Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 27, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Entity File Number | 001-40776 | |
Entity Registrant Name | Loyalty Ventures Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-1353472 | |
Entity Address State Or Province | TX | |
Entity Address, Address Line One | 8235 Douglas Avenue, Suite 1200 | |
Entity Address, City or Town | Dallas | |
Entity Address, Postal Zip Code | 75225 | |
City Area Code | 972 | |
Local Phone Number | 338-5170 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | LYLT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,611,933 | |
Entity Central Index Key | 0001870997 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 73,307 | $ 167,601 |
Accounts receivable, net, less allowance for doubtful accounts ($3.9 million and $4.7 million at September 30, 2022 and December 31, 2021, respectively) | 245,863 | 288,251 |
Inventories, net | 236,776 | 188,577 |
Redemption settlement assets, restricted | 609,711 | 735,131 |
Other current assets | 23,415 | 28,627 |
Total current assets | 1,189,072 | 1,408,187 |
Property and equipment, net | 63,742 | 79,959 |
Right-of-use assets - operating | 85,057 | 99,515 |
Deferred tax asset, net | 48,388 | 58,128 |
Intangible assets, net | 1,913 | 3,095 |
Goodwill | 177,978 | 649,958 |
Other non-current assets | 25,068 | 24,885 |
Total assets | 1,591,218 | 2,323,727 |
LIABILITIES AND EQUITY (DEFICIENCY) | ||
Accounts payable | 116,766 | 103,482 |
Accrued expenses | 131,242 | 144,997 |
Deferred revenue | 791,208 | 924,789 |
Current operating lease liabilities | 8,086 | 10,055 |
Current portion of long-term debt | 50,625 | 50,625 |
Other current liabilities | 120,651 | 118,444 |
Total current liabilities | 1,218,578 | 1,352,392 |
Deferred revenue | 87,793 | 97,167 |
Long-term operating lease liabilities | 88,390 | 103,242 |
Long-term debt | 567,720 | 603,488 |
Other liabilities | 18,369 | 20,874 |
Total liabilities | 1,980,850 | 2,177,163 |
Commitments and contingencies | ||
EQUITY | ||
Common stock, $0.01 par value; authorized, 200,000 shares; issued, 24,612 shares and 24,585 shares at September 30, 2022 and December 31, 2021, respectively | 246 | 246 |
Additional paid-in-capital | 272,487 | 266,775 |
Accumulated deficit | (496,390) | (55,383) |
Accumulated other comprehensive loss | (165,975) | (65,074) |
Total (deficiency) equity | (389,632) | 146,564 |
Total liabilities and (deficiency) equity | $ 1,591,218 | $ 2,323,727 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 3.9 | $ 4.7 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares | 200,000 | 200,000 |
Common stock, issued shares | 24,612 | 24,585 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Total revenue | $ 162,369 | $ 169,257 | $ 489,117 | $ 496,716 |
Operating expenses | ||||
Cost of operations (exclusive of depreciation and amortization disclosed separately below) | 133,905 | 119,882 | 407,890 | 372,820 |
General and administrative | 5,090 | 4,018 | 15,907 | 11,608 |
Depreciation and other amortization | 7,409 | 8,665 | 25,146 | 26,237 |
Amortization of purchased intangibles | 259 | 433 | 820 | 1,316 |
Goodwill impairment | 422,922 | |||
Total operating expenses | 146,663 | 132,998 | 872,685 | 411,981 |
Operating income (loss) | 15,706 | 36,259 | (383,568) | 84,735 |
Interest expense (income), net | 11,527 | (136) | 29,973 | (318) |
Income (loss) before income taxes and income from investment in unconsolidated subsidiary | 4,179 | 36,395 | (413,541) | 85,053 |
Provision for income taxes | 4,304 | 16,542 | 27,466 | 31,616 |
Income from investment in unconsolidated subsidiary - related party, net of tax | (4,108) | (4,067) | ||
Net (loss) income | $ (125) | $ 23,961 | $ (441,007) | $ 57,504 |
Net (loss) income per share - Basic (Note 3) | $ (0.01) | $ 0.97 | $ (17.92) | $ 2.34 |
Net (loss) income per share - Diluted (Note 3) | $ (0.01) | $ 0.97 | $ (17.92) | $ 2.34 |
Weighted average shares - Basic (Note 3) | 24,612 | 24,585 | 24,607 | 24,585 |
Weighted average shares - Diluted (Note 3) | 24,612 | 24,585 | 24,607 | 24,585 |
Redemption | ||||
Total revenue | $ 91,852 | $ 97,149 | $ 273,779 | $ 280,844 |
Services | ||||
Total revenue | 62,757 | 65,806 | 191,830 | 199,244 |
Other Revenue | ||||
Total revenue | $ 7,760 | $ 6,302 | $ 23,508 | $ 16,628 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net (loss) income | $ (125) | $ 23,961 | $ (441,007) | $ 57,504 |
Other comprehensive (loss) income: | ||||
Unrealized loss on securities available-for-sale | (1,505) | (2,769) | (32,737) | (11,245) |
Tax benefit | 693 | |||
Unrealized loss on securities available-for-sale, net of tax | (1,505) | (2,769) | (32,737) | (10,552) |
Unrealized (loss) gain on cash flow hedges | (1,289) | 1,206 | (986) | 2,134 |
Tax benefit (expense) | 300 | (298) | 233 | (454) |
Unrealized (loss) gain on cash flow hedges, net of tax | (989) | 908 | (753) | 1,680 |
Foreign currency translation adjustments | (21,417) | (21,064) | (67,411) | (40,005) |
Other comprehensive (loss) income, net of tax | (23,911) | (22,925) | (100,901) | (48,877) |
Total comprehensive (loss) income, net of tax | $ (24,036) | $ 1,036 | $ (541,908) | $ 8,627 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (DEFICIENCY) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Former Parent's Net Investment | Accumulated Other Comprehensive Loss | Total |
Balance at Beginning at Dec. 31, 2020 | $ 1,093,920 | $ 381 | $ 1,094,301 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 57,504 | 57,504 | ||||
Other comprehensive income (loss) | (48,877) | (48,877) | ||||
Change in former Parent's net investment | (109,352) | (109,352) | ||||
Balance at Ending at Sep. 30, 2021 | 1,042,072 | (48,496) | 993,576 | |||
Balance at Beginning at Jun. 30, 2021 | 1,012,586 | (25,571) | 987,015 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 23,961 | 23,961 | ||||
Other comprehensive income (loss) | (22,925) | (22,925) | ||||
Change in former Parent's net investment | 5,525 | 5,525 | ||||
Balance at Ending at Sep. 30, 2021 | $ 1,042,072 | (48,496) | 993,576 | |||
Balance at Beginning at Dec. 31, 2021 | $ 246 | $ 266,775 | $ (55,383) | (65,074) | 146,564 | |
Balance at Beginning (in shares) at Dec. 31, 2021 | 24,585 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | (441,007) | (441,007) | ||||
Other comprehensive income (loss) | (100,901) | (100,901) | ||||
Net transfers from former Parent for Separation-related transactions | 1,354 | 1,354 | ||||
Stock-based compensation | 5,248 | 5,248 | ||||
Other | (890) | (890) | ||||
Other (in shares) | 27 | |||||
Balance at Ending at Sep. 30, 2022 | $ 246 | 272,487 | (496,390) | (165,975) | (389,632) | |
Balance at Ending (in shares) at Sep. 30, 2022 | 24,612 | |||||
Balance at Beginning at Jun. 30, 2022 | $ 246 | 271,296 | (496,265) | (142,064) | (366,787) | |
Balance at Beginning (in shares) at Jun. 30, 2022 | 24,612 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | (125) | (125) | ||||
Other comprehensive income (loss) | (23,911) | (23,911) | ||||
Stock-based compensation | 1,339 | 1,339 | ||||
Other | (148) | (148) | ||||
Balance at Ending at Sep. 30, 2022 | $ 246 | $ 272,487 | $ (496,390) | $ (165,975) | $ (389,632) | |
Balance at Ending (in shares) at Sep. 30, 2022 | 24,612 |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (441,007) | $ 57,504 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 25,966 | 27,553 |
Deferred income taxes | 5,192 | (3,594) |
Non-cash stock compensation | 5,248 | 6,322 |
Goodwill impairment | 422,922 | |
Gain on sale of investment in unconsolidated subsidiary - related party | (4,110) | |
Change in other operating assets and liabilities: | ||
Change in deferred revenue | (59,035) | 12,775 |
Change in accounts receivable | 10,139 | (14,201) |
Change in accounts payable and accrued expenses | 20,748 | (12,496) |
Change in other assets | (71,851) | (28,982) |
Change in other liabilities | 9,326 | 62,415 |
Other | 20,798 | 10,539 |
Net cash (used in) provided by operating activities | (51,554) | 113,725 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Change in redemption settlement assets, restricted | 10,313 | (47,312) |
Capital expenditures | (15,936) | (13,137) |
Distributions from investment in unconsolidated subsidiary - related party | 795 | |
Sale of investment in unconsolidated subsidiary - related party | 4,055 | |
Net cash used in investing activities | (5,623) | (55,599) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under debt agreements | 12,000 | |
Repayments of borrowings | (49,969) | |
Payment of deferred financing costs | (1,964) | |
Dividends paid to former Parent | (120,000) | |
Net transfers to former Parent | (9,278) | |
Net transfers from former Parent for Separation-related transactions | 1,569 | |
Other | (557) | |
Net cash used in financing activities | (38,921) | (129,278) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (13,195) | (4,000) |
Change in cash, cash equivalents and restricted cash | (109,293) | (75,152) |
Cash, cash equivalents and restricted cash at beginning of year | 232,602 | 337,525 |
Cash, cash equivalents and restricted cash at end of year | 123,309 | 262,373 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Interest paid | 27,717 | 200 |
Income taxes paid, net | $ 19,693 | $ 30,781 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Description of the Business On November 5, 2021, Bread Financial Holdings, Inc., previously named Alliance Data Systems Corporation (“former Parent”), completed the spinoff of its LoyaltyOne reportable segment (the “Separation”) into an independent, publicly traded company, Loyalty Ventures Inc. (the “Company” or “Loyalty Ventures”). Loyalty Ventures provides coalition and campaign-based loyalty solutions through the Canadian AIR MILES ® Basis of Presentation Prior to the Separation, the Company had operated as part of the former Parent and not as a standalone company. The unaudited condensed combined financial statements for the three and nine months ended September 30, 2021 have been derived from the former Parent’s historical accounting records and are presented on a “carve-out” basis. The unaudited condensed combined financial statements for the three and nine months ended September 30, 2021 also include allocations of certain general and administrative expenses from the former Parent that directly or indirectly benefited Loyalty Ventures. However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the unaudited condensed combined financial statements had the Company operated independently. The former Parent’s third-party long-term debt and the related interest expense was not allocated for the three and nine months ended September 30, 2021 as the Company was not the legal obligor of such debt. The former Parent’s net investment represents its interest in the recorded net assets of the Company. All significant transactions between the Company and its former Parent have been included in the accompanying unaudited condensed combined financial statements. Transactions with the former Parent as contributions to the carve-out entity or distributions from the carve-out entity are reflected in the accompanying unaudited condensed consolidated and combined statements of equity (deficiency) as “Change in former Parent’s net investment.” The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022 were based on the reported results of Loyalty Ventures as a standalone company and prepared on a consolidated basis. All significant intercompany accounts and transactions between the businesses comprising the Company have been eliminated in the accompanying unaudited condensed consolidated and combined financial statements. The Company’s unaudited condensed consolidated and combined financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s unaudited condensed consolidated and combined financial statements and accompanying notes are presented in U.S. Dollars (“USD”), the Company’s reporting currency. The unaudited condensed consolidated and combined financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2022. Recently Issued Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Facilitation of the Effects of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 can be applied anytime between the first quarter of fiscal 2020 and the fourth quarter of fiscal 2022. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The Company’s primary association with LIBOR is through interest rates applicable under its senior secured credit agreement (the “Credit Agreement”) that provides for the use of the Secured Overnight Financing Rate (SOFR) if LIBOR is no longer available. Accordingly, the impact of ASU 2020-04 on the Company’s consolidated financial statements and related disclosures is not expected to be material. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification (“ASC”) 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company expects to adopt ASU 2021-08 in the first quarter of 2023 on a prospective basis. While the impact of these amendments is dependent on the nature of any future transactions, the Company does not expect ASU 2021-08 to have a significant impact on its consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU 2022-04, “Liabilities — |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE | |
REVENUE | 2. REVENUE The Company’s products and services are reported under two segments—AIR MILES Reward Program and BrandLoyalty, as shown below. The following tables present revenue disaggregated by major source, as well as geographic region based on the location of the subsidiary that generally correlates with the location of the customer: AIR MILES Three Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 63,971 $ — $ — $ 63,971 Campaign-based loyalty programs — 93,413 — 93,413 Other 45 1,611 (42) 1,614 Revenue from contracts with customers $ 64,016 $ 95,024 $ (42) $ 158,998 Investment income 3,371 — — 3,371 Total $ 67,387 $ 95,024 $ (42) $ 162,369 AIR MILES Three Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 68,580 $ — $ — $ 68,580 Campaign-based loyalty programs — 95,799 — 95,799 Other 10 1,530 — 1,540 Revenue from contracts with customers $ 68,590 $ 97,329 $ — $ 165,919 Investment income 3,338 — — 3,338 Total $ 71,928 $ 97,329 $ — $ 169,257 AIR MILES Nine Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 189,533 $ — $ — $ 189,533 Campaign-based loyalty programs — 284,943 — 284,943 Other 125 4,654 (129) 4,650 Revenue from contracts with customers $ 189,658 $ 289,597 $ (129) $ 479,126 Investment income 9,991 — — 9,991 Total $ 199,649 $ 289,597 $ (129) $ 489,117 AIR MILES Nine Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 203,870 $ — $ — $ 203,870 Campaign-based loyalty programs — 278,726 — 278,726 Other 12 3,867 — 3,879 Revenue from contracts with customers $ 203,882 $ 282,593 $ — $ 486,475 Investment income 10,241 — — 10,241 Total $ 214,123 $ 282,593 $ — $ 496,716 AIR MILES Three Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ — $ — $ — Canada 67,387 4,742 (42) 72,087 Europe, Middle East and Africa — 77,465 — 77,465 Asia Pacific — 7,061 — 7,061 Other — 5,756 — 5,756 Total $ 67,387 $ 95,024 $ (42) $ 162,369 AIR MILES Three Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ 95 $ — $ 95 Canada 71,928 3,894 — 75,822 Europe, Middle East and Africa — 68,168 — 68,168 Asia Pacific — 22,967 — 22,967 Other — 2,205 — 2,205 Total $ 71,928 $ 97,329 $ — $ 169,257 AIR MILES Nine Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ — $ — $ — Canada 199,649 12,426 (129) 211,946 Europe, Middle East and Africa — 220,658 — 220,658 Asia Pacific — 45,367 — 45,367 Other — 11,146 — 11,146 Total $ 199,649 $ 289,597 $ (129) $ 489,117 AIR MILES Nine Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ 2,637 $ — $ 2,637 Canada 214,123 15,163 — 229,286 Europe, Middle East and Africa — 200,022 — 200,022 Asia Pacific — 57,690 — 57,690 Other — 7,081 — 7,081 Total $ 214,123 $ 282,593 $ — $ 496,716 Contract Liabilities The Company records a contract liability when cash payments are received in advance of its performance, which applies to the service and redemption of an AIR MILES reward mile and the reward products for its campaign-based loyalty programs. A reconciliation of contract liabilities for the AIR MILES Reward Program is as follows: Deferred Revenue Service Redemption Total (in thousands) Balance at January 1, 2022 $ 230,492 $ 791,464 $ 1,021,956 Cash proceeds 131,316 202,961 334,277 Revenue recognized (1) (138,858) (254,938) (393,796) Other — 423 423 Effects of foreign currency translation (19,321) (64,538) (83,859) Balance at September 30, 2022 $ 203,629 $ 675,372 $ 879,001 Amounts recognized in the consolidated balance sheets: Deferred revenue (current) $ 115,836 $ 675,372 $ 791,208 Deferred revenue (non-current) $ 87,793 $ — $ 87,793 (1) Reported on a gross basis herein. The deferred redemption obligation associated with the AIR MILES Reward Program is effectively due on demand from the collector base, thus the timing of revenue recognition is based on the redemption by the collector. Service revenue is amortized over the expected life of a mile, with the deferred revenue balance expected to be recognized into revenue in the amount of $39.8 million in 2022 2023 2024 2025 The contract liabilities for BrandLoyalty’s campaign-based loyalty programs are recognized in other current liabilities in the Company’s unaudited condensed consolidated balance sheets. The beginning balance as of January 1, 2022 was $85.4 million and the closing balance as of September 30, 2022 was $99.1 million, with the change due to cash payments received in advance of program performance, offset in part by revenue recognized of approximately $212.4 million and the effect of foreign currency translation of $14.7 million during the nine months ended September 30, 2022. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 3. EARNINGS PER SHARE A total of 24,585,237 shares of Loyalty Ventures common stock were outstanding at November 5, 2021, the date of the Separation, and this share amount was utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. For the three and nine months ended September 30, 2021, these shares are treated as issued and outstanding for purposes of calculating historical basic and diluted earnings per share. For the three and nine months ended September 30, 2022, the calculation of basic and diluted earnings per share is based on the weighted average number of common shares outstanding. The dilutive effect of equity awards of Loyalty Ventures granted subsequent to the Separation is included in the diluted calculation. The following table sets forth the computation of basic and diluted earnings per share of common stock: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands, except per share amounts) Numerator: Net (loss) income $ (125) $ 23,961 $ (441,007) $ 57,504 Denominator: Weighted average shares, basic 24,612 24,585 24,607 24,585 Weighted average effect of dilutive securities: Net effect of dilutive unvested restricted stock (1) — — — — Denominator for diluted calculation 24,612 24,585 24,607 24,585 Basic net (loss) income per share: $ (0.01) $ 0.97 $ (17.92) $ 2.34 Diluted net (loss) income per share: $ (0.01) $ 0.97 $ (17.92) $ 2.34 (1) The dilutive calculation excludes 0.9 million and 0.6 million restricted stock units for the three and nine months ended September 30, 2022, respectively, as they were anti-dilutive for the respective periods. For the three and nine months ended September 30, 2021, there are no dilutive equity instruments as there were no equity awards of Loyalty Ventures outstanding prior to the Separation. |
INVENTORIES, NET
INVENTORIES, NET | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORIES, NET | |
INVENTORIES, NET | 4. INVENTORIES, NET Inventories, net of $236.8 million and $188.6 million at September 30, 2022 and December 31, 2021, respectively, primarily consist of finished goods to be utilized as rewards in the Company’s loyalty programs. Inventories are stated at the lower of cost and net realizable value and valued primarily on a first-in-first-out basis. The Company records valuation adjustments to its inventories if the cost of inventory exceeds the amount it expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management’s judgment regarding future market conditions and an analysis of historical experience. |
REDEMPTION SETTLEMENT ASSETS, R
REDEMPTION SETTLEMENT ASSETS, RESTRICTED | 9 Months Ended |
Sep. 30, 2022 | |
REDEMPTION SETTLEMENT ASSETS, RESTRICTED. | |
REDEMPTION SETTLEMENT ASSETS, RESTRICTED | 5. REDEMPTION SETTLEMENT ASSETS, RESTRICTED Redemption settlement assets consist of restricted cash, mutual funds, and securities available-for-sale and are designated for settling redemptions by collectors of the AIR MILES Reward Program under certain contractual relationships with sponsors of the AIR MILES Reward Program. The principal components of redemption settlement assets, which are carried at fair value, are as follows: September 30, December 31, 2022 2021 Fair Value Fair Value (in thousands) Restricted cash $ 40,870 $ 58,752 Mutual funds 20,696 25,990 Corporate bonds 548,145 650,389 Total $ 609,711 $ 735,131 The following table shows the amortized cost, unrealized gains and losses, and fair value of securities available-for-sale as of September 30, 2022 and December 31, 2021, respectively: September 30, 2022 December 31, 2021 Amortized Unrealized Unrealized Amortized Unrealized Unrealized Cost Gains Losses Fair Value Cost Gains Losses Fair Value (in thousands) Corporate bonds $ 578,741 $ — $ (30,596) $ 548,145 $ 648,248 $ 6,389 $ (4,248) $ 650,389 Total $ 578,741 $ — $ (30,596) $ 548,145 $ 648,248 $ 6,389 $ (4,248) $ 650,389 The following tables show the unrealized losses and fair value for those investments that were in an unrealized loss position as of September 30, 2022 and December 31, 2021, respectively, aggregated by investment category and the length of time that individual securities have been in a continuous loss position: September 30, 2022 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in thousands) Corporate bonds $ 369,156 $ (13,710) $ 178,989 $ (16,886) $ 548,145 $ (30,596) Total $ 369,156 $ (13,710) $ 178,989 $ (16,886) $ 548,145 $ (30,596) December 31, 2021 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in thousands) Corporate bonds $ 104,052 $ (1,341) $ 123,382 $ (2,907) $ 227,434 $ (4,248) Total $ 104,052 $ (1,341) $ 123,382 $ (2,907) $ 227,434 $ (4,248) The amortized cost and estimated fair value of the securities available-for-sale at September 30, 2022 by contractual maturity are as follows: Amortized Estimated Cost Fair Value (in thousands) Due in one year or less $ 122,736 $ 121,720 Due after one year through five years 456,005 426,425 Total $ 578,741 $ 548,145 Market values were determined for each individual security in the investment portfolio. The Company recorded losses associated with the change in fair value of mutual funds of $0.6 million and $3.1 million for the three and nine months ended September 30, 2022, respectively. Losses associated with the change in fair value of mutual funds were de minimis and $0.6 million for the three and nine months ended September 30, 2021, respectively. For available-for-sale debt securities in which fair value is less than cost, ASC 326, “Financial Instruments – Credit Losses,” requires that credit-related impairment, if any, is recognized through an allowance for credit losses and adjusted each period for changes in credit risk. The Company invests in highly rated securities with expected low probabilities of default and has the intent and ability to hold the investments until maturity. The Company performs an assessment each period for credit-related impairment. As of September 30, 2022, the Company does not consider its investments to be impaired. The Company believes unrealized losses on investments were caused by rising interest rates rather than changes in credit quality. The Company expects to recover, through collection of all of the contractual cash flows of each security, the amortized cost basis of these securities as it does not intend to sell, and does not anticipate being required to sell, these securities before recovery of the cost basis. There were no realized gains or losses from the sale of investment securities for the three months ended September 30, 2022 and 2021, respectively. Losses from the sale of investment securities were de minimis and $0.2 million for the nine months ended September 30, 2022 and 2021, respectively. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
LEASES | 6. LEASES The Company has operating leases for general office properties, warehouses, data centers, automobiles and equipment. As of September 30, 2022, the Company’s leases have remaining lease terms of less than 1 year to 11 years, some of which may include renewal options. For leases in which the implicit rate is not readily determinable, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease. Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and nonlease components as a single lease component for its identified asset classes. The components of lease expense were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) Operating lease cost $ 3,450 $ 3,923 $ 10,814 $ 11,929 Short-term lease cost 99 84 243 255 Variable lease cost 1,070 922 2,859 3,134 Total $ 4,619 $ 4,929 $ 13,916 $ 15,318 Sublease income was $1.4 million and $3.2 million for the three and nine months ended September 30, 2022, respectively, and $0.6 million and $1.6 million for the three and nine months ended September 30, 2021, respectively, and is presented net of lease expense. The Company evaluates its right-of-use assets for impairment in accordance with ASC 360, “Property, Plant and Equipment,” when events or changes in circumstances indicate that a right-of-use asset’s carrying amount may not be recoverable. The Company performed an impairment assessment for the right-of-use assets associated with certain subleased office space. As a result, the Company recorded asset impairment charges within its AIR MILES Reward Program segment of $0.4 million and $1.0 million in the three and nine months ended September 30, 2022, respectively, which is included in cost of operations in its unaudited condensed consolidated statements of operations. Other information related to leases was as follows: September 30, September 30, 2022 2021 Weighted-average remaining lease term (in years): Operating leases 10.0 10.9 Weighted-average discount rate: Operating leases 4.7 % 4.7 % Supplemental cash flow information related to leases was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,294 $ 4,062 $ 12,068 $ 13,871 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 1,434 $ 16 $ 4,171 $ 200 Maturities of the lease liabilities as of September 30, 2022 were as follows: Operating Year Leases (in thousands) 2022 (excluding the nine months ended September 30, 2022) $ 2,168 2023 13,560 2024 12,674 2025 12,081 2026 11,538 Thereafter 70,411 Total undiscounted lease liabilities 122,432 Less: Amount representing interest (25,956) Total present value of minimum lease payments $ 96,476 Amounts recognized in the September 30, 2022 consolidated balance sheet: Current operating lease liabilities $ 8,086 Long-term operating lease liabilities 88,390 Total $ 96,476 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS AND GOODWILL | |
INTANGIBLE ASSETS AND GOODWILL | 7. INTANGIBLE ASSETS AND GOODWILL Intangible Assets Intangible assets consist of the following: September 30, 2022 Gross Accumulated Assets Amortization Net Amortization Life and Method (in thousands) Tradenames $ 8,233 $ (6,320) $ 1,913 8‑15 years—straight line Total intangible assets $ 8,233 $ (6,320) $ 1,913 December 31, 2021 Gross Accumulated Assets Amortization Net Amortization Life and Method (in thousands) Tradenames $ 32,289 $ (29,194) $ 3,095 8‑15 years—straight line Collector database 55,397 (55,397) — 5 years—straight line Total intangible assets $ 87,686 $ (84,591) $ 3,095 The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows: For the Years Ending December 31, (in thousands) 2022 (excluding the nine months ended September 30, 2022) $ 252 2023 1,006 2024 516 2025 26 2026 26 Thereafter 87 Goodwill The changes in the carrying amount of goodwill are as follows: AIR MILES Reward Program BrandLoyalty (1) Total (in thousands) Balance at January 1, 2022 $ 194,767 $ 455,191 $ 649,958 Impairment — (422,922) (422,922) Effects of foreign currency translation (16,789) (32,269) (49,058) Balance at September 30, 2022 $ 177,978 $ — $ 177,978 (1) The amount of goodwill as of January 1, 2022 is net of an accumulated goodwill impairment charge of $50.0 million within the BrandLoyalty segment incurred as of December 31, 2021. As of June 30, 2022, the Company recorded a goodwill impairment charge of $422.9 million within the BrandLoyalty segment. The goodwill as of September 30, 2022 is net of accumulated goodwill impairment charges of $472.9 million within the BrandLoyalty segment. The Company tests goodwill for impairment annually, as of July 1, or when events and circumstances change that would indicate the carrying value may not be recoverable. During the second quarter of 2022, macroeconomic factors, including Russia’s invasion of Ukraine and its negative impact on consumer confidence and consumer behavior in Europe, inflation, and continued supply chain pressures, led the Company to believe that it is more likely than not the fair value of its BrandLoyalty reporting unit was less than its carrying amount. As a result, the economic disruption, coupled with increased uncertainty, indicated a material deterioration of the significant inputs used to determine the fair value of the BrandLoyalty reporting unit, resulting in the impairment of the goodwill. See Note 15, “Financial Instruments and Fair Value Measurements,” for more information. |
INVESTMENT IN UNCONSOLIDATED SU
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - RELATED PARTY | 9 Months Ended |
Sep. 30, 2022 | |
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - RELATED PARTY | |
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - RELATED PARTY | 8. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY – RELATED PARTY The Company previously owned a 99.9% interest in Comenity Canada L.P., a limited partnership, which is a consolidated subsidiary of the former Parent, and was accounted for using the equity method of accounting, as the Company exercised significant influence but did not control the entity. The investment was included in the AIR MILES Reward Program segment. In March 2021, the Company received a partnership distribution from Comenity Canada L.P. of $0.8 million, and the Company’s ownership interest declined from 99.9% to 98.0%. Under the equity method, the Company’s share of its investee’s earnings or loss is recognized in the consolidated and combined statements of operations. The Company recognized income from investment in unconsolidated related party subsidiary of $4.1 million for each of the three and nine months ended September 30, 2021, respectively. In August 2021, the Company’s investment in Comenity Canada L.P. was sold to an affiliate of the former Parent for $4.1 million and a gain on sale of investment in unconsolidated related party subsidiary of $4.1 million was recorded in income from investment in unconsolidated subsidiary within the Company’s unaudited condensed consolidated and combined statements of income. |
RESTRUCTURING AND OTHER CHARGES
RESTRUCTURING AND OTHER CHARGES | 9 Months Ended |
Sep. 30, 2022 | |
RESTRUCTURING AND OTHER CHARGES | |
RESTRUCTURING AND OTHER CHARGES | 9. RESTRUCTURING AND OTHER CHARGES In the second quarter of 2022, executive management initiated a plan to simplify the organization, reduce its cost structure, and optimize its supply chain. The Company expects this plan will be implemented throughout fiscal year 2022. For the three and nine months ended September 30, 2022, the Company incurred restructuring and other charges related to reductions in force and asset impairments associated with certain leased office space as the Company reduces its real estate footprint, and other exit costs primarily related to third-party professional services. These charges were recorded to cost of operations in the Company’s unaudited condensed consolidated and combined statements of operations. The following tables summarize the restructuring and other charges incurred by reportable segment for the three and nine months ended September 30, 2022: Termination Asset Other Three Months Ended September 30, 2022 Benefits Impairments Exit Costs Total (in thousands) AIR MILES Reward Program $ 2,934 $ 432 $ 108 $ 3,474 BrandLoyalty 1,881 — — 1,881 Total $ 4,815 $ 432 $ 108 $ 5,355 Termination Asset Other Nine Months Ended September 30, 2022 Benefits Impairments Exit Costs Total (in thousands) AIR MILES Reward Program $ 5,291 $ 969 $ 1,480 $ 7,740 BrandLoyalty 1,881 — — 1,881 Total $ 7,172 $ 969 $ 1,480 $ 9,621 There were no restructuring and other charges incurred for the three and nine months ended September 30, 2021. The Company’s liability for restructuring and other charges is recognized in accrued expenses in its consolidated balance sheets. The following table summarizes the activities related to the restructuring and other charges, as discussed above, for the periods presented: Termination Asset Other Benefits Impairments Exit Costs Total (in thousands) Liability as of January 1, 2022 $ — $ — $ — $ — Charged to expense 7,172 969 1,480 9,621 Adjustments for non-cash charges — (969) — (969) Cash payments (1,471) — (1,465) (2,936) Effects of foreign currency translation (165) — (15) (180) Liability as of September 30, 2022 $ 5,536 $ — $ — $ 5,536 The Company’s outstanding liability related to restructuring and other charges is expected to be settled in the next twelve months. Management is continuing to undergo an evaluation of its BrandLoyalty segment with additional restructuring and other charges expected to be incurred in the fourth quarter of 2022. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
DEBT | 10. DEBT Debt consists of the following: September 30, December 31, Description 2022 2021 Maturity (in thousands) Revolving credit facility (1) $ — $ — November 2026 Term loan A 165,156 175,000 November 2026 Term loan B 471,875 500,000 November 2027 Total long-term debt $ 637,031 $ 675,000 Less: unamortized debt issuance costs 18,686 20,887 Less: current portion 50,625 50,625 Long-term portion $ 567,720 $ 603,488 (1) As of September 30, 2022, availability under the revolving credit facility was $138.2 million as a result of $11.8 million in letters of credit outstanding under the Credit Agreement. As of December 31, 2021, availability under the revolving credit facility was $137.5 million as a result of $12.5 million in letters of credit outstanding under the Credit Agreement. Credit Agreement The Company has a Credit Agreement which provides for a $175.0 million term loan A facility, a $500.0 million term loan B facility, and a revolving credit facility in the maximum amount of $150.0 million. The term loan A and revolving credit facility mature November 3, 2026. The term loan B matures November 3, 2027. In July 2022, the Company entered into an amendment to its Credit Agreement, which, among other things, provides for adjustments to the financial maintenance covenant applicable to the term loan A and revolving credit facility as follows: Four Fiscal Quarters Ending Maximum Consolidated Total Leverage Ratio December 31, 2021 through June 30, 2022 5.00:1.00 September 30, 2022 through September 30, 2023 5.75:1.00 December 31, 2023 5.50:1.00 March 31, 2024 through September 30, 2024 5.25:1.00 December 31, 2024 through March 31, 2025 5.00:1.00 June 30, 2025 and each fiscal quarter thereafter 4.75:1.00 In addition, the amendment reduces the amount of revolving commitments by $2.8 million per quarter beginning September 30, 2022, for each quarter in which the total leverage ratio as defined in the Credit Agreement is in excess of 4.75 to 1. The total leverage ratio was 4.5 to 1 as of September 30, 2022. For the nine months ended September 30, 2022, the Company made its quarterly principal amortization payments totaling $38.0 million applicable to the term loan A and term loan B. As of September 30, 2022, the Company was in compliance with its financial covenants. Uncommitted Overdraft Facility The Company was party to an uncommitted overdraft facility with Deutsche Bank AG that provided overdraft protection in several currencies, up to a maximum amount of €10.0 million ($9.8 million as of September 30, 2022). Interest is calculated on debit balances at a rate of 3.5% per annum plus a relevant benchmark, due and payable at the end of each quarter. There were no amounts outstanding under the uncommitted overdraft facility as of September 30, 2022 and December 31, 2021, respectively. In October 2022, the uncommitted overdraft facility was terminated. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS. | 11. DERIVATIVE INSTRUMENTS The Company uses derivatives to manage risks associated with certain assets and liabilities arising from the potential adverse impact of fluctuations in foreign currency exchange rates. Certain derivatives used to manage the Company’s exposure to foreign currency exchange rate movements are not designated as hedges and do not qualify for hedge accounting. The Company generally hedges foreign currency exchange rate risks for periods of 12 months or less. The fair value of the Company’s derivative instruments as of September 30, 2022 was $4.6 million included in other current assets and $1.3 million included in other current liabilities in the Company’s unaudited condensed consolidated balance sheets. The fair value of the Company’s derivative instruments as of December 31, 2021 was $2.5 million included in other current assets and $0.5 million included in other current liabilities in the Company’s unaudited condensed consolidated balance sheets. |
SHARE-BASED PAYMENTS
SHARE-BASED PAYMENTS | 9 Months Ended |
Sep. 30, 2022 | |
SHARE-BASED PAYMENTS | |
SHARE-BASED PAYMENTS | 12. SHARE-BASED PAYMENTS Stock Compensation Expense During the nine months ended September 30, 2022, the Company awarded 814,545 service-based restricted stock units with a weighted average grant date fair value per share of $17.62 as determined on the date of grant. Service-based restricted stock unit awards typically vest ratably over a three-year period provided that the participant is employed by the Company on each such vesting date. The Company also awarded 88,033 performance-based restricted stock units with a weighted average grant date fair value per share of $24.19 as determined on the date of grant with pre-defined vesting criteria that permit a range from 0% to 150% to be earned. If the performance targets are met, the restrictions will lapse with respect to 33% of the award on February 15, 2023, an additional 33% of the award on February 15, 2024 and the final 34% of the award on February 15, 2025, provided that the participant is employed by the Company on each such vesting date. As of September 30, 2022, the Company believes the probable achievement is 0% and thus did not recognize stock compensation expense for these awards for the three and nine months ended September 30, 2022. Stock-based compensation expense recognized in the Company’s unaudited condensed consolidated and combined statements of operations for the three and nine months ended September 30, 2022 and 2021 is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) Cost of operations $ 724 $ 1,725 $ 3,054 $ 5,009 General and administrative 615 418 2,194 1,313 Total $ 1,339 $ 2,143 $ 5,248 $ 6,322 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in each component of accumulated other comprehensive income (loss), net of tax effects, are as follows: Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Three Months Ended September 30, 2022 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at July 1, 2022 $ (29,091) $ 1,506 $ (114,479) $ (142,064) Changes in other comprehensive income (loss) (1,505) (989) (21,417) (23,911) Balance at September 30, 2022 $ (30,596) $ 517 $ (135,896) $ (165,975) Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Three Months Ended September 30, 2021 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at July 1, 2021 $ 10,484 $ 72 $ (36,127) $ (25,571) Changes in other comprehensive income (loss) (2,769) 908 (21,064) (22,925) Balance at September 30, 2021 $ 7,715 $ 980 $ (57,191) $ (48,496) Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Nine Months Ended September 30, 2022 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at January 1, 2022 $ 2,141 $ 1,270 $ (68,485) $ (65,074) Changes in other comprehensive income (loss) (32,737) (753) (67,411) (100,901) Balance at September 30, 2022 $ (30,596) $ 517 $ (135,896) $ (165,975) Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Nine Months Ended September 30, 2021 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at January 1, 2021 $ 18,267 $ (700) $ (17,186) $ 381 Changes in other comprehensive income (loss) (10,552) 1,680 (40,005) (48,877) Balance at September 30, 2021 $ 7,715 $ 980 $ (57,191) $ (48,496) (1) Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates. Gains on cash flow hedges that were recorded to accumulated other comprehensive income (loss) during the term of the hedging relationship and reclassified into net income (loss) were $2.4 million and $1.8 million in the three and nine months ended September 30, 2022, respectively, and de minimis in the three and nine months ended September 30, 2021, respectively. Other reclassifications from accumulated other comprehensive income (loss) into net income (loss) for each of the periods presented were not material. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | 14. INCOME TAXES For the three months ended September 30, 2022 and 2021, the Company utilized an effective tax rate of 103.0% and 40.8%, respectively, to calculate its provision for income taxes. For the nine months ended September 30, 2022 and 2021, the Company utilized an effective tax rate of (6.6)% and 35.5%, respectively, to calculate its provision for income taxes. The change in the effective tax rate for the three months ended September 30, 2022 compared to the prior year period was primarily a result of increased U.S. corporate expenses for which a tax benefit cannot be currently realized. The change in the effective tax rate for the nine months ended September 30, 2022 compared to the prior year period was primarily a result of non-deductibility of the write-off of goodwill, increased U.S. corporate expenses, and the write-down of certain deferred tax assets. On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022 (the “IRA”). The IRA contains a number of tax provisions, including, but not limited to, a new corporate alternative minimum tax, an excise tax on stock buybacks, and incentives for energy and climate initiatives. These provisions are effective for taxable years beginning after December 31, 2022. Currently, the Company does not qualify for the corporate alternative minimum tax. |
FINANCIAL INSTRUMENTS AND FAIR
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2022 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | 15. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS In accordance with ASC 825, “Financial Instruments,” the Company is required to disclose the fair value of financial instruments for which it is practical to estimate fair value. To obtain fair values, observable market prices are used if available. In some instances, observable market prices are not readily available and fair value is determined using present value or other techniques appropriate for a particular financial instrument. These techniques involve judgment and as a result are not necessarily indicative of the amounts the Company would realize in a current market exchange. The use of different assumptions or estimation techniques may have a material effect on the estimated fair value amounts. Fair Value of Financial Instruments September 30, 2022 December 31, 2021 Carrying Fair Carrying Fair Amount Value Amount Value (in thousands) Financial assets Redemption settlement assets, restricted $ 609,711 $ 609,711 $ 735,131 $ 735,131 Other investments 353 353 471 471 Derivative instruments 4,639 4,639 2,465 2,465 Financial liabilities Derivative instruments 1,287 1,287 487 487 Long-term debt 618,345 359,993 654,113 654,113 The following techniques and assumptions were used by the Company in estimating fair values of financial instruments as disclosed herein: Redemption settlement assets, restricted — Other investments Derivative instruments derivative. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs. Long-term debt Financial Assets and Financial Liabilities Fair Value Hierarchy ASC 820, “Fair Value Measurement,” establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: ● Level 1, defined as observable inputs such as quoted prices in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and ● Level 3, defined as unobservable inputs where little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial instruments are considered Level 3 when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. The use of different techniques to determine fair value of these financial instruments could result in different estimates of fair value at the reporting date. The following tables provide information for the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2022 and December 31, 2021: Balance at Fair Value Measurements at September 30, September 30, 2022 Using 2022 Level 1 Level 2 Level 3 (in thousands) Mutual funds (1) $ 20,696 $ 20,696 $ — $ — Corporate bonds (1) 548,145 — 548,145 — Marketable securities (2) 353 353 — — Derivative instruments (3) 4,639 — 4,639 — Total assets measured at fair value $ 573,833 $ 21,049 $ 552,784 $ — Derivative instruments (3) $ 1,287 $ — $ 1,287 $ — Total liabilities measured at fair value $ 1,287 $ — $ 1,287 $ — Balance at Fair Value Measurements at December 31, December 31, 2021 Using 2021 Level 1 Level 2 Level 3 (in thousands) Mutual funds (1) $ 25,990 $ 25,990 $ — $ — Corporate bonds (1) 650,389 — 650,389 — Marketable securities (2) 471 471 — — Derivative instruments (3) 2,465 — 2,465 — Total assets measured at fair value $ 679,315 $ 26,461 $ 652,854 $ — Derivative instruments (3) $ 487 $ — $ 487 $ — Total liabilities measured at fair value $ 487 $ — $ 487 $ — (1) Amounts are included in redemption settlement assets, restricted in the unaudited condensed consolidated balance sheets. (2) Amounts are included in other current assets in the unaudited condensed consolidated balance sheets. (3) Amounts are included in other current assets and other current liabilities in the unaudited condensed consolidated balance sheets . Financial Instruments Disclosed but Not Carried at Fair Value The following table provides assets and liabilities disclosed but not carried at fair value as of September 30, 2022 and December 31, 2021: Balance at Fair Value Measurements at September 30, September 30, 2022 Using 2022 Level 1 Level 2 Level 3 (in thousands) Long-term debt $ 359,993 $ — $ 359,993 $ — Total liabilities measured at fair value $ 359,993 $ — $ 359,993 $ — Balance at Fair Value Measurements at December 31, December 31, 2021 Using 2021 Level 1 Level 2 Level 3 (in thousands) Long-term debt $ 654,113 $ — $ 654,113 $ — Total liabilities measured at fair value $ 654,113 $ — $ 654,113 $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets and liabilities are recognized or disclosed at fair value on a nonrecurring basis, including property and equipment, right-of-use assets and goodwill. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, including when there is evidence of impairment. For the three and nine months ended September 30, 2022, as part of restructuring and other charges, the Company recorded asset impairment charges of $0.4 million and $1.0 million, respectively, related to certain fixed assets and right-of-use assets as a result of subleases associated with certain leased office space. The fair value was determined utilizing discounted cash flow models over the estimated life of each asset. The principal assumptions used in the Company’s impairment analysis were forecasted future cash flows and a discount rate, which is considered Level 3 inputs. See Note 6, “Leases,” and Note 9, “Restructuring and Other Charges,” for more information. For the nine months ended September 30, 2022, the Company recognized a goodwill impairment charge of $422.9 million in the BrandLoyalty segment. To determine the fair value of the reporting unit, the Company used both income- and market-based valuation techniques to determine the fair value of the reporting unit, as opposed to just an income approach, as it provided a better representation of fair value of the reporting unit. The income-based approach utilizes a discounted cash flow analysis based on management's estimates of forecasted cash flows, with those cash flows discounted to present value using rates commensurate with the risks associated with those cash flows. The valuation includes assumptions related to revenue growth and profit performance, capital expenditures, and the discount rate which are unobservable inputs. The market-based approach involves an analysis of market multiples of revenues and earnings to a group of comparable public companies and recent transactions, if any, involving comparable companies, with the unobservable input being the forecasted earnings of BrandLoyalty. The assumptions utilized in our quantitative analysis are unobservable inputs classified as Level 3 under the fair value hierarchy of ASC 820, “Fair Value Measurement.” See Note 7, “Intangible Assets and Goodwill,” for more information. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2022 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 16. SEGMENT INFORMATION Operating segments are defined by ASC 280, “Segment Reporting,” as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The operating segments are reviewed separately because each operating segment represents a strategic business unit that generally offers different products and services. ● The AIR MILES Reward Program is a full-service outsourced coalition loyalty program for its sponsors, who pay the AIR MILES Reward Program a fee per AIR MILES reward mile issued, in return for which it provides all marketing, customer service, rewards and redemption management. ● BrandLoyalty designs, implements, conducts and evaluates innovative and tailor-made loyalty programs for grocers and other high-frequency retailers worldwide. These loyalty programs are designed to generate immediate changes in consumer behavior and are offered through leading grocers across Europe and Asia, as well as around the world. ● Corporate and other consists of corporate overhead not allocated to either of the Company’s segments. Income taxes and equity in earnings (losses) from related party investments accounted for under the equity method are not included in the computation of segment operating profit for internal evaluation purposes. AIR MILES Corporate/ Three Months Ended September 30, 2022 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 67,387 $ 95,024 $ — $ (42) $ 162,369 Income (loss) before income taxes $ 25,926 $ (4,622) $ (17,125) $ — $ 4,179 Interest (income) expense, net (449) (45) 12,021 — 11,527 Depreciation and amortization 5,586 2,067 15 — 7,668 Stock compensation expense 195 529 615 — 1,339 Strategic transaction costs 2 292 2,721 — 3,015 Restructuring and other charges 3,474 1,881 — — 5,355 Adjusted EBITDA (1) $ 34,734 $ 102 $ (1,753) $ — $ 33,083 AIR MILES Corporate/ Three Months Ended September 30, 2021 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 71,928 $ 97,329 $ — $ — $ 169,257 Income (loss) before income taxes $ 33,889 $ 6,524 $ (4,018) $ — $ 36,395 Interest (income) expense, net (206) 70 — — (136) Depreciation and amortization 6,018 3,080 — — 9,098 Stock compensation expense 777 948 418 — 2,143 Adjusted EBITDA (1) $ 40,478 $ 10,622 $ (3,600) $ — $ 47,500 AIR MILES Corporate/ Nine Months Ended September 30, 2022 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 199,649 $ 289,597 $ — $ (129) $ 489,117 Income (loss) before income taxes $ 68,274 $ (435,052) $ (46,763) $ — $ (413,541) Interest (income) expense, net (833) (27) 30,833 — 29,973 Depreciation and amortization 19,066 6,877 23 — 25,966 Stock compensation expense 1,168 1,886 2,194 — 5,248 Goodwill impairment — 422,922 — — 422,922 Strategic transaction costs 300 1,401 3,339 — 5,040 Restructuring and other charges 7,740 1,881 — — 9,621 Adjusted EBITDA (1) $ 95,715 $ (112) $ (10,374) $ — $ 85,229 AIR MILES Corporate/ Nine Months Ended September 30, 2021 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 214,123 $ 282,593 $ — $ — $ 496,716 Income (loss) before income taxes $ 94,214 $ 2,447 $ (11,608) $ — $ 85,053 Interest (income) expense, net (582) 264 — — (318) Depreciation and amortization 17,927 9,626 — — 27,553 Stock compensation expense 2,126 2,883 1,313 — 6,322 Adjusted EBITDA (1) $ 113,685 $ 15,220 $ (10,295) $ — $ 118,610 (1) Adjusted EBITDA is presented in accordance with ASC 280 as it is the primary performance metric utilized to assess performance of the segments and to determine the allocation of resources. Adjusted EBITDA is a non-GAAP financial measure equal to net (loss) income, the most directly comparable financial measure based on GAAP, plus income from investment in unconsolidated subsidiary – related party, provision for income taxes, interest expense (income), net, depreciation and other amortization, amortization of purchased intangibles, and stock compensation expense. Adjusted EBITDA also excludes goodwill impairment, strategic transaction costs, and restructuring and other charges. Strategic transaction costs represent costs associated with the Separation, which were comprised of amounts associated with the Employee Matters Agreement and Tax Matters Agreement. Strategic transaction costs also include advisory services associated with modifying the Credit Agreement and the Company’s capital structure. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 9 Months Ended |
Sep. 30, 2022 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
SUPPLEMENTAL CASH FLOW INFORMATION | 17. SUPPLEMENTAL CASH FLOW INFORMATION The following table provides a reconciliation of cash and cash equivalents to the total of the amounts reported in the unaudited condensed consolidated and combined statements of cash flows: September 30, September 30, 2022 2021 (in thousands) Cash and cash equivalents $ 73,307 $ 198,865 Restricted cash included within other current assets (1) 9,132 5,312 Restricted cash included within redemption settlement assets, restricted (2) 40,870 58,196 Total cash, cash equivalents and restricted cash $ 123,309 $ 262,373 (1) Includes cash restricted for travel deposits within the AIR MILES Reward Program. (2) See Note 5, “Redemption Settlement Assets, Restricted,” for additional information regarding the nature of restrictions on redemption settlement assets. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS Prior to the Separation, transactions between the Company and its former Parent were considered to be effectively settled at the time the transaction was recorded. The net effect of the settlement of these intercompany transactions is reflected in the unaudited condensed combined statement of cash flow as a financing activity as net transfers to the former Parent for the nine months ended September 30, 2021. In January 2021, the Company paid cash dividends to the former Parent of $124.2 million, of which $4.2 million was withheld for taxes. The former Parent allocated $4.0 million and $11.6 million for the three and nine months ended September 30, 2021, respectively, of corporate overhead costs that directly or indirectly benefit the Company that is included in general and administrative expense within the Company’s unaudited condensed combined statements of operations. These assessments relate to information technology, finance, accounting, and tax services provided, as well as human resources, and other functional support. These allocations were determined based on management estimates on the number of employees and non-employee costs associated with the use of these functions by the Company and may not be indicative of the costs that the Company would otherwise incur on a standalone basis. In addition, the Company had an investment in unconsolidated subsidiary that was a consolidated subsidiary of the former Parent, which was sold to a subsidiary of the former Parent in August 2021. See Note 8, “Investment in Unconsolidated Subsidiary - Related Party,” for additional information. As part of the Separation, the Company entered into certain agreements with its former Parent, including a Transition Services Agreement, Employee Matters Agreement, and Tax Matters Agreement. For the three and nine months ended September 30, 2022, the Company incurred $0.6 million and $1.8 million, respectively, of expenses in connection with the Transition Services Agreement for various corporate, administrative and information technology services provided by its former Parent, which have been included in general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. Pursuant to the terms of the Employee Matters Agreement, the Company received a net cash payment of $1.6 million as final settlement of the estimated prorated bonus amounts established at the time of the Separation. Additionally, the Company has certain assets and liabilities associated with the Tax Matters Agreement. The Company has $20.3 million and $20.1 million of accounts receivable as of September 30, 2022 and December 31, 2021, respectively, accrued expenses of $75.8 million and $80.0 million as of September 30, 2022 and December 31, 2021, respectively, and $1.0 million of other liabilities as of September 30, 2022 and December 31, 2021 included in the Company’s consolidated balance sheets. |
DESCRIPTION OF BUSINESS AND B_2
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION. | |
Description of the Business | Description of the Business On November 5, 2021, Bread Financial Holdings, Inc., previously named Alliance Data Systems Corporation (“former Parent”), completed the spinoff of its LoyaltyOne reportable segment (the “Separation”) into an independent, publicly traded company, Loyalty Ventures Inc. (the “Company” or “Loyalty Ventures”). Loyalty Ventures provides coalition and campaign-based loyalty solutions through the Canadian AIR MILES ® |
Basis of Presentation | Basis of Presentation Prior to the Separation, the Company had operated as part of the former Parent and not as a standalone company. The unaudited condensed combined financial statements for the three and nine months ended September 30, 2021 have been derived from the former Parent’s historical accounting records and are presented on a “carve-out” basis. The unaudited condensed combined financial statements for the three and nine months ended September 30, 2021 also include allocations of certain general and administrative expenses from the former Parent that directly or indirectly benefited Loyalty Ventures. However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the unaudited condensed combined financial statements had the Company operated independently. The former Parent’s third-party long-term debt and the related interest expense was not allocated for the three and nine months ended September 30, 2021 as the Company was not the legal obligor of such debt. The former Parent’s net investment represents its interest in the recorded net assets of the Company. All significant transactions between the Company and its former Parent have been included in the accompanying unaudited condensed combined financial statements. Transactions with the former Parent as contributions to the carve-out entity or distributions from the carve-out entity are reflected in the accompanying unaudited condensed consolidated and combined statements of equity (deficiency) as “Change in former Parent’s net investment.” The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022 were based on the reported results of Loyalty Ventures as a standalone company and prepared on a consolidated basis. All significant intercompany accounts and transactions between the businesses comprising the Company have been eliminated in the accompanying unaudited condensed consolidated and combined financial statements. The Company’s unaudited condensed consolidated and combined financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s unaudited condensed consolidated and combined financial statements and accompanying notes are presented in U.S. Dollars (“USD”), the Company’s reporting currency. The unaudited condensed consolidated and combined financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2022. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Facilitation of the Effects of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 can be applied anytime between the first quarter of fiscal 2020 and the fourth quarter of fiscal 2022. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The Company’s primary association with LIBOR is through interest rates applicable under its senior secured credit agreement (the “Credit Agreement”) that provides for the use of the Secured Overnight Financing Rate (SOFR) if LIBOR is no longer available. Accordingly, the impact of ASU 2020-04 on the Company’s consolidated financial statements and related disclosures is not expected to be material. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification (“ASC”) 606. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company expects to adopt ASU 2021-08 in the first quarter of 2023 on a prospective basis. While the impact of these amendments is dependent on the nature of any future transactions, the Company does not expect ASU 2021-08 to have a significant impact on its consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU 2022-04, “Liabilities — |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE | |
Schedule of revenue disaggregation | AIR MILES Three Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 63,971 $ — $ — $ 63,971 Campaign-based loyalty programs — 93,413 — 93,413 Other 45 1,611 (42) 1,614 Revenue from contracts with customers $ 64,016 $ 95,024 $ (42) $ 158,998 Investment income 3,371 — — 3,371 Total $ 67,387 $ 95,024 $ (42) $ 162,369 AIR MILES Three Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 68,580 $ — $ — $ 68,580 Campaign-based loyalty programs — 95,799 — 95,799 Other 10 1,530 — 1,540 Revenue from contracts with customers $ 68,590 $ 97,329 $ — $ 165,919 Investment income 3,338 — — 3,338 Total $ 71,928 $ 97,329 $ — $ 169,257 AIR MILES Nine Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 189,533 $ — $ — $ 189,533 Campaign-based loyalty programs — 284,943 — 284,943 Other 125 4,654 (129) 4,650 Revenue from contracts with customers $ 189,658 $ 289,597 $ (129) $ 479,126 Investment income 9,991 — — 9,991 Total $ 199,649 $ 289,597 $ (129) $ 489,117 AIR MILES Nine Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Major Source: Coalition loyalty program $ 203,870 $ — $ — $ 203,870 Campaign-based loyalty programs — 278,726 — 278,726 Other 12 3,867 — 3,879 Revenue from contracts with customers $ 203,882 $ 282,593 $ — $ 486,475 Investment income 10,241 — — 10,241 Total $ 214,123 $ 282,593 $ — $ 496,716 AIR MILES Three Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ — $ — $ — Canada 67,387 4,742 (42) 72,087 Europe, Middle East and Africa — 77,465 — 77,465 Asia Pacific — 7,061 — 7,061 Other — 5,756 — 5,756 Total $ 67,387 $ 95,024 $ (42) $ 162,369 AIR MILES Three Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ 95 $ — $ 95 Canada 71,928 3,894 — 75,822 Europe, Middle East and Africa — 68,168 — 68,168 Asia Pacific — 22,967 — 22,967 Other — 2,205 — 2,205 Total $ 71,928 $ 97,329 $ — $ 169,257 AIR MILES Nine Months Ended September 30, 2022 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ — $ — $ — Canada 199,649 12,426 (129) 211,946 Europe, Middle East and Africa — 220,658 — 220,658 Asia Pacific — 45,367 — 45,367 Other — 11,146 — 11,146 Total $ 199,649 $ 289,597 $ (129) $ 489,117 AIR MILES Nine Months Ended September 30, 2021 Reward Program BrandLoyalty Eliminations Total (in thousands) Disaggregation of Revenue by Geographic Region: United States $ — $ 2,637 $ — $ 2,637 Canada 214,123 15,163 — 229,286 Europe, Middle East and Africa — 200,022 — 200,022 Asia Pacific — 57,690 — 57,690 Other — 7,081 — 7,081 Total $ 214,123 $ 282,593 $ — $ 496,716 |
Schedule of reconciliation of contract liabilities | Deferred Revenue Service Redemption Total (in thousands) Balance at January 1, 2022 $ 230,492 $ 791,464 $ 1,021,956 Cash proceeds 131,316 202,961 334,277 Revenue recognized (1) (138,858) (254,938) (393,796) Other — 423 423 Effects of foreign currency translation (19,321) (64,538) (83,859) Balance at September 30, 2022 $ 203,629 $ 675,372 $ 879,001 Amounts recognized in the consolidated balance sheets: Deferred revenue (current) $ 115,836 $ 675,372 $ 791,208 Deferred revenue (non-current) $ 87,793 $ — $ 87,793 (1) Reported on a gross basis herein. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earning per share of common stock | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands, except per share amounts) Numerator: Net (loss) income $ (125) $ 23,961 $ (441,007) $ 57,504 Denominator: Weighted average shares, basic 24,612 24,585 24,607 24,585 Weighted average effect of dilutive securities: Net effect of dilutive unvested restricted stock (1) — — — — Denominator for diluted calculation 24,612 24,585 24,607 24,585 Basic net (loss) income per share: $ (0.01) $ 0.97 $ (17.92) $ 2.34 Diluted net (loss) income per share: $ (0.01) $ 0.97 $ (17.92) $ 2.34 (1) The dilutive calculation excludes 0.9 million and 0.6 million restricted stock units for the three and nine months ended September 30, 2022, respectively, as they were anti-dilutive for the respective periods. For the three and nine months ended September 30, 2021, there are no dilutive equity instruments as there were no equity awards of Loyalty Ventures outstanding prior to the Separation. |
REDEMPTION SETTLEMENT ASSETS,_2
REDEMPTION SETTLEMENT ASSETS, RESTRICTED (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
REDEMPTION SETTLEMENT ASSETS, RESTRICTED. | |
Schedule of redemption settlement assets | September 30, December 31, 2022 2021 Fair Value Fair Value (in thousands) Restricted cash $ 40,870 $ 58,752 Mutual funds 20,696 25,990 Corporate bonds 548,145 650,389 Total $ 609,711 $ 735,131 |
Schedule of amortized cost, unrealized gains and losses, and fair value of securities available-for-sale | September 30, 2022 December 31, 2021 Amortized Unrealized Unrealized Amortized Unrealized Unrealized Cost Gains Losses Fair Value Cost Gains Losses Fair Value (in thousands) Corporate bonds $ 578,741 $ — $ (30,596) $ 548,145 $ 648,248 $ 6,389 $ (4,248) $ 650,389 Total $ 578,741 $ — $ (30,596) $ 548,145 $ 648,248 $ 6,389 $ (4,248) $ 650,389 |
Schedule of unrealized loss position and fair value of debt securities available for sale | September 30, 2022 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in thousands) Corporate bonds $ 369,156 $ (13,710) $ 178,989 $ (16,886) $ 548,145 $ (30,596) Total $ 369,156 $ (13,710) $ 178,989 $ (16,886) $ 548,145 $ (30,596) December 31, 2021 Less than 12 months 12 Months or Greater Total Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses (in thousands) Corporate bonds $ 104,052 $ (1,341) $ 123,382 $ (2,907) $ 227,434 $ (4,248) Total $ 104,052 $ (1,341) $ 123,382 $ (2,907) $ 227,434 $ (4,248) |
Schedule of contractual maturity of debt securities available for sale | Amortized Estimated Cost Fair Value (in thousands) Due in one year or less $ 122,736 $ 121,720 Due after one year through five years 456,005 426,425 Total $ 578,741 $ 548,145 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
Schedule of components of lease expense | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) Operating lease cost $ 3,450 $ 3,923 $ 10,814 $ 11,929 Short-term lease cost 99 84 243 255 Variable lease cost 1,070 922 2,859 3,134 Total $ 4,619 $ 4,929 $ 13,916 $ 15,318 |
Schedule of weighted average remaining lease term and discount rate | September 30, September 30, 2022 2021 Weighted-average remaining lease term (in years): Operating leases 10.0 10.9 Weighted-average discount rate: Operating leases 4.7 % 4.7 % |
Schedule of supplemental cashflow information | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,294 $ 4,062 $ 12,068 $ 13,871 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 1,434 $ 16 $ 4,171 $ 200 |
Schedule of maturities of the lease liabilities | Operating Year Leases (in thousands) 2022 (excluding the nine months ended September 30, 2022) $ 2,168 2023 13,560 2024 12,674 2025 12,081 2026 11,538 Thereafter 70,411 Total undiscounted lease liabilities 122,432 Less: Amount representing interest (25,956) Total present value of minimum lease payments $ 96,476 Amounts recognized in the September 30, 2022 consolidated balance sheet: Current operating lease liabilities $ 8,086 Long-term operating lease liabilities 88,390 Total $ 96,476 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INTANGIBLE ASSETS AND GOODWILL | |
Schedule of Intangible assets | September 30, 2022 Gross Accumulated Assets Amortization Net Amortization Life and Method (in thousands) Tradenames $ 8,233 $ (6,320) $ 1,913 8‑15 years—straight line Total intangible assets $ 8,233 $ (6,320) $ 1,913 December 31, 2021 Gross Accumulated Assets Amortization Net Amortization Life and Method (in thousands) Tradenames $ 32,289 $ (29,194) $ 3,095 8‑15 years—straight line Collector database 55,397 (55,397) — 5 years—straight line Total intangible assets $ 87,686 $ (84,591) $ 3,095 |
Schedule of estimated amortization expense related to intangible assets | For the Years Ending December 31, (in thousands) 2022 (excluding the nine months ended September 30, 2022) $ 252 2023 1,006 2024 516 2025 26 2026 26 Thereafter 87 |
Schedule of changes in the carrying amount of goodwill | AIR MILES Reward Program BrandLoyalty (1) Total (in thousands) Balance at January 1, 2022 $ 194,767 $ 455,191 $ 649,958 Impairment — (422,922) (422,922) Effects of foreign currency translation (16,789) (32,269) (49,058) Balance at September 30, 2022 $ 177,978 $ — $ 177,978 (1) The amount of goodwill as of January 1, 2022 is net of an accumulated goodwill impairment charge of $50.0 million within the BrandLoyalty segment incurred as of December 31, 2021. As of June 30, 2022, the Company recorded a goodwill impairment charge of $422.9 million within the BrandLoyalty segment. The goodwill as of September 30, 2022 is net of accumulated goodwill impairment charges of $472.9 million within the BrandLoyalty segment. |
RESTRUCTURING AND OTHER CHARG_2
RESTRUCTURING AND OTHER CHARGES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
RESTRUCTURING AND OTHER CHARGES | |
Summary of restructuring and other charges incurred by reportable segment | Termination Asset Other Three Months Ended September 30, 2022 Benefits Impairments Exit Costs Total (in thousands) AIR MILES Reward Program $ 2,934 $ 432 $ 108 $ 3,474 BrandLoyalty 1,881 — — 1,881 Total $ 4,815 $ 432 $ 108 $ 5,355 Termination Asset Other Nine Months Ended September 30, 2022 Benefits Impairments Exit Costs Total (in thousands) AIR MILES Reward Program $ 5,291 $ 969 $ 1,480 $ 7,740 BrandLoyalty 1,881 — — 1,881 Total $ 7,172 $ 969 $ 1,480 $ 9,621 |
Summary of restructuring and other charges recognized in accrued expenses | Termination Asset Other Benefits Impairments Exit Costs Total (in thousands) Liability as of January 1, 2022 $ — $ — $ — $ — Charged to expense 7,172 969 1,480 9,621 Adjustments for non-cash charges — (969) — (969) Cash payments (1,471) — (1,465) (2,936) Effects of foreign currency translation (165) — (15) (180) Liability as of September 30, 2022 $ 5,536 $ — $ — $ 5,536 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
Schedule of debt | September 30, December 31, Description 2022 2021 Maturity (in thousands) Revolving credit facility (1) $ — $ — November 2026 Term loan A 165,156 175,000 November 2026 Term loan B 471,875 500,000 November 2027 Total long-term debt $ 637,031 $ 675,000 Less: unamortized debt issuance costs 18,686 20,887 Less: current portion 50,625 50,625 Long-term portion $ 567,720 $ 603,488 (1) As of September 30, 2022, availability under the revolving credit facility was $138.2 million as a result of $11.8 million in letters of credit outstanding under the Credit Agreement. As of December 31, 2021, availability under the revolving credit facility was $137.5 million as a result of $12.5 million in letters of credit outstanding under the Credit Agreement. |
Schedule of leverage ratio | Four Fiscal Quarters Ending Maximum Consolidated Total Leverage Ratio December 31, 2021 through June 30, 2022 5.00:1.00 September 30, 2022 through September 30, 2023 5.75:1.00 December 31, 2023 5.50:1.00 March 31, 2024 through September 30, 2024 5.25:1.00 December 31, 2024 through March 31, 2025 5.00:1.00 June 30, 2025 and each fiscal quarter thereafter 4.75:1.00 |
SHARE-BASED PAYMENTS (Tables)
SHARE-BASED PAYMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SHARE-BASED PAYMENTS | |
Schedule of stock-based compensation expense recognized in statements of income | Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (in thousands) Cost of operations $ 724 $ 1,725 $ 3,054 $ 5,009 General and administrative 615 418 2,194 1,313 Total $ 1,339 $ 2,143 $ 5,248 $ 6,322 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Schedule of changes in components of accumulated other comprehensive income (loss) | Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Three Months Ended September 30, 2022 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at July 1, 2022 $ (29,091) $ 1,506 $ (114,479) $ (142,064) Changes in other comprehensive income (loss) (1,505) (989) (21,417) (23,911) Balance at September 30, 2022 $ (30,596) $ 517 $ (135,896) $ (165,975) Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Three Months Ended September 30, 2021 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at July 1, 2021 $ 10,484 $ 72 $ (36,127) $ (25,571) Changes in other comprehensive income (loss) (2,769) 908 (21,064) (22,925) Balance at September 30, 2021 $ 7,715 $ 980 $ (57,191) $ (48,496) Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Nine Months Ended September 30, 2022 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at January 1, 2022 $ 2,141 $ 1,270 $ (68,485) $ (65,074) Changes in other comprehensive income (loss) (32,737) (753) (67,411) (100,901) Balance at September 30, 2022 $ (30,596) $ 517 $ (135,896) $ (165,975) Net Net Unrealized Foreign Accumulated Unrealized Gains (Losses) Currency Other Gains (Losses) on Cash Translation Comprehensive Nine Months Ended September 30, 2021 on Securities Flow Hedges Adjustments (1) Loss (in thousands) Balance at January 1, 2021 $ 18,267 $ (700) $ (17,186) $ 381 Changes in other comprehensive income (loss) (10,552) 1,680 (40,005) (48,877) Balance at September 30, 2021 $ 7,715 $ 980 $ (57,191) $ (48,496) (1) Primarily related to the impact of changes in the Canadian dollar and Euro foreign currency exchange rates. |
FINANCIAL INSTRUMENTS AND FAI_2
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS | |
Schedule of estimated fair value of Company's financial instruments | September 30, 2022 December 31, 2021 Carrying Fair Carrying Fair Amount Value Amount Value (in thousands) Financial assets Redemption settlement assets, restricted $ 609,711 $ 609,711 $ 735,131 $ 735,131 Other investments 353 353 471 471 Derivative instruments 4,639 4,639 2,465 2,465 Financial liabilities Derivative instruments 1,287 1,287 487 487 Long-term debt 618,345 359,993 654,113 654,113 |
Schedule of assets and liabilities carried at fair value measured on recurring basis | Balance at Fair Value Measurements at September 30, September 30, 2022 Using 2022 Level 1 Level 2 Level 3 (in thousands) Mutual funds (1) $ 20,696 $ 20,696 $ — $ — Corporate bonds (1) 548,145 — 548,145 — Marketable securities (2) 353 353 — — Derivative instruments (3) 4,639 — 4,639 — Total assets measured at fair value $ 573,833 $ 21,049 $ 552,784 $ — Derivative instruments (3) $ 1,287 $ — $ 1,287 $ — Total liabilities measured at fair value $ 1,287 $ — $ 1,287 $ — Balance at Fair Value Measurements at December 31, December 31, 2021 Using 2021 Level 1 Level 2 Level 3 (in thousands) Mutual funds (1) $ 25,990 $ 25,990 $ — $ — Corporate bonds (1) 650,389 — 650,389 — Marketable securities (2) 471 471 — — Derivative instruments (3) 2,465 — 2,465 — Total assets measured at fair value $ 679,315 $ 26,461 $ 652,854 $ — Derivative instruments (3) $ 487 $ — $ 487 $ — Total liabilities measured at fair value $ 487 $ — $ 487 $ — (1) Amounts are included in redemption settlement assets, restricted in the unaudited condensed consolidated balance sheets. (2) Amounts are included in other current assets in the unaudited condensed consolidated balance sheets. (3) Amounts are included in other current assets and other current liabilities in the unaudited condensed consolidated balance sheets . |
Schedule of assets and liabilities disclosed but not carried at fair value | Balance at Fair Value Measurements at September 30, September 30, 2022 Using 2022 Level 1 Level 2 Level 3 (in thousands) Long-term debt $ 359,993 $ — $ 359,993 $ — Total liabilities measured at fair value $ 359,993 $ — $ 359,993 $ — Balance at Fair Value Measurements at December 31, December 31, 2021 Using 2021 Level 1 Level 2 Level 3 (in thousands) Long-term debt $ 654,113 $ — $ 654,113 $ — Total liabilities measured at fair value $ 654,113 $ — $ 654,113 $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SEGMENT INFORMATION | |
Schedule of segment information | AIR MILES Corporate/ Three Months Ended September 30, 2022 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 67,387 $ 95,024 $ — $ (42) $ 162,369 Income (loss) before income taxes $ 25,926 $ (4,622) $ (17,125) $ — $ 4,179 Interest (income) expense, net (449) (45) 12,021 — 11,527 Depreciation and amortization 5,586 2,067 15 — 7,668 Stock compensation expense 195 529 615 — 1,339 Strategic transaction costs 2 292 2,721 — 3,015 Restructuring and other charges 3,474 1,881 — — 5,355 Adjusted EBITDA (1) $ 34,734 $ 102 $ (1,753) $ — $ 33,083 AIR MILES Corporate/ Three Months Ended September 30, 2021 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 71,928 $ 97,329 $ — $ — $ 169,257 Income (loss) before income taxes $ 33,889 $ 6,524 $ (4,018) $ — $ 36,395 Interest (income) expense, net (206) 70 — — (136) Depreciation and amortization 6,018 3,080 — — 9,098 Stock compensation expense 777 948 418 — 2,143 Adjusted EBITDA (1) $ 40,478 $ 10,622 $ (3,600) $ — $ 47,500 AIR MILES Corporate/ Nine Months Ended September 30, 2022 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 199,649 $ 289,597 $ — $ (129) $ 489,117 Income (loss) before income taxes $ 68,274 $ (435,052) $ (46,763) $ — $ (413,541) Interest (income) expense, net (833) (27) 30,833 — 29,973 Depreciation and amortization 19,066 6,877 23 — 25,966 Stock compensation expense 1,168 1,886 2,194 — 5,248 Goodwill impairment — 422,922 — — 422,922 Strategic transaction costs 300 1,401 3,339 — 5,040 Restructuring and other charges 7,740 1,881 — — 9,621 Adjusted EBITDA (1) $ 95,715 $ (112) $ (10,374) $ — $ 85,229 AIR MILES Corporate/ Nine Months Ended September 30, 2021 Reward Program BrandLoyalty Other Eliminations Total (in thousands) Revenues $ 214,123 $ 282,593 $ — $ — $ 496,716 Income (loss) before income taxes $ 94,214 $ 2,447 $ (11,608) $ — $ 85,053 Interest (income) expense, net (582) 264 — — (318) Depreciation and amortization 17,927 9,626 — — 27,553 Stock compensation expense 2,126 2,883 1,313 — 6,322 Adjusted EBITDA (1) $ 113,685 $ 15,220 $ (10,295) $ — $ 118,610 (1) Adjusted EBITDA is presented in accordance with ASC 280 as it is the primary performance metric utilized to assess performance of the segments and to determine the allocation of resources. Adjusted EBITDA is a non-GAAP financial measure equal to net (loss) income, the most directly comparable financial measure based on GAAP, plus income from investment in unconsolidated subsidiary – related party, provision for income taxes, interest expense (income), net, depreciation and other amortization, amortization of purchased intangibles, and stock compensation expense. Adjusted EBITDA also excludes goodwill impairment, strategic transaction costs, and restructuring and other charges. Strategic transaction costs represent costs associated with the Separation, which were comprised of amounts associated with the Employee Matters Agreement and Tax Matters Agreement. Strategic transaction costs also include advisory services associated with modifying the Credit Agreement and the Company’s capital structure. |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SUPPLEMENTAL CASH FLOW INFORMATION | |
Schedule of reconciliation of cash and cash equivalents | September 30, September 30, 2022 2021 (in thousands) Cash and cash equivalents $ 73,307 $ 198,865 Restricted cash included within other current assets (1) 9,132 5,312 Restricted cash included within redemption settlement assets, restricted (2) 40,870 58,196 Total cash, cash equivalents and restricted cash $ 123,309 $ 262,373 (1) Includes cash restricted for travel deposits within the AIR MILES Reward Program. (2) See Note 5, “Redemption Settlement Assets, Restricted,” for additional information regarding the nature of restrictions on redemption settlement assets. |
REVENUE - Schedule of revenue d
REVENUE - Schedule of revenue disaggregation (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Disaggregation of Revenue [Line Items] | ||||
Number of segments | segment | 2 | |||
Revenue from contracts with customers | $ 158,998 | $ 165,919 | $ 479,126 | $ 486,475 |
Investment income | 3,371 | 3,338 | 9,991 | 10,241 |
Total | 162,369 | 169,257 | 489,117 | 496,716 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 95 | 2,637 | ||
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 72,087 | 75,822 | 211,946 | 229,286 |
Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 77,465 | 68,168 | 220,658 | 200,022 |
Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 7,061 | 22,967 | 45,367 | 57,690 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 5,756 | 2,205 | 11,146 | 7,081 |
Brand Loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 95,024 | 97,329 | 289,597 | 282,593 |
Total | 95,024 | 97,329 | 289,597 | 282,593 |
Brand Loyalty | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 95 | 2,637 | ||
Brand Loyalty | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 4,742 | 3,894 | 12,426 | 15,163 |
Brand Loyalty | Europe, Middle East and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 77,465 | 68,168 | 220,658 | 200,022 |
Brand Loyalty | Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 7,061 | 22,967 | 45,367 | 57,690 |
Brand Loyalty | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 5,756 | 2,205 | 11,146 | 7,081 |
AIR MILES Reward Program | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 64,016 | 68,590 | 189,658 | 203,882 |
Investment income | 3,371 | 3,338 | 9,991 | 10,241 |
Total | 67,387 | 71,928 | 199,649 | 214,123 |
AIR MILES Reward Program | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 67,387 | 71,928 | 199,649 | 214,123 |
Operating segment | Brand Loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 95,024 | 97,329 | 289,597 | 282,593 |
Operating segment | AIR MILES Reward Program | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | 67,387 | 71,928 | 199,649 | 214,123 |
Eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | (42) | (129) | ||
Total | (42) | (129) | ||
Eliminations | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total | (42) | (129) | ||
Coalition loyalty program | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 63,971 | 68,580 | 189,533 | 203,870 |
Coalition loyalty program | AIR MILES Reward Program | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 63,971 | 68,580 | 189,533 | 203,870 |
Campaign-based loyalty programs | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 93,413 | 95,799 | 284,943 | 278,726 |
Campaign-based loyalty programs | Brand Loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 93,413 | 95,799 | 284,943 | 278,726 |
Other Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 1,614 | 1,540 | 4,650 | 3,879 |
Total | 7,760 | 6,302 | 23,508 | 16,628 |
Other Revenue | Brand Loyalty | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 1,611 | 1,530 | 4,654 | 3,867 |
Other Revenue | AIR MILES Reward Program | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 45 | $ 10 | 125 | $ 12 |
Other Revenue | Eliminations | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ (42) | $ (129) |
REVENUE - Schedule of reconcili
REVENUE - Schedule of reconciliation of contract liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Amounts recognized in the combined balance sheets: | ||
Deferred revenue (current) | $ 791,208 | $ 924,789 |
Deferred revenue (non-current) | 87,793 | $ 97,167 |
AIR MILES Reward Program | ||
Disaggregation of Revenue [Line Items] | ||
Beginning balance | 1,021,956 | |
Cash proceeds | 334,277 | |
Revenue recognized | (393,796) | |
Other | 423 | |
Effects of foreign currency translation | (83,859) | |
Ending balance | 879,001 | |
Amounts recognized in the combined balance sheets: | ||
Deferred revenue (current) | 791,208 | |
Deferred revenue (non-current) | 87,793 | |
AIR MILES Reward Program | Services | ||
Disaggregation of Revenue [Line Items] | ||
Beginning balance | 230,492 | |
Cash proceeds | 131,316 | |
Revenue recognized | (138,858) | |
Effects of foreign currency translation | (19,321) | |
Ending balance | 203,629 | |
Amounts recognized in the combined balance sheets: | ||
Deferred revenue (current) | 115,836 | |
Deferred revenue (non-current) | 87,793 | |
AIR MILES Reward Program | Redemption | ||
Disaggregation of Revenue [Line Items] | ||
Beginning balance | 791,464 | |
Cash proceeds | 202,961 | |
Revenue recognized | (254,938) | |
Other | 423 | |
Effects of foreign currency translation | (64,538) | |
Ending balance | 675,372 | |
Amounts recognized in the combined balance sheets: | ||
Deferred revenue (current) | 675,372 | |
Brand Loyalty | ||
Disaggregation of Revenue [Line Items] | ||
Revenue recognized | $ 212,400 |
REVENUE - Narratives (Details)
REVENUE - Narratives (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Brand Loyalty | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Revenue recognized | $ 212,400 | |
Effect of foreign currency translation | 14,700 | |
Brand Loyalty | Other current liabilities | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Contract liabilities | 99,100 | $ 85,400 |
AIR MILES Reward Program | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Contract liabilities | 879,001 | $ 1,021,956 |
Revenue recognized | (393,796) | |
AIR MILES Reward Program | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenue balance expected to be recognized | $ 39,800 | |
Deferred revenue balance expected to be recognized, period | 3 months | |
AIR MILES Reward Program | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenue balance expected to be recognized | $ 94,900 | |
Deferred revenue balance expected to be recognized, period | 12 months | |
AIR MILES Reward Program | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenue balance expected to be recognized | $ 52,300 | |
Deferred revenue balance expected to be recognized, period | 12 months | |
AIR MILES Reward Program | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Deferred revenue balance expected to be recognized | $ 16,600 | |
Deferred revenue balance expected to be recognized, period | 12 months |
EARNINGS PER SHARE - Narrative
EARNINGS PER SHARE - Narrative (Details) | Nov. 05, 2021 shares |
EARNINGS PER SHARE | |
Common stock, shares outstanding | 24,585,237 |
EARNINGS PER SHARE - Computatio
EARNINGS PER SHARE - Computation of basic and diluted earning per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net (loss) income | $ (125) | $ 23,961 | $ (441,007) | $ 57,504 |
Denominator: | ||||
Weighted average shares, basic | 24,612,000 | 24,585,000 | 24,607,000 | 24,585,000 |
Denominator for diluted calculation | 24,612,000 | 24,585,000 | 24,607,000 | 24,585,000 |
Basic net (loss) income per share: | $ (0.01) | $ 0.97 | $ (17.92) | $ 2.34 |
Diluted net (loss) income per share: | $ (0.01) | $ 0.97 | $ (17.92) | $ 2.34 |
Dilutive equity instruments (in shares) | 0 | 0 | ||
Equity awards (in shares) | 0 | 0 | ||
Restricted Stock [Member] | ||||
Denominator: | ||||
Anti-dilutive restricted stock units | 900,000 | 600,000 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
INVENTORIES, NET | ||
Inventories, net | $ 236,776 | $ 188,577 |
REDEMPTION SETTLEMENT ASSETS,_3
REDEMPTION SETTLEMENT ASSETS, RESTRICTED - Components of redemption settlement assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule Of Redemption Settlement Assets [Line Items] | ||
Redemption settlement assets, Fair Value, Total | $ 609,711 | $ 735,131 |
Restricted cash | ||
Schedule Of Redemption Settlement Assets [Line Items] | ||
Redemption settlement assets, Fair Value, Total | 40,870 | 58,752 |
Mutual funds | ||
Schedule Of Redemption Settlement Assets [Line Items] | ||
Redemption settlement assets, Fair Value, Total | 20,696 | 25,990 |
Corporate bonds | ||
Schedule Of Redemption Settlement Assets [Line Items] | ||
Redemption settlement assets, Fair Value, Total | $ 548,145 | $ 650,389 |
REDEMPTION SETTLEMENT ASSETS,_4
REDEMPTION SETTLEMENT ASSETS, RESTRICTED - Amortized cost, unrealized gains and losses, and fair value of securities available-for-sale (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 578,741 | $ 648,248 |
Unrealized Gains | 6,389 | |
Unrealized Losses | (30,596) | (4,248) |
Fair Value | 548,145 | 650,389 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 578,741 | 648,248 |
Unrealized Gains | 6,389 | |
Unrealized Losses | (30,596) | (4,248) |
Fair Value | $ 548,145 | $ 650,389 |
REDEMPTION SETTLEMENT ASSETS,_5
REDEMPTION SETTLEMENT ASSETS, RESTRICTED - Unrealized losses and fair value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 months, Fair Value | $ 369,156 | $ 104,052 |
Less than 12 months, Unrealized Losses | (13,710) | (1,341) |
12 Months or Greater, Fair Value | 178,989 | 123,382 |
12 Months or Greater, Unrealized Losses | (16,886) | (2,907) |
Fair Value | 548,145 | 227,434 |
Unrealized Losses | (30,596) | (4,248) |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Less than 12 months, Fair Value | 369,156 | 104,052 |
Less than 12 months, Unrealized Losses | (13,710) | (1,341) |
12 Months or Greater, Fair Value | 178,989 | 123,382 |
12 Months or Greater, Unrealized Losses | (16,886) | (2,907) |
Fair Value | 548,145 | 227,434 |
Unrealized Losses | $ (30,596) | $ (4,248) |
REDEMPTION SETTLEMENT ASSETS,_6
REDEMPTION SETTLEMENT ASSETS, RESTRICTED - Maturity (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Amortized Cost | |
Due in one year or less | $ 122,736 |
Due after one year through five years | 456,005 |
Total | 578,741 |
Estimated Fair Value | |
Due in one year or less | 121,720 |
Due after one year through five years | 426,425 |
Total | $ 548,145 |
REDEMPTION SETTLEMENT ASSETS,_7
REDEMPTION SETTLEMENT ASSETS, RESTRICTED - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
REDEMPTION SETTLEMENT ASSETS, RESTRICTED. | ||||
Realized gain (loss) | $ (0.6) | $ (3.1) | $ (0.6) | |
Realized gains or losses | $ 0 | $ 0 | $ (0.2) |
LEASES - Narratives (Details)
LEASES - Narratives (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
AIR MILES Reward Program | ||
Lessee, Lease, Description [Line Items] | ||
Asset impairment charges | $ 0.4 | $ 1 |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 11 years | 11 years |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 1 year | 1 year |
LEASES - Components of lease ex
LEASES - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Lessee Disclosure [Abstract] | ||||
Operating lease cost | $ 3,450 | $ 3,923 | $ 10,814 | $ 11,929 |
Short-term lease cost | 99 | 84 | 243 | 255 |
Variable lease cost | 1,070 | 922 | 2,859 | 3,134 |
Total | 4,619 | 4,929 | 13,916 | 15,318 |
Sublease income | $ 1,400 | $ 600 | $ 3,200 | $ 1,600 |
LEASES - Other information rela
LEASES - Other information related to leases (Details) | Sep. 30, 2022 | Sep. 30, 2021 |
LEASES | ||
Operating leases, Weighted-average remaining lease term (in years) | 10 years | 10 years 10 months 24 days |
Operating leases, Weighted-average discount rate: | 4.70% | 4.70% |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
LEASES | ||||
Operating cash flows from operating leases | $ 4,294 | $ 4,062 | $ 12,068 | $ 13,871 |
Operating leases, right-of-use assets obtained in exchange for lease obligations | $ 1,434 | $ 16 | $ 4,171 | $ 200 |
LEASES - Maturities (Details)
LEASES - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
LEASES | ||
2022 (excluding the nine months ended September 30, 2022) | $ 2,168 | |
2023 | 13,560 | |
2024 | 12,674 | |
2025 | 12,081 | |
2026 | 11,538 | |
Thereafter | 70,411 | |
Total undiscounted lease liabilities | 122,432 | |
Less: Amount representing interest | (25,956) | |
Total present value of minimum lease payments | 96,476 | |
Current operating lease liabilities | 8,086 | $ 10,055 |
Long-term operating lease liabilities | 88,390 | $ 103,242 |
Total | $ 96,476 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Intangible assets (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Assets | $ 8,233 | $ 87,686 |
Accumulated Amortization | (6,320) | (84,591) |
Net | 1,913 | 3,095 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Assets | 8,233 | 32,289 |
Accumulated Amortization | (6,320) | (29,194) |
Net | $ 1,913 | $ 3,095 |
Trade Names [Member] | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Life | 8 years | 8 years |
Trade Names [Member] | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization Life | 15 years | 15 years |
Collector Database [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Assets | $ 55,397 | |
Accumulated Amortization | $ (55,397) | |
Amortization Life | 5 years |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Intangible assets maturity (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
INTANGIBLE ASSETS AND GOODWILL | |
2022 (excluding the nine months ended September 30, 2022) | $ 252 |
2023 | 1,006 |
2024 | 516 |
2025 | 26 |
2026 | 26 |
Thereafter | $ 87 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Goodwill carrying amount (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill carrying amount | |
Balance at Beginning | $ 649,958 |
Impairment | (422,922) |
Effects of foreign currency translation | (49,058) |
Balance at Ending | 177,978 |
AIR MILES Reward Program | |
Goodwill carrying amount | |
Balance at Beginning | 194,767 |
Effects of foreign currency translation | (16,789) |
Balance at Ending | 177,978 |
Brand Loyalty | |
Goodwill carrying amount | |
Balance at Beginning | 455,191 |
Impairment | (422,922) |
Effects of foreign currency translation | (32,269) |
Brand Loyalty | Operating segment | |
Goodwill carrying amount | |
Impairment | $ (422,922) |
INTANGIBLE ASSETS AND GOODWIL_5
INTANGIBLE ASSETS AND GOODWILL - Additional information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Jan. 01, 2022 | |
Goodwill carrying amount | ||
Goodwill impairment | $ 422,922 | |
Brand Loyalty | ||
Goodwill carrying amount | ||
Goodwill impairment | 422,922 | |
Brand Loyalty | Operating segment | ||
Goodwill carrying amount | ||
Goodwill impairment | 422,922 | |
Accumulated goodwill impairment charges | $ 472,900 | $ 50,000 |
INVESTMENT IN UNCONSOLIDATED _2
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY - RELATED PARTY (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2021 | Mar. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Feb. 28, 2021 | |
Schedule of Equity Method Investments [Line Items] | |||||
Proceeds from sale of investment | $ 4,055 | ||||
Income from investment in unconsolidated subsidiary - related party, net of tax | $ 4,100 | 4,100 | |||
Gain on sale of investment of unconsolidated subsidiary - related party | $ 4,110 | ||||
Comenity Canada L.P [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Distribution | $ 800 | ||||
Ownership percentage | 98% | 99.90% | |||
Proceeds from sale of investment | $ 4,100 | ||||
Income from investment in unconsolidated subsidiary - related party, net of tax | $ 4,100 |
RESTRUCTURING AND OTHER CHARG_3
RESTRUCTURING AND OTHER CHARGES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | $ 5,355 | $ 0 | $ 9,621 | $ 0 |
Termination Benefits | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 4,815 | 7,172 | ||
Asset Impairments | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 432 | 969 | ||
Other Exit Costs | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 108 | 1,480 | ||
AIR MILES Reward Program | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 3,474 | 7,740 | ||
AIR MILES Reward Program | Termination Benefits | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 2,934 | 5,291 | ||
AIR MILES Reward Program | Asset Impairments | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 432 | 969 | ||
AIR MILES Reward Program | Other Exit Costs | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 108 | 1,480 | ||
Brand Loyalty | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 1,881 | 1,881 | ||
Brand Loyalty | Termination Benefits | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | $ 1,881 | $ 1,881 |
RESTRUCTURING AND OTHER CHARG_4
RESTRUCTURING AND OTHER CHARGES - Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | $ 5,355 | $ 0 | $ 9,621 | $ 0 |
Adjustments for non-cash charges | (969) | |||
Cash payments | (2,936) | |||
Effects of foreign currency translation | (180) | |||
Liability (Ending balance) | 5,536 | 5,536 | ||
Termination Benefits | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 4,815 | 7,172 | ||
Cash payments | (1,471) | |||
Effects of foreign currency translation | (165) | |||
Liability (Ending balance) | 5,536 | 5,536 | ||
Asset Impairments | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | 432 | 969 | ||
Adjustments for non-cash charges | (969) | |||
Other Exit Costs | ||||
RESTRUCTURING AND OTHER CHARGES | ||||
Restructuring and other charges | $ 108 | 1,480 | ||
Cash payments | (1,465) | |||
Effects of foreign currency translation | $ (15) |
DEBT (Details)
DEBT (Details) € in Millions, $ in Millions | 1 Months Ended | 9 Months Ended | ||
Jul. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 EUR (€) | Dec. 31, 2021 USD ($) | |
Uncommitted overdraft facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 9.8 | € 10 | ||
Interest rate | 3.50% | 3.50% | ||
Letters of credit outstanding | $ 0 | $ 0 | ||
Senior Secured Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Revolving commitments | $ (2.8) | |||
Total leverage ratio | 4.5 | 4.5 | ||
Senior Secured Credit Agreement | Minimum | ||||
Debt Instrument [Line Items] | ||||
Total leverage ratio | 4.75 | |||
Senior Secured Credit Agreement | Term loan A | ||||
Debt Instrument [Line Items] | ||||
Principal amount of debt | $ 175 | |||
Senior Secured Credit Agreement | Term loan B | ||||
Debt Instrument [Line Items] | ||||
Principal amount of debt | 500 | |||
Senior Secured Credit Agreement | Term loan A and Term loan B | ||||
Debt Instrument [Line Items] | ||||
Debt instrument periodic payment | 38 | |||
Senior Secured Credit Agreement | Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 150 | |||
Revolving credit facility | ||||
Debt Instrument [Line Items] | ||||
Letters of credit outstanding | $ 11.8 | $ 12.5 |
DEBT - Leverage ratio (Details)
DEBT - Leverage ratio (Details) | Jul. 31, 2022 |
December 31, 2021 through June 30, 2022 | |
Schedule of Debt Instruments | |
Maximum Consolidated Total Leverage Ratio | 5% |
September 30, 2022 through September 30, 2023 | |
Schedule of Debt Instruments | |
Maximum Consolidated Total Leverage Ratio | 5.75% |
December 31, 2023 | |
Schedule of Debt Instruments | |
Maximum Consolidated Total Leverage Ratio | 5.50% |
March 31, 2024 through September 30, 2024 | |
Schedule of Debt Instruments | |
Maximum Consolidated Total Leverage Ratio | 5.25% |
December 31, 2024 through March 31, 2025 | |
Schedule of Debt Instruments | |
Maximum Consolidated Total Leverage Ratio | 5% |
June 30, 2025 and each fiscal quarter thereafter | |
Schedule of Debt Instruments | |
Maximum Consolidated Total Leverage Ratio | 4.75% |
DEBT - Schedule of Debt Instrum
DEBT - Schedule of Debt Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Schedule of Debt Instruments | ||
Debt amount | $ 637,031 | $ 675,000 |
Less: unamortized debt issuance costs | 18,686 | 20,887 |
Less: current portion | 50,625 | 50,625 |
Long-term portion | 567,720 | 603,488 |
Revolving credit facility | ||
Schedule of Debt Instruments | ||
Availability under credit facility | 138,200 | 137,500 |
Letters of credit outstanding | 11,800 | 12,500 |
Senior Secured Credit Agreement | Term loan A | ||
Schedule of Debt Instruments | ||
Debt amount | 165,156 | 175,000 |
Senior Secured Credit Agreement | Term loan B | ||
Schedule of Debt Instruments | ||
Debt amount | $ 471,875 | $ 500,000 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 4.6 | $ 2.5 |
Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 1.3 | $ 0.5 |
SHARE-BASED PAYMENTS (Details)
SHARE-BASED PAYMENTS (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Performance-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted | shares | 88,033 |
Weighted average grant date fair value per share | $ / shares | $ 24.19 |
Probability of achieving performance targets to met | 0% |
Performance-based restricted stock units | Restriction lapse on February 15 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of awards restriction lapsed | 33% |
Performance-based restricted stock units | Restriction lapse on February 15 2024 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of awards restriction lapsed | 33% |
Performance-based restricted stock units | Restriction lapse on February 15 2025 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Percentage of awards restriction lapsed | 34% |
Performance-based restricted stock units | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards vesting percentage | 150% |
Performance-based restricted stock units | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards vesting percentage | 0% |
Service-based restricted stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards vesting period | 3 years |
Shares granted | shares | 814,545 |
Weighted average grant date fair value per share | $ / shares | $ 17.62 |
SHARE-BASED PAYMENTS - Stock-ba
SHARE-BASED PAYMENTS - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock compensation expense | $ 1,339 | $ 2,143 | $ 5,248 | $ 6,322 |
Cost of operations | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock compensation expense | 724 | 1,725 | 3,054 | 5,009 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock compensation expense | $ 615 | $ 418 | $ 2,194 | $ 1,313 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at Beginning | $ (366,787) | $ 987,015 | $ 146,564 | $ 1,094,301 |
Changes in other comprehensive income (loss) | (23,911) | (22,925) | (100,901) | (48,877) |
Balance at Ending | (389,632) | 993,576 | (389,632) | 993,576 |
Gain (loss) on cash flow hedges | 2,400 | 1,800 | ||
Accumulated Other Comprehensive Loss | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at Beginning | (142,064) | (25,571) | (65,074) | 381 |
Changes in other comprehensive income (loss) | (23,911) | (22,925) | (100,901) | (48,877) |
Balance at Ending | (165,975) | (48,496) | (165,975) | (48,496) |
Net Unrealized Gains (Losses) on Securities | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at Beginning | (29,091) | 10,484 | 2,141 | 18,267 |
Changes in other comprehensive income (loss) | (1,505) | (2,769) | (32,737) | (10,552) |
Balance at Ending | (30,596) | 7,715 | (30,596) | 7,715 |
Net Unrealized Gains (Losses) on Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at Beginning | 1,506 | 72 | 1,270 | (700) |
Changes in other comprehensive income (loss) | (989) | 908 | (753) | 1,680 |
Balance at Ending | 517 | 980 | 517 | 980 |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Balance at Beginning | (114,479) | (36,127) | (68,485) | (17,186) |
Changes in other comprehensive income (loss) | (21,417) | (21,064) | (67,411) | (40,005) |
Balance at Ending | $ (135,896) | $ (57,191) | $ (135,896) | $ (57,191) |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
INCOME TAXES | ||||
Effective income tax rate | 103% | 40.80% | (6.60%) | 35.50% |
FINANCIAL INSTRUMENTS AND FAI_3
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Estimated fair values of the company's financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Financial assets | ||
Redemption settlement assets, restricted | $ 609,711 | $ 735,131 |
Financial liabilities | ||
Long-term debt | 359,993 | 654,113 |
Carrying Amount | ||
Financial assets | ||
Redemption settlement assets, restricted | 609,711 | 735,131 |
Other investments | 353 | 471 |
Derivative instruments - Assets | 4,639 | 2,465 |
Financial liabilities | ||
Derivative instruments - Liability | 1,287 | 487 |
Long-term debt | 618,345 | 654,113 |
Fair Value | ||
Financial assets | ||
Redemption settlement assets, restricted | 609,711 | 735,131 |
Other investments | 353 | 471 |
Derivative instruments - Assets | 4,639 | 2,465 |
Financial liabilities | ||
Derivative instruments - Liability | 1,287 | 487 |
Long-term debt | $ 359,993 | $ 654,113 |
FINANCIAL INSTRUMENTS AND FAI_4
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Assets and liabilities carried at fair value measured on a recurring basis (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total liabilities measured at fair value | $ 359,993 | $ 359,993 | $ 654,113 |
Goodwill impairment | 422,922 | ||
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total liabilities measured at fair value | 359,993 | 359,993 | 654,113 |
Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Mutual funds | 20,696 | 20,696 | 25,990 |
Corporate bonds | 548,145 | 548,145 | 650,389 |
Marketable securities | 353 | 353 | 471 |
Derivative instruments - Assets | 4,639 | 4,639 | 2,465 |
Total assets measured at fair value | 573,833 | 573,833 | 679,315 |
Derivative instruments - Liability | 1,287 | 1,287 | 487 |
Total liabilities measured at fair value | 1,287 | 1,287 | 487 |
Recurring | Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Mutual funds | 20,696 | 20,696 | 25,990 |
Marketable securities | 353 | 353 | 471 |
Total assets measured at fair value | 21,049 | 21,049 | 26,461 |
Recurring | Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Corporate bonds | 548,145 | 548,145 | 650,389 |
Derivative instruments - Assets | 4,639 | 4,639 | 2,465 |
Total assets measured at fair value | 552,784 | 552,784 | 652,854 |
Derivative instruments - Liability | 1,287 | 1,287 | 487 |
Total liabilities measured at fair value | 1,287 | 1,287 | $ 487 |
AIR MILES Reward Program | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Asset impairment charges | $ 400 | $ 1,000 |
FINANCIAL INSTRUMENTS AND FAI_5
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Financial liabilities | ||
Long-term debt | $ 359,993 | $ 654,113 |
Total liabilities measured at fair value | 359,993 | 654,113 |
Level 2 | ||
Financial liabilities | ||
Long-term debt | 359,993 | 654,113 |
Total liabilities measured at fair value | $ 359,993 | $ 654,113 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Information | ||||
Revenues | $ 162,369 | $ 169,257 | $ 489,117 | $ 496,716 |
Income (loss) before income taxes | 4,179 | 36,395 | (413,541) | 85,053 |
Interest (income) expense, net | 11,527 | (136) | 29,973 | (318) |
Depreciation and amortization | 7,668 | 9,098 | 25,966 | 27,553 |
Stock compensation expense | 1,339 | 2,143 | 5,248 | 6,322 |
Goodwill impairment | 422,922 | |||
Strategic transaction costs | 3,015 | 5,040 | ||
Restructuring and other charges | 5,355 | 0 | 9,621 | 0 |
Adjusted EBITDA | 33,083 | 47,500 | 85,229 | 118,610 |
Eliminations | ||||
Segment Information | ||||
Revenues | (42) | (129) | ||
AIR MILES Reward Program | ||||
Segment Information | ||||
Revenues | 67,387 | 71,928 | 199,649 | 214,123 |
Restructuring and other charges | 3,474 | 7,740 | ||
AIR MILES Reward Program | Operating segment | ||||
Segment Information | ||||
Revenues | 67,387 | 71,928 | 199,649 | 214,123 |
Income (loss) before income taxes | 25,926 | 33,889 | 68,274 | 94,214 |
Interest (income) expense, net | (449) | (206) | (833) | (582) |
Depreciation and amortization | 5,586 | 6,018 | 19,066 | 17,927 |
Stock compensation expense | 195 | 777 | 1,168 | 2,126 |
Strategic transaction costs | 2 | 300 | ||
Restructuring and other charges | 3,474 | 7,740 | ||
Adjusted EBITDA | 34,734 | 40,478 | 95,715 | 113,685 |
Brand Loyalty | ||||
Segment Information | ||||
Revenues | 95,024 | 97,329 | 289,597 | 282,593 |
Goodwill impairment | 422,922 | |||
Restructuring and other charges | 1,881 | 1,881 | ||
Brand Loyalty | Operating segment | ||||
Segment Information | ||||
Revenues | 95,024 | 97,329 | 289,597 | 282,593 |
Income (loss) before income taxes | (4,622) | 6,524 | (435,052) | 2,447 |
Interest (income) expense, net | (45) | 70 | (27) | 264 |
Depreciation and amortization | 2,067 | 3,080 | 6,877 | 9,626 |
Stock compensation expense | 529 | 948 | 1,886 | 2,883 |
Goodwill impairment | 422,922 | |||
Strategic transaction costs | 292 | 1,401 | ||
Restructuring and other charges | 1,881 | 1,881 | ||
Adjusted EBITDA | 102 | 10,622 | (112) | 15,220 |
Corporate/Other | ||||
Segment Information | ||||
Income (loss) before income taxes | (17,125) | (4,018) | (46,763) | (11,608) |
Interest (income) expense, net | 12,021 | 30,833 | ||
Depreciation and amortization | 15 | 23 | ||
Stock compensation expense | 615 | 418 | 2,194 | 1,313 |
Strategic transaction costs | 2,721 | 3,339 | ||
Adjusted EBITDA | $ (1,753) | $ (3,600) | $ (10,374) | $ (10,295) |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION - Reconciliation of cash and cash equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Cash and cash equivalents | $ 73,307 | $ 167,601 | $ 198,865 | |
Total cash, cash equivalents and restricted cash | 123,309 | $ 232,602 | 262,373 | $ 337,525 |
Other current assets | ||||
Restricted cash | 9,132 | 5,312 | ||
Redemption settlement assets | ||||
Restricted cash | $ 40,870 | $ 58,196 |
RELATED PARTY TRANSACTIONS - Ot
RELATED PARTY TRANSACTIONS - Other information (Details) - Former parent - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jan. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Related Party Transactions | ||||||
Corporate overhead costs | $ 4 | $ 11.6 | ||||
Dividends | $ 124.2 | |||||
Dividend withheld for taxes | $ 4.2 | |||||
Amount of expenses incurred in relation to Transition services agreement | $ 0.6 | $ 1.8 | ||||
Employee matters agreement prorated bonus payment from parent | 1.6 | |||||
Accounts receivable from related party under tax matters agreement | 20.3 | 20.3 | $ 20.1 | |||
Accrued Liabilities | ||||||
Related Party Transactions | ||||||
Contractual liabilities under Tax Matters Agreement | 75.8 | 75.8 | 80 | |||
Other Liabilities | ||||||
Related Party Transactions | ||||||
Contractual liabilities under Tax Matters Agreement | $ 1 | $ 1 | $ 1 |