COLUMBUS, Ohio, Jan. 30, 2020 /PRNewswire/ -- Alliance Data
Systems Corporation (NYSE: ADS), a leading global provider of
data-driven marketing and loyalty solutions, today announced
results for the year ended December 31,
2019.
SUMMARY
|
Quarter Ended
December 31,
|
|
Year Ended
December 31,
|
(in millions,
except per share amounts)
|
2019
|
2018
|
%
Change
|
|
2019
|
2018
|
%
Change
|
Revenue
|
$1,461
|
$1,465
|
0%
|
|
$5,581
|
$5,667
|
-2%
|
Income from
continuing operations
|
$130
|
$253
|
-48%
|
|
$573
|
$946
|
-39%
|
Net income
|
$130
|
$285
|
-54%
|
|
$311
|
$963
|
-68%
|
Income from
continuing operations per diluted
share ("EPS")
|
$2.74
|
$4.67
|
-41%
|
|
$11.24
|
$17.17
|
-35%
|
Net income per
diluted share
|
$2.74
|
$5.25
|
-48%
|
|
$6.10
|
$17.49
|
-65%
|
Diluted shares
outstanding
|
47.6
|
54.2
|
|
|
50.9
|
55.1
|
|
*******************************
|
|
|
|
|
|
|
|
Supplemental Non-GAAP
Metrics (a):
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$392
|
$565
|
-31%
|
|
$1,710
|
$1,995
|
-14%
|
Adjusted
EBITDA, net of funding costs
("adjusted EBITDA, net")
|
$278
|
$458
|
-39%
|
|
$1,271
|
$1,609
|
-21%
|
Core earnings
per diluted share ("core EPS")
|
$4.12
|
$5.76
|
-29%
|
|
$16.77
|
$19.49
|
-14%
|
|
(a) See
"Financial Measures" for a discussion of non-GAAP financial
measures.
|
Charles Horn, vice chairman and
acting chief executive officer of Alliance Data, commented, "2019
was a transitional year for Alliance Data. While our financial
results certainly did not meet original expectations, we made
several strategic changes during the year that should benefit our
future. To list a few:
- Shifted our client base in Card Services toward faster growing
companies and verticals by selling approximately $2.1 billion in non-strategic receivables;
- Simplified our story and returned capital to our shareholders
by divesting Epsilon and Precima (January
2020);
- Streamlined the parent company cost structure eliminating over
$100 million in annual operating
costs;
- Changed the leadership and cost structure at LoyaltyOne, which
contributed to a 21 percent increase in constant currency adjusted
EBITDA for the fourth quarter;
- Extended the debt maturity ladder at the parent company
providing liquidity that can be used to re-invest in the company;
and
- Hired a seasoned industry veteran from Citigroup, Ralph Andretta, to lead the company going
forward.
"During 2020, management and the board of directors will
continue to evaluate strategic opportunities to better position the
company moving forward."
CONSOLIDATED RESULTS
FOURTH-QUARTER CONSOLIDATED RESULTS
Revenue decreased less than 1 percent to $1.46 billion for the fourth quarter of 2019. EPS
decreased 41 percent to $2.74 for the
fourth quarter of 2019, negatively impacted by ($0.65) in restructuring and strategic
transaction costs. Core EPS decreased 29 percent to $4.12 and adjusted EBITDA, net decreased 39
percent to $278 million for the
fourth quarter of 2019. EPS, core EPS and adjusted EBITDA were
negatively impacted by a 59 percent decrease in earnings before
taxes at Card Services.
FULL-YEAR CONSOLIDATED RESULTS
Revenue decreased 2 percent to $5.58
billion for 2019. EPS decreased 35 percent to $11.24 for 2019, negatively impacted by
($3.07) in loss on extinguishment of
debt and restructuring and strategic transaction costs. Core EPS
decreased 14 percent to $16.77 and
adjusted EBITDA, net decreased 21 percent to $1.27 billion for 2019.
FULL-YEAR SEGMENT RESULTS
LoyaltyOne®: Constant currency revenue
increased 1 percent to $1.08 billion
while constant currency adjusted EBITDA was flat at $253 million for 2019. AIR
MILES® reward miles issued increased less
than 1 percent for 2019. Changes to the collector value proposition
during 2019 are expected to stimulate issuance growth in 2020.
BrandLoyalty returned to double-digit adjusted EBITDA growth for
the year as a result of better program mix and cost containment
initiatives undertaken in 2019.
Card Services: Revenue decreased 1 percent to
$4.55 billion due to nominal growth
in normalized receivables coupled with a 50 basis points decline in
gross yields. Adjusted EBITDA, net decreased 25 percent to
$1.12 billion for 2019, primarily a
result of an additional $90 million
negative adjustment to the carrying value of held-for-sale
receivables and a $172 million
increase to the loan loss provision, as principal loss rates
stabilized in 2019 as compared to improving in 2018.
Net principal loss rates were 6.1 percent in 2019, 3 basis
points better than 2018, while delinquency rates increased slightly
to 5.8 percent at December 31, 2019
primarily due to the turn of receivables acquired in the second
quarter of 2019.
2020 Guidance
Revenue of $5.6 billion,
essentially flat with 2019. Core EPS of $20.50, up 22 percent compared with 2019.
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, 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 are completed.
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, loss on
the extinguishment of debt, 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 2020
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, January 30, 2020 at 8:30 a.m. (Eastern Time) to discuss the Company's
year-end 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) 624-4642 and enter "8696499". The replay will be
available at approximately 11:45 a.m.
(Eastern Time) on Thursday, January 30, 2020.
About 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 9,000 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.
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
December 31,
|
|
|
Year
Ended December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,461.0
|
|
|
$
|
1,464.6
|
|
|
$
|
5,581.3
|
|
|
$
|
5,666.6
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
728.3
|
|
|
|
739.0
|
|
|
|
2,838.4
|
|
|
|
2,699.7
|
|
Provision for loan
loss
|
|
|
380.7
|
|
|
|
169.6
|
|
|
|
1,187.5
|
|
|
|
1,016.0
|
|
Depreciation and
amortization
|
|
|
43.0
|
|
|
|
47.4
|
|
|
|
176.1
|
|
|
|
193.6
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
71.9
|
|
|
|
—
|
|
Total operating
expenses
|
|
|
1,152.0
|
|
|
|
956.0
|
|
|
|
4,273.9
|
|
|
|
3,909.3
|
|
Operating
income
|
|
|
309.0
|
|
|
|
508.6
|
|
|
|
1,307.4
|
|
|
|
1,757.3
|
|
Interest expense,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitization funding
costs
|
|
|
53.1
|
|
|
|
56.8
|
|
|
|
213.4
|
|
|
|
220.2
|
|
Interest expense on
deposits
|
|
|
61.3
|
|
|
|
50.0
|
|
|
|
225.6
|
|
|
|
165.7
|
|
Interest expense on
long-term and other debt, net
|
|
|
27.2
|
|
|
|
38.0
|
|
|
|
130.0
|
|
|
|
156.4
|
|
Total interest
expense, net
|
|
|
141.6
|
|
|
|
144.8
|
|
|
|
569.0
|
|
|
|
542.3
|
|
Income from
continuing operations before income taxes
|
|
$
|
167.4
|
|
|
$
|
363.8
|
|
|
$
|
738.4
|
|
|
$
|
1,215.0
|
|
Income tax
expense
|
|
|
37.0
|
|
|
|
110.7
|
|
|
|
165.8
|
|
|
|
269.5
|
|
Income from
continuing operations
|
|
|
130.4
|
|
|
|
253.1
|
|
|
|
572.6
|
|
|
|
945.5
|
|
Income (loss) from
discontinued operations, net of taxes (1)
|
|
|
—
|
|
|
|
31.8
|
|
|
|
(261.7)
|
|
|
|
17.6
|
|
Net income
|
|
$
|
130.4
|
|
|
$
|
284.9
|
|
|
$
|
310.9
|
|
|
$
|
963.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic
|
|
|
47.1
|
|
|
|
54.0
|
|
|
|
50.0
|
|
|
|
54.9
|
|
Weighted average
shares outstanding – diluted
|
|
|
47.6
|
|
|
|
54.2
|
|
|
|
50.9
|
|
|
|
55.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic – Income from
continuing operations
|
|
$
|
2.73
|
|
|
$
|
4.69
|
|
|
$
|
11.25
|
|
|
$
|
17.24
|
|
Basic – Income (loss)
from discontinued operations
|
|
|
—
|
|
|
|
0.59
|
|
|
|
(5.23)
|
|
|
|
0.32
|
|
Basic – Net
income
|
|
$
|
2.73
|
|
|
$
|
5.28
|
|
|
$
|
6.02
|
|
|
$
|
17.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted – Income from
continuing operations
|
|
$
|
2.74
|
|
|
$
|
4.67
|
|
|
$
|
11.24
|
|
|
$
|
17.17
|
|
Diluted – Income
(loss) from discontinued operations
|
|
|
—
|
|
|
|
0.58
|
|
|
|
(5.14)
|
|
|
|
0.32
|
|
Diluted – Net
income
|
|
$
|
2.74
|
|
|
$
|
5.25
|
|
|
$
|
6.10
|
|
|
$
|
17.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects the results
of operations of the Company's former Epsilon segment, which was
sold on July 1, 2019, direct costs identifiable to the Epsilon
segment and the allocation of interest expense on corporate
debt.
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
December
31,
2019
|
|
December 31,
2018
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,874.4
|
|
$
|
3,817.4
|
|
Credit card and loan
receivables:
|
|
|
|
|
|
|
|
Credit card and loan
receivables
|
|
|
19,463.1
|
|
|
17,855.0
|
|
Allowance for loan
loss
|
|
|
(1,171.1)
|
|
|
(1,038.3)
|
|
Credit card and loan
receivables, net
|
|
|
18,292.0
|
|
|
16,816.7
|
|
Credit card
receivables held for sale
|
|
|
408.0
|
|
|
1,951.6
|
|
Redemption settlement
assets, restricted
|
|
|
600.8
|
|
|
558.6
|
|
Right of use assets -
operating
|
|
|
264.3
|
|
|
—
|
|
Intangible assets,
net
|
|
|
153.3
|
|
|
217.4
|
|
Goodwill
|
|
|
954.9
|
|
|
954.8
|
|
Other
assets
|
|
|
1,947.1
|
|
|
1,913.8
|
|
Assets of
discontinued operations
|
|
|
—
|
|
|
4,157.4
|
|
Total
assets
|
|
$
|
26,494.8
|
|
$
|
30,387.7
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
$
|
922.0
|
|
$
|
875.3
|
|
Deposits
|
|
|
12,151.7
|
|
|
11,793.7
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
7,284.0
|
|
|
7,651.7
|
|
Long-term and other
debt
|
|
|
2,849.9
|
|
|
5,725.4
|
|
Operating lease
liabilities
|
|
|
314.3
|
|
|
—
|
|
Other
liabilities
|
|
|
1,351.7
|
|
|
1,749.1
|
|
Liabilities of
discontinued operations
|
|
|
—
|
|
|
260.4
|
|
Total
liabilities
|
|
|
24,873.6
|
|
|
28,055.6
|
|
Stockholders'
equity
|
|
|
1,621.2
|
|
|
2,332.1
|
|
Total liabilities and
stockholders' equity
|
|
$
|
26,494.8
|
|
$
|
30,387.7
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
|
Year
Ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
Net income
|
|
$
|
310.9
|
|
|
$
|
963.1
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
Depreciation and
amortization
|
|
|
249.3
|
|
|
|
487.3
|
|
Deferred income
taxes
|
|
|
(178.9)
|
|
|
|
16.3
|
|
Provision for loan
loss
|
|
|
1,187.5
|
|
|
|
1,016.0
|
|
Non-cash stock
compensation
|
|
|
54.8
|
|
|
|
80.8
|
|
Amortization of
deferred financing costs
|
|
|
43.4
|
|
|
|
47.3
|
|
Gain on sale of
business
|
|
|
(512.2)
|
|
|
|
—
|
|
Loss on extinguishment
of debt
|
|
|
71.9
|
|
|
|
—
|
|
Asset impairment
charges
|
|
|
52.0
|
|
|
|
—
|
|
Change in operating
assets and liabilities, net of sale of business
|
|
|
(302.0)
|
|
|
|
(184.2)
|
|
Originations of loan
receivables held for sale
|
|
|
—
|
|
|
|
(4,799.0)
|
|
Sales of loan
receivables held for sale
|
|
|
—
|
|
|
|
4,928.8
|
|
Other
|
|
|
241.0
|
|
|
|
198.5
|
|
Net cash provided by
operating activities
|
|
|
1,217.7
|
|
|
|
2,754.9
|
|
|
|
Cash Flows from
Investing Activities:
|
|
Change in redemption
settlement assets
|
|
|
(9.5)
|
|
|
|
(42.2)
|
|
Change in credit card
and loan receivables
|
|
|
(2,586.8)
|
|
|
|
(2,749.6)
|
|
Proceeds from sale of
business
|
|
|
4,409.7
|
|
|
|
—
|
|
Purchase of credit
card portfolios
|
|
|
(924.8)
|
|
|
|
—
|
|
Sale of credit card
portfolios
|
|
|
2,061.8
|
|
|
|
1,153.5
|
|
Capital
expenditures
|
|
|
(142.3)
|
|
|
|
(199.8)
|
|
Other
|
|
|
52.7
|
|
|
|
(33.9)
|
|
Net cash provided by
(used in) investing activities
|
|
|
2,860.8
|
|
|
|
(1,872.0)
|
|
|
|
Cash Flows from
Financing Activities:
|
|
Borrowings under debt
agreements
|
|
|
3,111.3
|
|
|
|
4,575.3
|
|
Repayments of
borrowings
|
|
|
(5,981.8)
|
|
|
|
(4,893.0)
|
|
Net increase in
deposits
|
|
|
355.6
|
|
|
|
864.1
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
4,851.8
|
|
|
|
3,714.6
|
|
Repayments/maturities
of non-recourse borrowings of consolidated securitization
entities
|
|
|
(5,219.0)
|
|
|
|
(4,871.0)
|
|
Payment of debt
extinguishment costs
|
|
|
(46.1)
|
|
|
|
—
|
|
Payment of deferred
financing costs
|
|
|
(45.4)
|
|
|
|
(25.8)
|
|
Purchase of treasury
shares
|
|
|
(976.1)
|
|
|
|
(443.2)
|
|
Dividends
paid
|
|
|
(127.4)
|
|
|
|
(125.2)
|
|
Other
|
|
|
(14.6)
|
|
|
|
(13.7)
|
|
Net cash used in
financing activities
|
|
|
(4,091.7)
|
|
|
|
(1,217.9)
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
3.6
|
|
|
|
(12.0)
|
|
Change in cash, cash
equivalents and restricted cash
|
|
|
(9.6)
|
|
|
|
(347.0)
|
|
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
|
|
$
|
3,958.1
|
|
|
$
|
3,967.7
|
|
__________________________________
|
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
December 31,
|
|
|
|
|
|
Year
Ended December 31,
|
|
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Change
|
|
|
2019
|
|
2018
|
|
Change
|
|
|
Segment
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
332.4
|
|
|
$
|
333.3
|
|
|
—
|
%
|
|
$
|
1,033.1
|
|
$
|
1,068.4
|
|
(3)
|
%
|
|
Card
Services
|
|
|
1,128.4
|
|
|
|
1,131.1
|
|
|
—
|
|
|
|
4,547.8
|
|
|
4,597.6
|
|
(1)
|
|
|
Corporate/Other
|
|
|
0.2
|
|
|
|
0.2
|
|
|
nm
|
*
|
|
|
0.4
|
|
|
0.6
|
|
nm
|
*
|
|
Total
|
|
$
|
1,461.0
|
|
|
$
|
1,464.6
|
|
|
—
|
%
|
|
$
|
5,581.3
|
|
$
|
5,666.6
|
|
(2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
80.3
|
|
|
$
|
67.4
|
|
|
19
|
%
|
|
$
|
244.5
|
|
$
|
254.2
|
|
(4)
|
%
|
|
Card
Services
|
|
|
209.6
|
|
|
|
427.4
|
|
|
(51)
|
|
|
|
1,119.7
|
|
|
1,496.0
|
|
(25)
|
|
|
Corporate/Other
|
|
|
(12.1)
|
|
|
|
(36.4)
|
|
|
(67)
|
|
|
|
(92.9)
|
|
|
(140.8)
|
|
(34)
|
|
|
Total
|
|
$
|
277.8
|
|
|
$
|
458.4
|
|
|
(39)
|
%
|
|
$
|
1,271.3
|
|
$
|
1,609.4
|
|
(21)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
sales
|
|
$
|
9,297
|
|
|
$
|
8,953
|
|
|
4
|
%
|
|
$
|
30,987
|
|
$
|
30,702
|
|
1
|
%
|
|
Credit sales -
active
|
|
$
|
8,602
|
|
|
$
|
7,774
|
|
|
11
|
%
|
|
$
|
27,832
|
|
$
|
25,376
|
|
10
|
%
|
|
Average
receivables
|
|
$
|
18,096
|
|
|
$
|
16,775
|
|
|
8
|
%
|
|
$
|
17,298
|
|
$
|
17,412
|
|
(1)
|
%
|
|
Gross yield
|
|
|
23.3%
|
|
|
|
23.6%
|
|
|
(0.3)
|
%
|
|
|
24.0%
|
|
|
24.5%
|
|
(0.5)
|
%
|
|
Net principal loss
rate
|
|
|
6.3%
|
|
|
|
5.5%
|
|
|
0.8
|
%
|
|
|
6.1%
|
|
|
6.1%
|
|
—
|
%
|
|
Delinquency
rate
|
|
|
5.8%
|
|
|
|
5.7%
|
|
|
0.1
|
%
|
|
|
5.8%
|
|
|
5.7%
|
|
0.1
|
%
|
|
AIR MILES reward miles
issued
|
|
|
1,486
|
|
|
|
1,468
|
|
|
1
|
%
|
|
|
5,511
|
|
|
5,500
|
|
—
|
%
|
|
AIR MILES reward miles
redeemed
|
|
|
1,199
|
|
|
|
1,160
|
|
|
3
|
%
|
|
|
4,416
|
|
|
4,482
|
|
(1)
|
%
|
|
|
* nm-not
meaningful
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year
Ended December 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
Adjusted EBITDA
and Adjusted EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
130.4
|
|
|
$
|
253.1
|
|
|
$
|
572.6
|
|
|
$
|
945.5
|
|
|
Income tax
expense
|
|
|
37.0
|
|
|
|
110.7
|
|
|
|
165.8
|
|
|
|
269.5
|
|
|
Total interest
expense, net
|
|
|
141.6
|
|
|
|
144.8
|
|
|
|
569.0
|
|
|
|
542.3
|
|
|
Depreciation and other
amortization
|
|
|
20.1
|
|
|
|
21.0
|
|
|
|
79.9
|
|
|
|
80.7
|
|
|
Amortization of
purchased intangibles
|
|
|
22.9
|
|
|
|
26.4
|
|
|
|
96.2
|
|
|
|
112.9
|
|
|
Stock compensation
expense
|
|
|
0.5
|
|
|
|
9.2
|
|
|
|
25.1
|
|
|
|
44.4
|
|
|
Strategic transaction
costs (1)
|
|
|
6.7
|
|
|
|
—
|
|
|
|
11.7
|
|
|
|
—
|
|
|
Restructuring and
other charges (2)
|
|
|
33.0
|
|
|
|
—
|
|
|
|
118.1
|
|
|
|
—
|
|
|
Loss on extinguishment
of debt (3)
|
|
|
—
|
|
|
|
—
|
|
|
|
71.9
|
|
|
|
—
|
|
|
Adjusted
EBITDA
|
|
$
|
392.2
|
|
|
$
|
565.2
|
|
|
$
|
1,710.3
|
|
|
$
|
1,995.3
|
|
|
Less: Funding costs
(4)
|
|
|
114.4
|
|
|
|
106.8
|
|
|
|
439.0
|
|
|
|
385.9
|
|
|
Adjusted EBITDA, net
of funding costs
|
|
$
|
277.8
|
|
|
$
|
458.4
|
|
|
$
|
1,271.3
|
|
|
$
|
1,609.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
|
130.4
|
|
|
$
|
253.1
|
|
|
$
|
572.6
|
|
|
$
|
945.5
|
|
|
Add back: non-cash/
non-operating items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
|
0.5
|
|
|
|
9.2
|
|
|
|
25.1
|
|
|
|
44.4
|
|
|
Amortization of
purchased intangibles
|
|
|
22.9
|
|
|
|
26.4
|
|
|
|
96.2
|
|
|
|
112.9
|
|
|
Non-cash interest
(5)
|
|
|
10.7
|
|
|
|
9.3
|
|
|
|
39.9
|
|
|
|
40.3
|
|
|
Strategic transaction
costs (1)
|
|
|
6.7
|
|
|
|
—
|
|
|
|
11.7
|
|
|
|
—
|
|
|
Restructuring and
other charges (2)
|
|
|
33.0
|
|
|
|
—
|
|
|
|
118.1
|
|
|
|
—
|
|
|
Loss on extinguishment
of debt (3)
|
|
|
—
|
|
|
|
—
|
|
|
|
71.9
|
|
|
|
—
|
|
|
Income tax effect
(6)
|
|
|
(8.1)
|
|
|
|
14.6
|
|
|
|
(81.4)
|
|
|
|
(69.6)
|
|
|
Core
earnings
|
|
$
|
196.1
|
|
|
$
|
312.6
|
|
|
$
|
854.1
|
|
|
$
|
1,073.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
47.6
|
|
|
|
54.2
|
|
|
|
50.9
|
|
|
|
55.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings per
share – diluted
|
|
$
|
4.12
|
|
|
$
|
5.76
|
|
|
$
|
16.77
|
|
|
$
|
19.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents costs for
professional services associated with strategic
initiatives.
|
(2)
|
Represents costs
associated with restructuring or other exit activities.
|
(3)
|
Represents loss on
extinguishment of debt resulting from the redemption price of the
senior notes and the write-off of deferred issuance costs related
to the July 2019 extinguishment of $1.9 billion outstanding senior
notes and a mandatory payment of $500.0 million of the Company's
revolving credit facility.
|
(4)
|
Represents interest
expense on deposits and securitization funding costs.
|
(5)
|
Represents
amortization of debt issuance costs.
|
(6)
|
Represents the tax
effect including the related non-GAAP measure adjustments using the
effective tax rate.
|
|
|
Three Months Ended
December 31, 2019
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
57.4
|
|
|
$
|
276.3
|
|
|
$
|
(24.7)
|
|
|
$
|
309.0
|
|
Depreciation and
amortization
|
|
|
20.5
|
|
|
|
20.9
|
|
|
|
1.6
|
|
|
|
43.0
|
|
Stock compensation
expense
|
|
|
0.8
|
|
|
|
(0.5)
|
|
|
|
0.2
|
|
|
|
0.5
|
|
Strategic transaction
costs
|
|
|
0.7
|
|
|
|
—
|
|
|
|
6.0
|
|
|
|
6.7
|
|
Restructuring and
other charges
|
|
|
0.9
|
|
|
|
27.3
|
|
|
|
4.8
|
|
|
|
33.0
|
|
Adjusted
EBITDA
|
|
|
80.3
|
|
|
|
324.0
|
|
|
|
(12.1)
|
|
|
|
392.2
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
114.4
|
|
|
|
—
|
|
|
|
114.4
|
|
Adjusted EBITDA,
net
|
|
$
|
80.3
|
|
|
$
|
209.6
|
|
|
$
|
(12.1)
|
|
|
$
|
277.8
|
|
|
|
|
|
Three Months Ended
December 31, 2018
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
45.1
|
|
|
$
|
506.3
|
|
|
$
|
(42.8)
|
|
|
$
|
508.6
|
|
Depreciation and
amortization
|
|
|
20.3
|
|
|
|
25.1
|
|
|
|
2.0
|
|
|
|
47.4
|
|
Stock compensation
expense
|
|
|
2.0
|
|
|
|
2.8
|
|
|
|
4.4
|
|
|
|
9.2
|
|
Adjusted
EBITDA
|
|
|
67.4
|
|
|
|
534.2
|
|
|
|
(36.4)
|
|
|
|
565.2
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
106.8
|
|
|
|
—
|
|
|
|
106.8
|
|
Adjusted EBITDA,
net
|
|
$
|
67.4
|
|
|
$
|
427.4
|
|
|
$
|
(36.4)
|
|
|
$
|
458.4
|
|
|
|
|
|
Year Ended
December 31, 2019
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
105.4
|
|
|
$
|
1,430.7
|
|
|
$
|
(228.7)
|
|
|
$
|
1,307.4
|
|
Depreciation and
amortization
|
|
|
80.1
|
|
|
|
89.3
|
|
|
|
6.7
|
|
|
|
176.1
|
|
Stock compensation
expense
|
|
|
7.2
|
|
|
|
9.3
|
|
|
|
8.6
|
|
|
|
25.1
|
|
Strategic transaction
costs
|
|
|
1.0
|
|
|
|
—
|
|
|
|
10.7
|
|
|
|
11.7
|
|
Restructuring and
other charges
|
|
|
50.8
|
|
|
|
29.4
|
|
|
|
37.9
|
|
|
|
118.1
|
|
Loss on
extinguishment of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
71.9
|
|
|
|
71.9
|
|
Adjusted
EBITDA
|
|
|
244.5
|
|
|
|
1,558.7
|
|
|
|
(92.9)
|
|
|
|
1,710.3
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
439.0
|
|
|
|
—
|
|
|
|
439.0
|
|
Adjusted EBITDA,
net
|
|
$
|
244.5
|
|
|
$
|
1,119.7
|
|
|
$
|
(92.9)
|
|
|
$
|
1,271.3
|
|
|
|
|
|
Year Ended
December 31, 2018
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
159.4
|
|
|
$
|
1,767.5
|
|
|
$
|
(169.6)
|
|
|
$
|
1,757.3
|
|
Depreciation and
amortization
|
|
|
84.8
|
|
|
|
101.1
|
|
|
|
7.7
|
|
|
|
193.6
|
|
Stock compensation
expense
|
|
|
10.0
|
|
|
|
13.3
|
|
|
|
21.1
|
|
|
|
44.4
|
|
Adjusted
EBITDA
|
|
|
254.2
|
|
|
|
1,881.9
|
|
|
|
(140.8)
|
|
|
|
1,995.3
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
385.9
|
|
|
|
—
|
|
|
|
385.9
|
|
Adjusted EBITDA,
net
|
|
$
|
254.2
|
|
|
$
|
1,496.0
|
|
|
$
|
(140.8)
|
|
|
$
|
1,609.4
|
|
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