Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Alliance Data Systems — Q4 2017 Earnings Presentation
17 slides from Bread Financial's earnings presentation, Jan 25, 2018
Slide 1: Fourth Quarter and Full Year 2017 Results
Alliance Data NYSE: ADS Fourth Quarter and Full Year 2017 ResultsJanuary 25, 2018
Slide 2: Forward-Looking Statements
11 2 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 generall
Slide 3: Agenda
Agenda Speakers: Ed Heffernan President and CEO Charles Horn EVP and CFO Fourth Quarter and Full Year Consolidated ResultsSegment Results2017 Full Year2018 Updated Guidance 1 3
Slide 4: Fourth Quarter and 2017 Consolidated Results
Fourth Quarter and 2017 Consolidated Results(MM, except per share) Quarter Ended December 31 , Year Ended December 31, 2017 2016 % Change 2017 2016 % Change Revenue $ 2,106 $ 1,828 +15% $ 7,719 $ 7,138 +8% Net income $ 271 $ 11 nm $ 789 $ 518 +52% EPS $ 4.88 $ 0.18 nm $ 14.10 $ 7.34 +92% Core EPS $
Slide 5: LoyaltyOne
LoyaltyOne® (MM) Quarter Ended December 31, Year Ended December 31, 2017 2016 % Change 2017 2016 % Change Revenue $ 385 $ 247 +56% $ 1,304 $ 1,338 -3% Adjusted EBITDA $ 80 $ 74 +9% $ 257 $ 314 -18% Non-controlling interest - - nm - -5 nm Adjusted EBITDA, net $ 80 $ 74 +9% $ 257 $ 309 -17% Adjusted E
Slide 6: Epsilon
Epsilon® (MM) Faster than expected stabilization and growth in Technology Platform offering.Conversant CRM bounced back to strong double-digit growth in fourth quarter.Strong growth in Europe. Quarter Ended December 31, Year Ended December 31, 2017 2016 % Change 2017 2016 % Change Revenue $ 640 $ 60
Slide 7: Card Services
Card Services (MM) Quarter Ended December 31, Year Ended December 31, 2017 2016 % Change 2017 2016 % Change Revenue $ 1,087 $ 988 +10% $ 4,171 $ 3,675 +13% Operating expenses 360 341 +6% 1,404 1,311 +7% Provision for loan losses 332 290 +15% 1,140 941 +21% Funding costs 84 59 +43% 282 210 +34% Adjus
Slide 8: Card Services Key Metrics
Card Services (MM) Tender share gains added over 100 basis points to credit sales growth for year.Divested two non-core portfolios in December reducing average receivables growth by 2 percent for fourth quarter.Hurricanes’ impact increased ending delinquency rates by approximately 20 basis points. K
Slide 9: 2017 Full Year
7 9 Revenue ($BN) Adj. EBITDA, net ($MM) Core EPS LoyaltyOne $ 1.30 -3% $ 257 (18%) Epsilon $ 2.27 +5% $ 505 -29 $ 476 +5%(1%) IncentiveComp. restoredv. $0 2016 Card Services $ 4.17 +13% $ 1,345 +11% ADS $ 7.72 +8% $ 1,937 +3% $19.35 +14% 1 Includes $1.02 of net tax benefit. 2017 Full Year 1
Slide 10: 2017 Full Year: LoyaltyOne
8 10 2017 Full Year (+) (▬) LoyaltyOne: AIR MILES Model stabilized (25 percent adj. EBITDA margins) Stabilized, but did not add to ADS growth Renewed BMO relationship (#1 client) Promotional spend (1/3 of issuance) remains weak No client losses Active collectors back to pre-crisis levels BrandLoyalt
Slide 11: 2017 Full Year: Epsilon
2017 Full Year 11 (+) (▬) Epsilon: Strong bounce to +5 percent revenue and +5 percent adj. EBITDA growth excluding restoration of incentive compensation Macro: impact of tight labor market for ‘hot skills’ Technology Platform offering (~25 percent of segment) turned from -13 percent revenue growth i
Slide 12: 2017 Full Year: Card Services
2017 Full Year 12 (+) (▬) Card Services: Delinquency wedge effectively closed (best predictor of future losses)55 basis points to 10 basis points excluding impact of hurricanes 3rd Party recovery market plummeted – lower recovery rate increased net principal loss rate by 60 basis points 15 percent g
Slide 13: 2017 Full Year Consolidated
2017 Full Year ConsolidatedRevenue up 8 percent and core EPS up 14 percent (up 8 percent excluding net tax benefit)Leverage modest @ 2.7x while funding approximately $1 billion for buybacks and capital for portfolio growthCredit loss rate stabilizing after two years of increasesADS poised to return
Slide 14: 2018 Updated Guidance
14 2018 Updated Guidance Consolidated 2017 2018 Revenue – prior $ 7.72BN $ 8.70BN +12% ASC 606 accounting reclassification 1 - -0.35BN Revenue – updated $7.72 BN $ 8.35BN +8% Core EPS $ 19.35 $22.50 - $23.00 +16 to 19% 1 ASC 606 revenue recognition, which is effective January 1, 2018, requires a net
Slide 15: 2018 Guidance by Segment
High single-digit revenue, low double-digit adjusted EBITDA growthMid-single-digit revenue and adjusted EBITDA growthMid-teens revenue and adjusted EBITDA growthMid-teens portfolio growth ($2.5BN)‘15 to ’17 signings ramping ($2.5 BN) plus core ($1.0 BN) less non-core $1.0 BN) = 15 percent growthStab
Slide 16: Financial Measures
12 16 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 EB
Slide 17: Q & A
Q & A 17
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