ADS
#Thank you.
I would say three-quarters of it is the recovery normalization and then the tiny piece left is just the normalization.
I would agree with that.
If you look over the last three years, <UNK>, we have seen our gross losses move ---+ and this is over a three-year window ---+ 20 bps and that 20 bps is all due to seasoning.
For sure.
I think that ---+ and you will see that in the fact that we are roughly 80% private label, 20% co-brand.
The shuffling or the competitive pressure that you are seeing is really on the co-brand side.
That is where ---+ let's face it, you are running into the buzz saw of the big banks who are looking to grow balances and the best way to grow balances is certainly not through private label, right.
They're tiny balances, but through the big co-brand balances.
And so what we are seeing out there is the pricing on co-brand deals, the big Visa, MasterCard balances, which are five times, six times what our private label balances are, it's getting incredibly competitive and as a result we've backed off in that area because we don't really need it.
What you will find is most of our co-brand stuff is an added product to an existing private-label client.
So to answer your question, the co-brand space is not an area where we think that the pricing makes sense.
In terms of the private-label stuff, that is where you get a lot more focus on the card being viewed as purely the loyalty tool, which gets into the data and the digital and that's where you get the Conversant discussions beginning to come in and the Epsilon discussions.
That's sort of our sweet spot and the more assets we bring on the digital side, like a Conversant, the better off we are with those businesses.
And, frankly, the sale on the private-label side is more a sale of developing a loyalty program with all the digital channels attached to it.
And that's where we don't really run in the type of pricing issues that you run in elsewhere, and that's where we're going to stay.
We will continue to be active with it, <UNK>.
We will slip it to our second priority versus our primary in 2015.
So it will slip behind M&A.
So it will be somewhat consistent with what we've done in the past, M&A first; buyback second.
It does incorporate some.
As you can see, we gave a range on share count.
Obviously with the market conditions being where they are, we've already been active during the course of the year.
It does not assume the entire share program being used.
It assumes basically what we have already done for the most part.
And you are talking about the overall business.
I think it's going to be fairly consistent with what you saw in 2015 where card services always had the ability to grow a little bit quicker.
You are getting good traction with Conversant.
We are assuming basically high single-digit growth for 2016.
Could do a little bit better based on the developing pipeline.
BrandLoyalty, if you get some traction in the US, that could be beneficial to us.
On the downside, we've talked about it.
Canada looks rough.
As the mix shifts, it reduces the revenue per mile redeemed, ergo, it reduces our profitability.
Epsilon, I think we have pretty good guidance.
Mid-single-digit revenue and EBITDA growth seemed solid.
Could be a little opportunity there as we get traction in our marketing tech, but I think that's sort of middle-of-the-road.
Upsides are always if we deploy the buyback program, take our share count down.
Upside would be we deploy our free cash flow and we buy a small tuck-in acquisition that's immediately accretive.
That's kind of the way I would look at it.
From a guidance standpoint, what <UNK> and I always try to do is do something middle-of-the-road.
Recognizing there could be upside, there could be downside, but we usually try to leave enough there to make sure if there's a few unknowns, we have the ability to cover it all in our guidance.
Think of one-third, one-third, one-third It's not head-on like the vintages and private label.
Maybe it's a little bit faster.
But you are going to see ---+ actually if you sign it in 2015, you will actually get about one-third of it up and running in 2015.
So current year, you will get one-third, the next year you will get up to two-thirds and a couple years out, you will get the final one.
I really don't have anything burning at the moment, <UNK>.
I would say we are probably just using some of the capital, and if we find something broadening the footprint in Europe, I think it's an interesting time over there.
We've seen with BrandLoyalty that's been a very helpful area for us, so something in that side of it to help bulk up core Epsilon.
And then we will see how the year plays out.
And if there's nothing there, we will go more heavily on the buyback.
Yes.
Thank you, everyone.
Good-bye.
