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?