Aimia Inc.

Good morning, ladies and gentlemen, and welcome to the AMEA fourth quarter 2021 results conference call. At this time, all lines are less than early mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, March 30, 2022. I would now like to turn the conference over to Mr. Tom Tran. Please go ahead.

Thank you, Anas, and welcome everyone to this morning's call. Today's presentation is available on CDAR and the company's website. Before we get underway, I would like to remind everyone to review our forward-looking statement and the caution and risk factors pertaining to the statement. With me on the call today are speakers Phil Middleman, AMIA CEO, Michael Lehman, our president, and Steve Leonard, our CFO. Phil will begin with our strategic highlights, followed by Michael, who will cover the performance of our investments, and will hand the call over to Steve to take you through the results of the quarter. We will have time for your questions at the end. With that, let me hand it over to Phil.

Thanks, Tom, and good morning to everyone on the phone and webcast today. 2021 was an exciting year for AMIA as we continued to advance our strategy of maximizing the value of our portfolio holdings while deploying capital towards new investment opportunities to deliver strong returns to our stakeholders. The key strategic achievements during the year included successfully shepherding PLM through Aeromexico's bankruptcy while receiving over $26 million in dividends, positioning us for the subsequently announced binding LOI to the best of stake for approximately $517 million in proceeds, or $5.58 per common share. Selling our stake in Ares' loyalty program, Big Life, for $22 million, realizing a gain of $6.9 million on the transaction as we transformed an illiquid holding into a valuable source of additional liquidity and upside. Initiating new, exciting investments, including TradeX, a rapidly growing B2B cross-border automotive trading platform. as well as other opportunistic investments, such as a new special purpose vehicle established to pursue a leveraged buyout. Successfully navigating our investment in Clear Media through its privatization, which is now positioned to benefit from valuable partnerships with its new industry-leading shareholders and a rebound in the out-of-home advertising industry in China as they accelerate their digitization plan. Generating substantial realized gains, resulting in over $16 million in net positive cash flow at the whole co-level from the sale of JC Deco and Numark, And finally, achieving our targeted annualized cash expense of $14 million, excluding transaction-related costs. Overall, 2021 was a strong year, which positioned us very well for 2022, during which we expect to receive substantial cash proceeds from the divestiture of our PLM stake. Against the backdrop of ongoing dislocations in world markets, these proceeds will allow AMIA to capitalize on investment opportunities shielded by over $700 million in available tax losses. Moving on to recap the strategic highlights for the fourth quarter. Beginning with PLM. As we recently announced, we are very pleased to have entered into a binding LOI with Aeromexico for the divestiture of our stake in PLM. I will cover this transaction, including our intentions with the proceeds, in greater detail later in my remarks. PLM continued to demonstrate strong recovery in its operating performance, and AME received an additional $5 million of distributions from PLM in the fourth quarter. bringing our total distributions received in 2021 to more than $26 million. Moving to Cognitive. Under a new management team led by Sean Pearson, President and newly appointed CEO, Cognitive has developed a strong pipeline of prospects and has secured contract renewals and extensions with longstanding clients. Our significant stake in Cognitive provides AMIA with exposure to an exciting technology company with significant potential upside. Having successfully completed a financing of $48.5 million, Led by Silicon Valley Bank, Cognitive is focused on accelerating its commercial efforts to achieve its growth plans. Moving to our investment in Clear Media, we are pleased with the progress made at Clear Media, participating together with a blue-chip consortium of operators and investors, including Clear Media's previous CEO, JC DeCoe, Ant Financial, and the China Wealth Growth Fund. While facing the headwinds of a slowdown in the Chinese economy and COVID-related shutdowns, Clear Media has nonetheless seen its business recover, as we begin to see them execute their plans to digitize key bus shelter assets. ClearMedia is a high-quality business with a long-term track record of strong financial performance. In 2021, ClearMedia nearly doubled its number of digital panels, accelerating their digitization strategy to drive future growth. As the largest operator of bus shelter advertising panels in China, commanding more than 70% market share in key cities, ClearMedia stands to benefit from its sizable market position and enhanced digital offerings. With less than 1% of its panels currently digital, we believe there remains significant growth potential for digital penetration over the coming years. Moving to Tradex. In July, AMIA invested $44 million as the lead investor of Tradex's financing round at a pre-money valuation of U.S. $250 million. Following AMIA's announcements of this transaction, other strategic investors have also invested in Tradex, bringing AMIA's fully diluted stake in Tradex to 12.2%. In December, AMIA further increased its investment in Tradex with an additional $32 million in Tradex's convertible note offering to support their continued growth. This convertible note is expected to convert to equity at a 25% discount to the pre-money valuation of Tradex's next qualified financing round. The addressable market for exporting pre-owned vehicles is immense and is estimated to be approximately $100 billion annually and is almost exclusively conducted offline. As the only global platform to offer an online cross-border solution to automotive trade, we believe Tradex is well-positioned to capture a meaningful share of this trading volume by automating and streamlining vehicle commerce through its highly scalable AI-powered digital platform. Tradex continues to commercialize its core product with major automotive customers, such as Carvana and Enterprise Holdings. and is growing at a remarkable rate as it opens new global trade corridors to facilitate cross-border automotive transactions across Europe, Latin America, Africa, Middle East, and Asia. Tradex is also actively pursuing a robust pipeline of accretive acquisitions targeting companies in current and complementary business lines that can help Tradex scale quickly in key growth markets and expand its market reach. There has been significant M&A activity in the automotive space, completed at strong valuations, notably Carvana's $2.2 million cash acquisition of Edessa's U.S. physical auction business from Car Global at a multiple of 22 times trailing EBITDA. We believe this transaction highlights a significant value of Tradex, which is projected to generate approximately $1 billion in gross vehicle sales in 2022 and strong EBITDA. Moving to our investment in Capital A. AirAsia's parent was rebranded as Capital A following its reorganization into a holding company, to separate its core airline business from its portfolio of digital assets, in which we see significant upside potential in companies such as AirAsia SuperApp and BigPay. BigPay is one of the fastest-growing fintech companies in Southeast Asia and secured U.S. $100 million in financing from South Korean conglomerate SK Group and has applied for a digital banking license in Malaysia with a consortium of strategic partners. AirAsia SuperApp has a highly engaged user base of more than 20 million monthly active users and was valued at US $1 billion in July 2021 following its acquisition of Gojek's ride-hailing and payments business in Thailand via ShareSwap. We are very pleased to see the airline resume its domestic travel and the reopening of Malaysia's borders as the region moves away from its zero-COVID strategy. Domestic capacity in Malaysia has rebounded to approximately 80% since the end of December, with international capacity at around 40%. These numbers are expected to increase as neighboring countries such as Thailand, Philippines, and Indonesia have also opened up their borders as they restart their tourism economy. During the fourth quarter, Amy invested an additional $9 million in Capital A's rights offering, in which the founders subscribed to a significant amount of the offering. AirAsia is an iconic brand, widely recognized across Southeast Asia, delivering the best value at the lowest cost. We expect Capital A will emerge from the pandemic as a stronger airline and holding company, uniquely positioned from its significant market position to capitalize on the sizable pent-up demand for low-cost air travel across Southeast Asia while enhancing the value of its digital assets. Moving to our new investment in a second special-purpose vehicle. Following our first investment in a special-purpose vehicle in 2020, AMIA made a new investment of $12.4 million in a second special-purpose vehicle in November, which was also created to pursue a similar buyout strategy. AMIA believes that co-investing with like-minded investment leaders can provide additional opportunities to gain a foothold and a target, they can potentially materialize into a significantly larger investment for AMIA. Finally, let's cover the PLM transaction and AMIA's intent for the use of proceeds. As we recently announced, AMIA entered into a binding LOI with Air Mexico to divest our 48.9% stake in PLM for net proceeds of approximately $517 million, or approximately $5.58 per common share. Following the announcement of the PLM transaction, Air Mexico announced on March 17th that it had successfully completed its financial restructuring and emerged from Chapter 11 and formally assumed the PLM contracts. Upon closing of the transaction, AMIA expects to receive $492 million Canadian in net proceeds at closing and additional earn-out of up to $25 million on a net basis will be paid to AMIA should PLM's performance achieve certain targeted annual gross billing amounts by 2024. AMIA is progressing towards the completion of definitive agreements and Mexican antitrust approval. We expect the transaction to close within the next four months. Upon receipt of the PLM proceeds, our primary focus is to continue to develop AMIA into a strong cash generator with significant net asset value appreciation potential, with our subsidiaries providing dividends to the Holdco. To achieve these strategic goals, AMIA intends to deploy the majority of the proceeds from the PLM transaction towards the acquisition of controlling positions in businesses operating in either the U.S. or Canada that will utilize our sizable net operating tax losses, which, when applying modest leverage at the subsidiary level, would provide AMIA with up to $1 billion in buying power. We have a robust pipeline of exciting potential targets, and we remain patient and disciplined in identifying and capitalizing on the best investment opportunities we can find globally. Additionally, we intend to allocate up to $75 million of the net proceeds towards a combination of opportunistic buybacks and or a special dividend to common shareholders. Our intent is to utilize a combination of our current NCIB, plus its subsequent proposed renewal upon expiration, to enable total buybacks of up to 14 million common shares, which would reduce our current outstanding common share count of 92.5 million. Should the company be unable to utilize the current NCIB, which expires on June 20th, and or the subsequent NCIB, AMIA will consider a one-time special dividend to achieve the target 75 million return of capital to shareholders. Over the past three years, we have repurchased more than 40% of our outstanding shares, And after a year of being restricted from repurchasing stock due to trading restrictions, mostly caused by PLM negotiations, we have a heightened interest in executing accretive buybacks as we believe our shares are significantly undervalued. We also announced this morning that Chris Middleman will be transitioning from his executive role at AMIA back to his role as CIO of Middleman Investment Management exclusively. This transition enables Chris to fully dedicate his efforts to managing MIM's global value strategy portfolios for institutional and individual investors, while continuing to provide AMIA with valuable investment ideas. Chris will remain on AMIA's board until the end of the next general meeting, scheduled in May, and will not stand for reelection. And with that, let me turn the floor over to Mike to provide you some further updates on our investment portfolio. Mike?

Thanks, Bill, and good morning to everyone. We'll begin our discussion with PLM on slide 12, where I'll be speaking to the operating performance in USD, which is PLM's functional currency. Its member base grew by 8.6% over last year to 7.6 million enrolled members in the fourth quarter of 2021. PLM's operating metrics continue to trend positively as gross billings in the fourth quarter recovered to approximately 80% of its pre-pandemic level during the fourth quarter of 2019. Gross billings were 57.4 million in the fourth quarter, up 54% over last year and up 16% over last quarter due to an increase in accumulation volume. as a result of the continued recovery of the travel industry from COVID-19. Adjusted EBITDA was $17.6 million in the quarter, up 100% over last year, and up 26% over last quarter due to higher gross billing. Further, free cash flow was a positive $20.4 million in the fourth quarter, up 14% over last year. Moving on to cognitive. In the fourth quarter, revenues from continuing operations were $14.9 million, an improvement of approximately $1 million over last quarter, benefiting from the gradual recovery of revenues from existing travel and hospitality clients, as well as revenue from new clients. Adjusted EBITDA for the continuing operations was a loss of $13.2 million, a sequential decline of $4.7 million from the prior quarter. The decline of adjusted EBITDA was the result of a one-time benefit of $2.6 million related to the Canada emergency wage and rent subsidies, recorded in Q3 2021, and an impact of $2 million from professional fees relating to financing and strategic initiatives in the fourth quarter of 2021. Excluding these items, adjusted EBITDA in the fourth quarter was broadly in line with last quarter. In 2022, Cognitive continues to focus on maximizing revenue growth from existing clients by expanding their subscription through member growth and widening the scope of their service engagements. As well, converting their pipeline to add new subscription-based clients remains a key priority for Cognitive this year. Turning to our investment management business, revenue for the quarter from investment management fees was approximately $600,000. Earnings before income taxes were break-even, which benefited from a U.S. government COVID-19 employee retention program credit during the quarter. Asset under management were 205.9 million in the fourth quarter, up 3% sequentially from the third quarter. Moving on to Clear Media. For the year ended December 31, bus shelter advertising panels increased by 22% year-over-year to 72,000. And digital panels nearly doubled from a year ago to 536, as Clear Media accelerates its digital transformation. Total revenue for the six months ended December 31, 2021, was 623 million renminbi, down 7% from last year and 3% from the first half of 2021, amid COVID-driven shutdowns in China and challenging operating environment. In November, ClearMedia paid a dividend to EverHarmonic, which was applied to finance its contractual obligation to repay the external financing related to the privatization of ClearMedia. AMI is entitled to its pro rata share of ClearMedia's dividends, and we recorded a $600,000 investment income receivable on our balance sheet in the fourth quarter. We expect this investment income balance to grow over time as ClearMedia declares further dividends to its shareholders. We believe ClearMedia's intensified efforts to broaden its client base and attract new customers will be well supported by its enhanced digital offering upon the expected recovery of outdoor advertising demand in China. And finally, turning to Tradex. Tradex continues to deliver terrific results. In the fourth quarter of 2021, Tradex generated gross vehicle sales of 117.6 million and 275.1 million for the full year, which represents an annual growth rate of 273% from 2020. Full year 2021 included 105 million in gross vehicle sales from acquisitions. Total cars sold were 3,369 in the fourth quarter and 7,845 for the full year in 2021. Based on Tradex's management expectations, year-to-date performance, and growth plan, in 2022, we expect Tradex to generate gross vehicle sales, including acquisitions completed in 2021, of approximately $1 billion. This growth is expected to be nearly four times the amount in 2021. supported by continued expansion of its trade corridors, including Europe, Latin America, Africa, Middle East, and Asia. And with that, let me turn it back over to Steve to take you through the financial results. Steve?

Thanks, Michael, and good morning to everyone. Let's begin by covering the consolidated results before we move to the segment performance and cash movements in the quarter, starting with our consolidated results on slide 20. In the fourth quarter, loss from investments was $5.8 million, compared to total income of $10.2 million from last year, mostly due to the company's equity pickup of its non-cash share of Cognitus net loss of $8.7 million in the fourth quarter of 2021, as well as the negative net change in fair value of investments of $5.5 million, mainly related to our investment in Capital A. Reported expenses were $7.7 million, up from $5.9 million in the same quarter of last year, driven by one-time credits related to technology and facilities in the fourth quarter of 2020, totaling $1.5 million, and higher compensation and benefit expenses of $0.6 million related to an increase in share-based compensation and other performance awards of $1 million due to a higher AMIA share price in the fourth quarter of 2021. Within total expenses, corporate operating expenses, which includes compensation, professional and advisory fees, as well as insurance, technology, and other office expenses, were $6.6 million in the fourth quarter, up from $4.3 million in the same period last year due to the same reasons as previously mentioned. Excluding share-based compensation and other performance awards, corporate cash operating costs were $3.8 million in the fourth quarter, which included approximately $400,000 in transaction fees. For the full year, total expenses were $22.8 million, excluding share-based compensation of $7.3 million, fair value loss and contingent consideration of $0.8 million, other financial income of $0.3 million, and transaction-related professional fees of $1 million. Recurring cash operating expenses were $14 million. in line with our targeted annual cash expenses. Moving on to cover the major cash movements for the quarter. We ended the fourth quarter with total cash excluding liquid investments of $34.5 million, including liquid investments of $49.1 million. Total cash and liquid investments ended at $83.6 million. The total cash movements in the quarter compared to last quarter were a $31.6 million investment in Tradex convertible note, a $12.4 million investment in the new special purpose vehicle, a $9.3 million investment in Capital A's rights offering, net proceeds of $18.7 million from the sale of our investment in Newmark, a $5 million distribution received from PLM. We paid preferred dividends of $3.1 million and a related part six tax of $1.2 million. and corporate cash operating costs were $3.8 million. Subsequent to the end of the quarter, AMIA invested an additional $10 million in cognitive via convertible note, bringing our pro forma cash and liquid investments to $73.6 million. And with that, let me now turn it over to Phil to wrap up with a few concluding remarks. Phil?

Thanks, Steve. This is an exciting time to be a shareholder of AMIA. We continue to execute our strategy of maximizing the value of our current portfolio holdings, while redeploying our capital into new investments with significant upside. 2022 is off to a strong start as we progress towards completing the largest corporate transaction in AMIA's history, while continuing to accrue our pro rata share of PLM's distributions in cash as we work towards closing this transaction. We look forward to providing you further updates as soon as we can, and we look forward to an exciting 2022.

Operator, that concludes today's prepared remarks. Please go ahead and ask the questions.

Thank you, sir. Ladies and gentlemen, we will now conduct the question and answer session. If you would like to ask a question, press start on the number one on your telephone keypad. If you would like to withdraw your question, press start two. If you're using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Brian Morrison with 2D Securities. Please go ahead.

Hey, good morning, guys. Hey, Brian, a couple of quick questions. Morning, Brian. Good morning, guys. Sorry I joined a bit late, but I just want to go through a couple things. So in terms of the proceeds and the NCIB, I get that up to $75 million, but if you can't complete, you're looking at a special dividend. Just curious, why would you consider that? Why wouldn't it be more accretive to potentially buy back a portion of your press, as you've done once before, or there are onerous tax implications from that?

Yeah, I mean, that's a good question. So we, you know, we, first of all, anytime we have a large liquidity event, We'd like going forward to make sure our shareholders taste of that a little bit and whether that's through accretive buybacks, which we love and obviously is our priority. We'd also like people to participate in some form of dividend when that happens. Ultimately, our goal is to be generating enough cash at the hold code to do that on a continuing basis like we did in the past. But in terms of the way we're going to allocate that cash, obviously our first target is to continue what we've done in the past, buying back over 40% of our shares. We want to do it opportunistically. The NCIB provides us with those opportunities. If for some reason the stock ran away and was trading at a much higher price or for whatever reason we couldn't execute the NCIB, we would consider a tax-efficient dividend for shareholders so that they can benefit from the sizable transaction that took place. In terms of the PREFs, we view the PREFs as a great long-term source of cheap capital. We want to keep those in place. we think that we can significantly outpace the cost of them in terms of the return on investment to shareholders, and we think that that's a better use of funds is not to buy back the PREFs at this time, any more PREFs.

And Brian, we're also, in our targets, we're looking at Canadian OPCOs, and if we acquire an OPCO, we can mitigate the Part 6 tax, so that's on our radar.

Okay. So I get it's a permanent source of long-term capital, but wouldn't it be sort of a permanent 30% accretion year NAV if you were to repeat what you did last time, or is it just the tax implications? And I understand the NCIB, et cetera.

I think what we're going to do is I think if you could put a pin in that question and kind of check back. We need to show you performance for a couple of years, and then you can compare our returns with that capital versus the cost of the prefs. If we're in a situation where we have a huge amount of cash and we were paying those dividends and all the cash wasn't at work, we would consider that then. But for now, we have a really exciting pipeline, and we see the returns for stakeholders ahead to be much more significant and long-term benefit to our stakeholders to deploy those into our pipeline instead of buying back prefs.

Fair enough. I think your track record would support that. I guess just turning to Clear Media and the EBITDA, can you just – thanks for that information, but why the year-over-year decline in revenue in EBITDA in the second half of 2021? Is it COVID? Is it something one time in nature in 2020? And are you getting closer to your target of a potential event on that investment?

So I'll take that. It's Mike Lehman. So the – this – The decline was primarily due to kind of one-time events, right? It's COVID-related. First, let's say the digitalization program has been exceptional, right? We couldn't be more pleased with that, and we couldn't be more pleased with the increase in bus panels. It was 59,000. last year, increased 22%, hit 72,000. So we couldn't be more pleased with that. The near-term slowdown had more to do with the slowdown of the overall economy, and that's evident. Advertising and marketing dollars are clearly vulnerable during these slower periods. We gain comfort by the dominant share that Clear Media has in its markets. Up to 70%, 75% market share in cities. They're in the 25 largest cities across China, so we're pleased with that. The long-term EBITDA margins do approach the 40s, so the EBITDA margins have been exceptional in the past, and we think that we'll get back to that in the future. Right now, I think the slowdown is, you know, and advertising and marketing dollars are one of the first to get pulled back during an ancillary period like we have now. And when people are, particularly in Shanghai, we've all seen the news, when people are staying home, if advertisers can pull back a little bit on dollars spent during this interim period, they will. So that was the primary focus. But the increase in clients overall has been very strong. So we're pleased with the position, pleased with the growth prospects. I think this could be characterized as more of a bump in the road than anything.

To address your question, you asked about an event. I think the old Clear Media was a great company with a long track record of consistent cash flow. The new Clear Media is a much more exciting prospect because there's tremendous growth prospects there and a great group of partners. I think that you know, in terms of potential events. I mean, you always could have a buyout event. You can always have stuff like that. But I think this really would lend well to, you know, an IPO that they could, you know, once they get really wrapping and COVID's behind them and things have started to really show some momentum. So there's a bunch of different potential events there. And I think what they're doing is tracking towards that. And obviously we'll let you know as soon as we know something. But, you know, we're very happy with their progress.

All right. And then I'll ask one last question, and it's probably for Mike again. Just in trade acts, I mean, that's a material increase in your revenue forecast, you know, threefold maybe. But a billion dollars, what's the margin profile associated with that upon maturity or in 2022? And then maybe just if you can explain the average selling price per car sold, the decline in that, that would be helpful as well. Thanks very much.

Sure, absolutely. So, yes, it is a material increase. But you see the increase going from $275 million for all of 2021, right? So an average of $70 million or so, just flatlining it to almost $120 million in 4Q. And that's ramping. There was an acquisition made in the year that is substantially increasing the number of cars sold. Cars, you see... little under 8,000 for the year, and about 40% of that was in fourth quarter. So you see the ramp there. They are doing an exceptional job expanding into other trade corridors. I don't recall if it was last quarter or the quarter before, but one of the real KPIs that we focus on is the number of cars sold into other trade corridors, because Remember, this is a global platform, right? It started as a North America, U.S., and Canada platform, but this is now certainly a global platform. So as they substantially increase number of units sold into other trade corridors, that's driving the growth. We will see – it was more of an anomaly, the very, very high per – unit car pricing three quarters ago. There were several very large unit sales that drove the car pricing materially higher. Now, as we continue to grow and we approach a billion in sales, for the year, we're going to more normalize and the car pricing is going to come down to, call it average car pricing within the global market. We're not going to be selling 15-year-old cars as much. So the under $10,000 sale will be less likely. But if you think about a bell curve, it's going to be kind of in between that $20,000 to $25,000 range. will be more the average. Not saying that that's going to be the average, but it's not going to be 75,000. It's not going to be the 10, right? So it's going to be more normalized. And then it depends on where we're selling into. There are trade corridors like Africa that do take older cars, and obviously there'll be less expensive cars. And there are other avenues into Europe and Latin America that the pricing is actually very, very strong.

And Brian, just to add to a little, you know, People kind of point to that sector and say, well, you know, they try to discount Tradex's growth or just the sector in general and say, well, there's a used car bubble and people are desperate for cars and pricing is through the roof. But I would counter that and say that this whole used car bubble has forced people to kind of look for new corridors of trade. And I think it's opened up these corridors and I don't think they're going to close. People didn't realize there's dealers, only 1% of dealers in the U S knew that have ever transacted cars outside of the U S and don't know how to do it. They literally have no idea how to do it. And they're learning from trade X, you know, wow, I can, I can go and buy these cars from Africa or from China or from any of the carters are opening up and they're learning about it and they can do it through their platform. And that's not going to go away. So, so I think it's, it's really been an eye opener for, for people. And, you know, I think it's been, this whole bubble thing has been a big benefit for trade X and, and the quarters are opening up.

On the margin, Brian, we haven't been giving precision on the margin yet. We're still dealing with a company that's growing, that's maturing. I think we've given some indications of what the business does in terms of on a transaction. I think it's out there around 5% to 6% on transactions. I think that's been out there in some of our commentary. So you can could use that as something in mind. You know, could margin increase higher than that? It all depends on certain corridors, as Mike and Phil have talked about, and certain other avenues of the complementary business. But, you know, it's in that, you know, band of, you know, mid-single digit to, you know, close to just below 10%, somewhere in that band. But we haven't really stuck to, you know, cementing the margin yet because the business is still maturing.

I'll squeeze this last one in. Your last round of financing, you have a convert that's at a discount. You can convert it at a discount, I think it's 25% to next financing round. Where do you see that in terms of a timeline for an IPO or the next funding round?

I think we're not going to point to... For us, it's obviously always sooner is better. you know, for us to monetize things and create value. Obviously, you want to do it when the time is right. You don't want to, you know, prematurely do something. But I think that as far as Tradex's progress, I mean, you couldn't ask for a better track record, what they're doing now, what we see going forward. There's a lot of opportunity there. And I think that we will... be announcing more in the future when we have something to announce. But as far as I'm concerned, there's a lot of opportunity, and we're going to do what's best for stakeholders, obviously. Tradex is going to do what's best for them, and we're going to do what's best for AMIA, and we're very excited about it. We'll let you know when we have something to announce.

All right. Thanks, Brian. Brian, if you think about the sales forecast that the management team has at Tradex of a billion dollars, and refer to Phil's comment about $100 billion global car market, we're going to have exceptional growth and only be at 1%. So I think that there's a lot of growth potential with this company. So while monetization is extremely important, we also have to marry that with how fast the company is growing, what their needs are, And if we think that sales can get to exponentially higher or we can get to another avenue that the brain, this technology platform will allow us to trade in, those are really attractive things that we will take our time and be patient if we see terrific additional value there, right? That doesn't mean that we couldn't take some money off the table or we couldn't participate in a future round that all of those things are on the table. But there is a tremendous amount of growth to be had here. So we have to be cognizant of that.

I think also, Brian, I would say that just one of the, you know, we had some incremental information come out. You heard that Enterprise and Carvana are two significant customers of theirs. When we got involved with this, you know, we knew that and we were really surprised to see such an early stage startup get those type of customers and there's a lot more like that. And so we spoke to them and we said, why are you using TradeOx? What is it about them? Why aren't you using much bigger companies or other people in the space? And they said, these guys just do it better. They said they are getting us better prices, better access to product, they're moving our product faster and we were really impressed and that's playing out and we're seeing more and more people gravitate to them because of that and it feeds on itself. That's something that was really notable and really surprising to see such an early-stage company that get those type of blue-chip customers behind them, you know, ranting and raving about their technology and their ability to build or enhance their businesses. Thank you.

Great. Thanks, Brian.

Thank you. Your next question comes from Drew McReynolds with RBC. Please go ahead.

Yeah, thanks very much, and good morning. Brian kind of ticked off a little bit of my list, but a couple extra. I guess first, I guess Phil and team, thanks for the added disclosure on Tradex. Sounds pretty positive. On the capital returns, maybe start with you, Phil. Just in terms of the proportion of the capital returns, piece versus the reinvestment piece. You know, what was your thinking with that split? If you could just provide a little bit of color there. And on the reinvestment side of things, I'm assuming in this kind of market, you know, it opens up even more kind of reinvestment opportunities. Just, you know, how did you characterize kind of your pipeline there? And I know you don't get proceeds for maybe up to another four months, but some thoughts there would be great.

Thank you. Yeah, it's a lot of moving parts. You know, we're trying to, explain to the market the way we're thinking at this present time. Obviously, that can change based on what the subset is of opportunities at the time when we receive the capital, where our stock price is, what it's available in terms of liquidity and stuff like that. So in terms of the breakdown, again, there's an art to this as much as a science, but we think our stock is significantly undervalued, and it's been frustrating for us because we spent the last year restricted from doing any buybacks, so it's been very frustrating. But we love our stock, and we think we'd like to buy back a lot of it. So we have to weigh that versus exponential returns on that capital, again, from opportunities there. And then we also, as much as dividends don't create a compounded creative experience for shareholders. People deserve and love dividends, and if you can do it in a tax-free basis through a return of capital, that's something that we'd like people to get a taste of as well. It's a balance, and again, there's no formula here except to say that if our stock remains undervalued, we want to aggressively buy it back. We also want to deploy the bulk of this cash into companies that can generate a lot of cash and utilize our NOLs, because we do have $700 million in tax losses, and we're getting no value for that. And once we start to actually burn through them, I think we will get value for that. So that's a pretty material increase to our NAV to be able to convert those to cash for stakeholders. So it's a moving target. If you told me down the road that if you had a crystal ball and told me that our stock was going to be really low, we were going to have more cash and, you know, we might buy back more stock. So, you know, this is where we are today at Snapshot today. We think it's a good mix and a fair balance. And I think it will result in good outcomes for AMIA stakeholders. Thank you.

And the pipeline, Phil, did we want to talk about the pipeline or Michael?

I mean, the pipeline, we're seeing, you know, a lot of exciting deals. I think, for starters, even dislocation like you've seen in the markets from what happened in Russia, people start to generate opportunities. So we're seeing a lot of private equity funds that have holdings that they need to liquidate either because their funds have matured or for whatever reasons they want to get out of them or maybe the growth prospects aren't high enough. We're not looking for We're not taking undue risks. We're not looking for turnarounds. We're not looking for super high growers. We're looking for stable generators of significant cash flow, high taxpayers, things that we can shelter with our gains, really well-managed companies that have long track records of doing that. So we're seeing a lot of that. And again, it's a balancing act for us because until you have the cash in your hand, you can't really move as fast as you'd like to. So But we are seeing a lot of exciting opportunities on our plate, and we expect that that should continue. And we're actively engaged with companies, and we're very excited. That's great.

So just to mention, yeah, just to mention, Drew, we're not going to be – just so you understand and we set the table – We're not going to be auction buyers, right? We're not going to be getting in and outbidding Apollo or somebody like that for 22 times versus 20 times in 2024. That's not our game, right? What we are looking for are stability, substantial EBITDA and free cash flow conversion. We're looking for mid-sized companies, you know, maybe $15, $20 million at the low end of EBITDA and $100 million at the high end. We've talked about a small handful of acquisitions, one, two, three acquisitions over the next period of time. And that coupled with our three larger positions, portfolio holding companies now, we'll have a nice eclectic mix of unique assets, assets that you can't go and buy anywhere else. Just the likes of Clear Media, very unique. Tradex, very, very unique. Cognitive, we haven't talked a lot about, but they're seeing a terrific adoption and focus on their collaborative commerce model. We're seeing brands around the world sharing and exchanging data and products and relationships with other brands. These are types of companies that others can't find you know, in an ETF or anywhere else. And I think that that's why people are coming to AMIA and taking a look at our portfolio and saying, boy, it looks like it's reasonably cheap here, extremely cheap here. And there's a lot of upside, not only in the current portfolio, but if these guys are not going to be these auction buyers, they're going to find other eclectic, attractive, free cash flow generating assets that, hey, by the way, can get shielded by the NOL. That's an awfully attractive proposition.

I mentioned it was frustrating that we couldn't buy back stock, but there's been a lot of other frustrations over the past year, and that is we can't talk about a lot of things going on because when you're in a company, people will say something like dismiss TradeX as a quote-unquote venture capital investment as if we're veering from the strategy, but as the story unfolds and you start to see bits and pieces more and more and we can disclose more and more, I think you start to realize that that it does fit the profile, and it is really exciting. And it's hard for us to, you know, we want to open the kimono as much as possible. You know, with Cognitive, all you see are these big losses out of them, and it's like, oh, what's that thing? And people are very negative about it. And we see a very different picture. And I can tell you that, you know, while we just told you about Corvana and Enterprise for Tradex, you know, there's Fortune 500 companies that are signing up with Cognitive. And... it's a huge barrier to entry. It's a new business. It's something that you have to teach. I would just imagine telling you to go to a Fortune 500 company and convince them to go onto a new platform and transact with a company they've never heard of in their product offerings and to maximize the value of their marketing. You're going through 50 layers of management, all kinds of education. It's a huge process. To get to the point where their sign, these people, is huge. And it's also a testament to how hard it is to get into that business and the moat that's going to be around them when it succeeds. So our goal here is to start to show as much as we can. And again, we're hamstrung by what companies will allow us to say and what certain companies will allow these companies to say and reveal the clients, et cetera, et cetera. But I think that this year is going to be a very eye-opening year for for investors into what we hold currently.

Yeah, I've understood. And needless to say, Phil, and I guess the broader team, I got an outcome on PLM through that environment and situation. You know, we talk about looking at your capital return and reinvestment profile of those net proceeds, but certainly a good outcome in all things considered. So I think for Brian and I that have covered AMIA and PLM for a long, long time, that certainly was good to see.

Okay, well, thank you very much, and we're also very happy with the fact that those are net numbers, net after-tax numbers, so we're very happy about that as well. Okay, thanks.

Great, thanks.

Thank you. There are no further questions at this time. Mr. Tran, you may proceed.

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