Attached files
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| 8-K - FORM 8-K - ALLIANCE DATA SYSTEMS CORP | d8k.htm |
 ©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Alliance Data
NYSE: ADS
Q4 2010
Exhibit 99.1 |
 NYSE:
ADS | Q4 2010 2
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Alliance Data is the largest and most comprehensive provider
of transaction-based marketing and loyalty solutions.
A Unique Business Model.
Advantages over traditional marketing channels:
-
Transaction-based
programs
allow
micro-segmentation
of
clients’
customer
data
-
Provide high, measurable ROIs
for our clients
Comprehensive suite of products that
target the $190 billion direct and digital marketing
channel:
NYSE: ADS | Q4 2010
2
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary |
 NYSE:
ADS | Q4 2010 3
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Designs and executes
ROI-based marketing
programs that deliver
measurable results
Designs, delivers and
manages a suite of
loyalty marketing
programs and services
to profitably change
customer behavior
Drives sales for our
clients by providing
marketing driven
branded credit
programs that build
customer loyalty
Three Businesses. One Focus.
The largest and most comprehensive provider of
transaction-based marketing and loyalty solutions. These
solutions are delivered through 3 businesses:
Private Label
YTD Revenue: $576mm
YTD adj. EBITDA: $159mm
YTD Revenue: $434mm
YTD adj. EBITDA: $103mm
YTD Revenue: $1.0bn
YTD adj. EBITDA, net
of funding costs: $265mm
*******
*******
******* |
 NYSE:
ADS | Q4 2010 4
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Key Clients
Shell Oil of Canada
We work with the biggest brands in North America.
NYSE: ADS | Q4 2010
4
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary |
 NYSE:
ADS | Q4 2010 5
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
2010 YTD Operating Results
($MM, except per share data)
2009
Actual
2009
Pro Forma
2010
Actual
% Change
10/09PF
Revenue
$1,418
$1,819
$2,036
12%
Net Income
$103
$103
$147
43%
EPS
$1.78
$1.78
$2.63
48%
Adjusted EBITDA
$415
$518
$629
21%
Core EPS
$3.53
$3.53
$4.31
22%
Nine Months Ended September 30,
1.
2009 revenue and adjusted EBITDA are shown pro forma to reflect the commercial
presentation format effective January 1, 2010. Net income, EPS and
core EPS are not impacted by the change in accounting presentation. 1
|
 NYSE:
ADS | Q4 2010 6
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Corporate:
•
$500 million in
available liquidity,
excluding $274 million
of cash held at bank
subsidiaries
•
Debt levels remain
moderate (leverage
ratio 2.5x at
September 30, 2010)
Liquidity and Capital at September 30, 2010
Bank Liquidity:
•
$3.0 billion of available
liquidity
•
All financings completed
for 2010
•
Diversified funding
sources: conduits, bank
issued CDs and term
ABS
•
Approximately 70%
fixed rate
Bank Capital:
WFNNB Regulatory
Ratios at September
30, 2010:
•
Tier 1: 13%
•
Leverage: 11%
•
Total risk based: 20%
Liquidity and Capital |
 NYSE:
ADS | Q4 2010 7
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
2010 Guidance
($MM, except per share data)
2009
Pro Forma
2010
Guidance
%
Change
Revenue
Reported
Normalized
$2,513
$2,478
$2,800
+11%
+13%
Core EPS
Reported
Normalized
$5.16
$4.64
$5.70+
+10%+
+23%+
1.
Excludes infrequently occurring items.
1
1 |
 NYSE:
ADS | Q4 2010 8
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
2010 Trends
Double-digit Revenue Growth Across All 3 Businesses
LoyaltyOne:
•Flat issuance growth
•
100% sponsor renewal
rate
•New sponsors YTD:
Whirlpool, Ontario Power
•Brazilian pilot –
moving
toward national roll-out with
select sponsors
Epsilon:
•
Accelerating back-half of
year due to key program
launches
•Significant new wins YTD:
Kraft, Dell, Unilever, AAA
•Acquisition of Equifax DMS
adds approximately 5% to full
year revenue growth
Private Label:
•Available liquidity of $3.0
billion
•Principal loss rates continue
to improve (9.4% Q3,09 to
8.3% Q3,10)
•Solid growth in average
credit card receivables; up
approximately 10% for year
•Regulatory matters resolved
favorably
•David’s Bridal, MyPoints
signed for new programs;
expect 1-2 additional wins |
 NYSE:
ADS | Q4 2010 9
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
2011 Guidance
($MM, except per share data)
2010
Guidance
2011
Guidance
%
Change
Revenue
$2,800
$3,000
8%
EPS
$3.48
$4.66
34%
Core EPS
$5.70
$6.75
18%
Diluted shares
55.6
56.0
+1% |
 NYSE: ADS | Q4 2010
10
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
2011 Outlook
•
Over $400 million in free cash flow or $7.15 per diluted share in 2011
LoyaltyOne:
•Single-digit growth in both
revenue and adj. EBITDA
•Miles issued increase
approximately 5%
•Increased international
investment
Epsilon:
•Strongest growth rates in
the Company
•Double-digit organic growth
in both revenue and adj.
EBITDA
•Backlog of wins and DMS
acquisition drive above
average growth
Private Label:
•Moderate portfolio growth
•Continued divergence
between unemployment and
credit loss rates; 70 basis
point improvement in credit
loss rate
•High single-digit growth in
revenue and mid-teens
growth in adj. EBITDA
•Bank dividends will resume
Revenue and Core EPS Growth of at Least 8% and 18%, Respectively
|
 NYSE: ADS | Q4 2010
11
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
The Business Model: Units Cycle Differently
Strong Growth and Consistency Regardless of Macro
Macro
$3.88
The Great Recession
*Excludes infrequently occurring items
The Great “Muddle Through”
2012
2008
2009
2010
2007
2011
Good
Liquidity Crisis
Massive Layoffs
Weakened Consumer Confidence
Challenging Regulatory Environment
No Double-dip, But Only 2-3% GDP
Slow Employment Recovery:
Unemployment 9.6%
9.2%
8.7% in 2012
$4.42
$4.64*
$5.70
Alliance Data
Core EPS
~$8.00
$6.75
Balanced
Growth Across
All Businesses
LoyaltyOne
and Epsilon’s
Performance, Plus Buyback
Outpace Decline in Private Label
Double
-digit
Topline
Across
All 3 Businesses
EBITDA Growth
Across All 3
Businesses
Balanced
Growth Across
All Businesses
Restored
2007-12
CAGR
16% |
 NYSE: ADS | Q4 2010
12
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Alliance Data’s Safe Harbor Statement and
Forward-Looking Statements
This release may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Such statements may
use
words
such
as
“anticipate,”
“believe,”
“estimate,”
“expect,”
“intend,”
“predict,”
“project”
and
similar
expressions
as
they
relate
to
us
or
our
management.
When
we
make
forward-looking
statements,
we
are
basing
them
on
our
management’s
beliefs
and
assumptions,
using
information
currently
available
to
us.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, these forward-looking statements are subject
to risks, uncertainties and assumptions, including the anticipated effects
of the CARD Act and those discussed in our filings with the Securities and Exchange Commission.
If one or more of these or other risks or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may vary
materially from what we projected. Any forward-looking statements
contained in this presentation reflect our current views with respect to future
events and are subject to these and other risks, uncertainties and
assumptions relating to our operations, results of operations, growth strategy
and liquidity. We have no intention, and disclaim any obligation, to update or
revise any forward-looking statements, whether as a result of new
information, future results or otherwise. “Safe
Harbor”
Statement
under
the
Private
Securities
Litigation
Reform
Act
of
1995:
Statements
in
this
presentation regarding Alliance Data Systems Corporation’s business which are
not historical facts are “forward-looking statements”
that involve risks and uncertainties. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those contained in
the forward-looking statements, see “Risk Factors”
in the Company’s Annual Report on Form 10-K for the most recently ended
fiscal year. Risk factors may be updated in Item 1A in each of the
Company’s Quarterly Reports on Form 10-Q for each quarterly period
subsequent to the Company’s most recent Form 10-K. NYSE: ADS
| Q4 2010 12
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary |
 NYSE: ADS | Q4 2010
13
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Financial Measures
In addition to the results presented in accordance with generally accepted
accounting principles, or GAAP, the Company presents financial measures
that are non-GAAP measures, such as constant currency financial
measures,
adjusted
EBITDA,
adjusted
EBITDA
margin,
core
earnings
and
core
earnings
per
diluted
share.
These non-GAAP financial measures exclude costs associated with the terminated
merger with affiliates of The Blackstone Group and other costs. 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. These metrics are an integral part of the Company’s
internal reporting to measure the performance of reportable segments and the
overall effectiveness of senior management. Reconciliations to comparable GAAP
financial measures are available in the accompanying schedules and on the
Company’s website. The financial measures presented are consistent
with the Company’s historical financial reporting practices. Core earnings and core earnings per
diluted share 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.
NYSE: ADS | Q4 2010
13
©2010 ADS Alliance Data Systems, Inc.
Confidential and Proprietary |