Aimia’s Share Buyback Progress: A Strategic Move to Boost Value

Aimia Inc. (TSX: AIM) has made substantial progress in its share buyback program, executing a strategic initiative to reduce its outstanding share count and narrow the gap between its stock price and the intrinsic value of its assets. With nearly half of its authorized repurchase limit utilized as of late 2024, the company’s efforts signal a commitment to enhancing shareholder returns and optimizing capital structure.

Buyback Program: Progress and Parameters

Aimia launched its Normal Course Issuer Bid (NCIB) in June 2024, authorizing the repurchase of up to 7,009,622 common shares—10% of its public float. By December 31, 2024, the company had repurchased 3 million shares (43% of the total NCIB limit) at a cost of $7.8 million, reducing its share count and improving metrics like earnings per share (EPS). The remaining capacity under the NCIB stands at 4.01 million shares, with the program set to expire in June 2025.

The buybacks are part of a broader strategy to address Aimia’s discount to net asset value (NAV). As of late 2024, the company estimated its NAV at approximately $3.40 per share, while its stock traded at a significant discount. By shrinking the share count, Aimia aims to increase the proportional value of remaining shares, potentially narrowing this gap.

Financial Context: Liquidity and Savings

Aimia’s liquidity position supports continued buybacks. As of December 31, 2024, the company held $95.4 million in cash and equivalents, despite allocating $2.4 million to repurchases in Q4 alone. Additionally, the recent Substantial Issuer Bid—which replaced preferred shares with senior notes—freed up $5.1 million in annual savings by eliminating preferred dividends. These funds could be redirected toward further share repurchases or other value-creating initiatives.

The company also benefits from $1.003 billion in tax losses, including $504 million operational and $499 million capital losses. Management has emphasized leveraging these losses to reduce future tax liabilities, freeing capital for additional share buybacks or business reinvestment.

Strategic Rationale and Risks

The NCIB aligns with Aimia’s goal to reduce holding company costs to $12 million annually by 2025, a critical step in improving profitability. By lowering the share count, Aimia also aims to enhance EPS and reduce dilution, making the company more attractive to investors.

However, risks remain. Market volatility or shifts in liquidity priorities could slow repurchases, and the pace of buybacks is subject to Toronto Stock Exchange rules, including daily trading limits. For instance, open-market purchases are capped at 11,828 shares per day, though block purchases are permitted weekly.

Upcoming Catalysts: Q1 2025 Results

The company’s Q1 2025 financial results, scheduled for release on May 13, 2025, will provide critical updates on:
- Progress toward the remaining 4.01 million share repurchase limit.
- Updated metrics on share count reduction and its impact on EPS.
- Liquidity management and capital allocation priorities for the rest of 2025.

Conclusion: A Solid Foundation for Value Creation

Aimia’s buyback program has already delivered tangible results, reducing its share count by 3 million shares in just eight months. With $5.1 million in annualized savings from preferred share exchanges and $95.4 million in liquidity, the company is well-positioned to accelerate repurchases in 2025. The upcoming Q1 results will be pivotal in assessing whether management can meet its $12 million annual holding cost target and further shrink the discount to NAV.

Crucially, Aimia’s $1.003 billion in tax losses provide a buffer for future earnings growth, while its core businesses—Bozzetto (specialty chemicals) and Cortland International (rope/netting solutions)—generated $80.4 million in adjusted EBITDA in 2024, ensuring cash flow stability. If the company continues to execute its buyback strategy and leverage its tax assets effectively, shareholders stand to benefit from a higher NAV-to-price ratio and stronger EPS growth.

Investors should monitor the May 13 earnings report closely for clarity on the NCIB’s pace and any shifts in capital allocation. With a disciplined approach to reducing shares and optimizing its balance sheet, Aimia is laying the groundwork for long-term value creation.