Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Alliance Data Systems — Q1 2019 Earnings Presentation
17 slides from Bread Financial's earnings presentation, Apr 25, 2019
Slide 1: First Quarter 2019 Results
Alliance Data NYSE: ADS First Quarter 2019 ResultsApril 25, 2019
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 Results2019 Outlook2019 Updated Guidance 1 3
Slide 4: Q1, 2019 Consolidated Results
Q1, 2019 Consolidated Results(MM, except per share) 2 4 Quarter Ended March 31, 2019 2018 % Change Revenue $1,334 $1,382 -3% Income from continuing operations $174 $177 -1% Income from continuing operations per diluted share (EPS) $3.28 $3.17 +3% Core EPS $3.72 $3.95 -6% Adjusted EBITDA $423 $435 -3
Slide 5: Q1, 2019 Segment Results
Quarter Ended March 31, 2019 2018 % Change Revenue: LoyaltyOne® $204 $226 -10% Unfavorable FX of $14mm; shift to net revenue of $9mm Card Services $1,130 $1,155 -2% $1,334 $1,381 -3% Adjusted EBITDA, net: LoyaltyOne $55 $54 +2% Unfavorable FX of $3mm Card Services $295 $319 -7% Corporate/Other ($33)
Slide 6: Q1, 2019 Overall
6 Q1, 2019 6 OverallFirst quarter results consistent with guidance of revenue down mid-single digits and core EPS down high-single digits (includes Epsilon®)Revenue of $1.8 billion, down 3 percentCore EPS of $4.07, down 8 percent 1.3 million shares repurchased during quarter (approximately 2 percent
Slide 7: Epsilon
EpsilonSigned definitive agreement to sell to Publicis GroupeExpect closing by early third quarterKey considerations:$4.4 billion in purchase consideration ($4.0 billion excluding tax reimbursement)Certainty and speed of close: 100 percent cash, fully committed financingAbility to drive larger ADS-P
Slide 8: Q1, 2019 Card Services
Q1, 2019 8 Card ServicesNew client signings: Houzz (e-commerce home furnishings); Sephora (beauty) and Burlington (high growth off-mall discount department store)Year-to-date signings at $2 billion vintageAttractive and heathier verticals continue to gain share2015-19 client signings now $5 billion
Slide 9: Q1, 2019 Credit Metrics
Quarter Ended March 31, 2019 2018 Change Credit sales $6,315 $6,806 -7% Average card receivables $16,850 $17,722 -5% Normalized average card receivables1 $18,764 $18,627 +1% Total gross yield (revenue/normalized average card receivables) 24.1% 24.8% -0.7% Operating expenses as % of normalized averag
Slide 10: Card Services: Average Receivables Growth
Card Services: Average Receivables Growth 10 Reported growth of -5 percentIncludes impact of discontinued programsActive client growth of +11 percent +11% Active Clients: + Discontinued programs: = Reported: $17.7bn $16.8bn -5% $15.6bn $0bn ~$5bn from 2015+ signings (35 percent growth) Q1, 2018 Q1,
Slide 11: Card Services: End of Year Receivables
Card Services: End of Year Receivables Billion $2.1bnremoved 8 year CAGR of 17% Consistent ROE’s > than 30 percent or 2-3x industry $17.9 15% exitrate 11
Slide 12: Card Services: Principal Loss Rates
6 Card Services: Principal Loss Rates 2005 - 2007~ 6% At Trend Below Trend 2016~ 5% 2017 ‐ 2019~ 6% At Trend Consistent with long-term trend 12 2019
Slide 13: 2019 Revised Guidance
Revenue 2018A 2019G Original $ 7,791 $ 8,100 +4% Less Epsilon (2,175) (2,257) Revised Guidance $ 5,616 $ 5,843 +4% Core EPS 2018A 2019G Original $22.72 $22.00 -3% Less Epsilon (assumed 1/1/2019): Adjusted EBITDA ($475) ($474) Depreciation and amortization 115 121 Allocated interest expense ($1.9bn i
Slide 14: 2019 Revised Guidance
2019 Revised Guidance Reported core EPS Bridging from $18.47 to full-year reported earnings require the addition of the partial year accretive impacts from the projected adjustments. Timing and share price considerations will impact the final reported earnings and guidance will be adjusted as implem
Slide 15: ADS 2.0 - Summary
ADS 2.0 - Summary Card Services:Move towards healthier growth verticals working2015-19 client signings: $5 billion of card receivables increasing to $13 billion when fully rampedDivestiture/reclassification of non-strategic clients completed in fourth quarter of 2018Removes pressure on growthReporte
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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