Slide 1: Third Quarter 2021 Results
Alliance Data Third Quarter 2021 Results Ralph Andretta President & CEO Perry Beberman EVP & CFO October 28, 2021 © 2021 ADS Alliance Data Systems, Inc.
Slide 2: Forward-Looking Statements
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 iden
Slide 3: Third Quarter 2021 Key Takeaways
Business development and product update • Strong pipeline and robust business development activities • Balanced mix of portfolios and products • Continued investment in Bread/Digital to scale for growth in 2022 • Announced new Sezzle strategic business relationship Third Quarter 2021 Credit sales an
Slide 4: Third Quarter 2021 Financial Highlights
Third Quarter 2021 Financial Highlights $1.1BN $224MM $4.47 Revenue Net Income Diluted EPS • Revenue increased 5% year-over-year, while total expenses excluding provision for loan loss declined 3% • Net Income of $224 million was up 68% year-over-year • Credit sales of $7.4 billion were up 20% year-
Slide 5: Brand Partner Highlights
Brand Partner Highlights Select New Brand Partners New Bread Strategic Relationship Brand Partner Renewals Select New Bread Direct Acquisition Partners © 2021 ADS Alliance Data Systems, Inc. 5
Slide 6: Bread Business Update
Bread Business Update Direct Acquisition Distribution Partners Platform-as-a-Service + Select new brand partners include New relationship with Sezzle on Bread RBC/Bread launched with Xbox All Access El Dorado and Nikon platform to offer installment lending at Best Buy and The Source Nearly 30 new di
Slide 7: LoyaltyOne Performance Highlights
LoyaltyOne® Performance Highlights • AIR MILES® reward miles issued and redeemed increased versus 2Q21 as airline bookings improved and merchandise redemptions remained strong 1,486 • We remain optimistic on the long-term outlook as travel returns 1,344 1,316 1,355 to steady-state levels 1,240 1,155
Slide 8: Financial Results – Consolidated
Financial Results – Consolidated ($ in millions, except per share) 3Q21 3Q20 % Change Total revenue $1,099 $1,050 5% Total operating expenses, 555 552 1 excl. provision for loan loss Interest expense, net 92 115 (20) Total expenses excl. provision for loan loss 647 667 (3) % Pre-tax pre-provision ea
Slide 9: Financial Results – Segments
Financial Results – Segments ($ in millions) 3Q21 3Q20 % Change LoyaltyOne $169 $185 (8)% Card Services 930 866 7 Corporate/Other - - nm Total revenue $1,099 $1,050 5% LoyaltyOne $45 $18 143% Card Services 314 212 48 Corporate (64) (55) 17 Eliminations (4) - nm Total earnings before tax (EBT) $291 $
Slide 10: Key Business Metrics
Key Business Metrics Average receivables and credit sales Card Services gross revenue yield and cost of funds ($ in billions) $18.1 $18.3 25.5% $17.4 24.7% 23.0% 24.0% $16.1 $15.8 $15.8 22.5% $15.3 $15.3 $15.5 23.3% 22.3% 22.5% 20.4% $9.3 $7.8 $7.7 $7.4 $7.4 $6.1 $6.2 $6.0 $4.8 2.4% 2.4% 2.4% 2.5% 2
Slide 11: Credit Quality and Allowance
Credit Quality and Allowance Delinquency rate Net loss rate 5.9% 6.0% 5.8% 7.6% 5 year Max rate: 7.6% 7.5% 7.0% 6.3% 4.7% 6.5% 5.8% 6.0% 4.3% 4.4% 5.6% 5.5% 5 year Avg rate: ~6.0% 5.0% 5.1% 3.8% 3.8% 3.3% 4.5% 5 year Min rate: 3.9% 3.9% 3.5% 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 3Q19 4Q19 1Q2
Slide 12: 2021 Financial Outlook
2021 Financial Outlook Full Year 2020 Full Year 2021 Commentary Actuals Outlook • Flat year-over-year in 2H21 Average receivables Down • Expect year-end receivables to be in line with year-end 2020 $16,367 million mid-single-digits • Credit sales up double-digits in 2021 • LoyaltyOne full year reven
Slide 13: Our Business Transformation Continues
Our Business Transformation Continues Simplifying our Business Model Expanding our Product Suite Leveraging our Bread Fintech Platform & Developing Strategic Relationships Enhancing our Core Technology & Advancing Digital Capabilities Attracting Top Talent, Activating DE&I Strategy, Drivin
Slide 14: Appendix
Appendix
Slide 15: Key Business Metrics
Key Business Metrics 3Q21 vs 3Q21 vs 3Q21 3Q20 2Q21 3Q20 2Q21 LoyaltyOne (in millions) AIR MILES reward miles issued 1,155 1,240 (7)% 1,139 1% AIR MILES reward miles redeemed 896 687 30% 800 12% Card Services ($ in millions) Credit sales $7,380 $6,152 20% $7,401 -% Average receivables $15,471 $15,30
Slide 16: Key Business Metrics – Quarterly
Key Business Metrics – Quarterly 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 LoyaltyOne (in millions) AIR MILES reward miles issued 1,344 1,486 1,316 1,053 1,240 1,355 1,112 1,139 1,155 AIR MILES reward miles redeemed 1,078 1,199 994 608 687 838 739 800 896 Card Services ($ in millions) Credit sale
Slide 17: Financial Results – Quarterly
Financial Results – Quarterly ($ in millions, except per share) 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Total revenue $1,438 $1,461 $1,382 $979 $1,050 $1,110 $1,085 $1,012 $1,099 Total operating expenses, excl. provision for loan loss 836 771 562 555 552 699 548 553 555 Interest expense, net 14
Slide 18: Financial Results – Segments by Quarter
Financial Results – Segments by Quarter ($ in millions) 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 LoyaltyOne $246 $332 $198 $151 $185 $231 $177 $151 $169 Card Services $1,192 1,128 1,184 828 866 879 908 861 930 Corporate/Other - - - - - - - - - Total revenue $1,438 $1,461 $1,382 $979 $1,050 $1,11
Slide 19: Funding, Capital and Liquidity
Funding, Capital and Liquidity Parent Level Funding Mix • Liquidity at 9/30 of $1.1 billion, consisting of cash on hand plus revolver capacity 3Q20 3Q21 • Approximately $332 million in cash and cash equivalents, ~$750 million in unused revolver 16% 16% • 9/30 TCE/TA ratio of ~4.0%. Expect ~300 basis
Slide 20: Card Services Sales Data
Card Services Sales Data In-store vs. digital sales 43% $6.2 $ in billions 63% 58% 60% 60% 62% 65% 69% 67% $4.6 $5.4 $4.6 $4.8 $3.9 $3.6 $3.6 $2.1 57% 37% 42% 40% 40% 38% 35% $3.1 $3.1 31% 33% $2.4 $2.2 $2.7 $2.6 $2.4 $2.8 $2.6 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 3Q19 4Q19 1Q20 2Q20 3Q20 4Q