Good morning, ladies and gentlemen, and welcome to the Aimia Inc. third quarter 2026 results conference call. At this time, all lines are in listen-only mode, and 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 Friday, November 6, 2026. I would now like to turn the call over to Mr. Joe Racanelli, VP Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. Joining me on today's call are our Executive Chairman, Rhys Summerton, and Aimia's President and CFO, Steven Leonard. Before we begin, I'd like to point out a couple items. We issued our financial results for the third quarter earlier today. All of our materials, including the news release, MD&A, and financial statements, are available from our website as well as from SEDAR+. We will be using a presentation today, and for those listening in to our call by phone, a copy is available from the IR section of our website. Some of the statements made on today's call may constitute forward-looking information, and our future results may differ materially from what we discuss. Please refer to the risks and uncertainties that may affect our future performance referenced in our presentation and MD&A.
In addition, we will be making note of GAAP and non-GAAP financial measures. Reconciliation of the non-GAAP financial measures is provided in the appendix of the presentation. Following today's discussion, please reach out to me if you have any outstanding questions or require any clarification on the matters that we discuss today. Thank you, and Rhys, please go ahead.
Yeah, thanks, Joe. Good morning, everybody. Good afternoon. Thank you for joining us today. As you have come to hear over recent investor calls, Steve and I will review some of the key developments on the quarter, and then we'll welcome any questions you might have. Just to run through our performance for the third quarter, I think what you will see is that the turnaround in Cortland that we flagged on the last set of results is starting to bear fruit. You can start to see it in the revenue growth that Cortland has delivered. Steve will give a few more details about that. We've also, importantly, been able to establish listings on the JSE in South Africa as well as the AIM market in the U.K., and that's very important because we're establishing the platform to support future M&A activities.
We've also been able to start deploying some of the capital. In the second quarter, we deployed about 13 million. In this quarter, the third quarter, we've deployed about 15.5 million, and obviously, it's a very short period, but we've shown an investment gain of 1.9 million to fair value. It's a good start, but clearly, on a quarterly basis, things can swing dramatically, as I'm sure everybody saw last night. With that, I will hand over to Steven to go through the financial highlights, and then I'll come back at the end to talk a bit more about the strategy as well as take any questions you might have. Steven?
Thank you, Rhys. Good day, everyone. Turning to our financial highlights. As you can see on slide seven, our results from continuing operations showed improvement across several financial metrics in Q3 when compared to the prior year period. In particular, revenue was up 21.3% to CAD 45.6 million, gross profit increased 25.3% to CAD 10.4 million, and gross profit margin improved to 22.8% from 22.1%. These improvements were offset, however, by a CAD 2 million increase in SG&A expenses that included one-time costs related to strategic corporate initiatives and multi-listing activities, as well as higher freight costs at Cortland. The increase in SG&A was partly offset by ongoing efforts to reduce HoldCo costs for items such as insurance and professional services. We incurred a net loss in Q3 2026, and I want to take this opportunity to put it into perspective. Our loss was largely attributable to two non-cash developments.
First, we recorded an CAD 8.3 million unrealized fair value loss on the company's investment in Clear Media due to a dispute the company is having with a bus shelter landlord in China that is affecting its liquidity and its ability to generate revenue. Second, net loss was impacted by net financial expenses of CAD 6.9 million, which included CAD 4.8 million of deferred financing costs associated with the redemption of the senior notes. Turning to Cortland. Cortland results for the third quarter are presented on slide eight. In Q3 2026, Cortland generated CAD 45.6 million of revenue, up 21% from last year. The year-over-year increase was due to a number of factors, including pricing surcharges implemented in response to rising raw material costs and freight costs, which have been impacted by increasing oil prices related to geopolitical events in the Middle East.
Other contributing factors to the revenue growth included product mix and improved conditions in several of the sectors it serves, such as fishing and aquaculture, as well as aerospace and defense in the U.S. The increased revenue was partially offset by lower sales volume in other sectors. Cortland's adjusted EBITDA in Q3 2026 was CAD 5.7 million, up from CAD 5.5 million in the prior year period. The gross profit increase was partially offset by CAD 1.8 million of higher SG&A expenses, primarily related to selling costs associated with freight, and in addition, higher compensation costs. Given the progress that Cortland has made on its turnaround and that customer demand in several of the sectors is improving, the new management team is committed to sustaining this momentum in the coming quarters.
We ended the quarter with CAD 152 million of cash on a consolidated basis, down from CAD 294.5 million at the end of June 30. Slide nine shows a waterfall of cash movements in the quarter. The key driver for the decrease in liquidity was CAD 131.4 million payment in aggregate principal amount for the redemption of the senior notes. This transaction, as we had disclosed previously, was triggered by the sale of Bozzetto. Other factors that contributed to the decline in our cash position included CAD 15.5 million of capital deployed for investments in marketable securities, CAD 1.6 million of cash flow used in operating activities, CAD 1.6 million of investments in property, plant, and equipment, CAD 0.7 million for the repurchase of common shares, and CAD 0.7 million for preferred share dividends.
The outflow of cash was partially offset by CAD 3.9 million of proceeds from an investment fund redemption, CAD 2 million of interest received, CAD 1.8 million in final adjustment proceeds from the Bozzetto transaction, included in other movements, and CAD 0.9 million in proceeds from the sale of marketable securities. Given the closing of the major transactions in 2026 were immediately subsequent to the quarter-end reporting periods, the cash position we reported throughout the year provided an incomplete picture of our available liquidity and movements in cash. To better illustrate the major movements in our cash, including the amounts we have deployed towards our investment strategy, slide 10 shows our consolidated cash position on a year-to-date basis.
As you will note, our cash position has increased CAD 43.3 million after taking into account the outflow of approximately CAD 130 million to repurchase the senior notes, which will save us CAD 13 million in annual interest costs, and we invested CAD 30 million in marketable securities. Other movements presented in the waterfall chart include CAD 3.9 million towards the repurchase of Aimia's common shares, CAD 7 million in interest payments related to the 2030 Notes, and CAD 2 million of dividend payments for our preferred shares.
Looking at our liquidity more closely, slide 11 shows a breakdown of our cash position by our segments as of September 30th. Our consolidated liquidity includes CAD 145.5 million of cash held at Holdings and CAD 7 million held at Cortland. We continue to estimate our operating expenses at the HoldCo are expected to be CAD 7 million over the next 12 months.
Of this total, approximately CAD 3.3 million is related to compensation, and the balance primarily relates to expenses of being a public company. Looking ahead, we plan to deploy the available capital consistent with our strategy to enhance shareholder value. This concludes my prepared comments. I would like to turn the call back to Rhys for his closing remarks.
Yeah, thanks, Steve. As you heard, the third quarter, we continued to execute on our investment strategy. It's gaining some momentum. We deployed CAD 15.5 million of capital in the quarter, making investments in public companies only, and those are companies that meet our investment criteria. We grew our portfolio of new investments to 28, nearly CAD 29 million at the end, taking the second quarter investments plus the third quarter. We continue to target companies that trade at what we perceive as a significant discount to their intrinsic value, have strong management teams, and most importantly, generate consistent cash flows that we can rely on to really create a permanent capital vehicle that is self-sustaining. A key consideration in our investment decisions is the potential for Aimia to get to a controlling position.
That's not always the case, but in the majority of the cases, that's what we're looking to do. It's still early in our advancement as an investment company, but we did generate CAD 1.9 million in this quarter from these new investments. But like I said in the opening remarks, quarterly performance is not something we wish to be measured on, but hopefully that all goes well for the future. Going on to slide 14, a couple of points here. What you'll notice on slide 14 is what we think is the net book value per share based on what the balance sheet is showing. What's interesting about that number is it excludes the tax losses. The 1.1 billion of tax losses is not included in this number.
So this is the balance sheet number, and obviously, we had the uptick from the end of December 31 with the Bozzetto sale. That continued to do well into the second quarter. This quarter, because of the Clear Media developments, it's come down slightly. But as we said, it's offset a little bit by the gains in the investment portfolio. And we hope that over the very long term, this number can compound at the very high rate, hopefully close to 20% a year. Certainly, if I look at the investment vehicle that Aimia is, it's very advantaged. It's got the tax losses, it's got cash. We have a listing in the U.K., as well as South Africa, as well as Canada. We should be able to really make the most of this opportunity. Going on to slide 15, the summary of the outlook. We've rolled out the investment strategy.
There's still a long way to go. We've only really just started on this for two quarters, but I think we started well. We continue to look for opportunities to invest in undervalued companies. The criteria I've already been through a little bit earlier. We've got the two listings, as I indicated. And I think, for me, what was important in this quarter is that we started to see signs of the changes that we put through at Cortland earlier on this year are really starting to come through. So having a CEO and a new CFO in place at Cortland, I think you're starting to see the benefits of that with the revenue growth.
I think what we want to see in future quarters, and what will hopefully come through, is sustained revenue growth with a real laser focus on costs, which will help the operating margin continue to improve. GP margin is a function of your sales makeup, but what we want to There's kind of limited control over that. But what you can control is the SG&A line, and we've had a good start there as well in really examining the expenses very closely. As a reminder, long term, our focus is on growing that net book value per share. We've started to make, I think, fairly good headway on that. With that, I'm going to open up for any questions you might have. The questions will come to me, and I'll either get Steve to answer, or I'll answer, and we welcome any questions.
Steven and Rhys, before we turn it over to inbound calls of people on the line, I did get a number of email questions, and I welcome other individuals listening via webcast to forward on some email questions as well. First relates to the NCIB. It wasn't as robust as in previous quarters, and the question is, were we capped on the daily purchases on the NCIB? If there's a bottleneck in place, would we consider an SIB?
Buybacks are always an interesting topic. It's not only for Aimia, but I think in most of the companies I'm involved in, buybacks feature, which is an important point to understand. They're going to feature in Aimia as well. Aimia is an investment vehicle, so what I would prioritize is acquisitions over share buybacks. Share buybacks have their place when the stock is undervalued, and we have been buying shares back when we can. We don't have any plans on an SIB. I think we can acquire shares in the markets at attractive prices, and we'll continue to whittle away at the number of shares, and they continue to decline. The number of shares in issue continues to decline, which is exactly where we want to take it. But we must be clear, though, that finding great acquisitions does trump share buybacks.
If we ended up buying back so many shares in Aimia that it eventually becomes It doesn't sustain itself as an investment vehicle because it'll be too small. There is an element of scale that you have to think about. Buybacks, definitely, I'm a big fan of buybacks. Every company I'm involved in, we do buybacks. Aimia is no exception. But preference is acquisitions.
Okay. Can you provide any color on the investments made in the quarter, either by providing details of the companies, their geography, and as well, how those investments interact with the company's tax losses?
I think there's companies that we've made acquisitions of by buying some of the securities in the public market. The two that we've disclosed, one is Foxtons, which is a London-based real estate agent, and the other is NWF, which is a mini conglomerate of three companies. We've made the public disclosures, so we're not going to say too much more about that, but you can see the geography is fairly straightforward. It's in the U.K. The reason for that is that the U.K. is offering, I still think, the best risk-reward for the investment destination of our CAD in Aimia. But the weakness of that is it doesn't utilize the tax losses right now. That's fine. We will get to utilizing those tax losses, and we've already utilized them partially with the sale of Bozzetto.
On a more sustainable basis, what we need to do is make acquisitions eventually in the U.S. and Canada, and we will get there. But right now, the focus is on getting Aimia to scale, getting dependable businesses where we can create value first and foremost, and once that's bedded down, we can then move to the next step of looking at the U.S. and other places that we can utilize the tax losses. The underlying message is we will definitely utilize them, and they do have a very long period before they start to expire. We completely believe that the investment case of Aimia, to really unlock the value, we will have to get to utilizing those losses, and we will do.
Okay. I have more questions from email, but why don't we turn it over to operator, to anybody who's in queue on our call for questions?
Thank you. Ladies and gentlemen, this will begin the question-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Rob Byde from Zeus Capital. Please go ahead.
Good morning, good afternoon. Hi, guys. Just on your investment strategy, you have made two, I think, great investments in Foxtons and NWF. Is quoted equity the best way to go? Would you look at private companies or perhaps even corporate credits? Then in terms of how active you might be, you have significant shareholdings in both Foxtons and NWF now. Would you, for example, be seeking board seats, or are you happy as a more passive investor in these cases? Thanks.
That is a really good question. No, we are definitely not passive. We will be very active, and we are active. The way we think about it is, if the companies are doing what we think they should be doing as far as allocating capital and making sure their cost base is appropriate, and they are able to generate that capital and upstream it to shareholders, we are completely fine with letting the companies go on their own and continue to operate autonomously. Where the problem comes in is if companies are not doing that. If they have a division that is losing money, and another division is making money, we cannot really tolerate that. We will work along with the company to make sure that that does not persist and that they make changes in the short term.
I think in the two examples you have given, of Foxtons and NWF, they are obviously interesting businesses, but there is a lot of work to do, I think, on both of them, and there is no guarantee that they are going to work out. I would just say that if we are able to unlock value in both of them, I think the rewards will be considerable, but there are no guarantees on doing that. How aggressive are we going to be, or how active are we going to be? We are very active in building our stakes in them.
I think Foxtons, we have kind of built most of that in the third quarter, so that has been a very quick gain in our ownership of that. There are different ownership thresholds that we need to be cognizant of, and we are, and that also features in how quickly we move on it.
But those are just two of the companies. I think we've also done a lot of work on companies that we haven't yet made investments in. And it could be that in the future quarters, we start to make progress on the companies that we haven't yet made investments in before we return to the ones that we have.
By way of color.
Please enter.
Sorry. By way of color, I mean, the reason that those two companies have been cited is largely because of some filings that we have done in the U.K. on the FCA. And you may not have seen reference to them in our financial materials, but we have put some filings on some of our positions, and that's how the last caller posed the question about our two investments.
Thank you.
Go ahead.
Just on the point, I mean, do you prefer quoted companies?
Yeah.
I guess because of the transparency and so on. Are you interested in private companies or even in non-equity investments in credit, for example?
Yeah, sorry, I missed that part out. The beauty of public companies, particularly U.K. public companies, is they have these shareholders that have monthly redemptions, which mean that they're essentially forced sellers for the last, I don't know, 44 months. We are there to be able to buy or take ownership of these companies or percentages of them at an attractive price. If we have to knock on the door and ask the CEO or the chairman, if we can buy the company, we're immediately having to pay 30% or 40% premiums. Our model, I think, is vastly superior because we can build stakes in companies at market prices.
I think the example of Foxtons is an interesting one because we were able to build a stake purely in the market from, I think, the one fund that we bought from was winding down, and another one had kind of given up. That's what we like. We hope more of them look to wind down and sell us some interesting companies at probably way below what a private buyer would pay for it, and way below what you could buy them in the private market. Unless we can find things in the private market that are outstanding investments at really attractive prices that can compete with what the public market can offer you, we'll probably avoid private for now and stick to our strategy. Credit's definitely not. We're not interested in taking that part of the market. We're not interested in distressed companies either.
We want cash flow generative companies with good management teams that are going to stick with us and want to be part of the future vehicle that we're building, which is Aimia.
Thanks, Rhys. That's very clear. Thank you.
Thanks.
Thank you. Your next question comes from Ben Elliott from RBC Dominion Securities. Please go ahead.
Hi, Rhys. Thanks for taking my call. Just following up on the capital allocation comments, understanding, I guess, acquisitions are the priority, given your strategy and kind of scale objectives there. With Aimia trading at a meaningful discount to NAV, I guess, could you provide some color on how you assess whether an acquisition will create more value per share than repurchasing your own stock? Is there maybe a specific hurdle you could provide?
Yeah. The opportunity to make acquisitions is utilizing the cash. It is a question of buying more of Aimia or making an acquisition. If you utilize the cash to buy more of Aimia, what are you getting? If you really take it to the extreme, you are getting Cortland, and you are getting this big tax loss. There is not a lot there operationally which is going to be able to allow you to scale up the business in future. You have to think about that, and you think about the costs of actually operating something like Aimia, CAD 6.5 million, CAD 7 million a year. Of that is not salaries, but that is the operating costs, audit fees, regulatory fees, compliance directors, et cetera. You need to have a certain size.
The share buybacks you can use and utilize on the margin, but the real big things you want to do to utilize those tax losses eventually is to be able to make acquisitions that give you this cash flow generating machine behind you that will then allow you to upstream cash to the HoldCo and go forth and make acquisitions in the U.S. and Canada. That is where you want to get to. I do not think it is going to take us all that long to get there. We have got an amazing platform in place right now. We spent a year getting it in place, like selling Bozzetto, getting the listings done. That is well set up. I think the other point that you are kind of maybe alluding to, or the other rival, if you think of capital allocation, it is the equity of Aimia.
You don't really want to be issuing equity in Aimia while it's trading at such a significant discount, even though what you're buying might be very cheap as well. You kind of have to thread the needle on that to make sure that if there is anything that you buy and you have the option of converting it into Aimia equity, it has to be remarkably cheap before you do any transaction like that. It just makes the hurdle that much higher given how cheap Aimia is or how the discount that Aimia trades at itself.
Excellent. Thank you.
Thank you. Your last question comes from Melker Samuelsson from Ennismore. Please go ahead.
Yes. Hello. Good day, guys. Two quick questions from me. Firstly, I think on your disclosed stakes for Foxtons and NWF, you're just shy of 10% or a little under 10% in each company. Could you maybe comment a little on how diversified you expect your portfolio to be in number of holdings? Secondly, on your remarks just now with regards to equity, is it the intention of Aimia to shrink the discount to be able to use the stock as a currency to make further acquisitions, or how do you view paying with currency or issuing shares further down the line? Thank you.
Yeah, thanks for those questions. The way this will work is that over time, we will become more diversified. If you think about it today, the only asset that Aimia really has, the only operating asset, if you like, is Cortland. Today, are we diversified? No. We've got a lot of concentration in one asset, operating assets, and then we've got this cash, and we've got the tax losses. The way I think about it is like three buckets of value. You've got the cash and the portfolio, you've got Cortland, put a value on that, and you've got the value of the tax losses. It's not all that diversified. Let's say we add in two acquisitions in the next six months. That's outright acquisitions where we own companies 100%. Then, we'll have three operating assets, so it's getting more diversified.
If you continue on that sort of vein, I would hope that by the end of next year, maybe into 2028 first quarter, I would hope that we have five or six operating assets within Aimia. We want those companies to be upstreaming CAD 100 million + a year into the whole of Aimia. It comes back to one of the earlier questions about utilizing the tax losses. As we get that machine going, cash flow starts coming through with the acquisitions we've made, yes, you're definitely more diverse, and that won't stop at five. Hopefully, we can go on and make numerous acquisitions into the future. But each of those companies that we acquire, we think there's opportunity for them to make their own acquisitions.
I sometimes describe Aimia as the serial acquirer of serial acquirers, because if you look at the companies that we are looking at acquiring and have bought stakes in, you can just take Foxtons, for example. Foxtons is a serial acquirer model. It buys lettings books, should be buying more of them, but it's buying them, and it continues to roll these up. We see no reason why that should change. We should think they should accelerate that process with us as one of the biggest shareholders. I think we can provide clear direction in that. What you want is, if we have five businesses or five platforms that we've acquired, they can each go and make their own acquisitions and expand. Another example is Cortland.
Cortland is about to make an acquisition, a very small one, but there's a long runway for them to utilize their platform that we have. I think what you'll see with Aimia, what I would hope to achieve is that we have a group of serial acquisition vehicles within Aimia. They will then each be utilizing the capital to make further acquisitions and expand. When you pull that off, that's really when you get the Lollapalooza effect, because you're not having to do all the work of finding new acquisitions. Your underlying investments are finding them themselves. We're pretty excited about that strategy. Second question that you had was on the share using the equity. Yeah. Utilizing the equity can only happen if we can find things that are better value than what Aimia is. That's not an easy task.
It's pretty difficult to find something where your hurdle rate is something more attractive than the discount that Aimia trades at. We will use it, but if we have a re-rating at some point in the valuation of Aimia, or we can find things that are even more attractive than Aimia, then we will look at that option. Sometimes you might need to use that option because the companies that we look at, their shareholders are not all that engaged. In some cases, you might have a situation where the company might be a very old company, and the shareholders might not even vote at an AGM. They might not really know what's happening within the company or follow it closely. They don't really want to be taken out and get given cash.
They might want to stay in, and using Aimia equity in that case might be a very attractive option. We have got these three listings for us to utilize that option. I hope that answers your question.
Yeah, very elaborative. Thank you.
We have a few more.
Thank you.
email questions that have come in. With respect to Cortland, do you have any line of sight in volume growth?
Steve, do you want to take that?
Yeah, I think we gave some indication of what we're seeing. The quarter, we saw some positive results in one of the sectors, which was in the aquaculture. We're doing very well there. Not only in the quarter, but going out in terms of the order book, we're seeing very positive signs on aquaculture. We're expecting to see It's a little different. We don't measure on weight. We look at it in terms of volume of cage orders, and those numbers are increasing, and we expect to have them increase going into 2027, over 2026, and over 2025, where we hardly had any. We're making good progress in that sector.
As well, we're still developing and working on a thesis on the high-performance side, high-performance rope side, and that's developing with production, basically moving to be concentrated in India, where we'll get the lower value cost on production. We're expecting to see volume growth going Q4 will likely not be the same size as Q3. Q3 typically is the strongest quarter of the year, but we're expecting a good quarter in Q4, and then we're expecting to see positive signs going into 2027.
Okay. A follow-on on Cortland. When we saw revenue growth of more than 21%, but operating income was marginal, can you provide some color in terms of how much of that revenue growth was through the surcharges versus the growth in the aquaculture and defense sector?
Well, I think if you look at the There's a couple of challenges, I mean, with the way we present the results under IFRS, but you saw gross profit or gross margin growth, I think just under CAD 2 million in the quarters. That was a positive sign, so we're getting some leverage in the gross profit. That's because of the product mix and certain things that we're selling. In SG&A, there was a bit of an offset relative to the freight costs, which are included in our SG&A line and our variable, and those have gone up. The freight costs have gone up just because of the price of oil and logistics container movements. But yeah, there's no denial. I think we highlighted that we had some of the revenue, 21% was significantly high.
Part of that was, a good portion of it was tied to increases in price to offset the raw material prices and the freight prices we incurred.
Great. Now, Rhys, you touched on some of the listing activities, but if you can just provide some specificity in terms of how you intend on using the listings from a strategic perspective.
Yeah, I won't answer that at this point, but as soon as we have something to elaborate on, we will be able to speak to investors about that. Sorry, I won't answer that now.
Okay. Our HoldCo cost for the year, or target, is CAD 7 million. How do you anticipate the new listings and the ongoing fees impacting that amount?
That outward-looking forecast at seven for the next 12 includes any of our secondary listing costs or any costs associated. We did call out the one-time or the initial cost that we incurred in the quarter, I think just over CAD 1 million, but those are not expected to recur, and the CAD 7 million going forward, and it's really closer, as Rhys said, six and a half, but we rounded it to seven, is what we expect to be incurring in the next 12 months.
Okay. With respect to Clear Media, now that we have written down 8.3, how much is still on the balance sheet?
We have four million left on the balance sheet.
What triggered the write-down now?
As we said in the disclosure, there has been a dispute with one of the Clear Media, which is a bus shelter advertiser, advertises on bus shelters throughout China, and they have an ongoing dispute with one of their city landlords who they lease the shelters from, and that has had an effect on their business, and we took a position at this time to make an adjustment to our carrying value.
Great. That is the last of our questions. We thank everyone for joining us today. As mentioned, if you do have any follow-up questions or would like to just get some clarity on anything that we discussed, please reach out to me, and we would be happy to help. That concludes our call. Thank you again, everyone.
Ladies and gentlemen, this concludes your conference call for today. We thank you very much for your participation, and you may now disconnect. Have a great day, everyone.