Alliance Data Systems Corporation
) reported adjusted earnings of $2.41 per share in the second
quarter of 2013. The results beat the Zacks Consensus of Estimate
of $2.18 and was ahead of the year-ago figure by 13%.
Including stock compensation expenses of $15 million,
amortization of purchased intangibles of $33.1 million, non-cash
interest expense of $28 million, non-cash mark-to-market gain on
interest rate derivatives of $2.2 million and an income tax
benefit of $26.2 million, Alliance Data reported a net income of
$116 million or $1.71 per share in the quarter. This compared
favorably with $104 million or $1.63 per share in the year-ago
Alliance Data posted better-than-expected results based on strong
performances across all segments.
During the quarter under review, Alliance Data generated revenues
of $1.03 billion. Revenues were up 19% year over year, driven by
double-digit increase at Epsilon and Private Label Services and
Credit. However, the results marginally missed the Zacks
Operating expenses escalated nearly 21.2% year over year to
$758.9 million in the second quarter of 2013, primarily due to a
21.3% increase in cost of operations and a 14.4% increase in
Second-quarter adjusted earnings before Interest Tax Depreciation
and Amortization (EBITDA) were $337.7 million, up 15% year over
year. The upside was aided by improvement in all three segments.
Operating income of Alliance Data increased 11.9% year over year
to $269.2 million in the quarter.
: Segment revenues totaled $220 million, down 4% year over year.
Adjusted EBITDA was $66.2 million, up 9% from the year-ago
During the reported quarter, operating income increased 10.7%
year over year to $59.1 million.
AIR MILES' reward miles issued decreased 5% in the quarter.
: Segment revenues were $331.8 million in the second quarter, up
41% year over year.
Adjusted EBITDA was $63.6 million in the second quarter, up 30%
year over year.
Second-quarter operating income was $24.2 million, up 19.8% from
the year-ago period.
Private Label Services and Credit
: Revenues from the segment came in at $479.9 million, up 19%
year over year.
Adjusted EBITDA was $231.8 million in the quarter, up 13% year
Second-quarter operating income improved 10.6% year over year to
Alliance Data exited the quarter with cash and cash equivalents
of $749.8 million, declining 16.1% from the 2012-end level.
Debt inched up 0.04% to $2.86 billion at the end of the second
quarter of 2013 from $2.85 billion reported at 2012 end.
Cash from operations of Alliance Data in the first half of 2013
was $530.4 million, up 27.1% from the year-ago period.
Capital expenditure increased to $59 million in the first half of
2013 from $55.5 million in the year-ago period.
Share Repurchase Update
Year to date, Alliance Data has bought back 1.3 million shares
worth $208 million.
Third Quarter of 2013
Alliance Data expects to generate $1.07 billion in revenues,
representing a year-over-year increase of 18%.
Core earnings are expected to be $170 million (up 10% year over
year) or $2.60 per share (up 10% year over year).
2013 Guidance Raised
Alliance Data raised its revenue expectation to $4.275 billion
from $4.25 billion. The new guidance represents a 17% increase
from 2012. Organic revenue growth is projected at 8%.
Core EPS was revised upward to $9.85 from $9.75. The new guidance
represents a 13% year-over-year improvement.
Shares outstanding are projected at 66.2 million, up 3% from the
Performance of another financial service transaction
) fiscal third-quarter (ended Jun 30, 2013) operating earnings of
$1.88 per Class A common share comfortably exceeded the Zacks
Consensus Estimate of $1.79 and the prior-year quarter figure of
$1.56 per share.
) posted second-quarter 2013 adjusted earnings per share of 92
cents, beating the Zacks Consensus Estimate of 90 cents. Results
were up 27.8% from the year-ago quarter.
Total System Services Inc
) reported second-quarter 2013 operating earnings of 34 cents per
share, which came in a penny higher than the Zacks Consensus
Estimate. However, it missed the year-ago quarter figure of 35
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. Revenues in the reported
quarter exceeded the $1 billion mark for the third time. Core EPS
also managed to outperform the guidance.
Continued focus on strategic acquisitions to grow inorganically,
the national rollout of its dotz coalition loyalty program in
Brazil (plans to enter 4 additional markets in the second half of
2013), and inking of long-term deals are expected to drive solid
numbers ahead for Alliance Data. Dotz is on track to exceed $100
million in revenues in 2013 with 10 million collectors by the end
of the year.
Alliance Data currently carries a Zacks Rank #3 (Hold).
ALLIANCE DATA (ADS): Free Stock Analysis
EQUIFAX INC (EFX): Free Stock Analysis Report
TOTAL SYS SVC (TSS): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
To read this article on Zacks.com click here.