Good morning and welcome to the Alliance Data Second Quarter Fiscal 2015 Earnings Conference Call. At this time, all parties have been placed on a listen-only mode. Following today's presentation, the floor will be open for your questions. It is now my pleasure to introduce your host, Mr. Steve Calk of FTI Consulting. Sir, the floor is yours.

Thank you, operator. By now, you should have received a copy of the company's second quarter 2015 earnings release. If you haven't, please call FTI Consulting at 212-850-5703. On the call today, we have Ed Heffernan, President and Chief Executive Officer of Alliance Data; Charles Horn, Chief Financial Officer of Alliance Data; and Bryan Pearson, Executive Vice President and President of LoyaltyOne. Before we begin, I'd like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties described in the company's earnings release and other filings with the SEC. Alliance Data has no obligation to update the information presented on the call. Also, on today's call, our speakers will reference certain non-GAAP financial measures, which we believe will provide useful information for investors. Reconciliation of those measures to GAAP will be posted on the Investor Relations website at www.alliancedata.com. With that, I'd like to turn the call over to Ed Heffernan. Ed? Edward J. Heffernan - President, Chief Executive Officer & Director: Thanks, Steve. Joining me today is Bryan Pearson, President of LoyaltyOne, which houses both the Canadian AIR MILES program as well as our European platform, BrandLoyalty; as well as Charles Horn, our always eloquent CFO. Bryan is going to give an update about LoyaltyOne, and Charles will walk you through the quarter, and I will discuss the year-to-date performance, critical goals, where I think we are in the year, and updated 2015 guidance. That being said, Charles? Charles L. Horn - Chief Financial Officer & Executive Vice President: Thanks, Edward. It was a solid second quarter with revenue up 19%, importantly 11% organic, and adjusted EBITDA, net up 18%, a good flow-through of the revenue…

Your first question comes from the line of Sanjay Sakhrani with KBW. Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.: Questions on the agency side of kind of legacy Epsilon business or the core Epsilon business. Could you just talk about what kind of opportunities there are to accelerate the growth there and maybe diversify away from some of your core customers? Charles L. Horn - Chief Financial Officer & Executive Vice President: Yeah. If you look at agency, what's unique about it is agency is more project-based versus contract-based. That makes it a little bit more difficult for us to forecast; and with several large clients in the agency, they can increase their projects, they can pull back, so they can influence the growth rates very quickly. We talked last year about Ford onboarding, it's ramping nicely. Conversely, we had another large client pull back a little bit. So that's a situation where it's always going to be a little bit bumpy being project-based. The upside for ADS is we continue to grow the technology side double-digit within Epsilon plus you ladder in Conversant, you get that back to double-digit growth. That will further diversify the product offering within Epi and allow it to mitigate some of these swings on project-based offerings. Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.: Okay. And then maybe one on Conversant, obviously, good traction in terms of the cross-sell opportunities. When we think about the sizes of the revenue opportunities that you're currently signing versus what might be out there prospectively, I mean, is it safe to assume that some of the opportunities are larger than what you're signing right now? Edward J. Heffernan - President, Chief Executive Officer & Director: No. I think that if you used somewhere between $3 million to…

Your next question comes from Andrew Jeffrey with SunTrust.

Hi. Good morning. Thanks for taking the question. Edward J. Heffernan - President, Chief Executive Officer & Director: Hey.

Ed, I wonder if we could just dig in a little bit on sort of the puts and takes of the transition that's taking place at Conversant. Can you be a little more specific on the business that you're pruning? I assume that's the – their traditional media business and the precise rationale behind that. And then also the nature of new the business you're signing if you exit with $75 million or $80 million of annual run rate revenue from cross-sells, there's multi-year deals and what could that number be like next year if you see continued momentum? Edward J. Heffernan - President, Chief Executive Officer & Director: Sure. Without getting too far into the specifics, it's pretty basic to think about our – what would be pruning for us, what are areas that aren't that exciting. The pruning areas for us would be, look, there's a chunk of that business that is a commodity and everyone has seen what has happened in ad tech over the last few years and what used to be real juicy stuff is now turning into more commodity type business especially on the agency side. That, to us is less exciting, because it brings in a whole lot of revenue, but it doesn't do anything for your bottom-line. And we're not out there looking to trade it 20 times revenue and some of that crazy stuff without earnings, we are known for generating huge cash flow. So that stuff we don't feel is sticky, we don't feel it's additive to our clients and as a result, those types of plays have been deemphasized. That being said, I think there's a lot of very exciting stuff on the agency side that will involve the use of data down to the individual level that we…

Okay. And then a follow-up on BrandLoyalty, just looking at obviously, very strong first half from a profitability perspective, it looks like almost all of the EBITDA was generated in the first quarter. Is that revenue timing? Is there a fixed cost component that pulls down the second quarter margin versus where you were in the first quarter, just trying to get a sense of that and whether or not you can have – whether or not we should expect the possibility of choppy margin quarters in BrandLoyalty over time? Bryan A. Pearson - Executive VP & President, LoyaltyOne: Andrew, it's something we've kind of talked about before, which is BL tends to have a high fixed cost structure, which we added to during the second quarter as we look to move further into Canada as well as to in the U.S. So, what happens is when we have good sales volume and drops to the bottom line, when you have a decline in revenue like what we did in Q2, it was down 7% year-over-year, a high fixed cost structure is going to hurt you. So, what you really have to do is you'll have a little choppiness there as we talked about before, but if you're hitting your revenue growth targets of 10%, 15%, 20%, you're going to see it flow through over the course of the year. But a pullback in any one quarter given a high fixed cost structure is punitive to your share earnings.

Okay. Thanks. Appreciate it, guys.

Your next question comes from the line of Darrin Peller with Barclays.

Thanks, guys. I just want to touch on this one, organic growth rate in Epsilon for one more minute just briefly. I mean I know there was a client you said pulled back. And obviously, Ford's going well. But I guess it's been a few quarters now where we've seen sort of mid-single digit growth there from the legacy organic business. Should we be looking at Epsilon now as a story where really to see that high single-digit growth rate, again it has to be really encompassing the full synergies and cross-selling from Conversant? Or is your legacy Epsilon business powerful enough by itself to still be a high single-digit grower? Just if you can help us think about that. Edward J. Heffernan - President, Chief Executive Officer & Director: Yeah. I mean, look, it's – we're pleased with the flow-through. We're not pleased with the top line. I do think Epsilon is a 7% to 8% top-line organic growth shop by itself. I think with Conversant now that we're getting on the upswing that will bring the whole segment up a few points. And that's really what we're looking to do. But I don't think 5% growth top-line for Epsilon is what we're shooting for. I don't think that's an acceptable long-term number.

Okay, all right. So it's still a 7% to 8% in your mind? Edward J. Heffernan - President, Chief Executive Officer & Director: Yep.

Okay. Just – all right. Shifting gears, BrandLoyalty, I know this quarter again you had a pull forward in first. I mean that's an area that does seem like with the build-out in Canada $25 million incremental revenues there and then potentially U.S., it could be a very large contributor maybe a year from now. I guess two questions. Number one is how substantial of a ramp do you think we could see for that in the new markets outside of just Europe? How's Europe going for, I guess – how's Europe going first of all, but more importantly, I mean in terms of the opportunity in the U.S. and Canada, is there something we can see in 12 months to 18 months to be really substantial? And then in terms of ownership stake of BrandLoyalty, I mean I think you were expecting that to increase per year, right? Could you just remind us on the economics around that? Bryan A. Pearson - Executive VP & President, LoyaltyOne: I'll answer that one first, Darrin, which is, yes, we own 70% now. We'll look to take the next 10% in January of 2016 and then in 2017 and 2018, that's the way it's structured.

Okay. Thanks. Charles L. Horn - Chief Financial Officer & Executive Vice President: And on the business side, I would say that what's the nice thing about BrandLoyalty, as Ed alluded to in his comments towards the end, is that the growth is very solidly happening across the European and Asian base right now. I mean that's where the primary growth is coming from. Canada is certainly additive to it, but it's – what we're seeing is a lot of client renewing programs, a lot of new clients coming on board, companies like Lidl extending programs into other markets that they operate in. And so, I think we feel really quite confident about what we're seeing in the existing markets that they are operating in today. And to answer the second question which is what's the horizon on the North American marketplace growing, if Canada is any indication, it will take two – a couple of years sort of starting the deal and starting the relationships with the clients. I think what happens is that, you see a pilot program or you may see an initial program run, and then what we've seen in Europe is that, the ultimate goal is to get your clients running a couple of programs a year. And so, they kind of dip their toe in the water, figure out how this works for them. They see the results, because we see that this definitively has an impact on our partner results, and then they are looking at – we're doing a program again to fix the go over issues that they'd have in the following year. And then they look at adding the second program. So it's sort of a stair step thing that happens over time. The big thing -

All right. Charles L. Horn - Chief Financial Officer & Executive Vice President: ...for the U.S. would be how many clients we get. So (51:08) -

Yeah. It seems like a – yeah, obviously, a much bigger opportunity in market wise, the only question is just how much competitive there is around loyalty solutions and rewards type programs in general in the U.S., but it seems like just with your pilot and what you're doing in Canada, it is a good start. So, you're not worried – just I guess the question is you're not worried about the competitive dynamics in the U.S., you still think that's something that can really be big? Bryan A. Pearson - Executive VP & President, LoyaltyOne: Yeah. It definitely can be big and I would say that if Canada's indication what we're seeing is that they're layering this program in, in addition to the long-term loyalty initiatives. So they're replacing other promotional activity and running the short-term 16-week to 20-week promotional campaigns and if the results – so there's no reason to believe that the programs would not work equivalently well in the U.S., I think the markets...

Okay. Bryan A. Pearson - Executive VP & President, LoyaltyOne: ...are similar enough. It's just about the grocers adopting it and thinking about this as a new tool in their arsenal, that's all.

All right. That's great, Bryan. Just – Charles, very quickly within private label, sales coming on in Q3, I think or Q4 maybe, how should we look at the portfolio yield cadence in the back half of the year. And then just for charge-offs, should we still expect flat to slightly up versus 2014 and I'll leave it at that, guys. Thanks. Charles L. Horn - Chief Financial Officer & Executive Vice President: So from a yield standpoint, I'm looking for about a point down year-over-year, that's pretty much what we thought starting the year.

Yep. Charles L. Horn - Chief Financial Officer & Executive Vice President: From a provision standpoint, probably an ending reserve around 5.5, which should mean a loss rate of around four or five-ish for the year. It may be up 10 basis points, 20 basis points year-over-year.

Okay. Charles L. Horn - Chief Financial Officer & Executive Vice President: They'll continue to work with it. Obviously, it takes a while and we're working through that to get it done by the end of the year.

All right. All right, that's all unchanged. Thanks, guys. I appreciate it.

And your next question comes from the line Josh Beck with Pacific Crest.

Thank you. I had a question really on going back to some of these CMO conversations that you're having, you've talked about 300 plus targets more or less among your Card Services in Epsilon client base. Could you just help us maybe bring to life some of those conversations, help us understand how CMOs are viewing your differentiation relative to competitors? Obviously, there's a lot of other people knocking on the doors as well. So just help us understand kind of where you're staying now, is it your data assets? What you're doing with attribution, transparency? I'm not sure exactly what it is, but if you could just give us some color there, I think, would be very helpful. Edward J. Heffernan - President, Chief Executive Officer & Director: Sure. Not a problem, Josh. I think that if you look at what we're trying to create here across – we talked about Card Services. We talked about Epsilon. I'm bugging Bryan to – who's sitting across from me – to get going on Canada and then, frankly, get going on Europe and elsewhere. But he's a little busy right now. Anyhow, there's probably – if you look at it in terms of all the stuff that's out there swirling around in the marketplace and there's a lot of good models and everything else, we are focused very closely on sort of five things to differentiate us from the rest of the pack. The first one is as we've talked about because of our size and because of what we do for a living, we only do one thing, which is using data to engender loyalty and drive sales. And our ability to reach any CMO across the spectrum is solid. We can get in the door anywhere, get a meeting…

Great. Yeah. That's very helpful. Certainly, a lot of moving parts to get there, but I do understand what you're saying there. I also wanted to ask on BrandLoyalty, how do you see the margins through that business at scale? Obviously, it's an earlier business and you're building it pretty substantially. So where could that go if you put your longer-term hat on? And then how should we think about seasonality kind of moving forward? Obviously, this year, we've had some moving parts between Q1 and Q2. And then I think we probably also have some moving parts around expanding that business. So maybe just help us think a little bit more about the seasonality of that business and how it evolves? Bryan A. Pearson - Executive VP & President, LoyaltyOne: From the margin side, I think, to say it's 20% plus would probably be in the right range. I mean, we're – Ed talked about – or sorry, Charles talked about the fixed cost nature of the business. But I know that there's continuing focus there on how we grow margins over time, but I think that would be safe. And then on the second question around seasonality, I mean, you've got to think about when grocers really want to focus on, on what happens in their business. And that's heading into the holiday seasons. And you can imagine, in the U.S., Thanksgiving will be a very large period of time and then the holidays after that with Christmas. And so, what you see is that the programs tend to skew a little bit towards the latter part of the year and then sometimes those programs run into the beginning of the following year into the first quarter. So you might get a little flop over of revenue and profits as you clean up the fall programs. And then people tend to run spring programs as well. So, it really is dependent on the clients and what the clients are trying to do in their business. We start from what the grocers are thinking about in terms of where they're looking to add sales and sort of create excitement for customers, and so that creates a little bit of the shift back and forth in terms of how you see the (59:45).

Q4 is usually the biggest, right? Bryan A. Pearson - Executive VP & President, LoyaltyOne: Yeah. Q4 is usually big.

But - Charles L. Horn - Chief Financial Officer & Executive Vice President: If you look at the first three quarters, what he's basically telling you, Josh, is it's not going to be a constant seasonality you can model every year.

Yeah. Charles L. Horn - Chief Financial Officer & Executive Vice President: It's just going to be a little bit bumpy with Q4 being the biggest.

Great. Thank you.

Your next question comes from the line of Dan Salmon with BMO Capital Markets.

Hey, guys. Good morning. Ed, when you look at the robust pipeline that you've got on the private label side, you mentioned sort of if we look – if you look back three years, you feel like it's just as strong now as it was then. How is it different? Is it maybe more tilted towards co-brand? Are there different verticals that are driving it more? But just as we think about the run rate over the next few years, we've obviously seen some new types of clients coming in there. If you could just give us a little bit color on sort of how you see that growing and executing against that sort of robust sort of growth numbers that you've talked about? Edward J. Heffernan - President, Chief Executive Officer & Director: Yeah. It's a fair question. Some of it again will be self-imposed on our end, which is I do think that, you know, our – the co-brand side of it, we're going to be a bit more cautious on because the co-brand stuff tends to attract some of the other players in the marketplace who are looking to make it sort of the number one card in the wallet, which is not necessarily what we're after from our clients' perspective. They just want to make sure it's number one when you're shopping at their store. And so I would expect that you would continue to see the vast, vast majority of our announcements to be private label as opposed to co-brand, which is really our basics. The co-brand stuff for the most part, if you looked over the portfolio, has either been in T&E, which is sort of unique to the T&E space or more specifically, they're co-brands that have been – that the clients have…

Okay, great. Thanks, guys. Edward J. Heffernan - President, Chief Executive Officer & Director: Okay. We'll take one more. Charles L. Horn - Chief Financial Officer & Executive Vice President: We'd already cut it off. Edward J. Heffernan - President, Chief Executive Officer & Director: That's it? Charles L. Horn - Chief Financial Officer & Executive Vice President: Yeah. Edward J. Heffernan - President, Chief Executive Officer & Director: Okay. Thank you for all your time. And we'll see next go around. Bye now.

Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.