Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Alliance Data Systems — Q2 2017 Earnings Presentation
16 slides from Bread Financial's earnings presentation, Jul 20, 2017
Slide 1: Alliance Data Q2 2017 Results
Alliance Data NYSE: ADS Q2, 2017 ResultsJuly 20, 2017 Exhibit 99.2
Slide 2: 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 3: Agenda
Agenda Speakers: Ed Heffernan President and CEO Charles Horn EVP and CFO Second Quarter 2017 Consolidated ResultsSegment ResultsFull Year 2017 Outlook and Initial 2018 Guidance 1 2
Slide 4: Second Quarter 2017 Consolidated Results
Second Quarter 2017 Consolidated Results(MM, except per share) Quarter Ended June 30, 2017 2016 % Change Revenue $ 1,822 $ 1,749 +4% Net Income $ 138 $ 141 -2% EPS $ 2.47 $ 1.24 +99% Core EPS $ 3.84 $ 3.68 +4% Adjusted EBITDA $ 499 $ 472 +6% Adjusted EBITDA, net $ 433 $ 422 +3% Diluted shares 55.8 5
Slide 5: LoyaltyOne
LoyaltyOne® (MM) Unfavorable foreign exchange rates reduced revenue and adjusted EBITDA by approximately $11 million and $2 million, respectively.Adjustments to AIR MILES program are on track. Collector activity and engagement are improving. BrandLoyalty’s results down due to program timing differen
Slide 6: Epsilon
Epsilon® (MM) Continued strength in Agency, Auto and Digital Media offerings.Technology Platform stabilizing : revenue -13 percent in Q4, 2016 → -7 percent in Q1, 2017 → -3 percent in Q2, 2017.Cost controls working. Salary and wage expense up 1 percent for the quarter. Quarter Ended June 30, 2017 20
Slide 7: Card Services
Card Services (MM) Quarter Ended June 30, 2017 2016 % Change Revenue $ 1,005 $ 886 +13% Operating expenses 346 332 +4% Provision for loan losses 288 228 +26% Funding costs 65 50 +30% Adjusted EBITDA, net $ 306 $ 276 +11% Adjusted EBITDA, net % 30% 31% -1% 5 Strong operating expense control. 90 basis
Slide 8: Card Services
Card Services (MM) Gross yields are down slightly due to increase in reserve for uncollectible, unpaid billed finance charges. Loss rates go up, reserve goes up; loss rates come down, reserve comes down. Allowance for loan loss reserve is 6.6 percent of $16.1 billion in reservable card receivables a
Slide 9: Delinquency Wedge
Delinquency Wedge Delinquency Rates 5.5% sas oe WiTES —2016 45% —2015 40% —2014 3.5% 3.0% Jan Feb. Mar Apr | May Jun. sul, Ss Aug. Sep, Oct’ «Ss Nov. Dee
Slide 10: Second Quarter 2017 Consolidated
9 Second Quarter 2017 Consolidated: +4 percent revenue and +4 percent core EPS growthGuidance was for mid-single-digit topline/flat core EPS growthCard Services: growth continues to be strongEpsilon: second consecutive quarter of repeatable growthLoyaltyOne:Canada: adjusted EBITDA margins improved d
Slide 11: Epsilon
10 Epsilon:Second consecutive quarter of solid top/bottom line growthLast occurred in 2015Technology Platform (~25 percent of Epsilon revenue)Revenue -13 percent in Q4, 2016 → -7 percent in Q1, 2017 → -3 percent in Q2, 2017→ expected to be flat by year-endMajor growth drivers: Agency, Auto and Digit
Slide 12: Full Year 2017 Outlook: LoyaltyOne
Full Year 2017 Outlook Loyalty One:Canada: no change to guidance$760 million in revenue, $180 million in adjusted EBITDASolid progress on re-tooling modelAdjusted EBITDA margin improved during Q2, consistent with mid-20’s expectation for full yearSolid progress on sponsor/collector engagement; no sp
Slide 13: Full Year 2017 Outlook: Card Services
Full Year 2017 Outlook Card Services:Card receivables growth of 15 percent or morePipeline robust: tracking to another $2 billion vintageTraditional, hybrid and pure on-lineGross yields stable; ~40 bps of operating leverage (operating expenses/average receivables) Credit normalization nearing comple
Slide 14: 2017 Outlook Consolidated Guidance
2017 Outlook Consolidated Guidance Old New Revenue $7.7 bn, +8 percent $7.8 bn, +9 percent Core EPS $18.50, +9 percent $18.10, +7 percent Growth rates to 2016 actual 2017 Quarterly Q1 Q2 Q3 Q4 Guidance Actual Guidance Actual Guidance Revenue High-single +12% Mid-single +4% Mid-single Mid-teens Core
Slide 15: Financial Measures
13 14 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 15
Alliance Data Systems — Q2 2017 Earnings Presentation on 6ix