengthen the leadership positions of both air miles and brand loyalty by building up on our relationships with existing clients, attracting new sponsors and clients, and driving enhanced collector and consumer engagement with our loyalty programs. Ultimately, these initiatives will transform air miles and brand loyalty and will help us continue to drive sustained profitable growth for our clients and for loyalty ventures. Operator, we are now ready to

Ultimately these initiatives will transform air miles and brand loyalty and will help us continue to drive sustained profitable growth for our clients and for loyalty ventures.

Operator, we are now ready to open the lines for questions.

Speaker 1: Ladies and gentlemen, as a question at this time, you will need to press the star then the one key on your touchtone cell phone. To withdraw your question, press the pound key.

Thank you, ladies and gentlemen to ask a question at this time you will need to press. The Star then the one key on your Touchtone telephone.

Latoya question with the pound key.

Speaker 1: Again, so as a question, please press star one. I'm sure we have a question coming from the line up. Mark Riddick with the dirty Yelena Sultan.

Again to ask a question. Please press star one I'm showing we have a question coming from the lineup Marc Riddick with Sidoti Your line is open.

Hi, good evening.

Sure.

So I wanted to start with.

Speaker 5: So I wanted to start with the, is there a general sense that we should be thinking about as far as the timeframe of the investments or throughout the, throughout 2022 if there's any, particularly on PNAS or how should we think about how that would flow throughout the year?

Is there a general sense that we should be thinking about as far as the timeframe of the investments are.

Throughout 2022, if there's any.

Particular, lumpiness or how should we think about how that would flow throughout the year.

Speaker 3: So the change we made to the air miles program to increase the value proposition, think of it as pretty much equally weighted by quarter just based upon the volumes. If you look at the CAPEX right now, we're really in the analysis stage of what changes we want to make and when we want to implement them. So I'd say, and maybe Jeff will agree with me, it's going to be more weighted Q2 through Q4 versus Q1 as we do a complete assessment of what we have and what we want to do.

Which of course.

The change will be made through the air miles program to increase the value proposition think of it as pretty much equally weighted by quarter just based upon the volumes. If you look at the Capex right now we're really in the analysis stage of what changes should we want to make and when we want to implement them. So I'd say, maybe Jeff will agree with me, it's going to be more weighted Q2 through Q4 versus.

Q1 is we do a complete assessment of what we have and what we want to do.

Okay, Great and then I wanted to shift gears and could you talk a little bit more about the Disney renewal.

Speaker 5: Could you talk a little bit more about the Disney renewal to the extent of what you can share with us as far as timeframe or maybe a little bit more detail around that renewal and the retail?

What you can share with us as far as.

Timeframe or sort of maybe a little bit more detail around that that renewal in the regions.

Speaker 3: Yes, sure. So if you think about it, much for a contract sit in the three to four year renewal space, and that's just what it's historically been, we can start negotiations in your advance. And so we'll be starting right now with one of our larger clients, and then we'll start later in the year with the second one. And so we'll continue with the we have in the past. We'll negotiate and we'll try to get a good deal for us and try to get a good deal for our clients. And we'll just see how it goes. It's just one of those things we always have to deal with with each short term contract.

Yes sure insurers. So if you think about it most of our contracts sit in that three to four year renewals space and Thats just the way. It's historically been we tend to start negotiations a year in advance and so we will be starting right now with one of our larger clients and that will start later in the year with the second one and so we'll continue with that we have in the past, we will negotiate and we'll try to get a good deal for us and tried.

To get a good deal for our clients and we'll just see how it goes.

It's just one of those things, we always have to deal with the short term contracts.

Speaker 5: Okay, and then can we talk a little bit about the card-linked offers, so some of the brands that you have mentioned in the presentation, there's certainly a mix of industry verticals. I was wondering if you could talk a little bit more about that and maybe where you think that might go and to some degree what that might do over time as to the mix of what's available and what's not.

Okay, and then can we talk a little bit about the card linked offers so some of the brands that you have.

<unk> mentioned in the.

The.

Presentation.

There is certainly a mix of.

Industry verticals, if we could talk a little bit more about that and maybe where you think that might go into to some degree what that might do over time as to the mix of.

What's available.

Please.

Speaker 4: Hey, Mark. This is Jeff. Yeah, we're excited about the CardLinkedOffer program. It's a great way to

Hey, Mark. This is this is Jeff we are excited about the card linked offer program, it's a great.

Way too.

Speaker 4: help our potential long-term sponsors try the program from an efficient standpoint without standing up too much infrastructure. It's also a way for our collectors

Help our potential long term.

Sponsors try the program.

From an efficiency standpoint, with outstanding up too much infrastructure. It's also a way for our collectors.

Speaker 4: to quickly expand where and how they earn. So, I would expect, this is a time-limited program, but I would expect to see more names joining here over the coming weeks, and we'll continue to evaluate it. I think this one's got legs.

So quickly expand where and how they earn so I would expect this is a time limited program, but I would expect to see more names joining here over the over the coming weeks and.

And we'll continue to evaluate and I think.

This one has got legs.

Speaker 5: Okay, and then shifting gears actually over to the...

Okay and then.

Shifting gears actually over to the.

Speaker 5: The commentary around the gaming option for folks, because quite frankly we don't spend enough time on our phones already as it is. I just wanted to talk a little bit about sort of how that program came about and sort of maybe even the content that's involved in these games. Is that something sort of where these games come from and as far as engagement and maybe how that works to sort of translate into revenue for yourselves and growth for your customers. Thank you. Thank you.

The commentary around the big.

The game.

The gaming option for for folks because quite frankly, we don't spend enough time on our phones already as it is I just wanted to talk a little bit about sort of how that.

Program came about and sort of maybe even.

The content that's involved in these games is that something sort of where does this game is coming from and as far as engagement and maybe how that works to sort of translate into revenue for yourselves and growth for your customers. Thank you.

Yes, Hey, Mark.

Speaker 4: So from a gamification standpoint, this is something that we work together in particular with our clients at BrandLoyalty to determine the type of traction or consumer behavior that they're looking to drive. And some of that behavior is foot traffic or basket size. Some of that behavior is oriented around app.

So from a from a gamification standpoint. This is something that we work together in particular with our clients a brand loyalty to determine that the type of.

Traction or consumer behavior that they're looking to drive and some of that behavior is foot traffic or basket size some of that behavior is oriented around.

Speaker 4: mobile adoption or online adoption, spending more time in the app. And so if that's the objective for the program, that's an opportunity for us to layer in those gamification elements. I really try to...

<unk>.

Mobile adoption or online adoption spending more time in the App and so.

If thats the objective for the program, that's an opportunity for us to layer in those game obligation elements.

And really try to two.

Speaker 4: sharpen the consumer's behavior around coming back to that app or that site in particular for retailers, especially in the grocery channel. Just like you're competing for foot traffic in your grocery store, you're competing for web traffic to get consumers to adopt.

Sharpen the consumers' behavior around coming back to that App.

That site in particular for retailer, especially in the grocery channel just like Youre competing for foot traffic in your grocery store, you're competing for web traffic to get consumers to adopt.

Speaker 4: your online delivery service or, you know, meals in a box, things of that nature. That's where you're gonna see those.

Your online.

Delivery service or.

Meals in a box things of that nature, Thats, where youre going to see those.

Speaker 4: really roll out and have traction. We'll do it in concert.

Really rollout and have traction we will do it in concert of course with the.

Speaker 4: of course with the retailers strategic objective.

With the retailers the strategic objectives.

Okay, and then one of the slides and then I'll jump back in queue, I'm, asking a bunch of questions I'm, sorry about that but.

Speaker 5: Okay, and then one of the slides, and then I'll jump back in queue, and I'm asking a bunch of questions. I'm sorry about that, but the.

Speaker 4: There was one slide on the brand loyalty going into the campaign statistics, and I was wondering if you could talk a little bit about that, the 185-plus campaigns, 140 retailers, and what have you. And I was wondering sort of where you think that can go in a normal environment, normal year, and how maybe what we've seen historically as far as those campaigns over time.

There was one slide.

On the brand loyalty going into the campaign statistics and I was wondering if could talk a little bit about that.

185, plus campaign and 140 retailers and what have you and I was wondering sort of where you think that can go in a normal environment normal year, and how maybe what we've seen historically as far as those those campaigns over time. Thank you.

Speaker 4: Yeah, sure. The, you know, brand loyalties.

Yes sure.

Brand loyalties.

Speaker 4: has been, as Charles mentioned earlier in his remarks, really impacted by the pandemic and the supply chain, the lack of travel in particular has limited brand loyalty's ability to get out and sell new campaigns to potential new clients.

It has been.

As Charles mentioned earlier in his remarks really impacted by the pandemic and the supply chain. The lack of travel in particular has limited brand loyalties ability to get out and sell.

New campaigns to potential new clients. So as you think about the list of countries. They are in today and where we're reporting those campaigns are running we'd expect that to grow as they move into not only more campaigns in their existing geographies, but expanding into those new geographies and new.

Speaker 4: So as you think about the list of countries they're in today and where we're reporting those campaigns are running, we'd expect that to grow as they move into not only more campaigns in their existing geographies, but expanding into those new geographies and new verticals within existing and new geographies as well through some of those partnership and digital innovations that Charles mentioned.

<unk>.

Within existing and new geographies as well through some of those partnership and in digital innovations that Charles mentioned so.

Speaker 4: Once the travel restrictions lift, not only certainly in Europe , where brand loyalty is headquartered, but in those regions around the world so they can get there.

Once that once the travel restrictions lift not only.

Certainly in Europe , where where brand loyalty is headquartered but in those regions around the world. So they can get there.

Speaker 4: and introduce these programs, I think you'll see those numbers continue to expand.

And and introduce these programs I think youll see those numbers continue to continue to expand.

Our next question coming from the line of Chris Crystal from Crystal family Office. Your line is open.

Speaker 1: Our next question coming from the line of Bruce Crystal from Crystal's family office.

Speaker 6: Yes, good afternoon. A few questions, please. The first is the investment of the 20 to 25 million that you'll be running through miles P and L. I was curious, was this at all related to the loss of the two sponsors earlier in the year?

Yes, good afternoon, a few questions. Please.

First is the investment of the $20 million to $25 million that you'll be running through.

Myles.

P&L.

I'm curious was this at all related to the loss of the two sponsors earlier in the year.

<unk>.

Speaker 6: And the second question along those lines, and a couple more after that, is your confidence that the $20 to $25 million investment, maybe you could spend a little bit more time about what that exactly will be, and will that in fact drive new sponsors, and specifically could there be any sponsors that are related beyond Canada?

And second question along those lines on a couple more after that.

Your confidence.

20% to $25 million investment, maybe you could spend a little bit more time about what that exactly will be and will that in fact drive new sponsors.

And specifically could there be any sponsors that.

Our related beyond Canada.

Speaker 3: So let's start off with your first question on really two of the programs that went away. The biggest one was Lowe's where they just decided not to be in the program anymore. I think indirectly it's a case where they were looking they were looking at cost. Now the collectors in the market were sitting there and we've gotten some feedback and we've gone out to all of our big sponsors and talked to them.

So let's start off with your first question on related to the program. So one way or the biggest gnome as Lowe's, where they've just decided not to be in the program anymore.

I think indirectly.

<unk>, where they were looking they were looking at could cost the.

The collectors in the market, we're sitting there and we've gotten some feedback and we've gone out to all of our big sponsors and talk to them.

Speaker 3: So we went out and did a little bit of a market check against some of our competitors in the market. And we felt that over the last couple of years, we kind of priced ourselves in terms of the value prop above where we should be.

So we went out and did a little bit of a market check against some of our competitors in the market and we felt that over the last couple of years, we've kind of priced yourselves in terms of the value prop above where we should be so we looked at it we said to bring us back into really in check even though we're the leader in the market to make it again more.

Speaker 3: So we looked at it, we said to bring us back into really in check, even though we're the leader in the market to make it again more agreeable to the plectral, if adjusted, let's try to get more value going through the consumer. They spend more, they pull through more to the sponsors to your point.

<unk> to the <unk> adjusted let's try to get more valuable intuit's consumer they spend more they pull through more to the sponsors to to your point sponsors get happy when people spend so if we get the collect or happy with the redemption options and we have a plethora and now they're getting more value they spend more and it's a virtuous cycle, we talked about so we.

Speaker 3: Sponsors get happy when people spend. So if we get the collector happy with the redemption options and we have a plethora, but now they're getting more value, they spend more and it's a virtuous cycle we talked about. So we felt after going into the market, talking to our big clients, doing a market check on some of the other programs in the market, PC Optimum, the RBC program and so forth, we felt it was appropriate to make the change. And we do think we'll get that back over time. We do think that's gonna drive collector engagement and drive more spend, and we're gonna come out ahead on it.

Felt after going into the market talking to our big clients doing in market share on some of the other programs in the market PC optimum the RBC program and so forth. We felt it was appropriate to make the change and we do think we'll get that back over time, we do think that's going to drive collector engagement and drive more spend and we're going to come out ahead on it.

Speaker 6: Okay, but at this point, is there any ability to...

Okay, but at this point or is there any ability to.

Speaker 6: see that this investment will lead to several new clients.

See that this investment will lead.

<unk> several new clients.

Speaker 3: I'll say we're being very active out in the market right now. To your point, we do need to bring in some new clients and some key verticals.

I will say, we've been very active out in the market right now to your point, we do need to bring in some new clients in some key verticals and we're trying to do it aggressively I do think this helps but this is not the only thing we need to do we also need to add capabilities, we need to move to open source data where clients can get into this rich database, we have and do some of their own marketing program.

Speaker 3: and we're trying to do it aggressively. I do think this helps, but this is not the only thing we need to do. We also need to add capabilities. We need to move to open source data where clients can get into this rich database we have and do some of their own marketing programs.

So there is a number of things we're looking to do to facilitate the products make it where it's even more than just the value profit consumer we're adding value to the sponsored by helping to market. The program end market and what they need. So that's really what the focus is going to be a combination of making it better for the collector, but also adding capabilities for the sponsor and make it.

Speaker 3: So there's a number of things we're looking to do to facilitate the products, make it where it's even more than just the value to the consumer. We're adding value to the sponsor by helping them market the program and marketing what they need. So that's really what the focus is going to be. The combination of making it better for the collector, but also adding capabilities for the sponsor and make it in such a way that no one else can replicate what we do. That's what we're attempting to do.

In such a way that no one else can replicate what we do that's what we're attempting to do.

Speaker 6: Okay. The second question is, in light of the lower ibadab,

Okay.

The second question is in <unk>.

Light of the lower EBITDA.

Speaker 6: Is there any change in the breakage rate assumptions? And if so, what would a 1% change in a breakage rate cause to the EBITDA?

Is was there any change in the brokerage rate assumptions.

And if so what would a 1% change in our breakage rate close to the EBITDA.

So I'll, let Jeff answer that one there was no change to the breakage rate, but if you think about what's happened over the last two years. The burn rate has been below the ultimate redemption rate and what I mean by that the amount of points Burns during the current year over the miles issued has been below the 80% ultimate redemption rate. So what it gives us some room down the road that if we see a spike and we think it.

Speaker 3: So I'll let Jeff answer that when there was no change to the breakage rate, but if you think about what's happened over the last two years, the burn rate has come below the ultimate redemption rate. And what I mean by that, the amount of points burned during the quarantine year over the month's issue has been below the 80% ultimate redemption rate. So what it gives us is some room down the road that if we see a spike, and we think it will, when people start booking flight again, we can go above the ultimate redemption rate for pretty much time the 80% on the drain program and not being a problem in an issue. So that shouldn't be a problem.

Will when people start looking flat again, we can go above the ultimate redemption rate for a period of time, the 80% on the dream program and not being a prop in an issue so that shouldn't be a problem.

Speaker 3: Jeff, to your point, did we quantify in our 10K the effect of one point change? I think it should be there, and you should know what that is.

Jeff.

Your point did we quantified in our 10-K.

The effect of one point change I think it should be there and you should know what that is.

Speaker 4: We haven't put the 10K out. I think you're referencing the form 10, Charles? Yeah.

We haven't built the <unk>.

<unk> 10-K out I think you're referencing the form 10, Charles yes.

Speaker 4: Yeah, I think it's, I think it's about, I think it's about $80 million Canadian.

Yes, I think it's.

I think it's about I think it's about 80 million.

Canadian.

I believe so yes.

Speaker 6: Okay, the next question I had was, just curious...

Okay.

The next question I have was.

Just curious here.

Speaker 6: the improvement here on the retail side of the business is actually quite dramatic. And I was wondering just from a...

The improvement here on the retail side of the business is actually quite dramatic.

And I was wondering just from a.

A.

Speaker 6: The fact that you're effectively a new company.

The fact that youre effectively a new company.

Speaker 6: And the fact that the parent company really was is effectively controlled by regulators, etc. and all of those type of things.

And the fact that the parent company would really was a.

As effectively controlled by regulators et cetera, all of those types of things.

Is there something here that.

Speaker 6: Is there something here that, you know, as you see as an independent company now that you'll be a strategy going forward will be, you know, a little bit shackle free, if you will, from regulators, et cetera, that will allow you to actually be a little bit more aggressive in the marketplace?

As you see as an independent company now that youll be the strategy going forward will be a little bit shackle shekel free if you will from regulators et cetera that will allow you to actually be a little bit more aggressive in the marketplace.

Charles you may be on you maybe on mute.

Speaker 3: Charles, you may be on mute. Oh, you're right. So you're right. So if you think about it with ADS, the focus was on the payment side. It was on the card services side, which to your point is highly regulated.

Alright. So you are right. So if you think about it with.

With the focus was on the payment side. It was on the card services side, which to your point is highly regulated so basically the loyalty ventures operations were looked at is how much cash can we harvest out and reinvest in the business. So it did do very well for <unk> in terms of dividend money back, but in my opinion at the detriment of future growth.

Speaker 3: So basically the loyalty ventures operations were looked at is how much cash can we harvest out and reinvest in the business.

Speaker 3: So it did do very well for ADS in terms of dividending money back, but in my opinion, that's a definite future growth.

Speaker 3: So as Jeff talked about, if we go through, we retain our cashflow, which is strong, we invest in the business for a couple of years, that's how we're gonna get to the growth profile we're looking for. That's gonna be the key thing for us, the ability to go into new markets.

As Jeff talked about if we go through we retain our cash flow, which is strong we invest in the business for a couple of years. That's how we are going to get to the growth profile. We're looking for.

That's going to be the key thing for us the ability to go into new markets I would like to bring air miles into the U S. I'd like to go many coalitions and some of the developing loyalty markets like Mexico Theres a number of things. We can do now that we just didn't have the opportunity to grow or not that there was anything wrong with the way. It was done it was just a different party. So we're shifting from harvesting cash now too.

Speaker 3: i'd like to bring air miles into the u.s. i'd like to go many coalitions and some of the developing a little p-market like mexico there's a number of things we can do now that we just didn't have the opportunity to group four not that there was anything wrong with the way we said it was just a different party so we're shifting from harvesting gas and out to how can we really grow the top line and make this a growthy company

How can we really grow the top line and make this a growth company.

Speaker 6: Do you think in 2022 we will actually see a U.S. partner?

Do you think in 2022, we will actually see a U S partner.

And air miles.

Speaker 3: Well, maybe not necessarily with AirMouse. We already have some U.S. partners with BrandLoyalty. We're going to look to bring some of the AirMouse capabilities, especially around data analytics into the U.S.

Well, maybe not necessarily with air miles. So we already have some U S partners with brand loyalty, we're going to look to bring some of the air miles capabilities, especially around data analytics into the U S. One of the things. We're also looking to do is to acquire certain assets in the U S. We had a presence in the U S. Before with a company that was part of air miles that was divested away a couple of.

Speaker 3: One of the things we're also looking to do is to acquire certain assets in the U.S.

Speaker 3: We had a presence in the US before with a company that was part of AirMal that was divested away a couple years ago by ADS. We'd like to reestablish some of that, go into the grocery vertical support brand loyalty in the US, and maybe add some additional capabilities.

Years ago by Aes, we'd like to reestablish some of that go into the grocery vertical supports brand loyalty in the U S and maybe add some additional capabilities.

Speaker 3: Back when Jeff and I were involved with epsilon. We knew what epsilon did really well We knew what epsilon didn't really do in the US markets And we think there's a gap there that we can really take advantage of.

Back when Jeff and our bulk with Epsilon, we knew what Epsilon did really well we knew what Epsilon didn't really do in the U S market. So we think there is a gap there that we can really take advantage of so look for us to be pretty aggressive trying to come into the U S and 2022.

Speaker 3: So look for us to be pretty aggressive trying to come into the US in 2022. Okay.

Okay.

And then just two.

Speaker 6: kind of a nitpicky question. So one is on the revolver.

Kind of nitpicky questions. One is on on the revolver.

Speaker 6: uh... you believe you could be four to seven rate increases has that have you thought about either doing something very creative like air candidate did where or not air can but united did in the second quarter here in uh... in the middle of the pandemic where they were able to secure ties part of their miles program

Depending on who you believe it could be 4% to 7% rate increases.

Have you thought about.

Either doing something very creative like Air Canada did were not allocated but United did in the second quarter here in the middle of the pandemic, where they were able to securitize part of their miles program.

Speaker 6: or do something where you know you swap out floating for fix.

Or do something where you would swap out.

Floating for fixed.

Yeah, Hey, Bruce.

Speaker 4: Yeah, Hey, Bruce. We certainly have been watching the rate environment. I don't know that we'd do anything from the airlines perspective with what they're considering, but certainly looking at swaps to help manage the interest exposure as we consider the entirety of the debt capital structure as well.

We certainly have been watching the rate environment.

No.

We do anything from like from the airline's perspective, with what Theyre considering but.

Certainly looking at.

Flops to help manage the.

The interest exposure as we consider the the entirety of the debt capital structure as well.

Speaker 6: Okay. It would just strike me that, you know, there's something I just hate to be in a position here where if we go through a multiple.

Okay.

It just strikes me that.

There's something I just hate to be in.

In a position here, where if we go through a multiple <unk>.

Speaker 6: increases you know uh... kept that out uh... but the uh... the final thing i was you know in the footnotes there was about a seventy million dollar tax law carry forward that had a various reserves against it and i was just wondering um... insofar as they're the goodwill charges and some of these other charges will there be a position that will be an attack law carry forward that will actually be able to be utilized going forward

Increases.

No.

Kept that out but the <unk>.

Final thing I was in the footnotes.

There was about a $70 million tax loss carryforward.

<unk> had various reserves against that and I was just wondering insofar as the goodwill charges in some of these other charges will there be a position that we'll be in a tax loss carryforward that will actually be able to be utilized going forward.

Speaker 4: If the, yeah, of course with the, I think there's some, there's a couple of elements there. In particular, there's a Canadian position that's owed back to the former parent. And then from a tax optimization standpoint, you're right, we're gonna be looking to.

Yeah of course, with the I think theres some theres a couple of elements there.

Particular theirs.

Canadian position, that's owed back to the former parent and then from a tax optimization standpoint, you're right, we're going to be looking to.

Speaker 4: really structure the business now that we're on our own in a way that we can leverage the tax efficiencies in the countries in which we're in and some of that's going to depend on that that those growth initiatives that Charles outlined in the US as well for this year.

Really structure the business now that we're on our own in a way that we can leverage.

The tax efficiencies in the countries in which we're in and some of that is going to depend on that.

Those growth initiatives that Charles outlined in the U S as well for this year okay.

Speaker 7: All right. Thank you very much for your time. Appreciate it. Thanks, Bruce.

Alright. Thank you very much for you to appreciate it.

Thanks Bruce.

Speaker 1: Ladies and gentlemen, as surrounded, if you have a question, please press star 1.

Ladies and gentlemen, as a reminder to ask a question. Please press star one.

Speaker 1: And our next question coming from the line of Seth Goldberg with Trilantic. Your line is open.

And our next question coming from the line of Fed Goldberg with <unk>. Your line is open.

Speaker 8: Hey guys, congrats and thanks for taking the question. First question is just around miles issuance and would love to get your thoughts as to the relative importance of factors that could cause issuance to inflect a growth.

Hey, guys, congrats and thanks for taking the question.

Sure Chris.

<unk> is just around miles issuance.

And would love to get your thoughts as to kind of the relative importance of factors.

Could cause issuance to inflect to growth.

Speaker 8: And so, you know, is it, you know, simply just an abatement of kind of COVID related pressures? Is it improving sponsor attention? Is it, you know, winning some sponsor logos? Okay. How do you think about what needs to happen in order for there to be an inflection to, you know, to my audition and Scrooze? Sure.

Is it simply just an abate.

Just kind of COVID-19 related pressures.

Improving sponsor retention and winning some new sponsor logos.

Do you think about what needs to happen in order for there to be an inflection.

Two miles issuance growth.

Sure.

Speaker 3: So, I'd break it down in a number of ways. The first is, we are looking actively to bring more sponsors into the program. So, that's always the best way to do it is to give your collectors the ability to cross-activate more places to spend. The second thing we need is to see some of our clients get back into promotional models.

US so I'd break it down in a number of ways. The first is we are looking actively to bring more sponsors into the program. So that's always the best way to do it is to give you a collector stability cross activate more places to spend the second thing we need is to see some of our clients get back into promotional miles.

Speaker 3: So the way our contracts normally work, you'll have clients who have base miles and then they have the opportunity to do promotional miles, which is above and beyond. We haven't seen a lot of promotional miles during this timeframe. You wouldn't expect it during COVID. So I think we will, over time, see the promotional miles come back into play.

So with the way our contracts really work you'll have clients, who are base miles and then they had the opportunity to do promotional miles, which is above and beyond.

We haven't seen a lot of promotional miles during this timeframe you would expected during COVID-19 .

We will over time see the promotional boss come back into play.

Speaker 3: And the third, we'd expect to pick up in discretionary spending. Once you see a pick up in discretionary spending, more credit card spend coming through BMO, that's another area that we think we could get some stimulus coming through. So it's going to be new clients, there's some promo miles, and there's going to be also a little element of mix as discretionary spend gets a little more prevalent.

And the third we would expect to pick up in discretionary spending.

Once you see a pickup in discretionary spending more credit card spend coming through with BMO.

Another area that we think we could get some stimulus coming through so it's going to be new clients as some promo mountain and this can be also little element of mix as discretionary spend gets some are more prevalent.

Speaker 8: it. And do you have any any color around?

Got it.

Do you have any color around.

Speaker 8: in the relative mix of base miles versus promo miles and the magnitude of the decline in promo miles that you saw during COVID.

The.

Relative mix of base miles versus promo miles.

The decline in volume that you saw during COVID-19 .

Speaker 3: I don't have that off the top of my head. I know promo models are way down from where they were. I just don't have it right at the moment. It's small, I know.

I don't have that off the top of my head I know promo mounts are way down from where they were I don't have it right at the moment.

A small announcement.

Speaker 8: No problem. And what, you know, how have you guys thought about the assumptions around mild issuance that are baked into the guidance for 2021?

No problem.

What have.

You guys thought about the assumptions around miles issuance that are that are baked into the guidance for 2002.

Hey.

Speaker 4: Hey, Seth, it's Jeff. You know, from a miles issuance standpoint, I think you'd be looking, you know, as we look across the year, we're looking at, you know, between four and five percent miles issuance, trending back up towards that five billion of issuance that we had last year.

Seth it's Jeff.

Our mouths issuance standpoint, I think <unk> been looking.

As we look across the year, we're looking at.

<unk>, 4% and 5% miles issuance that trending back up towards that $5 billion of issuance that.

Sure.

We had last year.

Speaker 8: Great. Got it. And then just switching gears for a second to the $40-$50 million of incremental investment that you highlighted. How much of that should we think of as recurring versus $22

Great got it.

And then just switching gears for a second to the.

The $40 to $50 million of incremental in Baltimore that you highlighted.

How much of that should we think of it as kind of recurring versus 22 on that.

Yes, so I'd break it down the Capex is going to be up for a couple of years, even though we start we expect to start seeing the benefit of it in 2023, the changes to the program in terms of the cost per mile or the value, we're giving to the consumer will stay the same but what youre going to look for us to drive more points issued more spend and youre going to listed basically.

Leverage your fixed costs more than mitigate the impact your EBITDA margins.

Speaker 3: So you'll see that the CapEx will start trending back down in 2023, and then you'll see us leveraging the top line and producing more EBITDA than what we did before, just as we get the pull-through effect from the collector being more engaged.

So you'll see that the Capex will start trending back down in 2023, and then Youll see us leveraging the top line and producing more EBITDA than what we did before just as we get the pull through effect from the collector being more engaged.

Speaker 8: And presumably, you know, to the extent that the incremental, you know, value to the collectors, you know, isn't something that drives, you know, increased engagement in Yuba Daad, and that's something that can be ratcheted back.

Got it and presumably can be extend the.

Incremental.

Value to the collectors.

Isn't something will drive.

Increasing engagement in EBITDA, and that's something that can be ratcheted back.

Speaker 3: Correct. Even though when we first announced the changes, we definitely saw an uptick in terms of redemptions for fly before the variant kicked back in and depressed us. So we definitely saw a very positive reaction. I'd like to maintain that positive reaction. I do think it helps with renewals. I do think it helps with collector engagement. It's really now about driving growth and leveraging our costs in the business.

Correct, even though when we first announced the changes we definitely saw an uptick in terms of redemptions for fly before the variant kicked back in and in process. So we definitely saw a very positive reaction I would like to maintain that fast reaction I do think it helps with renewals I do think it helps with collector engagement, it's really now about driving growth and leveraging our cost in the business.

Speaker 8: Got it. And one last question. How should we think about the sustaining CapEx needs of the business? Obviously, next year is going to be a big, or this year is going to be a big year for capital spending, and maybe there is some deferred, you know, investment and investment for growth. But just on a longer term basis, how do you think about what the CapEx profile of the business looks

Got it.

One last question, how should we think about the sustaining capex.

Obviously next year is going to be a big tour. This year, it's going to be a big year for.

Capital spending and maybe there was some deferred.

Investment and investment for growth, but just on all on a longer term basis, how do you think about it.

The capex profile of the business.

Speaker 4: Yeah. I think as you think about the CapEx outlook, we've got that extra investment this year. I think you'll see a blend between the baseline that we had before and what this new level is, incrementally speaking, as we go forward. And some of that investment beyond CapEx may be redirected into tuck-in acquisitions as we're on the lookout for adding capabilities if we see that there's something that we can pick up in the market.

And he said that.

As you think about the Capex outlook, we've got that extra investment this year I think youll see a blend between the baseline that we had before and what this new level is incrementally speaking.

As we go forward and some of that investment.

Beyond Capex may be redirected into tuck in acquisitions.

Acquisitions.

We're on the lookout for adding capabilities. If we see that there is something that we can pick up in the morning.

Market faster than we can build it ourselves.

Speaker 9: Got it. Well, thank you very much.

Got it thank you very much.

Thanks, Ed.

Speaker 1: And we have a follow-up question from Mark Riddick with Fedoti. Your line is open.

And we have a follow up question from Marc Riddick with Sidoti Your line is open.

Hi, Good evening I, just wanted to follow up on.

Speaker 5: Hi, good evening again. I just wanted to follow up on a couple of things. They're one of which being, because sort of comment on, given the investments that are maybe taking place this year, how we should be thinking about that reduction goals either just this year or sort of maybe in general on a longer-term basis as far as, you know, annualized that reduction on how we should be thinking about that. And then I will click follow up.

Couple of items, there one of which being if you can just sort of comment on.

Given the investments that are taking place this year, how we should be thinking about.

Debt reduction goals, either this year or sort of maybe in general on a longer term basis as far as.

Our annualized debt reduction or how we should be thinking about that and then I have a quick follow up after that.

Yeah sure Mark from a debt reduction standpoint, it's one of our top two.

Speaker 4: Yeah, sure, Mark. From a debt reduction standpoint, it's one of our top two capital allocation priorities for the year. The investments that Charles outlined as well as deleveraging and strengthening the balance sheet. I'd expect this year you'd see a reduction of approximately $50 million U.S. towards the debt capital structure as we move across the year.

Capital allocation priorities for the year, the investments that Charles outlined as well as deleveraging and strengthening the balance sheet I would expect this year you'd see a reduction of approximately $50 million.

Towards the.

Towards the.

The debt capital structure.

As we move across the year.

Speaker 5: Okay. And then given the investments that you're making, I'm sort of thinking about does this change or the timing or focus of acquisition targets? Are there maybe some type of acquisitions that you might, you know, push off until later until you've made these investments? Or how should we think about maybe the timing of acquisition targets and your ability to sort of, you know, get some of those done as you're also laying on the investment?

Okay, and then given the investments that youre, making.

Sort of thinking about how does this.

Change or the timing or focus of acquisition targets are there maybe some type of acquisitions that you might.

Pushed off until later until you've made these investments or how does how should we think about maybe the timing of acquisition targets and.

Your ability to sort of.

Get some of those done as Youre also lam on the investment spend.

Speaker 3: I'll break you down in pieces. I'd say for air miles, it's a double versus by concept. We know we want certain capabilities, products in place.

I'll break it down in pieces I would say for air miles.

Build versus buy concept, we know we want certain capabilities products in place and it may be a case, where we can acquire more timely and at a better cost than what we could necessarily developed internally. So I would say it will not reduce our effort and trying to engage acquisitions for air miles with brand loyalty, we could push it up.

Speaker 3: And it may be a case where we can acquire it more timely and then a better cost than what we could miss to be available in internally. So I'd say it will not reduce our effort and trying to engage that position for air miles.

Speaker 3: With brand loyalty, we could push it off a while. I think brand loyalty is in very good shape in terms of the capabilities they bring, the product offerings they have. So for them down the road, I'd like to do a little bit of a roll up.

So while I think brand royalties in very good shape in terms of the capabilities. They bring the product offerings. They have so with for them down the road and I'd like to do a little bit of a rollout.

Speaker 3: I'd like to take out some of the smaller uncapped, undercapped loss players within the space. That's not anything that's pressing, that's not anything we need to do right now. So the priorities really in 2022, going back to what's been asked before, get paid down, let's get to a very good leverage ratio that Jeff and I are comfortable with. And then adding capabilities for air miles, which may very well mean we acquire a company in Canada or the US that supports it.

I'd like to take out some of the smaller uncapped undercapitalized players within the space, but thats not anything thats pressing this evening, we need to do right now so the priority is really in 2022 going back to what's been asked before debt Paydown, let's get to a very good leverage ratio that Jeff and I are comfortable with and then adding capabilities for air miles, which may very well mean, we have.

<unk> company in Canada, or the U S that supports it.

Speaker 10: Okay, and the last one for me, I promise. The one thing you could talk a little bit about the efforts that were made around the supply team challenges, maybe what kind of worked well and what you kind of see being more, having longer tail and maybe just giving a couple of examples of that and sort of how that was received by customers and then how that might end up been packing how you do things a long time.

Okay, and then last one for me I promise.

I Wonder if you can talk a little bit about the efforts that were made around the supply chain challenges, maybe what kind of worked well and what you kind of see being more.

Having longer longer tail and maybe you could just maybe just give a couple of examples of that and sort of how that.

Was received by <unk>.

Customers and then how that might end up impacting how you do things long term.

Speaker 3: Sure. So one of the things we're doing it and we talked about it in the script is we are looking to add digital capabilities, e-capabilities, where basically you can redeem online. It could be gaming. It could be your redeeming to offset your carbon footprint. That will give us the ability to go into smaller, fast retail type businesses. So add more digital capabilities.

Sure. So one of the things we're doing it and we talked about it in the script is we are looking to add digital capabilities <unk> capabilities, where basically you can redeem online it could be gaming it could be you redeemed to offset your carbon footprint that will give us the ability to go into smaller.

Fast food.

Best retail type businesses, so add more digital capabilities. What we did do though is we started to buy a little bit more volume or do you get the containers, even though they were expensive the issue would be that the ports would shut down.

Speaker 3: What we did do though is we started to buy a little bit more volume or if you get the containers even though they were expensive, the issue would be that the ports would shut down.

Speaker 3: So when they push it down there's a lot you can do about it.

So when the port shut down there is not a lot you can do about it. So a lot of it is going to be trying to source locally which will really help us.

Speaker 3: So a lot of it's going to be trying to source locally, which will really help us a lot, but from a lead time standpoint as well, it's from a back stock standpoint, and then adding EK capabilities. And then I do think the ports are going to open up but we don't have this same level of lockdown that we're consistently dealing with in 2021.

A lot from a lead time standpoint, as well as from a backstop tenants standpoint, and then adding new capabilities and then I do think the courts are going to open up but we don't have the same level of lockdown that we're consistently dealing with in 2021.

I appreciate it thank you.

Yeah.

Okay.

Speaker 1: I'm sure enough for the questions at this time. I would now like to send a call back over to the patrol phone for any closing remarks.

And Im showing no further questions at this time I would now like to turn the call back over to Mr. Charles Horn for any closing remarks.

Speaker 3: Sure, thank you. I really appreciate everyone of you joining in for our first earnings call. It's a great event. We'd like to thank all the associates at LLT Ventures. We finally got to the point we're looking for. And so I really appreciate everyone being involved today. And let's look forward to driving some good outcomes in the future. Thanks, everyone.

Sure. Thank you really appreciate it appreciate every one of you joining into our first earnings call.

Great events, we'd like to thank all the associates of loyalty ventures. We finally got to the point, we were looking for and so I really appreciate everyone being involved today and let's look forward to driving some good outcomes in the future.

Thanks, everyone.

Speaker 1: Raise and join another feedback conference for today. Thank you for your participation. You may now disconnect.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

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Good afternoon, and welcome to the loyalty ventures fourth quarter 2021 earnings conference call.

Speaker 1: Good afternoon and welcome to Loyalty Ventures fourth quarter 2021 earnings conference call.

Speaker 1: At this time, all parties have been placed on a list and only mode. Following today's presentation, the floor will be open for your question.

At this time all parties have been placed on a listen only mode.

Following today's presentation the floor will be opened for your questions.

Speaker 1: To ask a question, you will need to press the star then the 1 key on your TouchTone telephone.

That's a question you will need to press. The Star then the one key on you touched on the telephone.

Speaker 1: And it's all my pleasure to introduce Ms. Lynn Morgan of Advisory Partners. Ms. Morgon.

And it's now my pleasure to introduce MS Lynn Morgen of Advisory partners.

MS Martin the floor is yours.

Thank you operator copies of the slides, we will be reviewing today and the earnings release can be found on the Investor Relations section of our website.

Speaker 2: Thank you operator copies of the slides we will be reviewing today and the earnings release can be found on the investor relations section of our web.

Speaker 2: Hosting today's call, our Charles Horn President and Chief Executive Officer of Royal Fugin.

During today's call are Charles Horn, President and Chief Executive Officer, Bill After ventures, and Jeff Chesnut, Executive Vice President and Chief Financial Officer.

Speaker 2: and Jeff Chestnut, Executive Vice President, and Chief the National Office.

Speaker 2: Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking states.

Before we begin I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the FCC.

Speaker 2: These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Neuralty Ventures has no obligation to update the information presented on.

LT ventures has no obligation to update the information presented on the call.

Speaker 2: Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors.

Also on today's call our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors reconciliation of those measures to GAAP will be posted on the Investor Relations website at loyalty ventures Dot com with that I would like to turn the call over to Charles Horn Charles.

Speaker 2: reconciliation of those measures to GAP will be posted on the investor relations website at loyaltyventures.com

Speaker 2: With that, I would like to turn the call over to Charles Horne. Charles?

Speaker 3: Thank you, Lynn, and thank you all for joining us today to review what we accomplished in 2021, and most importantly, to discuss our business outlook and roadmap for 2022.

Thank you Lynn.

Thank you all for joining us today to review, what we accomplished in 2021, and most importantly to discuss our business outlook and roadmap for 2022.

Speaker 3: 2021 was a pivotal year for Loyalty Ventures as we separated from a long-time parent on November 5th and became an independent publicly traded company. We have brought two established data-driven loyalty solution providers to the market, both of which share key investment strengths, namely they are leaders in their respective businesses, have long-standing customer relationships, and combined generate very strong cash flow. These are the attributes that we intend to build upon in the coming years.

2021, which is pivotal year for loyalty ventures, as we separated from a longtime parents in November 5th and became an independent publicly traded company. We have brought to establish data driven loyalty solution providers to the market.

Both of which Cherokee investments shrinks, mainly there are leaders in their respective businesses and longstanding customer relationships and combined generate very strong cash flow. These are the attributes that we intend to build upon in the coming years.

Speaker 3: As you can see on page three with our spinoff complete, we are now organized exclusively around the clients and consumers of our Air Miles and Brand Loyalty businesses. Air Miles and Brand Loyalty drive sustainable, top-line growth for their clients through their substantial data assets and the analytics to transform that data into actionable and personalized marketing insights delivered to scale.

As you can see on page three with our spinoff complete we are now organized exclusively around the clients and consumers of our air miles and <unk> businesses are modest and brand loyalty drive sustainable top line growth of their clients through their substantial data assets and the analytics to transform that data into actionable and personalized marketing.

That's delivered at scale.

Speaker 3: During a year, college with COVID development since applying to the indestructions, those capabilities helped us create value for our clients while developing new approaches to serve our partners in 2022.

During the year charge for Covid development and supply chain disruptions those capabilities helped us create value for our clients, while developing new approaches to serve our partners in 2022.

Speaker 3: At AirMiles, both revenue and adjusted EBITDA were up slightly compared to 2020. BrandLoyalty's revenue and adjusted EBITDA were both down in 2021 as the business dealt with ongoing COVID-related logistics challenges.

At Air miles, both revenue and adjusted EBITDA were up slightly compared to 2020.

<unk> revenue and adjusted EBITDA were both down in 2021 as the business dealt with ongoing COVID-19 related logistics challenges in 2021 brand loyalty implemented several initiatives to unlock more sourcing alternatives and drive improved performance in 2022.

Speaker 3: In 2021, Brandole T implemented several initiatives to unlock more sourcing alternatives and drive improved performance in 2022. As we look forward, our capital allocation priorities have been established around the goal of transforming our company. We will invest in meaningful in these businesses, so we built a capital to drive innovation and growth, and the commitment to be creative and flexible in our approach to enhance and ROI for our customers.

As we look forward our capital allocation priorities have been established around the goal of transforming our company, we will invest meaningful in these businesses with both the capital to drive innovation and growth and the commitments to be creative and flexible in our approach to enhancing ROI for our customers.

Speaker 3: Turning to slide four, it highlights the key financial metrics for the fourth quarter. Total revenue for the quarter was 239 million and adjusted EBITDA was 47 million. Revenue increased 3% year-over-year while adjusted EBITDA grew 15% year-over-year.

Turning to slide four highlights the key financial metrics for the fourth quarter total revenue for the quarter was $239 million and adjusted EBITDA was $47 million.

Revenue increased 3% year over year, while adjusted EBITDA grew 15% year over year.

Speaker 3: For the quarter, we reported a net loss of $2.27, which included a goodwill impairment charge of $50 million, transaction-related costs of $18 million, and vendor-related impact on the provision for income taxes.

For the quarter, we reported a net loss of $2 27.

Which included a goodwill impairment charge of $50 million transaction related costs of $18 million and then the related impact on the provision for income taxes.

Speaker 3: For the full year, revenue totaled $735 million and adjusted EBITDA was $166 million. In 2021, we reported $2 million of net income and earnings per share of $0.07, both of which were inclusive of the effects of the goodwill impairment, the transaction costs, and the impact on a provision for income tax.

For the full year revenue totaled $737 million and adjusted EBITDA was $166 million.

In 2021, we reported $2 million of net income and earnings per share of <unk> <unk>.

Both of which were excluding inclusive of the effects of the goodwill impairment the transaction costs and the impact on our provision for income taxes.

Speaker 3: When excluding the goodwill impairment and the transaction costs, net income and diluted EPS for the fourth quarter would have been $8,034,000 and for the full year $66,002.68.

When excluding the goodwill impairment and the transaction costs net income and diluted EPS for the fourth quarter would have been $8 million and 34 for the full year $66 million and $2 68.

Okay.

Speaker 3: Slide five provides a quick update on several key initiatives that launched in the fourth quarter at Air Moll.

Slide five provides a quick update on several key initiatives that launched in the fourth quarter at air miles and <unk>.

Speaker 3: In conjunction with this spinoff, AirMiles refreshed its visual identity, which helped to highlight and reinforce the enhancements we introduced to the program.

Conjunction with the spinoff earmuffs refresh distributional identity, which helped the highlights and reinforces the enhancements we introduced the program.

Speaker 3: The refresh was a strong success with high level of impressions, digital activations, and positive sentiment among collectors. Our sponsors also appreciated the extra energy and enthusiasm it added to the coalition.

The refreshed with strong success with high level of impressions digital activations and positive sentiment among sectors. Our sponsor's also appreciated the extra energy and enthusiasm it added to the coalition.

In addition air miles launching all new flight booking program in the fourth quarter collectors now have more airline partners from which to choose and more ways to pay using both cash and miles along with more value per mile.

Speaker 3: In addition, AirMiles launched an all-new flight booking program in the fourth quarter.

Speaker 3: Collectors now have more airline partners from which to choose and more ways to pay using both cash and miles, along with more value per mile. As a result, AirMiles saw a sizable lift in flight redemptions before the Omicron variant emerged late in the year.

As a result, aramark saw a sizable lift in flight redemptions before the omicron various emerged late in the year.

Speaker 3: Air Miles also rolled out the card-linked offers in Q4. Collectors now can link any Canadian-issued MasterCard to their Air Miles account and earn bonus miles at leading retailers.

Air miles also rolled out the card linked offers in Q4.

<unk> now can make any Canadian issue Mastercard to their air miles account and earn bonus miles at leading retailers.

Speaker 3: This limited promotion is a great way for collectors to earn more miles at more locations. We have seen strong collector uptake and engagement from this initiative and will continue to develop and test new ways to enhance collector sentiment and program value.

This limited promotion is a great way for collectors to earn more miles and more locations. We have seen strong uptake and engagement from this initiative and we will continue to develop and test new ways to enhance Quaker sentiment and program value.

Okay.

Slide six highlights slick sponsor additions and renewals during the quarter, we renewed several brands.

Speaker 3: Slide six highlights select sponsor additions and renewals. During the quarter, we renewed several brands, including Kent Building Supplies, Nova Scotia Liquor Corporation, and Samsung.

<unk> building supplies Nova Scotia.

Corporation and Samsung.

Speaker 3: In addition, Canadian consumers can now earn air miles supporting small Canadian small businesses through the Air Miles Incentive Shopify app, which we launched in December .

In addition, Canadian consumers can now earn air miles supporting small Canadian small businesses through the air miles incentive Shopify, App, which we launched in December .

Speaker 3: It simply and securely integrates with merchants' existing e-commerce platforms and the merchants can customize AirMiles offerings to promote specific products, services, or to increase basket size, reduce cart abandonment, and more.

Simply and securely integrates with merchants existing e-commerce platforms, and the merchants can customer air miles offerings to promote specific products services or to increase basket size reduced card abandonment and more.

Speaker 3: The app also offers merchants a simple to use interface along with transaction level reporting analytics.

<unk> also merchants offers merchants a simple to use interface along with transaction level reporting and analytics. We are excited about the early returns and look forward to growing in this important channel.

Speaker 3: We are excited about the early returns and look forward to growing in this important channel.

Speaker 3: As mentioned earlier, we launched our Card-Linked Offers program in November , and collectors can now earn miles at leading retailers including DSW, H&M, Indigo, Sephora, and Subway. We are seeing positive momentum.

As mentioned earlier, we launched our card linked offers program in November and collectors can now earn miles at leading retailers, including DSW H NIM Indigo Sephora and subway.

We are seeing positive momentum in this program.

Speaker 3: We remain focused on growing our sponsor base and providing collectors a multitude of options to earn AirMiles reward miles across a variety of retail verticals.

We remained focused on growing our sponsor base and providing collectors a multitude of options to earn herbal air miles reward miles across a variety of retail verticals.

Speaker 3: Turning to page seven, it highlights the error miles, reward miles issuance and redemption trends over the past nine quarters.

Turning to page seven highlights the arrow air miles reward miles issuance and redemption trends over the past nine quarters miles.

Speaker 3: Miles issued increased sequentially in the fourth quarter, boosted by the holiday season, and redemptions improved sequentially as well, though the emergence of the Omicron variant resulted in fewer flat bookings than would normally be expected. At the same time, merchandise redemptions remained strong and were higher in both the fourth quarter and the full year compared to 2020.

Miles issued increased sequentially in the fourth quarter boosted by the holiday season, and redemptions improved sequentially as well, though the emergence of the omicron variant resulted in fewer flight bookings that would normally be expected.

At the same time merchandize redemptions remained strong.

Higher in both the fourth quarter and the full year compared to 2020.

Speaker 3: As travel restrictions recede, we anticipate higher demand for flight bookings and travel redemptions.

As travel restrictions receipt, we anticipate higher demand for flight bookings and travel redemptions.

Speaker 3: Our redemption settlement assets account had a balance of $735 million a year in. Funded by cash, we set aside for future redemptions. We are confident the redemption settlement assets will cover periods of elevated redemptions without any impact on our liquidity or operating cash flow.

Our redemption settlement assets account at a balance of 735 million at year end funded by cash we set aside for future redemptions. We are confident redemption settlement assets will cover periods of elevated redemptions without any impact on our liquidity our operating cash flow.

Speaker 3: Turning to page eight, let's review the key developments for BrandLoyalty in the fourth quarter. As part of the spinoff, BrandLoyalty updated its visual identity and introduced a bold new logo that clearly establishes that loyalty is the foundation for what they deliver to their clients.

Turning to page eight let's review the key developments for brand loyalty in the fourth quarter.

As for the spinoff brand loyalty updated this visual identity and introduced a bold new logo that clearly establishes that loyalty is the foundation for what they deliver to their clients.

Speaker 3: Brent Loyalty also renewed its relationship with Disney in key regions, enabling us to offer loyalty promotions including the Walt Disney Company franchises to our retail clients.

Brandon, Let's see also renewed its relationship with Disney in key regions, enabling us to offer loyalty promotions, including the Walt Disney company franchises to our retail clients. We believe that this new relationship will continue to be a key differentiator for Grandma, we'll see going forward and we were pleased to recommit to this relationship.

Speaker 3: We believe the Disney relationship will continue to be a key differentiator for Brand and we are pleased to recommit to this relationship.

Speaker 3: The emergence of the Omicron variant in the fourth quarter extended the COVID-related supply chain challenges that Brantley-Lopez encountered throughout 2021.

The emergence of the omicron variant in the fourth quarter extended the COVID-19 related supply chain challenges that <unk> encountered throughout 2021.

Speaker 3: During the year, the team has worked to develop alternative sourcing options so that its reward merchandise can be reliably produced, shipped, and delivered to its clients.

During the year. The team has worked to develop alternative sourcing options. So thats reward merchandize can be reliably produced shipped and delivered to its clients.

Speaker 3: With an emphasis on regional sourcing, new shipping modalities, and pre-boot container capacity, we are confident that we are well positioned to navigate potential supply chain constraints in 2022.

With an emphasis on regional sourcing new shipping modalities and pre booked container capacity. We are confident that we are well positioned to navigate potential supply chain constraints in 2022.

Slide nine illustrates the broad geographic curious the brand multi serves in 2021. These areas were impacted by Covid differently not only in terms of Lockdowns and other restrictions on economic activity, but also in terms of vaccine availability FSC and uptake as a result, some of these countries and regions will rebound at different times.

Speaker 3: Slide nine illustrates the broad geographic areas the brand loyalty serves. In 2021, these areas were impacted by COVID differently, not only in terms of lockdowns and other restrictions on economic activity, but also in terms of vaccine availability, efficacy, and uptake. As a result, some of these countries and regions would rebound at different times and with different cadences, and each region will represent a different opportunity for brand growth.

And with different cadences, and each region will represent a different opportunity for brand loyalty.

Speaker 3: With our strong foundation in the EMEA region, we will work to expand that market through more grocery and retail relationships, while also supporting growth in the Americas and APAC. We believe that the current momentum combined with COVID recovery will lead to an expanded footprint and profitable growth in these areas.

With our strong foundation in the EMEA region, we will work to expand that market through more grocery and retail relationships will also supporting growth in the Americas and APAC. We believe that the current momentum combined with code recovery will lead to an expanded footprint and profitable growth in these areas.

Speaker 3: On slide 10, we provide additional detail on the investment roadmap that is designed to drive accelerated growth.

On slide 10, we provide additional detail on the investment roadmap that is designed to drive accelerated growth.

Speaker 3: Over the past few years, our businesses have been unable to use their free cash flow to invest in their capabilities at a pace that they wanted. Now that we are an independent company, our new team is committed to putting the earnings from these businesses back into initiatives that will fuel our future growth.

Over the past few years, our businesses had been unable to use the free cash flow to invest in new capabilities at a pace that they want it now that we are an independent company. Our new team is committed to putting the earnings from these businesses back into initiatives that will fuel our future growth.

Speaker 3: Specifically, we plan to invest an incremental 20 to 25 million of CapEx toward enhancing our collector-facing digital platforms, while also upgrading our data and analytics capabilities so we can serve our clients better.

Specifically, we plan to invest an incremental 20 to 25 million of capex toward enhancing our electric facing digital platforms. While also upgrading our data and analytics capabilities. So we can serve our clients better.

Speaker 3: These investments are underway in 2022, and will enhance our collector experience and sponsor analytics in 2023. To further demonstrate our commitment to enhancing the coalition today, we're investing 20 to 25 million toward improving the collector value proposition in Canada. We believe this will create a virtuous cycle. More engaged and excited consumers will collect more, which will help retain existing partners and attract new ones.

These investments are underway in 2022 and will enhance reflect your experiences sponsor analytics in 2023.

To further demonstrate our commitment to enhancing the coalition today, we're investing 20% to $25 million toward improving the collect your value proposition in Canada. We believe this will create a virtuous cycle more engaged and excited consumers will collect more which will help retain existing partners and attract new ones.

Speaker 3: This change capitalizes on the momentum of a recent spinoff, fulfills our promise to take a new approach, and serves as a bridge until the 2022 CapEx investments are live and in market next year.

This change capitalizes on the momentum of our recent spin off book.

Fulfills our promise to take a new approach and serves as a bridge until the 2022 Capex investments are alive and end market next year.

Speaker 3: We expect to start the transition back to traditional Ibadan margins in 2023.

We expect to start the transition back to a traditional EBITDA margins in 2023.

Speaker 3: Collectively, we believe these investments will strengthen our standing as the leading coalition loyalty platform in Canada and position AirMiles for a strong and vibrant future.

Collectively we believe these investments will strengthen our standing as the leading coalition loyalty platform in Canada. In addition to air miles for a strong and vibrant future.

Speaker 3: While the investment focus in 2022 will be concentrated on air miles, we will remain vigilant for opportunistic acquisitions that will help brand loyalty and add clients, suppliers, and capabilities to spur sustainable growth.

While the investment focus in 2022 will be concentrated in air miles, we will remain vigilant for opportunistic acquisitions that will help brand loyalty at clients suppliers and capabilities to spur sustainable growth.

Speaker 3: As we move to slide 11, let's start off with how we plan to elevate consumer engagement across our business.

As we move to slide 11, let's start off with how we plan to elevate consumer engagement across our businesses. It earmarks, we recognize the pandemic has impacted historical redemption patterns, but limited demand for travel rewards and temporarily lengthening the overall commentary Dean.

Speaker 3: At AirMiles, we recognize the pandemic has impacted historical redemption patterns by limiting demand for travel rewards and temporarily lengthening the overall time to redeem.

Speaker 3: To drive collector engagement, we've added new merchandise, reward options, adjusted certain mileage redemption thresholds, and enhanced our tier benefits. We've also started rolling out our real-time checkout platform, which provides sponsors with a streamlined method for instantly awarding their customers with AirMiles reward miles either in-store or online.

To drive collector engagement, we've added new merchandise reward options adjusted certain modest redemption thresholds and enhanced our tiered benefits. We've also started rolling out our real time checkout platform, which provide sponsors with a streamlined method for instantly awarding their customers with air miles reward mark either in store or online.

Speaker 3: Real-time issuance means our collectors can see their updated balances immediately after checkout and have an access to the reward mock sooner and makes redemption opportunities more accessible.

Real time issuance means or our collectors can see their updated balances immediately after checkout and having access to the reward mark sooner makes redemption opportunities more assessable.

Speaker 3: We believe these changes will help our sponsors engage their consumers and improve the overall collector experience.

We believe these changes will help our sponsors engage their consumers and improve the overall collector experience.

Speaker 3: At BrandLoyalty, we renewed our exclusive partnership with a Walt Disney company in key regions, making BrandLoyalty the only company in the industry to have a partner with Disney to offer campaigns featuring Disney-branded products.

At <unk>, we renewed our exclusive partnership with the Walt Disney Company in key regions, making brand loyalty the only company in the industry. They are a partner with Disney to offer campaigns featuring Disney branded products did.

Speaker 3: Disney's suite of products resonates with both clients and shoppers, engaging them in ways few other brands can. The brand loyalty team also recognized that the consumers value and prioritize sustainability in their everyday lives. So we have developed and deployed a set of virtual rewards in the form of carbon credit.

The suite of products resonates with both clients and shoppers engaged in ways few of the brands can.

<unk> also recognized that the consumers value and prior kind of sustainability in their everyday lives. So we have developed and deployed a set of virtual rewards in the form of carbon credits.

Speaker 3: Consumers can collect and ultimately redeem these credits to have trees planted, which will help offset their personal carbon footprints. These virtual rewards also offer retailers a redemption option that bypasses the fiscal supply chain and increases the certainty of a program's on-time launch.

<unk>.

Consumers can collect and ultimately redeem these credits to have trees planted which will help offset their personal carbon footprints. These virtual rewards also offer retailers redemption option that bypasses the physical supply chain and increases the certainty of our programs on time launch.

Speaker 3: On slide 12, let's explore how we are focused on digital innovations. At AirMiles, we introduced improvements in our travel booking experience, which offer consumers more choice and flexibility when reserving flights. With the ability to choose flights anywhere in the world, with different cabin classes and pay with miles for cash, the first phase of this new digital-first self-service platform was rolled out last quarter.

On slide 12, let's explore how we are focused on digital innovations at air miles, we introduced improvements in our travel booking experience, which offer consumers more choice and flexibility when reserving flats.

With the ability to choose slots anywhere in the world with different Kevin classes and pay with miles for cash. The first phase of this new digital first self service platform was rolled out last quarter.

Speaker 3: We will continue to enhance it throughout 2022 and we believe collectors will appreciate these enhancements even more as travel redemption patterns start to normalize.

We will continue to enhance it throughout 2022, and we believe collectively will appreciate these enhancements even more as travel redemption patterns start to normalize. Additionally, we partnered with Adobe to drive great Greater personalization and one to one messaging across our marketing and communication channels.

Speaker 3: Additionally, we partnered with Adobe to drive greater personalization and one-on-one messaging across our marketing and communication channels. We believe enabling tailored conversations at scale between our sponsors and our collectors will drive growth for our sponsors and more relevant offers for our collectors. We will be developing and deploying these capabilities to more sponsors throughout 2022.

We believe enabling tailored conversations at scale between our sponsors and architectures will drive growth of our sponsors and more relevant offers for collectors, we will be developing and deploying these capabilities to more sponsors throughout 2022.

Yeah.

Speaker 3: BrandLoyalty, in turn, has seen strong client uptake with its gamified digital loyalty solution. The new solution, where shoppers can win prizes by playing games, drives traffic to retailers' digital channels, and increases engagement with shoppers through omni-channel campaign activation, increasing monthly active users. BrandLoyalty has also launched a business consumer app, where consumers can offset their carbon footprint through certified projects.

Brand loyalty and churn has seen strong client uptake with this game of five digital loyalty solution.

The new solution, where shoppers can win prizes by playing games drives traffic to retailers digital channels and increases engagement with shoppers through Omnichannel campaign activation, increasing monthly active users were loyalty has also launched a business consumer at where consumers can offset their carbon footprint through certified projects with solution empowers consumers.

Speaker 3: This solution empowers consumers and partners to take collective action to tackle climate change. Unique sustainable platform, known as Club Leaf, also offers a suite of business-to-business carbon offsetting services.

Partners to take corrective action to tackle climate change unique sustainable platform known as club leaf also offers a suite of business to business carbon offsetting services.

Speaker 3: Finally, BrandLoyalty has delivered a new campaign solution in the fast-growing e-grocery, e-commerce landscape. The solution is targeted to building online ordering habits by rewarding shoppers for their behaviors.

Finally brand loyalty has delivered a new campaign solution in the fast growing E grocery E. Commerce landscape. This solution is targeted to build the online ordering habits are rewarding shoppers for their behaviors.

Speaker 3: Moving to slide 13, we have highlighted areas of investment in our data and analytics capabilities.

Moving to slide 13, we have highlighted areas of investment in our data and analytics capabilities.

Speaker 3: AirMouse has always used first-party data and insights from consumer behavior to deliver personalized offers. The investments we are making today will allow us to do this with a greater scale and automation. And as these campaigns are in market, AirMouse recording and analytics suites give our partners access to data, insights, and dashboards in order to analyze and evaluate performance in real time.

Earmarked as always use first party data and insights from consumer behavior to deliver personalized offers the investments we're making today will allow us to do this with greater scale and automation and as these campaigns were in market every monthly recording and analytics suite give our partners access to data insights and dashboards in order to analyze and evaluate performance in real time.

Finally, our machine learning solutions help measure campaign effectiveness and recommend personalized offers.

Speaker 3: Finally, our machine learning solutions help measure campaign effectiveness and recommend personalized offers.

Speaker 3: BrandLoyalty has elevated its impact measurement methodology to predict and measure shopper uplift down to the segment of one, paving the way for further personalized communication and campaign design. The new personalized services are deepening the data flow and sharing from our retail partners, which ultimately enables BrandLoyalty to deliver more impactful and relevant campaigns.

Brand loyalty is elevated its impact measurement methodology to predict and measure shopper uplift down to the segment of one paving the way for further personalized communication and campaign design, the new personalized services or deepening the data flow insurance from our retail partners, which ultimately enables <unk> to deliver more impactful and relevant campaigns.

Speaker 3: As you have heard, we've hit the ground running with programs to strengthen our value proposition and build our capability to support future growth. With that, I will turn it over to our CFO , Jeff Chesney.

As you've heard we've hit the ground running with programs to strengthen our value proposition and build our capabilities to support future growth with that I will turn it over to our CFO Jeff Chesnut.

Speaker 4: Thanks, Charles. Slide 14 presents our results for the fourth quarter and the full year of 2021 compared to the corresponding periods of 2020.

Thanks, Charles Slide 14 presents our results for the fourth quarter and the full year of 2021 compared to the corresponding periods of 2020.

Speaker 4: Revenue in the quarter was up 3% primarily due to a strong finish to the year at brand loyalty. Net income and diluted EPS were both down quarter over quarter as a result of the goodwill impairment, costs related to the spinoff, and the income tax provision.

Revenue in the quarter was up 3%, primarily due to a strong finish to the year at brand loyalty net income and diluted EPS were both down quarter over quarter. As a result of the goodwill impairment costs related to the spin off and the income tax provision, excluding the impairment and the strategic transaction costs net income and diluted EPS in the fourth quarter would've been $8 million.

Speaker 4: excluding the impairment and the strategic transaction cost, net income and diluted EPS in the fourth quarter would have been $8,034,000 per share.

<unk> 34 per share.

For the full year revenue declined 4% as a result of the difficult environment that brand loyalty faced in 2021, both net income and diluted EPS were each down for the full year as they were impacted by those items mentioned above excluding the impairment and the strategic transaction costs net income and diluted EPS for 2021 would've been 60.

Speaker 4: For the full year, revenue declined 4% as a result of the difficult environment that BrandLoyalty faced in 2021. Both net income and diluted EPS were each down for the full year as they were impacted by those items mentioned above. Excluding the impairment and the strategic transaction costs, net income and diluted EPS for 2021 would have been $66,268,000 per share.

$6 million and $2 68 per share.

Speaker 4: Over the last two years, the continuing impact of the pandemic combined with the global supply chain challenges have disrupted normal operations at brand loyalty. As a result, we determined it was more likely than not that the fair value of brand loyalty was below its carrying value and we performed an interim impairment test. Based on the preliminary results, we recognized a non-cash goodwill impairment charge of 50 million in the fourth quarter.

Over the last two years, the continuing impact of the pandemic combined with the global supply chain challenges and disrupted normal operations of brand loyalty as a result, we determined it was more likely than not that the fair value of brand loyalty was below its carrying value and we performed an interim impairment test based on the preliminary results we recognized a noncash.

Goodwill impairment charge of $50 million in the fourth quarter.

Speaker 4: BrandLoyalty's goodwill balance at the end of the year is expected to be $455 million after giving effect to the impairment and the FX impact.

Brand loyalty is goodwill balance at the end of the year is expected to be $455 million after giving effect of the impairment and the FX impact.

Speaker 4: As we will discuss in our outlook for this year, we believe brand loyalty will deliver a strong performance in 2022, and we're proud of how the team has navigated the circumstances of the past two years.

As we will discuss in our outlook for this year, we believe brand loyalty will deliver a strong performance in 2022, and we're proud of how the team has navigated the circumstances of the past two years.

Speaker 4: For full year 2021, the tax rates of the two segments ranged from approximately 25% to approximately 28%, and the consolidated tax rate was impacted by several factors. These include Canadian withholding taxes associated with the payments to the former parent and the currently non-deductible U.S. expenses, such as the goodwill impairment, interest expense, and corporate overhead. I'll provide more details on our.

For full year 2021, the tax rate for the two segments ranged from approximately 25% to approximately 28% and the consolidated tax rate was impacted by several factors. These included Canadian withholding taxes associated with the payments to the former parent and the currently nondeductible U S expenses, such as the goodwill impairment interest expense and.

Corporate overhead.

I'll provide more details on our results on the next slide.

Slide 15 presents our segment level results for the fourth quarter and the full year.

Speaker 4: Slide 15 presents our segment level results for the fourth quarter and the full year. In the fourth quarter, both AirMiles and Brand Loyalty exceeded their revenues in the year-ago period. AirMiles adjusted IPDOT was 13% higher than the fourth quarter of 2020 due to OPEX savings across payroll and marketing. Brand Loyalty's adjusted IPDOT in the fourth quarter was 18% higher than the year-ago period due to the margin from the revenue growth as well as lower costs associated with key programs.

In the fourth quarter, both air miles and brand loyalty exceeded their revenues in the year ago period Air miles adjusted EBITDA was 13% higher than the fourth quarter of 2020 due to opex savings across payroll and marketing.

Loyalty is adjusted EBITDA in the fourth quarter was 18% higher than the year ago period due to the margin from the revenue growth as well as lower costs associated with key programs.

Speaker 4: For the full year, AirMiles revenue and adjusted EBITDA increased 3% as the segment benefited from favorable exchange rates. Brand loyalty's full year revenue was down 8% and adjusted EBITDA was down 24% due to the ongoing impact of COVID in the markets in which brand loyalty operates.

For the full year air miles revenue and adjusted EBITDA increased 3% as the segment benefited from favorable exchange rates brand.

Brand loyalty is full year revenue was down 8% and adjusted EBITDA was down 24% due to the ongoing impact of Covid in the markets in which brand loyalty operates.

Speaker 4: In particular, brand loyalty experienced persistent difficulties in sourcing timely deliveries of the merchandise that uses to reward consumers. And as a result, some retailer loyalty campaigns ran less effectively or were deferred until the product could be reliably sourced.

In particular brand loyalty experienced persistent difficulties in sourcing timely deliveries of the merchandize that uses to reward consumers and as a result, some retailer loyalty campaigns ran less effectively over deferred until the product could be reliably sourced.

Speaker 4: Slide 16 provides our financial outlook for the year. Our full-year guidance for 2022 reflects enterprise-wide top-line growth of about 7% and an adjusted EBITDA margin of approximately 20% at the midpoint of our revenue guidance range after taking into account the increased spending we have budgeted in 2022 to drive accelerated growth in 23 and beyond.

Slide 16 provides our financial outlook for the year, our full year guidance for 2022 reflects enterprise wide topline growth of about 7% and an adjusted EBITDA margin of approximately 20% at the midpoint of our revenue guidance range. After taking into account the increased spending we have budgeted in 2022 to drive accelerated.

Growth in 'twenty, three and beyond.

Speaker 4: Supporting our guidance for 2022 is our expectation for strong performance from BrandLoyalty. The BrandLoyalty team has significantly more contracted and high potential business today compared to a year ago. As a result, we expect double digit top line growth at BrandLoyalty with an improvement in the margin profile from mid single digits to low double digits.

Supporting our guidance for 2022 is our expectation for strong performance from brand loyalty.

Loyalty team has significantly more contracted and high potential business today compared to a year ago.

As a result, we expect double digit top line growth that brand loyalty with an improvement in the margin profile for mid single digits to low double digits.

Speaker 4: We expect strong growth at brand loyalty to more than offset lower net revenues at air miles, which reflects the impact of the collective value enhancement initiatives that Charles mentioned earlier. Overall, we expect air miles to contribute about 70% of company-wide adjusted to the DAB before corporate expense.

We expect strong growth of brand loyalty to more than offset lower net revenues at air miles, which reflects the impact of the collective value enhancement initiatives that Charles mentioned earlier.

Overall, we expect air miles to contribute about 70% of companywide adjusted EBITDA before corporate expenses.

In fiscal 'twenty two.

Speaker 4: In fiscal 22, we expect the tax rates for the two segments to range from about 25% to about 28%.

We expect the tax rates for the two segments to range from about 25% to about 28%.

Speaker 3: After considering the currently non-deductible US expenses, we forecast the consolidated tax rate will be about 50% and we expect cash taxes for 2022 to range from 30 to 37 million. We are focused on reducing the consolidated tax rate and initiatives are underway to leverage or redistribute the currently non-deductible US expenses.

After considering the currently nondeductible U S expenses, we forecast the consolidated tax rate will be about 50% and we expect cash taxes for 2022 to range from 30% to $37 million.

We are focused on reducing the consolidated tax rate and initiatives are underway to leverage or redistribute. The currently nondeductible U S expenses.

As we undertake the investments discussed today, we are mindful of our liquidity and our cash flow slide 17 highlights that our liquidity is strong at over $300 million at year end and our free cash flow to $161 million, we have ample liquidity to support the strategic objectives, we've outlined with capacity to react quickly.

Speaker 4: As we undertake the investments discussed today, we are mindful of our liquidity and our cash flow. Slide 17 highlights that our liquidity is strong. It over 300 million at year end and our free cash flow in 161 million. We have ample liquidity to support the strategic objectives we've outlined with capacity to react quickly on inorganic opportunities as appropriate.

Inorganic opportunities as appropriate.

Speaker 4: We are confident that the strategic priorities we outlined today will enable us to strengthen the leadership positions of both Air Miles and Brand Loyalty by building upon our relationships with existing clients, attracting new sponsors and clients, and driving enhanced collector and consumer engagement with our loyalty programs. Ultimately, these initiatives will transform Air Miles and Brand Loyalty and will help us continue to drive sustained profitable growth for our clients and for loyalty ventures. Operator, we are now ready.

And we are confident that the strategic priorities, we outlined today will enable us to strengthen the leadership positions of both air miles and brand loyalty by building upon our relationships with existing clients, attracting new sponsors and clients and driving enhanced collector and consumer engagement with our loyalty programs.

Ultimately these initiatives will transform air miles and brand loyalty and will help us continue to drive sustained profitable growth for our clients and for loyalty ventures.

Operator, we are now ready to open the lines for questions.

Thank you, ladies and gentlemen to ask a question at this time you will need to press. The Star then the one key on your Touchtone telephone.

Speaker 1: Please, I'm John and as a question at this time, you will need to press the star then the one key on your touchtone cell phone. To withdraw your question, press the pound key.

A question with the pound key.

Again to ask a question. Please press star one I'm showing we have a question coming from the lineup Marc Riddick with Sidoti Your line is open.

Speaker 1: Again, if you have a question, please press star one. I'm sure we have a question coming from the lineup. Mark Riddick with stability.

Hi, good evening.

Sure.

Speaker 10: So, I wanted to start with the, is there a general sense that we should be thinking about as far as the timeframe of the investment or throughout 2022 if there's any particular lumpiness or how should we think about how that would flow throughout the year?

So I wanted to start with.

Is there a general sense that we should be thinking about as far as the timeframe of the investments or throughout the throughout 2022, if there's any.

Particular, lumpiness or how should we think about how that would flow throughout the year.

Speaker 3: So the change we made to the air miles program to increase the value proposition, think of it as pretty much equally weighted by quarter just based upon the volumes. If you look at the CAPEX right now, we're really in the analysis stage of what changes we want to make and when we want to implement them. So I'd say, and maybe Jeff will agree with me, it's going to be more weighted Q2 through Q4 versus Q1 as we do a complete assessment of what we have and what we want to do.

Which of course.

These changes will be made through the air miles program to increase the value proposition think of it as pretty much equally weighted by quarter just based upon the volumes. If you look at the Capex right now we're really in the analysis stage of what changes, we want to make and where we want to implement them. So I'd say, maybe Jeff will agree with me, it's going to be more weighted Q2 through Q4 versus.

Q1 is we do a complete assessment of what we have and what we want to do.

Speaker 10: Could you talk a little bit more about the Disney renewal, what you can share with us as far as timeframe or maybe a little bit more detail around that renewal and the retail?

Okay, Great and then I wanted to shift gears and could you talk a little bit more about the Disney renewal.

What you can share with us as far as.

Timeframe or sort of maybe a little bit more detail around that that renewal in the regions.

Speaker 3: Yeah, sure. So if you think about it, most of our contracts sit in the three to four year renewal space, and that's just the way it's historically been. We tend to start negotiations a year in advance. And so we'll be starting right now with one of our larger clients, and then we'll start later in the year with the second one. And so we'll continue with what we have in the past. We'll negotiate and we'll try to get a good deal for us and try to get a good deal for our clients. And we'll just see how it goes. It's just one of those things we always have to deal with with these short-term contracts.

Yes sure insurers. So if you think about it most of our contracts sits in that three to four year renewal space and Thats just the way. It's historically been we tend to start negotiations a year in advance and so we'll be starting right now with one of our larger clients and that will start later in the year with the second one and so we will continue with that we have in the past we will negotiate and we will try to get a good deal for us and try it.

To get a good deal for our clients and we'll just see how it goes.

It's just one of those things, we always have to deal with the short term contracts.

Okay, and then can we talk a little bit about the card linked offers so some of the brands.

Speaker 10: Okay, and then can we talk a little bit about the card-linked offers? So, some of the brands that you have mentioned in the presentation, there's certainly a mix of industry verticals. I was wondering if you could talk a little bit more about that and maybe where you think that might go and to some degree what that might do over time as to the mix of what's available.

<unk> mentioned in the.

The.

Presentation.

There is certainly a mix of.

Industry vertical just wanted to talk a little bit more about that and maybe where are you where do you think that might go into some degree what that might do over time as to the mix of.

What's available.

Please.

Speaker 4: Hey Mark, this is Jeff. It works fine about the cardling to offer a program. It's a great way to...

Hey, Mark. This is this is Jeff yes, we're excited about the card linked offer program, it's a great.

Way too.

Help our potential long term.

Speaker 4: help our potential long-term sponsors try the program from an efficient standpoint without standing up too much infrastructure. It's also a way for our collectors.

Sponsors try the program.

From an efficient standpoint with outstanding up too much infrastructure, it's also away for our collectors.

Speaker 4: to quickly expand where and how they earn. So, I would expect, this is a time-limited program, but I would expect to see more names joining here over the coming weeks, and we'll continue to evaluate it. I think this one's got legs.

So quickly expand where and how they earn so I would expect this.

As a time limited program, but I would expect to see more names joining here over the over the coming weeks and.

And we will continue to evaluate and I think.

This one has got legs.

Speaker 5: Okay, and then shifting gears actually over to the...

Okay and then.

Shifting gears actually over to the.

Speaker 10: The commentary around the gaming option for folks, because quite frankly, we don't spend enough time on our phones already as it is. Which one if you talk a little bit about how that program came about and maybe even the content that's involved in these games, is that something where these games come from and as far as engagement and maybe how that works to translate into revenue for yourselves and growth for your customers. you

The commentary around the big.

The gain.

The gaming option for for folks because quite frankly, we don't spend enough time on our phones already as it is I just wanted to talk a little bit about sort of how that.

Program came about and sort of maybe even.

The content that's involved in these games is that something sort of where does these games come from and as far as engagement and maybe how that works to sort of translate into revenue for yourselves and growth for your customers. Thank you.

Yes, Hey, Mark.

So from a from a gamification standpoint. This is something that we work together in particular with our clients with brand loyalty to determine that the type of.

Speaker 4: So from a gamification standpoint, this is something that we work together in particular with our clients at brand loyalty to determine the type of traction or consumer behavior that they're looking to drive. And some of that behavior is put traffic or basket size. Some of that behavior is oriented around app.

Traction or consumer behavior that they're looking to drive and some of that behavior is foot traffic or basket size some of that behavior is oriented around.

<unk>.

Speaker 4: Mobile adoption or online adoption, spending more time in the app. And so if the, if that's the objective for the program, that's an opportunity for us to layer in those gamification elements. And really try to

Mobile adoption or online adoption spending more time in the App and so.

If thats the objective for the program, that's an opportunity for us to layer in those gamification elements.

Really try to two.

Speaker 4: sharpen the consumer's behavior around coming back to that app or that site in particular for retailers, especially in the grocery channel. Just like you're competing for foot traffic in your grocery store, you're competing for web traffic to get consumers to adopt.

Sharpen the consumers' behavior around coming back to that app or that site in particular for retailers, especially in the grocery channel just like youre competing for foot traffic in your grocery store you're competing for.

Web traffic to get consumers to adopt.

Speaker 4: your online delivery service or, you know, meals in a box, things of that nature. That's where you're going to see those.

Your online delivery service or.

Meals in a box things of that nature, Thats, where youre going to see those.

Speaker 4: really roll out and have traction. We'll do it in concert.

Rollout and have traction we'll do it in concert of course with the.

Speaker 4: of course, with the retailer's strategic objectives.

With the retailers our strategic objectives.

Speaker 10: Okay, and then one of the slides, and then I'll jump back in queue, and I'm asking a bunch of questions, I'm sorry about that, but the...

Okay, and then one of the.

And then I'll jump back in queue, I'm, asking a bunch of questions I'm, sorry about that but.

Speaker 10: There was one slide on the brand loyalty going into the campaign statistics. I was wondering if you could talk a little bit about that. The 185 plus campaigns, 140 retailers, and what have you. And I was wondering where you think that can go in a normal environment, normal year, and maybe what we've seen historically as far as those campaigns over time.

There was one slide.

On the.

On the brand loyalty going into the campaign statistics and I was wondering if could talk a little bit about that.

185, plus campaign 140 retailers and what have you and I was wondering sort of where you think that can go in a normal environment normal year.

And how maybe what we've seen historically as far as those those campaigns over time. Thank you.

Speaker 4: Yeah, sure. The, you know, brand loyalties.

Yes sure.

Brand loyalties.

Speaker 4: has been, as Charles mentioned earlier in his remarks, really impacted by the pandemic and the supply chain, the lack of travel in particular has limited brand loyalty's ability to get out and sell new campaigns to potential new clients.

It has been.

Charles mentioned earlier in his remarks are really impacted by it.

The pandemic and the supply chain the lack of travel in particular has limited brand loyalties ability to get out and sell.

New campaigns to potential new clients.

Speaker 4: So as you think about the list of countries they're in today and where we're reporting, those campaigns are running. We'd expect that to grow as they move into not only more campaigns in their existing geographies, but expanding into those new geographies and new verticals within existing and new geographies as well, through some of those partnership and digital innovations that Charles mentioned. So...

As you think about the list of countries. They are in today and where we're reporting those campaigns are running we'd expect that to grow as they move into not only more campaigns in their existing geographies, but expanding into those new geographies and new verticals.

Within existing and new geographies as well through some of those partnership and in digital innovations that Charles mentioned so.

Speaker 4: Once that once the travel restrictions lift not only Certainly in Europe where where brand loyalty is headquartered, but in those regions around the world so they can get there

Once that once the travel restrictions lift not only.

Certainly in Europe , where where brand loyalty is headquartered but in those regions around the world. So they can get there.

Speaker 4: and introduce these programs, I think you'll see those numbers continue to expand.

And and introduce these programs I think youll see those numbers continue to continue to expand.

Speaker 1: Our next question coming from the line up, Bruce Crystal from Crystal's family office.

Our next question coming from the line of Bruce Crystal from Crystal family Office. Your line is now open.

Speaker 6: Yes, good afternoon. A few questions, please. The first is the investment of the $20 to $25 million that you'll be running through Miles P&L. I was curious, was this at all related to the loss of the two sponsors earlier in the year?

Yes, good afternoon, a few questions. Please.

First is the investment of the $20 million to $25 million that youll be running through.

Myles.

P&L.

I'm curious was this at all related to the loss of the two sponsors earlier in the year.

And second question along those lines on a couple more after that.

Speaker 6: And the second question along those lines, and a couple more after that, is your confidence that the $20 million to $25 million investment, maybe you could spend a little bit more time about what that exactly will be, and will that in fact drive new sponsors, and specifically could there be any sponsors that are related beyond Canada?

Your confidence.

The $20 million to $25 million investment, maybe you could spend a little bit more time about what that exactly will be and will that in fact drive new sponsors.

And specifically could there be any sponsors that.

Our related beyond Canada.

Speaker 3: So let's start off with your first question on really two of the programs that went away. The biggest one was Lowe's where they just decided not to be in the program anymore. I think indirectly it's a case where they were looking they were looking to cut costs. Now the collectors in the market were sitting there and we've gotten some feedback and we've gone out to all of our big sponsors and talked to them.

So let's start off with your first question on related to the program. So went away. The biggest one was Lowe's, where they've just decided not to be in the program anymore.

I think indirectly it's a case, where they were looking they were looking at could cost now the collectors in the market, we're sitting there and we've gotten some feedback and we'd say, we'd gone out to all of our big sponsors and talk to them. So we went out and did a little bit of a market check against some of our competitors in the market and we felt that over the last couple of years, we kind of priced yourselves in terms of the value.

Speaker 3: So we went out, did a little bit of a market check against some of our competitors in the market. And we felt that over the last couple of years, we kind of priced ourselves in terms of the value prop above where we should be.

Prop above where we should be.

Speaker 3: So we looked at it, we said, to bring us back into really in check, even though we're the leader in the market, to make it, again, more agreeable to the collateral, let's adjust it, let's try to get more value going to the consumer, they spend more, they pull through more to the sponsors, to your point.

So we looked at it we said to bring us back into really in check even though we're the leader in the market to make it again more.

Agreeable to the flexible that's adjusted let's try to get more valuable to the consumer they spend more they pull through more to the sponsors to your point sponsors get happy when people spend so if we get the collect or happy with the redemption options and we have a plethora of <unk>.

Speaker 3: sponsors get happy when people spend. So if we get the collector happy with the redemption options and we have a plethora, and now they're getting more value, they spend more, and it's a virtuous cycle we talked about. So we failed after going into the market, talking to our big clients, doing a market check on some of the other programs in the market, PC Optimum, the RBC program and so forth. We felt it was appropriate to make the change, and we do think we'll get that back over time. We do think that's gonna drive collector engagement and drive more spend, and we're gonna come out ahead on it.

More value they spend more and it's a virtuous cycle, we talked about so we felt after going into the market talking to our big clients doing in market share on some of the other programs in the market PC optimum the RBC program and so forth. We felt it was appropriate to make the change and we do think we'll get that back over time, we do think that's going to drive collector engagement and drive more.

Spend and we're going to come out ahead on it.

Okay, but at this point or is there any ability to.

Speaker 6: Okay, but at this point, is there any ability to...

Speaker 6: see that this investment will lead to several new clients.

This investment will lead to.

To several new clients.

Speaker 3: I'll say we've been very active about in the market right now. To your point, we do need to bring in some new clients and some key verticals.

I will say, we've been very active out in the market right now to your point, we do need to bring in some new clients in some key verticals and we're trying to do it aggressively I do think this helps but this is not the only thing we need to do we also need to add capabilities, we need to move to open source data where clients can get into this rich database, we have and do some of their own marketing program.

Speaker 3: and we're trying to do it aggressively. I do think this helps, but this is not the only thing we need to do. We also need to add capabilities. We need to move to open source data. Where clients can get into this rich database, we have and do some of their own marketing programs.

Speaker 3: So there's a number of things we're looking to do to facilitate the products, make it where it's even more than just the value process of the consumer. We're adding value to the sponsor by helping them market the program and marking what they need. So that's really what the focus is going to be. The combination of making it better for the collector, but also adding capabilities for the sponsor and make it in such a way that no one else can replicate what we do. That's what we're attempting to do.

So theres a number of things, we're looking to do to facilitate the products make it where it's even more than just the value profit consumer we're adding value to the sponsor by helping to market. The program end market and what they need. So that's really what the focus is going to be a combination of making it better for the collector, but also adding capabilities for the sponsor and making.

In such a way that no one else can replicate what we do and that's what we're attempting to do.

Speaker 6: Okay. The second question is, in light of the lower ibadab...

Okay.

The second question is in <unk>.

Light of the lower EBITDA.

Speaker 6: Is there any change in the breakage rate assumptions? And if so, what would a 1% change in a breakage rate caused to the EBITDA?

Was there any change in the brokerage rate assumptions.

And if so what would a 1% change in our breakage rate caused to the EBITDA.

Speaker 3: So I'll let Jeff answer that one. There was no change to the breakage rate, but if you think about what's happened over the last two years, the burn rate has been below the ultimate redemption rate. And what I mean by that, the amount of points burned during the current year over the months issued has been below the 80% ultimate redemption rate. So what it gives us is some room down the road that if we see a spike, and we think it will when people start booking flight again, we can go above the ultimate redemption rate for a period of time, the 80% on the dream program, and not being a problem in an issue. So that shouldn't be a problem.

So I'll, let Jeff answer that when there was no change to the breakage rate, but if you think about what's happened over the last two years. The burn rate has been below the ultimate redemption rate and what I mean.

And by that the amount of points burned during the current year over the miles issued has been below the 80% ultimate redemption rate. So what it gives us some room down the road that if we see a spike and we think it will when people start looking flat again, we can go above the ultimate redemption rate for a period of time to 80% on the dream program and not being a prop in an issue so that shouldn't be a problem.

Speaker 3: Jeff, to your point, did we quantify in our 10K the effect of one point change? I think it should be there and you should know what that is.

Jeff.

Your point did we quantified in our 10-K.

The effect of one point change I think it should be there and you should know what that is.

Speaker 4: We haven't put the 10K out. I think you're referencing the form 10, Charles?

We haven't put the.

10-K out I think you're referencing the form 10, Charles yes.

Speaker 4: Yeah, I think it's about 80 million Canadians.

Yes, I think it's.

I think it's about I think it's about 80.

<unk>.

Canadian.

I believe so yes.

Okay.

Speaker 6: Okay, the next question I had was just curious.

The next question I had was.

Just curious here.

Speaker 6: the improvement here on the retail side of the business is actually quite dramatic uh... and i was wondering just from a

The improvement here on the retail side of the business is actually quite dramatic.

And I was wondering just from a.

A.

Speaker 6: fact that you're effectively a new company.

The fact that youre effectively a new company.

Speaker 6: and that the fact that the parent company which really was a you know uh... is effectively you know controlled by regulators etc as all of those type of things

And the fact that the parent company, but it really was a.

As it is effectively controlled by regulators et cetera, all of those type of things.

Speaker 6: Is there something here that, you know, as you see as an independent company now that you're the strategy going forward will be, you know, a little bit shackle free, if you will, from regulators, et cetera, that will allow you to actually be a little bit more aggressive in the marketplace?

Is there something here that.

As you see as an independent company know that.

Strategy going forward will be a little bit shackle shekel free if you will from regulators et cetera that will allow you to actually be a little bit more aggressive in the in the marketplace.

Speaker 3: Charles, you may be on mute. Uh-oh, you're right. So you're right. So if you think about it with ADS, the focus was on the payment side. It was on the card services side, which your points highly regulated.

Charles you may be on you maybe on mute.

So you're right. So if you think about it with with the focus was on the payment side. It was on the card services side, which to your point is highly regulated so basically the loyalty ventures operations were looked at is how much cash can we harvest out and reinvest in the business. So it didn't do very well for <unk> in terms of dividend money back.

Speaker 3: So basically the loyalty ventures operations were looked at as how much cash can we harvest out and we invest in the business.

Speaker 3: So it did do very well for ADS in terms of dividend money back, but in my opinion, at the death minute future growth.

But in my opinion at the detriment of future growth.

Speaker 3: So as Jeff talked about, if we go through, we retain our cashflow, which is strong, we invest in the business for a couple of years, that's how we're gonna get to the growth profile we're looking for. That's gonna be the key thing for us, the ability to go into new markets.

So as Jeff talked about if we go through we retain our cash flow, which is strong we invest in the business for a couple of years, that's where we're going to get to the growth profile. We're looking for.

That's going to be the key thing for us the ability to go into new markets I would like to bring air miles into the U S. I'd like to go many coalitions and some of the developing loyalty markets like Mexico Theres a number of things. We can do now that we just didn't have the opportunity to grow or not that there was anything wrong with the way. It was done it was just a different party. So we're shifting from harvesting cash now too.

Speaker 3: I'd like to bring air miles into the US. I'd like to go with many coalitions and some of the developing loyalty markets like Mexico. There's a number of things we can do now that we just didn't have the opportunity to group for. Not that there was anything wrong with what it was done. It was just a different party. So we're shifting from harvesting gas now to how can we really grow the top line and make this a growthy company?

How can we really grow the top line and make this a growth company.

Speaker 6: Do you think in 2022 we will actually see a US partner?

Do you think in 2022, we will actually see a U S partner.

And air miles.

Speaker 3: I well maybe not necessarily with their mouse we already have some US partners with brand loyalty We're going to look to bring some of the ear models capabilities special on data analytics into the US

Well, maybe not necessarily with air miles. So we already have some U S partners with brand loyalty, we're going to look to bring some of the air miles capabilities, especially around data analytics into the U S. One of the things. We're also looking to do is to acquire certain assets in the U S. We had a presence in the U S. Before with a company that was part of air miles that was divested away a couple.

Speaker 3: One of the things we're also looking to do is to acquire certain assets in the U.S.

Speaker 3: We had a presence in the US before with a company that was part of AirMal that was divested away a couple of years ago by ADS. We'd like to reestablish some of that, go into the grocery vertical support brand loyalty in the US, and maybe add some additional capabilities.

Years ago by Aes, we'd like to reestablish some of that go into the grocery vertical supports brand loyalty in the U S and maybe add some additional capabilities.

Speaker 3: Back with Jeff and I were involved with S-Lon. We knew what S-Lon did really well We knew what S-Lon didn't really do in the US market So we think there's a gap that we can really take advantage of

Back when Jeff and our bulk with Epsilon, we knew what Epsilon did really well we knew what Epsilon didn't really do in the U S markets and we think there is a gap there that we can really take advantage of so look for us to be pretty aggressive trying to come into the U S and 2022.

Speaker 3: So look for us to be pretty aggressive trying to come into the US in 2022. Okay.

Okay.

And then just two.

Kind of a nitpicky question, but one is on on the revolver.

Speaker 6: kind of nitpicky questions. One is on the revolver.

Speaker 6: depending on who you believe it could be four to seven rate increases has that have you thought about either doing something very creative like air candidate did where or not air candidate but united did in the second quarter here in uh... in the middle of the pandemic where they were able to secure ties part of their miles program

Depending on who you believe it could be 4% to 7% rate increases.

Have you thought about.

Either doing something very creative like Air Canada did were not error, but United did in the second quarter here in the middle of the pandemic, where they were able to securitize part of their miles program.

Speaker 6: or do something where you know you swap out floating for fix.

Or do something where you would swap out.

Floating for fixed.

Speaker 4: Yeah, Hey, Bruce, we certainly have been watching the rate environment. I don't know that we'd do anything from like from the airlines perspective with what they're considering, but certainly looking at swaps to help manage the interest exposure as we consider the the entirety of the debt capital structure as well.

Yes, Hey, Bruce.

We certainly have been watching the rate environment.

No.

We'd do anything from like from the airline's perspective, with what Theyre considering but.

Certainly looking at.

Flops to help manage the.

The interest exposure as we consider the entirety of the debt capital structure as well.

Okay.

Speaker 6: Okay. It would just strike me that, you know, there's something, I just hate to be in a position here, where if we go through a multiple.

It just strikes me that.

There's something I, just hate to be in a position here, where if we go through a multiple.

Speaker 6: increases you know we don't kept that out uh... but the uh... the final thing i was you know in the footnotes there was about a seventy million dollar tax law carry forward that had a various reserves against it and i was just wondering um... in for far as they're the good will charges and some of these other charges will there be a position that will be in a tax law carry forward that will actually be able to be utilized going forward

The increases.

No.

Kept that out but.

The final thing I was in the footnotes.

There was about a $70 million tax loss carryforward.

<unk> had various reserves against that and I was just wondering insofar as the goodwill charges in some of these other charges.

Will there be a position that we'll be in a tax loss carryforward that will actually be able to be utilized going forward.

Speaker 4: If the, yeah, of course with the, I think there's some, there's a couple of elements there. In particular, there's a Canadian position that's owed back to the former parent. And then from a tax optimization standpoint, you're right, we're gonna be looking to.

If the yeah of course with the I think theres some theres a couple of elements there.

In particular, there is a.

Canadian position, that's owed back to the former parent and then from a tax optimization standpoint, youre right were going to be looking to.

Speaker 4: really structure the business now that we're on our own in a way that we can leverage the tax efficiencies in the countries in which we're in and some of that's going to depend on that that those growth initiatives the Charles outlined in the US as well for this year.

Really structure the business now that we're on our own in a way that we can leverage.

The tax efficiencies in the countries in which we're in and some of that is going to depend on that.

That those growth initiatives that Charles outlined in the U S as well for this year, Okay alright.

Speaker 7: Alright, thank you very much for your time. Appreciate it. Thanks Bruce.

Alright. Thank you very much for you to appreciate it thanks.

Thanks Bruce.

Speaker 1: Please, and gentlemen, as I run into, as a question, please press star one.

Ladies and gentlemen. This your line is ask a question. Please press star one.

Speaker 1: Now next question coming from Delana, set culprit with trial and teculina soap in.

And our next question coming from the lineup said Goldberg with <unk>. Your line is open.

Speaker 8: Hey guys, King Grabson, thanks for taking the question. The first question is just around miles of the woods. And we'd love to get your thoughts as to the relative importance of factors that could cause the issue and to select the growth.

Hey, guys, congrats and thanks for taking the question.

First question is just around miles issuance.

Would love to get your thoughts as to kind of the relative importance of factors.

Could cause issuance to inflect to growth.

Speaker 3: And so, you know, is it, you know, simply just an abatement of kind of COVID related pressures? Is it improving sponsor attention? Is it, you know, winning some sponsor logos? Like, how do you think about what needs to happen in order for there to be an inflection to, you know, to my audition and growth? Sure.

Is it simply just an abatement of kind of COVID-19 related pressures.

Improving sponsor retention.

We're winning some new sponsor logos, how do you think about what needs to happen in order for there to be an inflection.

Two miles issuance growth.

Sure.

Speaker 3: So I'd break you down in a number of ways. The first is we are looking at elite to bring more sponsors into the program. That's always the best way to do it is to give your collectors the ability to cross-activate more places to spend. The second thing we need is to see some of our plants get back into promotional balls.

So I'd break it down in a number of ways. The first is we are looking actively to bring more sponsors into the program. So that's always the best way to do it is to give your collectors the ability to cross activate more places to spend the second thing we need is to see some of our clients get back into promotional miles so with the way our contracts really work you'll have clients. We are based on.

Speaker 3: So with the way our contrasts currently work, you'll have clients who have base miles and then they had the opportunity to do promotional miles, which is above and beyond. We haven't seen a lot of promotional miles during this time frame, you wouldn't expect it during COVID. So I think we will over time see the promotional miles come back into play.

Miles and then they had the opportunity to be promotional miles, which is above and beyond.

Haven't seen a lot of promotional miles during this timeframe you would expect during COVID-19 . So I think we will over time see the promotional boss come back into play.

Speaker 3: And the third, we'd expect to pick up a discretionary spending. Once you see a pickup discretionary spending, more credit card spending coming through with BMO, that's another area that we think we could get some stimulus coming through. So it's gonna be new clients, there's some promo miles, and there's gonna be also a little amount of mix as discretionary spend gets a little more prevalent.

And the third we would expect to pick up in discretionary spending.

Once you see a pickup in discretionary spending more credit card spend coming through with BMO best.

Another area that we think we could get some stimulus coming through so it's going to be new clients as some promo mouth and this can be also little element of mix as discretionary spend gets and the more prevalent.

Got it.

Speaker 8: If you have any color around

Any any color around.

Speaker 9: the relative next to base knowledge versus promo miles and the magnitude of the decline in promo miles that he said and coded.

The.

Relative mix of advanced models versus promo miles on the magnitude of the decline in total amount that you saw during COVID-19 .

Speaker 3: I don't have that off the top of my head. I know promo monster way down from where they were. I don't have it right the moment. It's small and over.

I don't have that off the top of my head I know promo mounts are way down from where they were I don't have it right at the moment.

A small and elsewhere.

Speaker 8: no problem. And how have you just thought about the assumptions around mild issuance that are that are baked into the guidance for 20 years?

No problem and what have.

You guys thought about the assumptions around miles issuance that are that are baked into the guidance for 2010.

Speaker 4: Hey, Seth, it's Jeff. From a malzition with standpoint, I think you'd be looking, as we look across the year, we're looking at between four and 5% malz issuance, the trending back up towards that five billion of issuance that we had last year.

Hey.

Seth it's Jeff.

Our mouths issuance standpoint, I think you'd be looking.

As we look across the year, we're looking at.

Between 4% and 5% miles issuance that trending back up towards that $5 billion of issuance that.

Sure.

We had last year.

Speaker 8: Great, got it. And then just switching gears for a second to the 40 to $50 million to think of an online investment that you highlighted. How much of that should we think of those kind of recurring versus, you know, 22?

Great got it.

And then just switching gears for a second to the.

The $40 to $50 million incremental in Baltimore that you highlighted.

How much of that should we think of kind of recurring versus 22 on that.

Speaker 3: Yes, so I'd break you down. The cap X is going to be up for a couple of years. Even though we start, each VIX starts seeing the benefit of it in 2023. The changes to the program in terms of the cost per mile or the value we're giving to the consumer will stay the same. But what you're going to look for is to drive more points issued, more spends, and you're going to look to basically leverage your fixed cost more than mitigate the impact you're at the Dal Margin.

Yes, so I'd break it down the Capex is going to be up for a couple of years, even though we start we expect to start seeing the benefit of it in 2023, the changes to the program in terms of the cost per mile or the value, we're giving to the consumer will stay the same but what youre going to look for us to drive more points issued more spend and youre going to list and basically.

Leverage your fixed costs more than mitigate the impact your EBITDA margins.

Speaker 3: So you'll see that the capex will start trending back down in 2023, and then you'll see us leveraging the top line and producing more evidence than what we did before, just as we get the pull through effect from the collector being more engaged.

So you'll see that the Capex will start trending back down in 2023, and then Youll see us leveraging the top line and producing more EBITDA than what we did before.

As we get the pull through effect from the collector being more engaged.

Speaker 8: data and presumably, to the extent that the incremental value to the collectors, it isn't something that drives an increase engagement in the digital and that's something that can be retrofit that.

Got it and presumably it can be extended.

Incremental.

Value to the collectors.

Isn't something will drive.

Increased engagement and EBITDA, but not something that can be ratcheted back.

Speaker 3: Correct. Even though when we first announced the changes, we definitely saw an uptick in terms of redemptions for fly before the variant kicked back in and depressed us. So we definitely saw a very positive reaction. I'd like to maintain that positive reaction. I do think it helps with renewals. I do think it helps with collector engagement. It's really now about driving growth and leveraging our costs in the business.

Correct, even though when we first announced the changes we definitely saw an uptick in terms of redemptions for fly before the variant kicked back into impressive. So we definitely saw very positive reaction I would like to maintain that fast reaction I do think it helps with renewals I do think it helps with collector engagement, it's really now about driving growth and leveraging our cost in the business.

Speaker 8: And one last question. How should we think about the sustaining cat-backs needs of the business? Obviously next year is going to be a big, or this year is going to be a big year for capital spending. And maybe there is some deferred investment and investment for growth. But just on a long, or a term basis, how do you think about what the cat-backs for a follow-up of the business?

Got it.

And one last question, how should we think about the sustaining capex.

Obviously next year is going to be a big or this year is going to be a big year for <unk>.

Capital spending and maybe there was some deferred.

Investment and investment for growth, but just on all on a longer term basis, how do you think about.

With the Capex profile.

Paul.

And he said that.

Speaker 4: And I think as you think about the CAPEX outlook, we've got that extra investment this year. I think you'll see a blend between the baseline that we had before and what this new level is incrementally speaking as we go forward and some of that investment, beyond CAPEX, maybe redirected into tuck-in acquisitions.

As you think about the Capex outlook would get that extra investment. This year I think youll see a blend between the baseline that we had before and what this new level is incrementally speaking.

As we go forward and some of that investment.

Beyond Capex may be redirected into tuck in acquisitions.

Acquisitions.

Speaker 4: as we're on the lookout for adding capabilities if we see that there's something that we can pick up in the market faster than we could build it ourselves.

We're on the lookout for adding capabilities. If we see that there is something that we can pick up in the market faster than we can build it ourselves.

Got it thank you very much.

Thanks, Ed.

And we have a follow up question from Marc Riddick with Sidoti Your line is open.

Speaker 1: And we have a follow up question for Mark Ridic with Fedori, Yolanda Sultman.

Speaker 10: Hi, good evening again. I just wanted to follow up on a couple of things. They're one of which being, if you could sort of comment on, given the investments that are going to be taking place this year, how we should be thinking about that reduction goals, either just this year or sort of maybe in general on a longer time basis as far as, you know, analyze that reduction or how we should be thinking about that. And then I will click follow back.

Hi, Good evening I, just wanted to follow up on.

Couple of things there one of which being if you can just sort of comment on.

Given the investments that are going to be taking place. This year, how we should be thinking about.

Debt reduction goals, either this year or sort of maybe in general on a longer term basis as far as.

Our annualized debt reduction or how we should be thinking about that and then I have a quick follow up after that.

Speaker 4: Yes, you're Mark from a debt reduction standpoint. From our talk to capital allocation priorities for the year, the investments that Charles outlined as well as deleveraging and strengthening the balance sheet. I'd expect this year you'd see a reduction of approximately 50 million US towards the debt capital structure as we move across the year.

Yeah sure Mark from a debt reduction standpoint, it's one of our top two.

Our capital allocation priorities for the year, the investments that Charles outlined as well as deleveraging and strengthening the balance sheet I would expect this year you'd see a reduction of approximately $50 million.

Towards the.

Towards the.

The debt capital structure.

As we move across the year.

Speaker 10: Okay. And then given the investments that you're making, I'm sort of thinking about does this change or the timing or focus of acquisition targets? Are there maybe some type of acquisitions that you might, you know, push off until later until you've made these investments? Or how should we think about maybe the timing of acquisition targets and your ability to sort of, you know, get some of those done as you're also laying on the investment?

Okay, and then given the investments that youre, making.

Sort of thinking about how does this.

Change or the timing or focus of acquisition targets are there maybe some type of acquisitions that you might.

Pushed off until later into you've made these investments or how does how should we think about maybe the timing of acquisition targets and.

Your ability to sort of.

Get some of those done as Youre also lam on the investment spend.

Yes, I'll break it down in pieces I would say for air miles.

Speaker 3: I'll break you down in pieces that say for air miles, it's a double versus bi-concept. We know we want certain capabilities, products in place.

Build versus buy concept, we know we want certain capabilities products in place and it may be a case, where we can acquire more timely and at a better cost than what we could necessarily development internally. So I would say it will not reduce our effort and trying to engage acquisitions for air miles with brand loyalty, we could push it up.

Speaker 3: And it may be a case where we can acquire it more timely and at a better cost than what we could necessarily develop it internally. So I'd say it will not reduce our effort and trying to engage that position for air miles.

Speaker 3: With brand loyalty, we could push it off a while. I think brand loyalty is in very good shape in terms of the capabilities they bring, the product offerings they have. So for them down the road, I'd like to do a little bit of a roll up.

Well I think Brian royalties in very good shape in terms of the capabilities. They bring the product offerings. They have so for them down the road and I'd like to do a little bit of a rollout.

Speaker 3: I'd like to take out some of the smaller under-capitalized players within the space. But that's not anything that's pressing. That's not anything we need to do right now. So the priorities really in 2022, going back to what's been asked before, debt pay down. Let's get to a very good leverage ratio that Jeff and I are comfortable with. And then adding capabilities for air miles, which may very well mean we acquire a company in Canada or the U.S. that supports it.

I'd like to take out some of the smaller uncapped under capitalized players within the space, but thats not anything thats pressing this evening, we need to do right now so the priority is really in 2022 going back to what's been asked before debt pay down let's get to a very good leverage ratio that Jeff and I are comfortable with and then adding capabilities for air miles, which may very well, meaning we have.

<unk> company in Canada, or the U S that supports it.

Speaker 10: Okay, and the last one for me, I promise. We wanted to get to talk a little bit about the efforts that were made around the supply chain challenges, maybe what kind of worked well and what you kind of see being more, having longer tail, and maybe just give a couple of examples of that and sort of how that was received by customers and then how that might end up than packing how you do things long-term.

Okay, and then last one for me I promise.

I Wonder if you can talk a little bit about the.

The efforts that were made around the supply chain challenges, maybe what kind of worked well and what you kind of see being more.

Having longer longer tail and maybe you could just maybe just give a couple of examples of that and sort of how that.

Was received by <unk>.

Customers and then how that might end up impacting how you do things long term. Thanks.

Speaker 3: So one of the things we're doing it and we talked about it in the script.

Sure. So one of the things we're doing it and we talked about it in the script is we are looking to add digital capabilities E capabilities, where basically you can redeem online it could be gaming it could be you redeem it to offset your carbon footprint that will give us the ability to go into smaller.

Speaker 3: is we are looking at digital capabilities, e-capabilities. We're basically you can redeem online, it could be gaming, it could be your redeeming off such a carbon footprint. That will give us the ability to go into smaller, fast retail type businesses. So add more digital capabilities.

Fast food.

First retail type businesses, so add more digital capabilities. What we did do though is we started to buy a little bit more volume or do you get the containers, even though they were expensive the issue would be that the ports would shut down.

Speaker 3: What we did do though is we started to buy a little bit more volume which you get the containers even though they were expensive. The issue would be that the ports would shut down.

Speaker 3: So when they push it down, there's a lot you can do about it.

So when the port shut down there is not a lot you can do about it.

Speaker 3: So a lot of this is going to be trying to source locally, which will really help us a lot from a lead time standpoint as well as from a backstop standpoint, and then adding EK probabilities. And then I do think the ports are going to open up but we don't have this same level of lockdown that we're consistently dealing with in 2021.

So a lot of it is going to be trying to source locally, which will really help us out.

A lot from a lead time standpoint, as well as from a backstop standpoint, and then adding new capabilities and then I do think the courts are going to open up but we don't have the same level of lockdown that we're consistently dealing with it in 2021.

I appreciate it thank you.

Okay.

Speaker 1: I'm sure enough for the questions at this time. I would now like to send a call back of a tomatown patrol phone for any closing remarks.

And Im showing no further questions at this time I would now like to turn the call back over to Mr. Charles Horn for any closing remarks.

Speaker 3: Sure, thank you. I really appreciate everyone of you joining in to our first earnings call. It's a great event. We'd like to thank all the associates at Little T ventures. We finally got to the point we're looking for. And so I really appreciate everyone being involved today. And let's look forward to driving some good outcomes in the future. Thanks everyone.

Sure. Thank you really appreciate it appreciate everyone joining us for our first earnings call.

It's greater than that we'd like to thank all the associates of loyalty ventures, we finally got to the point, where we're looking for.

So I really appreciate everyone being involved today and let's look forward to driving some good outcomes in the future. Thanks.

Thanks, everyone.

Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Speaker 1: Ladies and gentlemen, that's our conference for today. Thank you for your participation. You may now disconnect.