DALLAS, Oct. 19, 2017 /PRNewswire/ -- Alliance Data
Systems Corporation (NYSE: ADS), a leading global provider of
data-driven marketing and loyalty solutions, today announced
results for the quarter ended September 30,
2017.
SUMMARY
|
Quarter Ended
September 30,
|
(in millions,
except per share amounts)
|
2017
|
|
2016
|
|
%
Change
|
Revenue
|
$ 1,912
|
|
$ 1,886
|
|
+1%
|
Net income
|
$
233
|
|
$
208
|
|
+12%
|
Net income
attributable to Alliance Data
stockholders
per diluted share ("EPS")
|
$
4.20
|
|
$
3.55
|
|
+18%
|
Diluted shares
outstanding
|
55.6
|
|
58.4
|
|
-5%
|
*******************************
|
|
|
|
|
|
Supplemental Non-GAAP
Metrics (a):
|
|
|
|
|
|
Adjusted
EBITDA
|
$
622
|
|
$
566
|
|
+10%
|
Adjusted
EBITDA, net of funding costs and non-
controlling interest ("adjusted EBITDA, net")
|
$
550
|
|
$
512
|
|
+7%
|
Core earnings
attributable to Alliance Data
stockholders per diluted share ("core EPS")
|
$
5.35
|
|
$
4.74
|
|
+13%
|
|
(a) See "Financial Measures"
below for a discussion of non-GAAP financial measures.
|
Ed Heffernan, president and chief
executive officer of Alliance Data, commented, "The third quarter
marked the beginning of our anticipated acceleration or 'slingshot'
in core earnings per share as we moved from growth of 2 percent in
the first quarter to 4 percent in the second quarter to 13 percent
this quarter. Excluding the change in our effective tax rate, our
growth still accelerated to high single-digits for the third
quarter. As with any quarter, there were "puts and takes," but the
primary driver behind the acceleration was the much anticipated
normalization in credit quality. Specifically, gross loss rates,
which were up approximately 75 basis points in the first half of
the year compared to the prior year period, improved to flat
year-over-year in the third quarter, which was earlier than
anticipated. We believe we are on track for reaching full
stabilization (closing of the delinquency wedge) in the fourth
quarter of 2017, suggesting that our 'slingshot' thesis for 2018
remains intact."
Heffernan continued, "Our third quarter results also reflect the
early impact of hurricanes Harvey and Irma, which prompted us to
provide a two-month leniency period for cardholders in
FEMA-designated 'individual assistance' disaster areas. During this
period, affected cardholders are not required to make payments, nor
will interest or late fees be assessed. As a result, our gross
yields on card receivables decreased over 100 basis points compared
to the third quarter of 2016. As we continue to sort through the
impacts of the hurricanes, we will do all that we can to lessen the
burden on impacted cardholders. These actions may pressure gross
yields, and the continued disruption from the hurricanes will
likely reduce card spending in the fourth quarter. Despite this
influence, and because of better than expected loss rates, we
remain comfortable with maintaining our core EPS guidance of
$18.10 for 2017 and $21.50 for 2018, representing a 19 percent growth
rate."
CONSOLIDATED RESULTS
Revenue increased 1 percent to $1.91
billion and EPS increased 18 percent to $4.20 for the third quarter of 2017. Adjusted
EBITDA, net increased 7 percent to $550
million, while core EPS increased 13 percent to $5.35 for the third quarter of 2017.
SEGMENT REVIEW
LoyaltyOne: Revenue decreased 20 percent to
$305 million while adjusted EBITDA
decreased 26 percent to $61 million
for the third quarter of 2017, largely due to both the breakage
estimate reset in the fourth quarter of 2016 for AIR
MILES® and timing of client programs at
BrandLoyalty.
AIR MILES revenue decreased 28 percent to $185 million for the third quarter of 2017
primarily due to a 43 percent decrease in AIR MILES reward miles
redeemed. AIR MILES reward miles issued also decreased 7 percent,
due to reduced promotional activity by certain sponsors. Sponsor
and collector engagement has been steadily improving since the
negative media attention surrounding the then-planned expiration of
AIR MILES reward miles at the end of 2016, and issuance growth is
expected to improve as we move into the fourth quarter.
BrandLoyalty revenue decreased 5 percent to $121 million for the third quarter of 2017.
Quarterly results for BrandLoyalty can be uneven due to the nature
of its offering - short-term loyalty solutions generally 12 to 20
weeks in duration. The outlook is for double-digit revenue growth
in the fourth quarter of 2017.
Epsilon: Revenue increased 3 percent to
$559 million, while adjusted EBITDA
decreased 7 percent to $125 million
for the third quarter of 2017. The decline in adjusted EBITDA is
primarily due to an unfavorable revenue mix toward lower margin
product offerings.
Of note, the Technology Platform offering - approximately 25
percent of Epsilon's revenue - returned to growth after four
consecutive quarterly declines, increasing 1 percent for the third
quarter of 2017, driven by new client wins.
Card Services: Revenue increased 9 percent to
$1.1 billion and adjusted EBITDA, net
increased 20 percent to $397 million
for the third quarter of 2017.
Gross yields were 25.4 percent for the third quarter of 2017,
down approximately 130 basis points from the prior comparable
period, primarily due to increased hardship accounts resulting from
hurricanes Harvey and Irma. Operating expenses increased 16 percent
to $382 million, or 9.2 percent of
average receivables. The loan loss provision decreased 19 percent
to $205 million for the third quarter
of 2017 due to a sequential decline in principal loss rates and an
outlook for further declines. Portfolio funding costs were
$71 million for the third quarter of
2017, or 1.7 percent of average credit card receivables, up 23
basis points from the third quarter of 2016.
Credit sales increased 5 percent to $7.4
billion for the third quarter of 2017, bolstered by a modest
increase in tender share. Average credit card receivables,
excluding amounts reclassified as assets held for sale, increased
14 percent to $15.9 billion compared
to the third quarter of 2016, while net principal loss rates for
the third quarter of 2017 were 5.5 percent, up 80 basis points from
last year but 75 basis points lower than the first half of 2017.
The delinquency rate was 5.43 percent at September 30, 2017, up 40 basis points from the
same time last year.
2017 Guidance
Guidance is for revenue of $7.8
billion, a 9 percent increase over 2016, and core EPS of
$18.10, a 7 percent increase over
2016.
2018 Guidance
The guidance for 2018 is revenue of $8.7
billion, representing a 12 percent increase and core EPS of
$21.50, representing a 19 percent
increase over 2017.
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 identified by the use of words such as "believe,"
"expect," "anticipate," "estimate," "intend," "project," "plan,"
"likely," "may," "should" or other words or phrases of similar
import. Similarly, statements that describe our business strategy,
outlook, objectives, plans, intentions or goals also are
forward-looking statements. Examples of forward-looking
statements include, but are not limited to, statements we make
regarding our expected operating results, future economic
conditions including currency exchange rates, future dividend
declarations and the guidance we give with respect to our
anticipated financial performance.
We believe that our expectations are based on reasonable
assumptions. Forward-looking statements, however, are subject to a
number of risks and uncertainties that could cause actual results
to differ materially from the projections, anticipated results or
other expectations expressed in this release, and no assurances can
be given that our expectations will prove to have been correct.
These risks and uncertainties include, but are not limited to,
factors set forth in the Risk Factors section in our Annual Report
on Form 10-K for the most recently ended fiscal year, which may be
updated in Item 1A of, or elsewhere in, our Quarterly Reports on
Form 10-Q filed for periods subsequent to such Form 10-K.
Our forward-looking statements speak only as of the date made,
and we undertake no obligation, other than as required by
applicable law, to update or revise any forward-looking statements,
whether as a result of new information, subsequent events,
anticipated or unanticipated circumstances or otherwise.
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, adjusted EBITDA, adjusted
EBITDA margin, adjusted EBITDA, net of funding costs and
non-controlling interest, core earnings and core earnings per
diluted share (core EPS). Constant currency excludes the impact of
fluctuations in foreign exchange rates. The Company calculates
constant currency by converting our current period local currency
financial results using the prior period exchange rates. The
Company uses adjusted EBITDA and adjusted EBITDA, net as an
integral part of internal reporting to measure the performance and
operational strength of reportable segments and to evaluate the
performance of senior management. Adjusted EBITDA eliminates the
uneven effect across all reportable segments of non-cash
depreciation of tangible assets and amortization of intangible
assets, including certain intangible assets that were recognized in
business combinations, and the non-cash effect of stock
compensation expense. Similarly, core earnings and core EPS
eliminate non-cash or non-operating items, including, but not
limited to, stock compensation expense, amortization of purchased
intangibles, amortization of debt issuance and hedging costs,
mark-to-market gains or losses on interest rate derivatives,
changes to the expiry policy and regulatory settlements. The
Company believes that these non-GAAP financial measures, viewed in
addition to and not in lieu of the Company's reported GAAP results,
provide useful information to investors regarding the Company's
performance and overall results of operations.
Reconciliation of Non-GAAP Financial Measures
Reconciliations to comparable GAAP financial measures are
available in the accompanying schedules, which are posted as part
of this earnings release in both the News and Investors sections on
the Company's website (www.alliancedata.com). No reconciliation is
provided with respect to forward-looking annual guidance for 2017
or 2018 core EPS as the Company cannot reliably predict all
necessary components or their impact to reconcile core EPS to GAAP
EPS without unreasonable effort. The events necessitating a
non-GAAP adjustment are inherently unpredictable and may have a
material impact on the Company's future results.
The financial measures presented are consistent with the
Company's historical financial reporting practices. Core earnings
and core EPS represent performance measures and are not intended to
represent liquidity measures. The non-GAAP financial measures
presented herein may not be comparable to similarly titled measures
presented by other companies, and are not identical to
corresponding measures used in other various agreements or public
filings.
Conference
Call
Alliance Data will host a conference call on Thursday, October 19, 2017 at 8:30 a.m. (Eastern Time) to discuss the Company's
third-quarter 2017 results. The conference call will be available
via the Internet at www.alliancedata.com. There will be several
slides accompanying the webcast. Please go to the website at least
15 minutes prior to the call to register, download and install any
necessary software. The recorded webcast will also be available on
the Company's website.
If you are unable to participate in the conference call, a
replay will be available. To access the replay, please dial (855)
859-2056 or (404) 537-3406 and enter "77386551". The replay will be
available at approximately 11:45 a.m.
(Eastern Time) on Thursday, October
19, 2017.
About Alliance Data
Alliance Data® (NYSE: ADS) is a leading global
provider of data-driven marketing and loyalty solutions serving
large, consumer-based industries. The Company creates and deploys
customized solutions, enhancing the critical customer marketing
experience; the result is measurably changing consumer behavior
while driving business growth and profitability for some of today's
most recognizable brands. Alliance Data helps its clients create
and increase customer loyalty through solutions that engage
millions of customers each day across multiple touch points using
traditional, digital, mobile and emerging technologies. An S&P
500 and Fortune 500 company headquartered in Plano, Texas, Alliance Data consists of three
businesses that together employ more than 17,000 associates at
approximately 100 locations worldwide.
Alliance Data's card services business is a leading provider of
marketing-driven branded credit card programs. Epsilon®
is a leading provider of multichannel, data-driven technologies and
marketing services, and also includes Conversant®, a
leader in personalized digital marketing. LoyaltyOne®
owns and operates the AIR MILES® Reward Program,
Canada's premier coalition loyalty
program, and Netherlands-based
BrandLoyalty, a global provider of tailor-made loyalty programs for
grocers.
Investor information about Alliance Data's businesses may be
found here.
Follow Alliance Data on Twitter, Facebook, LinkedIn and
YouTube.
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
|
$
|
1,912.4
|
|
$
|
1,885.6
|
|
$
|
5,613.2
|
|
$
|
5,310.5
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
1,104.5
|
|
|
1,086.6
|
|
|
3,248.0
|
|
|
3,189.0
|
Provision for loan
loss
|
|
|
204.7
|
|
|
251.3
|
|
|
807.9
|
|
|
651.0
|
Depreciation and
amortization
|
|
|
124.3
|
|
|
126.7
|
|
|
374.5
|
|
|
384.7
|
Total operating
expenses
|
|
|
1,433.5
|
|
|
1,464.6
|
|
|
4,430.4
|
|
|
4,224.7
|
Operating
income
|
|
|
478.9
|
|
|
421.0
|
|
|
1,182.8
|
|
|
1,085.8
|
Interest expense,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitization funding
costs
|
|
|
38.2
|
|
|
31.1
|
|
|
109.9
|
|
|
91.5
|
Interest expense on
deposits
|
|
|
33.2
|
|
|
22.6
|
|
|
87.9
|
|
|
60.0
|
Interest expense on
long-term and other debt, net
|
|
|
73.9
|
|
|
54.6
|
|
|
210.2
|
|
|
159.3
|
Total interest
expense, net
|
|
|
145.3
|
|
|
108.3
|
|
|
408.0
|
|
|
310.8
|
Income before income
tax
|
|
$
|
333.6
|
|
$
|
312.7
|
|
$
|
774.8
|
|
$
|
775.0
|
Income tax
expense
|
|
|
100.4
|
|
|
105.2
|
|
|
257.4
|
|
|
268.0
|
Net income
|
|
$
|
233.2
|
|
$
|
207.5
|
|
$
|
517.4
|
|
$
|
507.0
|
Less: Net income
attributable to non-controlling
interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
Net income
attributable to common stockholders
|
|
$
|
233.2
|
|
$
|
207.5
|
|
$
|
517.4
|
|
$
|
505.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders
|
|
$
|
233.2
|
|
$
|
207.5
|
|
$
|
517.4
|
|
$
|
505.2
|
Less: Accretion of
redeemable non-controlling interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83.5
|
Net income
attributable to common stockholders
after accretion of redeemable
non-controlling
interest
|
|
$
|
233.2
|
|
$
|
207.5
|
|
$
|
517.4
|
|
$
|
421.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – basic
|
|
|
55.4
|
|
|
58.3
|
|
|
55.8
|
|
|
59.0
|
Weighted average
shares outstanding – diluted
|
|
|
55.6
|
|
|
58.4
|
|
|
56.0
|
|
|
59.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic – Net income
attributable to common
stockholders
|
|
$
|
4.21
|
|
$
|
3.56
|
|
$
|
9.27
|
|
$
|
7.15
|
Diluted – Net income
attributable to common
stockholders
|
|
$
|
4.20
|
|
$
|
3.55
|
|
$
|
9.23
|
|
$
|
7.12
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,326.0
|
|
$
|
1,859.2
|
Credit card and loan
receivables:
|
|
|
|
|
|
|
Credit card and loan
receivables
|
|
|
16,439.8
|
|
|
16,543.9
|
Allowance for loan
loss
|
|
|
(1,033.8)
|
|
|
(948.0)
|
Credit card and loan
receivables, net
|
|
|
15,406.0
|
|
|
15,595.9
|
Credit card and loan
receivables held for sale
|
|
|
888.7
|
|
|
417.3
|
Redemption settlement
assets, restricted
|
|
|
576.2
|
|
|
324.4
|
Intangible assets,
net
|
|
|
813.4
|
|
|
1,003.3
|
Goodwill
|
|
|
3,873.4
|
|
|
3,800.7
|
Other
assets
|
|
|
3,010.4
|
|
|
2,513.3
|
Total
assets
|
|
$
|
27,894.1
|
|
$
|
25,514.1
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
Deferred
revenue
|
|
$
|
966.3
|
|
$
|
931.5
|
Deposits
|
|
|
10,374.0
|
|
|
8,391.9
|
Non-recourse
borrowings of consolidated securitization entities
|
|
|
6,866.1
|
|
|
6,955.4
|
Long-term and other
debt
|
|
|
6,242.6
|
|
|
5,601.4
|
Other
liabilities
|
|
|
1,851.5
|
|
|
1,975.7
|
Total
liabilities
|
|
|
26,300.5
|
|
|
23,855.9
|
Stockholders'
equity
|
|
|
1,593.6
|
|
|
1,658.2
|
Total liabilities and
equity
|
|
$
|
27,894.1
|
|
$
|
25,514.1
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In millions)
(Unaudited)
|
|
|
Nine Months
Ended
September
30,
|
|
|
2017
|
|
2016
(1)
|
|
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
Net income
|
$
|
517.4
|
|
$
|
507.0
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
Depreciation and
amortization
|
|
|
374.5
|
|
|
384.7
|
Deferred income
taxes
|
|
|
(62.5)
|
|
|
(57.0)
|
Provision for loan
loss
|
|
|
807.9
|
|
|
651.0
|
Non-cash stock
compensation
|
|
|
63.5
|
|
|
59.5
|
Amortization of
deferred financing costs
|
|
|
32.3
|
|
|
25.3
|
Change in operating
assets and liabilities
|
|
|
(56.2)
|
|
|
(326.3)
|
Originations of loan
receivables held for sale
|
|
|
(6,012.8)
|
|
|
(5,182.7)
|
Sales of loan
receivables held for sale
|
|
|
6,011.5
|
|
|
5,186.6
|
Other
|
|
|
104.0
|
|
|
106.7
|
Net cash provided by
operating activities
|
|
|
1,779.6
|
|
|
1,354.8
|
|
Cash Flows from
Investing Activities:
|
Change in redemption
settlement assets
|
|
|
(222.1)
|
|
|
55.4
|
Change in restricted
cash
|
|
|
(418.5)
|
|
|
(126.8)
|
Change in credit card
and loan receivables
|
|
|
(1,174.7)
|
|
|
(1,048.8)
|
Purchase of credit
card portfolios
|
|
|
—
|
|
|
(903.4)
|
Capital
expenditures
|
|
|
(176.6)
|
|
|
(158.3)
|
Other
|
|
|
(46.2)
|
|
|
30.3
|
Net cash used in
investing activities
|
|
|
(2,038.1)
|
|
|
(2,151.6)
|
|
Cash Flows from
Financing Activities:
|
Borrowings under debt
agreements
|
|
|
6,439.6
|
|
|
3,086.5
|
Repayments of
borrowings
|
|
|
(5,903.8)
|
|
|
(2,305.0)
|
Issuances of
deposits
|
|
|
4,062.7
|
|
|
3,727.5
|
Repayments of
deposits
|
|
|
(2,075.0)
|
|
|
(1,714.4)
|
Non-recourse
borrowings of consolidated securitization entities
|
|
2,455.0
|
|
|
2,567.5
|
Repayments/maturities
of non-recourse borrowings of consolidated securitization
entities
|
|
(2,545.0)
|
|
|
(3,150.0)
|
Acquisition of
non-controlling interest
|
|
|
—
|
|
|
(360.7)
|
Payment of deferred
financing costs
|
|
|
(53.4)
|
|
|
(20.7)
|
Purchase of treasury
shares
|
|
|
(553.7)
|
|
|
(692.8)
|
Dividends
paid
|
|
|
(86.8)
|
|
|
—
|
Other
|
|
|
(16.5)
|
|
|
(13.1)
|
Net cash provided by
financing activities
|
|
|
1,723.1
|
|
|
1,124.8
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
2.2
|
|
|
4.5
|
Change in cash and
cash equivalents
|
|
|
1,466.8
|
|
|
332.5
|
Cash and cash
equivalents at beginning of period
|
|
|
1,859.2
|
|
|
1,168.0
|
Cash and cash
equivalents at end of period
|
|
$
|
3,326.0
|
|
$
|
1,500.5
|
(1)
|
Adjusted to reflect
the adoption of Accounting Standards Update ("ASU") 2016-09,
"Improvements to Employee Share-Based Payment Accounting." The
effect of the adoption of the standard was to increase cash flows
from operating activities by $25.8 million and to decrease cash
flows from financing activities by $25.8 million for the nine
months ended September 30, 2016.
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
SUMMARY FINANCIAL
HIGHLIGHTS
|
(In
millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
2017
|
|
2016
|
|
Change
|
|
2017
|
|
2016
|
|
Change
|
Segment
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
305.2
|
|
$
|
383.8
|
|
(20)%
|
|
$
|
918.3
|
|
$
|
1,090.7
|
|
(16)%
|
Epsilon
|
|
|
558.7
|
|
|
543.2
|
|
3
|
|
|
1,631.8
|
|
|
1,555.3
|
|
5
|
Card
Services
|
|
|
1,055.4
|
|
|
965.8
|
|
9
|
|
|
3,083.6
|
|
|
2,687.1
|
|
15
|
Corporate/Other
|
|
|
—
|
|
|
0.1
|
|
nm*
|
|
|
—
|
|
|
0.2
|
|
nm*
|
Intersegment
Eliminations
|
|
|
(6.9)
|
|
|
(7.3)
|
|
nm*
|
|
|
(20.5)
|
|
|
(22.8)
|
|
nm*
|
Total
|
|
$
|
1,912.4
|
|
$
|
1,885.6
|
|
1%
|
|
$
|
5,613.2
|
|
$
|
5,310.5
|
|
6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LoyaltyOne
|
|
$
|
61.0
|
|
$
|
82.3
|
|
(26)%
|
|
$
|
176.4
|
|
$
|
235.3
|
|
(25)%
|
Epsilon
|
|
|
125.0
|
|
|
134.8
|
|
(7)
|
|
|
316.8
|
|
|
318.2
|
|
—
|
Card
Services
|
|
|
397.3
|
|
|
330.9
|
|
20
|
|
|
1,033.5
|
|
|
914.9
|
|
13
|
Corporate/Other
|
|
|
(33.2)
|
|
|
(36.0)
|
|
(8)
|
|
|
(103.7)
|
|
|
(95.4)
|
|
9
|
Total
|
|
$
|
550.1
|
|
$
|
512.0
|
|
7%
|
|
$
|
1,423.0
|
|
$
|
1,373.0
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit card statements
generated
|
|
|
74.2
|
|
|
69.0
|
|
8%
|
|
|
217.8
|
|
|
204.2
|
|
7%
|
Credit
sales
|
|
$
|
7,352.4
|
|
$
|
6,985.6
|
|
5%
|
|
$
|
21,447.0
|
|
$
|
20,262.6
|
|
6%
|
Average
receivables
|
|
$
|
15,949.8
|
|
$
|
13,995.1
|
|
14%
|
|
$
|
15,791.7
|
|
$
|
13,679.0
|
|
15%
|
AIR MILES reward miles
issued
|
|
|
1,325.6
|
|
|
1,431.5
|
|
(7)%
|
|
|
3,984.1
|
|
|
4,150.2
|
|
(4)%
|
AIR MILES reward miles
redeemed
|
|
|
1,062.7
|
|
|
1,851.2
|
|
(43)%
|
|
|
3,365.5
|
|
|
4,367.3
|
|
(23)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* nm-not
meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIANCE DATA SYSTEMS
CORPORATION
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(In millions, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Adjusted EBITDA
and Adjusted EBITDA, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
233.2
|
|
$
|
207.5
|
|
$
|
517.4
|
|
$
|
507.0
|
Income tax
expense
|
|
|
100.4
|
|
|
105.2
|
|
|
257.4
|
|
|
268.0
|
Total interest
expense, net
|
|
|
145.3
|
|
|
108.3
|
|
|
408.0
|
|
|
310.8
|
Depreciation and other
amortization
|
|
|
46.7
|
|
|
42.6
|
|
|
136.6
|
|
|
123.5
|
Amortization of
purchased intangibles
|
|
|
77.6
|
|
|
84.1
|
|
|
237.9
|
|
|
261.2
|
Stock compensation
expense
|
|
|
18.3
|
|
|
18.0
|
|
|
63.5
|
|
|
59.5
|
Adjusted
EBITDA
|
|
$
|
621.5
|
|
$
|
565.7
|
|
$
|
1,620.8
|
|
$
|
1,530.0
|
Less: Funding costs
(1)
|
|
|
71.4
|
|
|
53.7
|
|
|
197.8
|
|
|
151.5
|
Less: Adjusted EBITDA
attributable to
non-controlling interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.5
|
Adjusted EBITDA, net
of funding costs and
non-controlling interest
|
|
$
|
550.1
|
|
$
|
512.0
|
|
$
|
1,423.0
|
|
$
|
1,373.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
233.2
|
|
$
|
207.5
|
|
$
|
517.4
|
|
$
|
507.0
|
Add back: non-cash/
non-operating items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
expense
|
|
|
18.3
|
|
|
18.0
|
|
|
63.5
|
|
|
59.5
|
Amortization of
purchased intangibles
|
|
|
77.6
|
|
|
84.1
|
|
|
237.9
|
|
|
261.2
|
Non-cash interest
(2)
|
|
|
11.2
|
|
|
6.1
|
|
|
35.4
|
|
|
18.8
|
Income tax effect
(3)
|
|
|
(42.7)
|
|
|
(38.5)
|
|
|
(120.5)
|
|
|
(116.9)
|
Core
earnings
|
|
|
297.6
|
|
|
277.2
|
|
|
733.7
|
|
|
729.6
|
Less: Core earnings
attributable to non-
controlling interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.0
|
Core earnings
attributable to common stockholders
|
|
$
|
297.6
|
|
$
|
277.2
|
|
$
|
733.7
|
|
$
|
725.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – diluted
|
|
|
55.6
|
|
|
58.4
|
|
|
56.0
|
|
|
59.2
|
Core earnings
attributable to common stockholders
per share – diluted
|
|
$
|
5.35
|
|
$
|
4.74
|
|
$
|
13.10
|
|
$
|
12.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Represents interest expense on deposits and securitization funding
costs.
|
(2)
Represents amortization of debt issuance and hedging
costs.
|
(3)
Represents the tax effect for the related non-GAAP measure
adjustments using the expected effective tax rate.
|
|
|
Three Months Ended
September 30, 2017
|
|
|
LoyaltyOne
|
|
Epsilon
|
|
Card
Services
|
|
Corporate/
Other
|
|
Total
|
Operating income
(loss)
|
|
$
|
37.4
|
|
$
|
38.7
|
|
$
|
442.8
|
|
$
|
(40.0)
|
|
$
|
478.9
|
Depreciation and
amortization
|
|
|
21.4
|
|
|
77.9
|
|
|
22.9
|
|
|
2.1
|
|
|
124.3
|
Stock compensation
expense
|
|
|
2.2
|
|
|
8.4
|
|
|
3.0
|
|
|
4.7
|
|
|
18.3
|
Adjusted
EBITDA
|
|
|
61.0
|
|
|
125.0
|
|
|
468.7
|
|
|
(33.2)
|
|
|
621.5
|
Less: Funding
costs
|
|
|
—
|
|
|
—
|
|
|
71.4
|
|
|
—
|
|
|
71.4
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Adjusted EBITDA,
net
|
|
$
|
61.0
|
|
$
|
125.0
|
|
$
|
397.3
|
|
$
|
(33.2)
|
|
$
|
550.1
|
|
|
|
|
Three Months Ended
September 30, 2016
|
|
|
LoyaltyOne
|
|
Epsilon
|
|
Card
Services
|
|
Corporate/
Other
|
|
Total
|
Operating income
(loss)
|
|
$
|
57.7
|
|
$
|
48.2
|
|
$
|
358.1
|
|
$
|
(43.0)
|
|
$
|
421.0
|
Depreciation and
amortization
|
|
|
22.1
|
|
|
79.5
|
|
|
23.0
|
|
|
2.1
|
|
|
126.7
|
Stock compensation
expense
|
|
|
2.5
|
|
|
7.1
|
|
|
3.5
|
|
|
4.9
|
|
|
18.0
|
Adjusted
EBITDA
|
|
|
82.3
|
|
|
134.8
|
|
|
384.6
|
|
|
(36.0)
|
|
|
565.7
|
Less: Funding
costs
|
|
|
—
|
|
|
—
|
|
|
53.7
|
|
|
—
|
|
|
53.7
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Adjusted EBITDA,
net
|
|
$
|
82.3
|
|
$
|
134.8
|
|
$
|
330.9
|
|
$
|
(36.0)
|
|
$
|
512.0
|
|
|
|
|
Nine Months Ended
September 30, 2017
|
|
|
LoyaltyOne
|
|
Epsilon
|
|
Card
Services
|
|
Corporate/
Other
|
|
Total
|
Operating income
(loss)
|
|
$
|
109.4
|
|
$
|
57.1
|
|
$
|
1,147.1
|
|
$
|
(130.8)
|
|
$
|
1,182.8
|
Depreciation and
amortization
|
|
|
60.1
|
|
|
233.7
|
|
|
74.8
|
|
|
5.9
|
|
|
374.5
|
Stock compensation
expense
|
|
|
6.9
|
|
|
26.0
|
|
|
9.4
|
|
|
21.2
|
|
|
63.5
|
Adjusted
EBITDA
|
|
|
176.4
|
|
|
316.8
|
|
|
1,231.3
|
|
|
(103.7)
|
|
|
1,620.8
|
Less: Funding
costs
|
|
|
—
|
|
|
—
|
|
|
197.8
|
|
|
—
|
|
|
197.8
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Adjusted EBITDA,
net
|
|
$
|
176.4
|
|
$
|
316.8
|
|
$
|
1,033.5
|
|
$
|
(103.7)
|
|
$
|
1,423.0
|
|
|
|
|
Nine Months Ended
September 30, 2016
|
|
|
LoyaltyOne
|
|
Epsilon
|
|
Card
Services
|
|
Corporate/
Other
|
|
Total
|
Operating income
(loss)
|
|
$
|
167.6
|
|
$
|
46.5
|
|
$
|
990.1
|
|
$
|
(118.4)
|
|
$
|
1,085.8
|
Depreciation and
amortization
|
|
|
65.5
|
|
|
246.6
|
|
|
65.4
|
|
|
7.2
|
|
|
384.7
|
Stock compensation
expense
|
|
|
7.7
|
|
|
25.1
|
|
|
10.9
|
|
|
15.8
|
|
|
59.5
|
Adjusted
EBITDA
|
|
|
240.8
|
|
|
318.2
|
|
|
1,066.4
|
|
|
(95.4)
|
|
|
1,530.0
|
Less: Funding
costs
|
|
|
—
|
|
|
—
|
|
|
151.5
|
|
|
—
|
|
|
151.5
|
Less: Adjusted EBITDA
attributable to
non‑controlling interest
|
|
|
5.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.5
|
Adjusted EBITDA,
net
|
|
$
|
235.3
|
|
$
|
318.2
|
|
$
|
914.9
|
|
$
|
(95.4)
|
|
$
|
1,373.0
|
Contacts:
|
Investors/Analysts
|
|
Tiffany
Louder
|
|
Alliance
Data
|
|
214-494-3048
|
|
Tiffany.Louder@alliancedata.com
|
|
|
|
Media
|
|
Shelley
Whiddon
|
|
Alliance
Data
|
|
214-494-3811
|
|
Shelley.Whiddon@alliancedata.com
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/alliance-data-reports-third-quarter-2017-results-300539214.html
SOURCE Alliance Data Systems Corporation