Good morning, ladies and gentlemen, and welcome to the Aimia fourth quarter 2021 results conference call. At this time, all lines are in listen-only 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 SEDAR and the company's website. Before we get underway, I would like to remind everyone to review our forward-looking statements and the caution of the risk factors pertaining to the statement. With me on the call today are speakers Phil Mittleman, Aimia CEO, Michael Lehmann, our President, and Steven Leonard, our CFO. Phil will begin with our strategic highlights, followed by Michael, who will cover the performance of our investments before handing 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 Aimia 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 estate for approximately $517 million in proceeds or $5.58 per common share. Selling our stake in AirAsia's loyalty program, BIGLIFE, 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 TRADE X, 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 CAD 16 million in net positive cash flow at the whole co level from the sale of JCDecaux and Newmark. Finally, achieving our targeted annualized cash expense of CAD 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 Aimia to capitalize on investment opportunities shielded by over CAD 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 Aimia 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 Kognitiv.
Under a new management team led by Sean Pearson, President and newly appointed CEO, Kognitiv has developed a strong pipeline of prospects and has secured contract renewals and extensions with long-standing clients. Our significant stake in Kognitiv provides Aimia 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, Kognitiv 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, JCDecaux, 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. Clear Media is a high-quality business with a long-term track record of strong financial performance. In 2021, Clear Media 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, Clear Media stands to benefit from its sizable market position and enhanced digital offering. 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 TRADE X.
In July, Aimia invested $44 million as the lead investor of TRADE X's financing round at a pre-money valuation of $250 million. Following Aimia's announcement of this transaction, other strategic investors have also invested in TRADE X, bringing Aimia's fully diluted stake in TRADE X to 12.2%. In December, Aimia further increased its investment in TRADE X with an additional $32 million in TRADE X'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 TRADE X'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 TRADE X 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. TRADE X continues to commercialize its core product with major automotive customers such as Carvana and Enterprise Holdings. It 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. TRADE X is also actively pursuing a robust pipeline of accretive acquisitions, targeting companies in current and complementary business lines that can help TRADE X 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 billion cash acquisition of ADESA's U.S. physical auction business from KAR Global at a multiple of 22x trailing EBITDA. We believe this transaction highlights the significant value of TRADE X, 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 $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 $1 billion in July 2021 following its acquisition of Gojek's ride hailing and payments business in Thailand via share swap. 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, Aimia invested an additional CAD 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 the second special purpose vehicle.
Following our first investment in the special purpose vehicle in 2020, Aimia made a new investment of CAD 12.4 million in a second special purpose vehicle in November, which was also created to pursue a similar buyout strategy. Aimia believes that co-investing with like-minded investment leaders can provide additional opportunities to gain a foothold in a target that can potentially materialize into a significantly larger investment for Aimia. Finally, let's cover the PLM transaction and Aimia's intent for the use of proceeds. As we recently announced, Aimia entered into a binding LOI with Aeroméxico to divest our 48.9% stake in PLM for net proceeds of approximately CAD 517 million or approximately CAD 5.58 per common share.
Following the announcement of the PLM transaction, Aeroméxico announced on March 17 that it had successfully completed its financial restructuring and emerged from Chapter 11 and formally assumed the PLM contracts. Upon closing of the transaction, Aimia expects to receive CAD 492 million in net proceeds at closing. An additional earn-out of up to CAD 25 million on a net basis will be paid to Aimia should PLM's performance achieve certain targeted annual gross billing amounts by 2024. Aimia is progressing towards the completion of definitive agreements and Mexican antitrust approval. We expect the transaction to close within the next 4 months. Upon receipt of the PLM proceeds, our primary focus is to continue to develop Aimia 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, Aimia 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 Aimia 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, Aimia will consider a one-time special dividend to achieve the target CAD 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 Mittleman will be transitioning from his executive role at Aimia back to his role as CIO of Mittleman 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 Aimia with valuable investment ideas. Chris will remain on Aimia's board until the end of the next annual general meeting scheduled in May and will not stand for re-election. With that, let me turn the floor over to Mike to provide you some further updates on our investment portfolio. Mike?
Thanks, Phil, 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 continued 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 CAD 17.6 million in the quarter, up 100% over last year and up 26% over last quarter due to higher gross billings. Further, free cash flow was a + CAD 20.4 million in the fourth quarter, up 14% over last year. Moving on to Kognitiv. In the fourth quarter, revenues from continuing operations were CAD 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 CAD 13.2 million, a sequential decline of CAD 4.7 million from the prior quarter.
The decline of adjusted EBITDA was the result of a one-time benefit of CAD 2.6 million related to the Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy recorded in Q3 2021, and an impact of CAD 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, Kognitiv continues to focus on maximizing revenue growth from existing clients by expanding their subscriptions 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 Kognitiv this year. Turning to our investment management business. Revenue for the quarter from investment management fees was approximately CAD 600,000.
Earnings before income taxes were breakeven, which benefited from a U.S. government COVID-19 employee retention program credit during the quarter. Assets under management were CAD 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. 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 CNY 623 million, 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, Clear Media paid a dividend to Ever Harmonic, which was applied to finance its contractual obligation to repay the external financing related to the privatization of Clear Media. Aimia is entitled to its pro rata share of Clear Media's dividends, and we recorded a CAD 600,000 investment income receivable on our balance sheet in the fourth quarter. We expect this investment income balance to grow over time as Clear Media declares further dividends to its shareholders. We believe Clear Media'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. Finally, turning to TRADE X. TRADE X continues to deliver terrific results.
In the fourth quarter of 2021, TRADE X 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 TRADE X's management expectations, year-to-date performance, and growth plans, in 2022, we expect TRADE X to generate gross vehicle sales, including acquisitions completed in 2021, of approximately $1 billion.
This growth is expected to be nearly 4x the amount in 2021, supported by continued expansion of its trade corridors, including Europe, Latin America, Africa, Middle East, and Asia. 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 CAD 5.8 million compared to total income of CAD 10.2 million from last year, mostly due to the company's equity pickup on its non-cash share of Kognitiv's net loss of CAD 8.7 million in the fourth quarter of 2021, as well as the negative net change in fair value of investments of CAD 5.5 billion, 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 CAD 1.5 million. Higher compensation and benefit expenses of CAD 0.6 million related to an increase in share-based compensation and other performance awards of 1 million due to a higher Aimia 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 CAD 6.6 million in the fourth quarter, up from CAD 4.3 million in the same period last year due to the same reasons as previously explained, mentioned.
Excluding share-based compensation and other performance awards, corporate cash operating costs were CAD 3.8 million in the fourth quarter, which included approximately CAD 400,000 in transaction fees. For the full year, total expenses were CAD 22.8 million, excluding share-based compensation of CAD 7.3 million, fair value loss and contingent consideration of CAD 0.8 million, other financial income of CAD 0.3 million, and transaction-related professional fees of CAD 1 million. Recurring cash operating expenses were CAD 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 CAD 34.5 million, including liquid investments of CAD 49.1 million. Total cash and liquid investments ended at CAD 83.6 million.
The total cash movements in the quarter compared to last quarter were a CAD 31.6 million investment in TRADE X convertible note, a CAD 12.4 million investment in the new special purpose vehicle, a CAD 9.3 million investment in Capital A's rights offering, net proceeds of CAD 18.7 million from the sale of our investment in Newmark, a CAD 5 million distribution received from PLM. We paid preferred dividends of CAD 3.1 million and the related Part VI.1 tax of CAD 1.2 million, and corporate cash operating costs were CAD 3.8 million. Subsequent to the end of the quarter, Aimia invested an additional CAD 10 million in Kognitiv via a convertible note, bringing our pro forma cash and liquid investments to CAD 73.6 million. 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 Aimia. 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 Aimia'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 open 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 star then the number one on your telephone keypad. If you would like to withdraw your question, press star two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Brian Morrison with TD Securities. Please go ahead.
Hey, good morning, guys. Hey, Brian, a couple quick questions.
Morning, Brian.
Sorry, good morning, guys. Sorry, I joined a bit late, but I just wanna go through a couple things. In terms of the proceeds and the NCIB, I get that up to CAD 75 million. 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 pref as you've done once before? Are there onerous tax implications from that?
Yeah, I mean, that's a good question. We, you know, first of all, anytime we have a large liquidity event at Aimia, we like going forward to make sure our shareholders, you know, get a taste of that a little bit. 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, you know, when that happens. Ultimately, our goal is to be generating enough cash at the hold co to do that on a continuing basis like we did in the past. In terms of the way we're gonna 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 wanna do it opportunistically.
The NCIB provides us with those opportunities. If for some reason, you know, the stock ran away and, you know, 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, you know, the sizable transaction that took place. In terms of the pref's, I mean, we view the pref's as a great long-term source of cheap capital. We wanna 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 pref's at this time, any more pref's.
Brian, we're also in our targets, we're looking at Canadian Opcos. If we acquire an Opco, we can mitigate the Part VI.1 tax. That's on our radar.
Okay. I get it's a permanent source of long-term capital, but wouldn't it be sort of a permanent 30% accretion to your NAV if you were to repeat what you did last time? Or is it just the tax implications? I understand the NCIB, et c.
Yeah, I think what we're gonna do is I think if you could put a pin in that question and kinda check back. I'd say it's, you know, 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, you know, we were paying those dividends and all the cash wasn't at work, we would consider that then. For now, we have a really exciting pipeline, and we see the returns for our 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. Thanks for that information, but why the year-over-year decline in revenue and 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?
I'll take that. It's Mike Lehmann. The decline was primarily due to kind of one-time events, right? It's COVID related. 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. We couldn't be more pleased with that. The near-term slowdown had more to do with the slowdown in 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 75% market share in cities. They're in the 25 largest cities across China. We're pleased with that. The long-term EBITDA margins do approach the 40s. 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, advertising and marketing dollars are one of the first to get pulled back during an uncertain period like we have now. 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. That was the primary focus. The increase in clients overall has been very strong. 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.
Okay.
To address your question on, you know, you asked about an event, you know, just heading towards event. I think, you know, this, the old Clear Media was a great company with a long track record of consistent cash flow. The new Clear Media, you know, 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. I think this really would lend well to, you know, an IPO that they could, you know, once they get really revving and COVID's behind them and things have started to really show some momentum.
There's a bunch of different potential events there, and I think what they're doing is tracking towards that. Obviously, we'll let you know as soon as we know something, but, you know, we're very happy with their progress.
All right. Then I'll ask one last question, and it's probably for Mike again. Just in TRADE X, I mean, that's a material increase in your revenue forecast, you know, threefold maybe. $1 billion-
It could be.
What's the margin profile associated with that upon maturity or in 2022? Maybe just if you can explain the average selling price per car sold, the decline in that would be helpful as well. Thanks very much.
Sure. Absolutely. Yes, it is a material increase. You see the increase going from CAD 275 million for all of 2021, right? An average of CAD 70 million or so, just flatlining it to almost CAD 120 million in Q4, and that's ramping. There was an acquisition made in the year that is substantially increasing the number of cars sold. Cars you see a little under 8,000 for the year and about 40% of that was in fourth quarter. 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. 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 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 the you know 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 you know 15-year-old cars as much. You know the under $10,000 sale will be less likely. But if you think about a bell curve, it's gonna be kind of in between that $20,000-$25,000 range will be more the average. Not saying that that's going to be the average, but it's not gonna be $75,000, it's not gonna be the $10,000, right? It's gonna more normalize.
It depends on where we're selling into. There are trade corridors like Africa that do take older cars and obviously they'll be less expensive cars and there are other avenues into Europe and Latin America that the pricing is actually very, very strong.
Brian, just to add to that a little, you know, people kind of point to that sector and say, "Well, you know," they try to discount TRADE X's growth or just the sector in general and say, "Well, there's a used car bubble, and people are, you know, desperate for cars and pricing's 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. I think it's opened up these corridors, and I don't think they're gonna close. You know, you people didn't realize there are dealers. Only 1% of dealers in the U.S. 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.
They're learning from TRADE X, you know, wow, I can go and buy these cars from Africa or from China or from any of the corridors that are opening up, and they're learning about it, and they can do it through their platform. That's not gonna go away. I think it's really been an eye-opener for people. You know, I think this whole bubble thing has been a big benefit for TRADE X, and the corridors are opening up.
Phil, just follow-
On the margin, Brian, you know, 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, you know, it's out there around 5%-6% on transactions. I think that's been out there in some of our commentary. You can 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.
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. We haven't really stuck to you know cementing the margin yet because the business is still maturing.
Right. Hey, Phil, just I'll squeeze this one last one in. Your last round of financing, you have a convert that it's at a discount. You can convert it at a discount, I think it's 25% to the next financing round.
Mm-hmm.
Where do you see that as in terms of the timeline for an IPO or the next funding round? You know, I think, you know, we're not gonna point to. You know, for us, it's obviously always sooner is better, you know, for us to monetize things and create value. Obviously you wanna do it when the time is right. You don't wanna, you know, prematurely do something. I think that, as far as TRADE X'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, you know, be announcing more in the future when we have something to announce.
As far as I'm concerned, there's a lot of opportunity, and we're just gonna do what's best for stakeholders, obviously. TRADE X is gonna do what's best for them, and we're gonna do what's best for Aimia, and we're very excited about it, and we'll let you know when we have something to announce. All right. Thanks very much.
Brian, if you think about, you know, the sales forecast that the management team has at TRADE X of $1 billion and you know, refer to Phil's comment about a $100 billion global car market, we're gonna have exceptional growth and only be at 1%. I think that there's a lot of growth potential with this company.
You know, while monetization is extremely important, we also have to marry that with how fast the company's 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. There is a tremendous amount of growth to be had here, so we have to be cognizant of that.
Yeah. I think also, Brian, I would say that just one of the. You know, we had some incremental information coming 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. We spoke to them and we said, "You know, why are you using TRADE X? Like, what is it about them? You know, why aren't you using much bigger companies or other people in the space?" 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." We were really impressed.
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 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. Yeah, Brian kind of ticked off a little bit of my list. Like a couple extra. I guess first, Phil and team, thanks for the added disclosure on TRADE X. That sounds pretty positive. On the capital returns, maybe start with you, Phil, just in terms of the proportion of the capital return 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. 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 to, you know, how'd you characterize kind of your pipeline there?
I know you don't get proceeds for maybe up to another four months, but some thoughts there'd be great. Thank you.
Yeah. There'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 we, you know, what the subset is of opportunities at the time when we receive the capital, what our stock price is, what it's available in terms of liquidity and stuff like that. In terms of the breakdown, again, it's, you know, there's an art to this as much as a science. You know, 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. It's been very frustrating.
You know, we love our stock and we think, you know, we'd like to buy back as a lot of it. You know, we have to weigh that versus, you know, exponential returns on that capital again, from opportunities there. We also, you know, as much as people, you know, as much as dividends don't create a compounded accretive experience for shareholders, they do, you know, people deserve and love dividends. 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. Again, there's no formula here except to say that, you know, if our stock remains undervalued, we wanna aggressively buy it back.
We also wanna deploy the bulk of this cash into companies that can generate a lot of cash and utilize our NOLs, 'cause we do have, you know, CAD 700 million in tax losses, and we're getting no value for that. Once we start to actually burn through them, I think we will get value for that. That's a, you know, a pretty material increase to our NAV to be able to convert those to cash for stakeholders. You know, it's a moving target. You know, we could do. If you know, if you told me down the road that if you had a crystal ball and told me that our stock was gonna be really low and we were gonna have more cash, you know, we might buy back more stock.
You know, this is where we are today, a snapshot today. We think it's a good mix and a fair balance. I think it will result in good outcomes for Aimia stakeholders.
Super. Thank you.
The pipeline, Phil, did we wanna talk about the pipeline or Michael?
I mean, the pipeline, we're seeing, you know, a lot of exciting deals. I think, you know, for starters, even, you know, dislocation like you've seen in, you know, in the markets from what happened in Russia is. It just starts to generate opportunities. We're seeing, you know, 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 wanna get out of them or maybe the growth prospects aren't high enough. You know, we're not looking for. We're not taking, you know, undue risks. We're not looking for turnarounds. We're not looking for, you know, super high growers.
We're looking for stable generators of significant cash flow, high taxpayers, things that we can shelter with our gains really, you know, well-managed companies that have long track records of doing that. You know, we're seeing a lot of that. Again, it's a balancing act for us because, you know, until you have the cash in your hand, you can't really, you know, move as fast as you'd like to. But we are seeing a lot of exciting opportunities on our plate, and we expect that should continue. You know, we're actively engaged with companies, and we're very excited.
That's great. Thank you.
Just to mention, Drew, we're not gonna be auction buyers, right? Just so you understand and we set the table, we're not gonna be getting in and outbidding Apollo or somebody like that for 22x versus 20x 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, you know, a small handful of one, two, three acquisitions over the next period of time.
That coupled with the with our three larger position portfolio holding companies now, we'll have a nice eclectic mix of unique assets that you can't go and buy anywhere else. You know, just the likes of Clear Media, very unique. TRADE X, very unique. Kognitiv, we haven't talked a lot about, but they're seeing a terrific adoption and focus on their collaborative commerce model. We're seeing, you know, 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.
I think that that's why people are coming to Aimia and taking a look at our portfolio and saying, "Boy, it looks like it's reasonably cheap here or extremely cheap here." There's a lot of upside, not only in the current portfolio, but if these guys are not gonna be these auction buyers, they're gonna 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, you know, year. That is, you know, we can't talk about a lot of things going on because, you know, when you're in a company, like people will say something like dismiss TRADE X as a quote, unquote, "venture capital investment" as if we're veering from the strategy. You know, 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 it does fit the profile, and it is really exciting. It's hard for us to. You know, we wanna open the kimono as much as possible.
You know, with Kognitiv, all you see are these big losses out of them, and it's like, "Oh, what's that thing?" People are very negative about it. We see a very different picture. You know, I can tell you that, you know, we just told you about Carvana and Enterprise for TRADE X. You know, there's Fortune 500 companies that are signing up with Kognitiv. It's a huge barrier to entry. It's a new business. It's something that you have to teach. You have to go. I mean, 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 never heard of in their product offerings and to maximize the value of their marketing.
You know, you're going through 50 layers of management, all kinds of education. It's a huge process. To get to the point where they're signing 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 gonna be around them when it succeeds. It's our goal here is to start to show as much as we can, and again, we're hamstrung by what companies allow us to say and what certain companies will allow these companies to say and reveal, you know, the clients, et c., et c. I think that this year is gonna be a very eye-opening year for investors into what we hold currently.
Yeah. Understood. Needless to say, Phil, and I guess the broader team, like that 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, you know, all things considered. I think for Brian and I that are covering Aimia 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. We're very happy about that as well.
Yep. Okay, thanks.
Great. Thanks.
Thank you. There are no further questions at this time. Mr. Tran, you may proceed.
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