Slide 1: Alliance Data Third Quarter 2016 Results
Alliance Data NYSE: ADS Third Quarter 2016 ResultsOctober 20, 2016
Slide 2: Agenda
Agenda Speakers: Ed Heffernan President and CEO Charles Horn EVP and CFO Bryan Kennedy President of Epsilon Third Quarter Consolidated ResultsSegment ResultsThird Quarter and Full Year Outlook2017 Guidance 1 2
Slide 3: Third Quarter 2016 Consolidated Results
Third Quarter 2016 Consolidated Results(MM, except per share) Double-digit revenue and core EPS growth, both exceeding guidanceIncreasing annual guidance for both revenue and core EPSApproximately 3.3 million shares repurchased year-to-dateEstablishing quarterly cash dividend 2 1 After $0.65 in regu
Slide 4: LoyaltyOne
LoyaltyOne® (MM) AIR MILES® revenue increased 43 percent on a constant currency basis, driven by higher than expected redemptions AIR MILES redeemed increased 74 percent ahead of the upcoming expiry dateA portion is likely due to timing. Pull-forward of redemptions from Q4 Q3BrandLoyalty revenue inc
Slide 5: Epsilon
Epsilon® (MM) Revenue growth was short of expectations at 2 percentOn a positive note, the drag from agency media & services lessenedHowever, loyalty and database solutions - part of technology platforms - was softAdjusted EBITDA growth improvingExpect mid-single digit growth in the fourth quarter o
Slide 6: Card Services
Card Services (MM) Quarter Ended September 30, 2016 2015 % Change Revenue $ 966 $ 764 26% Operating expenses 330 266 24% Provision for loan losses 251 172 46% Funding costs 54 37 46% Adjusted EBITDA, net $ 331 $ 289 14% Adjusted EBITDA, net % 34% 38% -4% 5 Revenue increased 26 percent to $966 millio
Slide 7: Card Services
Card Services (MM) Growth of 3 percent in core cardholder spending driven by a 150 basis point tender share gain Operating expenses improved 30 bps expressed as a percentage of average card receivablesDelinquency rate trends tracking to loss rate guidance for full year Quarter Ended September 30, Ke
Slide 8: Consolidated
ConsolidatedThird Quarter: revenue of $1.9 billion, +19 percent and core EPS of $4.74, +20 percentBoth exceeding guidance (business strength and timing)Raising annual guidance: revenue of $7.2 billion, +11 percent and core EPS of $16.90, +12 percentShare repurchase program: ~$700 million year-to-dat
Slide 9: Third Quarter and Full Year Outlook
Third Quarter and Full Year Outlook EpsilonRevenue growth still choppy: -2 percent in Q1, +5 percent in Q2 and +2 percent in Q3Adjusted EBITDA benefitting from India initiative-22 percent in Q1, -9 percent in Q2, FLAT in Q3, up +5 percent in Q4 (estimate)LoyaltyOne BrandLoyalty: tracking to double-d
Slide 10: 2017 Outlook
2017 Outlook Consolidated revenue and core EPS growth of +10 percent, +10 percentBase caseAssumes no meaningful share repurchases or M&AFactors in final drag from principal loss rate normalizationOverall, expect another solid year of double-digit organic growthLoyaltyOne:BrandLoyalty: continue globa
Slide 11: Outlook: Delinquency and Net Loss Rates
OutlookDelinquency and Net Loss RatesDelinquency rates best predictor of forward loss rate90% Correlation 11
Slide 12: 2017 Outlook – Closing the "Wedge"
Delinquency rates have strong seasonality (Sep-Oct peak), but are very predictable.Delinquency rates are 90% correlated with net loss rates that come 3-6 months later (an account becomes a p&l loss after 180 days delinquent).2017 delinquency rates should narrow and become flat by the third quarter.
Slide 13: Summary
Summary Over the past 15 years Revenue: $770 million $7.2 billion* (16 percent CAGR)Core EPS: $0.52 $16.90* (26 percent CAGR)2016 – 2017Principal loss rates increase following uncharacteristically low levels during 2012 to 2015Knocks 10 points from core EPS growth each yearRevenue and core EPS still
Slide 14: Forward-Looking Statements
Forward-Looking StatementsThis presentation 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
Slide 15: Financial Measures
Financial MeasuresIn 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,
Slide 16: Q & A
Q & A 16