LYLT - Earnings call transcript Q4 2021

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Operator

Good afternoon and welcome to Loyalty Ventures Fourth Quarter 2021 Earnings Conference Call. At this time, all parties have been placed on a listen-only mode.

Following today’s presentation, the floor will be open for your question. [Operator Instructions] It is now my pleasure to introduce Ms. Lynn Morgen of Advisiry Partners. Ms. yours. is floor the Morgen,

Lynn Morgen

today’s Thank Jeff you, reviewing found we be Chief of website. the the and Officer. Horn, Chief Financial Executive Executive Copies and the Vice of Officer Hosting our today of be Ventures, Relations slides are earnings Charles Investor President and will Loyalty section Operator. call Chestnut, release on and can President

on obligation some on subject of These update you begin, those believe useful will will responses to that to some release to non-GAAP like today’s over our filings call. presented will the I speakers the I call to described comments the statements call that, of risks certain and provide we be to questions we and Before your Charles at on the with earnings uncertainties remind SEC. Investor information made the would statements. to turn Charles? the no Reconciliation may to financial measures on would of which forward-looking Ventures company’s the investors. Loyalty Horne. in other and Relations like today’s call, website measures, contain the royaltyventures.com. the GAAP are With has posted for Also, information reference

Charles Horn

attributes which leaders customer very we the and respective intend build to strengths, coming And in on for Solution pivotal what their businesses have the years. a the flow. independent established November from business Lynn. outlook a roadmap as you we generate to you, and parent most was that two brought thank us share to data Ventures became review joining year our and company. discuss X Thank XXXX. traded we Loyalty an driven accomplished combined all longtime cash and are today to for namely publicly importantly in providers market, investment of upon These XXXX key Loyalty for strong and longstanding relationships both separated We XXXX

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revenue as improved drive were more initiatives the both disruptions, adjusted BrandLoyalty’s those to several help revenue this During with In At and both clients in chain performance XXXX, challenges. value implemented XXXX. our developing to in were XXXX. EBITDA XXXX. EBITDA MILES, in COVID create down serve for with slightly year dealt BrandLoyalty challenged approaches new AIR XXXX supply sourcing alternatives up developments while ongoing unlock to and related our compared partners adjusted the and COVID business logistics capabilities and

we As of forward, around allocation company. look been capital goal the transforming our priorities established have our

customers. to and the invest will We our be approach our ROI enhancing flexible on capital the in to and in to businesses commitment with innovation the drive and both creative for these growth needful

slide year-over-year. for X% increased highlights million. X, Total while it was quarter. key the EBITDA year-over-year, fourth the financial revenue adjusted to $XX Revenue and Turning million the grew for was EBITDA $XXX XX% adjusted quarter metrics

related of For for taxes. provision then the $XX of quarter, loss transaction the impairment we a million, and reported impact charge $XX which goodwill the million a on of costs $X.XX, net included related income

$X $X.XX. In been effects million and reinforce per identity, totaled AIR year for adjusted provision and quarter provides million at a spinoff, In program. net full transaction visual inclusive the share cost strong MILES we to collectors. which full of conjunction $XXX was digital EPS helped $XX impairment success was high would refreshed AIR earnings the income the MILES. When the costs, which to net key quick its and impairment, Slide highlight and fourth we reported X the year enhancements update of goodwill for revenue positive have the impact million were taxes. $X.XX the income launched the sentiment both XXXX, of the goodwill for For diluted impressions, with on among $X.XX with and level income refresh and EBITDA The excluding million initiatives and fourth and of introduced and the that the $XXX the $X activations in and on of million. several transaction of quarter the the

and the Our the energy extra sponsors also added to enthusiasm it appreciated coalition.

booking In choose pay to flight with miles to which airline quarter. addition, Collectors from fourth value the AIR new using more and per MILES at ways in along cash partners both have more more program mile. launched now

the great leading Slide to value. This more strong and MILES sponsor sizable Omicron also additions engagement As uptake the can seen card earn and in and for now Collectors retailers. develop year. continue collector to this highlights offers redemptions will from late a before Canadian at to MasterCard variant test and AIR new the a in issued result, bonus X enhance We’ve renewals. make flight is way collectors MILES locations. AIR out earn program to select AIR MILES saw promotion a limited linked any collector and lift initiative QX. ways and at more sentiment miles their miles in rolled emerged account

quarter, building the supplies, Samsung. brands, Nova including several and cart Liquor Scotia we Corporation renewed During

abandonment can which in to e-commerce or earn more. to with transaction size, AIR customize merchants and merchants’ supporting can MILES and the integrates simply basket specific reporting MILES a existing to Shopify products, increase merchants It In cart AIR addition, reduce Canadian securely and level small AIR offers promote use services platforms, launched businesses the with app consumers Canadian along December. The app, also through offerings interface, analytics. incentives now we MILES simple

growing channel. this to look returns and forward important excited about in are We the early

collectors card H&M, November leading at DSW, As program including miles earn mentioned can launched our we Subway. earlier, Sephora linked and now and Indigo, retailers in offers

to providing We’re of a multitude in collectors verticals. this focused of momentum MILES on retail variety base positive sponsor miles growing We earn a options and reward seeing AIR across remain program. our

remain emergency At both to it higher the Omicron the though expected. in the Turning that the the miles Miles or and AIR merchandise bookings XXXX. nine compared in fourth trends redemptions strong would full the MILES fourth season increased improved be quarters. issuance highlights over quarter well variant same fewer flight in boosted sequentially the resulted the issued redemptions to time, and normally page year past and sequentially reward redemption as holiday X, quarter by

demand we and bookings redemptions. flight restrictions for recede, anticipate travel travel As higher

settlement end balance assets funded redemption at cash aside future million Our we $XXX account of a at for by redemptions. year set

will assets elevated on liquidity of any or We’re cover periods our confident redemptions cash flow. operating impact redemption without settlement

Turning to page X.

review Let’s quarter. for the fourth key the BrandLoyalty in developments

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our wanted. past to invest a pace unable Over flow free use have cash they to been the at their capabilities in the that few years, businesses

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on XXXX AIR suppliers that opportunistic add be we in focus and sustainable will remain will investment growth. for and help the acquisitions BrandLoyalty capabilities vigilant to concentrated spur clients, will While MILES,

ultimately Company Disney regions, Disney BrandLoyalty of marks in campaigns shoppers in will collector We Disney them time access our the and with At company to value opportunities Walt makes instantly lives, either so AIR online. physical both the overall credits brands everyday redemption an virtual introduced rewards digital balances experience, to our store that believe consumers reward which have the the innovations. their we the other with BrandLoyalty time or branded a provides immediately by means miles platform certain in updated a let’s the partner engaging increases or slide collector consumers checkout sustainability we with sooner across and sponsors launch. awarding flights. see businesses. bypasses trees with offset will can help key Real also few improve set benefits. These also tiered travel the we’ve making programs retailers to customers in for issuance the we assessable. BrandLoyalty, the real move can our On deployed To MILES, suite on-time rolling have lengthening in AIR elevate that pandemic let’s reward consumer patterns start temporarily and on by have that XX, products can’t. to when to more demand travel personal time in carbon products. redemption clients and AIR At mileage resonates will slide featuring how of how redemption overall our merchandise drive and recognize their offer recognized redeem. plan reserving option new chain impacted with only rewards engagement we planted, XX, limiting Disney carbon a started ways flexibility rewards offer and Consumers our footprints. engagement, we industry We’ve the focused offer partnership At also prioritize of historical The experience. these in exclusive credits. changes choice and form out team As after and in a of reward collect for booking engage consumers MILES has collectors enhanced with developed more their method the MILES, explore redeem are which the thresholds streamline off checkout options help renewed which redemption certainty these improvements added the to supply we we just our virtual sponsors

the ability out quarter. first the With anywhere choose platform world, classes digital of was in different and self with pay this service cabin rolled to new with or cash, last flights phase first the miles

XXXX enhance to We even to appreciate travel redemption will continue start will enhancements these and normalize. throughout as patterns more believe we collectors it

collectors. personalization more between sponsors greater communication and growth we marketing our Additionally, across for partnered believe messaging channels. Adobe drive will to our We with enabling offers relevant and our and conversations tailored for our at one-on-one sponsors collectors and drive scale

users. and with channels developing by solution. strong shoppers activation can shoppers gamified be deploying active the sustainable through offers traffic footprint BrandLoyalty digital throughout empowers omni-channel where monthly will carbon business their collective BrandLoyalty club playing as The new app win XXXX. Unique engagement turn leaf offsetting in services. these to This increases this launched capabilities uptake tackle We and campaign drives seen platform consumer solution carbon where business of loyalty solution offset also to to increasing consumers to sponsors digital and more business has also to known client games, partners a has through change. certified with can consumers take climate suite retailers projects. prizes action

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automation. analytics areas used deliver personalized consumer we’re allow MILES greater time. to these making we this analytics to evaluate to data, and real reporting analyze offers. investments will have today and with in capabilities, data do access a partners suites The party insights scale Moving to are market, XX, as AIR first campaigns AIR and insights in data to our and of from investment order always in has behavior our slide in And us highlighted and dashboards performance give MILES

our Finally, and to its has impact BrandLoyalty to flow which the effectiveness of services personalized uplift solutions machine enables retail ultimately sharing campaigns. recommend The segment one, more offers. learning impactful for personalized to data BrandLoyalty and measure the paving personalized the elevated way to campaign deliver methodology predict shopper partners, design. deepening from measure measure further and relevant and and communication down campaigns our new are help

with our proposition over Chestnut. turn I value growth. As programs that, to you Jeff running have strengthen our to heard, to build our capability support will we’ve and ground hit With the CFO, future it

Jeff Chestnut

quarter presents finish EPS quarter primarily of year XX a our as X% full tax strong in costs to results XXXX. down the income diluted the to due Slide the the to XXXX and the quarter-over-quarter a provision. of BrandLoyalty, spinoff and was fourth of income compared at Revenue the the Charles. the periods Thanks, and to net both were goodwill impairment related for year corresponding result up

and the strategic and the per fourth costs, would share. $X.XX diluted EPs quarter Excluding in $X impairment and income transaction the net been million have

Both declined mentioned revenue faced down BrandLoyalty a result each For diluted the of year difficult net EPS the by that and were income the as full full above. for were year, as X% environment impacted in XXXX. they items those

and would impairment costs, and and income the for share. $XX been EPS Excluding the per transaction XXXX have net strategic million diluted $X.XX

Over supply the impact the normal operations disrupted challenges of two combined the the pandemic years, global BrandLoyalty. have continuing chain with last at

end results, impairment of it we below was preliminary we to the balance to expected the non-cash more and $XXX likely the giving after the not was quarter. a value goodwill effect million we in goodwill recognized carrying the its BrandLoyalty As of fourth determined impact. million FX impairment than the value an fair be and at performed impairment interim charge a $XX the BrandLoyalty’s that Based of is result, year on test.

outlook on year, two discuss will believe will in of over we’re we navigated circumstances we how strong this BrandLoyalty the and our deliver past team the a performance the has As years. proud XXXX for

fourth in XX% impairment, corporate approximately the EBITDA ago In XX slide. quarter OpEx and interest U.S. the key rate These for segments and XX% marketing. on adjusted provide the period with factors. former the associated costs higher exceeded full as the such ago fourth the associated XXXX, segment presents and of level withholding details higher quarter, programs. AIR quarter two more For BrandLoyalty’s on from year. the currently of XX% Canadian results and well results and rates to the full due by to revenue the expenses XX% overhead. MILES was margin with goodwill several due XXXX savings and the the their as the from payroll across the non-deductible our Slide the parent approximately BrandLoyalty lower ranged year impacted next than as was payments our adjusted year I’ll to revenues fourth both AIR fourth tax MILES’ consolidated expense taxes EBITDA the year the than growth to tax the in was included quarter period.

due X% In operates. to For a the the and the MILES reliably the particular, the be for campaigns adjusted markets which XX% and was in reward X% our of BrandLoyalty could down as full year, BrandLoyalty AIR as segment BrandLoyalty’s favorable consumers product revenue retailer merchandise was uses XX year. impact effectively the persistent revenue EBITDA benefited Slide EBITDA COVID down of until from deliveries outlook increased rates. year ongoing ran or loyalty sourcing full to in deferred exchange adjusted provides financial that less were timely experienced some the difficulties result, sourced. and in

of full Our in spending about after account growth for midpoint our top at enterprise an of X% adjusted wide of XXXX and the performance XXXX ago. BrandLoyalty XXXX is have approximately team accelerated a guidance for business guidance high into to we has BrandLoyalty. potential XXXX XX% EBITDA drive growth year year expectation margin Supporting reflects taking line the increased budgeted range beyond. significantly revenue guidance today to our compared for The our and contracted more strong from and in

at double to expect single we top in BrandLoyalty line an result, low with mid margin from double the a digits digits. growth improvement digit As profile

contribute XX% XXXX, to expenses. adjusted the corporate AIR before AIR offset which In the impact to BrandLoyalty for to million growth expect from tax $XX Overall, expect strong about segments will XX% fiscal we enhancement range that lower of After about value at at rates to initiatives reflects cash mentioned $XX and than range forecast Charles earlier. expect for non-deductible EBITDA we U.S. companywide the XXXX the currently XX%. rate more about the about to two considering consolidated we tax We expect MILES of net expenses, MILES from be collector revenues XX% the we to taxes million.

the focused consolidated expenses. redistribute reducing U.S. underway on or tax non-deductible We are initiatives and rate the currently are to leverage

As of that cash $XXX today, XX year $XXX is and flow. and liquidity cash are our at over strong million. our we investments at million free liquidity end we mindful highlights Slide the undertake flow discussed our our

we’ve liquidity we And today clients, sponsors quickly driving ample support drive and objectives both that to strengthen enable priorities loyalty consumer Ultimately, will new for have MILES clients and strategic We initiatives BrandLoyalty as strategic for relationships existing leadership AIR help the collector with confident profitable the and sustained are questions. we now we’re transform of attracting AIR our and inorganic enhanced to with with and and ready appropriate. ventures. these clients positions opportunities growth on our outlined to react us Operator, open will lines the continue capacity outlined BrandLoyalty will our engagement building and upon by us to for loyalty programs. to MILES the

Operator

question Thank a from you. with Riddick line Sidoti. have Marc of coming Instructions] the We [Operator

Your line is open.

Marc Riddick

how So, I how far that of as thinking with, the throughout about particular general timeframe or that throughout wanted flow be year? any should a as there’s to there investment the XXXX would about if think start we sense lumpiness is should the we

Charles Horn

the to equally much the by just made volumes. of increase based MILES is the will AIR it think changes program proposition weighted The value pretty to upon be quarter

the at to them. to of we right you what want implement in CapEx we’re now, the and analysis want we really If look make, changes stage

with have QX more me, QX QX want complete a do. assessment do Jeff So and what weighted say what agree it’s of and we we maybe versus we I’d be to through to as going will

Marc Riddick

and about wanted Disney a more gears more extent bit you renewal can then, as to timeframe the I or us a maybe could detail and little And talk the to as regions? the with around far of little you sort that what shift renewal bit share

Charles Horn

sure. Yes,

start of space negotiations a renewal been, four tend think most year about advance. the it’s to year contracts three that’s it, a we way our So just sit if in you and in to historically

now right year with of a it and And one start so, we’ll be the our will later clients in second one. larger with starting

and good with things and continue with have where to goes. we a one try And we’ll get will of to a clients. to for contracts. just get how us those have It’s deal always for so, And the that good try short it past we’ll the negotiate term deal our we we’ll we deal see in

Marc Riddick

linked you a then, we wondering mix that to more verticals. could a some you to a I of And and to some maybe was the can might certainly presentation, little card of time as degree of the talk you if what’s offers? industry mentioned go, the that bit that available about that about in have talk brands over there’s do little think customers? bit where what mix might the So

Jeff Chestnut

our this way efficient a Jeff. how about our earn. potential expand for It’s we’re much the and excited linked And Mark, program. help collectors up to also try from standpoint, the quickly without infrastructure. great they It’s card program standing offer way is where a to sponsors, term an long too

expect So think time and weeks. program. And got over I see is would expect continue I this would one names joining legs. to this limited it we’ll to coming has I more evaluate the But here a

Marc Riddick

growth engagement your and translate where revenue something Thank that’s these for far as you. sort maybe over that games, gears come about on phones program actually don’t these that works spend gaming as sort around wondering folks the customers? our is. for that of the how involved of commentary option of games the of enough you yourselves for it came and talk and how we maybe sort from shifting content could And quite is even already if then, into I was and little to in about frankly, to time bit sort as because, a

Jeff Chestnut

Mark. Yes,

or at together, is So with our work they’re something consumer type from to to determine this drive. of standpoint, particular, traction clients that looking behavior we a gamification in BrandLoyalty the that

size, some oriented online is of that or in or more spending the app, basket app. of mobile some around that foot traffic behavior adoption, time And adoption behavior is

the if consumers channel. retailer, so, elements those And that’s us gamification to the the in or the especially and to particular, that around in layer coming try opportunity to app program, that for that’s behavior site objective in sharpen an for for back grocery really

competing Just web to get like in that in concert, That’s your you’re and or foot going see to you’re where strategic traffic store, for consumers delivery adopt have a for and objectives. competing of really you’re the traction. do traffic it online retailers’ We’ll your nature. things grocery service to meals those rollout box, of course, with

Marc Riddick

And wondering then, there sorry into one statistics. back But I’m of a that. time? you, as The campaigns as jump I’ll talk and seen of where questions. slide queue. you go I far of was that. how BrandLoyalty on in the the one bit and And slides historically could little retailers, we’ve a have can then asking what bunch was normal about campaigns, I’m over if wondering, campaign the you what was in maybe think those and about a XXX plus you. Thank XXX I going that environment, sort normal year,

Jeff Chestnut

limited impacted mentioned in remarks ability in to new sure. out new BrandLoyalty Yes, chain. has the pandemic of supply as travel, BrandLoyalty’s sell and particular his get been, The the clients. Charles The really to lack earlier and by potential campaigns has

verticals not more and those as only existing they’re countries, running geographies but those we’d in the that through their those innovations campaigns campaigns into move about think partnerships new into in new of to within are some reporting, existing we’re expect and and of you digital mentioned. expanding grow that as well Charles today list and geographies new as geographies, they So

where and introduce So they not around Europe, there numbers world programs, see you’ll expand. so these regions to in but is in once those those get the certainly only lift, restrictions headquartered, travel think BrandLoyalty can I continue the

Operator

Our from Family Krystal [ph] line Bruce next of Krystal from question coming Office.

open. is line Your

Unidentified Analyst

afternoon. Good few please. questions, A Yes.

the the after more that you’ll could two Canada? The that million was P&L. be $XX at those of year? sponsors be be is, the $XX specifically, and drive is that $XX earlier that through the new curious, could question this along your a time the million loss related second to will exactly to all more investment bit you fact and a will there to little running what the spend lines investment in first I confidence maybe that And sponsors of are couple sponsors any the was that million about related in million Miles beyond XX

Charles Horn

question of So off the to be with one two start decided the the your not anymore. really that was they went just let’s first away, on programs program [Indiscernible] biggest in

I think case cost. looking were indirectly, it’s where at they the a

we’ve there feedback. collectors to in the the and and we’re sponsors sitting we’ve market, of to some them. Now gotten talk out And gone all big our

value of So prop some a should in in we where market. of priced our little on be. terms of we we felt the check And market went competitors the a that bit above kind last we of against over the ourselves couple of years,

bring cycle to they spend going said adjust looked consumer, leader it try to agreeable even though they more into we we get the check, the us more let’s really So in it, again, to sponsors. at and to collector the happy more in the they to to market happy back value collector make more through it, the more, more point, let’s we’re plethora, To virtuous about. people with and get when we if we they a we sponsors pull your and get gain the now it’s value, so talked have redemption spend spend options, a

spend engagement do that back collector programs the overtime. we’ll check market, after PC program We market of market, on a So to out other drive the forth, and think and and was into to optimum, in the get change come it. to the so that’s doing some appropriate it clients, do going going talking big on we’re we RVC felt our to and ahead the we going make we drive think felt more

Unidentified Analyst

see this any this point at ability clients? that But is to several investment to new will lead there

Charles Horn

I I’d say we and some not in we it to we’re do. clients some we’ve helps. the verticals. in to to point, thing only this aggressively. key now. been very do And But need the do is think this Sure trying active need bring new out market right do

to do to get of database need have clients where need and also add some capabilities. We can move to data, their we into We programs. this open marketing rich source own

So products there facilitate it’s make even just the where to do value it we’re looking prop to than things are number more to the of consumer. the

to marketing We’re helping sponsor value the need. by and they them market the program adding what

the So no the we such The be. way sponsor that’s do. a to what also better do. what else attempting adding focus for can make in one replicate to the that making really it going combination for capabilities but collector, That’s what is of we’re and it

Unidentified Analyst

lower is the question what rate light any X% rate cost And change in a the there second the breakage if assumptions? so, The to EBITDA, a in EBITDA? was change in breakage of would

Charles Horn

I So that last below redemption years, change Jeff the about two answer the breakage by below over that the been the And the redemption rate to ultimate the what There Miles you points rate. issued let ultimate But was if burn no XX% mean one. of the during rate. current think amount what’s rate. the I’ll over year burned been has happened has

rate profit flight the will, we issue. we us the the when program, a see an gives dream a and a the room above we people and spike being booking some redemption again, think can period time it if in that not go ultimate start So it on road down of XX% for

know your there. that point I in change, is. that be should be And XX-K we what of should a quantify one the Jeff, point So problem. think it that our to effect shouldn’t you

Jeff Chestnut

put haven’t out. the We XX-K

the think I referencing XX, Form Charles? you’re

Charles Horn

Yes.

Jeff Chestnut

Yes.

I think million. it’s about $XX

Charles Horn

Canadian?

Jeff Chestnut

yes. so, believe I

Unidentified Analyst

retail And fact effectively quite the company. of I are from actually And the now in as as you will to will you things. as independent I be bit question if just Is you curious regulators, of the all etc, fact had is you little going and next company here, etc., here free, a is here parent actually company controlled The a marketplace? little a dramatic. be business was, the a there was of the more new really that improvement that those type the regulators, that wondering something by allow that bit on just side will that forward the aggressive from an strategy shackled see effectively

Jeff Chestnut

mute. on be may you Charles,

Charles Horn

right. You’re

So, the side, it card it points your on services which if about side, payment ATS, you highly the think focus on regulated. was the was with

can So cash how harvest business. Loyalty out in and were at reinvest looked basically, the is much Ventures the operations we

back, do it my ADS terms well So money at and very growth. for dividends opinion of in did the detriment future but of in

was like into there’s and was just like of things of if we looking we’re done. for the the developing That’s mini to the do of as go didn’t a to we business through, we key do for that I’d is the profile U.S., there thing to to way It we Jeff we’re coalitions a new I’d how about, cash not with our number it couple invest anything years. go party. a for. Mexico, AIR going bring ability we opportunity talked can flow, markets. wrong different to to some So growth MILES the that be us, going strong, just markets in That’s loyalty like the for have go was now which the the into get retain to

So from company. harvesting can to we’re cash the this really shifting now make growth grow we and a line how top

Unidentified Analyst

actually XXXX, we will AIR see you in a in MILES? Do U.S. partner think

Charles Horn

partners going the capabilities, with AIR to some Well, Brand the We to of data some into MILES especially bring maybe not certain look MILES. already on AIR Loyalty, a analytics U.S. have U.S. with we’re

when support well. vertical and maybe really had in BrandLoyalty also reestablish We capabilities. U.S. some presence really years do additional into and some markets We what Epsilon that a U.S. Back to couple away MILES a assets of company add looking involved we and acquire that One grocery, Epsilon, was the the of gap didn’t AIR of take to of a part were we go a that can did U.S. in ADS. really the Jeff We’d do divested knew what Epsilon advantage of. the there’s was we like I in the is before knew think that certain with U.S. ago by in things to we’re the with

us in look come the to XXXX. to aggressive be pretty So trying for into U.S.

Unidentified Analyst

creative the increases. of seven Air thought where it in rate you Air four like And who then Depending questions, nitpicky be Canada kind here believe, could revolver. one to very did able swap about or you pandemic, out program? something the not were to Have just doing second on securitize Or in either on fixed? Canada, where is the something miles their quarter they but the middle to you’d part United did do of floating for of

Jeff Chestnut

the consider we the they’re with entirety at airlines’ don’t certainly looking have swaps like interest anything we certainly as that been capital to do well. manage Bruce, Yes. the know I rate debt what perspective the of considering, from structure exposure the we environment. as but help watching

Unidentified Analyst

other Just And it. don’t the about forward out. if forward strike loss be final that tax in to in I’d multiple position here, wondering, loss able me be various to increases, the utilized million position that just that forward? hate carry be thing that they’re we of goodwill tax a carry footnotes, be insofar the a a as some in through we cap a was, I was there’s charges, be I actually charges But had reserves where go against something just that these there $XX and going was will will there will a

Jeff Chestnut

of a now in I elements a to in this business course, standpoint, well really that in as And that’s to U.S. of Charles former there, there’s we’re going our position in then, outlined there’s on those going efficiencies looking the for own some and year. we’re the think to the Canadian in tax of to the leverage that the be a structure way growth back couple Yes, we that can a we’re countries right, from owed depend in tax optimization you’re parent. which initiatives that’s on particular,

Operator

And with Instructions] Trilantic. the [Operator Goldberg of question from Seth next line our coming

Your line is open.

Seth Goldberg

Hi guys, congrats, and for the thanks question. taking

just to growth. question kind the thoughts cause miles could of First as relative love that to get around to importance flip to your is issues of factors would and

growth? it sponsor Is improving COVID what it in sponsor be an pressures? How the just And about related an of to abatement kind to inflection assurance do of think to you simply for so, logos? happen is order from Miles there attention? Is needs winnings it

Jeff Chestnut

Sure.

So ways. a it in of number break down I’ll

first bring collectors it do That’s to into way the more more actively spend. the places ability is, programs. activate your cross sponsors The are to always give the we looking is to to best to

need see The second models. we back is into some to promotional thing of our clients get

have promotional beyond. our contracts which you’ll is way do have above who then to the they and generally So opportunity base and clients miles, had the miles work,

lot timeframe. miles seen promotional a this haven’t We during of

COVID. You to during would expect

I spending And card up the think play. overtime pick we promotional think on could stimulus will come Once through. coming that So up DEMO we we’d get expect discretionary area spending. miles credit more see through coming back see the third, that’s another pick into discretionary to we spend you some

going it’s this also to as a a it’s clients, new bit of little gets discretionary little be prevalent. going more promo So and can be mix be miles spend

Seth Goldberg

COVID? do And the around miles promo in miles base have promo decline of saw magnitude mix relative during color just of the that you any versus the miles and you

Jeff Chestnut

I have where promo of the the my just that head. down don’t know were. I miles know. right I they small off don’t it It’s I moment. top way have from are

Seth Goldberg

miles how the baked thought issuance about And guidance are that XXXX? assumptions around problem. the you guys for into No

Jeff Chestnut

standpoint, issuance think had X billion looking Seth, the across that towards miles trending we we’re its and of you’d year, I be issuance between last issuance we miles Jeff. X% look X% up that From year. a at looking, as back

Seth Goldberg

a $XX incremental we of switching as of you gears think of XXXX And of that investment recurring highlighted. then much versus should $XX to million for kind How to only? the that second million just

Charles Horn

giving going changes break be years, program or it the in going are I’ll your of cost more mitigate of the a of the to terms even to your we for so start CapEx Yes, same. impacts But though stay started is drive going the the down, mile will look costs benefit to to to spent, value EBITDA it you’re look seeing the the more The issued per fixed for to the leverage is to couple expect margins. we in consumer XXXX. more to points you’re what than to and basically

CapEx the So you’ll us see you’ll see will line down trending than EBITDA did and before. leveraging the then we back producing top that in more and XXXX start what

we through the get the being from as collector pull Just engaged. more effect

Seth Goldberg

the And presumably, extent be isn’t to engagement that that back? drives, that increase incremental to that’s and something EBITDA collectors ratcheted can in the value something the

Charles Horn

variant definitely announced for in Even process. back changes, of Correct. an kicked though we the uptick terms when we saw first the redemptions before in flight

now it engagement. positive definitely I business. in I and growth leveraging think helps helps really saw that And collector So with to it like reaction. that think maintain positive do we reaction. with very costs driving I’d do the It’s our renewals.

Seth Goldberg

term last big how think about a question, maybe we one needs be capital of next about year of some think going just for CapEx for the Obviously, like? growth. longer what investment deferred and the was do And on there a you be look sustaining business? it’s this CapEx how should the year, big the spending, a profile going year or investment to is business basis, to and But

Charles Horn

this forward. baseline speaking new incrementally as before and see extra is I the we a get would that investment that as CapEx go this blend think, about had what level you I you’ll Seth, think year, between the Yes, outlook think we

there’s beyond ourselves. investment pick on lookout adding that we’re build be tuck-in into acquisitions, in of can the redirected that Some than as if CapEx for up it faster we capabilities market could we something that we may the see

Operator

up with And we have a follow from Sidoti. Marc Riddick question

Your line is open.

MarcRiddick

evening. just to on Again, I things good follow Hi, wanted a there. of up couple

that this I general in a and investments as annualized or follow how can we this how sort just then have are after debt basis reduction a place goals of quick One as of if reduction either we of year, on taking given far thinking thinking going maybe sort the And longer being, that? should should that. on be term about that be year up to be which you about comment

Jeff Chestnut

the debt the of towards a this for From $XX balance Marc. as as two Charles U.S. sure, year. investments strengthening structure the priorities capital deleveraging and reduction allocation we you’d Yes one approximately it’s the standpoint, our sheet. debt capital that year, move reduction across the of I’d million a well expect see year outlined, as top

Marc Riddick

these change that push you’re might to or type your or targets acquisition also targets, done until acquisition some And and think the then, of timing ability those investments thinking of given off are of later sort there be making, some the that until about of get you’ve I’m investments as timing investments the acquisitions spend? made of sort you the should how or may of you’re we focus this on laying about maybe

Charles Horn

AIR better want it’s where for certain it timely and concept. break pieces. in down we than a build We a it more And we say can it a be capabilities, cost may could internally. place. products at what necessarily case I it we would acquire buy MILES, I’ll know in versus develop

while. So AIR I’d acquisitions say a With our to off BrandLoyalty, it will not MILES. and it engage could for reduce for effort we push trying

I think capabilities in in shape have. they the product of is BrandLoyalty bring, terms good they offerings very the

take under bit now. is of of a down within roll road, we them, to the for pressing, there anything need out smaller do right not there space, like not capitalist is the to So to do players up, like little a anything some I’d the I

MILES, to priorities in very AIR then which Jeff the mean So good been really down, that well supports acquire Canada let’s get asked and U.S. we back comfortable are XXXX, what’s before company for with. leverage to it. a I a adding that pay going may ratio debt in capabilities the or very And

Marc Riddick

wondering you that how a tail, was customers, longer then end and for me kind were chain term? efforts you and give if little one that I supply see of me, might around things last that that worked in of promise. the am what kind Thanks. bit maybe the you a I made sort of how And long could how by of talk what impacting just up and the challenges, being of the couple having received well about do and maybe examples more

Charles Horn

Sure.

will script, of fast us one and you it capabilities, could into where give it, online, be go redeem gaming, smaller, things footprint, So basically talked to retail redeem your the it, are in could the be you we’re businesses. add digital that we type can about offset the doing e-capabilities, is to it it looking carbon we ability

ports a though the we started even that we What do volume, shutdown. to So more be did add would the though the they were or buy would expensive, issue little containers get to more bit capabilities. digital is,

there’s ports a So the shutdown, you when do can it. not lot about

be of a a a to it’s lot which standpoint, and but in adding dealing as us are source trying from a time we’re open well going locally, to consistently standpoint, level lot, same lead do So XXXX. will lockdown with stock to really e-capabilities from think help back we then going I up, that the then as and ports don’t the but of have

Operator

And I’m turn the over I remarks. questions to for at closing call any will this showing time. no Mr. now Horn further like back to Charles

Charles Horn

Ventures, for. into event. associates earnings Loyalty of thank great the appreciate like point looking for first we’re got a you, It’s call. to finally everyone really to all joining thank the Sure, we We’d our

being forward so, look let’s to future. some everyone I really today, good Thanks, in And outcomes and involved the everyone. driving appreciate

Operator

gentlemen for that participation. and you does conclude your today. our for Ladies conference Thank

now disconnect. You may

Loyalty Ventures (LYLTQ) 4 Feb 222021 Q4 Earnings call transcript