DALLAS, Oct. 20, 2016 /PRNewswire/ -- Alliance Data
Systems Corporation (NYSE: ADS), a leading global provider of
data-driven marketing and loyalty solutions, today announced
results for the quarter ended September 30,
2016.
SUMMARY
|
Quarter Ended
September 30,
|
(in millions,
except per share amounts)
|
2016
|
2015
|
%
Change
|
Revenue
|
$ 1,886
|
$ 1,589
|
+19%
|
Net income
|
$
208
|
$
130
|
+59%
|
Net income
attributable to Alliance Data
stockholders
per diluted share ("EPS") (a)
|
$
3.55
|
$
2.08
|
+71%
|
Diluted shares
outstanding
|
58.4
|
61.8
|
-5%
|
*******************************
|
|
|
|
Supplemental Non-GAAP
Metrics (b):
|
|
|
|
Adjusted
EBITDA
|
$
566
|
$
497
|
+14%
|
Adjusted
EBITDA, net of funding costs and non-
controlling interest ("adjusted EBITDA, net") (a)
|
$
512
|
$
453
|
+13%
|
Core earnings
attributable to Alliance Data
stockholders per diluted share ("core EPS") (a)
|
$
4.74
|
$
3.95
|
+20%
|
(a)
|
2015 profitability
measures shown above are net of amounts attributable to the
minority interest in Netherlands-based BrandLoyalty, referred to as
'non-controlling interest'.
|
(b)
|
See "Financial
Measures" below for a discussion of non-GAAP financial
measures.
|
CONSOLIDATED RESULTS
Revenue increased 19 percent to $1.9
billion while adjusted EBITDA, net increased 13 percent to
$512 million for the third quarter of
2016. Net income increased 59 percent to $208 million, while EPS increased 71 percent to
$3.55 compared to the third quarter
of 2015, which included $0.65 in
regulatory settlement charges. Core EPS increased 20 percent to
$4.74 for the third quarter of 2016,
beating guidance of $4.42.
Ed Heffernan, president and chief
executive officer of Alliance Data, commented, "It was the largest
quarter in our history with $1.9
billion in revenue and $4.74
in core EPS. The over-performance to guidance was significant and
was driven by both underlying strength in the business, which we
have passed through to annual guidance, as well as timing, which
will reverse in the fourth quarter.
"Looking at the individual segments, LoyaltyOne's revenue and
adjusted EBITDA increased 28 percent and 14 percent, respectively,
compared to the third quarter of last year. Notably, AIR
MILES® strong results benefitted from higher than
expected redemption rates as collectors got ahead of the
December 31 expiration date, which
was set almost five years ago. We added call center personnel to
accommodate the higher traffic to make sure that this unique event
after 24 years of activity does not negatively impact the strong
brand we have in Canada.
"Epsilon's results were mixed for the third quarter as revenue
was a bit lower than expected, but the operating leverage we had
been looking for was achieved. Revenue was soft in the large
technology platform offering - a function of timing and pricing
pressure - while the drag from agency media & services
lessened. Importantly, adjusted EBITDA turned from year-over-year
declines in the first and second quarters to flat during the third
quarter and we expect positive growth in the fourth quarter of
2016.
"Card Services had a terrific quarter with revenue and adjusted
EBITDA, net up 26 percent and 14 percent, respectively, compared to
the third quarter of last year. There were several positives during
the quarter as gross yields, operating expense leverage and
principal loss rates were all better than expected. As it relates
to principal loss rates, we believe the 20 basis points beat to
third quarter guidance is timing related, essentially seasonality,
which will flip in the fourth quarter keeping us on-track to full
year guidance."
Heffernan continued, "Return of capital to shareholders has
always been a priority for Alliance Data. For years, we preferred
the flexibility of share repurchases, which could be flexed upwards
or downwards based upon market dynamics. Going forward, we believe
a combination of share repurchases and dividends offers a more
balanced approach. Accordingly, our board of directors today
declared a quarterly dividend yielding one percent with a record
date of November 3rd.
SEGMENT REVIEW
LoyaltyOne®: Revenue increased 28
percent to $384 million, while
adjusted EBITDA increased 14 percent to $82
million for the third quarter of 2016. Foreign exchange
translation rates had a nominal impact on revenue and adjusted
EBITDA for the third quarter of 2016.
AIR MILES® revenue increased 43 percent on a constant
currency basis driven by strong redemption growth. AIR MILES reward
miles issued increased 6 percent compared to the third quarter of
2015 due to strength of financial services sponsors. AIR MILES
reward miles redeemed increased 74 percent compared to the third
quarter of 2015, as redemption activity accelerated ahead of the
upcoming year-end expiration date.
BrandLoyalty revenue increased 5 percent on a constant currency
basis. Its North American expansion efforts continue to develop in
the United States with the recent
signing of supermarket chain Lowes Foods.
Epsilon®: Revenue increased 2 percent
to $543 million, while adjusted
EBITDA was flat at $135 million for
the third quarter of 2016. Adjusted EBITDA for the third quarter of
2016 was reduced by approximately $4
million in duplicative payroll costs as the new India office ramps up, and $4 million in severance expense. The duplicative
payroll costs are down from approximately $6
million in the second quarter of 2016 and are expected to
further abate in the fourth quarter.
Digital & technology platforms revenue increased 5 percent
to $405 million, largely driven by
growth in CRM. The backlog for CRM continues to grow as 36 new
clients have already been signed in 2016 with an aggregate annual
contract value of approximately $80
million. Agency media & services revenue dropped 5
percent from the prior year quarter to $138
million, a substantial improvement from revenue declines of
23 percent and 15 percent in the first and second quarters,
respectively, of 2016.
Agency media & services performance has been weak for
several quarters and Epsilon continues to adjust the cost structure
commensurate with lower revenue expectations. Epsilon is also
attempting to redirect digital agency toward mid-size agencies and
direct-to-clients and to pivot digital agency towards data-driven
marketing and insights, thus offering a CRM 'light' solution for
clients.
Card Services: Revenue increased 26 percent to
$966 million and adjusted EBITDA, net
increased 14 percent to $331 million
for the third quarter of 2016.
Gross yields were 26.8 percent for the third quarter of 2016,
down approximately 10 basis points from the prior comparable
period. Operating expenses were flat at $330
million for the third quarter of 2016. Excluding
$65 million in regulatory settlement
charges from the third quarter of 2015, operating expenses
increased 24 percent for the third quarter of 2016. Expressed as a
percentage of average receivables, operating expenses were 9.1
percent for the third quarter of 2016 compared to 9.4 percent for
the third quarter of 2015 excluding the regulatory charges. The
loan loss provision increased 46 percent to $251 million for the third quarter of 2016,
driven by strong growth in average card receivables and higher
principal loss rates. Portfolio funding costs were $54 million for the third quarter of 2016, or 1.5
percent of average credit card receivables, up 20 basis points from
the third quarter of 2015.
Credit sales increased 16 percent to $7.0
billion for the third quarter of 2016, supported by a 3
percent increase in core cardholder spending as tender share gains
of approximately 150 basis points continued. Average credit card
receivables, excluding amounts reclassified as assets held for
sale, increased 23 percent to $14.0
billion compared to the third quarter of 2015, while net
principal loss rates for the third quarter of 2016 were 4.7
percent, up 30 basis points from last year. The increase is
primarily due to account seasoning. The delinquency rate was 5.0
percent at September 30, 2016, up 50
basis points from the same time last year and tracking consistent
with guidance of a 50 basis points increase in principal loss rates
for full year 2016.
Guidance
Guidance for 2016 has been raised a second time to $7.2 billion in revenue, an 11 percent increase,
and $16.90 in core EPS, a 12 percent
increase, both as compared to 2015.
Initial guidance for 2017 is for 10 percent growth in both
revenue and core EPS.
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, such as
constant currency financial measures, adjusted EBITDA, adjusted
EBITDA margin, adjusted EBITDA, net of funding costs and
non-controlling interest, core earnings and core earnings per
diluted share (core EPS). 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 and overall results
of operations. Constant currency excludes the impact of
fluctuations in foreign exchange rates. The Company calculates
constant currency by converting our current period local currency
financial results using the prior period exchange rates. These
metrics are an integral part of the Company's internal reporting to
measure the performance of reportable segments and the overall
effectiveness of senior management. Reconciliations to comparable
GAAP financial measures are available in the accompanying schedules
and on the Company's website. The financial measures presented are
consistent with the Company's historical financial reporting
practices. Core earnings and core earnings per diluted share
represent performance measures and are not intended to represent
liquidity measures. 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.
Conference Call
Alliance Data will host a conference call on Thursday, October 20, 2016 at 8:30 a.m. (Eastern Time) to discuss the Company's
third-quarter 2016 results. The conference call will be available
via the Internet at www.alliancedata.com. There will be several
slides accompanying the webcast. Please go to the website at least
15 minutes prior to the call to register, download and install any
necessary software. The recorded webcast will also be available on
the Company's website.
If you are unable to participate in the conference call, a
replay will be available. To access the replay, please dial (855)
859-2056 or (404) 537-3406 and enter "87014237". The replay will be
available at approximately 11:45 a.m.
(Eastern Time) on Thursday, October
20, 2016.
About Alliance Data
Alliance Data® (NYSE: ADS) is a leading global
provider of data-driven marketing and loyalty solutions serving
large, consumer-based industries. The Company creates and deploys
customized solutions, enhancing the critical customer marketing
experience; the result is measurably changing consumer behavior
while driving business growth and profitability for some of today's
most recognizable brands. Alliance Data helps its clients create
and increase customer loyalty through solutions that engage
millions of customers each day across multiple touch points using
traditional, digital, mobile and emerging technologies. An S&P
500 and Fortune 500 company headquartered in Plano, Texas, Alliance Data consists of three
businesses that together employ more than 16,000 associates at
approximately 100 locations worldwide.
Alliance Data's Card Services business is a leading provider of
marketing-driven branded credit card programs. Epsilon®
is a leading provider of multichannel, data-driven technologies and
marketing services, and also includes Conversant®, a
leader in personalized digital marketing. LoyaltyOne®
owns and operates the AIR MILES® Reward Program,
Canada's premier coalition loyalty
program, and Netherlands-based
BrandLoyalty, a global provider of tailor-made loyalty programs for
grocers.
Follow Alliance Data on Twitter, Facebook, LinkedIn and
YouTube.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. 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 our expected operating results, future economic
conditions including currency exchange rates, future dividend
declarations and the guidance we give with respect to our
anticipated financial performance.
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 in our Annual Report
on Form 10-K for the most recently ended fiscal year, which may be
updated in Item 1A of, or elsewhere in, our Quarterly Reports on
Form 10-Q filed for periods subsequent to such Form 10-K.
Our 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,
whether as a result of new information, subsequent events,
anticipated or unanticipated circumstances or otherwise.
ALLIANCE DATA SYSTEMS
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
2015
|
|
Revenue
|
|
$
|
1,885.6
|
|
|
$
|
1,589.1
|
|
|
$
|
5,310.5
|
|
|
$
|
4,690.9
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
1,086.6
|
|
|
|
941.9
|
|
|
|
3,189.0
|
|
|
|
2,899.5
|
|
|
Provision for loan
loss
|
|
|
251.3
|
|
|
|
171.7
|
|
|
|
651.0
|
|
|
|
461.9
|
|
|
Regulatory
settlement
|
|
|
—
|
|
|
|
64.6
|
|
|
|
—
|
|
|
|
64.6
|
|
|
Depreciation and
amortization
|
|
|
126.7
|
|
|
|
123.4
|
|
|
|
384.7
|
|
|
|
367.1
|
|
|
Total operating
expenses
|
|
|
1,464.6
|
|
|
|
1,301.6
|
|
|
|
4,224.7
|
|
|
|
3,793.1
|
|
|
Operating
income
|
|
|
421.0
|
|
|
|
287.5
|
|
|
|
1,085.8
|
|
|
|
897.8
|
|
|
Interest expense,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitization funding
costs
|
|
|
31.1
|
|
|
|
23.1
|
|
|
|
91.5
|
|
|
|
71.5
|
|
|
Interest expense on
deposits
|
|
|
22.6
|
|
|
|
13.7
|
|
|
|
60.0
|
|
|
|
37.1
|
|
|
Interest expense on
long-term and other debt, net
|
|
|
54.6
|
|
|
|
45.3
|
|
|
|
159.3
|
|
|
|
132.2
|
|
|
Total interest
expense, net
|
|
|
108.3
|
|
|
|
82.1
|
|
|
|
310.8
|
|
|
|
240.8
|
|
|
Income before income
tax
|
|
$
|
312.7
|
|
|
$
|
205.4
|
|
|
$
|
775.0
|
|
|
$
|
657.0
|
|
|
Income tax
expense
|
|
|
105.2
|
|
|
|
75.0
|
|
|
|
268.0
|
|
|
|
231.7
|
|
|
Net income
|
|
$
|
207.5
|
|
|
$
|
130.4
|
|
|
$
|
507.0
|
|
|
$
|
425.3
|
|
|
Less: Net income
attributable to non-controlling interest
|
|
|
—
|
|
|
|
2.0
|
|
|
|
1.8
|
|
|
|
3.0
|
|
|
Net income
attributable to common stockholders
|
|
$
|
207.5
|
|
|
$
|
128.4
|
|
|
$
|
505.2
|
|
|
$
|
422.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
|
207.5
|
|
|
$
|
128.4
|
|
|
$
|
505.2
|
|
|
$
|
422.3
|
|
|
Less: Accretion of
redeemable non-controlling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
83.5
|
|
|
|
15.2
|
|
|
Net income
attributable to common stockholders after accretion of redeemable
non-controlling interest
|
|
$
|
207.5
|
|
|
$
|
128.4
|
|
|
$
|
421.7
|
|
|
$
|
407.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic
|
|
|
58.3
|
|
|
|
61.4
|
|
|
|
59.0
|
|
|
|
62.1
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
58.4
|
|
|
|
61.8
|
|
|
|
59.2
|
|
|
|
62.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic – Net income
attributable to common stockholders
|
|
$
|
3.56
|
|
|
$
|
2.09
|
|
|
$
|
7.15
|
|
|
$
|
6.55
|
|
|
Diluted – Net income
attributable to common stockholders
|
|
$
|
3.55
|
|
|
$
|
2.08
|
|
|
$
|
7.12
|
|
|
$
|
6.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
(1)
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,500.5
|
|
$
|
1,168.0
|
|
Credit card and loan
receivables:
|
|
|
|
|
|
|
|
Credit card and loan
receivables
|
|
|
14,615.8
|
|
|
13,799.5
|
|
Allowance for loan
loss
|
|
|
(874.4)
|
|
|
(741.6)
|
|
Credit card and loan
receivables, net
|
|
|
13,741.4
|
|
|
13,057.9
|
|
Credit card and loan
receivables held for sale
|
|
|
525.1
|
|
|
95.5
|
|
Redemption settlement
assets, restricted
|
|
|
428.7
|
|
|
456.6
|
|
Intangible assets,
net
|
|
|
1,077.0
|
|
|
1,203.7
|
|
Goodwill
|
|
|
3,837.8
|
|
|
3,814.1
|
|
Other
assets
|
|
|
2,529.3
|
|
|
2,554.1
|
|
Total
assets
|
|
$
|
23,639.8
|
|
$
|
22,349.9
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
$
|
775.9
|
|
$
|
844.9
|
|
Deposits
|
|
|
7,614.0
|
|
|
5,605.9
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
5,899.3
|
|
|
6,482.7
|
|
Long-term and other
debt
|
|
|
5,826.0
|
|
|
5,017.4
|
|
Other
liabilities
|
|
|
1,740.8
|
|
|
2,221.6
|
|
Total
liabilities
|
|
|
21,856.0
|
|
|
20,172.5
|
|
Redeemable
non-controlling interest
|
|
|
—
|
|
|
167.4
|
|
Stockholders'
equity
|
|
|
1,783.8
|
|
|
2,010.0
|
|
Total liabilities and
equity
|
|
$
|
23,639.8
|
|
$
|
22,349.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted to reflect
the adoption of Accounting Standards Update ("ASU") 2015-03,
"Simplifying the Presentation of Debt Issuance Costs."
|
ALLIANCE DATA SYSTEMS
CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
|
|
|
|
Nine Months
Ended
September
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
Net income
|
|
$
|
507.0
|
|
|
$
|
425.3
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
Depreciation and
amortization
|
|
|
384.7
|
|
|
|
367.1
|
|
Deferred income
taxes
|
|
|
(57.0)
|
|
|
|
(62.8)
|
|
Provision for loan
loss
|
|
|
651.0
|
|
|
|
461.9
|
|
Non-cash stock
compensation
|
|
|
59.5
|
|
|
|
73.3
|
|
Amortization of
deferred financing costs
|
|
|
25.3
|
|
|
|
23.5
|
|
Change in operating
assets and liabilities
|
|
|
(344.7)
|
|
|
|
(216.8)
|
|
Originations of loan
receivables held for sale
|
|
|
(5,182.7)
|
|
|
|
(4,569.8)
|
|
Sales of loan
receivables held for sale
|
|
|
5,186.6
|
|
|
|
4,556.3
|
|
Other
|
|
|
106.7
|
|
|
|
(26.8)
|
|
Net cash provided by
operating activities
|
|
|
1,336.4
|
|
|
|
1,031.2
|
|
|
|
Cash Flows from
Investing Activities:
|
|
Change in redemption
settlement assets
|
|
|
55.4
|
|
|
|
(16.4)
|
|
Change in restricted
cash
|
|
|
(126.8)
|
|
|
|
(0.4)
|
|
Change in credit card
and loan receivables
|
|
|
(1,048.8)
|
|
|
|
(913.8)
|
|
Purchase of credit
card portfolios
|
|
|
(910.8)
|
|
|
|
—
|
|
Sale of credit card
portfolios
|
|
|
5.9
|
|
|
|
26.9
|
|
Capital
expenditures
|
|
|
(158.3)
|
|
|
|
(140.1)
|
|
Payment for acquired
businesses, net of cash acquired
|
|
|
—
|
|
|
|
(45.4)
|
|
Other
|
|
|
24.4
|
|
|
|
(13.8)
|
|
Net cash used in
investing activities
|
|
|
(2,159.0)
|
|
|
|
(1,103.0)
|
|
|
|
Cash Flows from
Financing Activities:
|
|
Borrowings under debt
agreements
|
|
|
3,086.5
|
|
|
|
2,426.4
|
|
Repayments of
borrowings
|
|
|
(2,305.0)
|
|
|
|
(1,528.9)
|
|
Issuances of
deposits
|
|
|
3,727.5
|
|
|
|
2,191.9
|
|
Repayments of
deposits
|
|
|
(1,714.4)
|
|
|
|
(1,743.0)
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
2,567.5
|
|
|
|
2,570.0
|
|
Repayments/maturities
of non-recourse borrowings of consolidated securitization
entities
|
|
|
(3,150.0)
|
|
|
|
(2,788.8)
|
|
Payment of
acquisition-related contingent consideration
|
|
|
—
|
|
|
|
(205.9)
|
|
Acquisition of
non-controlling interest
|
|
|
(360.7)
|
|
|
|
(87.4)
|
|
Purchase of treasury
shares
|
|
|
(692.8)
|
|
|
|
(856.9)
|
|
Other
|
|
|
(8.0)
|
|
|
|
15.4
|
|
Net cash provided by
(used in) financing activities
|
|
|
1,150.6
|
|
|
|
(7.2)
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
4.5
|
|
|
|
(20.9)
|
|
Change in cash and
cash equivalents
|
|
|
332.5
|
|
|
|
(99.9)
|
|
Cash and cash
equivalents at beginning of period
|
|
|
1,168.0
|
|
|
|
1,077.2
|
|
Cash and cash
equivalents at end of period
|
|
$
|
1,500.5
|
|
|
$
|
977.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
SUMMARY FINANCIAL HIGHLIGHTS
(In millions)
(Unaudited)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Change
|
|
|
2016
|
|
2015
|
|
Change
|
|
|
Segment
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
383.8
|
|
|
$
|
299.1
|
|
|
28
|
%
|
|
$
|
1,090.7
|
|
$
|
988.8
|
|
10
|
%
|
|
Epsilon
|
|
|
543.2
|
|
|
|
532.4
|
|
|
2
|
|
|
|
1,555.3
|
|
|
1,532.5
|
|
1
|
|
|
Card
Services
|
|
|
965.8
|
|
|
|
764.0
|
|
|
26
|
|
|
|
2,687.1
|
|
|
2,189.1
|
|
23
|
|
|
Corporate/Other
|
|
|
0.1
|
|
|
|
0.2
|
|
|
nm
|
|
|
|
0.2
|
|
|
0.3
|
|
nm
|
|
|
Intersegment
Eliminations
|
|
|
(7.3)
|
|
|
|
(6.6)
|
|
|
nm
|
|
|
|
(22.8)
|
|
|
(19.8)
|
|
nm
|
|
|
Total
|
|
$
|
1,885.6
|
|
|
$
|
1,589.1
|
|
|
19
|
%
|
|
$
|
5,310.5
|
|
$
|
4,690.9
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
82.3
|
|
|
$
|
64.5
|
|
|
28
|
%
|
|
$
|
235.3
|
|
$
|
197.2
|
|
19
|
%
|
|
Epsilon
|
|
|
134.8
|
|
|
|
135.0
|
|
|
—
|
|
|
|
318.2
|
|
|
351.2
|
|
(9)
|
|
|
Card
Services
|
|
|
330.9
|
|
|
|
289.2
|
|
|
14
|
|
|
|
914.9
|
|
|
822.4
|
|
11
|
|
|
Corporate/Other
|
|
|
(36.0)
|
|
|
|
(35.7)
|
|
|
1
|
|
|
|
(95.4)
|
|
|
(95.0)
|
|
—
|
|
|
Total
|
|
$
|
512.0
|
|
|
$
|
453.0
|
|
|
13
|
%
|
|
$
|
1,373.0
|
|
$
|
1,275.8
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit card statements
generated
|
|
|
69.0
|
|
|
|
60.0
|
|
|
15
|
%
|
|
|
204.2
|
|
|
177.9
|
|
15
|
%
|
|
Credit
sales
|
|
$
|
6,985.6
|
|
|
$
|
6,000.4
|
|
|
16
|
%
|
|
$
|
20,262.6
|
|
$
|
16,968.8
|
|
19
|
%
|
|
Average
receivables
|
|
$
|
13,995.1
|
|
|
$
|
11,369.4
|
|
|
23
|
%
|
|
$
|
13,679.0
|
|
$
|
10,971.0
|
|
25
|
%
|
|
AIR MILES reward miles
issued
|
|
|
1,431.5
|
|
|
|
1,355.7
|
|
|
6
|
%
|
|
|
4,150.2
|
|
|
4,066.8
|
|
2
|
%
|
|
AIR MILES reward miles
redeemed
|
|
|
1,851.2
|
|
|
|
1,061.3
|
|
|
74
|
%
|
|
|
4,367.3
|
|
|
3,416.1
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nm-not
meaningful
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
RECONCILIATION OF NON-GAAP INFORMATION
(In millions, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Adjusted EBITDA
and Adjusted EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
207.5
|
|
|
$
|
130.4
|
|
|
$
|
507.0
|
|
|
$
|
425.3
|
|
|
Income tax
expense
|
|
|
105.2
|
|
|
|
75.0
|
|
|
|
268.0
|
|
|
|
231.7
|
|
|
Total interest
expense, net
|
|
|
108.3
|
|
|
|
82.1
|
|
|
|
310.8
|
|
|
|
240.8
|
|
|
Depreciation and other
amortization
|
|
|
42.6
|
|
|
|
36.5
|
|
|
|
123.5
|
|
|
|
105.0
|
|
|
Amortization of
purchased intangibles
|
|
|
84.1
|
|
|
|
86.9
|
|
|
|
261.2
|
|
|
|
262.1
|
|
|
Stock compensation
expense
|
|
|
18.0
|
|
|
|
21.8
|
|
|
|
59.5
|
|
|
|
73.3
|
|
|
Regulatory
settlement
|
|
|
—
|
|
|
|
64.6
|
|
|
|
—
|
|
|
|
64.6
|
|
|
Adjusted
EBITDA
|
|
$
|
565.7
|
|
|
$
|
497.3
|
|
|
$
|
1,530.0
|
|
|
$
|
1,402.8
|
|
|
Less: Funding costs
(1)
|
|
|
53.7
|
|
|
|
36.8
|
|
|
|
151.5
|
|
|
|
108.6
|
|
|
Less: Adjusted EBITDA
attributable to non-controlling interest
|
|
|
—
|
|
|
|
7.5
|
|
|
|
5.5
|
|
|
|
18.4
|
|
|
Adjusted EBITDA, net
of funding costs and non-controlling interest
|
|
$
|
512.0
|
|
|
$
|
453.0
|
|
|
$
|
1,373.0
|
|
|
$
|
1,275.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
207.5
|
|
|
$
|
130.4
|
|
|
$
|
507.0
|
|
|
$
|
425.3
|
|
|
Add back: non-cash/
non-operating items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
|
18.0
|
|
|
|
21.8
|
|
|
|
59.5
|
|
|
|
73.3
|
|
|
Amortization of
purchased intangibles
|
|
|
84.1
|
|
|
|
86.9
|
|
|
|
261.2
|
|
|
|
262.1
|
|
|
Regulatory
settlement
|
|
|
—
|
|
|
|
64.6
|
|
|
|
—
|
|
|
|
64.6
|
|
|
Non-cash interest
expense (2)
|
|
|
6.1
|
|
|
|
6.1
|
|
|
|
18.8
|
|
|
|
17.9
|
|
|
Income tax effect
(3)
|
|
|
(38.5)
|
|
|
|
(60.2)
|
|
|
|
(116.9)
|
|
|
|
(147.0)
|
|
|
Core
earnings
|
|
|
277.2
|
|
|
|
249.6
|
|
|
|
729.6
|
|
|
|
696.2
|
|
|
Less: Core earnings
attributable to non-controlling interest
|
|
|
—
|
|
|
|
5.2
|
|
|
|
4.0
|
|
|
|
12.7
|
|
|
Core earnings
attributable to common stockholders
|
|
$
|
277.2
|
|
|
$
|
244.4
|
|
|
$
|
725.6
|
|
|
$
|
683.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
58.4
|
|
|
|
61.8
|
|
|
|
59.2
|
|
|
|
62.6
|
|
|
Core earnings
attributable to common stockholders per share - diluted
|
|
$
|
4.74
|
|
|
$
|
3.95
|
|
|
$
|
12.26
|
|
|
$
|
10.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents interest
expense on deposits and securitization funding costs.
|
(2)
|
Represents
amortization of debt issuance costs and mark-to-market gains on
interest rate derivatives.
|
(3)
|
Represents the tax
effect for the related non-GAAP measure adjustments using the
expected effective tax rate.
|
|
|
Three Months Ended
September 30, 2016
|
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
57.7
|
|
|
$
|
48.2
|
|
|
$
|
358.1
|
|
|
$
|
(43.0)
|
|
|
$
|
421.0
|
|
Depreciation and
amortization
|
|
|
22.1
|
|
|
|
79.5
|
|
|
|
23.0
|
|
|
|
2.1
|
|
|
|
126.7
|
|
Stock compensation
expense
|
|
|
2.5
|
|
|
|
7.1
|
|
|
|
3.5
|
|
|
|
4.9
|
|
|
|
18.0
|
|
Adjusted
EBITDA
|
|
|
82.3
|
|
|
|
134.8
|
|
|
|
384.6
|
|
|
|
(36.0)
|
|
|
|
565.7
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
53.7
|
|
|
|
—
|
|
|
|
53.7
|
|
Less: Adjusted EBITDA
attributable to non‑controlling interest
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Adjusted EBITDA,
net
|
|
$
|
82.3
|
|
|
$
|
134.8
|
|
|
$
|
330.9
|
|
|
$
|
(36.0)
|
|
|
$
|
512.0
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2015
|
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
48.6
|
|
|
$
|
42.6
|
|
|
$
|
239.5
|
|
|
$
|
(43.2)
|
|
|
$
|
287.5
|
|
Depreciation and
amortization
|
|
|
21.1
|
|
|
|
81.7
|
|
|
|
18.1
|
|
|
|
2.5
|
|
|
|
123.4
|
|
Stock compensation
expense
|
|
|
2.3
|
|
|
|
10.7
|
|
|
|
3.8
|
|
|
|
5.0
|
|
|
|
21.8
|
|
Regulatory
settlement
|
|
|
—
|
|
|
|
—
|
|
|
|
64.6
|
|
|
|
—
|
|
|
|
64.6
|
|
Adjusted
EBITDA
|
|
|
72.0
|
|
|
|
135.0
|
|
|
|
326.0
|
|
|
|
(35.7)
|
|
|
|
497.3
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
36.8
|
|
|
|
—
|
|
|
|
36.8
|
|
Less: Adjusted EBITDA
attributable to non‑controlling interest
|
|
|
7.5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.5
|
|
Adjusted EBITDA,
net
|
|
$
|
64.5
|
|
|
$
|
135.0
|
|
|
$
|
289.2
|
|
|
$
|
(35.7)
|
|
|
$
|
453.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2016
|
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
167.6
|
|
|
$
|
46.5
|
|
|
$
|
990.1
|
|
|
$
|
(118.4)
|
|
|
$
|
1,085.8
|
|
Depreciation and
amortization
|
|
|
65.5
|
|
|
|
246.6
|
|
|
|
65.4
|
|
|
|
7.2
|
|
|
|
384.7
|
|
Stock compensation
expense
|
|
|
7.7
|
|
|
|
25.1
|
|
|
|
10.9
|
|
|
|
15.8
|
|
|
|
59.5
|
|
Adjusted
EBITDA
|
|
|
240.8
|
|
|
|
318.2
|
|
|
|
1,066.4
|
|
|
|
(95.4)
|
|
|
|
1,530.0
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
151.5
|
|
|
|
—
|
|
|
|
151.5
|
|
Less: Adjusted EBITDA
attributable to non‑controlling interest
|
|
|
5.5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5.5
|
|
Adjusted EBITDA,
net
|
|
$
|
235.3
|
|
|
$
|
318.2
|
|
|
$
|
914.9
|
|
|
$
|
(95.4)
|
|
|
$
|
1,373.0
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2015
|
|
|
|
LoyaltyOne
|
|
|
Epsilon
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
145.9
|
|
|
$
|
69.5
|
|
|
$
|
801.0
|
|
|
$
|
(118.6)
|
|
|
$
|
897.8
|
|
Depreciation and
amortization
|
|
|
61.6
|
|
|
|
244.5
|
|
|
|
54.1
|
|
|
|
6.9
|
|
|
|
367.1
|
|
Stock compensation
expense
|
|
|
8.1
|
|
|
|
37.2
|
|
|
|
11.3
|
|
|
|
16.7
|
|
|
|
73.3
|
|
Regulatory
settlement
|
|
|
—
|
|
|
|
—
|
|
|
|
64.6
|
|
|
|
—
|
|
|
|
64.6
|
|
Adjusted
EBITDA
|
|
|
215.6
|
|
|
|
351.2
|
|
|
|
931.0
|
|
|
|
(95.0)
|
|
|
|
1,402.8
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
—
|
|
|
|
108.6
|
|
|
|
—
|
|
|
|
108.6
|
|
Less: Adjusted EBITDA
attributable to non‑controlling interest
|
|
|
18.4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18.4
|
|
Adjusted EBITDA,
net
|
|
$
|
197.2
|
|
|
$
|
351.2
|
|
|
$
|
822.4
|
|
|
$
|
(95.0)
|
|
|
$
|
1,275.8
|
|
Contacts:
|
Investors/Analysts
|
|
Tiffany
Louder
|
|
Alliance
Data
|
|
214-494-3048
|
|
Tiffany.Louder@alliancedata.com
|
|
|
|
Media
|
|
Shelley
Whiddon
|
|
Alliance
Data
|
|
214-494-3811
|
|
Shelley.Whiddon@alliancedata.com
|
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SOURCE Alliance Data