Slide 1: Second Quarter 2021 Results
Alliance Data Second Quarter 2021 Results Ralph Andretta President & CEO Perry Beberman EVP & CFO July 29, 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: Second Quarter 2021 Key Takeaways
1 Continued progress on strategic initiatives • Bread’s strategic relationship with Fiserv active as of June 30 • New partner signings, renewals, and strong pipeline • Modernization and efficiency initiatives on schedule Second Quarter 2021 Key Takeaways 2 Inflection point for receivables growth • C
Slide 4: Second Quarter 2021 Financial Highlights
Second Quarter 2021 Financial Highlights $1.0B $273MM $5.47 Revenue Net Income Diluted EPS • Revenue increased 3% year-over-year, while total expenses excluding provision for loan loss declined 4% • Net Income of $273 million includes a net reserve release of $208 million • Credit sales of $7.4 bill
Slide 5: Strategic Initiatives Update
Strategic Initiatives Update Bread Distribution Relationship with Fiserv • Launch of Bread / Fiserv strategic relationship Enhanced Digital Suite (EDS) & Unified Software Development Kit (SDK) • Accelerating integration with brand partners Core Processing & Statement Processing Conversions • Success
Slide 6: Card Services Brand Partner Highlights
Card Services Brand Partner Highlights Select New Brand Partners Select New Bread Direct Acquisition Partners Brand Partner Renewals © 2021 ADS Alliance Data Systems, Inc. 6
Slide 7: Bread Business Update
Bread Business Update Direct Acquisition Distribution Technology Platform + Select new brand partners include E-commerce pilot active on June 30 Anticipated new brand partner Wayfair and Blue Nile Select early launches in 2H21 additions in 4Q21 Pipeline gaining momentum Full roll-out in 2022 © 2021
Slide 8: LoyaltyOne Performance Highlights
LoyaltyOne® Performance Highlights • AIR MILES® reward miles issued and redeemed increased versus 2Q20 as airline bookings improved and merchandise redemptions remained strong 1,486 1,423 • AIR MILES is working with travel partners to offer promotions 1,344 1,316 1,355 and redemptions to drive incre
Slide 9: 2020 Environmental, Social and Governance Performance Report
2020 Environmental, Social and Governance Performance Report Report highlights key findings from second materiality assessment, which will guide Company’s evolving ESG strategy in alignment with its business transformation. Progress against 3-year sustainability goals set in 2017: • Sustainability G
Slide 10: Financial Results – Consolidated
Financial Results – Consolidated ($ in millions, except per share) 2Q21 2Q20 % Change Total revenue $1,012 $979 3% Total operating expenses, 553 555 - excl. provision for loan loss Interest expense, net 102 128 (20) Total expenses excl. provision for loan loss 655 683 (4) % Pre-provision, pre-tax ea
Slide 11: Financial Results – Segments
Financial Results – Segments ($ in millions) 2Q21 2Q20 % Change LoyaltyOne $151 $151 -% Card Services 861 828 4 Corporate/Other - - - Total revenue $1,012 $979 3% LoyaltyOne $24 $24 2% Card Services 404 70 475 Corporate/Other (57) (47) 21 Total earnings before tax (EBT) $372 $47 691% 6% 15% 2Q21 tot
Slide 12: Key Business Metrics
Key Business Metrics Credit sales near pre-pandemic level Card Services gross revenue yield remains steady ($ in billions) $18.1 $18.3 25.5% $17.4 24.7% $16.8 $16.1 $15.8 $15.8 22.5% 23.0% $15.3 $15.3 23.9% 23.3% 22.5% 22.3% 20.4% $9.3 $7.6 $7.8 $7.7 $7.4 $6.1 $6.2 $6.0 $4.8 2.3% 2.4% 2.4% 2.4% 2.5%
Slide 13: 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% 5.2% 7.0% 4.7% 6.3% 6.1% 6.0% 4.3% 4.4% 5.8% 5.6% 5 year Avg rate: ~6.0% 3.8% 5.0% 5.1% 3.3% 5 year Min rate: 4.7% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20* 4Q20* 1
Slide 14: 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 $16,367 million mid-single-digits • Credit sales up double-digits in 2021 • LoyaltyOne full year reven
Slide 15: Financial Measures
Financial Measures In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, the Company may present financial measures that are non-GAAP measures, such as pre-provision earnings before taxes, adjusted EBITDA, adjusted EBITDA, net of funding costs, co
Slide 16: Appendix
Appendix
Slide 17: Key Business Metrics
Key Business Metrics 2Q21 vs 2Q21 vs 2Q21 2Q20 1Q21 2Q20 1Q21 LoyaltyOne (in millions) AIR MILES reward miles issued 1,139 1,053 8% 1,112 2% AIR MILES reward miles redeemed 800 608 32% 739 8% Card Services ($ in millions) Credit sales $7,401 $4,799 54% $6,043 22% Average receivables $15,282 $16,116
Slide 18: Key Business Metrics – Quarterly
Key Business Metrics – Quarterly 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 LoyaltyOne (in millions) AIR MILES reward miles issued 1,423 1,344 1,486 1,316 1,053 1,240 1,355 1,112 1,139 AIR MILES reward miles redeemed 1,050 1,078 1,199 994 608 687 838 739 800 Card Services ($ in millions) Credit sa
Slide 19: Financial Results – Quarterly
Financial Results – Quarterly ($ in millions, except per share) 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Total revenue $1,348 1,438 $1,461 $1,382 $979 $1,050 $1,110 $1,085 $1,012 Total operating expenses, excl. provision for loan loss 754 836 771 562 555 552 699 548 553 Interest expense, net 143
Slide 20: Financial Results – Segments by Quarter
Financial Results – Segments by Quarter ($ in millions) 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 LoyaltyOne $251 $246 $332 $198 $151 $185 $231 $177 $151 Card Services $1,097 $1,192 1,128 1,184 828 866 879 908 861 Corporate/Other - - - - - - - - - Total revenue $1,348 $1,438 $1,461 $1,382 $979 $1
Slide 21: Capital and Liquidity
Capital and Liquidity Parent Level • Liquidity at 6/30 of $1.0 billion, consisting of cash on hand plus revolver capacity • Approximately $284 million in cash and cash equivalents, $750 million in unused revolver Bank Level • Banks finished the quarter with $2.7 billion in cash and $3.1 billion in e
Slide 22: Card Services Sales Data
Card Services Sales Data In-store vs. digital sales 43% $6.2 $ in billions 63% 58% 60% 60% 62% 67% 69% 67% $4.6 $5.0 $5.4 $4.6 $3.9 $3.6 $3.6 $2.1 57% 37% 42% 40% 40% 38% $3.1 $2.7 $3.1 $2.8 33% 31% 33% $2.5 $2.4 $2.2 $2.6 $2.4 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 2Q19 3Q19 4Q19 1Q20 2Q20 3Q
Slide 23: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information ($ in millions, except per share amounts) 2Q21 Net income $273.5 Add back non-cash/ non-operating items: Stock compensation expense 9.2 Amortization of purchased intangibles 11.5 Non-cash interest(1) 8.0 Strategic transaction costs(2) 4.8 Income tax effect(3) (
Slide 24: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information ($ in millions) LoyaltyOne Card Services Corporate 2Q21 Total Income (loss) before income taxes $24.5 $404.5 $(57.4) $371.6 Interest expense, net (0.1) 72.2 29.6 101.7 Operating income (loss) 24.4 476.7 (27.8) 473.3 Depreciation and amortization 9.4 21.5 0.6 31
Slide 25: Alliance Data announces spinoff of the LoyaltyOne Segment
Alliance Data announces spinoff of the LoyaltyOne Segment Proposed spinoff is expected to be tax-free and will create two independent, publicly traded companies • Aligns with our strategic transformation to deliver long-term, sustainable growth • Positions both companies to invest more deeply in the