Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Alliance Data Systems — Q2 2018 Earnings Presentation
16 slides from Bread Financial's earnings presentation, Jul 19, 2018
Slide 1: Alliance Data Second Quarter 2018 Results
Alliance Data NYSE: ADS Second Quarter 2018 ResultsJuly 19, 2018 Exhibit 99.2
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 Consolidated ResultsSegment ResultsCredit Metrics2018 Guidance 1 3
Slide 4: Second Quarter 2018 Consolidated Results
Second Quarter 2018 Consolidated Results(MM, except per share) 2 4 Quarter Ended June 30, 2018 2017 % Change Revenue $1,904 $1,822 +5% Pro forma revenue1 $1,970 $1,822 +8% Net income $218 $138 +58% EPS $3.93 $2.47 +59% Core EPS $5.01 $3.84 +31% Adjusted EBITDA $563 $499 +13% Adjusted EBITDA, net $47
Slide 5: Delinquency and Loss Rates
Delinquency and Loss Rates 50 bps 40 bps ↑50 bps ↑40 bps TDR related Improving delinquency rates In June, more modified accounts (TDRs) stayed in the delinquency rate than expected (neither cured or charged-off)This caused the reported delinquency rate to be elevated compared to the true run-rate (↑
Slide 6: Second Quarter 2018 Segment Results
Quarter Ended June 30, 2018 2017 % Change Revenue: LoyaltyOne® $249 $280 ASC 606 adjustment 66 -- Change to net revenue presentation Pro forma 315 280 +12% Epsilon® 514 544 -5% Weakness in Agency and site-based display offerings (not CRM Direct) Card Services 1,149 1,005 +14% Other (8) (7) $1,970 $1
Slide 7: LoyaltyOne Q2: Double-digit pro forma revenue and adjusted EBITDA growth
7 LoyaltyOne 6 Q2: Double-digit pro forma revenue and adjusted EBITDA growthKey expansion by largest sponsor in AIR MILES® program, Bank of Montreal (BMO) Key metric – AIR MILES issued - turned positive (+2 percent) for first time in over 6 quartersTelus and Kroger (U.S.) deals inked 2nd Half Guide:
Slide 8: Epsilon 1st Half: Revenue down, adjusted EBITDA up
Epsilon 1st Half: Revenue down 5 percent, but primarily pass-through, low-margin Agency businessAdjusted EBITDA up 4 percent in 1st half (tracking to guidance)Additional $ added to innovation fund (partial use of tax windfall)2nd Half Guide: Mid-single revenue and adjusted EBITDA growth expectedAuto
Slide 9: Card Services 1st Half: +14 percent revenue growth
Card Services 1st Half: +14 percent revenue growth, +3 percent adjusted EBITDA, net growthRevenue growth consistent Q1 and Q2, adjusted EBITDA, net ramping (-4 percent in Q1, +10 percent in Q2)+19 percent average receivables growth (active programs), +12 percent reportedApproximately $6 million of i
Slide 10: Credit Metrics
Credit Metrics (MM) Quarter Ended June 30, 2018 2017 Change Credit sales $7,568 $7,515 +1% Credit sales – active programs $7,405 $6,659 +11% Average card receivables $17,570 $15,740 +12% Total gross yield 24.9% 25.0% -0.1% Operating expenses as % of average card receivables 8.9% 8.6% +0.3% Principal
Slide 11: Card Services: First-Half Credit Sales
Card Services: First-Half Credit Sales 6 Active clients’ credit sales up 12 percentTotal credit sales growth masked by portfolios in liquidation (Bon Ton, Gander Mountain, Virgin America)New clients’ credit sales (2015-2018 signings) up approximately 70 percent and now represent ~25 percent of credi
Slide 12: Card Services: First-Half Card Receivables Growth
6 Card Services: First-Half Card Receivables Growth 6 Active clients’ receivables growth up 19 percentTotal receivables growth masked by portfolios in liquidation (Bon Ton, Gander Mountain, Virgin America)New clients’ receivables growth (2015-2018 signings) up 110 percent and now represent ~25 perce
Slide 13: Loss Rates: Returning to Trend
Loss Rates: Returning to Trend 6 2005 - 2007~ 6% At Trend Below Trend 2016~ 5% 2017 ‐ 2018~ 6% At Trend 13
Slide 14: 2018 Guidance
14 2018 Guidance Revenue running a bit softer than original guidance, but no impact to profits and cash flow Card Services: Bon-Ton (~$800 million in receivables at time of bankruptcy)Liquidation vs. reorganization assumption – liquidation is $75 million hit to revenueEpsilonAgency (primarily low-ma
Slide 15: Financial Measures
12 15 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 16: Q & A
Q & A 16
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