Synchrony Financial

Good morning and welcome to the Synchrony Financial fourth quarter and full year 2024 earnings conference call. Please refer to the company's investor relations website for access to their earnings materials. Please be advised that today's conference call is being recorded. Currently, all callers have been placed in a listen-only mode. The call will be open for your questions following the conclusion of management's prepared remarks. If at any time you should need operator assistance, please press star zero. If you wish to ask a question following the prepared remarks, please press star 1. I will now turn the call over to Katherine Miller, Senior Vice President of Investor Relations. Thank you. You may begin.

Thank you, and good morning, everyone. Welcome to our quarterly earnings conference call. In addition to today's press release, we have provided a presentation that covers the topics we plan to address during our call. The press release, detailed financial schedules, and presentation are available on our website, synchronyfinancial.com. This information can be accessed by going to the investor relations section of the website. Before we get started, I wanted to remind you that our comments today will include forward-looking statements. These statements are subject to risks and uncertainty, and actual results can differ materially. We list the factors that might cause actual results to differ materially in our SEC filings, which are available on our website. During the call, we will refer to non-GAAP financial measures in discussing the company's performance. You can find a reconciliation of these measures to GAAP financial measures in our materials for today's call. Finally, Synchrony Financial is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized webcasts are located on our website. On the call this morning are Brian Doubles, Synchrony's President and Chief Executive Officer, and Brian Wentzel, Executive Vice President and Chief Financial Officer. I will now turn the call over to Brian Doubles.

Thanks, Kathryn. Good morning, everyone. I'd like to first take a moment to acknowledge all those who have been affected by the devastation of the California wildfires. Synchrony has colleagues, customers, partners, and providers that were impacted. and while we do not expect a meaningful financial impact on our business, we are monitoring the situation closely and offering support in a number of ways to all those affected. Moving to Synchrony's fourth quarter performance, we added 5 million new accounts, generated $48 billion of purchase volume, and grew ending loan receivables by 2%. In addition, we continue to see improvement in our portfolio's year-over-year delinquency trends. Our RSA continued to align the interests of both Synchrony and our partners and we maintain our cost discipline to deliver fourth quarter net earnings of $774 million, or $1.91 per diluted share, a return on average assets of 2.6%, and a return on tangible common equity of 23%. These fourth quarter results enabled a strong close to 2024, during which Synchrony acquired almost 20 million new accounts and financed more than $182 billion of purchase volume. This year marked our second highest level of purchase volume and serves as an important testament to the lasting appeal of our diverse and flexible financing solutions and compelling value propositions that we offer. Synchrony deeply understands the needs of our many stakeholders, and so even as customers became more discerning in their spending choices and the impacts of persistent inflation in our credit actions took hold as the year progressed, Synchrony leveraged our scale, our data analytics, and deep lending expertise and our advanced digital capabilities to remain nimble and responsive in a rapidly changing environment. As a result, Synchrony generated full-year 2024 net earnings of $3.5 billion, or $8.55 per diluted share, a return on average assets of 2.9%, and a return on tangible common equity of 27.5%. The financial performance included both the positive and adverse impacts of several non-recurring events in our business, ranging from the sale of one business and the acquisition of another to the undertaking of an unprecedented multi-phase plan to prepare for a potential regulatory change with far-reaching implications for the consumer lending industry. And yet, through all the complexities of these opportunities and amidst an ever-evolving landscape, Synchrony executed at a high level across all our key strategic priorities to optimize our business and position us for sustainable growth at strong risk-adjusted returns for the long term. During 2024, we added more than 45 new partners, including iconic brands like Virgin, Gibson, and BRP, as well as technology-oriented relationships like Addit, Practice Management Software, and Service Titan. Each of these additions further diversified the industries, products, and services for which Synchrony can provide flexible financing solutions while also extending our customer reach. Synchrony also grew and expanded existing partnerships during the year with the renewal of more than 45 programs, including Verizon and Generac, and more recently, two of our top five partners, Sam's Club and JCPenney. We're excited to announce that in January, we renewed and extended our more than 30-year relationship with Sam's Club, which builds upon our strong focus of delivering member-centric digital experiences and value. Synchrony's partnership with JCPenney has also evolved over nearly 25 years through both collaboration and innovation as our customers' needs have changed. Our long-term program extension and expansion will now include the introduction of Synchrony Pay Later, our buy-now-pay-later financing solution with six-, 12-, or 24-month installment payments. Customers can scan a QR code in-store to complete an application on their own device, and if approved, select their preferred financing option and make their purchase immediately. And just as Synchrony is evolving and expanding the ways in which we deliver value through partner programs we offer, we are also focused on diversifying the programs and markets we serve and the breadth and utility of the products we offer. In 2024, we completed the acquisition of the Ally Lending business and are in the process of transitioning merchants to Synchrony PayLater. We're excited to continue further developing our multi-product capabilities and continue the expanded integration of this vertical in 2025. We also finalized the sale of Pets Best to Independence Pet Holdings. And in addition to a significant financial gain, we extended our reach in the rapidly growing pet industry through an equity interest in IPH. We're excited about the recent launch of Better Together with CareCredit and Pets Best, a patent-pending, simple, and seamless innovation that connects the two solutions by directly reimbursing insurance claims to the CareCredit Health and Wellness Card. We believe this streamlined payment process will deliver a unified experience for pet parents and support our growth in the pet care financing industry. And we launched CareCredit into wellness markets to finance fertility, nutrition, and dietician products and services, which supported almost 15% growth in wellness-related purchase volume during 2024. In addition, Synchrony enhanced the utility of a number of our private label credit cards, by broadening their acceptance and expanding their distribution channels, an evolution made possible by the delivery of our financial ecosystem through more of our merchant acquirer partners. For example, the Amazon store card can now be used at all Whole Foods locations via mobile QR code and for One Medical memberships. The results have exceeded expectations and build upon our strong foundation of acceptance, including Amazon.com, Amazon Pay, and Audible. In addition, CareCredit can now be used to pay for select health and wellness products and services across a growing list of approximately 18,000 retail acceptance locations, including Albertsons Companies, Sam's Club, Walgreens, and Walmart. And in keeping with our strategy of broadening product utility, we continued to roll out our CareCredit dual card over the past year, which grew open accounts by 16%. Thanks to its strong value proposition and utility, about 60% of this product's out-of-partner spend in 2024 was outside of traditional health and wellness categories. Today, Synchrony delivers a wide variety of innovative financing products and services that are designed to responsibly address each customer's needs whenever and however they are looking to make a purchase. an opportunity that is increasingly occurring digitally, whether that's on a mobile device or at the physical point of sale through wallet apps and digital payments. So throughout the past year, Synchrony has been on a journey to bring our customer experience to life through more engaging and cohesive content across our digital footprint. From our native apps to our marketplace and website, we are expanding and deepening the role that Synchrony plays with our customers and partner relationships. In fact, through our efforts to expand Synchrony's digital presence, we've enhanced our cross-marketing capabilities and strengthened partner and product awareness for our customers. We're also seeing customers engage with Synchrony more extensively, visiting our sites more often, and while they're engaging longer on our properties, this engagement has contributed to incremental new accounts and sales, as well as lower acquisition costs. In the case of Synchrony Bank, we've more than doubled the number of new Synchrony Bank accounts acquired through our Synchrony.com website with almost no associated acquisition costs. And thanks to the combination of our dynamic technology platform, our advanced analytics, and our scale, with more than 140 million reported trade lines and trillions of customer and spend data points, we can leverage proprietary insights throughout our digital financial ecosystem and across the customer journey to deliver highly personalized and engaging experiences. Synchronize Marketplace is a growing part of that financial ecosystem and drives greater connectedness between our customers and partners. Over the last year, we've launched curated campaigns and differentiated offers to our marketplace that contributed to more than 600 million impressions and 1 million referrals across participating partners. In addition, Marketplace hosted almost 228 million customer visits and drove more than 17% growth in newly submitted applications within Marketplace. Synchrony's digital wallet strategy also made great strides in 2024, driving stronger engagement, utility, and purchasing power for our customers. In fact, Synchrony's unique active wallet users grew 85% compared to 2023 and contributed to more than double the digital wallet sales in 2024. This growth also supported a more than 200 basis point improvement in our dual and co-brand cards wallet penetration rate. We should enhance the stickiness of these products and provide natural tailwinds to Synchrony's mobile wallet share as we continue to invest in the strategy. We're also excited by the opportunities we see to drive our digital penetration further in 2025. This includes our recent announcement that eligible Synchrony MasterCard holders can now choose to pay with the standard terms of their credit card or use a promotional offer that includes fixed monthly payments when checking out with Apple Pay Online and in-app on an iPhone or an iPad. This enhances the way users pay and provides them with more choice and flexibility. And we plan to expand on this Apple Pay integration even further later this year by bringing users the ability to view and redeem rewards from eligible Synchrony-issued cards. Synchrony also plans to work with our Apple Pay-enabled partners to expand this capability across our portfolio. And if Synchrony continues to innovate and drive still greater financing experience and value for all those we serve, we're maintaining our discipline and leveraging our core strengths to sustainably grow and deepen our leadership position. Our sophisticated approach to customer lifetime value is driving incremental and deeper connections between approximately 70 million customers and hundreds of thousands of partners, providers, and small and mid-sized businesses that we serve. Our diversified portfolio of products, programs, and spend categories is empowering our customers with financing flexibility in whatever moment of life they're in. Our expansive distribution channels and omnichannel capabilities are increasingly delivering our financial ecosystem anywhere a purchase can be made. And our differentiated approach to underwriting and credit management is driving the stability of our portfolio's post-pandemic credit performance compared to most other lenders in the industry. All of this has been made possible with an incredible team of people and culture that earned Synchrony the honor of being ranked fifth among best companies to work for in the U.S. by Fortune magazine and great places to work in 2024. So as we look to 2025 and beyond, Synchrony is operating from a position of strength. We're executing across our key strategic priorities, empowering strong outcomes for the many stakeholders we serve. We're deepening our role within the heart of American commerce and priming our business for profitable growth for years to come. And we're driving considerable long-term value for our shareholders. With that, I'll turn the call over to Brian to discuss our financial performance in greater detail. Thanks, Brian, and good morning, everyone.