COLUMBUS, Ohio, April 23, 2020 /PRNewswire/ -- Alliance Data
Systems Corporation (NYSE: ADS), a leading provider of data-driven
marketing, loyalty and payment solutions, today announced results
for the first quarter ended March 31,
2020.
Commenting on first quarter results, Ralph Andretta, president and chief executive
officer of Alliance Data said, "Our performance in January and
February of this year showed positive momentum, with strong revenue
growth and the benefit of cost savings programs. Favorable business
trends continued through the onset of COVID-19 in early March,
resulting in revenue growth of 4% for the first quarter paired with
lower operating costs of $90 million
for the period. First quarter earnings, however, were below last
year's levels, as we increased our provision for loan loss by
$404 million reflecting the adoption
of CECL as of January 1, 2020 and the
COVID-19 impact on our business, resulting in earnings before taxes
of $25 million. Over
$300 million of the $404 million provision increase is due to the
economic impact of COVID-19.
Andretta continued, "In navigating this difficult and
unprecedented time, the health and safety of our people remains the
number one priority at Alliance Data, and I commend the tremendous
efforts of our global leadership team and associates during this
crisis. I am proud of the significant measures implemented to keep
everyone safe and to minimize disruption to our business during the
quarter and likewise, to our partners and customers.
"With our business continuity plans fully implemented, Alliance
Data continues to operate effectively within this challenging
environment, demonstrating the dedication of our global associates
and our robust IT infrastructure. Teleworking protocols are in
place for more than 95% of our global associates. Additionally,
cross-training programs have been completed at our Card Services
business to ensure appropriate workforce coverage while managing
higher cardholder-related call volumes resulting from forbearance
programs we have proactively introduced. Also, we are working
closely with our partners across all of our businesses to optimize
their budgets, adjust marketing support accordingly and accommodate
the rapid shift to ecommerce in light of temporary retail-based
store closings resulting from COVID-19."
Andretta continued, "The Company entered this crisis in a
position of strength and is focused on remaining liquid and well
capitalized. We are proactively managing all aspects of our
business to further strengthen our financial position and reduce
risk. At the end of the first quarter, we had over $1 billion of immediate liquidity between cash on
hand and our revolver at the parent level. Our FDIC-insured banks
had $2.5 billion of equity capital
and total risk-based capital of approximately 17%. Like many public
companies, we have taken the prudent steps of suspending our share
repurchase program and reducing our dividend payments during this
time of uncertainty. At the same time, we have tightened our credit
standards and continue to actively identify and implement
cost-reduction measures that will significantly lower our expense
levels over the near-term. We continually stress test our
business and have intensified that process in light of the current
business environment. While it is difficult to predict how
the economy will evolve, Alliance Data is projected to remain EBT
and cash flow positive with sufficient liquidity through an assumed
period of very significant stress."
CONSOLIDATED RESULTS
SUMMARY
|
Quarter Ended
March 31,
|
|
(in millions,
except per share amounts)
|
2020
|
2019
|
%
Change
|
|
Revenue
|
$1,382
|
$1,334
|
4%
|
|
Income from
continuing operations before income taxes ("EBT')
|
$25
|
$213
|
-88%
|
|
Income from
continuing operations
|
$30
|
$178
|
-83%
|
|
Net income
|
$30
|
$149
|
-80%
|
|
Income from
continuing operations per diluted share ("EPS")
|
$0.63
|
$3.35
|
-81%
|
|
Net income per
diluted share
|
$0.63
|
$2.80
|
-78%
|
|
Diluted shares
outstanding
|
47.7
|
53.2
|
|
|
*******************************
|
|
|
|
|
Supplemental Non-GAAP
Metrics (a):
|
|
|
|
|
Adjusted
EBITDA
|
$194
|
$423
|
-54%
|
|
Adjusted
EBITDA, net of funding costs
("adjusted EBITDA, net")
|
$83
|
$317
|
-74%
|
|
Core earnings
per diluted share ("core EPS")
|
$0.75
|
$3.79
|
-80%
|
|
Pre-Provision, pre-tax earnings
|
$681
|
$465
|
46%
|
|
|
|
|
|
|
Consolidated revenue increased 4% to $1.38 billion compared to the first quarter of
2019, while income from continuing operations decreased 83% to
$30 million, due to an increase in
provision for loan loss of $404
million in the first quarter of 2020. EBT decreased
88% to $25 million, adjusted EBITDA,
net decreased 74% to $83 million and
EPS decreased 81% to $0.63, all due
to the higher provision expense.
SEGMENT RESULTS
Card Services: Revenue increased 5% to
$1.18 billion benefitting from a
gross yield improvement of 140 basis points. Adjusted EBITDA, net
of $47 million was down 84% due to a
$404 million increase in provision
for loan loss reflecting the combined effect of our CECL
implementation and COVID-19-related impacts on our
business. Net principal loss rates were 7.0% in the
first quarter, up 60 basis points year-over-year, reflecting
reduced volumes. Delinquency rate of 6.0% increased 20 basis points
from December 31, 2019.
LoyaltyOne®: Revenue decreased 3% to $198 million resulting from the sale of Precima
in early January 2020, which
contributed $15 million in
incremental revenue in last year's first quarter. Adjusting for the
sale of Precima, revenue increased $9
million, or 4%. On a constant currency basis, revenue was
flat at $203 million and adjusted
EBITDA increased 7% to $59 million.
AIR MILES® revenue increased 1% on a constant
currency basis and adjusted for the sale of Precima, due to higher
brand revenue associated with strong issuance growth. AIR MILES
reward miles issued increased 5%, benefitting from increased
sponsor promotions early in the first quarter. AIR MILES reward
miles redeemed decreased 9%, reflecting the impact of COVID-19 on
travel related redemptions in March. BrandLoyalty revenue increased
8% due to better than expected program performance with its grocer
clients.
SUMMARY AND OUTLOOK
Andretta concluded, "Looking ahead, it is difficult to project
the duration of this pandemic and its impact on our full year
results. Therefore, we are suspending our previous guidance for
2020. That said, our business is fully operational, and we
are confident that Alliance Data will manage through this crisis
effectively. Using the last recession as a guidepost, we believe
our credit card portfolio is more diversified and better positioned
from a risk standpoint than it was in 2009, and we are in a
stronger financial position, with significant liquidity and
additional borrowing capacity.
"We have taken action throughout our enterprise to address the
COVID-19 impacts on our business and those we expect to see in the
future. At Card Services, we implemented our recession readiness
program to address lower credit sales and higher delinquencies.
In addition to managing credit risk, we are adjusting our
partner marketing strategies to align with the needs of their
business and customers, including shifting efforts toward
e-commerce, while working with customers on forbearance plans. At
AIR MILES, we are adjusting the timing of significant coalition and
sponsor-specific promotions and marketing
programs. Additionally, we are enhancing efforts on redemption
categories that focus on high-demand, non-travel reward options,
stay-at-home products and services, and AIR MILES Cash (in-store,
online and mobile) redemptions.
"It is difficult to project the recovery rate of retail spending
post-COVID-19. Today, our focus is on assisting our partners and
customers in addressing today's realities, while we strengthen
Alliance Data's liquidity with a focus on the future. We also
expect to realize additional savings in procurement, marketing and
operating expenses, while maintaining service levels and
positioning for future growth. At the same time, we have
prioritized strategic investments in data and information
management, and additional digital customer-facing products and
capabilities to ensure that Alliance Data emerges from this crisis
as an even stronger competitor."
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, and
the guidance we give with respect to, our anticipated operating or
financial results, completion of strategic initiatives, future
dividend declarations, and future economic conditions, including,
but not limited to, fluctuation in currency exchange rates, market
conditions and COVID-19 impacts related to relief measures for
impacted borrowers and depositors, labor shortages due to
quarantine, reduction in demand from clients, supply chain
disruption for our reward suppliers and disruptions in the airline
or travel industries.
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.
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, pre-provision pre-tax
earnings, 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. In addition, adjusted EBITDA eliminates the
effect of the gain (loss) on the sale of a business, strategic
transaction costs, and restructuring and other charges.
Adjusted EBITDA, net is equal to adjusted EBITDA less
securitization funding costs and interest expense on deposits.
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,
non-cash interest, gain (loss) on the sale of a business, strategic
transaction costs and restructuring and other charges. 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). 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, April 23, 2020 at 8:30 a.m. (Eastern Time) to discuss the Company's
first quarter 2020 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 "1249616". The replay will be
available at approximately 11:45 a.m.
(Eastern Time) on Thursday, April 23, 2020.
About Alliance Data® (NYSE: ADS) is a leading
provider of data-driven marketing, loyalty and payment solutions
serving large, consumer-based industries. The Company creates and
deploys customized solutions that measurably change consumer
behavior while driving business growth and profitability for some
of today's most recognizable brands. Alliance Data helps its
partners create and increase customer loyalty 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 8,500 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
March
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
Revenue
|
|
$
|
1,381.8
|
|
|
$
|
1,334.2
|
|
Operating
expenses:
|
|
Cost of
operations
|
|
|
523.1
|
|
|
|
678.8
|
|
Provision for loan
loss
|
|
|
655.9
|
|
|
|
252.1
|
|
Depreciation and
amortization
|
|
|
38.8
|
|
|
|
46.4
|
|
Total operating
expenses
|
|
|
1,217.8
|
|
|
|
977.3
|
|
Operating
income
|
|
|
164.0
|
|
|
|
356.9
|
|
Interest expense,
net:
|
|
Securitization funding
costs
|
|
|
49.9
|
|
|
|
57.3
|
|
Interest expense on
deposits
|
|
|
60.3
|
|
|
|
48.7
|
|
Interest expense on
long-term and other debt, net
|
|
|
28.4
|
|
|
|
37.9
|
|
Total interest
expense, net
|
|
|
138.6
|
|
|
|
143.9
|
|
Income from
continuing operations before income taxes
|
|
|
25.4
|
|
|
|
213.0
|
|
Income tax (benefit)
expense
|
|
|
(4.6)
|
|
|
|
34.8
|
|
Income from
continuing operations
|
|
|
30.0
|
|
|
|
178.2
|
|
Loss from
discontinued operations, net of taxes
|
|
|
—
|
|
|
|
(29.1)
|
|
Net income
|
|
$
|
30.0
|
|
|
$
|
149.1
|
|
|
|
|
|
Per share
data:
|
|
|
|
Weighted average
shares outstanding – basic
|
|
|
47.6
|
|
|
|
53.0
|
|
Weighted average
shares outstanding - diluted
|
|
|
47.7
|
|
|
|
53.2
|
|
|
|
Basic – Income from
continuing operations
|
|
$
|
0.63
|
|
|
$
|
3.36
|
|
Basic – Loss from
discontinued operations
|
|
|
—
|
|
|
|
(0.55)
|
|
Basic – Net
income
|
|
$
|
0.63
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
|
Diluted – Income from
continuing operations
|
|
$
|
0.63
|
|
|
$
|
3.35
|
|
Diluted – Loss from
discontinued operations
|
|
|
—
|
|
|
|
(0.55)
|
|
Diluted – Net
income
|
|
$
|
0.63
|
|
|
$
|
2.80
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
millions)
(Unaudited)
|
|
|
|
March
31,
2020
|
|
December 31,
2019
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,456.8
|
|
$
|
3,874.4
|
|
Credit card and loan
receivables:
|
|
|
|
|
|
|
|
Credit card and loan
receivables
|
|
|
17,731.9
|
|
|
19,463.1
|
|
Allowance for loan
loss
|
|
|
(2,150.8)
|
|
|
(1,171.1)
|
|
Credit card and loan
receivables, net
|
|
|
15,581.1
|
|
|
18,292.0
|
|
Credit card
receivables held for sale
|
|
|
88.8
|
|
|
408.0
|
|
Redemption settlement
assets, restricted
|
|
|
568.0
|
|
|
600.8
|
|
Right of use assets -
operating
|
|
|
256.8
|
|
|
264.3
|
|
Intangible assets,
net
|
|
|
129.9
|
|
|
153.3
|
|
Goodwill
|
|
|
929.1
|
|
|
954.9
|
|
Other
assets
|
|
|
2,224.4
|
|
|
1,947.1
|
|
Total
assets
|
|
$
|
24,234.9
|
|
$
|
26,494.8
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
$
|
851.9
|
|
$
|
922.0
|
|
Deposits
|
|
|
11,385.7
|
|
|
12,151.7
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
6,360.7
|
|
|
7,284.0
|
|
Long-term and other
debt
|
|
|
3,076.1
|
|
|
2,849.9
|
|
Operating lease
liabilities
|
|
|
304.9
|
|
|
314.3
|
|
Other
liabilities
|
|
|
1,167.9
|
|
|
1,384.6
|
|
Total
liabilities
|
|
|
23,147.2
|
|
|
24,906.5
|
|
Stockholders'
equity
|
|
|
1,087.7
|
|
|
1,588.3
|
|
Total liabilities and
stockholders' equity
|
|
$
|
24,234.9
|
|
$
|
26,494.8
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
millions)
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
Cash Flows from
Operating Activities:
|
|
Net income
|
|
$
|
30.0
|
|
|
$
|
149.1
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
38.8
|
|
|
|
118.9
|
|
Deferred income
taxes
|
|
(158.7)
|
|
|
|
(35.0)
|
|
Provision for loan
loss
|
|
655.9
|
|
|
|
252.1
|
|
Non-cash stock
compensation
|
|
4.7
|
|
|
|
21.1
|
|
Amortization of
deferred financing costs
|
|
9.5
|
|
|
|
11.0
|
|
Change in operating
assets and liabilities, net of sale of business
|
|
8.6
|
|
|
|
8.7
|
|
Other
|
|
(16.3)
|
|
|
|
84.9
|
|
Net cash provided by
operating activities
|
|
572.5
|
|
|
|
610.8
|
|
|
|
Cash Flows from
Investing Activities:
|
|
Change in redemption
settlement assets
|
|
1.0
|
|
|
|
(0.1)
|
|
Change in credit card
and loan receivables
|
|
1,446.7
|
|
|
|
758.2
|
|
Proceeds from sale of
business
|
|
25.4
|
|
|
|
—
|
|
Sale of credit card
portfolio
|
|
289.5
|
|
|
|
—
|
|
Capital
expenditures
|
|
(15.7)
|
|
|
|
(38.7)
|
|
Other
|
|
(0.6)
|
|
|
|
(1.9)
|
|
Net cash provided by
investing activities
|
|
1,746.3
|
|
|
|
717.5
|
|
|
|
Cash Flows from
Financing Activities:
|
|
Borrowings under debt
agreements
|
|
|
500.0
|
|
|
|
1,045.1
|
|
Repayments of
borrowings
|
|
|
(275.4)
|
|
|
|
(870.9)
|
|
Net decrease in
deposits
|
|
|
(769.4)
|
|
|
|
(502.6)
|
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
350.0
|
|
|
|
1,122.2
|
|
Repayments/maturities
of non-recourse borrowings of consolidated securitization
entities
|
|
|
(1,275.0)
|
|
|
|
(1,997.5)
|
|
Payment of deferred
financing costs
|
|
|
(0.6)
|
|
|
|
(5.4)
|
|
Purchase of treasury
shares
|
|
|
—
|
|
|
|
(222.8)
|
|
Dividends
paid
|
|
|
(30.3)
|
|
|
|
(33.9)
|
|
Other
|
|
|
(2.7)
|
|
|
|
(17.2)
|
|
Net cash used in
financing activities
|
|
|
(1,503.4)
|
|
|
|
(1,483.0)
|
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
(7.6)
|
|
|
|
3.0
|
|
Change in cash, cash
equivalents and restricted cash
|
|
|
807.8
|
|
|
|
(151.7)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
3,958.1
|
|
|
|
3,967.7
|
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
|
4,765.9
|
|
|
$
|
3,816.0
|
|
________________________________________
|
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
March 31,
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
Change
|
|
Segment
Revenue:
|
|
|
|
LoyaltyOne
|
|
$
|
198.1
|
|
$
|
203.8
|
|
|
(3)%
|
|
Card
Services
|
|
|
1,183.6
|
|
|
1,130.4
|
|
|
5
|
|
Corporate/Other
|
|
|
0.1
|
|
|
—
|
|
|
nm*
|
|
Total
|
|
$
|
1,381.8
|
|
$
|
1,334.2
|
|
|
4%
|
|
Segment Adjusted
EBITDA, net:
|
|
|
|
LoyaltyOne
|
|
$
|
57.8
|
|
$
|
55.1
|
|
|
5%
|
|
Card
Services
|
|
|
47.0
|
|
|
294.9
|
|
|
(84)
|
|
Corporate/Other
|
|
|
(21.3)
|
|
|
(33.5)
|
|
|
(36)
|
|
Total
|
|
$
|
83.5
|
|
$
|
316.5
|
|
|
(74)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Indicators:
|
|
|
|
Credit
sales
|
|
$
|
6,099
|
|
$
|
6,315
|
|
|
(3)%
|
|
Average
receivables
|
|
$
|
18,294
|
|
$
|
16,850
|
|
|
9%
|
|
Gross yield
|
|
|
25.5%
|
|
|
24.1%
|
|
|
1.4%
|
|
Net principal loss
rate
|
|
|
7.0%
|
|
|
6.4%
|
|
|
0.6%
|
|
Delinquency
rate
|
|
|
6.0%
|
|
|
5.2%
|
|
|
0.8%
|
|
AIR MILES reward miles
issued
|
|
|
1,316
|
|
|
1,258
|
|
|
5%
|
|
AIR MILES reward miles
redeemed
|
|
|
994
|
|
|
1,089
|
|
|
(9)%
|
|
|
* nm-not
meaningful
|
ALLIANCE DATA SYSTEMS
CORPORATION
RECONCILIATION OF
NON-GAAP INFORMATION
(In millions, except
per share amounts)
(Unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
Adjusted EBITDA
and Adjusted EBITDA, net:
|
|
Income from
continuing operations
|
|
$
|
30.0
|
|
|
$
|
178.2
|
|
Income tax
(benefit)expense
|
|
|
(4.6)
|
|
|
|
34.8
|
|
Total interest
expense, net
|
|
|
138.6
|
|
|
|
143.9
|
|
Depreciation and other
amortization
|
|
|
17.4
|
|
|
|
20.6
|
|
Amortization of
purchased intangibles
|
|
|
21.4
|
|
|
|
25.8
|
|
Stock compensation
expense
|
|
|
4.7
|
|
|
|
11.3
|
|
Gain on sale of
business, net of strategic transaction costs
(1)
|
|
|
(8.0)
|
|
|
|
—
|
|
Strategic transaction
costs (2)
|
|
|
0.7
|
|
|
|
—
|
|
Restructuring and
other charges (3)
|
|
|
(6.5)
|
|
|
|
7.9
|
|
Adjusted
EBITDA
|
|
$
|
193.7
|
|
|
$
|
422.5
|
|
Less: Funding
costs (4)
|
|
|
110.2
|
|
|
|
106.0
|
|
Adjusted EBITDA, net
of funding costs
|
|
$
|
83.5
|
|
|
$
|
316.5
|
|
|
|
Core
Earnings:
|
|
Income from
continuing operations
|
|
$
|
30.0
|
|
|
$
|
178.2
|
|
Add back: non-cash/
non-operating items:
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
|
4.7
|
|
|
|
11.3
|
|
Amortization of
purchased intangibles
|
|
|
21.4
|
|
|
|
25.8
|
|
Non-cash interest
(5)
|
|
|
9.5
|
|
|
|
9.3
|
|
Gain on sale of
business, net of strategic transaction costs
(1)
|
|
|
(8.0)
|
|
|
|
—
|
|
Strategic transaction
costs (2)
|
|
|
0.7
|
|
|
|
—
|
|
Restructuring and
other charges (3)
|
|
|
(6.5)
|
|
|
|
7.9
|
|
Income tax effect
(6)
|
|
|
(16.1)
|
|
|
|
(30.7)
|
|
Core
earnings
|
|
$
|
35.7
|
|
|
$
|
201.8
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - diluted
|
|
|
47.7
|
|
|
|
53.2
|
|
Core earnings per
share - diluted
|
|
$
|
0.75
|
|
|
$
|
3.79
|
|
Pre-provision
pre-tax earnings:
|
|
|
Income from continuing
operations before income taxes
|
|
$
|
25.4
|
|
|
$
|
213.0
|
|
Provision for loan
loss
|
|
|
655.9
|
|
|
|
252.1
|
|
Pre-provision pre-tax
earnings
|
|
$
|
681.3
|
|
|
$
|
465.1
|
|
_____________________
|
(1)
Represents gain on sale of Precima in January 2020, net of
strategic transaction costs. Precima was included
in the Company's
LoyaltyOne segment.
|
(2) Represents
costs for professional services associated with strategic
initiatives.
|
(3) Represents
costs associated with restructuring or other exit activities. In
2020, the amounts consist of adjustments
to our liability associated
with restructuring and other charges recorded for cost saving
initiatives executed in 2019.
|
(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 expected effective annual
tax rate.
|
|
|
|
Three Months Ended
March 31, 2020
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
46.4
|
|
|
$
|
142.3
|
|
|
$
|
(24.7)
|
|
|
$
|
164.0
|
|
Depreciation and
amortization
|
|
|
18.2
|
|
|
|
19.7
|
|
|
|
0.9
|
|
|
|
38.8
|
|
Stock compensation
expense
|
|
|
1.0
|
|
|
|
1.7
|
|
|
|
2.0
|
|
|
|
4.7
|
|
Gain on sale of
business, net of strategic transaction costs
|
|
|
(8.0)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8.0)
|
|
Strategic transaction
costs
|
|
|
0.1
|
|
|
|
—
|
|
|
|
0.6
|
|
|
|
0.7
|
|
Restructuring and
other charges
|
|
|
0.1
|
|
|
|
(6.5)
|
|
|
|
(0.1)
|
|
|
|
(6.5)
|
|
Adjusted
EBITDA
|
|
|
57.8
|
|
|
|
157.2
|
|
|
|
(21.3)
|
|
|
|
193.7
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
110.2
|
|
|
|
—
|
|
|
|
110.2
|
|
Adjusted EBITDA,
net
|
|
$
|
57.8
|
|
|
$
|
47.0
|
|
|
$
|
(21.3)
|
|
|
$
|
83.5
|
|
|
|
|
|
Three Months Ended
March 31, 2019
|
|
|
|
LoyaltyOne
|
|
|
Card
Services
|
|
|
Corporate/
Other
|
|
|
Total
|
|
Operating income
(loss)
|
|
$
|
24.1
|
|
|
$
|
372.9
|
|
|
$
|
(40.1)
|
|
|
$
|
356.9
|
|
Depreciation and
amortization
|
|
|
20.1
|
|
|
|
24.3
|
|
|
|
2.0
|
|
|
|
46.4
|
|
Stock compensation
expense
|
|
|
3.0
|
|
|
|
3.7
|
|
|
|
4.6
|
|
|
|
11.3
|
|
Restructuring and
other charges
|
|
|
7.9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7.9
|
|
Adjusted
EBITDA
|
|
|
55.1
|
|
|
|
400.9
|
|
|
|
(33.5)
|
|
|
|
422.5
|
|
Less: Funding
costs
|
|
|
—
|
|
|
|
106.0
|
|
|
|
—
|
|
|
|
106.0
|
|
Adjusted EBITDA,
net
|
|
$
|
55.1
|
|
|
$
|
294.9
|
|
|
$
|
(33.5)
|
|
|
$
|
316.5
|
|
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