Alliance Data Systems (ADS) Misses Q3 EPS by 16c, Lowers FY EPS Guidance

October 24, 2019 7:38 AM EDT

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Alliance Data Systems (NYSE: ADS) reported Q3 EPS of $5.05, $0.16 worse than the analyst estimate of $5.21. Revenue for the quarter came in at $1.44 billion versus the consensus estimate of $1.46 billion.


Alliance Data Systems sees FY2019 EPS of $16.75-$17.00, versus the consensus of $19.22.

  • Recent prime rate changes, an adjustment to the value of certain held-for-sale credit card receivable portfolios, and lower average receivables caused an aggregate reduction in expected core EPS. As a result of these factors, the Company has lowered its full-year 2019 core EPS guidance range to $16.75 to $17.00 (assumes no further interest rate reductions from the Federal Open Market Committee). On a pro forma basis, which assumes the full year effect of the lower share count, debt retirement and company-wide expense reductions, expected core EPS guidance would range from $20.50 to $20.75.
  • Since the receipt of the $3.5 billion net proceeds from the Company's sale of its Epsilon segment, Alliance Data has retired $2.4 billion of corporate debt, which is expected to yield annualized interest cost savings of approximately $120 million.
  • Additionally, as previously announced, Alliance Data successfully completed a "modified Dutch Auction" tender offer, repurchasing 5,050,505 shares at a price of $148.50 per share. The aggregate cost of that transaction was approximately $750 million, exclusive of fees and expenses related to the tender offer. The Company expects to opportunistically allocate the remaining net proceeds of approximately $350 million based on management's assessment of potential investments to accelerate organic growth, its cash requirements, and the benefit from additional share buybacks.
  • Looking ahead, management continues to have confidence in the successful execution of its business strategy transformation and streamlining efforts, with the majority of initiatives completed or in progress. These initiatives, designed to provide a leaner, simplified operating model for all of Alliance Data's businesses, will position the company for low-single digit revenue growth in 2020 and mid-twenties to high-twenties year-over-year improvement in our core EPS.

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

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