Aimia reports third quarter results
Coalition Programs Drive Strong Free Cash Flow Performance
-
EMEA posts fifth consecutive quarter of double digit gross billings
growth -
Canadian region delivers solid financial performance despite a slowdown
in consumer spending - i2c joint venture formed with Sainsbury’s
-
Acquisition of Excellence in Motivation (EIM) enhances full suite
product portfolio and geographic presence in the US market -
Agreement reached for acquisition of additional 20 per cent in Club
Premier -
Minority investment in China Rewards provides strategic entrance into
key growth market -
2012 guidance confirmed; now expecting consolidated Adjusted EBITDA and
Free Cash Flow at or above the top end of the target ranges
| THIRD QUARTER HIGHLIGHTS |
Three Months Ended September 30, |
Year Over Year 3 | ||
| (in millions of Canadian dollars, except per share amounts) | 2012 | 2011 | per cent Change | |
| As Reported |
As Reported |
Constant Currency1 |
||
| Gross Billings | 537.0 | 541.8 | (0.9) | (0.7) |
| Total Revenue | 498.8 | 501.4 | (0.5) | (0.4) |
| Net Earnings | 29.8 | 25.1 | 18.5 | na |
| Earnings per Common Share | 0.15 | 0.13 | 15.4 | na |
| Adjusted EBITDA2 | 93.6 | 104.2 | (10.2) | (9.8) |
| Free Cash Flow before Dividends Paid 2 | 129.9 | 124.8 | 4.1 | na |
| 1 |
Constant currency excludes the translation effect of foreign operations on consolidated results. For more information on constant currency, please refer to the Use of Non-GAAP Financial Information section of this news release. |
||||||
| 2 | A non-GAAP financial measurement. Please refer to the Use of Non-GAAP Financial Information section of this news release. | ||||||
| 3 | Discrepancies in variances may arise due to rounding. | ||||||
MONTREAL, Nov. 8, 2012 /CNW Telbec/ – (TSX: AIM) Aimia today reported
its financial results for the third quarter ended September 30, 2012.
All financial information is in Canadian dollars unless otherwise
noted.
“We have been very successful in our pursuit of global growth,” said
Rupert Duchesne, Group Chief Executive. “We recently announced several
important initiatives that will support and strengthen our strategic
vision as the recognized world leader in loyalty management, including
an agreement with Grupo Aeromexico to increase our ownership in Club
Premier by an additional 20 per cent and the acquisition of Excellence
in Motivation. Critical to all of this is the continued strength of our
existing businesses.”
Third Quarter Highlights (Period ended September 30, 2012 versus period
ended September 30, 2011)
Consolidated – A Solid Quarter – Record Nine Month Performance – On
Track For Guidance
- Third quarter Gross Billings of $537.0 million, a decrease of 0.9 per cent or 0.7 per cent on a constant currency basis
- Nine month Gross Billings of $1.6 billion, an increase of 1.0 per cent or 0.8 per cent on a constant currency basis
-
For the quarter, the decrease in Gross Billings was due to lower Gross
Billings from proprietary loyalty services, offset in part by the
strong performance from coalition loyalty programs in the EMEA region - Adjusted EBITDA of $93.6 million in the quarter, a decrease of 10.2 per cent
- Nine month record Adjusted EBITDA of $284.1 million, an increase of 12.5 per cent versus the comparable period in 2011
-
Adjusted EBITDA in the third quarter 2011 was favourably affected by the
impact of a $4.9 million revision of an estimate associated with online
store activities. In addition, Adjusted EBITDA in 2012 includes $1.8
million of EIM acquisition-related costs
Canada – Operating Leverage Continues To Drive Performance
- Third quarter Gross Billings of $311.1 million compared with $321.3 million in the same period of 2011, a decrease of 3.2 per cent
-
Gross Billings decrease in the third quarter due to reduced volumes in
the proprietary loyalty financial vertical, a decrease in airline
partner activity including a reduction in accumulation at Air Canada
and offset in part by an increase in financial partner activity
reflecting an increase in the number of active credit cards despite a
decrease in spend per credit card due to weakening economic conditions - Adjusted EBITDA of $91.7 million in the third quarter, a decrease of 7.9 per cent compared to the prior year period
-
Adjusted EBITDA was negatively impacted by a higher redemption cost per
Aeroplan Mile due to reinvestment in the value proposition related to
promotional activities in the quarter - Aeroplan Miles issued decreased by 0.6 per cent in the quarter, while total Aeroplan Miles redeemed increased 2.4 per cent in the quarter compared to the same period in 2011
Europe, Middle East & Africa (EMEA) – Fifth Consecutive Quarter of
Double Digit Gross Billings Growth – Strong Momentum Continues
- Third quarter Gross Billings of $160.8 million, an increase of 14.9 per cent or 16.3 per cent on a constant currency basis
- Adjusted EBITDA of $17.2 million in the quarter, an increase of 0.3 per cent or 2.7 per cent on a constant currency basis
-
Nectar UK points issued in the third quarter increased by 10.5 per cent compared to the same period in 2011, driven by strong underlying growth
at Sainsbury’s and British Gas, as well as growth from new sponsors -
During the quarter Nectar UK announced a major new partnership with
eBay, the UK’s largest online marketplace with 17 million unique
monthly visitors. Nectar card holders will be able to collect points
automatically when they shop on eBay. -
Redemption activity for the Nectar Program increased by 10.0 per cent in the quarter mainly driven by an increase in the number of Nectar
Points in circulation -
In the third quarter, Nectar Italia points issued increased by 7.3 per cent, while Nectar Italia points redeemed increased significantly consistent
with members having increased availability of points in their accounts
and the program’s growth -
Gross Billings for Intelligent Shopper Solutions (ISS) increased by 22.4 per cent resulting from growth in existing international contracts as well as
services provided in the UK -
During the quarter Aimia announced the creation of a new joint venture
with Sainsbury’s. The new venture, to be known as i2c, will offer
suppliers more comprehensive multi-channel marketing solutions in and
around Sainsbury’s stores and online.
US & Asia Pacific – US Stabilized But Still Challenging – Strategic
Initiatives To Drive Growth
-
Third quarter Gross Billings of $66.4 million, a decrease of 18.8 per cent or 19.7 per cent on a constant currency basis compared to the same period of 2011. Excluding the impact of the Qantas
exit, Gross Billings were down 4.9 per cent or 5.9 per cent on a constant currency basis -
Third quarter Adjusted EBITDA of $(0.7) million. Excluding EIM acquisition-related costs of $1.8 million, Adjusted
EBITDA would have been $1.1 million in the quarter -
The US continues to be an extremely challenging environment, however,
the region is making good strides in terms of stabilizing,
repositioning and focusing on higher value-add strategic loyalty
services - Strategic initiatives undertaken:
-
EIM acquisition expands the full suite product portfolio and geographic
presence in the US market -
agreement to increase Aimia’s ownership in Interact from 40 per cent to
100 per cent with a $2 million investment. Interact is the leader in
Indonesia’s rapidly emerging loyalty sector with a solid portfolio of
blue chip clients, including Nestle and Mazda -
agreement to co-invest up to $5 million each with Points International
Ltd. in China Rewards. China Rewards is a new loyalty program partnered
with China Union Pay, one of the world’s largest network operators and
the only domestic payment card in China.
Club Premier – Strong Performance Continues – Agreement Reached For
Additional Investment
Club Premier continues to perform exceptionally well. It generated Gross
Billings of more than US$34 million this quarter, an increase of 17 per
cent over the same period last year. Year-over-year, the number of
members and commercial partners has increased by 10 per cent and 28 per
cent, respectively.
On October 29, 2012, Aimia and Grupo Aeromexico announced an agreement
in principle for the acquisition by Aimia of an additional 20 per cent
equity participation in Premier Loyalty & Marketing, S.A.P.I. de C.V.
(PLM). PLM’s fair value has been established at US$518 million and
Aimia will pay US$88 million which includes a discount agreed to at the
time of Aimia’s initial investment in PLM in September 2010. The
transaction is expected to close before the end of 2012. After closing,
Aimia’s and Grupo Aeromexico’s equity participations in PLM will
approximate 49 per cent and 51 per cent respectively.
Cash Flow and Financial Position
At September 30, 2012, Aimia had $337.3 million of cash and cash
equivalents, $25.3 million of restricted cash, $43.8 million of
short-term investments and $312.9 million of long-term investments in
bonds, for a total of $719.3 million.
Aimia’s Free Cash Flow (before dividends paid) was $129.9 million for
the third quarter of 2012 compared to $124.8 million for the third
quarter of 2011. Free Cash Flow in the quarter increased year over year
primarily due to an increase in cash from operating activities
including lower cash taxes and lower capital expenditures.
Dividends Declared
Common Shares
The Board of Directors declared a quarterly dividend of $0.16 per common
share, payable on December 31, 2012 to shareholders of record at the
close of business on December 17, 2012.
Preferred Shares
The Board also declared a quarterly dividend in the amount of $0.40625
per Cumulative Rate Reset Preferred Share, Series 1, payable on
December 31, 2012 to the holders of record at the close of business on
December 17, 2012.
Dividends paid by Aimia to Canadian residents on both its common and
preferred shares are “eligible dividends” for Canadian income tax
purposes.
2012 Outlook
We are reconfirming the 2012 guidance provided in our February 22, 2012
earnings press release, as updated on September 20, 2012. In fact, we
now expect to report consolidated Adjusted EBITDA and Free Cash Flow at
or above the top end of the target ranges. However, in order to meet
our outlook for Gross Billings in Canada and on a consolidated basis,
we will need to finish the year on a strong note, with robust credit
card spend during the holiday season. For the year ending December 31,
2012, Aimia expects to report the following:
| Key Financial Metric |
Target Range (February 22, 2012) |
Target Range (updated September 20, 2012) |
Target Range (updated November 8, 2012) |
| Consolidated Outlook | |||
| Gross Billings Growth 1 | Between 3% and 5% | Lower end of range | No change |
| Adjusted EBITDA2 | Between $370 and $380 million | Upper end of range | At or above the top end of the range |
| Free Cash Flow 2,3 | Between $220 million and $240 million | No change | At or above the top end of the range |
| Capital Expenditures | To approximate $55 million | No change | No change |
| Income Taxes |
Current income tax rate is anticipated to approximate 27% in Canada and 17% in Italy. The Corporation expects no significant cash income taxes will be incurred in the rest of its foreign operations. |
No change | No change |
| Business Segment Gross Billings Growth Outlook | |||
| Canada | Between 2% and 4% | Between 1% and 2% | No change |
| EMEA | Between 8% and 11% | Between 11% and 13% | No change |
| US & APAC1 | Between -2% and 2% | Between -9% and -7% | No change |
| Other | |||
| Nectar Italia | Greater than €60 million in Gross Billings | No change | No change |
Notes:
-
The Gross Billings growth guidance excludes the effect of a client loss
(Qantas) in APAC at the end of the first quarter of 2012. The target
growth ranges are based on 2011 reported Gross Billings, excluding $40
million related to Qantas. The client loss will have a negligible
impact on Adjusted EBITDA. -
The Adjusted EBITDA and Free Cash Flow outlook range includes an
assumption of planned incremental operating expenses in business
development activities, principally in the U.S., India and Brazil,
technology platform related expenditures that are operating in nature
and additional brand related expenses associated with our new branding,
which in total will approximate $20 million in 2012. - Free Cash Flow before dividends.
The above guidance excludes the effects of fluctuations in currency
exchange rates. In addition, Aimia made a number of economic and market
assumptions in preparing its 2012 forecasts, including assumptions
regarding the performance of the economies in which the Corporation
operates and market competition and tax laws applicable to the
Corporation’s operations. The Corporation cautions that the assumptions
used to prepare the above forecasts for 2012, although reasonable at
the time they were made, may prove to be incorrect or inaccurate.
Accordingly, our actual results could differ materially from our
expectations as set forth in this news release. The outlook provided
constitutes forward-looking statements within the meaning of applicable
securities laws and should be read in conjunction with the “Caution
Concerning Forward-Looking Statements” section.
Use of Non-GAAP Financial Information
In order to provide a better understanding of the results, the following
indicators are used:
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization
EBITDA adjusted for certain factors particular to the business, such as
changes in deferred revenue and Future Redemption Costs (“Adjusted
EBITDA”), is used by management to evaluate performance, and to measure
compliance with debt covenants. Management believes Adjusted EBITDA
assists investors in comparing the Corporation’s performance on a
consistent basis without regard to depreciation and amortization, which
are non-cash in nature and can vary significantly depending on
accounting methods and non-operating factors such as historical cost.
Adjusted EBITDA is not a measurement based on GAAP, is not considered an
alternative to operating income or net income in measuring performance,
and is not comparable to similar measures used by other issuers. For a
reconciliation to GAAP, please refer to the Summary of Consolidated
Operating Results and Reconciliation of EBITDA, Adjusted EBITDA,
Adjusted Net Earnings and Free Cash Flow included in the attached schedule. Adjusted EBITDA should not be used as
an exclusive measure of cash flow because it does not account for the
impact of working capital growth, capital expenditures, debt repayments
and other sources and uses of cash, which are disclosed in the
statements of cash flows.
Adjusted Net Earnings
Adjusted Net Earnings provides a measurement of profitability calculated
on a basis consistent with Adjusted EBITDA. Net earnings attributable
to equity holders of the Corporation are adjusted to exclude
Amortization of Accumulation Partners’ contracts, customer
relationships and technology, share of net earnings (loss) of
equity-accounted investments and impairment charges. Adjusted Net
Earnings includes the Change in deferred revenue and Change in Future
Redemption Costs, net of the income tax effect and non-controlling
interest effect (where applicable) on these items at an entity level
basis.
Adjusted Net Earnings is not a measurement based on GAAP, is not
considered an alternative to net earnings in measuring profitability,
and is not comparable to similar measures used by other issuers. For a
reconciliation to GAAP, please refer to the Summary of Consolidated
Operating Results and Reconciliation of EBITDA, Adjusted EBITDA,
Adjusted Net Earnings and Free Cash Flow included in the attached
schedule.
Standardized Free Cash Flow (“Free Cash Flow”)
Free Cash Flow is a non-GAAP measure recommended by the CICA in order to
provide a consistent and comparable measurement of free cash flow
across entities of cash generated from operations and is used as an
indicator of financial strength and performance.
Free Cash Flow is defined as cash flows from operating activities, as
reported in accordance with GAAP, less adjustments for:
(a) total capital expenditures as reported in accordance with GAAP; and
(b) dividends, when stipulated, unless deducted in arriving at cash
flows from operating activities.
For a reconciliation to cash flows from operations please refer to the
Summary of Consolidated Operating Results and Reconciliation of EBITDA,
Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in
the attached schedule.
EBITDA and Free Cash Flow are non-GAAP measurements recommended by the
CICA in accordance with the recommendations provided in their October
2008 publication, Improved Communications with Non-GAAP Financial Measures – General
Principles and Guidance for Reporting EBITDA and Free Cash Flow.
Constant Currency
Because exchange rates are an important factor in understanding period
to period comparisons, the presentation of various financial metrics on
a constant currency basis or after giving effect to foreign exchange
translation, in addition to the reported metrics, helps improve the
ability to understand operating results and evaluate performance in
comparison to prior periods. Constant currency information compares
results between periods as if exchange rates had remained constant over
the periods. Constant currency is derived by calculating current-year
results using prior-year foreign currency exchange rates. Results
calculated on a constant currency basis should be considered in
addition to, not as a substitute for, results reported in accordance
with GAAP and may not be comparable to similarly titled measures used
by other companies.
Q3 2012 Conference Call / Audio Webcast
Aimia will host a conference call to discuss its third quarter 2012
financial results at 8:00 a.m. ET on Friday, November 9, 2012. The call
can be accessed by dialing 1-888-231-8191 or 647-427-7450 for the
Toronto area. The call will be simultaneously audio webcast at: http://www.newswire.ca/en/webcast/detail/891083/950093
A slide presentation intended for simultaneous viewing with the
conference call will be available the evening of November 8, 2012 at: https://www.aimia.com/English/Investors/Financial-Reports/Quarterly-Reports/default.aspx and an archived audio webcast will be available at: https://www.aimia.com/English/Investors/Presentations-and-Events/Events/default.aspx for ninety days following the original broadcast.
The consolidated financial statements, the MD&A and a financial
highlights presentation will be accessible on the investor relations
website at: https://www.aimia.com/English/Investors/Financial-Reports/Quarterly-Reports/default.aspx.
About Aimia
Aimia Inc. (“Aimia”) is a global leader in loyalty
management. Aimia’s unique capabilities include proven expertise in
delivering proprietary loyalty services, launching and managing
coalition loyalty programs, creating value through loyalty analytics
and driving innovation in the emerging digital and mobile
spaces. Aimia owns and operates Aeroplan, Canada’s premier coalition
loyalty program and Nectar, the United Kingdom’s largest coalition
loyalty program. In addition, Aimia has majority equity positions in
Air Miles Middle East and Nectar Italia as well as a minority position
in Club Premier, Mexico’s leading coalition loyalty program and
Cardlytics, a US-based private company operating in transaction-driven
marketing for electronic banking. Aimia is a Canadian public company
listed on the Toronto Stock Exchange (TSX: AIM) and has over 3,400
employees in more than 20 countries around the world. For more
information about Aimia, please visit www.aimia.com.
Follow us on Twitter: http://twitter.com/#!/aimiainc.
Caution Concerning Forward-Looking Statements
Forward-looking statements are included in this news release. These
forward-looking statements are identified by the use of terms and
phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”,
“intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and
similar terms and phrases, including references to assumptions. Such
statements may involve but are not limited to comments with respect to
strategies, expectations, planned operations or future actions.
Forward-looking statements, by their nature, are based on assumptions
and are subject to important risks and uncertainties. Any forecasts,
predictions or forward-looking statements cannot be relied upon due to,
among other things, changing external events and general uncertainties
of the business and its corporate structure. Results indicated in
forward-looking statements may differ materially from actual results
for a number of reasons, including without limitation, dependency on
top accumulation partners and clients, conflicts of interest, greater
than expected redemptions for rewards, regulatory matters, retail
market/economic conditions, industry competition, Air Canada liquidity
issues, Air Canada or travel industry disruptions, airline industry
changes and increased airline costs, supply and capacity costs,
unfunded future redemption costs, failure to safeguard databases and
consumer privacy, changes to coalition loyalty programs, seasonal
nature of the business, other factors and prior performance, foreign
operations, legal proceedings, reliance on key personnel, labour
relations, pension liability, technological disruptions and inability
to use third party software, failure to protect intellectual property
rights, interest rate and currency fluctuations, leverage and
restrictive covenants in current and future indebtedness, uncertainty
of dividend payments, managing growth, credit ratings, as well as the
other factors identified in this news release and throughout Aimia’s
public disclosure record on file with the Canadian securities
regulatory authorities.
The forward-looking statements contained herein represent Aimia’s
expectations as of November 8, 2012, and are subject to change after
such date. However, Aimia disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result of
new information, future events or otherwise, except as required under
applicable securities regulations.
SUMMARY OF CONSOLIDATED OPERATING RESULTS AND RECONCILIATION OF EBITDA,
ADJUSTED EBITDA, ADJUSTED NET EARNINGS AND FREE CASH FLOW
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
%∆ | ||||||
|
(in thousands of Canadian Dollars, except share and per share information) |
2012 | 2011(f) | 2012 | 2011(f) | Q3 | YTD | ||
| Gross Billings | 537,030 | 541,819 | 1,627,968 | 1,612,117 | (0.9) | 1.0 | ||
| Gross Billings from the sale of Loyalty Units | 398,885 | 384,651 | 1,198,895 | 1,135,593 | 3.7 | 5.6 | ||
| Revenue from Loyalty Units | 361,616 | 345,150 | 1,146,476 | 1,069,389 | 4.8 | 7.2 | ||
| Revenue from proprietary loyalty services | 104,021 | 128,549 | 334,249 | 404,994 | (19.1) | (17.5) | ||
| Other revenue | 33,144 | 27,713 | 90,014 | 80,839 | 19.6 | 11.3 | ||
| Total revenue | 498,781 | 501,412 | 1,570,739 | 1,555,222 | (0.5) | 1.0 | ||
| Cost of rewards and direct costs | (285,978) | (283,733) | (888,274) | (909,086) | 0.8 | (2.3) | ||
| Gross margin before depreciation and amortization (a) | 212,803 | 217,679 | 682,465 | 646,136 | (2.2) | 5.6 | ||
| Depreciation and amortization | (9,407) | (8,419) | (26,412) | (24,335) | 11.7 | 8.5 | ||
|
Amortization of Accumulation Partners’ contracts, customer relationships and technology |
(20,788) | (23,109) | (62,403) | (69,331) | (10.0) | (10.0) | ||
| Gross margin | 182,608 | 186,151 | 593,650 | 552,470 | (1.9) | 7.5 | ||
| Operating expenses | (131,301) | (130,867) | (413,296) | (408,332) | 0.3 | 1.2 | ||
|
Amortization of Accumulation Partners’ contracts, customer relationships and technology |
20,788 | 23,109 | 62,403 | 69,331 | (10.0) | (10.0) | ||
|
Operating income before amortization of Accumulation Partners’ contracts, customer relationships and technology |
72,095 | 78,393 | 242,757 | 213,469 | (8.0) | 13.7 | ||
| Depreciation and amortization | 9,407 | 8,419 | 26,412 | 24,335 | 11.7 | 8.5 | ||
| EBITDA(a)(c) | 81,502 | 86,812 | 269,169 | 237,804 | (6.1) | 13.2 | ||
| Adjustments: | ||||||||
| Change in deferred revenue | ||||||||
| Gross Billings | 537,030 | 541,819 | 1,627,968 | 1,612,117 | ||||
| Revenue | (498,781) | (501,412) | (1,570,739) | (1,555,222) | ||||
| Change in Future Redemption Costs(b) | (26,147) | (23,000) | (42,282) | (42,042) | ||||
|
(Change in Net Loyalty Units outstanding x Average Cost of Rewards per Loyalty Unit for the period) |
||||||||
| Subtotal of Adjustments | 12,102 | 17,407 | 14,947 | 14,853 | ||||
| Adjusted EBITDA(c) | 93,604 | 104,219 | 284,116 | 252,657 | (10.2) | 12.5 | ||
| Net earnings attributable to equity holders of the Corporation | 28,210 | 26,066 | 108,355 | 66,589 | ||||
| Weighted average number of shares | 172,034,083 | 177,253,111 | 172,683,579 | 180,956,779 | ||||
| Earnings per common share(d) | 0.15 | 0.13 | 0.58 | 0.32 | ||||
| Net earnings attributable to equity holders of the Corporation | 28,210 | 26,066 | 108,355 | 66,589 | ||||
|
Amortization of Accumulation Partners’ contracts, customer relationships and technology |
20,788 | 23,109 | 62,403 | 69,331 | ||||
| Share of net (earnings) loss of equity-accounted investments | (576) | 669 | (3,291) | (5,859) | ||||
| Adjusted EBITDA Adjustments (from above) | 12,102 | 17,407 | 14,947 | 14,853 | ||||
| Tax on adjustments(e) | 619 | 888 | 5,373 | 4,658 | ||||
| Non-controlling interests share on adjustments above | 23 | (553) | (1,354) | (1,314) | ||||
| Adjusted Net Earnings(c) | 61,166 | 67,586 | 186,433 | 148,258 | (9.5) | 25.7 | ||
| Adjusted Net Earnings per common share(c)(d) | 0.34 | 0.37 | 1.03 | 0.77 | ||||
| Cash flow from operations | 140,436 | 138,604 | 256,873 | 214,918 | ||||
| Capital expenditures | (10,516) | (13,779) | (34,449) | (29,734) | ||||
| Dividends | (30,364) | (29,056) | (89,618) | (84,581) | ||||
| Free Cash Flow(c) | 99,556 | 95,769 | 132,806 | 100,603 | 4.0 | 32.0 | ||
| Total assets | 4,986,187 | 4,997,980 | 4,986,187 | 4,997,980 | ||||
| Total long-term liabilities | 1,577,327 | 1,335,740 | 1,577,327 | 1,335,740 | ||||
| Total dividends | 30,364 | 29,056 | 89,618 | 84,581 | ||||
| Total dividends per preferred share | 0.406 | 0.406 | 1.219 | 1.219 | ||||
| Total dividends per common share | 0.160 | 0.150 | 0.470 | 0.425 | ||||
| (a) |
Excludes depreciation and amortization as well as amortization of Accumulation Partners’ contracts, customer relationships and technology. |
|
| (b) |
The per unit cost derived from this calculation is retroactively applied to all prior periods with the effect of revaluing the Future Redemption Cost liability on the basis of the latest available average unit cost. |
|
| (c) | A non-GAAP measurement. | |
| (d) | After deducting dividends declared on preferred shares. | |
| (e) |
The effective tax rates, calculated as income tax expense / earnings before taxes for the period on an entity level basis, are applied to the related entity level adjustments noted above. |
|
| (f) |
These figures do not include any effect attributable to the change in Breakage estimates made during the fourth quarter of 2011 in the Nectar and Air Miles Middle East programs. |
|
SEGMENTED INFORMATION
At September 30, 2012, the Corporation had three reportable and
operating segments: Canada, EMEA and US & APAC. The table below
summarizes the relevant financial information by operating segment:
| Three months ended September 30, | ||||||||||||||||||||||||
| (in thousands of Canadian dollars) | 2012 | 2011(f) | 2012 | 2011(f)(g) | 2012 | 2011(f) | 2012 | 2011 | 2012 | 2011(f) | 2012 | 2011(f)(g) | ||||||||||||
| Operating Segments | Canada | EMEA | US & APAC | Corporate(b) | Eliminations | Consolidated | ||||||||||||||||||
| Gross Billings | 311,082 | 321,253 | 160,804 | (c) | 139,981 | (c) | 66,388 | (c) | 81,780 | (c) | – | – | (1,244) | (1,195) | 537,030 | (c) | 541,819 | (c) | ||||||
| Gross Billings from the sale of Loyalty Units | 262,063 | 265,798 | 136,822 | 118,853 | – | – | – | – | – | – | 398,885 | 384,651 | ||||||||||||
| Revenue from Loyalty Units | 259,694 | 253,315 | 101,922 | 91,835 | – | – | – | – | – | – | 361,616 | 345,150 | ||||||||||||
| Revenue from proprietary loyalty services | 35,504 | 42,488 | 3,637 | 5,739 | 64,880 | 80,322 | – | – | – | – | 104,021 | 128,549 | ||||||||||||
| Other revenue | 12,944 | 12,393 | 20,200 | 15,320 | – | – | – | – | – | – | 33,144 | 27,713 | ||||||||||||
| Intercompany revenue | – | 414 | 49 | 198 | 1,195 | 583 | – | – | (1,244) | (1,195) | – | – | ||||||||||||
| Total revenue | 308,142 | 308,610 | 125,808 | 113,092 | 66,075 | 80,905 | – | – | (1,244) | (1,195) | 498,781 | 501,412 | ||||||||||||
| Cost of rewards and direct costs | 167,348 | 162,754 | 84,832 | 72,670 | 33,847 | 49,361 | – | – | (49) | (1,052) | 285,978 | 283,733 | ||||||||||||
| Gross margin before depreciation and amortization | 140,794 | 145,856 | 40,976 | 40,422 | 32,228 | 31,544 | – | – | (1,195) | (143) | 212,803 | 217,679 | ||||||||||||
| Depreciation and amortization (a) | 23,381 | 25,297 | 4,389 | 3,423 | 2,425 | 2,808 | – | – | – | – | 30,195 | 31,528 | ||||||||||||
| Gross margin | 117,413 | 120,559 | 36,587 | 36,999 | 29,803 | 28,736 | – | – | (1,195) | (143) | 182,608 | 186,151 | ||||||||||||
| Operating expenses before share-based compensation | 51,753 | 54,152 | 32,963 | 31,956 | 33,264 | 33,771 | 11,275 | 9,477 | (1,195) | (143) | 128,060 | 129,213 | ||||||||||||
| Share-based compensation | – | – | – | – | – | – | 3,241 | 1,654 | – | – | 3,241 | 1,654 | ||||||||||||
| Total operating expenses | 51,753 | 54,152 | 32,963 | 31,956 | 33,264 | 33,771 | 14,516 | 11,131 | (1,195) | (143) | 131,301 | 130,867 | ||||||||||||
| Operating income (loss) | 65,660 | 66,407 | 3,624 | 5,043 | (3,461) | (5,035) | (14,516) | (11,131) | – | – | 51,307 | 55,284 | ||||||||||||
| Adjusted EBITDA (h) | 91,655 | 99,562 | 17,188 | 17,140 | (723) | (1,352) | (14,516) | (11,131) | – | – | 93,604 | 104,219 | ||||||||||||
| Additions to non-current assets (d) | 5,878 | 7,301 | 3,271 | 4,818 | 1,367 | 1,660 | – | – | N/A | N/A | 10,516 | 13,779 | ||||||||||||
| Non-current assets (d) | 3,205,993 | 3,272,133 | 457,567 | (e) | 469,715 | (e) | 76,976 | (e) | 106,229 | (e) | 2,246 | – | N/A | N/A | 3,742,782 | (e) | 3,848,077 | (e) | ||||||
| Deferred revenue | 1,779,658 | 1,828,179 | 503,282 | 357,446 | 23,385 | 14,146 | – | – | N/A | N/A | 2,306,325 | 2,199,771 | ||||||||||||
| Total assets | 3,767,255 | 3,789,354 | 947,136 | 941,639 | 206,173 | 202,279 | 65,623 | 64,708 | N/A | N/A | 4,986,187 | 4,997,980 | ||||||||||||
| (a) |
Includes depreciation and amortization as well as amortization of Accumulation Partners’ contracts, customer relationships and technology. |
|
| (b) |
Includes expenses that are not directly attributable to any specific operating segment. Corporate also includes the financial position and operating results of our operations in India, the investments in PLM, Prismah and Cardlytics. |
|
| (c) |
Includes third party Gross Billings of $130.6 million in the UK and $39.0 million in the US for the three months ended September 30, 2012, compared to third party Gross Billings of $116.1 million in the UK and $43.9 million in the US for the three months ended September 30, 2011. Third party Gross Billings are attributed to a country on the basis of the country where the contractual and management responsibility for the customer resides. |
|
| (d) |
Non-current assets includes amounts relating to goodwill, intangible assets and property and equipment. |
|
| (e) |
Includes non-current assets of $407.6 million in the UK and $70.4 million in the US as of September 30, 2012, compared to non-current assets of $417.0 million in the UK and $100.0 million in the US as of September 30, 2011. |
|
| (f) |
Intercompany revenue and expenses related to the comparative period have been reclassified to conform with the presentation adopted in the current period. |
|
| (g) |
These figures do not include any effect attributable to the change in Breakage estimates made during the fourth quarter of 2011 in the Nectar and Air Miles Middle East programs. |
|
| (h) | A non-GAAP measurement. |
SOURCE: AIMIA
Contact:
Media
JoAnne Hayes
416-352-3706
joanne.hayes@aimia.com
Analysts & Investors
Trish Moran
416-352-3728
trish.moran@aimia.com