Aimia (TSE:AIM) reported higher third-quarter revenue as its Cortland business benefited from price increases and improving demand in several markets, while a write-down on its Clear Media investment and financing expenses contributed to a net loss.
The company is also advancing its strategy of investing in undervalued businesses, deploying CAD 15.5 million in publicly traded companies during the quarter. Executive Chairman Rhys Summerton said Aimia intends to prioritize acquisitions over share buybacks as it seeks to build a larger, cash-generating investment vehicle.
Cortland revenue rises, but costs offset gains
Selling, general and administrative expenses increased by CAD 2 million, including one-time costs tied to corporate initiatives and listings, as well as higher freight costs at Cortland. Leonard said efforts to reduce holding company expenses partly offset the increase.
Cortland, which generated the quarter’s CAD 45.6 million in revenue, benefited from pricing surcharges introduced in response to higher raw material and freight costs. Product mix and improved conditions in fishing and aquaculture, as well as U.S. aerospace and defense, also contributed. Lower sales volumes in other sectors partly offset those gains.
Cortland’s adjusted EBITDA rose to CAD 5.7 million from CAD 5.5 million a year earlier. Leonard said a good portion of the revenue growth was tied to price increases intended to offset raw material and freight costs.
Looking ahead, Leonard said Cortland’s aquaculture order book showed positive signs and that cage orders were expected to increase in 2027 from 2026. He said the fourth quarter would likely be smaller than the third, which is typically the strongest quarter, but that the company expected a good quarter.
Summerton said the focus at Cortland is on sustaining revenue growth and controlling costs to improve operating margins. He also said Cortland is about to make a small acquisition, without providing further details.
Clear Media write-down and debt redemption
Aimia recorded an CAD 8.3 million unrealized fair value loss on its investment in Clear Media. Leonard said a dispute between the Chinese bus shelter advertising business and one of its landlords had affected Clear Media’s liquidity and ability to generate revenue. The investment remained on Aimia’s balance sheet at CAD 4 million after the write-down.
The quarterly net loss was also affected by CAD 6.9 million in net financial expenses, including CAD 4.8 million of deferred financing costs associated with redeeming senior notes, Leonard said.
Consolidated cash fell to CAD 152 million at quarter-end from CAD 294.5 million at the end of June. The main driver was a CAD 131.4 million payment of aggregate principal to redeem the senior notes, a transaction triggered by the sale of Bozzetto. Leonard said the redemption will save approximately CAD 13 million in annual interest costs.
Aimia expects holding company operating expenses of approximately CAD 7 million over the next 12 months, including ongoing costs associated with its secondary listings. Leonard said the company incurred just over CAD 1 million in initial listing costs during the quarter that it does not expect to recur.
Investment strategy favors public companies
Aimia’s investments made during the second and third quarters totaled nearly CAD 29 million at quarter-end, Summerton said. The new investments generated a CAD 1.9 million fair-value gain in the third quarter, though he cautioned that quarterly performance can fluctuate significantly.
Summerton said Aimia targets companies it believes trade at significant discounts to intrinsic value, have strong management teams and generate consistent cash flow. In most cases, he said, the company considers whether it could ultimately gain control.
Aimia has disclosed stakes in U.K. businesses Foxtons and NWF. Summerton said the company is an active investor and is building its positions, although he cautioned that there is no guarantee it can unlock value in either business. He said Aimia currently favors public companies over private acquisitions because it can build stakes at market prices, and is not interested in credit or distressed companies.
The U.K. investments do not currently utilize Aimia’s tax losses, Summerton said. He said the company eventually intends to pursue acquisitions in the U.S. and Canada that could help it use those losses, but its immediate focus is on building scale.
Aimia has established listings on South Africa’s JSE and the U.K.’s AIM market. Summerton said the listings support future acquisition activity, while declining to elaborate on specific plans. He also said Aimia would continue repurchasing shares when it can, but has no plans for a substantial issuer bid and considers acquisitions the priority.
Over time, Summerton said he hopes Aimia will own five or six operating assets by the end of 2027 or the first quarter of 2028, with those businesses ultimately sending more than CAD 100 million a year into Aimia. He presented those figures as aspirations rather than a firm forecast.
About Aimia (TSE:AIM)
Aimia Inc (TSX: AIM; JSE: AII) is a diversified conglomerate focused on enhancing the value of its holdings. Headquartered in Toronto, Aimia’s priorities include increasing its intrinsic value, reducing holding company costs, reducing the discount of its share price to the intrinsic value of its businesses, and redeploying capital to make investments in undervalued companies.
