Alliance Data Systems (ADS) Tops Q3 EPS by 5c; to Unlock Intrinsic Value of ADS Portfolio of Businesses

Alliance Data Systems (NYSE: ADS) reported Q3 EPS of $6.26, $0.05 better than the analyst estimate of $6.21. Revenue for the quarter came in at $1.95 billion versus the consensus estimate of $2.03 billion.

Plan to Unlock Intrinsic Value of ADS Portfolio of Businesses to be Communicated Prior to Year-end

Ed Heffernan, president and chief executive officer of Alliance Data, commented, "Pro forma revenue increased 5 percent to $2.02 billion for the third quarter of 2018, below expectations. Conversely, core EPS came in strong, increasing 17 percent to $6.26 for the third quarter of 2018. Year-to-date core EPS has increased 20 percent to $15.70, which firmly positions us to realize our full-year guidance of $22.50 to $23.00 per share, an increase of 16 to 19 percent.

"There were three significant achievements during the third quarter. First, we are now seeing the benefits from shifting to in-house recovery of charged-off accounts in our Card Services segment as recovery rates moved from a multi-quarter drag toward a growing benefit. Second, also in the Card Services segment, we are trending to a record level of new client signings, which will add as much as $4 billion in card receivables growth over time. And third, our LoyaltyOne® segment had another solid quarter of pro forma revenue growth, coupled with momentum in our AIR MILES® Reward Program as evidenced by a nice step-up in AIR MILES issued.

"Shifting to our strategic direction, we have spent the better part of this year reviewing the portfolio of businesses that constitute Alliance Data. We are nearing the end of this process and feel it's appropriate to share our current thinking."

Heffernan continued: "Stated simply, we firmly believe that our current stock price does not reflect the intrinsic value of our portfolio of businesses across the enterprise. We are evaluating which assets would likely thrive under a different steward, while also unlocking value for our stockholders. We know that the right answer could involve significant realignment of our businesses and we are actively evaluating that optimal strategy. We expect to crystallize a game plan of precisely − what and how − before year end, and will continue to communicate our path forward when appropriate."

For earnings history and earnings-related data on Alliance Data Systems (ADS) click here.

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