Alliance Data Systems(BFH) - 2024 Q4 - Annual Results

Financial Performance - Full year 2024 revenue was $3.8 billion, a decrease of $451 million or 11% compared to the previous year[13] - Adjusted net income for 2024 was $279 million, down from $737 million in 2023, representing a decline of 62%[22] - Total non-interest expenses for 2024 were $2.06 billion, a decrease of 2% compared to $2.09 billion in 2023[22] - The company repurchased $44 million in principal amount of convertible notes, impacting adjusted income from continuing operations[10] - The efficiency ratio rose to 57.8% in 4Q24 from 50.8% in 4Q23, reflecting increased operational costs[38] - Return on average equity decreased to 0.9% in 4Q24 from 6.2% in 4Q23, highlighting challenges in profitability[38] - Adjusted net income for 4Q23 was $45 million, a decrease from $173 million in 3Q23[41] - In Q4 2023, the company reported a loss before income taxes of $19 million, a significant improvement from a loss of $207 million in Q4 2022[61] Credit Metrics - Average loans for 2024 were $18.1 billion, a decrease of 1% year-over-year, driven by moderated consumer spending[16] - Credit sales for 2024 totaled $27.0 billion, reflecting a decrease of 7% due to moderated consumer spending and a shift in product mix[16] - The net loss rate increased to 8.2% in 2024 from 7.5% in 2023, while the delinquency rate decreased to 5.9% from 6.5%[16] - The net loss rate for 2024 is projected to be between 8.0% and 8.2%, remaining elevated due to ongoing inflation and ability to pay concerns[28] - The delinquency rate improved to 5.9% in 4Q24 from 6.5% in 4Q23, indicating a positive trend in credit performance[38] - Credit sales decreased by 23% year-over-year in 4Q23, totaling $7,802 million[39] - The net loss rate increased to 8.0% in 4Q23, compared to 6.3% in 4Q22[41] - Provision for credit losses in Q4 2023 was $482 million, compared to $692 million in Q4 2022, indicating a reduction in expected credit losses[61] Capital and Equity - The CET1 capital ratio improved by 20 basis points year-over-year to 12.4%[5] - Direct-to-consumer deposits increased by 19% year-over-year to $7.7 billion[10] - The common equity tier 1 capital ratio improved to 12.4% in 4Q24 from 12.2% in 4Q23, indicating a stronger capital position[38] - The common equity tier 1 capital ratio was 12.2% in 4Q23, down from 12.9% in 3Q23[45] - Total risk-based capital ratio stood at 13.6% in 4Q23, compared to 14.2% in 3Q23[45] - Average tangible common equity increased to $2,100 million in Q4 2023, up from $2,020 million in Q3 2023[61] - Total stockholders' equity reached $2,918 million in Q4 2023, compared to $2,864 million in Q3 2023[61] - Tangible common equity (TCE) for Q4 2023 was $2,156 million, an increase from $2,093 million in Q3 2023[61] Operational Efficiency - Total non-interest expenses increased by 4% compared to 4Q23, driven by higher employee compensation and technology-related transformation costs[34] - The efficiency ratio improved to 50.8% in 4Q23 from 53.1% in 4Q22[39] - The efficiency ratio, representing total non-interest expenses divided by total net interest and non-interest income, is a key measure of operational efficiency[52] Strategic Focus - The company is focusing on responsible growth and disciplined capital allocation to manage macroeconomic and regulatory challenges[29] - The company plans to continue focusing on improving its credit loss provisions and enhancing its equity base in the upcoming quarters[61] - The company expects to deliver positive operating leverage for the full year 2025, excluding the $107 million pre-tax impact from repurchased convertible notes[28] Market Outlook - The ratings outlook was upgraded from stable to positive by Moody's and Fitch, reflecting improved financial metrics[5] - Forward-looking statements indicate potential risks including macroeconomic conditions and regulatory changes that could impact future performance[55] - End-of-period credit card and other loans decreased by 2% to $18,896 million in 4Q24 compared to $19,333 million in 4Q23[38] - Total assets as of Q4 2023 were $23,141 million, up from $21,608 million in Q3 2023[61] - Tangible assets (TA) in Q4 2023 amounted to $22,379 million, compared to $20,837 million in Q3 2023[61]