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Alliance Data (ADS) Q4 Earnings & Revenues Top, Decline Y/Y
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Alliance Data Systems Corporation’s operating earnings of $3.31 per share for the fourth quarter of 2020 beat the Zacks Consensus Estimate of $2.48. The quarterly earnings benefited from continued gradual recovery in Card Services credit sales. Shares of the company gained 3.9% in the pre-market trading session, reflecting the outperformance
However, the bottom line plunged 20% year over year.
Behind the Headlines
Alliance Data reported total revenues of $1.1 billion, down 24% year over year, attributable to the continuing impacts of COVID-19. Both Card Services as well as LoyaltyOne segment generated lower revenues. The top line however beat the Zacks Consensus Estimate by 1.1%.
Operating expenses decreased 26.1% year over year to $851.2 million. Operating income decreased 16.3% year over year to $258.7 million largely due to lower revenues.
Adjusted EBITDA (net of funding costs) increased 2% year over year to $282.3 million.
Segment Update
LoyaltyOne: Revenues totaled $231 million, down 31% year over year, attributable to fewer short-term loyalty programs due to the impact of COVID-19 as well as the divestment of Precima.
Adjusted EBITDA decreased 45% to $44.3 million.
AIR MILES reward miles issued decreased 9%, reflecting a decline in discretionary spending, including credit card spend and delays in promotions by sponsors. AIR MILES reward miles redeemed declined 30%, reflecting the impact of the pandemic on travel-related categories, offset in part by strength from merchandise redemptions.
BrandLoyalty revenues decreased 35% due to a decline in programs.
Card Services: Revenues were $879 million, down 22% year over year, attributable to a decline in average receivables, primarily reflecting a decline in average receivables, lower sales volumes, and to some extent interest rate cuts earlier in 2020. Adjusted EBITDA was $259.8 million, up 24% year over year.
Full-Year Highlights
Operating earnings of $9.39 per share beat the Zacks Consensus Estimate of $8.57. However, the bottom line plunged 44% year over year.
Operating revenues of $4.5 billion in 2020 declined 19% year over year and marginally lagged the consensus estimate.
Financial Update
As of Dec 31, 2020, cash and cash equivalents was $3.1 billion, down 20.5% from Dec 31, 2019-level.
At quarter end, the debt level was down 1.6% from 2019-end to $2.8 billion.
Cash from operations increased 1.5% year over year to $1.9 billion in 2020. Capital expenditure at Alliance Data declined 62% year over year to $54 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Mar 18 to stockholders of record as of Feb 12.
2021 Guidance
Total revenues are estimated to be down in low single digits from 2020 as the impact from lower receivables is expected to be partially offset by improving revenues from LoyaltyOne and the Bread acquisition.
Credit sales are projected to increase in high single digits. The company expects to resume high single-digit to low double-digit card receivables growth as it exits 2021.
Expenses are expected to remain flat with 2020 level. It includes more than $100 million of digital innovation and technology enhancement investment to support growth and the delivery of positive operating leverage in 2022.
Mastercard’s (MA - Free Report) fourth-quarter 2020 earnings beat the Zacks Consensus Estimate.
Upcoming Release
The Western Union Company (WU - Free Report) is set to release fourth-quarter 2020 earnings on Feb 9. The Zacks Consensus Estimate for the same stands at 42 cents per share.
Global Payments (GPN - Free Report) is set to release fourth-quarter 2020 earnings on Feb 8. The Zacks Consensus Estimate for the same stands at $1.78 per share.
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Alliance Data (ADS) Q4 Earnings & Revenues Top, Decline Y/Y
Alliance Data Systems Corporation’s operating earnings of $3.31 per share for the fourth quarter of 2020 beat the Zacks Consensus Estimate of $2.48. The quarterly earnings benefited from continued gradual recovery in Card Services credit sales. Shares of the company gained 3.9% in the pre-market trading session, reflecting the outperformance
However, the bottom line plunged 20% year over year.
Behind the Headlines
Alliance Data reported total revenues of $1.1 billion, down 24% year over year, attributable to the continuing impacts of COVID-19. Both Card Services as well as LoyaltyOne segment generated lower revenues. The top line however beat the Zacks Consensus Estimate by 1.1%.
Operating expenses decreased 26.1% year over year to $851.2 million. Operating income decreased 16.3% year over year to $258.7 million largely due to lower revenues.
Adjusted EBITDA (net of funding costs) increased 2% year over year to $282.3 million.
Segment Update
LoyaltyOne: Revenues totaled $231 million, down 31% year over year, attributable to fewer short-term loyalty programs due to the impact of COVID-19 as well as the divestment of Precima.
Adjusted EBITDA decreased 45% to $44.3 million.
AIR MILES reward miles issued decreased 9%, reflecting a decline in discretionary spending, including credit card spend and delays in promotions by sponsors. AIR MILES reward miles redeemed declined 30%, reflecting the impact of the pandemic on travel-related categories, offset in part by strength from merchandise redemptions.
BrandLoyalty revenues decreased 35% due to a decline in programs.
Card Services: Revenues were $879 million, down 22% year over year, attributable to a decline in average receivables, primarily reflecting a decline in average receivables, lower sales volumes, and to some extent interest rate cuts earlier in 2020. Adjusted EBITDA was $259.8 million, up 24% year over year.
Full-Year Highlights
Operating earnings of $9.39 per share beat the Zacks Consensus Estimate of $8.57. However, the bottom line plunged 44% year over year.
Operating revenues of $4.5 billion in 2020 declined 19% year over year and marginally lagged the consensus estimate.
Financial Update
As of Dec 31, 2020, cash and cash equivalents was $3.1 billion, down 20.5% from Dec 31, 2019-level.
At quarter end, the debt level was down 1.6% from 2019-end to $2.8 billion.
Cash from operations increased 1.5% year over year to $1.9 billion in 2020. Capital expenditure at Alliance Data declined 62% year over year to $54 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Mar 18 to stockholders of record as of Feb 12.
2021 Guidance
Total revenues are estimated to be down in low single digits from 2020 as the impact from lower receivables is expected to be partially offset by improving revenues from LoyaltyOne and the Bread acquisition.
Credit sales are projected to increase in high single digits. The company expects to resume high single-digit to low double-digit card receivables growth as it exits 2021.
Expenses are expected to remain flat with 2020 level. It includes more than $100 million of digital innovation and technology enhancement investment to support growth and the delivery of positive operating leverage in 2022.
Zacks Rank
Alliance Data currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Another Player From the Industry
Mastercard’s (MA - Free Report) fourth-quarter 2020 earnings beat the Zacks Consensus Estimate.
Upcoming Release
The Western Union Company (WU - Free Report) is set to release fourth-quarter 2020 earnings on Feb 9. The Zacks Consensus Estimate for the same stands at 42 cents per share.
Global Payments (GPN - Free Report) is set to release fourth-quarter 2020 earnings on Feb 8. The Zacks Consensus Estimate for the same stands at $1.78 per share.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>