0001870997false00018709972022-11-082022-11-08

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):

November 8, 2022

LOYALTY VENTURES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

 

001-40776

 

87-1353472

(State or Other Jurisdiction

 

(Commission

 

(IRS Employer

of Incorporation)

 

File Number)

 

Identification No.)

8235 DOUGLAS AVENUE, SUITE 1200

DALLAS, TX 75225

(Address and Zip Code of Principal Executive Offices)

(972) 338-5170

(Registrant’s Telephone Number, including Area Code)

NOT APPLICABLE

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading symbol

 

Name of each exchange on which registered

Common stock, par value $0.01 per share

 

LYLT

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Item 2.02. Results of Operations and Financial Condition.

On November 8, 2022, Loyalty Ventures Inc. (the “Company”) issued a press release regarding its results of operations for the third quarter ended September 30, 2022. A copy of this press release is furnished as Exhibit 99.1.

Item 7.01. Regulation FD Disclosure.

On November 8, 2022, the Company issued a press release regarding its results of operations for the third quarter ended September 30, 2022. A copy of this press release is furnished as Exhibit 99.1.

Attached as Exhibit 99.2 is a presentation to be given to investors and others by senior officers of the Company.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.

Document Description

99.1

Press Release dated November 8, 2022 announcing the results of operations for the third quarter ended September 30, 2022.

99.2

Investor Presentation Materials.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

Note: The information contained in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Loyalty Ventures Inc.

Date: November 8, 2022

By:

/s/ Cynthia L. Hageman

Cynthia L. Hageman

Executive Vice President, General Counsel and Secretary

Exhibit 99.1

Graphic

Loyalty Ventures Inc. Reports Third Quarter 2022 Results

Consistent Performance by AIR MILES in Line with Expectations; Miles Issued Up 2%
Recent Contract Extensions With Bank of Montreal, Shell Canada and Metro in Ontario
BrandLoyalty’s Financial Results Impacted by Shifting Economic Conditions and Consumer Sentiment; Adjusting Campaign Rewards Strategy to Better Align with Consumer Priorities

Summary of Financial Results

(in millions, except per share data)

Third Quarter 2022

Revenue

$162.4

Net Loss

$(0.1)

Diluted Loss Per Share

$(0.01)

Adjusted EBITDA*

$33.1

*See “Reconciliation of Non-GAAP Financial Measures” and “Financial Measures” below for a discussion of non-GAAP financial measures.

DALLAS, Texas, November 8, 2022 – Loyalty Ventures Inc. (Nasdaq: LYLT), a leading provider of tech-enabled, data-driven consumer loyalty solutions today announced financial results for the third quarter ended September 30, 2022.

Commenting on the results, Charles Horn, Chief Executive Officer, stated, “Our results in the third quarter are in line with our expectations. AIR MILES reported an increase of approximately 2% in miles issued compared to the third quarter of 2021, with strength in the credit card and fuel verticals partially offset by changes in the grocery category. Importantly, I’m pleased to note that we recently completed contract extensions with three long-time sponsors in our AIR MILES coalition, Bank of Montreal, Shell Canada nationwide, and Metro in Ontario.

“We believe these partnership extensions, with premier companies in large retail sectors, reflect the value the AIR MILES® Reward Program delivers to Canadian consumers. Moreover, this illustrates the positive response to our changes to the AIR MILES Reward Program and fortifies our commitment to enhancing and expanding the coalition. Under AIR MILES’ new direction, we are driving a more flexible model that can better meet the varying and unique needs of each of our clients, something that our collectors have been able to experience first-hand throughout the year.

“BrandLoyalty revenues decreased approximately 2% with essentially breakeven adjusted EBITDA, reflecting continued pressure to this offering related to the effects of the Russian invasion of Ukraine, higher prices, higher interest rates, and consumer uncertainty in Europe that we expect to persist throughout the rest of the year. Europe is the strongest market for our BrandLoyalty campaigns, so we are significantly impacted by the macroeconomic conditions that persist in that region. With that in mind, we have shifted our strategy around our rewards structure and inventory to focus more on relevant rewards rather than aspirational luxuries, while concentrating our rewards lineup on items that better align with current consumer preferences in our key markets. We are optimistic that our combination of global grocer relationships and exclusive supplier partnerships provides a strong foundation for future growth. With our realigned approach we believe that we are well positioned to drive momentum for BrandLoyalty heading into 2023.”


Third Quarter 2022 Consolidated Financial Results

Total revenue for the third quarter was $162 million, a decrease of 4% from the third quarter of 2021, and adjusted EBITDA of $33 million was down 30% year over year. Net loss was $(0.1) million, or $(0.01) per diluted share.

Loyalty Ventures’ available liquidity at September 30, 2022 was $212 million, and the company was in compliance with its loan covenants.

Third Quarter Segment Financial Results

AIR MILES Reward Program: Revenue decreased 6% to $67 million, compared to $72 million in the third quarter of 2021, related to the impact of the decline in AIR MILES reward miles issued during the pandemic in 2020 and 2021 and the increase in the collector value proposition implemented in late 2021. Adjusted EBITDA decreased 14% to $35 million, compared to the third quarter of 2021, due to the decline in revenue noted above.

AIR MILES reward miles issued increased 2%. AIR MILES reward miles redeemed increased 45% compared to the third quarter of 2021, due to the continued demand for travel as COVID-related restrictions have abated.

BrandLoyalty: Revenue decreased 2% to $95 million from $97 million in the third quarter of 2021, primarily related to foreign exchange considerations. Adjusted EBITDA decreased to $0.1 million from $11 million in the prior year third quarter primarily as a result of the higher cost of redemptions.

Summary & Outlook

“While our third quarter results reflect challenges encountered in both our operating segments, we have mobilized to address the changing macroeconomic conditions impacting our businesses and we are making progress with the strategic initiatives and operational efficiency measures we have put in place. As we’ve said before, 2022 is a transition year for Loyalty Ventures, and we remain focused on operational execution as we reshape our business to more nimbly address shifting consumer sentiment and worldwide economic volatility.

“As we move toward the close of 2022, we reiterate our expectation that our adjusted EBITDA for 2022 will be approximately $110 million, with a lower contribution from BrandLoyalty offset by improvements at AIR MILES and Corporate, relative to last quarter’s guidance. Our expectations reflect our assessment of macro conditions and consumer sentiment in BrandLoyalty’s key European markets, the exit of three grocery regions at AIR MILES, and the strategic investments underway. These projected financial results, along with the add-backs used to calculate Consolidated EBITDA as defined in our credit agreement, are expected to enable us to maintain compliance with our loan covenant. Additionally, we’ve established and are executing on a capital allocation program designed to enhance our offerings to provide more value to existing clients and to attract new partners and sponsors. With our visibility today, we believe we are well positioned as a trusted resource with the capabilities to help our global partners achieve their marketing objectives while also driving long-term growth for AIR MILES and BrandLoyalty,” Mr. Horn concluded.

Third Quarter 2022 Conference Call and Webcast Information

Loyalty Ventures Inc. will hold a conference call to discuss its results and business outlook at 7:30 a.m. CT on Tuesday, November 8, 2022. The live webcast of the conference call can be accessed here. The webcast replay will be available on the Company’s investor relations website for up to one year.

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About Loyalty Ventures Inc.

Loyalty Ventures Inc., a Nasdaq Global Select Market company (Nasdaq: LYLT), is a leading provider of tech-enabled, data-driven consumer loyalty solutions. We help partners achieve their strategic and financial objectives including increased consumer basket size, shopper traffic, frequency, digital reach and enhanced program reporting and analytics.

We help financial services providers, retailers and other consumer-facing businesses create and increase customer loyalty across multiple touch points from traditional to digital to mobile and emerging technologies. We own and operate the AIR MILES® Reward Program, Canada’s most recognized loyalty program, and Netherlands-based BrandLoyalty, a global provider of purpose-driven, tailor-made, campaign-based loyalty solutions for grocers and other high-frequency retailers.

At our AIR MILES Reward Program, AIR MILES Collectors earn AIR MILES at more than 300 leading Canadian, global and online brands and at thousands of retail and service locations across the country. This activity powers an unmatched data asset which along with world-class analytics and marketing capabilities, enables clients to accelerate their marketing activities and ROI. AIR MILES provides Collectors the flexibility and choice to use AIR MILES on aspirational rewards such as merchandise, travel, events or attractions or, instantly, in-store or online, through AIR MILES Cash at participating Partner locations. For more information, visit: airmiles.ca. Having celebrated the issuance of its 100 Billionth Mile in 2021, AIR MILES invites Canadians to visit the Program on Facebook, Instagram and Twitter.

BrandLoyalty provides winning loyalty campaigns by connecting high-frequency retailers, brand partners, and shoppers. BrandLoyalty changes shoppers’ behavior in high-frequency retail worldwide - both on a transactional and emotional level. Find out more via brandloyalty.com or on LinkedIn and YouTube.

More information about Loyalty Ventures can be found at loyaltyventures.com.

Caution Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our expectations or forecasts of future events and can generally be identified by the use of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results and future economic conditions, all of which are subject to risks that include, but are not limited to, our high level of indebtedness; reductions in our credit ratings that limit our ability to access capital markets; increases in market interest rates; the potential for our common stock to be delisted from trading on Nasdaq for failure to meet minimum continuing listing standards; continuing impacts related to COVID-19, including variants, labor shortages, reduction in demand from clients, supply chain disruption for our reward suppliers and capacity constraints, rising costs or other disruptions in the airline or travel industries; changes in geopolitical conditions, including the Russian invasion of Ukraine, related global sanctions and Russian restrictions or actions with respect to local assets; fluctuation in foreign exchange rates; execution of restructuring plans and any resulting cost savings; loss of, or reduction in demand for services from, significant clients; loss of active AIR MILES® Reward Program collectors or greater than expected redemptions by the same; unfavorable resolution of pending or future litigation matters; disruption to operations due to the separation from our former parent or failure of the separation to be tax-free; new regulatory limitations related to consumer protection or data privacy limiting our services; and loss of consumer information due to compromised physical or cyber security.

We believe that our expectations are based on reasonable assumptions. Forward-looking statements, however, are subject to a number of risks and uncertainties that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurances can be given that our expectations will prove to have been correct. These risks and uncertainties include, but are not limited to, factors set forth in the Risk Factors section of both (1) our Form 10-K for the most recently ended fiscal year and (2) any updates in Item 1A, or elsewhere, in our Quarterly Reports on Form 10-Q filed for periods subsequent to such Form 10-K or any updates thereto. Further risks and uncertainties include, but are not limited to, the execution of restructuring plans and any resulting cost savings. Our forward-looking statements speak only as of

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the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward-looking statements, whether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise.

Financial Measures

In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, the Company may present financial measures that are non-GAAP measures, adjusted EBITDA and adjusted EBITDA margin. The Company believes that these non-GAAP financial measures, viewed in addition to and not in lieu of the Company’s reported GAAP results, provide useful information to investors regarding the Company’s performance, liquidity and overall results of operations. The Company uses adjusted EBITDA as an integral part of internal reporting to measure the performance and operational strength of reportable segments and to evaluate the performance of senior management. Adjusted EBITDA eliminates the uneven effect across all reportable segments of non-cash depreciation of tangible assets and amortization of intangible assets and the non-cash effect of stock compensation expense. In addition, adjusted EBITDA eliminates goodwill impairment, strategic transaction costs, which represent costs related to the separation and advisory services associated with modifying its credit agreement and capital structure, and restructuring and other charges. Adjusted EBITDA margin represents adjusted EBITDA divided by revenue.

Reconciliation of Non-GAAP Financial Measures

Reconciliations to comparable GAAP financial measures are available in the accompanying schedules, which are posted as part of this earnings release in both the Press Releases and Investor Relations sections on the Company’s website (www.loyaltyventures.com). No reconciliation is provided with respect to forward looking annual guidance as we cannot reliably predict all necessary components or their impact to reconcile these non-GAAP measures without unreasonable effort. The events necessitating a non-GAAP adjustment are inherently unpredictable and may have a material impact on the Company’s future results.

The financial measures presented are consistent with the Company’s historical financial reporting practices. The non-GAAP financial measures presented herein may not be comparable to similarly titled measures presented by other companies and are not identical to corresponding measures used in other various agreements or public filings.

Investor Contacts:
IMS Investor RelationsLoyalty Ventures Inc. Investor Relations Line

jnesbett@imsinvestorrelations.cominvestorrelations@loyalty.com

+1.203.972.9200+1.972.338.4505

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LOYALTY VENTURES INC.

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2022

    

2021

    

2022

    

2021

(in thousands, except per share amounts)

Revenues

 

  

 

  

 

  

 

  

Redemption, net

$

91,852

$

97,149

$

273,779

$

280,844

Services

 

62,757

 

65,806

 

191,830

 

199,244

Other

 

7,760

 

6,302

 

23,508

 

16,628

Total revenue

 

162,369

 

169,257

 

489,117

 

496,716

Operating expenses

 

  

 

  

 

  

 

  

Cost of operations (exclusive of depreciation and amortization disclosed separately below)

 

133,905

119,882

407,890

372,820

General and administrative

 

5,090

4,018

15,907

11,608

Depreciation and other amortization

 

7,409

8,665

25,146

26,237

Amortization of purchased intangibles

 

259

433

820

1,316

Goodwill impairment

422,922

Total operating expenses

 

146,663

 

132,998

 

872,685

 

411,981

Operating income (loss)

 

15,706

36,259

 

(383,568)

 

84,735

Interest expense (income), net

 

11,527

(136)

29,973

(318)

Income (loss) before income taxes and income from investment in unconsolidated subsidiary

 

4,179

 

36,395

 

(413,541)

 

85,053

Provision for income taxes

 

4,304

16,542

27,466

31,616

Income from investment in unconsolidated subsidiary – related party, net of tax

 

(4,108)

(4,067)

Net (loss) income

$

(125)

$

23,961

$

(441,007)

$

57,504

Net (loss) income per share:

Basic

$

(0.01)

$

0.97

$

(17.92)

$

2.34

Diluted

$

(0.01)

$

0.97

$

(17.92)

$

2.34

Weighted average shares:

Basic

24,612

24,585

24,607

24,585

Diluted

24,612

24,585

24,607

24,585

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LOYALTY VENTURES INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 

December 31, 

2022

    

2021

(in thousands, except per share amounts)

ASSETS

Cash and cash equivalents

$

73,307

$

167,601

Accounts receivable, net

 

245,863

 

288,251

Inventories, net

 

236,776

 

188,577

Redemption settlement assets, restricted

 

609,711

 

735,131

Other current assets

 

23,415

 

28,627

Total current assets

 

1,189,072

 

1,408,187

Property and equipment, net

 

63,742

 

79,959

Right of use assets - operating

 

85,057

 

99,515

Deferred tax asset, net

 

48,388

 

58,128

Intangible assets, net

 

1,913

 

3,095

Goodwill

 

177,978

 

649,958

Other non-current assets

 

25,068

 

24,885

Total assets

$

1,591,218

$

2,323,727

LIABILITIES AND EQUITY (DEFICIENCY)

 

  

 

  

Accounts payable

$

116,766

$

103,482

Accrued expenses

 

131,242

 

144,997

Deferred revenue

 

791,208

 

924,789

Current operating lease liabilities

 

8,086

 

10,055

Current debt

50,625

 

50,625

Other current liabilities

 

120,651

 

118,444

Total current liabilities

 

1,218,578

 

1,352,392

Deferred revenue

 

87,793

 

97,167

Long-term operating lease liabilities

 

88,390

 

103,242

Long-term debt

567,720

 

603,488

Other liabilities

 

18,369

 

20,874

Total liabilities

 

1,980,850

 

2,177,163

Common stock, $0.01 par value; authorized, 200,000 shares; issued, 24,612 shares and 24,585 shares at September 30, 2022 and December 31, 2021, respectively

246

246

Additional paid-in-capital

272,487

266,775

Accumulated deficit

(496,390)

(55,383)

Accumulated other comprehensive loss

 

(165,975)

 

(65,074)

Total (deficiency) equity

 

(389,632)

 

146,564

Total liabilities and (deficiency) equity

$

1,591,218

$

2,323,727

6


LOYALTY VENTURES INC.

UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30, 

2022

2021

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

  

  

Net (loss) income

$

(441,007)

$

57,504

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

Depreciation and amortization

 

25,966

 

27,553

Deferred income taxes

 

5,192

 

(3,594)

Non-cash stock compensation

 

5,248

 

6,322

Goodwill impairment

422,922

 

Gain on sale of investment in unconsolidated subsidiary – related party

(4,110)

Change in other operating assets and liabilities

 

(90,673)

 

19,511

Other

 

20,798

 

10,539

Net cash (used in) provided by operating activities

 

(51,554)

 

113,725

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

  

Change in redemption settlement assets, restricted

 

10,313

 

(47,312)

Capital expenditures

 

(15,936)

 

(13,137)

Distributions from investment in unconsolidated subsidiary – related party

 

 

795

Sale of investment in unconsolidated subsidiary – related party

4,055

Net cash used in investing activities

 

(5,623)

 

(55,599)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Borrowings under debt agreements

12,000

 

Repayments of borrowings

(49,969)

 

Payment of deferred financing costs

(1,964)

Dividends paid to former Parent

(120,000)

Net transfers to former Parent

(9,278)

Net transfers from former Parent for Separation-related transactions

 

1,569

 

Other

 

(557)

 

Net cash used in financing activities

 

(38,921)

 

(129,278)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(13,195)

 

(4,000)

Change in cash, cash equivalents and restricted cash

 

(109,293)

 

(75,152)

Cash, cash equivalents and restricted cash at beginning of year

 

232,602

 

337,525

Cash, cash equivalents and restricted cash at end of year

$

123,309

$

262,373

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LOYALTY VENTURES INC.

UNAUDITED SUMMARY OF FINANCIAL HIGHLIGHTS

Three Months Ended September 30, 

Nine Months Ended September 30, 

 

    

2022

    

2021

    

% Change

    

2022

    

2021

    

% Change

 

 

(in thousands, except percentages)

Segment Revenue:

 

  

 

  

 

  

 

  

 

  

 

  

AIR MILES Reward Program

$

67,387

$

71,928

 

(6)

%  

$

199,649

$

214,123

 

(7)

%

BrandLoyalty

 

95,024

 

97,329

 

(2)

 

289,597

 

282,593

 

2

Corporate/Other

 

 

 

 

 

Eliminations

(42)

nm*

(129)

nm*

Total

$

162,369

$

169,257

 

(4)

%  

$

489,117

$

496,716

 

(2)

%

Segment Adjusted EBITDA:

 

  

 

  

 

  

 

  

 

  

 

  

AIR MILES Reward Program

$

34,734

$

40,478

 

(14)

%  

$

95,715

$

113,685

 

(16)

%

BrandLoyalty

 

102

 

10,622

 

(99)

 

(112)

 

15,220

 

(101)

Corporate/Other

 

(1,753)

 

(3,600)

 

(51)

 

(10,374)

 

(10,295)

 

1

Total

$

33,083

$

47,500

 

(30)

%  

$

85,229

$

118,610

 

(28)

%

Key Performance Indicators (in millions):

AIR MILES reward miles issued

1,176.8

1,155.2

2

%  

3,470.0

3,406.1

2

%  

AIR MILES reward miles redeemed

1,294.9

895.8

45

%  

3,584.8

2,435.5

47

%  

* not meaningful

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LOYALTY VENTURES INC.

UNAUDITED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

(in thousands)

Adjusted EBITDA:

Net (loss) income

$

(125)

$

23,961

$

(441,007)

$

57,504

Income from investment in unconsolidated subsidiary – related party, net of tax

(4,108)

(4,067)

Provision for income taxes

4,304

16,542

27,466

31,616

Interest expense (income), net

11,527

(136)

29,973

(318)

Depreciation and other amortization

7,409

8,665

25,146

26,237

Amortization of purchased intangibles

259

433

820

1,316

Stock compensation expense

1,339

2,143

5,248

6,322

Goodwill impairment

422,922

Strategic transaction costs (1)

3,015

5,040

Restructuring and other charges (2)

5,355

9,621

Adjusted EBITDA

$

33,083

$

47,500

$

85,229

$

118,610

(1)Represents costs associated with the Separation, which were comprised of amounts associated with the Employee Matters Agreement and Tax Matters Agreement. Strategic transaction costs also include advisory services associated with modifying the credit agreement and the capital structure.
(2)Represents costs associated with termination benefits, asset impairments and other exit costs.

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Exhibit 99.2

GRAPHIC

Third Quarter 2022 Results 1 November 2022

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Forward - Looking Statements and Financial Measures 2 This presentation contains forward - looking statements within the meaning of Section 27A of the Securities Act of 1933, as amende d, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward - looking statements give our expectations or forecasts of future events and can generally be identified by the u se of words such as “believe,” “expect,” “anticipate,” “estimate,” “intend,” “project,” “plan,” “likely,” “may,” “should” or other words or phrases of similar import. Similarly, statements tha t d escribe our business strategy, outlook, objectives, plans, intentions or goals also are forward - looking statements. Examples of forward - looking statements include, but are not limited to, statements we make regarding, and the guidance we give with respect to, our anticipated operating or financial results and future economic conditions, all of which are subject to risks that include, bu t a re not limited to, our high level of indebtedness; reductions in our credit ratings that limit our ability to access capital markets; increases in market interest rates; the potential for our common st ock to be delisted from trading on Nasdaq for failure to meet minimum continuing listing standards; continuing impacts related to COVID - 19, including variants, labor shortages, reduction in demand f rom clients, supply chain disruption for our reward suppliers and capacity constraints, rising costs or other disruptions in the airline or travel industries; changes in geopolitical conditio ns, including the Russian invasion of Ukraine and related global sanctions and Russian restrictions or actions with respect to local assets; fluctuation in foreign exchange rates; execution of restructuri ng plans and any resulting cost savings; loss of, or reduction in demand for services from, significant clients; loss of active AIR MILES® Reward Program collectors or greater than expected redemptions by the same; unfavorable resolution of pending or future litigation matters; disruption to operations due to the separation from our former parent or failure of the separation to be tax - free; new regulatory limitations related to consumer protection or data privacy limiting our services; and loss of consumer information due to compromised physical or cyber security. We believe that our expectations are based on reasonable assumptions. Forward - looking statements, however, are subject to a numb er of risks and uncertainties that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, and no assurance s c an be given that our expectations will prove to have been correct. These risks and uncertainties include, but are not limited to, factors set forth in the Risk Factors section of both (1) our For m 10 - K for the most recently ended fiscal year and (2) any updates in Item 1A, or elsewhere, in our Quarterly Reports on Form 10 - Q filed for periods subsequent to such Form 10 - K or any updates thereto. O ur forward - looking statements speak only as of the date made, and we undertake no obligation, other than as required by applicable law, to update or revise any forward - looking statements, wh ether as a result of new information, subsequent events, anticipated or unanticipated circumstances or otherwise. In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, we may present fin anc ial measures that are non - GAAP measures, such as adjusted EBITDA and constant currency. Adjusted EBITDA eliminates the non - cash depreciation of tangible assets and amortization of intang ible assets, the non - cash effect of stock compensation expense, goodwill impairment, strategic transaction costs and restructuring and other charges. Constant currency excludes the impact o f f luctuations in foreign exchange rates. We calculate constant currency by converting our current period local currency financial results using the prior period exchange rates. No reconcil iat ion is provided with respect to forward looking annual guidance as we cannot reliably predict all necessary components or their impact to reconcile these non - GAAP measures without unreasonable effor t. The events necessitating a non - GAAP adjustment are inherently unpredictable and may have a material impact on our future results. Reconciliations to the most directly comparabl e G AAP financial measures are available in our earnings press release, which is posted in the Press Releases section on our website (www.loyaltyventures.com).

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Q3 2022 Key Takeaways 3 Performance Update • Recent extensions with credit, fuel and grocery partners at AIR MILES ® Reward Program support our confidence in the Program • AIR MILES reward miles issued increased 2%, in line with management’s expectations • BrandLoyalty is facing macro challenges, but solutions are in place Priorities • Ongoing investments in innovation and transformation at both AIR MILES and BrandLoyalty • Operational efficiency initiative has created meaningful savings and contributed to enhanced flexibility • Pursuing adjustments to make our capital structure more efficient

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Q3 2022 Summary of Financial Results 4 • Q3 Revenue decreased $7MM year - over - year due to the Collector value proposition enhancement at AIR MILES (3) and the decline in the EUR/USD exchange rate • Q3 Adj. EBITDA decreased $14MM year - over - year due to the Collector value proposition enhancement at AIR MILES and underperformin g programs in EMEA and higher cost of redemptions at BrandLoyalty • Q3 Diluted EPS includes $0.28 per share of strategic transaction costs and restructuring and other charges • YTD net loss impacted by $423 million goodwill impairment at BrandLoyalty Notes: 1. Adj. EBITDA excludes goodwill impairment, restructuring costs and strategic transaction costs 2. Loss per share (“EPS”) 3. In accordance with ASC 606, “Revenue from contracts with customers”, redemption revenue for our AIR MILES Reward Program is presented net of cost of redemptions $162MM Revenue $33MM Adj. EBITDA (1) ($0MM) ($0.01) Q3 YTD $489MM $85MM ($441MM) ($17.92) Net Loss / Diluted EPS (2)

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Americas EMEA APAC BrandLoyalty Performance Update 5 • Focusing near - term sales efforts on known geographies in EMEA • Adjusting rewards mix towards home goods and entertainment • Adjusting fixed cost infrastructure to reflect more targeted and profitable growth going forward 76% 16% 8% YTD September Revenue by Geography Campaign Highlights Retailer Rewards Supplier

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Refining Approach & Cost Structure • Reorganized business processes to improve speed to market and flexibility • Implementation of operational efficiency plan expected to help offset margin impact of higher costs BrandLoyalty Recent Developments 6 Sustainability • Consumers and retailers value BrandLoyalty’s environmental advocacy and commitment • Responsible stewardship: reducing waste and improving logistics through streamlined packaging • Sustainable sourcing: developed eco - friendly cookware line Green Ray regularly featured in campaigns across EMEA • Developing campaigns with digital reward models with immersive and interactive experiences • Campaigns with fully digital rewards are higher margin, have better working capital profiles and provide supply chain and ESG benefits Merchandise Strategy • Focusing future campaigns on home goods with an emphasis on kitchenware • Well - positioned to power campaigns in Q4 with rewards ready for delivery • Evaluating opportunities to redeploy existing inventory to familiar markets

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Shell Canada • Partner since 1993; AIR MILES are available on fuel, eligible convenience store and car wash purchases • Shell Canada is a leading mobility retailer in Canada with more than 1,400 stations from coast to coast • AIR MILES represents the exclusive loyalty currency for Shell customers in Canada AIR MILES Reward Program Partner Renewals 7 Bank of Montreal • One of the founding Partners of AIR MILES in 1992 • 8 th largest bank by assets in North America serving 12 million customers • BMO & AIR MILES offer co - brand products to Personal & Small Business customers • Collectors with a BMO credit card earn notably more miles and benefit from a flexible grocery accelerator launched in July that provides incremental value on spend at any grocery retailer Metro • Partner in Ontario since 1997 • Metro is among the top three grocery brands in Canada and in the province of Ontario • AIR MILES reward miles are issued at more than 130 stores in Ontario (Ontario)

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AIR MILES Reward Program Ecosystem Update 8 Core Card and Loyalty Linked Depth of Integration and Partnership AIR MILES Shops Open & Flexible Model… • Allows brands to participate and expand the commitment to AIR MILES as value proposition is proven over time • Light - touch technology integration options simplify collaboration Home Improvement Ontario Consumer Electronics Athletic Wear General Merchandise Fashion / Clothing Entertainment Travel / Hospitality …Will Expand Ecosystem • 46 n ew businesses across Canada have joined the Program this year through September, including Best Buy , Canada’s largest consumer electronics retailer, which joined Shops in Q3 • Additional partners have joined Card Linked Offers subsequent to quarter end, including Goodfood , Natura Market and Peter & Paul’s Gifts

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AIR MILES Reward Program Recent Developments 9 New Offerings & Initiatives • Seasonal and focused campaigns: helping retailers drive incrementality and maximize marketing ROIs through enhanced, personalized issuance offers in key seasonal periods • Max Pass: introduced a micro - subscription model where Collectors can purchase a multiplier on their spend at a rotating group of Partners • AMP Media: early - stage media services platform giving brands of all sizes the power to create more impactful touchpoints and more effective advertising solutions 9

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Early Results on Mobile App Seamless onboarding process, providing newly enrolled Collectors with a clear set of next steps and compelling offers Simplified app login to encourage frequent, repeat visits New self - service capabilities to elevate Collector satisfaction AIR MILES Reward Program Strategic Investments 10 10

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1,240 1,355 1,112 1,139 1,155 1,264 1,065 1,229 1,177 55% 62% 67% 70% 78% 85% 99% 100% 110% 0% 20% 40% 60% 80% 100% 120% 140% 160% 0 200 400 600 800 1,000 1,200 1,400 1,600 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Miles Issued (in Millions) Miles Redeemed / Issued ("Burn Rate") AIR MILES Reward Program Recent Performance 11 • Miles issued in Q3 up 2% year - over - year with particular strength in credit cards and fuel • Includes partial impact of regional grocery exits in Q3 2022 • Burn rate remained elevated as expected due to demand for travel as well as regional grocery transitions • Redemption Settlement Assets (held in trust) fund future redemptions

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Financial Results – Consolidated 12 ($ in millions, except per share) Q3 2022 Q3 2021 % Change YTD 9/30/22 YTD 9/30/21 % Change Total revenue $162.4 $169.3 (4%) $489.1 $496.7 (2%) Operating expenses Cost of operations (exclusive of goodwill impairment and restructuring costs below) $141.3 $133.0 6% $440.1 $412.0 7% Goodwill impairment - - nm 422.9 - nm Restructuring and other charges 5.4 - nm 9.6 - nm Total operating expenses $146.7 $133.0 10% $872.7 $412.0 nm Operating income (loss) $15.7 $36.3 (57%) ($383.6) $84.7 nm Interest expense (income), net 11.5 (0.1) nm 30.0 (0.3) nm Income (loss) before income taxes and income from investment in unconsolidated subsidiary $4.2 $36.4 (89%) ($413.5) $85.1 nm Provision for income taxes $4.3 $16.5 (74%) $27.5 $31.6 (13%) Income from investment in unconsolidated subsidiary – related party, net of tax - (4.1) nm - (4.1) nm Net (loss) income ($0.1) $24.0 (101%) ($441.0) $57.5 nm Net (loss) income per share - Diluted ($0.01) $0.97 nm ($17.92) $2.34 nm Weighted average shares - Diluted 24.6 24.6 0% 24.6 24.6 0% Figures may not add due to rounding; nm indicates a figure that is not meaningful

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Financial Results – Segments 13 Notes: 1. In accordance with ASC 606, “Revenue from contracts with customers”, redemption revenue for our AIR MILES Reward Program is p res ented net of cost of redemptions ($ in millions) Q3 2022 Q3 2021 % Change YTD 9/30/22 YTD 9/30/21 % Change AIR MILES Reward Program (1) $67.4 $71.9 (6%) $199.6 $214.1 (7%) BrandLoyalty 95.0 97.3 (2%) 289.6 282.6 2% Eliminations (0.0) - nm (0.1) - nm Total Revenue $162.4 $169.3 (4%) $489.1 $496.7 (2%) AIR MILES Reward Program $34.7 $40.5 (14%) $95.7 $113.7 (16%) BrandLoyalty 0.1 10.6 (99%) (0.1) 15.2 (101%) Corporate/Other (1.8) (3.6) (51%) (10.4) (10.3) 1% Total Adj. EBITDA $33.1 $47.5 (30%) $85.2 $118.6 (28%) Figures may not add due to rounding; nm indicates a figure that is not meaningful

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285 451 735 2021A 2022E AIR MILES BrandLoyalty 148 32 (14) 166 2021A 2022E AIR MILES BrandLoyalty Corporate 2022 Consolidated Outlook 14 Revenue $MM Adj. EBITDA $MM Key Commentary Based on our current visibility, we expect full year 2022 revenue to range from $660 to $670 million Reflects the impact of recent extensions and grocery exits for all regions except Quebec, plus the effect of the operational efficiency initiative 2022 results heavily impacted by persistence of higher cost of rewards and mismatch of consumers' current economic priorities with campaigns planned and ordered in 2021 110 660 – 670 260 400 – 410

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Financial Results – Recent Developments 15 Economic & Operational Developments • Macro volatility in key markets • Inflation and rising rates • Shifting consumer sentiment • Partner exits in Canada Operational Efficiency Program • Reviewed products, people and processes • Targeted $15MM → now expect $25MM • Implemented across Q3 and Q4 with full annualized savings expected to be available in 2023

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Liquidity & Capital Structure 16 Cash and Cash Equivalents (1) Revolver Capacity (2) Liquidity $73 $138 $212 Net Debt at 9/30/22 $564 Gross Debt at 9/30/22 $637 Less: Cash at 9/30/22 ($73) Q3 2022 Liquidity Capital Structure ($ in millions, figures do not total due to rounding) ($ in millions) 2022 Free Cash Flow priorities include reinvesting in the business and deleveraging Gross Debt at 6/30/22 $650 Less: Q3 Debt Reduction ($13) Notes: 1. Redemption Settlement Assets, which include restricted cash, are presented separately on the balance sheet 2. $150MM revolver; no amounts borrowed, but adjusted for letters of credit

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Operating Efficiency initiative will be an ongoing priority to maximize financial flexibility BrandLoyalty reorienting core operating principles in response to macro challenges AIR MILES excited to continue working with BMO, Shell and Metro, as well as a host of new Partners Significant steps taken during transition year to lay foundation for 2023 and beyond Summary 17 1 2 3 4

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APPENDIX

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2022 Taxes 19 • AIR MILES Reward Program and BrandLoyalty tax rates estimated to range from ~25% to ~28% (1) • Currently non - deductible U.S. expenses, including interest expense, corporate overhead and Canadian withholding taxes will negatively impact our effective tax rate • Non - deductible expenses have an unlimited carryforward period to be used against future U.S. taxable income • Non - deductible goodwill impairment and write - down of BrandLoyalty deferred tax assets negatively impacted the effective tax rate for YTD 9/30/22 • Cash taxes projected to be towards low end of previously estimated range of $25MM to $30MM Notes: 1. Excluding write - down of BrandLoyalty deferred tax assets and goodwill impairment