Alliance Data Systems Boost 2014 Outlook As Q2 Results Top Estimates

(RTTNews) - Marketing and customer loyalty solutions provider Alliance Data Systems Corp. (ADS) reported Thursday a profit for the second quarter that increased from last year, boosted by revenue growth across all its operational segments.

Both core earnings per share and quarterly revenues topped analysts' expectations. The company also provided earnings and revenues forecast for the third quarter and raised its full-year 2014 guidance for the second time in the year.

"The year continues to unfold better than we had anticipated," President and CEO Ed Heffernan said in a statement.

The Dallas, Texas-based company reported net income of $137.4 million, or $2.19 per share for the second quarter, higher than $116.4 million, or $1.71 per share in the prior-year quarter.

Excluding special items, core earnings for the quarter was $181.5 million or $2.90 per share, compared to $164.1 million or $2.41 per share in the year-ago quarter.

On average, 24 analysts polled by Thomson Reuters expected the company to report earnings $2.73 per share for the quarter. Analysts' estimate typically excludes special items.

Revenue for the quarter increased 23 percent to $1.27 billion from $1.03 billion in the same quarter last year, and topped twenty-two Wall Street analysts' consensus estimate of $1.25 billion. Organic revenue growth was 10 percent.

Segment-wise, revenues from LoyaltyOne surged 62 percent to $356 million, and revenue from Epsilon rose 8 percent to $357 million from a year ago. Private Label Services and Credit revenue grew 16 percent to $557 million from the prior-year quarter.

Looking ahead to the third quarter, the company expects core earnings to be about $3.25 per share, on projected revenues of about $1.30 billion. Analysts currently expect the company to earn $3.49 per share on revenues of $1.35 billion for the quarter.

The company also expects acceleration in core earnings per share growth for the remainder of 2014 as the diluted share count will drop following the maturity of the convertible notes in May 2014.

For fiscal 2014, the company raised its core earnings guidance to $12.35 per share from the prior forecast of $12.25 per share. It also now projects revenues of $5.30 billion, up from the previous forecast of $5.25 billion. Street is currently looking for full-year 2014 earnings of $12.35 per share, on annual revenues of $5.27 billion.

"Core EPS growth is expected to continue to accelerate as the year progresses due to both operating expense leveraging as new clients begin producing revenue, and a lower diluted share count. This back-half acceleration has the added benefit of setting the stage for a strong 2015," Heffernan added.

ADS closed Wednesday's regular trading session at $275.17, down $1.47 on a volume of 0.65 million shares.