BFH 8-K
Bread Financial Holdings, Inc. (BFH)
8-K
2021-04-29
For: 2021-04-29
View Original
Added on
April 10, 2026
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
(Exact Name of Registrant as Specified in Charter)
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(State or Other Jurisdiction
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(Commission
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(IRS Employer
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of Incorporation)
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File Number)
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Identification No.)
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(Address and Zip Code of Principal Executive Offices)
(614 ) 729-4000
(Registrant’s Telephone Number, including Area Code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02 Results of Operations and Financial Condition.
On April 29, 2021, Alliance Data Systems Corporation (the "Company") issued a press release regarding its results of operations for
the first quarter ended March 31, 2021. A copy of this press release is furnished as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure.
On April 29, 2021, the Company issued a press release regarding its results of operations for the first quarter ended March 31,
2021. A copy of this press release is furnished as Exhibit 99.1.
Attached as Exhibit 99.2 is a presentation to be given to investors and others by senior officers of the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No.
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Document Description
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Press Release dated April 29, 2021 announcing the results of operations for the first quarter ended March 31, 2021.
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Investor Presentation Materials.
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| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
Note: The information contained in this report
(including Exhibits 99.1 and 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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Alliance Data Systems Corporation
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Date: April 29, 2021
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By:
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/s/ Joseph L. Motes III
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Joseph L. Motes III
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Executive Vice President, Chief
Administrative Officer, General
Counsel and Secretary
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Exhibit 99.1
Alliance Data Reports First Quarter 2021 Results
--Announced Bread strategic partnership leveraging Fiserv’s extensive merchant network--
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•
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Net income of $286 million or $5.74 per diluted share reflects continued resilient performance; strong credit management and a more favorable
economic outlook drove a net reserve release of $165 million
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•
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Stable year-over-year credit sales aligned with improving consumer confidence and a recovery of in-store sales
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COLUMBUS, Ohio, April 29, 2021 – Alliance Data
Systems Corporation (NYSE: ADS), a leading provider of data-driven marketing, loyalty and payment solutions, today announced results for the quarter ended March 31, 2021.
“Alliance Data’s first quarter results represent a positive start to the year and reflect the continued sequential improvement in business conditions as
well as the success of our ongoing business transformation strategies,” said Ralph Andretta, president and chief executive officer of Alliance Data. “On a year-over-year basis, revenue declined 21%, due to elevated payment rates and the continued
impact of the pandemic. Total expenses excluding provision for loan loss declined 6% year-over-year, despite increased strategic investment and costs related to Bread, which was acquired in the fourth quarter. We continued to enhance our loyalty
programs and competitive positioning, providing an integrated full suite of product capabilities for our partners and expanded choices of payment solutions for consumers.
“Credit sales year-over-year performance strengthened versus the previous quarter, in line with improved consumer confidence levels, leading to a recovery
of in-store sales performance, coupled with continued strength of digital spending. Application and new account growth rates improved year-over-year as consumers were increasingly active in omnichannel shopping and engagement. Card Services revenue
increased sequentially as average receivables remained steady and yields improved. We project a more favorable operating environment for LoyaltyOne® in the second half of the year with the potential for a surge in post-pandemic
travel-related redemptions.
“The improvement in our credit metrics reflects discipline in our risk management and underwriting activities, which remains a key element of our
strategy. We took deliberate actions and the results are evident due to our net loss rate remaining below the historical rate of 6.0% and a first quarter delinquency rate of 3.8%, down 220 basis points year-over-year. Payment rates benefitted from
the additional government stimulus checks received at the end of the quarter, and we expect consumer financial health to continue to improve, auguring well for a broad-based US economic recovery.”
Mr. Andretta continued, “The joint partnership between Bread and Fiserv announced today provides additional growth opportunities, enabling us to leverage
Fiserv’s extensive merchant network. This strategic partnership will power point-of-sale lending for Fiserv’s substantial merchant base and drive platform sales and receivables growth for Alliance Data. Additionally, we successfully launched our
first card brand partner on Bread’s platform. We are actively pursuing cross-sell opportunities, and our partners have shown considerable interest in augmenting existing programs with Bread’s white-label solutions. We continue to invest in the
expansion of Bread’s innovative fintech capabilities to capitalize on its significant prospects and drive long-term profitable growth for our shareholders.”
Alliance Data Systems Corporation
April 29, 2021
2021 OUTLOOK
“We remain keenly focused on balancing growth and profitability to ensure the sustainable economics of our portfolio. In 2021, we expect our credit sales
to increase at a high-single- to low-double-digit rate, with a net loss rate below 6% for the year and in the mid-to-upper 5% range in the second quarter of 2021,” said Mr. Andretta. “Based on our current visibility, credit card and loan receivables
at year-end 2021 are projected to be in line with year-end 2020 levels, although average receivables are expected to be down mid-single-digits for the year, reflecting year-over-year pressure in the first half of 2021. We expect to resume
high-single-digit to low-double-digit card receivables growth as we enter 2022. Total revenue is anticipated to be down low-single-digits compared to 2020 as the impact from lower receivables is partially offset by improving revenue from LoyaltyOne
and the Bread acquisition. We expect efficiencies to enable us to keep total expenses excluding provision for loan loss flat year-over-year while we continue to fund
initiatives to better position the Company for future growth. For 2021, our expense forecast includes over $100 million of digital innovation and technology enhancement and $50 million in marketing investments to support growth and a return to
positive operating leverage in 2022.”
CONSOLIDATED RESULTS
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SUMMARY
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Quarter Ended March 31,
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||||||||||||
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(in millions, except per share amounts)
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2021
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2020
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Change
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||||||||||
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Revenue
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$
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1,085
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$
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1,382
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-21
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%
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Income before income taxes (“EBT”)
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$
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394
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$
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25
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1,452
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%
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Net income
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$
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286
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$
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30
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854
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%
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Net income per diluted share
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$
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5.74
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$
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0.63
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811
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%
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Diluted shares outstanding
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49.8
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47.7
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Shares of common stock outstanding
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49.7
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47.6
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**********************************
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Supplemental Non-GAAP Metrics (a):
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Pre-provision, pre-tax earnings
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$
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428
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$
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681
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-37
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%
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(a) See “Financial Measures” for a discussion of non-GAAP Financial Measures.
First Quarter: Due to the impact
of COVID-19, consolidated revenue decreased 21% to $1,085 million, compared to the first quarter of 2020. EBT increased 1,452% to $394 million, positively impacted by a net reserve release of $165 million during the first quarter of 2021. Net
income was $286 million, or $5.74 per diluted share.
2
Alliance Data Systems Corporation
April 29, 2021
SEGMENT RESULTS
Card Services: Revenue decreased
23% to $908 million, compared to the first quarter of 2020, primarily due to the decline in average receivables and in part from interest rate reductions in 2020. EBT increased to $410 million, compared to the first quarter of 2020, attributable to a
lower provision for loan loss. The net principal loss rate was 5.0% in the first quarter of 2021, an improvement of 200 basis points from the prior year period,
while the delinquency rate of 3.8% improved 220 basis points from the prior year period.
Credit sales decreased 1% to $6.0 billion, compared to the first quarter of 2020. On a sequential basis, year-over-year credit sales performance continues
to improve as consumer spending recovers.
LoyaltyOne: Revenue decreased
11% to $177 million, compared to the first quarter of 2020, as a result of fewer short-term loyalty programs in market due to the impact of COVID-19. On a constant currency basis, revenue declined 17% to $163 million, compared to $198 million in the
first quarter of 2020. BrandLoyalty revenue decreased 20%, or $24 million, on a constant currency basis, due to a decline in programs due to retailer delays related to the continuing impact of COVID-19. AIR MILES® revenue decreased 13%,
or $10 million, compared to the first quarter of 2020 on a constant currency basis, due primarily to lower service and redemption revenue as well as the sale of Precima in January 2020, which accounted for $2 million of incremental revenue in last
year’s first quarter. LoyaltyOne EBT decreased 32% to $32 million, primarily due to the lost margin from the decrease in revenue and the gain on the sale of Precima in January 2020.
Issuance of AIR MILES reward miles decreased 16%, compared to the first quarter of 2020, reflecting a decline in discretionary spending, including credit
card spend. AIR MILES reward miles redemptions decreased 26%, compared to the first quarter of 2020, reflecting the impact of the pandemic on travel-related categories, offset in part by strength from merchandise redemptions.
Contacts:
Investor Relations: Brian Vereb
([email protected]), 614-528-4516
Media Relations: Shelley Whiddon
([email protected]), 214-494-3811
3
Alliance Data Systems Corporation
April 29, 2021
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, and the guidance we give with respect to, our anticipated operating or financial results, initiation or completion of strategic initiatives, future dividend declarations, and future economic
conditions, including, but not limited to, fluctuation in currency exchange rates, market conditions and COVID-19 impacts related to relief measures for impacted borrowers and depositors, labor shortages due to quarantine, reduction in demand from
clients, supply chain disruption for our reward suppliers and disruptions in the airline or travel industries.
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 and pre-provision pre-tax earnings. 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. Pre-provision pre-tax earnings is calculated by adding the provision for loan loss to income before taxes. 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.
4
Alliance Data Systems Corporation
April 29, 2021
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). 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. 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, April 29, 2021 at 8:30 a.m. (Eastern Time) to discuss the Company’s first quarter 2021 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 (800) 585-8367 or (416) 624-4642 and
enter “6479243”. The replay will be available at approximately 11:59 a.m. (Eastern Time) on Thursday, April 29, 2021.
About Alliance Data
Alliance Data® (NYSE: ADS) is a leading provider of data-driven marketing, loyalty and payment solutions serving large, consumer-based
industries. The Company creates and deploys customized solutions that measurably change consumer behavior while driving business growth and profitability for some of today's most recognizable brands. Alliance Data helps its partners create and
increase customer loyalty across multiple touch points using traditional, digital, mobile and emerging technologies. A FORTUNE 500 and S&P MidCap 400 company headquartered in Columbus, Ohio, Alliance Data consists of businesses that together
employ nearly 8,000 associates at 45 locations worldwide.
Alliance Data’s Card Services business is a comprehensive provider of market-leading private label, co-brand, general purpose and business credit card
programs, digital payments, including Bread®, and Comenity-branded financial services. LoyaltyOne® owns and operates the AIR MILES® Reward Program, Canada’s most recognized loyalty program, and Netherlands-based
BrandLoyalty, a global provider of tailor-made loyalty programs for grocers. More information about Alliance Data can be found at www.AllianceData.com.
Follow Alliance Data on Twitter, Facebook, LinkedIn, Instagram and YouTube.
5
Alliance Data Systems Corporation
April 29, 2021
ALLIANCE DATA SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
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Three Months Ended
March 31,
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|||||||
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2021
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2020
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||||||
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Revenue
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$
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1,084.9
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$
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1,381.8
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||||
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Operating expenses:
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||||||||
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Cost of operations
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514.4
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523.1
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||||||
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Provision for loan loss
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33.4
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655.9
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||||||
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Depreciation and amortization
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34.0
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38.8
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||||||
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Total operating expenses
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581.8
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1,217.8
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||||||
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Operating income
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503.1
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164.0
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||||||
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Interest expense, net:
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||||||||
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Securitization funding costs
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33.6
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49.9
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||||||
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Interest expense on deposits
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45.5
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60.3
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||||||
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Interest expense on long-term and other debt, net
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29.6
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28.4
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||||||
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Total interest expense, net
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108.7
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138.6
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||||||
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Income before income tax
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$
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394.4
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$
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25.4
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||||
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Income tax expense (benefit)
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108.2
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(4.6
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)
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|||||
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Net income
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$
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286.2
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$
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30.0
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||||
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Per share data:
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||||||||
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Weighted average shares outstanding – basic
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49.7
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47.6
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||||||
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Weighted average shares outstanding – diluted
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49.8
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47.7
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||||||
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Basic – Net income
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$
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5.76
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$
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0.63
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||||
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Diluted – Net income
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$
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5.74
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$
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0.63
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||||
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Pre-provision pre-tax earnings:
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||||||||
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Income before income tax
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$
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394.4
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$
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25.4
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||||
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Provision for loan loss
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33.4
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655.9
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||||||
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Pre-provision pre-tax earnings
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$
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427.8
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$
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681.3
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||||
Reconciliation of non-GAAP core earnings per share available in earnings slide appendix
6
Alliance Data Systems Corporation
April 29, 2021
ALLIANCE DATA SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
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March 31,
2021
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December 31,
2020
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|||||||
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Assets
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||||||||
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Cash and cash equivalents
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$
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2,858.6
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$
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3,081.5
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||||
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Credit card and loan receivables:
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||||||||
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Credit card and loan receivables
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15,536.6
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16,784.4
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||||||
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Allowance for loan loss
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(1,843.3
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)
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(2,008.0
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)
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||||
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Credit card and loan receivables, net
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13,693.3
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14,776.4
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||||||
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Redemption settlement assets, restricted
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725.7
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693.5
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||||||
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Right of use assets - operating
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218.1
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233.2
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||||||
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Intangible assets, net
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74.9
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81.7
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||||||
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Goodwill
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1,351.1
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1,369.6
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||||||
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Other assets
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2,241.2
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2,311.2
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||||||
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Total assets
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$
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21,162.9
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$
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22,547.1
|
||||
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Liabilities and Stockholders’ Equity
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||||||||
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Deferred revenue
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$
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1,022.6
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$
|
1,004.0
|
||||
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Deposits
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9,956.9
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9,792.6
|
||||||
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Non-recourse borrowings of consolidated securitization entities
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3,845.8
|
5,709.9
|
||||||
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Long-term and other debt
|
2,782.9
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2,805.7
|
||||||
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Operating lease liabilities
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285.2
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300.0
|
||||||
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Other liabilities
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1,505.2
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1,413.3
|
||||||
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Total liabilities
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19,398.6
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21,025.5
|
||||||
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Stockholders’ equity
|
1,764.3
|
1,521.6
|
||||||
|
Total liabilities and stockholders’ equity
|
$
|
21,162.9
|
$
|
22,547.1
|
||||
|
Shares of common stock outstanding
|
49.7
|
49.7
|
||||||
7
Alliance Data Systems Corporation
April 29, 2021
ALLIANCE DATA SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
|
|
Three Months Ended
March 31,
|
|||||||
|
|
2021
|
2020
|
||||||
|
|
||||||||
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Cash Flows from Operating Activities:
|
||||||||
|
Net income
|
$
|
286.2
|
$
|
30.0
|
||||
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Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
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Depreciation and amortization
|
34.0
|
38.8
|
||||||
|
Deferred income taxes
|
(25.8
|
)
|
(158.7
|
)
|
||||
|
Provision for loan loss
|
33.4
|
655.9
|
||||||
|
Non-cash stock compensation
|
6.8
|
4.7
|
||||||
|
Amortization of deferred financing costs
|
8.5
|
9.5
|
||||||
|
Change in operating assets and liabilities, net of sale of business
|
154.9
|
8.6
|
||||||
|
Other
|
19.2
|
(16.3
|
)
|
|||||
|
Net cash provided by operating activities
|
517.2
|
572.5
|
||||||
|
Cash Flows from Investing Activities:
|
||||||||
|
Change in redemption settlement assets
|
(13.1
|
)
|
1.0
|
|||||
|
Change in credit card and loan receivables
|
1,034.6
|
1,446.7
|
||||||
|
Proceeds from sale of business
|
—
|
25.4
|
||||||
|
Sale of credit card portfolio
|
—
|
289.5
|
||||||
|
Capital expenditures
|
(12.2
|
)
|
(15.7
|
)
|
||||
|
Other
|
(0.3
|
)
|
(0.6
|
)
|
||||
|
Net cash provided by investing activities
|
1,009.0
|
1,746.3
|
||||||
|
Cash Flows from Financing Activities:
|
||||||||
|
Borrowings under debt agreements
|
—
|
500.0
|
||||||
|
Repayments of borrowings
|
(25.4
|
)
|
(275.4
|
)
|
||||
|
Net increase (decrease) in deposits
|
162.2
|
(769.4
|
)
|
|||||
|
Non-recourse borrowings of consolidated securitization entities
|
175.0
|
350.0
|
||||||
|
Repayments/maturities of non-recourse borrowings of consolidated securitization entities
|
(2,039.1
|
)
|
(1,275.0
|
)
|
||||
|
Payment of deferred financing costs
|
(0.2
|
)
|
(0.6
|
)
|
||||
|
Dividends paid
|
(10.7
|
)
|
(30.3
|
)
|
||||
|
Other
|
(2.6
|
)
|
(2.7
|
)
|
||||
|
Net cash used in financing activities
|
(1,740.8
|
)
|
(1,503.4
|
)
|
||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(1.7
|
)
|
(7.6
|
)
|
||||
|
Change in cash, cash equivalents and restricted cash
|
(216.3
|
)
|
807.8
|
|||||
|
Cash, cash equivalents and restricted cash at beginning of period
|
3,463.2
|
3,958.1
|
||||||
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
3,246.9
|
$
|
4,765.9
|
||||
8
Alliance Data Systems Corporation
April 29, 2021
ALLIANCE DATA SYSTEMS CORPORATION
SUMMARY FINANCIAL HIGHLIGHTS
(In millions)
(Unaudited)
|
Three Months Ended March 31,
|
||||||||||||||
|
2021
|
2020
|
Change
|
||||||||||||
|
Segment Revenue:
|
||||||||||||||
|
LoyaltyOne
|
$
|
176.6
|
$
|
198.1
|
(11
|
)%
|
||||||||
|
Card Services
|
908.3
|
1,183.6
|
(23
|
)
|
||||||||||
|
Corporate/Other
|
—
|
0.1
|
nm*
|
|||||||||||
|
Total
|
$
|
1,084.9
|
$
|
1,381.8
|
(21
|
)%
|
||||||||
|
Segment Earnings Before Taxes:
|
||||||||||||||
|
LoyaltyOne
|
$
|
31.7
|
$
|
46.7
|
(32
|
)%
|
||||||||
|
Card Services
|
409.9
|
32.1
|
1,179
|
|||||||||||
|
Corporate/Other
|
(47.2
|
)
|
(53.4
|
)
|
(12
|
)
|
||||||||
|
Total
|
$
|
394.4
|
$
|
25.4
|
1,452
|
%
|
||||||||
|
Key Performance Indicators:
|
||||||||||||||
|
Credit sales
|
$
|
6,043
|
$
|
6,099
|
(1
|
)%
|
||||||||
|
Average receivables
|
$
|
15,785
|
$
|
18,294
|
(14
|
)%
|
||||||||
|
End of period receivables
|
$
|
15,537
|
$
|
17,732
|
(12
|
)%
|
||||||||
|
Card Services gross yield
|
23.0
|
%
|
25.5
|
%
|
(2.5
|
)%
|
||||||||
|
Net principal loss rate
|
5.0
|
%
|
7.0
|
%
|
(2.0
|
)%
|
||||||||
|
Delinquency rate
|
3.8
|
%
|
6.0
|
%
|
(2.2
|
)%
|
||||||||
|
AIR MILES reward miles issued
|
1,112
|
1,316
|
(16
|
)%
|
||||||||||
|
AIR MILES reward miles redeemed
|
739
|
994
|
(26
|
)%
|
||||||||||
* nm-not meaningful
Reconciliation of non-GAAP core earnings per share available in earnings slide appendix
9
Exhibit 99.2
Alliance Data First Quarter 2021 ResultsApril 29, 2021Ralph Andretta – President & CEO
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 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, and the guidance we give with respect to, our anticipated operating or financial results,
initiation or completion of strategic initiatives, future dividend declarations, and future economic conditions, including, but not limited to, fluctuation in currency exchange rates, market conditions and COVID-19 impacts related to relief
measures for impacted borrowers and depositors, labor shortages due to quarantine, reduction in demand from clients, supply chain disruption for our reward suppliers and disruptions in the airline or travel industries.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 presentation, 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. 2
First Quarter 2021 Key Takeaways 3 Credit sales returning to pre-pandemic levels aligned with improving
consumer confidence and activityDigital sales strength continues while in-store activity has begun to recover, supporting our outlook for improved credit sales performanceStrong momentum with BreadSuccessful launch of card brand partner on
Bread platformNew Bread strategic partnership leveraging Fiserv’s extensive merchant networkCredit performance improved as a result of strategic risk management changes, deliberate underwriting actions, and direct consumer stimulus payments
$1.1B Revenue $286MMNet Income Net Income of $286 million includes a net reserve release of $165
million, or $2.40 per diluted shareRevenue declined 21% year-over-year, while total expenses excluding provision for loan loss declined 6%Credit sales of $6.0 billion in 1Q21, which were virtually flat compared to 1Q20Average receivables were
down 14% year-over-year, yet remained flat to 4Q20Credit metrics remained strong with a net loss rate of 5.0% for the quarter 4 First Quarter 2021 Financial Highlights $5.74Diluted EPS
Card Services Performance Highlights 5 Improvement in year-over-year credit sales performance aligns
with increasing consumer confidence Total application growth improved sequentially with applications flat year-over-year New accounts were up 1% year-over-yearCredit sales performance continues to improve and stabilize year-over-yearThe
majority of the credit sales performance improvement can be attributed to in-store sales, which have benefitted from increased consumer confidence and mobility*Online sales remained at 40% of total in 1Q21 * Mobility is based on time spent
away from home, estimated using cellphone location data from Google users who have enabled the Location History setting.** Consumer confidence in last month of the quarter and sourced from
https://tradingeconomics.com/united-states/consumer-confidence
Card Services Partnership HighlightsContinued growth brings total partnerships to approximately 650
6 Partner Renewal Select New Partnerships Strategic Partnership Primary omnichannel provider of point-of-sale lending products
Bread Business ModelsPlatform provides diversified growth opportunities 7 Installment loan and Buy Now,
Pay Later products can be white-labeled (partner-branded) or branded Bread in the Direct Acquisition and Distribution model Direct Acquisition Distribution Technology Platform Merchant Acquirer Network / Platform(Always
Bread) Issuer / Loan Originator(Owns Consumer Relationship & Holds Accounts Receivable)
LoyaltyOne® Performance Highlights AIR MILES reward miles issued and redeemed declined vs 1Q20 due to
continued lockdown in CanadaAIR MILES is working with airline partners to plan for the eventual comeback of airline travel with optimism for bookings in 2H21 8 AIR MILES program performance BrandLoyalty’s new program activity is picking up
with a strong pipeline of clients in the second half of 2021Consumers are actively engaged in loyalty campaigns with particular success in products focused on the home
Financial Results – Consolidated 9 ($ in millions, except per share) 1Q21 1Q20 % Change Total
revenue $1,085 $1,382 (21) % Total operating expenses, excl. provision for loan loss 548 562 (2) Interest expense, net 109 139 (22) Total expenses excl. provision for loan
loss 657 701 (6) % Provision for loan loss 33 656 (95) Total earnings before tax (EBT) $394 $25 1,452 % Income tax 108 (5) nm Net income $286 $30 854 % Net income per
diluted share $5.74 $0.63 811 % Diluted average shares outstanding 49.8 47.7 Shares of common stock outstanding 49.7 47.6 Pre-provision, pre-tax earnings $428 $681 (37) % See appendix for Core EPS
and Adjusted EBITDA calculationsTotals may not sum due to rounding; nm = not meaningful
Totals may not sum due to rounding Financial Results – Segments 1Q21 total revenue* 1Q21 total
earnings before tax* 10 * Percentages based on Card Services and LoyaltyOne segments combined as reported excluding Corporate/Other and intersegment eliminations ($ in millions) 1Q21 1Q20 % Change
LoyaltyOne $177 $198 (11) % Card Services 908 1,184 (23) Total revenue $1,085 $1,382 (21) % LoyaltyOne $32 $47 (32) % Card Services 410 32 1,179 Corporate/Other (47) (53) (12) Total earnings
before tax (EBT) $394 $25 1,452 %
11 Key Business Metrics Card Services revenue improved 3% on a sequential basis with steady receivables
and a 70bp pickup in gross yieldLoyaltyOne revenue was down 24% on a sequential basis with declines in both AIR MILES and BrandLoyaltyTotal operating expenses excluding provision for loan loss decreased $154 million sequentially as a result of
the nearly $50 million of real estate optimization costs in 4Q20, an approximately $40 million decrease in cost of redemptions in our LoyaltyOne business, an approximately $30 million decrease in depreciation and amortization expense, and an
approximately $21 million seasonal decrease in marketing spend Card Services yield improved sequentially in 1Q21 Average receivables remained flat sequentially($ in billions) *Revenue divided by normalized average receivables
Improvement in net loss rate is a result of prudent risk management strategy, deliberate underwriting
actions, and direct consumer stimulus paymentsContinued decline in delinquency rate is a positive indicator for 2021 performanceAllowance of $1.8 billion is down $165 million from 4Q20 12 Credit Quality and Allowance 5 year Max rate: 7.6% 5
year Min rate: 4.7% 5 year Avg rate: ~6.0% Delinquency rate Net loss rate Reserve rate ($ in millions) * Net loss rate impacted by pandemic-related consumer relief program.** Calculated as a percentage of allowance for loan loss to end of
period credit card and loan receivables ** historic quarterly range for the last five years * *
13 2021 Financial Outlook Full Year 2020Actuals Full Year 2021Outlook Commentary Average receivables
2020 = $16,367 million Down mid-single-digits Sequential decline in 2Q21 Flat year-over-year in 2H21Expect year-end receivables to be in line with year-end 2020Credit sales up high-single- to low-double-digits in 2021 Total revenue2020 =
$4,521 million Down low-single-digits LoyaltyOne full year revenue growth in 2021Revenue pressure for Card Services as receivable balances rebuild from pandemic-related reductionsGross card yields remain steady Total expenses*(Excludes
provision for loan loss)2020 = $2,861 million Flat Includes increased digital investment and a ramp up in marketing spend from depressed levels in 2020Impacted by Bread® & Fiserv related transition expenses Net loss rate2020 =
6.6% Expected 2Q21 net loss rate in mid-to-upper 5% range Net loss rate for 2021 projecting better than the historic average of 6% * Total expenses represent total operating expenses excluding provision for loan loss plus total interest
expense, net
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, adjusted EBITDA margin, adjusted EBITDA, net of
funding costs, 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. 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. In addition, adjusted EBITDA eliminates the effect of the gain (loss) on the sale of a business, strategic transaction
costs, asset impairments, restructuring and other charges, and the loss on extinguishment of debt. Adjusted EBITDA, net is equal to adjusted EBITDA less securitization funding costs and interest expense on deposits. 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, non-cash interest, gain (loss) on the sale of a business, strategic transaction costs,
asset impairments, restructuring and other charges, and the loss on extinguishment of debt. 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. 14
Appendix 15
1Q21 1Q20 1Q21 vs 4Q20 1Q21 vs 1Q20 4Q20 LoyaltyOne (in millions) AIR
MILES reward miles issued 1,112 1,316 (16)% 1,355 (18)% AIR MILES reward miles redeemed 739 994 (26)% 838 (12)% Card Services ($ in millions) Credit
sales $6,043 $6,099 (1)% $7,657 (21)% Average receivables $15,785 $18,294 (14)% $15,759 - % Normalized average receivables* $15,785 $18,553 (15)% $15,759 - % End of period
receivables $15,537 $17,732 (12)% $16,784 (7)% Total gross yield %** 23.0% 25.5% (2.5)% 22.3% 0.7% Cost of funds 2.0% 2.4% (0.4)% 2.1% (0.1)% Principal loss rate 5.0% 7.0% (2.0)% 6.0% (1.0)% Reserve
rate 11.9% 12.1% (0.2)% 12.0% (0.1)% Delinquency rate 3.8% 6.0% (2.2)% 4.4% (0.6)% Return on equity 27% 18% 9% 16% 11% Key Business Metrics 16 *Normalized average receivables includes held-for-sale receivables**Revenue
divided by normalized average receivables
1Q20 2Q20 3Q20 4Q20 1Q21 LoyaltyOne (in millions) AIR MILES reward miles
issued 1,316 1,053 1,240 1,355 1,112 AIR MILES reward miles redeemed 994 608 687 838 739 Card Services ($ in millions) Credit sales $6,099 $4,799 $6,152 $7,657 $6,043 Average
receivables $18,294 $16,116 $15,300 $15,759 $15,785 Normalized average receivables* $18,553 $16,204 $15,356 $15,759 $15,785 End of period receivables $17,732 $15,809 $15,599 $16,784 $15,537 Total gross yield
%** 25.5% 20.4% 22.5% 22.3% 23.0% Cost of funds 2.4% 2.5% 2.4% 2.1% 2.0% Principal loss rate 7.0% 7.6% 5.8% 6.0% 5.0% Reserve rate 12.1% 13.3% 13.3% 12.0% 11.9% Delinquency rate 6.0% 4.3% 4.7% 4.4% 3.8% Return on
equity 18% 15% 14% 16% 27% Key Business Metrics 17 *Normalized average receivables includes held-for-sale receivables**Revenue divided by normalized average receivables
Financial Results – Quarterly 18 ($ in millions, except per
share) 1Q20 2Q20 3Q20 4Q20 1Q21 Total revenue $1,382 $979 $1,050 $1,110 $1,085 Total operating expenses, excl. provision for loan loss 562 555 552 699 548 Interest expense, net 139 128 115 113
109 Total expenses excl. provision for loan loss 701 683 667 812 657 Provision for loan loss 656 250 208 152 33 Total earnings before tax (EBT) $25 $47 $176 $146 $394 Income
tax (5) 9 43 53 108 Income from continuing operations $30 $38 $133 $93 $286 Income from continuing operations per diluted share $0.63 $0.81 $2.79 $1.93 $5.74 Diluted average shares
outstanding 47.7 47.7 47.8 48.4 49.8 Shares of common stock outstanding 47.6 47.7 47.7 49.7 49.7 Pre-provision, pre-tax earnings $681 $297 $384 $299 $428
************************************************************************************************************ (Including discontinued operations) Net income $30 $38 $133 $12 $286 Net income per
diluted share $0.63 $0.81 $2.79 $0.25 $5.74 Totals may not sum due to rounding
Financial Results – Segments by Quarter 19 ($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21
LoyaltyOne $198 $151 $185 $231 $177 Card Services 1,184 828 866 879 908 Corporate/Other - - - - - Total revenue $1,382 $979 $1,050 $1,110 $1,085 LoyaltyOne $47 $24 $18 $22 $32 Card
Services 32 70 212 187 410 Corporate/Other (53) (47) (55) (63) (47) Total earnings before tax (EBT) $25 $47 $176 $146 $394 Totals may not sum due to rounding
Parent Level Liquidity at 3/31 of $1.1 billion, consisting of cash on hand plus revolver capacity
Approximately $373 million in cash and cash equivalents, $750.0 million in unused revolverBank LevelBanks finished the quarter with $2.5 billion in cash and $2.9 billion in equityTotal risk based capital ratio at 22.3% - over double the 10%
threshold to be considered well-capitalized; CET1 at 21.0%Funding readily available with heavy demand for FDIC-insured deposit products – both direct-to-consumer and brokered 20 Capital and Liquidity Combined Banks Capital
Ratios 1Q20 2Q20 3Q20 4Q20 1Q21 Common equity tier 1 capital ratio 15.9% 18.3% 18.8% 18.4% 21.0% Tier 1 capital ratio 15.9% 18.3% 18.8% 18.4% 21.0% Total risk based capital ratio 17.3% 19.7% 20.1% 19.7% 22.3% Tier 1
leverage capital ratio 12.8% 14.2% 16.1% 17.1% 17.8%
Card Services Sales Data In-store vs. digital sales Digital includes all non-store new accounts and
Bread $ in billions In-store vs. digital new accounts 21 In millions
22 (1) Represents amortization of debt issuance costs.(2) Represents costs for professional services
associated with strategic initiatives.(3) Represents adjustments to our liability associated with restructuring or other exit activities recorded for cost saving initiatives executed in 2019.(4) Represents the tax effect including the related
non-GAAP measure adjustments using the expected effective annual tax rate. Reconciliation of Non-GAAP Information ($ in millions, except per share amounts) 1Q21 Net income $286.2 Add back non-cash/ non-operating items: Stock
compensation expense 6.8 Amortization of purchased intangibles 11.1 Non-cash interest(1) 8.5 Strategic transaction costs(2) 2.8 Restructuring and other charges(3) (0.4) Income tax effect(4) (1.8) Core
earnings $313.2 ********************************************************************** Weighted average shares outstanding – diluted 49.8 Core earnings per share – diluted $6.28
23 Reconciliation of Non-GAAP Information (1) Represents costs for professional services associated
with strategic initiatives.(2) Represents adjustments to our liability associated with restructuring or other exit activities recorded for cost saving initiatives executed in 2019. ($ in millions) LoyaltyOne Card Services Corporate 1Q21
Total Income (loss) before income taxes $31.7 $409.9 $(47.2) $394.4 Interest expense, net - 79.1 29.6 108.7 Operating income (loss) $31.7 $489.0 $(17.6) $503.1 Depreciation and amortization 9.0 24.4 0.6 34.0 Stock
compensation expense 1.5 2.4 2.9 6.8 Strategic transaction costs(1) - - 2.8 2.8 Restructuring and other charges(2) - - (0.4) (0.4) Adjusted EBITDA $42.2 $515.8 $(11.7) $546.3 Less: Securitization funding
costs - 33.6 - 33.6 Less: Interest expense on deposits - 45.5 - 45.5 Adjusted EBITDA, net $42.2 $436.7 $(11.7) $467.2