Alliance Data Systems Corporation
) 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.
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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.
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
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.
: The segment revenues totaled $241 million, down 7% year over
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.
: 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
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
Adjusted EBITDA was $227 million in the quarter, up 16% year over
First-quarter operating income improved 13.3% year over year to
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
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
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
) is scheduled to release its first-quarter 2013 earnings on Apr
) will release results on Apr 24 and
) is scheduled to release results on Apr 30. All these stocks
carry a Zacks Rank #2 (Buy).