Exhibit 99.1
Advanta Provides Earnings Guidance for 2007
SPRING HOUSE, Pa.--(BUSINESS WIRE)--Nov. 27, 2006--Advanta Corp.
(NASDAQ: ADVNB; ADVNA) today announced that its 2007 earnings from
continuing operations are expected to be in a range of $3.15 to $3.25
per diluted share for Class A and Class B shares combined. This
reflects estimated 2007 pretax income from Advanta Business Cards of
between $152 million and $157 million. The Company also indicated that
2008 earnings per share are estimated to increase by over 40% from
2007.
"2006 full year income from Business Cards is expected to increase
by about 50% from 2005, despite ramped-up marketing to acquire a
record number of new customers. 2007 income is expected to increase
another 16% even after taking into account the temporary effect of
lower yields related to this record number of new customers added in
2006. Further, the profits from these new customers are expected to
make our 2008 income surge more than 40% higher than 2007 based on our
current projections," said Dennis Alter, Chairman and CEO.
The Company expects owned and managed business card receivables to
grow by between 20% and 25% in 2007, while 2007 transaction volume is
projected to increase between 15% and 20%. The Company also expects
the managed net credit loss rate for 2007 to be in a range of 3.20% to
3.50% with the owned net credit loss rate in a range of 3.00% to
3.30%.
Conference Call Details
Advanta management will hold a conference call with analysts and
institutional investors today, November 27, at 9:00 a.m. Eastern time
to review expectations for full year 2007. The call can be accessed by
dialing 719-457-2680 and referring to pass code 4131211. The call will
also be webcast simultaneously via a Vcall link on the Company's
website, www.advanta.com, or at www.vcall.com. Those interested in
listening to the webcast should go to the website at least fifteen
minutes before the call to register and download any necessary
software. Replays of the call will be available beginning at noon
today on the Internet at www.advanta.com or www.vcall.com or by
dialing 719-457-0820 and referring to confirmation code 4131211. The
conference call may include a discussion of non-GAAP financial
measures, which are reconciled to the most directly comparable GAAP
financial measure in this press release or the statistical supplements
available at www.advanta.com in the "Corporate Info" section.
Advanta focuses on the small business market and related
community, providing funding and support to the nation's small
businesses and business professionals through innovative product
offerings and services. Using its direct marketing and
information-based expertise, Advanta identifies potential customers
and provides a high level of service tailored to the needs of small
businesses. Advanta is one of the nation's largest issuers (through
Advanta Bank Corp.) of business credit cards to small businesses and
business professionals. Since 1951, Advanta has pioneered many of the
marketing techniques common in the financial services industry today,
including remote lending and direct mail, affinity and relationship
marketing. Learn more about Advanta at www.advanta.com.
This Press Release contains forward-looking statements that are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those projected. The most
significant among these risks and uncertainties are: (1) the Company's
managed net interest income including changes resulting from
fluctuations in the volume of receivables and the range and timing of
pricing offers to cardholders; (2) competitive pressures, including
product development and pricing, among financial institutions; (3)
political conditions, social conditions, monetary and fiscal policies
and general economic and other environmental conditions that affect
the level of new account originations, customer spending,
delinquencies and charge-offs; (4) factors affecting fluctuations in
the number of accounts or receivable balances, including the retention
of cardholders after promotional pricing periods have expired; (5)
interest rate fluctuations; (6) the level of expenses; (7) the timing
of the securitizations of the Company's receivables; (8) the effects
of government regulation, including restrictions and limitations
imposed by banking laws, regulators and examinations; (9) effect of,
and changes in, tax laws, rates, regulations and policies; (10) effect
of legal and regulatory developments, including changes in bankruptcy
laws and regulations and the ultimate resolution of the
industry-related judicial proceedings relating to the legality of
certain interchange rates; (11) relationships with customers,
significant vendors and business partners; (12) difficulties or delays
in the Company's ability to develop, acquire, produce, test and market
products or services, including the ability and cost to obtain
intellectual property rights or a failure to implement new products or
services when anticipated; (13) the amount and cost of financing
available to the Company; (14) the ratings on the debt of the Company
and its subsidiaries; (15) the effect of changes in accounting
policies or practices as may be required by changes in U.S. generally
accepted accounting principles; (16) the impact of litigation,
including judgments, settlements and actual or anticipated insurance
recoveries for costs or judgments; (17) the proper design and
operation of the Company's disclosure controls and procedures; and
(18) the ability to attract and retain key personnel. Additional risks
that may affect the Company's future performance are detailed in the
Company's filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K and its Quarterly
Reports on Form 10-Q.
In addition to the GAAP results provided throughout this document,
the Company has provided managed receivable data and other non-GAAP
financial measurements. Management believes that the non-GAAP
financial measures used to manage the business may provide users
additional useful information. The table attached to this press
release includes a reconciliation of these non-GAAP financial measures
to the most directly comparable GAAP financial measure and a
description of why the non-GAAP financial measures are useful to
investors.
ADVANTA
($ in thousands)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FORWARD-LOOKING
MANAGED DATA
- ----------------------------------------------------------------------
In addition to evaluating the financial performance of the Advanta
Business Cards segment under U.S. generally accepted accounting
principles ("GAAP"), we evaluate Advanta Business Cards' performance
on a managed basis. Our managed business credit card receivable
portfolio is comprised of both owned and securitized business credit
card receivables. We believe that performance on a managed basis
provides useful supplemental information to investors because we
retain interests in the securitized receivables and, therefore, we
have a financial interest in and exposure to the performance of the
securitized receivables. Revenue and credit data on the managed
portfolio provides additional information useful in understanding the
performance of the retained interests in securitizations.
The data below provides reconciliations of forward-looking managed
receivables and managed net principal charge-offs as a percentage of
average managed receivables (non-GAAP financial measures) to owned
receivables and owned net principal charge-offs as a percentage of
average owned receivables (the most directly comparable GAAP financial
measures). In the forward-looking business credit card credit data
below, the forward- looking average receivable balances are calculated
as a simple average of the projected December 31, 2006 balances and
the midpoint of the range of projected December 31, 2007 balances. In
the forward-looking business credit card credit data below, the Low
End of Range column assumes the forward-looking average receivable
balances multiplied by our Low End of Range charge-off rate
expectations, and the High End of Range column assumes the
forward-looking average receivable balances multiplied by our High End
of Range charge-off rate expectations. The data presented below
depicts only certain possibilities out of a large set of possible
scenarios.
Projected
Estimate
at
December
31, 2006 Projected Estimate at December 31, 2007
----------- -------------------------------------------
Forward- Low End Percentage High End Percentage
Looking of Range Increase of Range Increase
Ending
Business
Credit Card
Receivable
Balances:
-------------------- ---------- ----------
Owned $1,143,000 $1,372,000 20% $1,429,000 25%
Securitized 3,745,000 4,494,000 20% 4,681,000 25%
---------- ---------- ----------
Managed $4,888,000 $5,866,000 20% $6,110,000 25%
Year Ended
December
31, 2007
-----------
Forward-
Looking
Average
Business
Credit Card
Receivable
Balances:
Owned $1,272,000
Securitized 4,166,000
----------
Managed $5,438,000
Year Ended December 31, 2007
-------------------------------------------
Forward- Low End High End
Looking of Range of Range
Business
Credit Card
Credit Data:
---------- ----------
Owned net
principal
charge-offs $ 38,200 $ 42,000
As a
percentage
of average
owned
receivables 3.00% 3.30%
Securitized
net
principal
charge-offs $ 135,800 $ 148,300
As a
percentage
of average
securitized
receivables 3.26% 3.56%
Managed net
principal
charge-offs $ 174,000 $ 190,300
As a
percentage
of average
managed
receivables 3.20% 3.50%
CONTACT: Advanta Corp.
Amy B. Holderer, 215-444-5335
Vice President, Investor Relations
aholderer@advanta.com
or
David M. Goodman, 215-444-5073
Director, Communications
dgoodman@advanta.com