Attached files
| file | filename |
|---|---|
| 8-K - ALLIANCE DATA SYSTEMS CORP 8-K 2-23-2011 - ALLIANCE DATA SYSTEMS CORP | form8k.htm |
Exhibit 99.1
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Alliance Data
Company Overview
NYSE: ADS
Epsilon Discussion
Company Overview
NYSE: ADS
Epsilon Discussion
First Quarter 2011
NYSE: ADS | 1Q2011
2
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Three Businesses. One Focus.
The largest and most comprehensive provider of
transaction-based marketing and loyalty solutions.
These solutions are delivered through three businesses:
transaction-based marketing and loyalty solutions.
These solutions are delivered through three businesses:
Designs and executes
ROI-based marketing
programs that deliver
measurable results
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
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
by providing marketing
driven branded credit
programs that build
customer loyalty
Private Label
Opportunity: ~$300 Billion Addressable Market
Marketing spend is shifting from traditional mass marketing
to data-enabled, multi-channel direct marketing
to data-enabled, multi-channel direct marketing
The digital channel spend directed toward transaction-based, ROI solutions:
Strong double-digit growth market | Still less than 10% of $300+ billion prize
NYSE: ADS | 1Q2011
3
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
The Alliance Data End-to-End Solution
Three Platforms, One Model
Three Platforms, One Model
Strategy/
Creative
Analytics
and Insights
and Insights
Distribution
Data and
Database
LoyaltyOne | Epsilon | Private Label
Results and
Measurement
Measurement
Mobile
Direct Mail
In-store
Permission-
based Email
based Email
Social Media
On-line
Call Center
NYSE: ADS | 1Q2011
4
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
How We Drive Measurable Results: Epsilon
Using their NFL
sponsorship
sponsorship
Identify goals that
are 1:1 with each
customer
are 1:1 with each
customer
1) Personalized
messaging and
offers on the “Game
Time” website
messaging and
offers on the “Game
Time” website
2) Direct mail
3) Email
4) Targeted banner
ads on other FedEx
sites
ads on other FedEx
sites
5) Sales force
Strategy
Analytics
and Insights
and Insights
Distribution
Data and
Database
Results and
Measurement
Measurement
NYSE: ADS | 1Q2011
5
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
|
Revenue (billions)
|
$2.5
|
$2.8
|
12%
|
$≥ 3.0
|
~8%
|
|
Adjusted EBITDA (millions)
|
$717
|
$823
|
15%
|
$≥ 900
|
~10%
|
|
Income from continuing
ops per share
|
$ 2.54
|
$3.51
|
38%
|
$≥ 4.66
|
~33%
|
|
Core EPS
|
$4.64
|
$5.86
|
26%
|
$≥ 6.75
|
~15%
|
2011 Guidance
1 See reconciliation in appendix
Summary
Adjusted
20091
Actual
2010
%
Increase
Guidance
2011
%
Increase
NYSE: ADS | 1Q2011
6
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
2011 Free Cash Flow Projection
(in millions, except per share)
(in millions, except per share)
|
Adjusted EBITDA
|
$900
|
|
LoyaltyOne adjustment
|
50
|
|
|
$950
|
|
|
|
|
Private Label funding costs
|
$(200)
|
|
Core interest expense/capital
expenditures/cash taxes/regulatory capital |
$(350)
|
|
Free cash flow
|
$400
|
|
Free cash flow per share
|
$7.22
|
NYSE: ADS | 1Q2011
7
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
The Business Model: Units Cycle Differently
Macro
$3.88
The Great Recession
*Excludes infrequently occurring items
Moderate Macro Recovery
2012
2008
2009
2010
2007
2011
Good
Liquidity Crisis
Massive Layoffs
Weakened Consumer Confidence
$4.42
$4.64*
$5.86
Alliance Data
~$8.00
Balanced
Growth Across
All Businesses
Growth Across
All Businesses
LoyaltyOne and Epsilon’s
Performance, Plus Buyback
Outpace Decline in Private Label
Performance, Plus Buyback
Outpace Decline in Private Label
Double-digit
Topline Across
All 3 Businesses
Topline Across
All 3 Businesses
EBITDA Growth
Across All 3
Businesses
Across All 3
Businesses
Balanced
Growth Across
All Businesses
Restored
Growth Across
All Businesses
Restored
2007-12
CAGR
16%
16%
Strong Growth and Consistency Regardless of Macro Environment
Strong ADS Performance
NYSE: ADS | 1Q2011
8
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Safe Harbor Statement and
Forward-Looking Statements
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.
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.
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.
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 | 1Q2011
9
©2011 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.
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 | 1Q2011
10
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Appendix
NYSE: ADS | 1Q2011
11
©2011 ADS Alliance Data Systems, Inc.
Confidential and Proprietary
Adjusted 2009 (MM, except per share)
Loan Loss
Securitization
Divested
Bankruptcy
Bargain
Foreign
Tax Reserve
As Reported
Expense
Funding Costs
Revenue
LoyaltyOne
715
$
715
$
Epsilon
514
514
Private Label
708
404
144
1,256
Corp
27
-
-
(27)
-
-
-
-
-
1,964
$
404
$
144
$
(27)
$
-
$
-
$
-
$
-
$
2,485
$
Adjusted EBITDA
LoyaltyOne
201
$
11
$
212
$
Epsilon
128
128
Private Label
315
144
(7)
(21)
431
Corp
(54)
-
-
-
-
-
-
-
(54)
590
$
-
$
144
$
-
$
(7)
$
(21)
$
11
$
-
$
717
$
Income from continuing operations
177
$
(4)
$
(21)
$
7
$
(11)
$
147
$
Income from continuing operations
per diluted share
3.06
$
(0.09)
$
(0.37)
$
0.14
$
(0.20)
$
2.54
$
Core EPS
5.16
$
(0.09)
$
(0.37)
$
0.14
$
(0.20)
$
4.64
$
Year Ended December 31, 2009