Aimia Net Loss Widens as Investment Income Slumps 76%

Aimia Inc. swung to a C$23 million net loss in the second quarter, hit by a C$11.1 million unrealized loss on marketable securities and a 76% drop in investment income.

The Toronto holding company reported a loss of C$2.86 per share, compared with a C$3.7 million profit a year earlier. Revenue fell 12% to C$23.7 million, pulled lower by the April sale of its controlling stake in chemical maker Bozzetto Group.

The Bozzetto exit generated C$266 million in gross proceeds, or C$99 million in net cash after debt repayment and costs. It stripped the chemical maker's revenue and operating earnings from Aimia's consolidated results, leaving a smaller base of wholly owned businesses.

Chairman Rhys Summerton called the quarter a transition period. "We are now a much simpler company," he said on the earnings call. "Our focus is on deploying the capital from the Bozzetto sale into investments that generate better returns for shareholders."

Investment income fell to C$4.6 million from C$19.3 million a year earlier. Summerton attributed the drop to a "challenging equity market environment" that hit the value of Aimia's publicly traded holdings. Corporate and segment costs rose 10% to C$11 million, driven by legal and advisory fees tied to the Bozzetto sale and ongoing portfolio work.

On an adjusted basis, Aimia reported a loss of C$26.7 million, or C$3.33 per share. The adjusted figure strips out fair-value swings on investments and other one-time items. A year earlier, adjusted income was C$4 million, or C$0.49 per share.

The Discount and the Buyback

Aimia bought back 550,000 shares during the quarter at an average price of C$4.61, spending C$2.5 million on repurchases. The stock trades at roughly a 40% discount to the company's estimated net asset value of C$7.50 to C$8.00 per share, Summerton said. The gap has widened since the Bozzetto sale closed.

The company's biggest single holding is a 19.9% stake in PLM Premier, the operator of the Premier loyalty program in Latin America. PLM contributed C$4.9 million in equity income during the quarter, up from C$4.2 million a year earlier. Aimia also holds a 10% stake in travel technology company Accelya, which is not publicly traded.

Aimia ended the quarter with C$250 million in cash and marketable securities, down from C$285 million at year-end. It carries no debt.

Mithaq Capital and Governance

Aimia's largest shareholder, Mithaq Capital, now owns 39.8% of the stock after buying shares in the open market this year. Mithaq appointed three directors to Aimia's board last year and has pushed for faster capital deployment. Summerton said the relationship is constructive. "We have regular dialogue with Mithaq," he said. "They are supportive of our strategy to narrow the discount to NAV."

Analyst Surinder Thind at Jefferies asked whether a special dividend or a larger buyback might close the discount faster. Summerton said the board prefers to hold cash for acquisitions. "We think the best use of capital right now is to find the right platform company, not to return it to shareholders in a one-time event," he said.

Summerton said Aimia is evaluating acquisition targets in the C$50 million to C$200 million range, focused on North American technology and services businesses. He expects to complete at least one deal before year-end, though he declined to name targets.

"We have a clear mandate to deploy capital intelligently," Summerton said. "The patience of the last two years is starting to pay off."

Aimia's shares closed at C$4.57 on Friday, down 22% this year. The stock has not traded above C$5.50 since the Bozzetto sale closed in April.