Slide 1: First Quarter 2021 Results
Alliance Data First Quarter 2021 Results April 29, 2021 Ralph Andretta – President & CEO ©2021 ADS Alliance Data Systems, Inc.
Slide 2: Forward-Looking Statements
Forward-Looking Statements This 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: First Quarter 2021 Key Takeaways
First Quarter 2021 Key Takeaways • Credit sales returning to pre-pandemic levels aligned with improving consumer confidence and activity • Digital sales strength continues while in-store activity has begun to recover, supporting our outlook for improved credit sales performance • Strong momentum wit
Slide 4: First Quarter 2021 Financial Highlights
First Quarter 2021 Financial Highlights $1.1B $286MM $5.74 Revenue Net Income Diluted EPS • Net Income of $286 million includes a net reserve release of $165 million, or $2.40 per diluted share • Revenue declined 21% year-over-year, while total expenses excluding provision for loan loss declined 6%
Slide 5: Card Services Performance Highlights
Card Services Performance Highlights • Total application growth improved sequentially with applications flat year-over-year • New accounts were up 1% year-over-year • Credit sales performance continues to improve and stabilize year-over-year • The majority of the credit sales performance improvement
Slide 6: Card Services Partnership Highlights
Card Services Partnership Highlights Continued growth brings total partnerships to approximately 650 Strategic Partnership Partner Renewal Primary omnichannel provider of point-of-sale lending products Select New Partnerships ©2021 ADS Alliance Data Systems, Inc. 6
Slide 7: Bread Business Models
Bread Business Models Platform provides diversified growth opportunities Direct Acquisition Distribution Technology Platform Merchant Acquirer Network / Platform (Always Bread) Issuer / Loan Originator (Owns Consumer Relationship & Holds Accounts Receivable) Installment loan and Buy Now, Pay Later p
Slide 8: LoyaltyOne Performance Highlights
LoyaltyOne® Performance Highlights • AIR MILES reward miles issued and redeemed • BrandLoyalty’s new program activity is picking declined vs 1Q20 due to continued lockdown up with a strong pipeline of clients in the in Canada second half of 2021 • AIR MILES is working with airline partners to • Cons
Slide 9: Financial Results – Consolidated
Financial Results – Consolidated ($ in millions, except per share) 1Q21 1Q20 % Change Total revenue $1,085 $1,382 (21) % Total operating expenses, 548 562 (2) excl. provision for loan loss Interest expense, net 109 139 (22) Total expenses excl. provision for loan loss 657 701 (6) % Provision for loa
Slide 10: Financial Results – Segments
Financial Results – Segments ($ in millions) 1Q21 1Q20 % Change LoyaltyOne $177 $198 (11) % Card Services 908 1,184 (23) Total revenue $1,085 $1,382 (21) % LoyaltyOne $32 $47 (32) % Card Services 410 32 1,179 Corporate/Other (47) (53) (12) Total earnings before tax (EBT) $394 $25 1,452 % 7% 16% 1Q21
Slide 11: Key Business Metrics
Key Business Metrics • Card Services revenue improved 3% on a sequential basis with steady receivables and a 70bp pickup in gross yield • LoyaltyOne revenue was down 24% on a sequential basis with declines in both AIR MILES and BrandLoyalty • Total operating expenses excluding provision for loan los
Slide 12: Credit Quality and Allowance
Credit Quality and Allowance Net loss rate Reserve rate ($ in millions) 7.6% 5 year Max rate: 7.6% $2,151 $2,096 $2,081 $2,008 $1,843 7.0% 6.0% 5 year Avg rate: ~6.0% 5.8% 5.0% 13.3% 13.3% 12.1% 12.0% 11.9% 5 year Min rate: 4.7% 1Q20 2Q20 3Q20* 4Q20* 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 historic quarterly
Slide 13: 2021 Financial Outlook
2021 Financial Outlook Full Year 2020 Full Year 2021 Commentary Actuals Outlook • Sequential decline in 2Q21 Average receivables Down • Flat year-over-year in 2H21 2020 = $16,367 million mid-single-digits • Expect year-end receivables to be in line with year-end 2020 • Credit sales up high-single- t
Slide 14: Financial Measures
Financial Measures In addition to the results presented in accordance with generally accepted accounting principles, or GAAP, the Company may present financial measures that are non-GAAP measures, such as constant currency financial measures, pre-provision earnings before taxes, adjusted EBITDA, adj
Slide 15: Appendix
Appendix ©2021 ADS Alliance Data Systems, Inc. 15
Slide 16: Key Business Metrics
Key Business Metrics 1Q21 vs 1Q21 vs 1Q21 1Q20 4Q20 1Q20 4Q20 LoyaltyOne (in millions) AIR MILES reward miles issued 1,112 1,316 (16)% 1,355 (18)% AIR MILES reward miles redeemed 739 994 (26)% 838 (12)% Card Services ($ in millions) Credit sales $6,043 $6,099 (1)% $7,657 (21)% Average receivables $1
Slide 17: Key Business Metrics
Key Business Metrics 1Q20 2Q20 3Q20 4Q20 1Q21 LoyaltyOne (in millions) AIR MILES reward miles issued 1,316 1,053 1,240 1,355 1,112 AIR MILES reward miles redeemed 994 608 687 838 739 Card Services ($ in millions) Credit sales $6,099 $4,799 $6,152 $7,657 $6,043 Average receivables $18,294 $16,116 $15
Slide 18: Financial Results – Quarterly
Financial Results – Quarterly ($ in millions, except per share) 1Q20 2Q20 3Q20 4Q20 1Q21 Total revenue $1,382 $979 $1,050 $1,110 $1,085 Total operating expenses, 562 555 552 699 548 excl. provision for loan loss Interest expense, net 139 128 115 113 109 Total expenses excl. provision for loan loss 7
Slide 19: Financial Results – Segments by Quarter
Financial Results – Segments by Quarter ($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21 LoyaltyOne $198 $151 $185 $231 $177 Card Services 1,184 828 866 879 908 Corporate/Other - - - - - Total revenue $1,382 $979 $1,050 $1,110 $1,085 LoyaltyOne $47 $24 $18 $22 $32 Card Services 32 70 212 187 410 Corporate/O
Slide 20: Capital and Liquidity
Capital and Liquidity Parent Level • Liquidity at 3/31 of $1.1 billion, consisting of cash on hand plus revolver capacity • Approximately $373 million in cash and cash equivalents, $750.0 million in unused revolver Bank Level • Banks finished the quarter with $2.5 billion in cash and $2.9 billion in
Slide 21: Card Services Sales Data
Card Services Sales Data In-store vs. digital sales 43% $4.6 $ in billions 63% 58% 60% 60% $3.9 $3.6 $3.6 $2.1 57% 37% 42% 40% 40% $2.7 $3.1 $2.2 $2.6 $2.4 1Q20 2Q20 3Q20 4Q20 1Q21 1Q20 2Q20 3Q20 4Q20 1Q21 In-store vs. digital new accounts 32% 2.1 67% 63% 65% 67% In millions 1.6 1.6 0.6 1.7 68% 1.3
Slide 22: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information ($ in millions, except per share amounts) 1Q21 Net income $286.2 Add back non-cash/ non-operating items: Stock compensation expense 6.8 Amortization of purchased intangibles 11.1 Non-cash interest(1) 8.5 Strategic transaction costs(2) 2.8 Restructuring and othe
Slide 23: Reconciliation of Non-GAAP Information
Reconciliation of Non-GAAP Information ($ in millions) LoyaltyOne Card Services Corporate 1Q21 Total Income (loss) before income taxes $31.7 $409.9 $(47.2) $394.4 Interest expense, net - 79.1 29.6 108.7 Operating income (loss) $31.7 $489.0 $(17.6) $503.1 Depreciation and amortization 9.0 24.4 0.6 34