Alliance Data Surpasses Earnings Est


Alliance Data Systems Corporation (ADS) reported adjusted earnings of $2.55 per share for first quarter 2013, comfortably beating the Zacks Consensus Estimate of $2.43. Results augmented approximately 7% year over year.

Including stock compensation expenses of $13 million, amortization of purchased intangibles of $33.3 million, non-cash interest expense of $27.3 million, non-cash mark-to-market gain on interest rate derivatives of $6.3 million and an income tax benefit of $24.5 million, Alliance Data reported net income of $129 million or $1.92 per share in the quarter, compared with $115.2 million or $1.86 per share in the year-ago period.

Alliance Data posted better-than-expected results based on strong performances across all segments.

Operational Performance

Revenues of Alliance Data in the reported quarter were $1.05 billion, up 18% year over year. The upside was buoyed by a double-digit increase at Epsilon and Private Label Services and Credit. Results surpassed the Zacks Consensus Estimate of $1.02 billion. Revenue in the reported quarter exceeded the $1 billion mark for the first time.

Operating expenses escalated nearly 19.3% year over year to $762.2 million in the first quarter of 2013, primarily due to a 16.6% increase in cost of operations and 35.1% increase in provision for loan loss and 36.7% increase in depreciation and amortization.

First-quarter adjusted earnings before Interest Tax Depreciation and Amortization (:EBITDA) was $357.1 million, up 18% year over year. The upside was aided by improvement in all three segments.

Operating income of Alliance Data increased 15.3% year over year to $291.2 million in the quarter.

Segment Update

LoyaltyOne: The segment revenues totaled $241 million, down 7% year over year.

Adjusted EBITDA was $63 million, up 7% from the year-ago quarter.

During the reported quarter, operating income increased 9.2% year over year to $55.9 million.

AIR MILES’ reward miles issued decreased 3% in the quarter.

Epsilon: Segment revenues were $318 million in the first quarter, up 39% year over year.

Adjusted EBITDA was $54 million in the first quarter, up 37% year over year.

First-quarter operating income was $16.2 million, up 37.3% from the year-ago period.

Private Label Services and Credit: Revenues from the segment came in at $497 million, up 22% year over year.

Adjusted EBITDA was $227 million in the quarter, up 16% year over year.

First-quarter operating income improved 13.3% year over year to $242.4 million.

Financial Update

Alliance Data exited the quarter with cash and cash equivalents of $764.1 million, declining 14.5% from 2012-end level.

Debt inched up 0.6% to $2.87 billion at first quarter 2013 end from $2.85 billion reported at 2012 end.

Cash from operations of Alliance Data in the first quarter totaled $279 million, up 16.4% from the year-ago period.

Capital expenditures decreased to $28.3 million in the quarter from $31.4 million in the year-ago period.


Second Quarter of 2013

Alliance Data expects to generate $1.02 billion in revenue, representing an 18% year-over-year increase.

Core earnings are expected to be $150 million (up 10% year over year) or $2.25 per share (up 6% year over year).

2013 Guidance Raised

Alliance Data raised its revenue expectation to $4.25 billion from $4.20 billion. The new guidance represents a 17% increase from the 2012 level. Organic revenue growth is projected to be around 7%.

Core EPS was revised upward to $9.75 from $9.65. The new guidance represents a 12% year-over-year improvement.

Share outstanding are projected at 65.7 million, up 2% from 2012 level.

Our Take

Alliance Data continues with the trend of delivering positive earnings surprise. It remains well poised for the upcoming quarters based on continued strong performances across the segments and a solid financial position.

Continued focus on strategic acquisitions to grow inorganically, the national rollout of its dotz coalition loyalty program in Brazil (plans to enter 5 additional markets in 2013), and inking long-term deals are expected to drive sold numbers ahead. Dotz is on track to exceed $100 million in revenue in 2013.

Alliance Data currently carries a Zacks Rank #2 (Buy). Among other financial transaction service providers, Total System Services, Inc. (TSS) is scheduled to release its first-quarter 2013 earnings on Apr 22, while Equifax Inc. (EFX) will release results on Apr 24 and Fiserv, Inc. (FISV) is scheduled to release results on Apr 30. All these stocks carry a Zacks Rank #2 (Buy).

Read the Full Research Report on TSS

Read the Full Research Report on FISV

Read the Full Research Report on ADS

Read the Full Research Report on EFX

Zacks Investment Research

More From


View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Masters in Accounting or Forensic Accounting

    Study online in your spare time and graduate in less than two years. Accredited program from New England College School of Accounting.

    AdChoicesNew England CollegeSponsored
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Fed comments tell Cramer to buy Apple & more

    Jim Cramer spent Wednesday afternoon sifting through the Fed statement and the comments made by Fed Chief Janet Yellen in the subsequent press conference. "The trick with the Yellen regime, like the trick with the Ben Bernanke regime before her is to remember that they speak for the common person,"…

  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Anyone With $40 Could Become A Millionaire

    1 simple Warren Buffett quote explains the key investing strategy that could create unimaginable long term wealth for you and your family.

    AdChoicesThe Motley FoolSponsored
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Gold loses luster on Fed; Barclays cuts forecast

    Barclays cuts gold forecasts, sees increasingly bearish backdrop Bloomberg MA MB MC MD ME SAN FRANCISCO (MarketWatch) — Gold prices dipped Wednesday on concerns about a stronger dollar ahead of the Federal Reserve policy statement and in response to Barclays lowering its gold forecast.

  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Is Education & Teaching Your Calling?

    Grand Canyon's College of Education boasts 52 teachers of the year & counting! Will you be the next? Ask about our B.S., M.A. & M.Ed. degree programs.

    AdChoicesGrand Canyon UniversitySponsored
  • Fed renews zero rate pledge, but hints at steeper rate hike path

    The Federal Reserve on Wednesday renewed its pledge to keep interest rates near zero for a "considerable time," but also indicated it could raise borrowing costs faster than expected when it starts moving. In a statement after a two-day meeting of its policy-setting Federal Open Market Committee,…

  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • Romney-Sized IRAs Scrutinized as Government Studies Taxes

    The preliminary report attaches data to an issue that drew attention during the 2012 presidential campaign, when Republican nominee Mitt Romney reported an IRA worth $20 million to $102 million. Senate Finance Committee Chairman Ron Wyden said many of these "massive" accounts come from deals…

  • Russian billionaire placed under house arrest

    A billionaire Russian tycoon was placed under house arrest Tuesday in a money-laundering case that has drawn comparisons with a government crackdown on Russia's Yukos oil company more than a decade ago. The Investigative Committee, Russia's top investigative agency, said that Vladimir Yevtushenkov,…

    Associated Press
  • The Government Keeps Helping People Buy Failing Cold Stone Creamerys

    Would you loan someone money to buy a Cold Stone Creamery franchise if you knew that more than a quarter of those loans default? Over the last decade, franchisees in the Cold Stone Creamery ice cream chain defaulted on 29 percent of working-capital loans backed by the government, costing taxpayers…

  • $40-Off Limited Time Offer From Norton

    Award-winning PC protection that doesn't slow you down. Easy installation & money-back guarantee. Download today with our $40-off limited time offer.

    AdChoicesNorton by SymantecSponsored
  • Facebook Is Hiding Important Information From Investors

    Facebook Is Hiding Important Information From Investors On July 23, when Facebook reported its earnings for the second quarter, the company stunned everyone. Revenues were $2.68 billion, up 67% from the same quarter during the year

    Business Insider