American Express Company

Ladies and gentlemen, thank you for standing by. Welcome to the American Express Q1 2019 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to ask a question, please press star, then 1 on your touchtone phone. You will hear a tone indicating you have been placed in queue, and you may remove yourself from the queue by pressing the pound key at any time. If you're using a speakerphone, please pick up your handset before pressing the numbers. Should you require assistance during the conference call, please press star, then zero. As a reminder, today's call is being recorded. I would now like to turn the conference over to our host, Head of Investor Relations, Mr. Edmund Reist. Please go ahead.

Thank you, Alan. Welcome. We appreciate all of you joining us for today's call. The discussion contains a certain forward-looking statement about the company's future financial performance and business prospects, which are based on management's current expectations and are subject to risk and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today's presentation slides and in the company's reports on file with the Securities and Exchange Commission. The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the first quarter 2019 earnings release and presentation slides, as well as the earnings material for prior periods that may be discussed, all of which are posted on our website at ir.americanexpress.com. We encourage you to review that information in conjunction with today's discussion. Today's discussion will begin with Steve Swery, Chairman and CEO, who will start the call with some remarks about the company's progress and results. And then Jeff Campbell, Chief Financial Officer, will provide a more detailed review of our first quarter financial performance. Once Jeff completes his remark, we'll move to a Q&A session on the financial results with both Steve and Jeff. With that, let me turn it over to Steve.

Thanks, Edmund. Good morning, everyone, and thanks for joining us. As our first quarter results showed, we had a solid start to the year. FX adjusted revenues grew 9%, which marked the seventh consecutive quarter with FX adjusted revenues up by at least 8%. Once again, this growth was broad-based and well-balanced across spend, lend, and fee revenues, reflecting the benefits of our integrated business model. Our adjusted EPS is $2.01. reflected good progress against our strategic imperatives, as well as our focus on consistently investing in share, scale, and relevance to drive growth. We added 3.1 million new proprietary cards in Q1, driven primarily by our digital acquisition efforts. We continue to expand our merchant network in the U.S. and internationally, and billing's growth remains solid across customer segments and geographies. Loan growth continued to be strong, and credit quality remained at industry-leading levels. As you recall, we started the year with mixed signals in the economic environment. Since then, we've seen the economy grow at a steady pace, although not quite as strong as the robust levels we saw in 2018. Consistent with what we said at our investor day last month, we are not seeing any broad signals in our business of a significant economic downturn. Looking ahead, we continue to see a number of attractive growth opportunities across our businesses. And as you've heard me say on many occasions, we're continuing to invest to take advantage of those opportunities in order to drive revenue growth over the moderate to longer term. At our Investor Day, I also discussed three company-wide initiatives we're focusing on to help accelerate progress on our strategic imperatives. All three will build on and strengthen aspects of our business model that differentiate us from our competitors. As a reminder, these initiatives are as follows. We're focusing on our customer base as a platform for growth. We're adopting a more focused international strategy, which is guiding how we manage our business outside the U.S. And we're expanding our network of strategic partners to bring additional value propositions to our customers. There's good progress to report on each of these priorities. We're seeing steady increases in customer engagement and acquisitions from our Member Get Member Referral Program, as well as through our innovative lending offerings, such as Pay at Planet, for consumers and working capital loans for our SME customers. We're generating strong billings across international, especially in our consumer and SME segments, and we are driving increased merchant coverage. And we made a number of announcements regarding strategic partnerships since the beginning of the year. I want to spend a few minutes on that last item. During the quarter, we renewed our relationship with Air Canada, and revamped our consumer and commercial cards with Marriott's Bonvoy Travel Program. We acquired two digital platforms that we've been partnering with, Pocket Concierge, which provides restaurant reservations in Japan, and Lounge Buddy, which enables travelers to discover, book, and access airport lounges worldwide. We announced a new AP automation solution for SMEs with our partner, Bill.com, and we also announced a strategic partnership with SAP Ariba. And in China, we're continuing to make progress in developing our network offerings with our partner, Lianlian. The biggest news, of course, was Delta. As you know, we announced an extension of our partnership with Delta Airlines that will take us to 2030. This is a terrific step forward for both Delta and for us. Delta is our largest co-brand partnership, and it's one of the most valuable portfolios in the industry. Our 11-year extension is groundbreaking and perhaps unprecedented in terms of its length and breadth, and I wanted to give you a sense of how excited we are about the value creation opportunity it represents for both our customers and our shareholders. First, as a reminder, I talked at Investor Day about how the Delta partnership broadly fits with the four strategic imperatives that we're focused on. Delta shares are a strong focus on a premium consumer customer base, Delta has a large base of business customers, which provides many attractive opportunities to build on our strong position in commercial payments. Delta's global reach and scale helps strengthen our merchant network in the U.S. and in many countries around the world. And last, Delta shares our focus on using technology capabilities to deliver digital experiences that help us become an essential part of our customers' digital lives. These common values are what has driven Delta to drive 8% of our buildings and 20% of our lending today. So with that as background, Delta's CEO, Ed Bastian, and I started meeting on a regular basis shortly after I became CEO. It became clear very quickly that we both appreciated the importance of this partnership to our respective companies. It was also clear that we had a shared interest in working more closely together to build something even bigger and better for both companies. Our existing agreement had four more years to run, but towards the end of last year, we started talking about the benefits of an early renewal. Given the potential we both saw, we wanted to think and act for the long term and avoid the short-term distractions or disruptions that could come if there was any uncertainty about the next stage of our partnership. We went to work in a renewal agreement so that we could focus our respective teams on growing the portfolio with innovative products and services for our customers. I feel great about where we came out and where we're going. The Delta relationship is now positioned to remain a key element in our strategy of growing our share, scale, and relevance, producing great returns for our shareholders. Delta will continue to be one of the fastest growing parts of our business as it has been for years. I would remind you that spending on our Delta co-brand products has grown by double digits annually for many years, and together we've acquired more than 1 million new accounts in each of the past two years. With the certainty of our relationship now locked in until 2030, we can work together even more closely to sustain this momentum, growing the value every year for our mutual customers and for both partners. This means becoming even more integrated in our customer value propositions, digital efforts, and how we run our businesses. As Ed Bastian said during Delta's earnings call last week, Delta will be investing alongside us to grow the portfolio and strengthen the ways we work together. Given this kind of commitment by both partners for the next 11 years and all the opportunities we see, I believe the Delta relationship will remain a key cornerstone of our growth across every dimension, including billings, lending, revenue, scale, and profitability. So all in all, this is a great partnership for the customers and shareholders of both companies. In summary, I feel good about the progress we are making as a business, about our results this quarter, and about our prospects as we look at the rest of 2019. As we stated at Investor Day and most recently when we announced the Delta renewal, we are reaffirming our guidance for the full year of delivering revenue growth in the 8% to 10% range and adjusted earnings per share between $7.85 and $8.35. I remain excited about the opportunities that lie ahead and confident in our ability to continue to deliver sustainable growth for our shareholders. Let me now turn the call over to Jeff.