ADS - Earnings call transcript Q1 2018 | Bread Financial Holdings, Inc.

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Operator

Good morning and welcome to Alliance Data's First Quarter 2018 Earnings Conference Call. At this time, all parties have been placed on a listen-only mode.

Following today's presentation the floor will be open for your questions. [Operator Instructions] In order to view the Company's presentation on their website, please remember to turn off the pop-up blocker on your computer. It is now my pleasure to introduce your host, Ms. Consulting. FTI of Liu Emily Ma'am, the is yours. floor

Emily Liu

you, copy of By you XXXX now, a received have should the release. Thank earnings operator. Company's quarter first

haven't, you please FTI at If call XXX-XXX-XXXX. Consulting

and and Charles Chief we Ed today, call Data. of Horn, Officer the Data; Heffernan, Financial On President Alliance of Chief Alliance have Officer Executive

financial presented Also, statements. on subject will will like your the some and to call. of the believe the responses Relations turn the to Before information no would you investors. our has provide the in some Heffernan. call that, on useful the to over www.alliancedata.com. we information uncertainties speakers Ed begin, obligation on like of are posted of on Alliance SEC. website GAAP which certain release Ed? to the measures, at those today's that may These measures contain risks and With Company's to forward-looking questions for we to Data call, remind update with Investor to non-GAAP and I the the statements Reconciliation be comments today's will made call described reference filings other I'd the earnings

Edward Heffernan

Emily. Thanks Great.

we He'll Joining I'll keep quarter our is Horn, me XXXX give have We'll outlook. and remarks of our the can full-year back Charles plenty Q&A. today, update of prepared you short, on results. our as update come CFO. an time then that so always, first And for everyone fairly with

of, the issue to else. Facebook we've getting discuss one in questions probably turn with and been it to whole over lot a of Before I Charles, data everything want do I surrounding quite the obviously,

not folks and mistakenly as a data that as that's in lump think us we to business. a do broker, tend what I

guess, so a the explain we of example way what probably, I company. be do it, as best give would to an to And

and own through hotel about might for Epsilon hotel provide company. note example, in the major its to works the implementing customers key for have some customers developing campaigns. use these company say, itself. hotel a in to of And It's company and So loyalty marketing let's opted that already Epsilon data with type

data this known company's most for information So for out and, have marketing their hotel or consent would customers when self-reported is data the the the loyalty provided they as their because first-party importantly, type filled of purposes. profiles given program

are company's reach do as data, from Now we who clients' these The information transactional might with that data, using or to public what is that to combine purchase data such in compiled interested data such messages as run behalf ads consumers. on records likely or the programs hotel has of offer. data, the we'll help demographic be in consumers been most that bottom are already is that opted are line overwhelmingly

business, that's perspective, really And Epsilon, from again, some than of a piece it's so a small broker do. X% we and but, minimis again, not our which less are outside ADS, de relate where whatsoever. what There of very players, sales doesn't to third-party to there is data very, is

in think programs. in for we I folks other lumped is So do a got overwhelmingly information our folks' when, fact, we've of opt-in bunch use with we what

being turn over don't said, it to that, with why So I Charles.

Charles Horn

increased XX% forma the quarter. for core revenue at strength Pro Thanks led Services. EPS [indiscernible] of Card Ed. while first XX% by to increased XXXX $X.XX $X.XX, to to for increased the X% quarter EPS first

quarter accounts $X.XX XX associated loss to by higher expected, points press of and collection or approximately first EPS rates core drag on to As in-source our decision with growth. charged-off

and benefit earnings we quarter, net rates shift to While punitive was believe loss strategy the will in forward. first moving the that

consumer down X% to the to segments. quarter quarter, with revenue revenue of decreased quarter of we break the Starting essentially soft XXXX from the where various LoyaltyOne, XXXX, first first Issuance increased the pro and the of decreased Customer million. of aggregate slide pro XXXX, flat hit sentiment quarter XXXX. was XX% the to and forma XX% continues BrandLoyalty's basically MILES a about XX% XXXX. go pick for next AIR first forma to revenue Let's If talk from and started have up. to hangover from the $XXX target. has needed promotional now accelerated fourth revenue improve activity quarter number bookings of to the

$XXX to million. to Revenue Epsilon. Turning decreased X%

the was We very a year, to had grow-over. tough expected strong a as we quarter XXXX. a modest It first start of

a the XX%, shift creating increased X primarily CPG point profitability from due In quarter. the On to total over a by addition, X adjusted on growth. margins agency points lower EBITDA revenue drag pressure, revenue for agency dropped note, positive business

Services value due carrying $XX increased net to million XX% with adjustment held-for-sale Card receivables. to Lastly, card approximate downward $X.XX million built the X% EBITDA a $XXX growth the million to consistent of in average adjusted to reserve receivables, allowance built rate revenue or and billion, our decreased while $XX

first over of further should net expect remainder The reserve to adjustments the the to XXXX, XXXX carrying the held-for-sale high drop the Thus, rate should we watermark and quarter the the need receivable. rates. for value be not of loss do

the credit Let's the page go about next of metrics. a and talk to key few

with due from our from fair basis quarter points fourth accounting increased credit vintages. growth the card XXXX billion basis with $XX.X the share. increased X% first XX The point associated sales, Gross Signet by to value of of portfolio of first is receivables XX coming in Average acquisition newer over of the to aided XX% we'll tender increase talk decreased XX% the yields XXXX. quarter in about an which the

Operating the acquired As we payroll higher mark-to-market due gross and $XX increased the on increase. million receivables. portfolio XX to expense expenses talked yields will basis just about turns, the points held-for-sale

air Lastly, end the elevated pocket, delinquency QX. to hurricane which abate rates will the remained of due by

going on. next important three gives good want which things And what's There of and I down is - I break chart important to kind want pretty to bridge. to where loss make here. think what's go the I saying this Let's always is slide changing highlight the points investors and a rate,

recovery to points. and It's transition only increase lower is So all should recovery first basis QX. the rates. is the negatively internal to impact from due XX is This

loss zones, gross points. hurricane actually strip declined out loss the rates basis actually gross basis FEMA And we improved rates or if XX XX points. or third, Second, improved lowered

I there appears in While to With the turn the due credit on noise hurricane track. some to over normalization quarter be will to impact, loss rate Ed. that, second it thesis residual will be

Edward Heffernan

Great.

So changed. changed. Essentially, why go about or talk not we what's and changed now don't nothing's back and full-year guidance XXXX

overall adjustment. to is look on we laid as the by pro look XX%. accounting about today. XX% looking softest And to growth, beginning and we topline what be basis, sequence for for continue be year year. to to solid we basis, From And apples-to-apples pro closer forma quarter, it between do their XX% then look XX% going if core X%. reported Those of X%. and and at QX We're your X% how at it case. mentioned, revenue at first growth out So a you of the at the to overall forma us to forma we we're growth topline pro continues revs And should numbers growth anywhere consolidated an of EPS of the which about were

or EPS there, XX% thereafter. expect up we we losses obviously, expect then And acceleration bit mid-teens to to continue an to continue to that QX. trip drifting We reserve expect, obviously, start and, And to move would, into in core as higher. therefore, we a about expect from downward, rates

year the think I good. what initially looks so overall, So and had we solid thought far, so from

X, Slide low adjusted change forma units the of individual expect high growth. LoyaltyOne, no single-digit double-digit there, we terms In revenue themselves, pro and EBITDA

first return strong quarter has last right MILES double-digit growth and year, of we it's into trending had back in difficult the was go quarter, flat, in a right essentially And issued will bit BrandLoyalty, actually expect second now. to direction through quarter the current in very We in the which year. half better as came AIR and year a the the

as see back move X% we that So part we finally nice the the or to of X% want a to growth year. to turn rate metric

fairly on it LoyaltyOne pretty shape. in from everyone to grow-over the it to was Epsilon, So and no looks light due but be choppy, tends usually, knows, quarter year, exception. was revs, last strong good as was through very what of down any course, comp of for nice includes, in - that. include terms and like there of type and incentive falling that things earnings was comp growth, accruals and first executive

it XX% a some up. I the the in revs about very a growth, on seems quarter overall that, starts XX% of year, sale it's the will newer the address, tend had the flow portfolio on growth the at the growth of number quarter should It the of we're in of want of that EBITDA given way. targeting our the comparing forth X% growth, back moved Services, stuff to base. off mid-single-digit right a mid-teens out and noted pretty up year. about and the Overall, also issue overall, nicely, and against for tick which Epsilon progresses the for go client think, that for Card was very to In growth, clients But growth. points adjusted now muted last have I that and and a portfolio. which cash just is credit growth briefly, pulling So adjusted to track side, growth track relatively be should EBITDA terms which started will as year couple revenue good year,

or Gander sold. example, was for bankrupt; America, an through was obviously, went So Mountain through a PayPal acquisition, Virgin and the business acquired; merger

of last that So clients those handful quarter. contributed sales are a to first

book, If would at client have you sales just up have look - out year-over-year. been would those XX% active been sales credit took up our and our

a to your of probably that's in keep So mind. metric the decent back

looks The number quarters. drop-off significant quite the a announcements type in very be over cards to next of interest going of you'll couple at of strong don't it's see overall, real So robust. any year. have pipeline this program, see I another There'll that all. in like remains

off, going probably, we accounts to And would complete. it, would quite time, where spent time trend. entirely our quarters of prior that But first that Charles first than XX first investment up significant rates we last rates than the It our in recovery to by but charged is percentage, a actually like at rate lot mentioned, shifted looks a used spooled a and So we in and It quarter, quarter outside bit seems, fees which are. big basis now you're receive dramatically still remains good period due the XX loss losses - they sell were were have X.X%. that was, up differently, sell loss points meant paper XX, we overall We quite prior-year high. rates we there as process to due and that below the gross once reason year, to third where the to it do dragged were were It recovery. book hadn't it recovery made see drag several Those We in-house. everything rates was quarter, ramping higher that. loss on as actually recoveries. basis of interest points. on was year. QX the long-term down rate took was Said a or well - quarter to and, last the and went parties better we Therefore, internal a

it like collectors that all we all doing of dissipate. results got we've our And to starts so Right we're and in-house, up right now, now. the and running. And

latter you'll year - and we will a headwind tailwind I'm tailwind, this So will as then year. move sorry, of move neutral what move will as and will part is neutral that to then well next the as be move to through see that

been a hit would normal, against and XX rates we for put is that not had dissipating, norms rate. perspective, a it To the XX%. So XX, this have and elevated, that weren't it, everything our points, looks basis We It's see the made. to getting had that the little the and in rate growth back added reserve we is the the but kept have to the long-term put investment market, to earnings and And everyone it outside on rates. the we loss made investment been investment higher half. we had points XX painful good pretty EBITDA would closer in that to growth it made

as was it. and the we off, it's it investment, this going with paying big to year I do think is plays we a long-term, expect, worth nice So be And tailwind a as out. said,

so piece We couple in then going that where this for And reserve which year. set Xs, loss do you're look bubble from rate keep So about a looking the of are [indiscernible] the the the looking And the rates, be the we to be conservatively. - dramatically. we a months final result, build is, year, rate that, at the What tend QX we delinquencies loss hurricanes, for process, to the half XX-month that it's the and something we why quarter's as QX? nicely a would elevated fairly as means so the more loss and us year back quarter. up drop are better, was we'll it you'll like that's as and at in getting probably then of maybe at our well X% in should our flat see on rate, to to current as to so high tend track the that's reserve

next headwinds those reserve have these types we a need to is, the see going what as obviously, in to quarter, the rates. As acceleration significant of result, to earnings you'll a over keep pretty dissipate don't growth. you're And tend

going looking So be a of the the quarter trends having progressively a forward that softest all And friend good that eagerly at like it from better the it's I something to are to. which things as think, means point. here, being first is with get us And this said, that looks year. are

why with it questions. So said, we up being ahead that and open for don't go

Operator

first Sakhrani [Operator from Instructions] the question line KBW. Sanjay Your of with comes

Sanjay Sakhrani

Thanks. Good morning.

of come maybe like a decline on so the second give And in that the with really obviously, me, provisions the risks revenues on What those then execution revenues in that's us help we you've see that second about those. the comfort some for just guidance about the the the with up on should the us first card So targets. whether inventory benefit associated the quarter back-half then the the on the a just off, those loaded is or for the and, would could should half I that? guess, that up it boost businesses provision, Perhaps, delinquencies not is in non-card the point, non-card And given meaningful the And businesses. achievable? that business. you a since not think Thanks. been seems achieving associated for charge-offs recoveries, be to story risk building aren't in your hurricane in Maybe or the on confidence right?

Edward Heffernan

add take a some And stab. it. I'll Charles color to can Sure. then

we last flat. which In in be in terms came to water we're actually first is non-card relatively negative like think we based looks the move businesses, above summer on It now into some I the that we our quarter, of points what that was a going activity issuance that Canada see seeing business to promotional expected didn't level, break in the we're AIR few as year the head pipeline. the that we in the in know MILES

Canadian the into mode. is growth some us that finally And gives comfort so business back that moving

of disappointing a quarter-to-quarter, is the does how at based that of And seeing terms signed is type quarter. I built. book. of of type last same been we're the certainly and was doesn't at BrandLoyalty, but the which get attrition the I through. and which from new this looking growth doable. our book mean, had modest the final what in it the solid much which all year, relatively story should of year then is book XX% point, think first XX% is And on on of terms about come comp about a And risk chop suggests the It has we're there. downside very your it's business, European-based if targeting of easier In little we're it's progressively rates, it bit Epsilon, in toughest terms their clients And

Charles Horn

right. you're delinquencies, the on Sanjay, And

As rate the recoveries, see course of we're at at net we On based year the second QX, loss X.X% rates correct to from in. XXXX. delinquencies upon be our quarter, you What means see the at it reserve That could end that benefit were hurricane drop the end the impact that of I being seeing now. right the out rate, what flows very should similar it was of to trends is QX. you're it a XXXX. should of the over come reserve a could in some toward in

Sanjay Sakhrani

there Is give on a you now any quantification it's headwind, impact become can that, it will like positive effect? a

Charles Horn

a rates, if recovery single-digit look was in I you we'd guess, down, break first number it the X%, the of the quarter, way it it think X%. at

second around mid-teens. it you when year, quarter, what run where say, was close Let's prior anniversary-ing into the you're to Then getting the move XX%. we

So should XX%, be in be north Meaning, XX%. be it's a we Could year. be it by of what was QX, position means QX, prior beneficial. to that to the going

Ed at As year end earnings north rate call, be in about of quarter the talked last could a run XX%. of the

Sanjay Sakhrani

Okay. Great. Thank you.

Operator

the of Jefferies. question next line of Your Ramsey comes El-Assal from

Ramsey El-Assal

Thanks slowdown for I quarter you the out. Epsilon agency in wanted to my called and about the the this performance ask taking question. business

If you be a if could maybe on focusing think could or that something there quarter. fleeting provide some headwind that How about it's agency into whether model just talk and incremental they that you in you was to broadly the an volatility seems the lasting for introduces more And strategic business, somewhat color lately. some there? is like it element it you degree to the which

Charles Horn

a it's great so Yes, question.

world you years. about soft of so the last if been agency, couple think business, has entire around the So basically the

of the use. CRM. that next Part we we consolidate is be sell, battle. up cross-sell help one quarter, referring is quarter-to-quarter. other seen it we which earlier, what agency some Ed bit can Epsilon what products choppy though, of can was see a point, as lot and that our quarter, your of It agencies little such companies To be the still do, with a You've a the number What us choppy. of It that's they it's be can volatile. down to Conversant does

would in going for agency up one we But still some So the for in back is look of to of product would agency CRM, feel model on that's remainder an for the But of or down and year auto, quarterly somewhat Conversant year basis. a offerings steady what to Epsilon. stabilization always still part the half we through provide. I in it's coming going the bounce look is improvements the strength technology. integral the be of the I

Ramsey El-Assal

I about alternatives Okay. business. where feels to a for you'd kind returns of a ask unlock like down be also different viable earnings Is wanted just identify say there still And an multiple the strategic are getting profile. possible could for returns purely to you hypothetically, potential for there there particular by you're point alternative It your higher shareholders? not inflection path? that just moving had path could a is normalized

Edward Heffernan

what thought Yes, over hurricane. think question. then or At of quarter options We've the or moving the the people compression. couple lot the board credit it's the there. see to residual primarily initially impact fact were moment, really years a probably about level by from was had we a five recoveries final it and biggest normalize. are the we and We And I that multiple the about every six that that frankly, given a hearing obviously, in-house off fair and of at need talked year different of ago, the months we're that out stabilize is been, last the getting so drag

is all year once earnings growth, nicely those core growth running to you'll out revenue was earnings, comfortable and you're it where I off a the races. of flow that people into all and very those will that now directly to the know are stable book ago, the think way the get

those I we continue out. still level. people, play board a doesn't we'll wait-and-see see the but the think And obviously, out there that - want and discussions then, at at time, there, to to if is one that have same excite

Ramsey El-Assal

great, All right, a thanks lot.

Operator

Your Markets. next Dan RBC from Capital with question comes Perlin

Daniel Perlin

bit as to But want in would business. are sheet I be buybacks. you to down guys idea your the pretty these I historically, guys. year, when in versus stated Hey, deleveraging still of kind sounds mean happened, you docs and the to the goal clearly, more compressed been you that check have sheet quite the of aggressive want of separate balance pay it to said, I a on buybacks. on But balance which terms like buyback. to deleveraging kind debt, versus seem just of know set guys up this the where

Edward Heffernan

debt of roughly of flow, when And look $X.X again the It's round you the billion or down the to then right. card billion, I'll that you than but company up round, so. around and pay like the little business had initially buybacks. And $X fund flow cash leaves for at anyhow. set I or Yes, with say, Charles cash to bit X/X operating doesn't free we'll a use in we growth year or less first maybe the all that either

levels, some will and give buyback there operations momentum run put print a likely depressed will in Obviously, four expect away you down. specifics. strong to a pay hard that didn't a these be an remain from with we in the quarters bias activity just clean But on be there can't we bit sequential purely year." expect us perspective, and growth the debt rates Let's side. for from things at can increases really from so And

can I think that's it, we're certainly of aware but really painfully all say, Dan. I

Daniel Perlin

you impact cadence? question just it was I of in a quick help on down know yields, bit the One I gross us seem XX as Can Understood. little hurricanes Decembers well. to bps. out the terms mean,

half of the have quarter, numbers get you in mid-teens the year. to projected be I the up guys suggest has that think, this even the to maybe back meaningfully revenue

kind So Thanks. helpful? super be of would trend there directional any

Charles Horn

Sure.

out interest in how initially back APR with XXXX. some about about the look of would if over up, year. drag it basis, were variable on have yield took a beneficial. We half been think a It we we talked have the gross rates at little in of an affected XX% We gross have portfolio the changes XX.X% off terms which from if we of annual you at the we've Signet So year. going which a year, do of hurricane the acquisition, the that's yield a burns the this course impact,

your it yield QX a of that XX.X% we're So we and XXXX. year-over-year. I gross with drop a QX, should to would gross yield to you growth always together, But just in would XX.X% denominator yes, is put little the tracking QX, the QX to be the probably say of year. QX, around due maybe in tracking obviously, say say a effect. would XX.X%, I more XX.X%, delta the for QX, you get biggest improvements year-over-year QX bit a up

Daniel Perlin

quick just can that just fixed. mentioned - you - one just your be in you Can extent think, your that variable environment? then Thanks. of And us that us like cost how I to rising remind that's could as that portfolio got cards has rate, that in past, rate or do that a XX% you the the the again rate said we remind XX% funding spread on positive get, of one environment? you roughly XX% you but and rising are

Charles Horn

Yes.

in is cycles. Dan, let's to right. of you're asset at means beneficial to numbers, What duration. the is would So first AR, but Whereas year is will get within $X to is ADS. the point, reset your to $X our look billion it say increase won't the fixed, I you XX% the way very debt into book, it billion X-year

more flattish. second year, The

bit impact a move we it don't on in can if Third further the negative little terms any have us increases. rate year, of

Daniel Perlin

Got it. you. Thank

Operator

from Your Andrew the with of line next SunTrust. question comes Jeffrey

Andrew Jeffrey

of do Hi, credit offering, quarter. How positioning and will wonder are question. go the I guys, I the and an this it, if sales growth sales. you're you high mid- relevance don't you I that sort a are and growth that single-digit the you of with think of there good credit recognizing to sustainability for say, are addressing Ed, proactively know some of, obviously, and puts there be morning. bankrupt as about the Services Card mean, customers Thanks underpinning competitive the anticipating? so comfortable just the for about, kind appreciate and portfolio forth? lot takes, thinking you M&A taking

Edward Heffernan

Yes, from to upon, vintages years I has fair look mean the of less the question. going over one the the on And more really, signings or landscape a the you to model so bulk X you've client that's big been change done that's you're retail relying that Again, the where core at shifted for book. your the growth it's big changing so traditional as base the and going dramatically. much saw prior and

who signing the have ones can the the verticals retailers which overwhelm is type you're are the said, have environment. are of mall-based the coming trend to which new call way, need them And of sales bringing over marketing. last retailers. can lot distressed that folks it, that personal pressure I - to and really bottom each just you really certainly, are of announce AR, have the sales vast that to to years, been are we where of the X% given which your that's either we've year, that are we're us, that trends goal the ones who mid-teens two is you're year, the the point more realization the going grow to secular then to going other of And growth, portfolio, one-to-one you on on retailers the or funnel, those that the folks in seeing, the sure going a what - can they mode, where as have think So which XX%. the X trends require sort majority And is a with traditional very as into dealing against going from to is make us get we I means And to see sales you're this growth nice you are of growth. What

And for we billboards their and into and so like radio newspaper TV budgets are that from stuff ads commercials the a do and and what the migrating and living.

beneficiary net a the where pipeline, while. of for far, to And we've it. thus think we're be I a going been that's based on So

Andrew Jeffrey

you. Thank Okay.

regard the quick to question there you Are all risk a that a meaningful I collections with recovery get functionality guess, mean, in the real in or mileposts you're As efforts. is efficacy I internal driving a is, in-house? there for that that internally? having that lift looking brought follow-up, rates don't benchmarks some at

Edward Heffernan

closely. want last and Recession. it percent the above a we following year. half was the of as pretty the know, said, you that move, back once up we're as the I we then got a we sort track jump-off see our - we final then you means see that thing it Yes. after we did right in as to that. actually we what it mid-single, mid-teens of seeing as QX, is is into QX. tailwind did And nice mean, move rate you've that year, into creep is, Great we to We're And thing right as QX, this and where We before. that moving to watching seeing gross as right know were Charles now expect it And want on what to for to charge-offs from

started is we're we what summer. so been, as So there, painfully it. seeing And of, this fortunately, far, everyone last we've been it's because done aware

looked and so And folks identically like really is hundred curve And the the what and it seeing Recession. what find few we right now while almost to experience a post-Great build need. we're to up takes compares it expertise the the that

So, good. But like hawk. sure, so we're it a for watching far, so

Andrew Jeffrey

Thank you.

Operator

Blair. Napoli question from next William Bob comes of Your

Robert Napoli

prior Thank question. good morning. you, and on a Follow-up

is of you I is health customer the think - think of it, the credit, the retail, in if look health of part the and your general. valuation big of base view - of chunk a I besides

couple If retailers, you look at - their isn't I portfolio lot over different. some have Bon-Ton versus Private much But you're that going look look you versus troubled theoretically, the should another, be if have way few from now closest if will But and But then, health at and DSW, is out historically, a to portfolio, portfolio try get put growth higher the base you you look is multiple RH, put of credit and would? worth quantify some you pieces rates a you mean, And coming like, you customer of it's retailers, your least? in of of obviously And very at you then whether having York. Label this today a quality if to there it way investors non-troubled, it's any that's or of for - Ascena do have if segment to I on your good cycle had New years troubled of troubled Place, you that, a peer, IKEA or retailers or and to have, then your we if gone. Williams-Sonoma, it going comfort also on. the the time. a right, multiples, non-troubled, mix top the what guess, others at that at Children's be - one

Edward Heffernan

But it. a to bigger I The built do to retailers are Yes. a by And And their to good issue has that mall there's who seems some perfect people their an majority structure it's I that the there. very down sitting a everyone or debt retailers answer distressed aren't, something with got under to think I and or they believe stores think result, distressed that of like mean, the store vast lot. they what's need overbuilt that leverage with that by they counts fact increased get many LBO. distressed And capital retailers that, look, the No, because of and the the a because stores were everything online the way just I too is question. really and else. in to to versus we discuss today - be nothing be most it may is first a equilibrium. used going of it's and the bringing of third and down item XX% fact out there's those of those much hit footprint in as before think do pressure we've is distressed the come terms don't question a part

in about of you And I is big you will, of the coming I that know said, the going grow rest portfolio don't way the over means this to for cycle out like business need to that in said, from is up that assume that billion the to so about be out. of billion. the we looks business, the there's $X.X the bulk signed think it which as $X we've going accounts set are three last probably, So cycle fact, we portfolios year or those the we as And years.

factored huge trend to been out, that it, in growth our away. would would the you signing perspective, above past four going the and think I growth, about netting years, the rate billion fairly over $X.X size vintages we've call a which secular a of cycling XX% file. you're suggest the billion we've from out And in as of our portfolios in three, good $X that's that's So about at favor,

- and My factor we six So year we our there's probably or with billion bubble guess up that bubble, that the six last of see. distressed the that a on the in number about are $X five come that's absolutely folks. there will on drag were how is we five or

Charles Horn

Yes.

the been Bob, years, underperforming good of think that profile takeaway cycling our or still to XXXX and We've fit XXXX, clients the this nothing been through is out we growth I this were able new. maintain have didn't XXXX, rate. key is

that It's the it's that don't cathartic. that client to nothing right cycle them but out [indiscernible]. growing opportunity take nothing it's it's we if grow the just We And where quicker, So using we something always we like comfortable could new. we unique. with, now. a feel then that's file It's

Robert Napoli

maybe and think than trending? I CRM I the biggest mean, just the I and CRM those is little agency Epsilon, - that, of revenue high-growth trend. a probably follow-up And businesses this less the than there. of XX% a more you. are but agency another had the are on revenue, How mean, XX%. one of XX% platform, three Auto tech pieces the business, Thank understood,

auto. were you of double-digit think growth for looking I

Edward Heffernan

guidance Yes, of melting or and a - ago, perspective, the about that. your points so which think run probably of year is year. we'd remainder quarter, that - to as then a from as platform, double agency of I couple Epsilon, point, point, about out a the going is got And CRM half of and which a which is to running agency to now. like tech auto, iceberg was growth right digits probably your And their they're see declining this you've well sort coming is to definitely

X%, growth all probably you like would the got that piece, put in, type third stabilize. think piece, Time-to-market rate it turn third business. point that you together for we year. the and is good. The to we've platform a get price mix We if be the the for engine that The nicely X% tech would like is So goal into growth frankly, good.

tech we high decent So start sort quite growth if could which that's when of from the into moving mode, really auto, mid-single the a growth, have organic single all in platform you'll CRM and Epsilon frankly. goal, is

Robert Napoli

Thank you. Okay.

Edward Heffernan

Yes.

Operator

next from of David line Evercore ISI. comes question the Your Togut with

David Togut

you. Thank

quarter. to of which technologies for any or reasons XX point your the gain points And you customers tender has put year-over-year to out offers drive XXX there the in That's the tender are that? basis share growth? What your are faster new basis called trend retailers' line, you out XXX more can that to So historically. in basis been gain, below point share

Charles Horn

programs filed quite about, That walked grow-over One of over So course which impact that will the abate back David. bankruptcy such of there there, that pulled the Ed quarter. things away year. during from, the the hard talked are a couple as to we is the Bon-Ton

client the programs. fact You're correct in we will that support

programs. You'll us do probably see

know, in the a You'll really, client, little it's But of stimulate we the discretionary they when case more more that bit was when started of good-sized to Services see pulled sales as toward of filed bankruptcy the Card pulled a do really year. out sales, probably liquidation division they well. Bon-Ton move looking as marketing that to in us a fairly our back where, credit half in

growing So and the of voluntarily that really, should the bankruptcy impact from it's more through the grow-over over filed increase year. that remainder we're in walked from loss or away first they of that quarter, we the of a clients

Edward Heffernan

what we're to also, are question, of on clients many and think, online place. website abandonment abandonment from be the of incremental good and the it put XX% if marketing. of that I some so think move payments get a there needle the a sales of would and our in the the make that put part. directly don't - over of And and that's are sure. that a can initiative our have, that fairly experience, get online have their of right clients Yes, frictionless-type enhance as of And so And for working our into a capabilities I see well the do, our something to integrate payments we the can types to card folks big coming the because holiday, the are helping right? we some traction online, that, you loyalty dollars online as focus all possible it IT is our we in of much it's to it clunky And During as almost systems it's sales nicely, from a number perspective, now. process

David Togut

Understood.

within was your Services? sales QX As for same-store retailers Card a number the quick follow-up, in what

Charles Horn

David. know, number the of don't don't - to that with have get I I'd head. I top my have off

David Togut

Thank you very much.

Operator

with of Your next question Scharf comes line JMP Securities. from David the

David Scharf

A reservable of X.X% is balance just about AR total at is Signet to the we the the where that Could we with pulling there could we have we end end Hi, calculating - Charles, driving lot to answered, know rate. were how me conceivably [indiscernible]. might And good I than be earlier your at what that receivables a XXXX you been out follow-ups. anything other the reserve few the that? of through mentioned cycle should rate? just want tell thinking is the morning. that when that reserve we of but as revisit be year, you've ought

Charles Horn

to reservable $XX.X let's AR of was round billion. - So March at the the end XX it

you that's where your billion, reserve X.X% to how rate. is get which So get of your you $X.XXX reserve

David Scharf

it. of got balance the Okay remaining Signet? billion the reservable delta and I between the Okay. And total is $XX.X that gross

Charles Horn

reserve. Signet Yes,

David Scharf

in a Is sort growth last just QX Signet wasn't number on of I we to guess side the demand Back sales Okay. credit credit. actually there - year. present if

left, is So correct the out correct? some of number of we programs sort credit when sales the the pull XX% you apples-to-apples

Edward Heffernan

include think probably more you like would Signet, so single you're digits. I high

David Scharf

you Okay. mean, when at all as of coming ultimately terms from little I of newer off programs And factors? historically, the what the the of what your in promotion, get retailers are what's the biggest pipeline, kind lighter as terms think the the well play, what in I of AR And quarter? than about kind you a I to growth in guess in commitment ramping, Ed, mean you're profile growth seeing year are first share expected that mid-teens factors level this tender of that

Edward Heffernan

X I on where combined, what of of is the XXXX years, driven $X XXXX, and at that's looking $X.X growth the the Yes, core to that, if you're we're will clients think bringing for years, by there XX% portfolio. of of vintages really add XXXX big bulk spin-up the was types billion where back the biggest billion, been unlike go factors, of it of the sitting many all the you - vast

don't heck of a whole anymore, very core of we different used have. So need the model which is a to than really a lot you out

retailers rates and So of retailers marketing it's out we've investments and really the personalized on expect stuff. experiencing of recent seen It's don't the just a cycling solid the distressed more function growth of into are are that And and most focused you're almost naturally. the core. all that the of coming cycling happening from signings. growth it from It's much the and never so we much coming some

year think want XX% attrition to our you're looking say in core the less the billion AR coming think the don't that I quarterly right the creep progresses. the little probably net be as is, relatively I from our as will wheelhouse in $X.X of a growth it's a each leaves And signing at as the that growth we think flat. long - safe core, or $X.X - of vintages. where on up the the to year, anyone we're and in was I And core, So newer give probably frankly, XX% vintage we growth billion didn't expecting bit - about

- So structure it's for a sure. it's a we're different used what from to, just

David Scharf

to was of like you buckets? side XX%, wondering, Are you seen the Yes. of on levels extent I'm just rolled to that bit said, guide, a been mean, credit, the the about areas? below they the in a FEMA XX%. they were roles, little full-year any levels that increased they on about has thinking again, ago? have there consumers, hurricane haven't are year in of once demand even it's of was wheelhouse. so I And the the the your any I'm to those the year relation it But the wondering, delinquency thinking increased actually part spending spending into half much delinquency on in issues. pressures if related kind question on at the back focus timing pressures just

Charles Horn

Yes.

saw talking reciprocal of hurricanes. you about. a consumer what we'll of a come the as out bit of you're little lift for be looking what flip What in spend is think I they

half back seen lift homes year. see a going it the as to their furniture tell buy if new part, to so So benefit of your then you in it's sales start really a to for And time. we'd the yet. That But be the can't depress for they you're going I period and credit forth. could of

David Scharf

Thank Okay. Got you. it.

Operator

Your Jaffray. of with next the question Piper comes Jason Deleeuw from line

Jason Deleeuw

Thanks. Yes. morning. Good

rates. retailer wishes? in balance on you Just with do your and your receivables client just changes APR versus targets Services that growth Card How wondering any

Charles Horn

a our programs. APR. It's primary Jason, tied of the majority to So we're variable

we're will to based the it's down what's Basically, change not going rate. case, up on where be upon APR or spreads. with So a any looking moving prime

Jason Deleeuw

kind change targeting Got portfolios you card what's any any different from over of it. is of retailers? the the opportunity. of that's years. kind terms after? going of about in Are portfolios then of of Thanks. new just have What thoughts And types pipeline kind of out already on anything the Just portfolio? in in there And you're characteristics we're thinking there coming that the there you're what

Edward Heffernan

question. Yes, a good it's

that interest lot traditional folks, the the part, of a of were for Label the customers. mall-based terms In more most traditional the Private we're seeing,

do that, to penetrated very that So kind market more my than about brother But because customer you could it's means of their individual run, what understand how others. level, I are is that is the and down say - you're we much which everyone is seeing the program seeing, we again, talking what SKU-based interesting.

beginning interest. saw to before never a you lot that verticals show seeing You're of

doing that, extremely interested - of dot-com us vertical Viking of traditional types verticals they customer of our to Again, That separate the who a the the for like build Beauty, well. didn't example, exist lines, base, have are different that IKEAs we're sort very Cruise from of us. new like have like what The than something that for a their are boutiques, model. away like of Retailers world. is. So new players, their world, from mall Ulta for cruise the dot-coms, standalone that wafer you mall-based different be a and again, understanding would Those very so they in a lines, very their model while dot-coms have more in pure finally, used the then ago.

trend more of retailers. that sort mid-teens the seeing the than of the the portfolio, traditional dampening more keep sort before, is secular that traditional the had of interest - of in which you're is their the great you're appeal individual seeing is of the customers, they beyond now is that well get product we broadening so will - in a which in offset And rate some itself, the the it's the because what can base growth information on

Jason Deleeuw

Great, thank you.

Edward Heffernan

more. One

Operator

question of last Baird. Your with Meuler line Jeff comes from the

Jeffrey Meuler

trends higher FEMA you. the extent the the other trends the what the versus what's thank from largely FEMA case, rate consumers year-over-year other of the last that's hurricanes comment over in the outside impact trends delinquency the to things? And couple is or wondering which zones? just zones? trend on run impacts And the can just there FEMA are months? rate now Or to for rate is, zones to the Yes, delinquency the you right because I'm I due increase in on guess, of delinquency through Can financial you

Edward Heffernan

a general, level, mean delinquency But I the can in can color. to pipe. and you picture bit is overall Yes, up through of bubble this I give sort at moving then XX more points be the rates as higher you high Charles give little your basis a

can And year And let's and that you so ago. expect to dramatically And drop then off hurricane-related. May, delinquencies the that's to where you're to as And bubble should write-off. then it going all were April, clears it. less, are, flow accounts a call more line they in those with have see or that

Charles Horn

you loss about lag talked to rate about before. the quarter, one think delinquencies about if as between Yes, we is it,

would points talked loss So about QX. your XX in the you we hurricanes points basis expect QX, about means Ed be basis in the up XX to which rates as slides, points, in XX net hit to rate us expect year-over-year basis delinquency

out coming through will clear is air you just then So delinquency QX in that pocket it's indicator basically, a bubble leading trends. will improving or the see

Edward Heffernan

Yes, then at clear you'll delinquencies still elevated again, And the June, by the levels. May have of sort to ought deck. April,

Jeffrey Meuler

and And and meaning of five business of been on at I Okay. from that? financial at in a clients can you? and new it is, client least going that's of you to the I'm And your the which part - to like to client point? had, base, Services going model churn don't just years you more that this the more thinking are the Card kind So felt having increased impacts churn extent launch like, comment model. - implications to then the out base What what to the if clients four, know back, prior higher has cost implications fully than

Edward Heffernan

bottom, about, what if The coming is, churn sort was from coming we I'd But secular verticals people to never wanting in and different know seeing the are - be their that even talked trend, about in question. pretty we knew consumers. other of just was that as then and good existed trends it a a secular it's out the Yes, the worried. we're

lot bottom the it, to in the coming so we're is call I of in, the offset funnel. out top what a as funnel And churning getting the more than of

capital if a to are terms a that And so terms we with is folks. owners' comes XX be in, case we position of more selective we weren't of been frankly we of in bit in can demands, when choose put couple elsewhere, years renewal to which and are a ago, it that's may there our the in times,

to So pretty change wouldn't I would We that here, overall seeing say, returns. robust much. you're expect

Charles Horn

churn And Jeff, cost if you clients years and onboarding and onboarding think new we've The are about for material. double-digit been the not it, cost years or years.

Jeffrey Meuler

Okay. Thank you.

Edward Heffernan

Well, Okay. And that's everyone talk it. or everyone we'll see to QX. in

Operator

concludes conference This call. today's

You may now disconnect.

Bread Financial (BFH) 19 Apr 182018 Q1 Earnings call transcript