Mr. Phil Mittleman reports

AIMIA REPORTS THIRD QUARTER 2023 RESULTS

Aimia Inc. has released its financial results for the three months ended Sept. 30, 2023.

Q3 2023 highlights and recent events:

• Bozzetto reported revenues of $75.9-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $11.7-million (15.4-per-cent adjusted EBITDA margin) for the quarter ended Sept. 30, 2023.
• After quarter-end, Bozzetto signed a definitive share purchase agreement to acquire 65 per cent of StarChem SA for $25.1-million, with a potential earnout of $12.5-million. The synergies with Bozzetto are significant and the combination opens new sales opportunities for both companies throughout the Americas.
• On July 11, 2023, Tufropes acquired Cortland Industrial for $26.6-million.
• Cortland International, the rebranded combination of Tufropes and Cortland Industrial, reported revenues of $38.4-million for the quarter ended Sept. 30, 2023, with an adjusted EBITDA of $5.7-million, representing an adjusted EBITDA margin of 14.8 per cent.
• Cortland International announced the appointment of Stuart Janke as chief executive officer and Brian Pettipas as chief financial officer of Cortland International.
• Kognitiv, which is 49.2 per cent owned by Aimia, has had a recent strong influx of new business opportunities and client engagements, reflecting the positive reception to its new product offerings, including its artificial-intelligence-powered Kognitiv Pulse.
• On Oct. 21, 2023, Aimia closed a private placement related to the issuance of 10,475,000 common shares for gross proceeds of $32.5-million. In addition, investors received 10,475,000 warrants at a strike price of $3.70, for potential additional proceeds of $38.8-million. Concurrent with this transaction, Thomas Finke was named chairman of the board and Yannis Skoufalos was named to the board of directors.

Phil Mittleman, chief executive officer of Aimia, stated: "The strong quarterly performance of Bozzetto and Cortland International provide an exciting look at the future of Aimia, as we continue to focus on the acquisition of control stakes in companies with strong free cash flow and opportunities for growth both organically and through further acquisitions. Their combined contribution of adjusted EBITDA of $17.4-million was achieved in spite of macroeconomic headwinds.

"The recent acquisitions of StarChem and Cortland are examples of the type of strategic, value-creating acquisitions our flagship subsidiaries will pursue. The synergies are significant, and the combinations open new sales and distribution opportunities for both companies. These acquisitions further demonstrate the value Aimia adds to our portfolio companies through strategic oversight and access to capital. In addition, Cortland International is advancing towards a sizable new acquisition, which would significantly increase its EBITDA and free cash flow while creating substantial synergies and sales opportunities. With these acquisitions, and more to come, we are proud to have successfully transformed Aimia into a cash-generating holding company focused on control stakes with significant upside potential," added Mr. Mittleman.

This quarterly earnings release should be read in conjunction with Aimia's interim consolidated financial statements and management discussions and analysis (MD&A) for the quarter ended Sept. 30, 2023, which can be accessed on SEDAR+ as well as Aimia's website under investor relations.

Bozzetto

Aimia owns a 94-per-cent equity stake in Bozzetto, one of the world's largest ESG-focused (environmental, social, governance) providers of specialty sustainable chemicals. The remaining 6 per cent is owned by Bozzetto's management team.

• Bozzetto reported revenues of $75.9-million for the three months ended Sept. 30, 2023, and a gross profit of $18-million. Excluding depreciation and amortization expense of $2.4-million included in cost of sales, the gross profit amounted to $20.4-million. The adjusted EBITDA amounted to $11.7-million, representing an adjusted EBITDA margin of 15.4 per cent.
• In the third quarter of 2023, volume trends improved, with a year-over-year decline less pronounced than in Q1 and Q2 of 2023. Management continues to deliver exceptional EBITDA margins through effective yield management.
• Subsequent to quarter-end, Bozzetto signed a definitive share purchase agreement to acquire 65 per cent of StarChem for $25.1-million, with a potential earnout of $12.5-million. The synergies with Bozzetto are significant and the combination opens new sales opportunities for both companies throughout the Americas. Aimia expects to close the transaction in the next 30 to 60 days.

Cortland International

Aimia owns a 100-per-cent equity stake in Cortland International, the rebranded combination of Tufropes and Cortland Industrial, a global leader in the manufacturing of high-performance synthetic fibre ropes and netting solutions for maritime and other industrial customers. The results for the Cortland International segment include the results of Tufropes for the full three months and the results of Cortland from its acquisition on July 11, 2023.

• Cortland International reported revenues of $38.4-million for the three months ended Sept. 30, 2023, and a gross profit of $6.7-million. Excluding depreciation and amortization expense of $3-million included in cost of sales, the gross profit amounted to $9.7-million. The selling, general and administrative expenses included $2.8-million of one-time transaction and transition-related costs mostly related to the Cortland acquisition. The adjusted EBITDA amounted to $5.7-million, representing an adjusted EBITDA margin of 14.8 per cent.
• Tufropes's performance, excluding Cortland Industrial, improved sequentially in the third quarter of 2023 mainly due to volumes shipped of 10,500 metric tonnes, an increase of 10.8 per cent sequentially.
• Subsequent to quarter-end, Aimia announced the appointment of Mr. Janke as chief executive officer and Mr. Pettipas as chief financial officer of the combined Cortland Industrial and Tufropes businesses under the Cortland International brand.

Holdings segment results for Q3 2023

The holdings segment includes Aimia's investments in Clear Media Ltd., Kognitiv, Capital A, Trade X, as well as minority investments in various public company securities and limited partnerships. Holdings also includes central operating costs, including costs related to public company disclosure and board costs, executive leadership, legal, finance and administration.

During the third quarter of 2023, the holdings segment reported a loss before income taxes of $28.8-million, mainly related to a negative net change in fair value of investments of $25.7-million.

This fair value change included an unrealized fair value loss of $36.2-million on the company's investment in convertible preferred shares, warrants and convertible notes of Trade X. This non-cash unrealized fair value loss is related to Trade X's recent trade financing challenges impacting its financial performance which have led the company to adjust its business model.

Selling, general and administrative expenses amounted to $7.4-million, up by $2.1-million versus the same quarter in the prior year. This increase was primarily due to legal and advisory-related fees associated with the response to shareholder activism of $2.5-million.

Investment performance summary

Kognitiv

Aimia owns a 49.2-per-cent equity stake in Kognitiv as of Sept. 30, 2023. Kognitiv helps brands build deeper, more meaningful relationships with customers through the design, delivery and management of loyalty programs.

Kognitiv's adjusted EBITDA for the three months ended Sept. 30, 2023, amounted to negative $4.3-million, an improvement of $2.9-million compared with the same period in the prior year, mainly due to lower professional fees and technology expenses as well as increased revenues.

Kognitiv has implemented a series of initiatives to reduce costs and increase efficiency, and when combined with modest revenue growth, these are expected to result in positive adjusted EBITDA in 2024. Kognitiv successfully closed the sale of a non-core business on Aug. 2, 2023, generating $9.4-million in upfront proceeds (comprising $7.8-million of base consideration as well as an earnout of $1.6-million advanced at closing). The company has received $4.4-million of the current equity raise and expects to raise an additional $6-million.

Balance sheet and liquidity

As of Sept. 30, 2023, Aimia had cash and cash equivalents of $42.5-million, of which $26.8-million is held in Bozzetto, $6.5-million in Cortland International and $9.2-million in the holdings segment.

In addition, Aimia had a liquid portfolio of equities which had a market value of $45.2-million. In total, Aimia had $87.7-million in cash, cash equivalents and liquid securities.

Cash flow from operations

During the third quarter of 2023, Aimia generated $11.9-million of consolidated cash flow from operations. On an adjusted basis, Aimia generated $4.2-million of consolidated cash flow from operations, which excludes cash generated from net redemptions at Precog of $12.6-million, outflows related to transaction costs of $2.8-million and shareholder activism-related fees of $2.1-million.

Available tax losses

Aimia utilized approximately $130-million of net capital losses to mitigate capital gains on the repatriation of proceeds from foreign affiliates in the fourth quarter 2022.

Remaining tax losses are approximately $691-million as of Sept. 30, 2023, comprising $283-million in capital losses and $408-million in net operating losses. In addition, upon the liquidation and dissolution of a foreign affiliate entity, Aimia expects to record additional capital losses associated with the legacy Nectar transaction of approximately $200-million.

Dividends

Dividends of $3.1-million were paid for the third quarter ended Sept. 30, 2023, on the two series of outstanding preferred shares.

On Nov. 13, 2023, the board of directors of Aimia declared quarterly dividends of 30.0125 cents per Series 1 preferred share and 37.5688 cents per Series 3 preferred share, in each case payable on Dec. 29, 2023, to shareholders of record on Dec. 15, 2023.

Quarterly conference call and audio webcast information

Aimia will host a conference call to discuss its third quarter 2023 financial results at 8:30 a.m. EST on Nov. 14, 2023. The call will be webcast on-line. A slide presentation intended for simultaneous viewing with the conference call and an archived audio webcast will be available for 90 days following the original broadcast.

Aimia's third quarter 2023 financial statements, management's discussion and analysis, and financial highlights presentation will be filed on SEDAR+ around 7 a.m. EST on Nov. 14, 2023, as well as on Aimia's website under investor relations.

About Aimia Inc.

Aimia is a holding company that makes long-term investments in private and public businesses through controlling or minority stakes. The company targets companies with durable economic advantages evidenced by a record of substantial free cash flow generation over complete business cycles, strong growth prospects and guided by strong, experienced management teams. Headquartered in Toronto, Canada, Aimia is positioned to invest in any sector, wherever a suitable opportunity can be identified worldwide. In addition, Aimia seeks investments that may efficiently utilize the company's operating and capital loss carry-forwards to further enhance stakeholder value.

We seek Safe Harbor.