Q3 2025 Aimia Earnings Call
Good morning, ladies and gentlemen, and welcome to a media, third quarter, 2025 results conference call.
At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session.
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I would now like to turn the conference over to Joe ra canelli VP investor relations. Please go ahead.
Plus.
We will be using a presentation today and for those listening to our discussion by phone, a copy is available from the IR section of our website.
Some of the statements made today on today's call, May constitute forward-looking information and our future results May differ. Materially from what we discussed, please refer to the risks and uncertainties that may affect our future performance reference in our presentation and mdna.
In addition, we will be making note of gaap and non-gaap financial measures reconciliation of these is provided in the appendix of our presentation and in the news release as well.
Now, following today's presentation, and if we don't get a chance to answer any of your questions, please reach out and we'll be happy to, uh, have a follow-on discussion with you.
please, go ahead and re
Thanks Jack. Well, good morning. Good afternoon, everyone. Uh, it's uh, it's uh, it's great that we can, uh, report, uh, results to you, uh, which shows that we've generated our first profit for Equity holders in 3 years and we saw, uh, measurable growth in adjusted, evida and cash flow from operations.
Uh, this was the spot, uh, Q3 being marked by, uh, some pretty difficult, macroeconomic headwinds which, uh, the underlying, uh, companies. We, we own navigated, uh, really well.
And, uh, we'll discuss that in a bit more detail.
Uh but when you look at what, what drove this improved results performance, what you'll notice is that, uh, reducing hold code costs was a big feature and we still have work to do there and we'll continue to be doing that. Uh, where do where does that leave us now? Well, combined, with our increased liquidity,
And efforts to close the discounted, uh, of our share price. Uh, we ended Q3 ready to focus on the third step of our strategy and that is uh, to start to deploy or allocate the capital uh, that we have uh, to new Investments. And I'll talk a little bit more about that towards the end of the presentation. But first, I'm going to hand over to Steve who will review our financial results in a bit more detail.
See.
Thank you, Reese. Good morning and afternoon, everyone.
I'd like to begin my remarks with a review of our Consolidated results.
as you will note from slide 7, we experienced improvements to several key financial metrics against the backdrop, backdrop of macroeconomic and geopolitical challenges of note, sgna expenses declined, 11% to 26.3 million
Operating income grew 37% to 7.8 million.
Adjusted, even to increase by 35% to 20.3 million.
Cash flow from operations grew by 13.8 million.
We generated net earnings of $1.4 million, which represents a turnaround of $3.6 million.
Our Pro improvements on a year-over-year basis were largely due to reduced. Hold code costs, including the absence of shareholder activism costs incurred last year.
And to the positive impact of foreign currency fluctuations relative to the Canadian dollar.
Returning to the performance of our core Holdings. Starting with the Zeto on slide 8.
The results of our specialty chemical business in Q3 underscore the strength of its business model and its Diversified product.
And market mix, which led it to outperform its specialty chemical peers.
In Q3 25, beasie. Saw a 3.3% revenue, increase on a year-over-year basis.
On a constant currency basis, Beto Revenue was down 3.8%.
The decline was attributable to softness experienced by its textile Solutions sector due to the impact of us. Tariffs on several Asian markets that the Zeto sells into
the Zeto textile Solutions are used in these markets to manufacture textiles that are then, exported into the Us and other markets.
This Revenue decline was offset by improved pricing and product, mix at the Water Solutions and dispersion solution, sectors, whose products are mainly sold outside of the US.
In Q3 255, Beto generated adjusted Eva Dove 16.8 million.
Which represents a margin of 18.9%.
The year-over-year improvements were driven by reduced sgna costs in favorable product mix.
Courtland results from the third quarter are presented on slide 9.
In Q3 2025, Courtland generated revenue of $37.6 million.
Down from 12.8% down 12.8% from last year, on a constant currency basis Courtland Revenue, decline by 5.9 million or 13.7%.
Similar to other rope and netting. Manufacturing companies, corland experience, softer sales in the quarter. Albeit did better than peers. We track courtland's ropes sales to Marine and shipping. Customers fell due to Market uncertainty associated with the introduction of terrorists, and we have seen some competitive pricing on netting Solutions.
I should point out that courtland's Revenue in the comparative period. Last year was Boyd by strong project sales in North America within the oil and gas sector which did not reoccur in 2025.
Despite a Topline Revenue. Decline Courtland generated 2, a 2 increase in its adjusted Ava and improved. Its margin to 14.6% from 12 and a half percent compared to last year.
The improvements were largely driven by lower sgna costs and Q3 2024 Courtland incurred, 1 million of professional and advisory fees related to a business transformation initiative.
We ended third the third quarter with 106.5 million of cash up from 70.5 million at the end of Q2.
Slide 10 shows a waterfall of the cash movements in the quarter.
Key drivers.
For the increase in liquidity, included a 29.3 million. Refund from the CRA, the Canadian tax Authority, 15.1 million of net cash flow from operations, and 1.8 million from the sale of an idol facility at Beto.
Cash Out. Flows in the quarter included, 3.3 million of common share BuyBacks including tax 4.2 million of capex Investments.
and 2 million of principal repayments on the bozzetto credit facilities,
looking at our liquidity more closely slide, 11 shows, a breakdown of our cash position by segment at at the end of September,
over the next 12 months, our cash requirements will include
Less than 9 million of whole Co costs.
13.9 million of interest payments on our 2030 notes.
10.8 million on the Beto, senior debt financing and 9.8 9.6 million of Beto, interest payments. I should point out that our September 30 liquid exclusivity anticipated 8.5 million refund,
From revenu, Quebec associated with the tax settlement.
And operating cash flows from Beto in Courtland, over the next 12 months.
Through the 9-month period, Beto in Courtland. Generated, 666.5 million of adjusted. EBA on a combined basis, putting us on track to reach our guidance for 2025.
As Illustrated on slide 12, our forecast for adjusted ebit on 2025.
For the 2 businesses is between 88 and 95 million.
We continue to monitor macroeconomic developments and their impact on these core holdings. We'll adjust our outlook if necessary.
Similarly, we are on track to lower our whole Co costs to 9 million.
For the year.
Some of the cost savings, we have made on whole Co costs include reduced audit and professional fees, lower rent, lower insurance, and reduce director, fees stemming from the optimization of our board. Earlier this year, this concludes my summary of the financial results I would now like to return to call back to ree for his closing remarks.
I thank you Steve and, uh, particularly well done on on reducing the uh the whole code costs.
So on uh, slide 14.
We, uh, instituted a three-step strategy about six months ago.
uh, when I took on the role as executive chairman
Uh and just to remind you what those 3 steps were the first was reduced, Hulk code costs.
Uh, the second reduced the discount that the shares trade at, and the third, uh, allocate capital effectively. Uh, so how are we doing with those three? Well, we've made progress. Uh, we believe on, uh, the cost-cutting initiatives as far as the whole code is concerned.
Continue that into uh, 2026.
I think we very confident that we'll achieve a good result there. Uh, then on Step 2, we brought back, uh, about 3 million worth of shares.
And we are becoming pretty confident about the value, the market value of our call holdings.
As a result of the actions that, uh, we have taken so far and also getting to know the businesses.
Uh better. Why is it important? Because knowing the market value of your, what you own gives you options on what you do next. And that's obviously the the really exciting part.
and as I've discussed in the past, these options include, you know, creating additional value from existing assets,
uh, whether that's through new Investments, or making adjustments, to how they operate and other option is, of course, to realize value for them, uh, based on the market value of those, uh, underlying assets,
We excited about the opportunities ahead that I want to, uh, make the uh, make it very clear that we will, uh, proceed with, uh, profit due diligence and oversight of, uh, of the next steps.
Options. I would also point out that we are, well, positioned to allocate, uh, any new capital that comes our way. Uh, we've already received in capital from, uh, the CRA settlements.
And, uh, we have a list of potential Investments, uh, which we would look forward to uh, talking about more in in the coming periods.
So undergoing this this transformation from where we were at the start of the year or even 6 months ago uh and we expect this transformation will accelerate over uh the next uh several months.
And moving on to slide 15 progress on the share bar back.
And that just indicates that uh We've bought back uh about 8.9% of uh the shares since June 2024.
and we down now to just over 90 million shares,
just like you make a point about the share buyback. If you look at it, we on a monthly basis announced. The number of shares that we've acquired in the market and that leads some to ask, you know, why have you tempered your BuyBacks recently?
just to be, you know, clear about
This the barbec is, um, available. But during blackout periods. It's difficult for us or more challenging to execute barbecues freely, uh, as we can during non-b blackout periods. So, just bear that in mind. Uh, when you see, the, the monthly share BuyBacks, but the important point is, we will buy back shares as long as we see, uh, value. And, uh, we, we see, uh, that BuyBacks will be a, a real opportunity to continue to close that discount. So that the shares trade at,
The next slide 16 always an interesting, uh, slide updated valuation metrics. And I just wanted to draw out a couple of, um, points from this Slide. The first is that that very first number Netbook, value should be able to come and shareholders at 295 million
Now that number is impacted mostly on the way down when when assets get valued lower, it's hardly ever assets that are valued higher.
So we we put that number in there, uh, to show what that that we expect that number to grow over time.
And we would expect strong growth out of that number into the future.
And then the other 2 numbers that I would draw out, are kind of a large Ally to that.
It's it's the bottom 2 and that's the Capital, Tax losses and nols.
So that's over a billion dollars those 2 numbers combined now that that that value isn't reflected anywhere.
Uh, in the network value. Uh, and and but we have every intention of utilizing, uh, that Value Inn in the future. And so on, on the following Slide, the tax loss carry forward, what we've included. It's just an extract from the annual accounts, which just gives you an idea about when those losses start to expire. And also the fact that they are, uh, mostly focused on Canada and the US now that that's that's on the, the nol the capital losses. Well, they um are available.
At the whole code level, and they have no expiration.
So we have a little bit of time on our side before we need to start. Um,
Being able to, uh, utilize these tax losses in those jurisdictions. I think that's important because it should give investors an Amia. Some, you know, Clarity and confidence that we, you know, the process that we're going to is going to get us to a a point where we can start allocating Capital to, uh, benefit from these, um, operating tax losses that we have.
Uh, onto the next slide, slide, 18, measuring the value creation. This is our Netbook value for a common share. And you can see it's, it's stabilized, uh, down at 326 per share. But we want this number to start growing. And we think that, uh, as the group, uh, changes, uh, you'll see this number starting to start to, uh, increase materially
so, to summarize, uh, the the third quarter, I would talk to us improvements to several Financial metrics
And of course, a lot of progress on our three-step strategy.
I focus on the coming months will be to continue with this momentum and execute against that strategy in particular. Uh, we will begin to make investments in companies that meet our specific criteria. These criteria, as discussed previously, will include investing in companies that provide an opportunity to reach a controlling interest.
But more importantly they generate strong cash flows. Uh that have uh very strong balance sheets uh mostly carrying cash on the balance sheets.
And of course, they have to be significantly undervalued.
And that's how we're going to create value.
Our other priorities include achieving our guidance for the year, which Steve spoke about earlier and continuing to reduce our whole curve costs which are really in our control and we confident of doing that and executing on the share buyback program, uh, in line with, uh, the various constraints, we have and different reasons for the flat, for, for being in blackout periods.
So we look forward to providing updates on on this program uh progress. Uh thank you for your your time and uh we'll now handle the 4 questions to Joe
Operator, if you would ask um or particip or pull the participants for Q&A, please. And then a recall. I also asked some questions that have come in after we've gone through um,
set of questions from people on the call.
Thank you, ladies and gentlemen. Should you have a question please? Press the star followed by the 1 on your touchdown phone. Should you wish to cancel your request? Please press the star followed by the 2. If you are using a speaker-phone, please lift to handset before pressing any case, once again that is star 1, should you wish to ask a question?
and your first question is from Brian Morrison from TD Cowen, your line is now open,
Oh, thanks very much uh morning re um, you say you've gained confidence in the market value of your core Holdings. I'm just wondering if you can, maybe do it at a high level. Stay to us. What steps have been taken to gain such confidence and if you think you have visibility into potential timing of monetization of these assets,
Yeah, good questions. Uh, so I think
We we were discussing with internally last couple of days.
Um,
you know, a lot of what we can disclose at this time. Doesn't tell you the work. That's kind of gone on um underneath the surface here.
And so, you know, maybe I can elaborate a little bit. Uh, We've, we've spent a lot of time meeting with um, different players in in the industry, uh, different, uh, owners of, uh, similar assets to what, what we have
And I think, you know what, what's clear is that you know, there's trade buyers Financial buyers. Um, competitors, you know, there's there's no shortage of interest in in the assets that we own
and that is, you know, what I can say about about our underlying confidence in what the value of these assets are
If you take, if you go back 6 months, I think you know, we could see what the numbers showed but that doesn't tell you what, you know, potential market value, might be of these assets.
These artists but it's clear to me that um you know these assets are are in demand from various interested parties. Now uh what I would say on that to elaborate a little bit more, is that
Uh, you know, I've also grown in confidence in in the businesses and understood them a bit better.
and, uh, you know, I'm particularly, you know, I think, uh, Roberto and Stefan have been an amazing job running, uh, visitor so well, in a difficult environment,
Uh, they, you know, really outstanding managers uh and um you know, when it comes to Courtland Courtland is a a very, very interesting business.
And it's not a business that uh, you know, you know initially I might have thought. Well, I'm not sure how how solid or how strong that business is. I I think I'm pretty confident that we can make
Uh, some changes to that business, which will enhance it and prove it. And I think it'll be a very attractive business in the future. So, um, I hope the balance of your questions, uh, in terms of timing
I don't think we want to go into the timing of things but I would, I would imagine, you know, if you think about what what we want to do as a business and and create this permanent Capital vehicle which it is but to utilize it better.
Uh, you know, we don't want to procrastinate at all. So we are moving as as quickly as we possibly can, but we are cautious. Uh, we are doing all the appropriate due diligence, um, and our, uh, you know, managing it as managing the processes, as confidently as we can.
Okay, and then I want to maybe circle all back on to this Permanent Capital vehicle you alluded to and identify your short list of target investments. I wanted to ask you about the criteria, but you stated that, I think you said controlling interest has positive free cash flow and it's undervalued. I mean, the global markets have had a very good run here; maybe just talk about where you see the sweet spot in terms of potential size and geographies where you might find these attributes.
Yeah, it's it's another good question. I mean, you know, if you think about where we are,
Uh, everything we look at, um, in the US every time we we kind of, get excited about finding something. There it. It turns out, uh, it has, um,
Some large SBC, uh, charge, which doesn't go through the, you know, EBA line or, uh, maybe the business is, is not as strong as we initially thought.
When we are finding good businesses and this is what I've alluded to before. Uh, is is in the UK where, uh, there are
Uh, facing issues from, you know, not having very high passes and, you know, passes investing or investment ownership, uh, they've got ongoing redemption in the UK. And so you find relatively cheap valuations,
For a variety of reasons. They are also sitting with, uh, almost no gearing, or net cash on the balance sheets, which is, uh, great for us.
Um and you find, you know, 1 of the, the things that people don't really appreciate as as much is, uh, you find that the management teams are are, um, significantly cheaper, and probably as good as what you find in other countries.
so,
I would say as a first stop.
In in the past, 4 for India, you know, obviously we want to run this for the next, you know, 30, 40 years. Uh, but as a first stop, I think you'll find our Focus will be on on UK, uh, exposed companies.
Uh, with our cheap.
But equally, things change quickly. You know, if valuation starts to, uh, present itself in other places.
Um, we have the flexibility of of going there.
But I, I want to stress that, you know, we can't allow that to happen for too long because we want to start utilizing the tax losses.
So that's why I think we put the slide in there, showing that the tax losses start to expire in 2028 onwards. We want to be in a position where, well before that, we are starting to benefit from that asset.
And would you consider potentially going down the risk scale a little bit and looking at paying down some of your high-cost debt, or accelerating the buyback on any with the discount now that it's currently at?
Level and you don't necessarily want to get the whole code level. So you want to match cash flow with
It.
And I think that's, that's 1 of the shortcomings that we've identified. And and, you know, we will, we will Rectify that in the time ahead. I think what you would expect going forward is, um, a matching of the 2 idea, a lot of debt. Anyway, um, if we buying companies that have net cash on the balance sheet,
And we upstreaming some of that cash uh for enable us to continue to buy backs. I will also enable us to use that for further investment. Uh, but I think if you to look at this business, in the years ahead,
Uh, I wouldn't want there to be hold code debt, uh, hanging around, you know, I don't mind debt at the subsidiary level, but not the whole code.
Appreciate the color and obviously, I'm I'm I'm barbecu. We you know uh we we we love barbecues and uh as much as we can while offer offers good value uh we will continue with with the barbecue
Hi. This is Logan on for surrender. Uh I was just wondering if you could give us more color on the sale of the idle manufacturing facility that you mentioned in your earnings release.
Just wondering like the how long I guess it's had access capacity. Um any anything else you can point out there?
Yeah, it's the I think that's genuinely thought about capital.
Such sorry, Steve I'll I'll hand to you now. Steve, I think it's it's it's probably a little bit part of our
Our focus on, um, making sure we can allocate Capital, even at the, uh, subsidiary level. Now, I don't think we've we've done enough there yet, uh, and there's more opportunities to do that. But it's, it's as a general point, I think we'll try to be as efficient as possible.
For the details on hand over to Steve.
Yeah, it's uh, it was a it was an idol facility. Uh, when we acquired, uh, the bazel business that was identified there was certain
uh, as you can appreciate in any manufacturing, there were certain parameters that had to be cleared prior to disposing of the facility and those were
those were achieved and uh it wasn't a large facility facility, but it wasn't something that was being in production for some time and uh,
They realized around 2 million dollars in, uh, proceeds.
Got it. Thanks for the caller there. Um, and then lastly, uh, I was wondering if you could give us an update on clear media, I know last quarter. It's seemed to seem to sound like you were seeing some early green shoots. I was just wondering if you could give us an update there.
Yeah, absolutely. I think we seeing signs of strength uh, coming through in the business. Uh, Steve can give us some more details there.
Yeah, as as we've commented in the past on clear media, a lot of the revenue generation is is tied to consumer spending, which is still. Although there's been some GDP growth in China. There's there's the consumer spending is still lagging. However, in the quarter we saw some uh, strong performance in the business, uh, tied to some, uh, high level of advertising in a particular industry, particularly in in the online industry that which
Pulled through in terms of advertising on their, on their, on their panels.
So, um, things are turning around their, we're starting to see some positive signs, uh, while the business was
Uh, going through some tough times. On the revenue side, they took out a significant amount of costs.
Both uh overhead and and other operating costs, and that's positioning them. Well,
As the revenue is coming back. So, uh, we're we're looking for some future, uh,
Growth in that business. Uh but the the key indicator is going to be consumer spending when that comes back.
Uh, we'll see some good returns that Clear Media.
Great. Thank you.
We've received a couple of questions inbound. So recent Steve uh first off with respect to potential Investments, would you consider uh any debt financing in the short term to support those efforts?
Uh, we must not, uh, need to raise any, any debts? And and like I said earlier, you know, we have debt at the whole code which we want to extinguish over time, uh, rather than um,
Take on more but we'll look at all. All ways of uh allocating Capital um and if debt can answer their returns, we'll we'll definitely look at it.
Okay, I know you discussed this but if you can clarify, how would the company benefit from its tax losses? If you start making investments in the UK,
Well, that's a good question, uh, because it won't necessarily... if we buy our companies entirely.
Uh, but it's a means to an end. So over time,
Uh it will give us the cash flows and the size to be able to, um, make further Acquisitions in the US and Canada. So uh you know the reason that we need to move relatively quickly is that uh we have 2028 has been the tax losses start to roll off and so we must be in a position where we can be executing on on buying, you know, high quality cashier to businesses in the US and Canada by that time.
So buying things in the UK or wherever else. Um, that is, you know, part of the, you know, that's the first phase of uh further Acquisitions to get us to to having critical mass.
and I want to point out that on the, on the capital law side as long as we structure the acquisition through the whole Co
will be shielded, no matter where that that business is operating as long as we structure it through, uh, the whole code.
So whole Co um costs were initially forecast for 11. They've gone down now to 9, how much further can they actually go?
Well I think you saw in Q3 I think our costs were around 2 million for the quarter. Uh so you know we're we're still uh we're still evaluating there's a few things. We're we're we're spending on that are
Not necessarily going to be uh, recurring. Um, but we were we were being prudent in terms of the guidance where we've said 9 million. Um, I think a year to date. We were at 6 6.4 million. So
You know, we're definitely getting closer to the lower end uh of, you know, below 9. Uh and and I think we as reset, I think there's a few other action items that we're we're looking at to to lower the bass. Okay? And then final question. Can you provide some color, sorry.
Sorry, just just to remind everybody. That's that's, you know, the target is to go below 1 and a half percent of all book value on an annual basis that that that for me is has been the target from from day 1. And I think we we will we will get uh, well below that in the future.
Great. And then final question, can you provide some color on the 4 million caps capex spend in the quarter?
I mean, you know that split between the 2 businesses, I mean, obviously they have, uh, they're spending, uh, you know, for maintenance, for for, for, for also, for safety or or compliance. And also, uh, on the growth side, I would say that would be the smaller portion of the 3 categories. Um, and uh, yeah, so, you know, whether that 4 is a recurring number, you know, I think in the past, we've
We've guided around 3 to 5% in Revenue in terms of capex. And obviously we look at that very closely.
So that that's uh, that concludes our call today and we appreciate all the questions that we received. If you do have any further, please do reach out to us, we'll certainly make ourselves available.
Thank you, everyone have a good day.
Thank you, ladies and
Gentlemen, thank you all for joining. You may all disconnect your lines