Alliance Data Systems Corp., a leading provider of transaction services, credit services and marketing services, announced record results for its third quarter ended September 30, 2002.
Total third quarter revenue increased over 8 percent to $218.7 million compared to $201.7 million for the third quarter of 2001. EBITDA for the third quarter of 2002 increased 16 percent to $39.5 million compared to $34.1 million for the third quarter of 2001. Operating EBITDA also increased 16 percent to $45.4 million. Cash earnings increased 55 percent to $13.2 million, or $0.17 per share, compared to $8.5 million, or $0.11, for the third quarter of 2001.
“This was a tremendous quarter by all measures. During the quarter, we announced contract extensions or new contract signings with Crate and Barrel, Bank of Montreal, Duke Energy and each of Limited Brands’ divisions,” stated Mike Parks, chairman and chief executive officer. “We continue to be strongly on track for another year of record performance. Through three quarters, revenue, EBITDA and cash earnings are up 12 percent, 15 percent and 28 percent, respectively, compared to the same period in 2001. For 2003, we expect another year of growth consistent with our long-term goals.”
Transaction Services revenue, accounting for approximately half of the Company’s total revenue, increased 2 percent, to $133.9 million. EBITDA increased 12 percent to $22.0 million. Margins expanded 150 basis points reflecting the previously announced selective pruning of low margin customers in the segment’s Merchant Services group. This pruning was undertaken to increase the profitability of this segment and did not impact cash flow growth. Both Utility Services and Issuer Services, two of Alliance’s growth engines, again recorded double digit gains in revenue and earnings.
Credit Services revenue, approximately one-quarter of the Company’s total revenue, increased 20 percent to $84.8 million. EBITDA increased 24 percent to $8.7 million. Total private label credit sales increased 23 percent, driving fee income and portfolio growth. This growing momentum and strong performance reflect the rollout and ramp-up of new customer programs begun over the past 18 months, as well as solid growth in the rest of the client base. These trends are expected to continue as Alliance Data ramps up its newest customers. The Company also continues to experience positive trends in two key operating expense categories. Credit losses continued the improvement seen last quarter, and funding costs continued to benefit from the refinancing of fixed rate term debt at lower rates.
Marketing Services revenue increased 15 percent to $61.5 million. EBITDA increased 17 percent to $8.8 million. AIR MILES(R) Reward Miles issued and redeemed continued to register strong growth during the quarter as a result of the increasing number of new program members, new sponsors and deeper relationships with existing sponsors.
Based on the visibility and momentum in the Company’s three business segments, Alliance Data is raising its guidance for the full year of 2002. The Company now anticipates revenue approaching $870 million, EBITDA approaching $148 million, and cash earnings per share of $0.62.
Looking ahead into 2003, Alliance Data projects results consistent with its oft-stated long-term growth goals of approximately 12 percent revenue growth, 15 percent EBITDA growth and high teens percentage growth in cash earnings per share each year. For 2003, this equates to revenue of approximately $970 million, EBITDA of approximately $170 million, and cash earnings per share of $0.73.
About Alliance Data Systems
Based in Dallas, Alliance Data Systems (NYSE: ADS) is a leading provider of transaction services, credit services and marketing services. The company assists retail, petroleum, utility and financial services clients in managing the critical interactions between them and their customers. Alliance Data manages over 72 million consumer relationships for some of North America’s most recognizable companies and operates and markets the largest coalition loyalty program in Canada. Alliance Data Systems employs approximately 6,500 associates at more than 20 locations in the United States, Canada and New Zealand.
For more information about the company visit CardData ([www.carddata.com]).