Research Desk Line-up: Moody's Post Earnings Coverage

LONDON, UK / ACCESSWIRE / July 26, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Alliance Data Systems Corp. (NYSE: ADS) ("ADS"), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ADS, following the Company's reporting of its second quarter fiscal 2017 earnings results on July 20, 2017. The leading global provider of data-driven marketing and loyalty solution outperformed earnings estimates. The Company also provided an initial forecast for FY18. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Get more of our free earnings reports coverage from other constituents of the Business Services industry. Pro-TD has currently selected Moody's Corporation (NYSE: MCO) for due-diligence and potential coverage as the Company announced on July 21, 2017, its financial results for Q2 2017 and also provided its current outlook for the full year 2017. Register for a free membership today, and be among the early birds that get access to our report on Moody's when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on ADS; also brushing on MCO. With the links below you can directly download the report of your stock of interest free of charge at:

http://protraderdaily.com/optin/?symbol=ADS

http://protraderdaily.com/optin/?symbol=MCO

Earnings Reviewed

For the quarter ended June 30, 2017, ADS' revenue increased 4% to $1.82 billion compared to revenue of $1.75 billion in Q2 2016. The Company's revenue numbers fell short of analysts' expectations of $1.84 billion.

During Q2 2017, ADS' adjusted EBITDA totaled $499 million, up 6% compared to adjusted EBITDA of $472 million. The Company's adjusted EBITDA, net of funding costs and non-controlling interest (adjusted EBITDA, net), grew 3% to $433 million from $422 million in the prior year's same quarter.

For Q2 2017, ADS reported net income of $138 million compared to net income of $141 million in Q2 2016. The Company's earnings per share surged 99% to $2.47 for the reported quarter compared to earnings of $1.24 per share in the prior year's corresponding quarter. Excluding $1.14 in accretion charges related to the purchase of the remaining 20% net interest in BrandLoyalty from Q2 2016, ADS' earnings advanced 4% on a y-o-y basis. The Company's non-GAAP earnings totaled 3.84 per share, up 4% and came in ahead of Wall Street's expectations of $3.72 per share.

Segment Analysis

During Q2 2017, ADS' LoyaltyOne segment revenue fell 21% to $280 million, while adjusted EBITDA dropped 28% to $57 million, primarily due to the breakage estimate reset in Q4 2016 for AIR MILES and timing of client programs at BrandLoyalty. The Company stated that unfavorable foreign exchange rates reduced revenue and adjusted EBITDA by approximately $11 million and $2 million, respectively.

LoyaltyOne segment's AIR MILES revenue declined 12% on a y-o-y basis to $179 million in Q2 2017 primarily due to a 13% drop in AIR MILES reward miles redeemed. AIR MILES reward miles issued also fell 1%, primarily due to the timing of promotional activity by certain sponsors. The segment's BrandLoyalty revenue dropped 32% to $101 million in the reported quarter. ADS noted that quarterly results for BrandLoyalty can be uneven due to the nature of its offering - short-term loyalty solutions generally 12 to 20 weeks in duration.

For Q2 2017, ADS' Epsilon division's revenue rose 5% to $544 million and adjusted EBITDA grew 4% to $107 million. The Company noted that cost controls implemented in 2016 held the increase in payroll and benefits expense during the reported quarter to approximately 1%.

The segment's Automotive, Agency, and digital CRM offerings contributed double-digit revenue growth in Q2 2017, driven by new wins and strength in existing client relationships. Furthermore, the Technology Platform offering, which generates approximately 25% of Epsilon's revenue performance, improved with revenue from the unit down 3% in the reported quarter compared to a drop of 13% in Q4 2016.

During Q2 2017, ADS' Card Services segment's revenue advanced 13% to $1.0 billion and adjusted EBITDA, net, increased 11% to $306 million. The division's gross yields were 25.0% in the reported quarter, down approximately 40 basis points from the prior comparable period, due to an increase in the reserve for uncollectible, unpaid finance charges billed.

The Card Services division's operating expenses rose 4% to $346 million, or 8.6% of average receivables, reflecting an improvement of 90 basis points on a y-o-y basis. During Q2 2017, the loan loss provision increased 26% to $288 million, driven by strong growth in average card receivables and higher principal loss rates. The division's portfolio funding costs were $65 million in the reported quarter, or 1.6% of average credit card receivables, up 18 basis points from Q2 2016.

ADS' credit sales grew 6% to $7.5 billion for Q2 2017, bolstered by a modest increase in tender share. The segment's average credit card receivables, excluding amounts reclassified as assets held for sale, rose 17% on a y-o-y basis to $15.7 billion, while net principal loss rates for the reported quarter totaled 6.2%, up 110 basis points from the year ago comparable period, primarily due to lower recovery rates. The delinquency rate was 5.05% at June 30, 2017, up 46 basis points from the year ago same period.

Dividend

On July 20, 2017, ADS announced that its Board of Directors declared a quarterly cash dividend of $0.52 per share on the Company's common stock, payable on September 19, 2017, to stockholders of record at the close of business on August 14, 2017.

Outlook

ADS announced that it is raising FY17 revenue guidance from $7.7 billion to $7.8 billion, an increase of 9% on a y-o-y basis, but it is lowering 2017 core EPS guidance from $18.50 to $18.10 which is about a 2% drop to reflect the timing issue at BrandLoyalty.

The Company also provided initial guidance for FY18, where it is forecasting revenue of $8.7 billion, which represents a 12% growth rate, and core EPS of $21.50, which is a 19% growth over 2017.

Stock Performance

Alliance Data Systems' share price finished yesterday's trading session at $242.07, slightly advancing 0.80%. A total volume of 626.30 thousand shares have exchanged hands. The Company's stock price advanced 7.01% in the past six months and 5.07% in the previous twelve months. Additionally, the stock gained 5.94% since the start of the year. Shares of the Company have a PE ratio of 27.55 and have a dividend yield of 0.86%. The stock currently has a market cap of $13.60 billion.

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