Bread Financial Holdings, Inc.

Good morning and welcome to Bread Financial's third quarter earnings conference call. My name is Drew and I'll be coordinating your call today. At this time, all parties have been placed on a listen-only mode. Following today's presentation, the floor will be open for your questions. To register a question, please press start followed by one. It's now my pleasure to introduce Mr. Brian Verub, Head of Investor Relations at Bread Financial. The floor is yours.

Thank you. Copies of the slides we will be reviewing and the earnings release can be found on the investor relations section of our website. On the call today, we have Ralph Andretta, President and Chief Executive Officer of Bread Financial, and Perry Beiberman, Executive Vice President and Chief Financial Officer of Bread Financial. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are based on management's current expectations and assumptions and are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Also on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. Reconciliation of those measures to GAAP are included in our quarterly earnings materials posted on our investor relations website at breadfinancial.com. With that, I would like to turn the call over to Ralph Andretta.

Good morning. Thank you, Brian. And thank you to everyone for joining the call this morning. I will start on slide three by highlighting a few key updates from the quarter. We continue to make strong progress towards our 2022 financial goals. We are pleased with the continued acceleration of our loan growth with end of period loans of 16% on a year over year basis, leading to revenue growth of 15% for the quarter. Credit sales growth remained positive for the quarter despite pressure on discretionary spending in July when fuel prices temporarily spiked and consumer confidence declined. Notably, year-over-year sales growth rates improved in both August and September from the July low as consumer confidence and in-store traffic gradually recovered, and we're seeing that trend continue in October. Also, in anticipation of the transition of our credit card processing services, we shifted promotions and incentives with our brand partners and direct-to-consumer offerings from the third quarter to the fourth quarter, which impacted sales growth. The outlook for credit sales growth in the fourth quarter looks strong, driven by new partner additions and holiday spending. We're already seeing brand partners ramp up their promotions and incentives in preparation for the holiday season. Pre-tax, pre-provisioned earnings growth improved at double-digit rate from the prior year periods for the sixth consecutive quarter. highlighting the quality growth we are focused on consistently delivering over the long term. We improved our funding mix and made significant progress again in the third quarter with retail deposit growth of over 70% year over year and 24% sequentially. Retail deposit balances exceeded $5 billion, benefiting both our funding diversification and cost of funds relative to other funding sources. Earlier this month, we successfully converted the AAA portfolio of over 1 million active accounts and approximately 1.5 billion in loan balances. We are confident that the new and improved cardholder value proposition on our AAA products will drive further engagement with AAA's more than 56 million U.S. members, driving increased sales and accounts. By leveraging our full product suite, we remain well-positioned to continue to add quality partners that further strengthen our diverse portfolio. We also continue to invest in our technology modernization and business transformation efforts. We have made major upgrades in the last year, including transitioning our credit card processing system, converting to the cloud, and integrating Alveria, a state-of-the-art collection software to help enhance the productivity of our collectors. While we experienced some temporary disruptions during our transition, These upgrades support our long-term plan, enhance our strategic differentiation, and are essential to further driving operating efficiencies and innovation. From a macroeconomic perspective, while labor markets remain resilient, lower and middle-income households feel the pressure of persistently high inflation and increased costs of overall consumer debt. According to an internal study, Over 90% of Americans have changed their spending habits due to inflation. We have taken targeted actions to protect inflation vulnerable segments when possible. We consistently and proactively adjust our underwriting and credit management to account for changes in inflation and other factors present to consumers. We will continue to closely monitor consumer health indicators, including how consumers are navigating an increasingly challenging economic environment. Our seasoned leadership team has extensive credit card lending experience and has successfully navigated the full range of economic cycles. We remain focused on reasonable risk management and proactive recession readiness planning. We are confident in our outlook and financial resilience. Moving to slide four, I will highlight some of our business development success. This morning, we announced a new long-term credit card relationship with WorldMarket. a specialty retailer of home furniture, decor, apparel, and international food products with over 240 million locations across the U.S. and a vast online assortment at worldmarket.com. We will leverage our deep expertise of serving specialty retailers coupled with our sophisticated data and analytics capabilities to offer world market customers and their 6.5 million reward members a new payment product with valuable rewards and an enhanced shopping experience. Also during the quarter, we signed a multi-year renewal with our valued partner, Buckle. Buckle operates over 440 retail stores in 42 states, as well as its buckle.com e-commerce site, and has grown to become one of America's favorite denim destinations with a strong millennial customer base. This partnership will focus on providing Buckle guests with lending solutions and a customer loyalty program tailored to evolving guests' wants and needs. Turning to BreadPay, we are pleased to have signed WaterRower among dozens of other new small and medium-sized partners in the third quarter. We have grown our total BreadPay merchant base by over 50% this year while developing incremental platform capabilities and enhancements, including ensuring our products are regulatory compliant. Finally, our strategic relationship with Sezzle has experienced faster than expected new merchant additions with over 125 merchants enrolled and now able to access BreadPay's long-term lending solutions since launching in the first quarter. We look forward to building on our business development momentum in the coming quarters. Moving to the bottom half of the page, we remain committed to continuously enhancing our customer experience through technology. Through relationships with Marketta and Versatile Credit, we are making it easier for consumers and merchants to access our broad suite of consumer payment products. The program we've developed with Marketta brings access to our bread pay installment lending and split pay products in store, ensuring consumers can access their preferred payment option and the channel of their choice. The virtual card solution we've developed with Marketta enables customers to seamlessly apply for, provision in a digital wallet, and purchase in-store. We took an innovative approach to the virtual card, and working with Marketa and two of the largest digital wallet providers, developed a smoother and faster process that does not require a mobile app download to complete the sale. A market first. This improved virtual card process is accessible in-store through a QR code scan, and by eliminating the app download step, it does not disrupt the merchant checkout flow. which improves customer conversion rates. BreadPay puts brand partners first with a simple white label ready web to wallet based solution. This offering is a prime example of how our technology investments improve the customer experience and enhance the payment products that our brand partners provide. Bread will continue to expand its presence into home improvement, elective medical, and furniture verticals by integrating into versatile credits simple, flexible and diversified sales finance lending platform. Versatile has relationships with hundreds of merchants and this integrated solution extends BreadPay's distribution and increases speed to market while providing merchants with a turnkey solution. With the addition of these two relationships, BreadPay delivers split pay or pay in four at point of sale installment loan products both online and in store. We continue to transform our company through the successful execution of our strategy. We have positioned Bread Financial to drive sustainable, profitable growth through continuous improvement, innovation, operating efficiencies, and the appropriate risk management balance. I'll now turn it over to our CFO, Perry Bieberman, to review the financials.