Bread Financial Holdings, Inc. · NYSE:BFH
Bread Financial — Alliance Data Systems — Q2 2020 Earnings Presentation
16 slides from Bread Financial's earnings presentation, Jul 23, 2020
Slide 1: Alliance Data Second Quarter 2020 Results
Alliance Data NYSE: ADS Second Quarter 2020 ResultsJuly 23, 2020
Slide 2: Forward-Looking Statements
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 generally b
Slide 3: Q2 2020 Agenda
Q2 2020 Agenda Speakers: Ralph Andretta President and CEO Tim King EVP and CFO Key TakeawaysQ2 Consolidated Financial Results Q2 Business Segment Financial ResultsLoyaltyOne®Card ServicesQ2 Business Update – Card ServicesKey MetricsLiquidity UpdateStore Opening / Credit Sales TrendsState Re-opening
Slide 4: Q2 2020 Key Takeaways
Q2 2020 Key Takeaways Mixed results at LoyaltyOne AIR MILES® benefitted from expense reduction – adjusted EBITDA, net increased 5% on a constant currency basis; Solid performance in grocer Sponsor categoryBrandLoyalty experienced deferred program spending – revenue decreased 44% on a constant curren
Slide 5: Q2 2020 Consolidated Results
Q2 2020 Consolidated Results (MM, except per share) 5 Quarter Ended June 30, 2020 2019 % Change Revenue $979 $1,348 -27% Income from continuing operations $38 $142 -73% Income from continuing operations per diluted share (EPS) $0.81 $2.71 -70% Core EPS $1.86 $3.83 -51% Adjusted EBITDA $258 $414 -38%
Slide 6: Q2 2020 LoyaltyOne
6 Quarter Ended June 30, 2020 2019 % Change Revenue $151 $251 -40% Operating Expenses $127 $223 43% Operating Income $24 $28 -16% Interest Expense $0 $1 nm Earnings before taxes $24 $27 -13% Adjusted EBITDA, net $44 $51 -14% AIR MILES Issued 1,053 1,423 -26% AIR MILES Redeemed 608 1,050 -42% Revenue
Slide 7: Q2 2020 Card Services
7 Quarter Ended June 30, 2020 2019 % Change Revenue $828 $1,097 -24% Operating Expenses Asset impairments $34 $0 nm Mark-to-market $2 $40 nm Operating Expenses $370 $432 -14% Total Operating Expenses $406 $472 -14% Provision for Loan Losses Charge Offs $305 $258 18% ALLL Build/(Release) -$55 -$1 nm
Slide 8: Q2 2020 Card Services Key Metrics
Q2 2020 Business Update – Card Services 8 1 Normalized card receivables includes held-for-sale receivables2 Revenue divided by normalized card receivables3 Excludes mark-to-market on held-for-sale receivables and asset impairment charges Key Metrics Quarter Ended June 30, 2020 2019 % Change/ Varianc
Slide 9: Q2 2020 Liquidity Update
Parent Level Liquidity at 6/30 of $1.1 billion, consisting of cash on hand plus revolver capacity $775 million in cash and cash equivalents, $350 million in unused revolverNo debt maturities until December 2022Bank LevelBanks finished the quarter with $4.2 billion in cash and $2.5 billion in equityT
Slide 10: Store Openings / Credit Sales Trends
Pre-COVID = 1/1 to 3/14Shelter in Place = 3/15 to 4/30Compared to February base, stores were largely reopened at quarter-endStore-based sales recovered commensurate with store re-openings Q2 2020 Business Update – Card Services Net Credit Sales Direct Channels Store Based General Purpose 10 Store Op
Slide 11: State Re-Opening Trends
States with COVID surges have come off of their peak re-openingsUncertainty in Q3/4 continues to rely on consumer confidence with direct implications from cases both in terms of number and severity Q2 2020 Business Update – Card Services 11 State Re-Opening Trends Shelter in Place Re-Opening Phase C
Slide 12: Payment Behavior Trends
Total forbearance programs peaked above 10% of our total A/R and now represent slightly less than 4%Forbearance group was heavily influenced by Payment Holiday (largest program); still shows strong payment trends Over 50% of Payment Holiday enrollees made a payment even though none was requiredOver
Slide 13: Retailer Bankruptcy Economics
Approximately 6% of A/R is from retailers currently in bankruptcy process Cards retain functionality during retailer reorganizations, with appropriate measures implemented by ADS for prudent account managementIf a retailer ultimately liquidates, the associated A/R portfolio follows a predictable and
Slide 14: Q2 2020 Closing Remarks: The Way Forward
The Way Forward - Planning For Our FutureBoard refreshment – in June, two new directors were elected to our board and three completed their serviceAdding key talent – recent addition of industry veteran Val Greer as Chief Commercial OfficerContinuing investment in Data and Analytics and digital capa
Slide 15: Financial Measures
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, pre-provision earnings before taxes, adjusted EBITDA, a
Slide 16: Q & A
Q & A 16
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