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Bread Financial (BFH) Q1 Earnings Lag, Credit Sales Fall Y/Y
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Bread Financial Holdings’ (BFH - Free Report) operating income of $2.73 per share for the first quarter of 2024 missed the Zacks Consensus Estimate of $2.92. The bottom line plunged 70% year over year.
The quarterly results reflected a drop in credit sales and, subsequently, average loans. The company noted that consumer spending continues to moderate, given persistent inflation and higher interest rates. Loan growth was impacted by proactive credit tightening initiatives given stricter credit risk management due to economic pressures that affect consumer spending and payment capacity.
Behind the Headlines
Revenues decreased 23% year over year to $1 billion, attributable to lower late fee revenues and higher interest expense. The top line missed the consensus estimate by 0.4%.
Credit sales of $6 billion decreased 18% year over year, reflecting the sale of the BJ's Wholesale Club portfolio in late February 2023, ongoing strategic credit tightening and moderating consumer spending, partially offset by new partner growth. Our estimate for the metric was pegged at $7.1 billion.
Bread Financial Holdings, Inc. Price and EPS Surprise
Average loan amount was $18.5 billion, down 4% year over year, due to the decline in credit sales. Our estimate for the same was $18.4 billion.
Total interest income decreased 3% to $1.3 billion. Our estimate for the same was $1.3 billion. The Zacks Consensus Estimate was pegged at $1.27 billion.
The net interest margin contracted 30 basis points to 18.7%. The Zacks Consensus Estimate and our estimate for the metric were 19.1% and 19.6%, respectively.
Total non-interest expenses decreased 12% to $482 million, primarily attributable to a decrease in card and processing expenses and employee compensation and benefit costs as well as marketing expenses. Our estimate for the same was pegged at $606.6 million.
The delinquency rate of 6.2% deteriorated 50 basis points year over year. The net loss rate of 8.5% deteriorated 150 basis points.
Pre-tax pre-provision earnings decreased 1% year over year to $509 million. Our estimate for the same was $392 million.
Financial Update
As of Mar 31, 2024, cash and cash equivalents were $3.6 billion, up 5.5% from the 2023 level.
At first-quarter 2024 end, long-term debt and other debt declined 7.2% from the 2023-end level to $1.4 billion.
Tangible book value was $45.96 per share as of Mar 31, 2024, improved 5% year over year.
Return on average equity was 17.5%, which contracted 5550 basis points year over year.
Cash from operations in the reported quarter increased 12.3% year over year to $447 billion.
Capital Deployment
The board also approved a quarterly dividend of 21 cents to be paid out on Jun 14, to stockholders of record as of May 10. It bought back shares worth $11 million.
2024 Guidance
Management estimates average receivables to decline in the low single-digit range from the 2023 level. It expects 2024 average credit card and other loans to be down in low single digits from the 2023 level.
Total revenues are estimated to decline in low-to-mid single digits.
Total non-interest expenses are estimated to decline in low-mid-single digits.
The Western Union Company (WU - Free Report) posted robust first-quarter 2024 results, driven by the Branded Digital business's resilience, growth in transactions, a solid Consumer Money Transfer business performance and stabilization of the retail business. This solid performance prompted the company to raise its full-year outlook. However, increased expenses tempered some of the gains.
It announced first-quarter 2024 adjusted earnings per share (EPS) of 45 cents, which beat the Zacks Consensus Estimate by 12.5%. The bottom line rose nearly 5% year over year. Total revenues increased more than 1% year over year on a reported basis or 3% on an adjusted basis, to nearly $1.05 billion. The top line beat the Zacks Consensus Estimate by 3.9%.
Adjusted operating margin of 19.7% deteriorated 80 basis points year over year due to the timing of marketing expenses and increased redeployment costs. The first-quarter adjusted effective tax rate of 15.6% was higher than 13.5% in the year-ago period, due to the impact of Business Solutions divestment.
Upcoming Releases
Mastercard Incorporated (MA - Free Report) will report first-quarter 2024 results on May 1. The Zacks Consensus Estimate for first-quarter earnings is pegged at $3.22 per share, indicating an increase of 15% from the year-ago quarter’s reported figure.
MA’s earnings beat estimates in each of the trailing four quarters.
Global Payments (GPN - Free Report) will report first-quarter 2024 results on May 1. The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.57 per share, indicating an increase of 7.1% from the year-ago quarter’s reported figure.
GPN’s earnings beat estimates in each of the trailing four quarters.
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Bread Financial (BFH) Q1 Earnings Lag, Credit Sales Fall Y/Y
Bread Financial Holdings’ (BFH - Free Report) operating income of $2.73 per share for the first quarter of 2024 missed the Zacks Consensus Estimate of $2.92. The bottom line plunged 70% year over year.
The quarterly results reflected a drop in credit sales and, subsequently, average loans. The company noted that consumer spending continues to moderate, given persistent inflation and higher interest rates. Loan growth was impacted by proactive credit tightening initiatives given stricter credit risk management due to economic pressures that affect consumer spending and payment capacity.
Behind the Headlines
Revenues decreased 23% year over year to $1 billion, attributable to lower late fee revenues and higher interest expense. The top line missed the consensus estimate by 0.4%.
Credit sales of $6 billion decreased 18% year over year, reflecting the sale of the BJ's Wholesale Club portfolio in late February 2023, ongoing strategic credit tightening and moderating consumer spending, partially offset by new partner growth. Our estimate for the metric was pegged at $7.1 billion.
Bread Financial Holdings, Inc. Price and EPS Surprise
Bread Financial Holdings, Inc. price-eps-surprise | Bread Financial Holdings, Inc. Quote
Average loan amount was $18.5 billion, down 4% year over year, due to the decline in credit sales. Our estimate for the same was $18.4 billion.
Total interest income decreased 3% to $1.3 billion. Our estimate for the same was $1.3 billion. The Zacks Consensus Estimate was pegged at $1.27 billion.
The net interest margin contracted 30 basis points to 18.7%. The Zacks Consensus Estimate and our estimate for the metric were 19.1% and 19.6%, respectively.
Total non-interest expenses decreased 12% to $482 million, primarily attributable to a decrease in card and processing expenses and employee compensation and benefit costs as well as marketing expenses. Our estimate for the same was pegged at $606.6 million.
The delinquency rate of 6.2% deteriorated 50 basis points year over year. The net loss rate of 8.5% deteriorated 150 basis points.
Pre-tax pre-provision earnings decreased 1% year over year to $509 million. Our estimate for the same was $392 million.
Financial Update
As of Mar 31, 2024, cash and cash equivalents were $3.6 billion, up 5.5% from the 2023 level.
At first-quarter 2024 end, long-term debt and other debt declined 7.2% from the 2023-end level to $1.4 billion.
Tangible book value was $45.96 per share as of Mar 31, 2024, improved 5% year over year.
Return on average equity was 17.5%, which contracted 5550 basis points year over year.
Cash from operations in the reported quarter increased 12.3% year over year to $447 billion.
Capital Deployment
The board also approved a quarterly dividend of 21 cents to be paid out on Jun 14, to stockholders of record as of May 10. It bought back shares worth $11 million.
2024 Guidance
Management estimates average receivables to decline in the low single-digit range from the 2023 level. It expects 2024 average credit card and other loans to be down in low single digits from the 2023 level.
Total revenues are estimated to decline in low-to-mid single digits.
Total non-interest expenses are estimated to decline in low-mid-single digits.
The net loss rate is guided in the low 8% range.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Another Industry Player
The Western Union Company (WU - Free Report) posted robust first-quarter 2024 results, driven by the Branded Digital business's resilience, growth in transactions, a solid Consumer Money Transfer business performance and stabilization of the retail business. This solid performance prompted the company to raise its full-year outlook. However, increased expenses tempered some of the gains.
It announced first-quarter 2024 adjusted earnings per share (EPS) of 45 cents, which beat the Zacks Consensus Estimate by 12.5%. The bottom line rose nearly 5% year over year. Total revenues increased more than 1% year over year on a reported basis or 3% on an adjusted basis, to nearly $1.05 billion. The top line beat the Zacks Consensus Estimate by 3.9%.
Adjusted operating margin of 19.7% deteriorated 80 basis points year over year due to the timing of marketing expenses and increased redeployment costs. The first-quarter adjusted effective tax rate of 15.6% was higher than 13.5% in the year-ago period, due to the impact of Business Solutions divestment.
Upcoming Releases
Mastercard Incorporated (MA - Free Report) will report first-quarter 2024 results on May 1. The Zacks Consensus Estimate for first-quarter earnings is pegged at $3.22 per share, indicating an increase of 15% from the year-ago quarter’s reported figure.
MA’s earnings beat estimates in each of the trailing four quarters.
Global Payments (GPN - Free Report) will report first-quarter 2024 results on May 1. The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.57 per share, indicating an increase of 7.1% from the year-ago quarter’s reported figure.
GPN’s earnings beat estimates in each of the trailing four quarters.