2010 guidance confirmed with upward adjustment to Nectar Italia Gross Billings
Increases normal course issuer bid to approximately 20 million common shares
- Aeroplan and Nectar UK programs demonstrate solid growth
- Price resetting with Air Canada completed and billing dispute with Air
Canada resolved with no material impact on Average Cost of Rewards Per
Aeroplan Mile Redeemed going forward
- Carlson Marketing on track to achieve financial guidance and complete
migration by year end
- Nectar Italia signs 5 million members and 3 new partners
- Global expansion continues with build out into India and Chile
Second Quarter Highlights
Three months ended June 30, 2010 vs. three months ended June 30, 2009
- Gross Billings of $555.7 million ($577.4 million on a constant currency
basis) vs. $358.9 million
- Total revenue of $473.2 million ($487.3 million on a constant currency
basis) vs. $333.5 million
- Operating income of $26.2 million ($23.8 million on a constant currency
basis) vs. $37.5 million
- Adjusted EBITDA(1) of $89.9 million ($90.1 million on a constant
currency basis) vs. $70.6 million
- Earnings per share of $0.06 vs. $0.13
MONTREAL, Aug. 11 /CNW Telbec/ - (TSX:AER) Groupe Aeroplan Inc. ("Groupe Aeroplan" or the "Corporation"), today reported its financial results for the second quarter ended June 30, 2010. All financial information is in Canadian dollars unless otherwise noted.
"The second quarter was a very strong one for Groupe Aeroplan and clearly illustrates our strategy in action," said Rupert Duchesne, Groupe Aeroplan's President and Chief Executive Officer. "We have been steadfastly working on the development of a long-term strategy to build shareholder value since our conversion to a corporation in mid-2008, while weathering successfully the worst recession since the 1970s; this clearly demonstrates the robustness of our business model. This work has centred on: reinforcing our major programs, Aeroplan and Nectar, and their associated cash-flows; reducing significantly our revenue concentration; mitigating Air Canada-related risk; exploiting embedded assets like greenfield, data-analytics, and frequent flyer program spin-off know-how to grow in key global markets; and gaining access through Carlson Marketing to the full loyalty-market spend. This has all been achieved as we have also built a strong balance sheet with prudent cash reserves, maintained a high dividend rate and secured an investment-grade rating.
Added Duchesne, "I am very excited about our prospects heading into 2011. The company is growing as global markets recover and is now positioned substantially ahead of its competitors in all major geographies. This is further evidenced by our recently announced expansion into India and South America and our imminent investment in Aeromexico's frequent flyer program."
Non-Comparable Items
Fiscal 2010 is a year of transition and integration for the Corporation following significant investments made over the past twelve months. As a result, there are several non-comparable items affecting SG&A in the quarter totalling $12.4 million, including costs of $7.4 million associated with the launch of Nectar Italia, $3.0 million in connection with the migration of Carlson Marketing and $2.0 million in strategic consulting fees at the corporate level. In addition, as part of the integration of Carlson Marketing, we identified a one-time $17.4 million positive adjustment to Gross Billings and Adjusted EBITDA as amounts previously included in customer deposits were reclassified to deferred revenue at June 30, 2010.
Business Segment Results
Aeroplan Canada
Aeroplan Canada continues to demonstrate growth and good operating leverage as well as the stability and strength of its critical business fundamentals, such as Breakage. During the second quarter, Aeroplan Canada's Gross Billings from the sale of GALUs grew 3.1 per cent to $254.0 million, reflecting (i) an increase in average consumer spend per financial card, (ii) increased airline partner activity; and (iii) increased retail activity as consumer confidence showed signs of increased strength. Aeroplan Miles issued continued to outpace the growth in Aeroplan Miles redeemed. Gross margin percentage improved by 170 basis points. Driven by strong SG&A expense management, Aeroplan Canada's Adjusted EBITDA as a percentage of Gross Billings improved by 220 basis points.
On August 4, 2010, as provided for in the existing commercial participation services agreement between the parties, Aeroplan Canada and Air Canada reached agreement relating to fixed capacity redemption rates to be paid by Aeroplan in connection with airline seat redemptions for the period beginning January 1, 2011 through to December 31, 2013. In addition, the billing dispute with Air Canada was resolved to the mutual satisfaction of the parties and did not result in any payments or accruals for retroactive amounts. There will be no material impact on the Average Cost of Rewards per Aeroplan Mile Redeemed going forward as a result of these developments.
Groupe Aeroplan Europe
Groupe Aeroplan Europe also had a strong quarter despite the ongoing economic challenges in the UK. Gross Billings from the sale of GALUs grew by 42.8 per cent to $130.6 million on a constant currency basis. This increase was fuelled by strong performance in the grocery sector, the full year impact of the Homebase relationship and a $20.4 million contribution from our new program, Nectar Italia. LMG Insight & Communication (I&C) continues to grow and was responsible for the majority of the increase in other Gross Billings. Also during the quarter, I&C signed a second major retailer outside of the UK and it has a solid pipeline of opportunities going into the second half of the year.
During the quarter, Groupe Aeroplan Europe's gross margin percentage decreased by 280 basis points and Adjusted EBITDA declined. This is mainly attributable to two factors. Firstly, the success of I&C, which has signed contracts with two major retailers outside of the UK, including one with CVS in the United States. I&C incurred approximately $1.5 million of direct costs in the second quarter in connection with the set-up and implementation of these two new contracts. Gross Billings under these contracts will only commence in the second half of the year. Secondly, Adjusted EBITDA was negatively affected by the initial operating losses and $7.4 million in launch costs at Nectar Italia.
Excluding the effect of launch expenses in Italy, Groupe Aeroplan Europe grew Adjusted EBITDA from $4.2 million (2.3m pounds sterling) in 2009 to $8.5 million (5.3m pounds sterling) in 2010. This was achieved after taking into account the incremental SG&A related to Nectar Italia. It should also be noted that in the second quarter of 2009, SG&A was negatively impacted by $2.0 million related to the launch of Homebase.
Newly launched Nectar Italia is outperforming expectations. It achieved the 12 month targeted 5 million member milestone in only four months, and recently signed up three new partners, namely UniCredit, Italy's largest financial institution, IBS, a leading online book retailer, and Quixa, a direct insurance provider. Based on Nectar Italia's performance to date, we are increasing our forecast for 2010 Gross Billings to 40 to 50 million Euros from our original forecast of 30 to 40 million Euros.
Carlson Marketing
Carlson Marketing experienced year-over-year growth with Gross Billings of $169.0 million, $17.4 million of which relates to the reclassification of customer deposits to deferred revenue. Top line growth reflects strength in Carlson Marketing's operations in Canada and Asia Pacific. Reported Adjusted EBITDA was $21.9 million. Excluding the adjustment of $17.4 million and migration costs of $3.0 million for the second quarter and $5.6 million year-to-date, Adjusted EBITDA for Carlson Marketing would have been $7.5 million and $18.3 million, respectively, resulting in an Adjusted EBITDA margin as a percentage of Gross Billings of 5 per cent for the quarter and 5.9 per cent year-to-date. Based on performance in the first half of the year, we are confirming Carlson Marketing's Gross Billings and Adjusted EBITDA guidance for the 2010 fiscal year.
Carlson Marketing's migration is on schedule to be completed by year end and the costs are tracking to the revised estimate outlined in May.
Cash Flow and Financial Position
At June 30, 2010, Groupe Aeroplan had $541.1 million of cash and cash equivalents, $6.8 million of restricted cash and $11.5 million of short-term investments, for a total of $559.4 million.
Groupe Aeroplan's Free Cash Flow was $11.7 million for the second quarter of 2010.
Capital Expenditures
For the three and six months ended June 30, 2010, capital expenditures amounted to $8.9 million and $18.1 million, respectively. Anticipated capital expenditures, which are primarily associated with software development initiatives for fiscal 2010, are expected to approximate $40.0 million for the full year 2010.
Income Taxes
Income taxes include $7.7 million in current income taxes, representing an effective tax rate of 29.4 per cent. We expect the average current income tax rate for the year to approximate 30 per cent.
Normal Course Issuer Bid
The Corporation announced today that it has received approval from the Toronto Stock Exchange to increase the number of shares it can repurchase under the Normal Course Issuer Bid ("NCIB") from 5,000,000 to 19,983,631, or approximately 10% of the public float of 199,836,311 common shares as at May 11, 2010, during the period from May 14, 2010 to no later than May 13, 2011.
During the second quarter of 2010, pursuant to the NCIB previously announced on May 11, 2010, the Corporation purchased 2,500,000 common shares for total cash consideration of $23.7 million. Subsequent to the second quarter, in July and August 2010, the Corporation purchased an additional 2,255,900 shares for total cash consideration of $22.1 million.
Dividends Declared
Common Shares
The Board of Directors has declared a quarterly dividend of $0.125 per common share, payable on September 30, 2010 to shareholders of record at the close of business on September 16, 2010.
Preferred Shares
The Board has also declared a quarterly dividend in the amount of $0.40625 per Cumulative Rate Reset Preferred Share, Series 1, payable on September 30, 2010 to the holders of record at the close of business on September 16, 2010.
Dividends paid by Groupe Aeroplan to Canadian residents on both its common and preferred shares are "eligible dividends" for Canadian income tax purposes.
Chile
Groupe Aeroplan has also been busy in South America, where we have been licensing our IT expertise for the last three years. We have now agreed to license the successful Nectar brand to Cencosud for the relaunch of its proprietary loyalty program. Cencosud is one of the leading retailers in Latin America with presence in Argentina, Brazil, Chile, Colombia and Peru, and turnover of US$11.6 billion.
Groupe Aeroplan does not have any financial stake in the program but we will receive a royalty stream in return for the provision of the Nectar brand, IT systems and other intellectual property. This is a great opportunity for us to cost effectively gain access to Chile and perhaps other regions of South America, exposing ourselves to significant opportunity while mitigating risks.
India
Carlson Marketing announced its expansion into India with the opening of an office in Mumbai on the strength of its relationship with Kingfisher Airlines. India represents a strategic opportunity for both Carlson Marketing and Groupe Aeroplan. Carlson Marketing has worked with Kingfisher over the last year to develop and differentiate the King Club program, a key part of the airline's value proposition. Carlson Marketing was chosen for this project based on its deep international loyalty and airline expertise. The new Mumbai office offers a full suite of services in support of loyalty and relationship building programs.
Outlook
For the year ending 2010, Groupe Aeroplan expects to report consolidated Gross Billings within the range of $2.0 billion and $2.1 billion and realize growth in consolidated Adjusted EBITDA compared to 2009 reported Adjusted EBITDA. Free Cash Flow levels for 2010 are expected to be reduced compared to 2009 as a result of investments required to support future growth and the effect of non-recurring favourable items which occurred in 2009.
The current income tax rate is anticipated to approximate 30% in Canada, and there is an expectation that no significant cash income taxes will be incurred in the rest of the Corporation's foreign operations.
For 2010, Groupe Aeroplan anticipates Gross Billings growth ranging between 2 and 4 per cent for Aeroplan Canada and Groupe Aeroplan Europe (excluding Nectar Italia). Based on the year-to-date performance of these loyalty programs and taking into account current market drivers in their respective environments, we now expect to achieve results at the high end of this range.
Groupe Aeroplan expects to realize growth in Adjusted EBITDA in its legacy businesses, after adjusting for operating costs, which are not expected to recur in the future, related to the launch of the Nectar Italia program and the effect of brand investment promotional campaigns scheduled for 2010, in the Aeroplan and Nectar UK programs.
The Average Cost of Rewards per Aeroplan Mile Redeemed is now not expected to exceed 0.95 cents on an annual basis through to the end of 2011, with gross margin remaining relatively stable.
Gross Billings from Carlson Marketing are expected to approximate US$600.0 million in 2010, with Adjusted EBITDA in the 6% to 8% range, before one-time migration costs, which are estimated at US$26.0 million, and the $17.4 million reclassification adjustment. The migration from Carlson Marketing's former parent company's infrastructure to a stand-alone platform is progressing according to schedule and is expected to be completed by the end of 2010.
The funding requirements for the launch of the Nectar Italia program, which will affect consolidated Adjusted EBITDA, are expected to be in the range of (euro)15 million over 2010. Nectar Italia is expected to generate annual Gross Billings in the range of (euro)60 million to (euro)80 million within three years. For 2010, Nectar Italia is now expected to generate annual Gross Billings in the range of (euro)40 million to (euro)50 million (up from the previous estimate of (euro)30 million to (euro)40 million).
The above guidance excludes the effect of any currency fluctuations on Groupe Aeroplan's operating results.
The outlook provided constitutes forward-looking statements within the meaning of applicable securities laws and should be read in conjunction with the "Caution Concerning Forward-Looking Information" section.
Use of Non-GAAP Financial Information
In order to provide a better understanding of the results, the following terms are used:
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA adjusted for certain factors particular to the business, such as changes in deferred revenue and Future Redemption Costs ("Adjusted EBITDA"), is used by management to evaluate performance, and to measure compliance with debt covenants. Management believes Adjusted EBITDA assists investors in comparing the Corporation's performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and non-operating factors such as historical cost.
Adjusted EBITDA is not a measurement based on GAAP, is not considered an alternative to operating income or net income in measuring performance, and is not comparable to similar measures used by other issuers. For a reconciliation to GAAP, please refer to the Summary of Consolidated Operating Results and Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in the attached schedule. Adjusted EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statements of cash flows.
Adjusted Net Earnings
Net earnings in accordance with GAAP adjusted for Amortization of Accumulation Partners' contracts, customer relationships and technology, Change in deferred revenue, Change in Future Redemption Costs and the income tax effect thereon calculated at the effective income tax rate as reflected in the statement of operations, provides a measurement of profitability calculated on a basis consistent with Adjusted EBITDA.
Adjusted Net Earnings is not a measurement based on GAAP, is not considered an alternative to net earnings in measuring profitability, and is not comparable to similar measures used by other issuers. For a reconciliation to GAAP, please refer to the Summary of Consolidated Operating Results and Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in the attached schedule.
Standardized Free Cash Flow ("Free Cash Flow")
Free Cash Flow is a non-GAAP measure recommended by the CICA in order to provide a consistent and comparable measurement of free cash flow across entities of cash generated from operations and is used as an indicator of financial strength and performance.
Free Cash Flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less adjustments for:
(a) total capital expenditures as reported in accordance with GAAP; and
(b) dividends, when stipulated, unless deducted in arriving at cash flows
from operating activities.
For a reconciliation to cash flows from operations please refer to the Summary of Consolidated Operating Results and Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow included in the attached schedule.
EBITDA and Free Cash Flow are non-GAAP measurements recommended by the CICA in accordance with the draft recommendations provided in their February 2008 publication, Improved Communications with Non-GAAP Financial Measures - General Principles and Guidance for Reporting EBITDA and Free Cash Flow.
Constant Currency
Because exchange rates are an important factor in understanding period to period comparisons, the presentation of various financial metrics on a constant-currency basis or after giving effect to foreign exchange translation, in addition to the reported metrics helps improve the ability to understand operating results and evaluate performance in comparison to prior periods. Constant-currency information compares results between periods as if exchange rates had remained constant over the periods. Constant currency is calculated by calculating prior-year results using current-year foreign currency exchange rates. Results calculated on a constant-currency basis should be considered in addition to, not as a substitute for, results reported in accordance with GAAP and may not be comparable to similarly titled measures used by other companies.
Q2 2010 Conference Call / Audio Webcast
Groupe Aeroplan will host a conference call to discuss its second quarter 2010 financial results at 8:00 a.m. ET on Thursday August 12, 2010. The call can be accessed by dialling 1- 888-231-8191 or 1-647-427-7450 for the Toronto area. The call will be simultaneously audio webcast at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3147980.
Supporting slides for the call will also be available the evening of August 11, 2010. An archive of the audio webcast and a copy of the slides will be available at: http://www.groupeaeroplan.com/pages/invEvents.php for ninety days following the original broadcast.
The unaudited interim consolidated financial statements, the MD&A and a financial highlights presentation will be accessible on the investor relations website at www.groupeaeroplan.com under Financial Results.
About Groupe Aeroplan Inc.
Groupe Aeroplan Inc., a global leader in loyalty management, owns Aeroplan, Canada's premier coalition loyalty program, Carlson Marketing, an international loyalty marketing services, engagement and events provider headquartered in the U.S., as well as Nectar, the United Kingdom's leading coalition loyalty program. In the Gulf Region, Groupe Aeroplan holds a 60 per cent interest in the Air Miles Middle East programs in the United Arab Emirates, Qatar and Bahrain. Groupe Aeroplan also operates LMG Insight & Communication, a customer-driven insight and data analytics business offering international services to retailers and their suppliers, and it has a majority 75 per cent ownership position in Nectar Italia, the first independent loyalty coalition program uniting leading retailers in Italy.
For more information about Groupe Aeroplan, please visit www.groupeaeroplan.com.
Caution Concerning Forward-Looking Statements
Forward-looking statements are included in this news release. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business and its corporate structure.
Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks related to the business and the industry, Air Canada liquidity issues, dependency on top accumulation partners and clients, conflicts of interest, Air Canada or travel industry disruptions, airlines industry changes and increased airline costs, retail market/economic downturn, greater than expected redemptions for rewards, industry competition, integration of Carlson Marketing, supply and capacity costs, unfunded future redemption costs, failure to safeguard databases and consumer privacy, consumer privacy legislation, changes to loyalty programs, seasonal nature of the business, other factors and prior performance, regulatory matters, legal proceedings, reliance on key personnel, labour relations, pension liability, technological disruptions and inability to use third party software, failure to protect intellectual property rights, interest rate and currency fluctuations, leverage and restrictive covenants in current and future indebtedness, dilution of shareholders, uncertainty of dividend payments, level of indebtedness-refinancing risk, managing growth, credit ratings, as well as the other factors identified throughout Groupe Aeroplan's public disclosure record on file with the Canadian securities regulatory authorities.
The forward-looking statements contained herein represent Groupe Aeroplan's expectations as of August 11, 2010, and are subject to change after such date. However, Groupe Aeroplan disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
---------------------------
1 A non-GAAP measurement.
Summary of Consolidated Operating Results and Reconciliation of EBITDA,
Adjusted EBITDA, Adjusted Net Earnings and Free Cash Flow
-------------------------------------------------------------------------
(in thousands,
except miles,
share and per Three months ended Six months ended
share information) June 30, June 30,
-------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------
$ $ $ $
-------------------------------------------------
Gross Billings 555,734(e) 358,947 1,073,681(e) 705,275
-------------------------------------------------------------------------
Gross Billings from
the sale of GALUs 364,722 337,832 702,991 664,080
-------------------------------------------------------------------------
Revenue 451,869 312,400 935,861 648,144
Other revenue 21,328 21,115 44,115 41,195
-------------------------------------------------------------------------
Total revenue 473,197 333,515 979,976 689,339
Cost of rewards and
direct costs (274,256) (204,360) (579,996) (433,016)
-------------------------------------------------------------------------
Gross margin 198,941 129,155 399,980 256,323
Selling, general
and administrative
expenses (141,746) (65,994) (288,181) (129,841)
Depreciation and
amortization (7,166) (5,127) (14,793) (10,064)
-------------------------------------------------------------------------
Operating income
before amortization
of Accumulation
Partners' contracts,
customer
relationships
and technology 50,029 58,034 97,006 116,418
-------------------------------------------------------------------------
Depreciation and
amortization 7,166 5,127 14,793 10,064
-------------------------------------------------------------------------
EBITDA(a) 57,195 63,161 111,799 126,482
-------------------------------------------------------------------------
Adjustments:
Change in
deferred revenue
Gross Billings 555,734 358,947 1,073,681 705,275
Revenue (473,197) (333,515) (979,976) (689,339)
Change in Future
Redemption Costs(b) (49,849) (18,029) (60,401) (7,101)
(Change in Net
GALUs outstanding
x Average Cost of
Rewards per GALUs
for the period)
-------------------------------------------------------------------------
Subtotal of Adjustments 32,688 7,403 33,304 8,835
-------------------------------------------------------------------------
Adjusted EBITDA(a) 89,883(e) 70,564 145,103(e) 135,317
-------------------------------------------------------------------------
Net earnings in
accordance with GAAP 13,991 26,746 28,863 49,974
Weighted average
number of shares 198,905,059 199,462,480 199,181,460 199,423,366
Earnings per share(c) 0.06 0.13 0.12 0.25
-------------------------------------------------------------------------
Net earnings in
accordance with GAAP 13,991 26,746 28,863 49,974
Amortization of
Accumulation Partners'
contracts, customer
relationships and
technology 23,812 20,485 46,780 40,200
Subtotal of Adjustments
(from above) 32,688 7,403 33,304 8,835
Effective tax rate(d) 29.37% 32.15% 24.37% 25.38%
Tax on adjustments at
the effective rate (9,601) (2,380) (8,117) (2,242)
-------------------------------------------------------------------------
Adjusted net
earnings(a)&(c) 60,890 52,254 100,830 96,767
Adjusted net earnings
per share(c) 0.29 0.26 0.48 0.49
-------------------------------------------------------------------------
Net earnings 13,991 26,746 28,863 49,974
Earnings per share 0.06 0.13 0.12 0.25
-------------------------------------------------------------------------
Cash flow from
operations 48,141 121,843 18,410 105,831
Capital Expenditures (8,910) (6,005) (18,069) (13,987)
Dividends (27,567) (24,997) (54,716) (49,994)
-------------------------------------------------------------------------
Free cash flow(a) 11,664 90,841 (54,375) 41,850
-------------------------------------------------------------------------
Total assets 5,124,126 4,983,382 5,124,126 4,983,382
Total long-term
liabilities 1,445,334 1,437,791 1,445,334 1,437,791
Total dividends 27,567 24,997 54,716 49,994
Total dividends per
preferred share 0.406 N/A 0.718 N/A
Total dividends per
common share 0.125 0.125 0.25 0.25
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in thousands,
except miles,
share and per
share information) %Variation
-------------------------------------------------
Q2 YTD
-------------------------------------------------
-------------------------------------------------------------------------
Gross Billings 54.8 52.2
-------------------------------------------------------------------------
Gross Billings from
the sale of GALUs 8.0 5.9
-------------------------------------------------------------------------
Revenue 44.6 44.4
Other revenue 1.0 7.1
-------------------------------------------------------------------------
Total revenue 41.9 42.2
Cost of rewards and
direct costs 34.2 33.9
-------------------------------------------------------------------------
Gross margin 54.0 56.0
Selling, general
and administrative
expenses 114.8 121.9
Depreciation and
amortization 39.8 47.0
-------------------------------------------------------------------------
Operating income before
amortization of
Accumulation Partners'
contracts, customer
relationships and
technology (13.8) (16.7)
-------------------------------------------------------------------------
Depreciation and
amortization 39.8 47.0
-------------------------------------------------------------------------
EBITDA(a) (9.4) (11.6)
-------------------------------------------------------------------------
Adjustments:
Change in deferred
revenue
Gross Billings
Revenue
Change in Future
Redemption Costs(b)
(Change in Net
GALUs outstanding
x Average Cost of
Rewards per GALUs
for the period)
-------------------------------------------------------------------------
Subtotal of Adjustments
-------------------------------------------------------------------------
Adjusted EBITDA(a) 27.4 7.2
-------------------------------------------------------------------------
Net earnings in
accordance with GAAP
Weighted average
number of shares
Earnings per share(c)
-------------------------------------------------------------------------
Net earnings in
accordance with GAAP (47.7) (42.2)
Amortization of
Accumulation Partners'
contracts, customer
relationships and
technology
Subtotal of Adjustments
(from above)
Effective tax rate(d)
Tax on adjustments at
the effective rate
-------------------------------------------------------------------------
Adjusted net
earnings(a)&(c) 16.5 4.2
Adjusted net earning
per share(c)
-------------------------------------------------------------------------
Net earnings
Earnings per share
-------------------------------------------------------------------------
Cash flow from
operations (60.5) (82.6)
Capital Expenditures
Dividends
-------------------------------------------------------------------------
Free cash flow(a) (87.2) (229.9)
-------------------------------------------------------------------------
Total assets
Total long-term
liabilities
Total dividends
Total dividends per
preferred share
Total dividends per
common share
-------------------------------------------------------------------------
(a) A non-GAAP measurement.
(b) The per unit cost derived from this calculation is retroactively
applied to all prior periods with the effect of revaluing the Future
Redemption Cost liability on the basis of the latest available
average unit cost.
(c) After deducting dividends paid on preferred shares in 2010.
(d) Effective tax rate calculated as follows: income tax expense per
statement of operations / earnings before income taxes for the
period.
(e) Includes the positive effect of a $17.4 million adjustment, as a
result of a reclassification of deferred revenue amounts previously
included in customer deposits.
SEGMENTED INFORMATION
At June 30, 2010, the Corporation has three operating segments: Aeroplan Canada, Carlson Marketing and Groupe Aeroplan Europe. The tables below summarize the relevant financial information by segment:
-------------------------------------------------------------------------
(in thousands, except
miles information) Three months ended June 30,
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Groupe Aeroplan
Operating segments Aeroplan Canada Europe
-------------------------------------------------------------------------
Number of Aeroplan Miles
issued (in billions) 20.5 20.1 - -
Number of Total Miles
redeemed (in billions) 15.0 17.0 - -
Number of Aeroplan Miles
redeemed (in billions) 15.0 16.3 - -
-------------------------------------------------------------------------
$ $ $ $
-------------------------------------------------------------------------
Gross Billings 265,521 260,463 121,256(d) 98,484
-------------------------------------------------------------------------
Gross Billings from
the sale of GALUs 253,960 246,401 110,762 91,431
-------------------------------------------------------------------------
Revenue 227,060 241,085 69,160 71,315
Other revenue 11,562 14,062 9,765 7,053
-------------------------------------------------------------------------
Total revenue 238,622 255,147 78,925 78,368
Cost of rewards and
direct costs 136,136 149,916 57,045 54,444
-------------------------------------------------------------------------
Gross margin 102,486 105,231 21,880 23,924
Selling, general and
administrative
expenses 34,730 38,458 30,593 23,709
Depreciation and
amortization(a) 21,983 21,531 3,675 4,081
Interest on long-term
debt - - 96 -
Interest income 4,198 410 2,799 1,640
Foreign exchange loss - - - -
Adjusted EBITDA(b) 77,528 70,217 896(d) 4,174
Earnings (loss) before
income taxes 49,280 47,542 (9,685) (2,308)
-------------------------------------------------------------------------
Additions to capital
assets 4,403 4,985 135 1,020
Goodwill 1,675,842 1,675,842 263,779 312,778
Deferred revenue 1,682,476 1,624,180 299,951 318,771
Total assets 4,886,642 4,780,610 79,728 202,772
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in thousands, except
miles information)
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Operating segments Carlson Marketing Corporate(c)
-------------------------------------------------------------------------
Number of Aeroplan Mile
issued (in billions) - - - -
Number of Total Miles
redeemed (in billions) - - - -
Number of Aeroplan Mile
redeemed (in billions) - - - -
-------------------------------------------------------------------------
$ $ $ $
-------------------------------------------------------------------------
Gross Billings 168,957(d)&(e) - - -
-------------------------------------------------------------------------
Gross Billings from
the sale of GALUs - - - -
-------------------------------------------------------------------------
Revenue 155,650 - - -
Other revenue - - - -
-------------------------------------------------------------------------
Total revenue 155,650 - - -
Cost of rewards and
direct costs 81,075 - - -
-------------------------------------------------------------------------
Gross margin 74,575 - - -
Selling, general and
administrative
expenses 65,936 - 10,487 3,827
Depreciation and
amortization(a) 5,320 - - -
Interest on long-term
debt - - 12,645 9,125
Interest income 27 - - -
Foreign exchange loss - - - 9,224
Adjusted EBITDA(b) 21,946(d)&(e) - (10,487) (3,827)
Earnings (loss) before
income taxes 3,346 - (23,132) (5,814)
-------------------------------------------------------------------------
Additions to capital
assets 4,372 - N/A N/A
Goodwill 106,088 - N/A N/A
Deferred revenue 28,975 - N/A N/A
Total assets 157,756 - N/A N/A
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(in thousands, except
miles information) Three months ended June 30,
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
Operating segments Consolidated
-------------------------------------------------------------------------
Number of Aeroplan Mile
issued (in billions) - -
Number of Total Miles
redeemed (in billions) - -
Number of Aeroplan Mile
redeemed (in billions) - -
-------------------------------------------------------------------------
$ $
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Gross Billings 555,734(d)&(e) 358,947
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Gross Billings from
the sale of GALUs 364,722 337,832
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Revenue 451,870 312,400
Other revenue 21,327 21,115
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Total revenue 473,197 333,515
Cost of rewards and
direct costs 274,256 204,360
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Gross margin 198,941 129,155
Selling, general and
administrative
expenses 141,746 65,994
Depreciation and
amortization(a) 30,978 25,612
Interest on long-term
debt 12,741 9,125
Interest income 7,024 2,050
Foreign exchange loss - 9,224
Adjusted EBITDA(b) 89,883(d)&(e) 70,564
Earnings (loss) before
income taxes 19,809 39,420
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Additions to capital
assets 8,910 6,005
Goodwill 2,045,709 1,988,620
Deferred revenue 2,011,402 1,942,951
Total assets 5,124,126 4,983,382
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(a) Includes amortization of Accumulation Partners' contracts, customer
relationships and technology.
(b) A non-GAAP measurement.
(c) Includes revenue and expenses that are not directly attributable to
any operating segment.
(d) Includes Gross Billings of $101.6 million in the UK and $87.7 million
in the US for the three months ended June 30, 2010 compared to Gross
Billings of $80.3 million in the UK for the three months ended June
30, 2009.
(e) Includes the positive effect of a $17.4 million adjustment, as a
result of a reclassification of deferred revenue amounts previously
included in customer deposits.
%SEDAR: 00027127EF