COLUMBUS, Ohio, July 18, 2019 /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 June 30,
2019.
SUMMARY
|
Quarter Ended June
30,
|
(in millions,
except per share amounts)
|
2019
|
2018
|
%
Change
|
Revenue
|
$1,348
|
$1,397
|
-3%
|
Income from
continuing operations
|
$142
|
$224
|
-36%
|
Net income
|
$139
|
$218
|
-36%
|
Income from
continuing operations per diluted share ("EPS")
|
$2.71
|
$4.04
|
-33%
|
Net income per
diluted share
|
$2.64
|
$3.93
|
-33%
|
Diluted shares
outstanding
|
52.6
|
55.4
|
|
*******************************
|
|
|
|
Supplemental Non-GAAP
Metrics (a):
|
|
|
|
Adjusted
EBITDA
|
$414
|
$457
|
-9%
|
Adjusted
EBITDA, net of funding costs
("adjusted EBITDA, net")
|
$310
|
$365
|
-15%
|
Core earnings
per diluted share ("core EPS")
|
$3.83
|
$4.37
|
-12%
|
|
(a) See
"Financial Measures" for a discussion of non-GAAP financial
measures.
|
Melisa Miller, president and
chief executive officer of Alliance Data, commented, "We continued
to execute on our business transformation in the second quarter and
made progress on delivering our strategic plan to lead the market
in the convergence of payments, data and marketing. Our second
quarter results were mostly in line with expectations, although
core EPS was negatively impacted by the timing of credit card
portfolio acquisitions. We acquired several client portfolios
aggregating over $900 million in
June, which were expected to occur later in the year. While this
pull-forward supports our receivables growth projections for the
year, the impact of the provision build post-acquisition reduced
second quarter core EPS.
"In keeping with our business transformation plans, I am pleased
to say that we successfully completed the sale of Epsilon to
Publicis Groupe on July
1st. As previously disclosed, we expect to use
the net proceeds to retire $2.4
billion of corporate debt and repurchase up to $1.1 billion of our shares, per our recently
announced Board-authorized plan. Towards that end, we anticipate
launching in the next few days a "modified dutch auction" tender
offer to acquire between $700 to
$750 million of our common stock. The
Epsilon divestiture underscores our stated commitments to move
toward a more simplified and focused business model with the goal
of returning to our more traditional growth profile."
Miller continued, "In addition to my new role, Tim King, former CFO of our Card Services
business, has succeeded Charles Horn
as Alliance Data's CFO. I believe Tim will do a tremendous job
leading the financial stewardship of the company and engaging with
the investor community. I want to thank Charles for his ongoing
support through his new role as Vice Chairman. During our
extended transition, he will be focused on several key
initiatives related to our business transition. I am deeply honored
and excited to be in this new leadership position, and with the
support of our Board, the commitment of our strong management team,
and the dedication of our 10,000+ associates, Alliance Data is well
positioned for our growth comeback.
"In closing, as we enter into the final stages of our business
strategy transformation, I am confident that we are taking the
right steps, and making the necessary important decisions and
changes to drive long-term sustainable growth. I am eager for the
challenge of leading this great organization's evolution where we
will build upon our strongest, most successful assets, and return
to driving growth for the business and our stockholders."
CONSOLIDATED RESULTS
Revenue decreased 3 percent to $1.35
billion, while EPS decreased 33 percent to $2.71 for the second quarter of 2019. The higher
effective tax rate for EPS, 27 percent, compared to 15 percent for
the second quarter of 2018, reduced EPS by approximately
$0.43 for the second quarter. Core
EPS decreased 12 percent to $3.83 for
the second quarter of 2019, while adjusted EBITDA, net decreased 15
percent to $310 million for the
second quarter of 2019.
SEGMENT RESULTS
|
Quarter Ended June
30,
|
(in
millions)
|
2019
|
2018
|
%
Change
|
Revenue:
|
|
|
|
LoyaltyOne
|
$251
|
$249
|
+1%
|
Card
Services
|
$1,097
|
$1,148
|
-4%
|
Total revenue
|
$1,348
|
$1,397
|
-3%
|
|
|
|
|
Adjusted EBITDA,
net:
|
|
|
|
LoyaltyOne
|
$51
|
$69
|
-27%
|
Card
Services
|
$287
|
$336
|
-14%
|
Corporate/other
|
($28)
|
($40)
|
|
Total adjusted EBITDA,
net
|
$310
|
$365
|
-15%
|
|
|
|
|
LoyaltyOne®: Revenue increased 1
percent to $251 million, while
adjusted EBITDA decreased 27 percent to $51
million for the quarter ended June
30, 2019. Revenue increased 10 percent compared with the
prior year when adjusted for unfavorable foreign exchange rates and
additional product redemptions now recorded as net revenue.
Adjusted EBITDA, net decreased 23 percent on a constant currency
basis due to higher redemption costs at AIR MILES®,
which is largely a function of product mix redeemed. AIR MILES
reward miles issued decreased 2 percent for the second quarter of
2019, primarily due to less promotional activity in the grocery
vertical.
Card Services: Revenue decreased 4 percent to
$1.10 billion and adjusted EBITDA,
net decreased 14 percent to $287
million for the second quarter of 2019. Gross yields
decreased 90 basis points to 23.9 percent on essentially flat
normalized average card receivables growth (card receivables plus
held-for-sale receivables). The loan loss provision decreased 17
percent to $257 million as a result
of a 7 percent decrease in reservable card receivables and a 30
basis point improvement in principal loss rates. Operating expenses
increased $35 million to $472 million, primarily due to an approximate
$26 million increase in
mark-to-market charges on held-for-sale receivables. Excluding the
mark-to-market charges, operating expenses expressed as a
percentage of normalized average card receivables increased
approximately 25 basis points to 9.4 percent. During the quarter,
over $900 million in credit card
receivables were acquired from third parties, while approximately
$510 million in credit card
receivables were reclassified as held-for-sale.
2019 Guidance
Guidance for revenue is $5.8
billion, up 4 percent over 2018, and core EPS of
$19.50 to $19.75, flat to up 1 percent compared to
$19.49 for 2018. These amounts
include the partial-year benefit of anticipated share repurchases
and cost reductions.
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
strategic initiatives, the expected use of proceeds from the
Epsilon divestiture, 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. Further
risks and uncertainties include, but are not limited to, the impact
of strategic initiatives on us or our business if any transactions
are undertaken, and whether the anticipated benefits of such
transactions can be realized as well as whether or if any share
repurchases, including tender offers, are undertaken.
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.
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, core earnings
and core earnings per diluted share (core EPS). 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. The Company uses adjusted EBITDA and adjusted
EBITDA, net 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, including certain intangible assets that were
recognized in business combinations, and the non-cash effect of
stock compensation expense. Similarly, core earnings and core EPS
eliminate non-cash or non-operating items, including, but not
limited to, stock compensation expense, amortization of purchased
intangibles, restructuring or strategic transaction costs,
amortization of debt issuance and hedging costs. 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.
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 News and Investors sections on
the Company's website (www.alliancedata.com). No reconciliation is
provided with respect to forward-looking annual guidance for 2019
core EPS as the Company cannot reliably predict all necessary
components or their impact to reconcile core EPS to GAAP EPS
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. Core earnings
and core EPS 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, July 18, 2019 at 8:30 a.m. (Eastern Time) to discuss the Company's
second-quarter 2019 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 (800)
585-8367 or (416) 621-4642 and enter "6097910". The replay will be
available at approximately 11:45 a.m.
(Eastern Time) on Thursday, July 18, 2019.
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, FORTUNE 500 and FORTUNE 100 Best Companies to Work For company
headquartered in Columbus, Ohio,
Alliance Data consists of businesses that together employ over
10,000 associates at more than 50 locations worldwide.
Alliance Data's card services business is a provider of
market-leading private label, co-brand, and business credit card
programs. LoyaltyOne® owns and operates the AIR MILES®
Reward Program, Canada's most
recognized loyalty program, and Netherlands-based BrandLoyalty, a global
provider of tailor-made loyalty programs for grocers. In
July 2019 Alliance Data completed the
sale of its Epsilon® business to Publicis Groupe.
Follow Alliance Data on Twitter, Facebook, LinkedIn, Instagram
and YouTube.
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,348.5
|
|
|
$
|
1,397.2
|
|
|
$
|
2,682.7
|
|
|
$
|
2,778.9
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
712.1
|
|
|
|
640.0
|
|
|
|
1,390.8
|
|
|
|
1,263.0
|
|
|
Provision for loan
loss
|
|
|
257.3
|
|
|
|
311.9
|
|
|
|
509.5
|
|
|
|
649.6
|
|
|
Depreciation and
amortization
|
|
|
41.8
|
|
|
|
48.6
|
|
|
|
88.2
|
|
|
|
97.4
|
|
|
Total operating
expenses
|
|
|
1,011.2
|
|
|
|
1,000.5
|
|
|
|
1,988.5
|
|
|
|
2,010.0
|
|
|
Operating
income
|
|
|
337.3
|
|
|
|
396.7
|
|
|
|
694.2
|
|
|
|
768.9
|
|
|
Interest expense,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitization funding
costs
|
|
|
51.6
|
|
|
|
55.2
|
|
|
|
108.8
|
|
|
|
107.3
|
|
|
Interest expense on
deposits
|
|
|
53.2
|
|
|
|
36.8
|
|
|
|
102.0
|
|
|
|
72.3
|
|
|
Interest expense on
long-term and other debt, net
|
|
|
38.7
|
|
|
|
41.6
|
|
|
|
76.6
|
|
|
|
81.1
|
|
|
Total interest
expense, net
|
|
|
143.5
|
|
|
|
133.6
|
|
|
|
287.4
|
|
|
|
260.7
|
|
|
Income from
continuing operations before income taxes
|
|
$
|
193.8
|
|
|
$
|
263.1
|
|
|
$
|
406.8
|
|
|
$
|
508.2
|
|
|
Income tax
expense
|
|
|
51.4
|
|
|
|
39.3
|
|
|
|
86.1
|
|
|
|
104.5
|
|
|
Income from
continuing operations
|
|
|
142.4
|
|
|
|
223.8
|
|
|
|
320.7
|
|
|
|
403.7
|
|
|
Loss from
discontinued operations, net of taxes (1)
|
|
|
(3.4)
|
|
|
|
(6.0)
|
|
|
|
(32.6)
|
|
|
|
(21.9)
|
|
|
Net income
|
|
$
|
139.0
|
|
|
$
|
217.8
|
|
|
$
|
288.1
|
|
|
$
|
381.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic
|
|
|
51.3
|
|
|
|
55.2
|
|
|
|
52.1
|
|
|
|
55.3
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
52.6
|
|
|
|
55.4
|
|
|
|
52.9
|
|
|
|
55.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic – Income from
continuing operations
|
|
$
|
2.76
|
|
|
$
|
4.05
|
|
|
$
|
6.13
|
|
|
$
|
7.30
|
|
|
Basic – Loss from
discontinued operations
|
|
|
(0.07)
|
|
|
|
(0.11)
|
|
|
|
(0.62)
|
|
|
|
(0.40)
|
|
|
Basic – Net
income
|
|
$
|
2.69
|
|
|
$
|
3.94
|
|
|
$
|
5.51
|
|
|
$
|
6.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted – Income from
continuing operations
|
|
$
|
2.71
|
|
|
$
|
4.04
|
|
|
$
|
6.07
|
|
|
$
|
7.27
|
|
|
Diluted – Loss from
discontinued operations
|
|
|
(0.07)
|
|
|
|
(0.11)
|
|
|
|
(0.62)
|
|
|
|
(0.40)
|
|
|
Diluted – Net
income
|
|
$
|
2.64
|
|
|
$
|
3.93
|
|
|
$
|
5.45
|
|
|
$
|
6.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes the
allocation of interest expense associated with the Company's $500.0
million mandatory repayment of its revolving credit facility and
$1.9 billion in senior notes outstanding. On April 30, 2019, the
Company amended its credit agreement, which among other items,
provided that upon consummation of the sale of Epsilon, a mandatory
payment of $500.0 million of the revolving credit facility was
required and all of the Company's $1.9 billion outstanding senior
notes were required to be redeemed.
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,026.8
|
|
$
|
3,817.4
|
|
Credit card and loan
receivables:
|
|
|
|
|
|
|
|
Credit card and loan
receivables
|
|
|
17,614.5
|
|
|
17,855.0
|
|
Allowance for loan
loss
|
|
|
(1,010.9)
|
|
|
(1,038.3)
|
|
Credit card and loan
receivables, net
|
|
|
16,603.6
|
|
|
16,816.7
|
|
Credit card
receivables held for sale
|
|
|
1,834.3
|
|
|
1,951.6
|
|
Redemption settlement
assets, restricted
|
|
|
594.0
|
|
|
558.6
|
|
Right of use assets -
operating
|
|
|
268.4
|
|
|
—
|
|
Intangible assets,
net
|
|
|
195.8
|
|
|
217.4
|
|
Goodwill
|
|
|
960.3
|
|
|
954.8
|
|
Other
assets
|
|
|
1,992.2
|
|
|
1,913.8
|
|
Assets of
discontinued operations
|
|
|
4,264.3
|
|
|
4,157.4
|
|
Total
assets
|
|
$
|
30,739.7
|
|
$
|
30,387.7
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
$
|
902.7
|
|
$
|
875.3
|
|
Deposits
|
|
|
12,534.7
|
|
|
11,793.7
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
6,727.0
|
|
|
7,651.7
|
|
Long-term and other
debt
|
|
|
5,825.6
|
|
|
5,725.4
|
|
Operating lease
liabilities
|
|
|
318.8
|
|
|
—
|
|
Other
liabilities
|
|
|
1,687.8
|
|
|
1,749.1
|
|
Liabilities of
discontinued operations
|
|
|
351.4
|
|
|
260.4
|
|
Total
liabilities
|
|
|
28,348.0
|
|
|
28,055.6
|
|
Stockholders'
equity
|
|
|
2,391.7
|
|
|
2,332.1
|
|
Total liabilities and
stockholders' equity
|
|
$
|
30,739.7
|
|
$
|
30,387.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
|
Six Months
Ended
June
30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
Net income
|
|
$
|
288.1
|
|
|
$
|
381.8
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
Depreciation and
amortization
|
|
|
161.5
|
|
|
|
243.7
|
|
Deferred income
taxes
|
|
|
(47.6)
|
|
|
|
(82.0)
|
|
Provision for loan
loss
|
|
|
509.5
|
|
|
|
649.6
|
|
Non-cash stock
compensation
|
|
|
51.3
|
|
|
|
46.3
|
|
Amortization of
deferred financing costs
|
|
|
22.1
|
|
|
|
25.5
|
|
Change in operating
assets and liabilities
|
|
|
(38.3)
|
|
|
|
(87.1)
|
|
Originations of loan
receivables held for sale
|
|
|
—
|
|
|
|
(4,743.4)
|
|
Sales of loan
receivables held for sale
|
|
|
—
|
|
|
|
4,791.9
|
|
Other
|
|
|
143.1
|
|
|
|
95.5
|
|
Net cash provided by
operating activities
|
|
|
1,089.7
|
|
|
|
1,321.8
|
|
|
|
Cash Flows from
Investing Activities:
|
|
Change in redemption
settlement assets
|
|
|
(2.0)
|
|
|
|
(39.7)
|
|
Change in credit card
and loan receivables
|
|
|
(20.9)
|
|
|
|
(121.2)
|
|
Purchase of credit
card portfolios
|
|
|
(936.5)
|
|
|
|
—
|
|
Sale of credit card
portfolios
|
|
|
539.3
|
|
|
|
55.6
|
|
Capital
expenditures
|
|
|
(92.2)
|
|
|
|
(98.5)
|
|
Other
|
|
|
(2.0)
|
|
|
|
(32.4)
|
|
Net cash used in
investing activities
|
|
|
(514.3)
|
|
|
|
(236.2)
|
|
|
|
Cash Flows from
Financing Activities:
|
|
Borrowings under debt
agreements
|
|
|
2,077.3
|
|
|
|
2,399.1
|
|
Repayments of
borrowings
|
|
|
(1,974.8)
|
|
|
|
(2,678.5)
|
|
Net increase
(decrease) in deposits
|
|
|
742.8
|
|
|
|
(373.2)
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
2,193.3
|
|
|
|
1,475.0
|
|
Repayments/maturities
of non-recourse borrowings of consolidated securitization
entities
|
|
(3,117.2)
|
|
|
|
(2,510.0)
|
|
Payment of deferred
financing costs
|
|
|
(18.8)
|
|
|
|
(7.8)
|
|
Purchase of treasury
shares
|
|
|
(222.8)
|
|
|
|
(94.5)
|
|
Dividends
paid
|
|
|
(67.0)
|
|
|
|
(63.3)
|
|
Other
|
|
|
(9.4)
|
|
|
|
(15.8)
|
|
Net cash used in
financing activities
|
|
|
(396.6)
|
|
|
|
(1,869.0)
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
8.2
|
|
|
|
(4.1)
|
|
Change in cash, cash
equivalents and restricted cash
|
|
|
187.0
|
|
|
|
(787.5)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
3,967.7
|
|
|
|
4,314.7
|
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
|
4,154.7
|
|
|
$
|
3,527.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The cash
flow statement is presented with the combined cash flows from
discontinued operations with cash flows from continuing operations
within each cash flow statement category.
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
SUMMARY FINANCIAL
HIGHLIGHTS
|
(In
millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
|
|
Six Months
Ended June 30,
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
|
Segment
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
251.5
|
|
|
$
|
248.6
|
|
|
1%
|
|
$
|
455.3
|
|
$
|
474.9
|
|
(4)%
|
|
Card
Services
|
|
|
1,096.9
|
|
|
|
1,148.5
|
|
|
(4)
|
|
|
2,227.3
|
|
|
2,303.7
|
|
(3)
|
|
Corporate/Other
|
|
|
0.1
|
|
|
|
0.1
|
|
|
nm*
|
|
|
0.1
|
|
|
0.3
|
|
nm*
|
|
Total
|
|
$
|
1,348.5
|
|
|
$
|
1,397.2
|
|
|
(3)%
|
|
$
|
2,682.7
|
|
$
|
2,778.9
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
51.0
|
|
|
$
|
69.5
|
|
|
(27)%
|
|
$
|
106.1
|
|
$
|
123.4
|
|
(14)%
|
|
Card
Services
|
|
|
287.2
|
|
|
|
335.7
|
|
|
(14)
|
|
|
582.1
|
|
|
654.3
|
|
(11)
|
|
Corporate/Other
|
|
|
(28.6)
|
|
|
|
(39.9)
|
|
|
(28)
|
|
|
(62.0)
|
|
|
(65.4)
|
|
(5)
|
|
Total
|
|
$
|
309.6
|
|
|
$
|
365.3
|
|
|
(15)%
|
|
$
|
626.2
|
|
$
|
712.3
|
|
(12)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
sales
|
|
$
|
7,551
|
|
|
$
|
7,568
|
|
|
—%
|
|
$
|
13,867
|
|
$
|
14,373
|
|
(4)%
|
|
Credit sales -
active
|
|
$
|
6,675
|
|
|
$
|
6,157
|
|
|
8%
|
|
$
|
12,220
|
|
$
|
11,460
|
|
7%
|
|
Average
receivables
|
|
$
|
16,798
|
|
|
$
|
17,570
|
|
|
(4)%
|
|
$
|
16,824
|
|
$
|
17,646
|
|
(5)%
|
|
Gross yield
|
|
|
23.9%
|
|
|
|
24.9%
|
|
|
(0.9)%
|
|
|
24.0%
|
|
|
24.8%
|
|
(0.8)%
|
|
Net principal loss
rate
|
|
|
6.1%
|
|
|
|
6.4%
|
|
|
(0.3)%
|
|
|
6.3%
|
|
|
6.6%
|
|
(0.3)%
|
|
Delinquency
rate
|
|
|
5.2%
|
|
|
|
5.5%
|
|
|
(0.3)%
|
|
|
5.2%
|
|
|
5.5%
|
|
(0.3)%
|
|
AIR MILES reward miles
issued
|
|
|
1,423
|
|
|
|
1,445
|
|
|
(2)%
|
|
|
2,681
|
|
|
2,671
|
|
—%
|
|
AIR MILES reward miles
redeemed
|
|
|
1,050
|
|
|
|
1,068
|
|
|
(2)%
|
|
|
2,139
|
|
|
2,246
|
|
(5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* nm-not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
Adjusted EBITDA
and Adjusted EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
142.4
|
|
|
$
|
223.8
|
|
|
$
|
320.7
|
|
|
$
|
403.7
|
|
|
Income tax
expense
|
|
|
51.4
|
|
|
|
39.3
|
|
|
|
86.1
|
|
|
|
104.5
|
|
|
Total interest
expense, net
|
|
|
143.5
|
|
|
|
133.6
|
|
|
|
287.4
|
|
|
|
260.7
|
|
|
Depreciation and other
amortization
|
|
|
19.3
|
|
|
|
19.8
|
|
|
|
39.9
|
|
|
|
39.1
|
|
|
Amortization of
purchased intangibles
|
|
|
22.5
|
|
|
|
28.8
|
|
|
|
48.3
|
|
|
|
58.3
|
|
|
Stock compensation
expense
|
|
|
10.2
|
|
|
|
12.0
|
|
|
|
21.6
|
|
|
|
25.6
|
|
|
Strategic transaction
costs (1)
|
|
|
2.7
|
|
|
|
—
|
|
|
|
2.7
|
|
|
|
—
|
|
|
Restructuring charges
(2)
|
|
|
22.4
|
|
|
|
—
|
|
|
|
30.3
|
|
|
|
—
|
|
|
Adjusted
EBITDA
|
|
$
|
414.4
|
|
|
$
|
457.3
|
|
|
$
|
837.0
|
|
|
$
|
891.9
|
|
|
Less: Funding costs
(3)
|
|
|
104.8
|
|
|
|
92.0
|
|
|
|
210.8
|
|
|
|
179.6
|
|
|
Adjusted EBITDA, net
of funding costs
|
|
$
|
309.6
|
|
|
$
|
365.3
|
|
|
$
|
626.2
|
|
|
$
|
712.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
142.4
|
|
|
$
|
223.8
|
|
|
$
|
320.7
|
|
|
$
|
403.7
|
|
|
Add back: non-cash/
non-operating items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
|
10.2
|
|
|
|
12.0
|
|
|
|
21.6
|
|
|
|
25.6
|
|
|
Amortization of
purchased intangibles
|
|
|
22.5
|
|
|
|
28.8
|
|
|
|
48.3
|
|
|
|
58.3
|
|
|
Non-cash interest
(4)
|
|
|
9.5
|
|
|
|
12.4
|
|
|
|
18.7
|
|
|
|
22.0
|
|
|
Strategic transaction
costs (1)
|
|
|
2.7
|
|
|
|
—
|
|
|
|
2.7
|
|
|
|
—
|
|
|
Restructuring charges
(2)
|
|
|
22.4
|
|
|
|
—
|
|
|
|
30.3
|
|
|
|
—
|
|
|
Income tax effect
(5)
|
|
|
(8.3)
|
|
|
|
(34.9)
|
|
|
|
(39.1)
|
|
|
|
(44.2)
|
|
|
Core
earnings
|
|
$
|
201.4
|
|
|
$
|
242.1
|
|
|
$
|
403.2
|
|
|
$
|
465.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
52.6
|
|
|
|
55.4
|
|
|
|
52.9
|
|
|
|
55.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share – diluted
|
|
$
|
3.83
|
|
|
$
|
4.37
|
|
|
$
|
7.62
|
|
|
$
|
8.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents costs for
professional services associated with strategic
initiatives.
|
(2)
|
Represents costs
associated with the wind-down of Merison, a retail marketing
division within BrandLoyalty, in the first quarter of 2019 and a
reorganization of Corporate, resulting from the sale of
Epsilon.
|
(3)
|
Represents interest
expense on deposits and securitization funding costs.
|
(4)
|
Represents
amortization of debt issuance costs.
|
(5)
|
Represents the tax
effect including the related non-GAAP measure adjustments using the
expected effective annual tax rate.
|
|
|
Three Months Ended
June 30, 2019
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
28.3
|
|
|
$
|
367.6
|
|
|
$
|
(58.6)
|
|
|
$
|
337.3
|
|
Depreciation and
amortization
|
|
|
19.6
|
|
|
|
20.8
|
|
|
|
1.4
|
|
|
|
41.8
|
|
Stock compensation
expense
|
|
|
2.9
|
|
|
|
3.6
|
|
|
|
3.7
|
|
|
|
10.2
|
|
Strategic transaction
costs
|
|
|
0.2
|
|
|
|
—
|
|
|
|
2.5
|
|
|
|
2.7
|
|
Restructuring
charges
|
|
|
—
|
|
|
|
—
|
|
|
|
22.4
|
|
|
|
22.4
|
|
Adjusted
EBITDA
|
|
|
51.0
|
|
|
|
392.0
|
|
|
|
(28.6)
|
|
|
|
414.4
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
104.8
|
|
|
|
—
|
|
|
|
104.8
|
|
Adjusted EBITDA,
net
|
|
$
|
51.0
|
|
|
$
|
287.2
|
|
|
$
|
(28.6)
|
|
|
$
|
309.6
|
|
|
|
|
|
Three Months Ended
June 30, 2018
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
45.6
|
|
|
$
|
399.3
|
|
|
$
|
(48.2)
|
|
|
$
|
396.7
|
|
Depreciation and
amortization
|
|
|
21.5
|
|
|
|
25.3
|
|
|
|
1.8
|
|
|
|
48.6
|
|
Stock compensation
expense
|
|
|
2.4
|
|
|
|
3.1
|
|
|
|
6.5
|
|
|
|
12.0
|
|
Adjusted
EBITDA
|
|
|
69.5
|
|
|
|
427.7
|
|
|
|
(39.9)
|
|
|
|
457.3
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
92.0
|
|
|
|
—
|
|
|
|
92.0
|
|
Adjusted EBITDA,
net
|
|
$
|
69.5
|
|
|
$
|
335.7
|
|
|
$
|
(39.9)
|
|
|
$
|
365.3
|
|
|
|
|
|
Six Months Ended
June 30, 2019
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
52.4
|
|
|
$
|
740.5
|
|
|
$
|
(98.7)
|
|
|
$
|
694.2
|
|
Depreciation and
amortization
|
|
|
39.8
|
|
|
|
45.0
|
|
|
|
3.4
|
|
|
|
88.2
|
|
Stock compensation
expense
|
|
|
5.8
|
|
|
|
7.4
|
|
|
|
8.4
|
|
|
|
21.6
|
|
Strategic transaction
costs
|
|
|
0.2
|
|
|
|
—
|
|
|
|
2.5
|
|
|
|
2.7
|
|
Restructuring
charges
|
|
|
7.9
|
|
|
|
—
|
|
|
|
22.4
|
|
|
|
30.3
|
|
Adjusted
EBITDA
|
|
|
106.1
|
|
|
|
792.9
|
|
|
|
(62.0)
|
|
|
|
837.0
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
210.8
|
|
|
|
—
|
|
|
|
210.8
|
|
Adjusted EBITDA,
net
|
|
$
|
106.1
|
|
|
$
|
582.1
|
|
|
$
|
(62.0)
|
|
|
$
|
626.2
|
|
|
|
|
|
Six Months Ended
June 30, 2018
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
74.0
|
|
|
$
|
776.2
|
|
|
$
|
(81.3)
|
|
|
$
|
768.9
|
|
Depreciation and
amortization
|
|
|
43.5
|
|
|
|
50.1
|
|
|
|
3.8
|
|
|
|
97.4
|
|
Stock compensation
expense
|
|
|
5.9
|
|
|
|
7.6
|
|
|
|
12.1
|
|
|
|
25.6
|
|
Adjusted
EBITDA
|
|
|
123.4
|
|
|
|
833.9
|
|
|
|
(65.4)
|
|
|
|
891.9
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
179.6
|
|
|
|
—
|
|
|
|
179.6
|
|
Adjusted EBITDA,
net
|
|
$
|
123.4
|
|
|
$
|
654.3
|
|
|
$
|
(65.4)
|
|
|
$
|
712.3
|
|
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 Systems Corporation