Good morning, and welcome to the Alliance Data Third Quarter 2015 Earnings Conference Call. At this time, all parties have been placed on 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 third quarter 2015 earnings release. If you have not, please call FTI Consulting at 212-850-5721. 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 Kennedy, Chief Executive of Epsilon/Conversant. 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. Welcome, everyone. Joining me today, as mentioned, is Bryan Kennedy, the CEO of Epsilon and Conversant (sic) [Epsilon/Conversant] (1:38); and Charles Horn, our always dynamic CFO. Bryan will update you on both Epsilon and, in particular, the trends that we're seeing at Conversant, and Charles [audio gap] (1:52) the results, and then I'll finish up and discuss our final outlook for this year and then what we're thinking about for 2016. So, with that, I'll turn it over to Charles. Charles L. Horn - Chief Financial Officer & Executive Vice President: Thanks, Ed. It was a strong and balanced third quarter for Alliance Data as all three operating segments achieved double-digit growth on a constant…

All right. Thanks, Charles. Epsilon's revenue increased 41% to $532 million, and adjusted EBITDA increased a strong 60%, both helped by the acquisition of Conversant in December of 2014. If you were to exclude Conversant, revenue and adjusted EBITDA increased 5% and 6%, respectively, for the third quarter of 2015, with margins expanding by 300 basis points, also mostly due to Conversant. For legacy Epsilon, third quarter showed steady progress as we improved by a full point in both top-line and bottom-line growth rates compared to the previous quarter. Much of that lift came from strong performance in our Technology Services business, along with good strength in the automotive vertical where existing clients were adding on additional services. And that over-performance more than offset some of the project softness we've seen within agency. Okay. Turning to Conversant in the next slide. I'm pleased to report that after three straight quarters of revenue declines, Q3 demonstrated a substantial recovery and came at flat versus prior year, reversing a trend which had appeared to be accelerating over the first half, but was in fact all part of the transformation process we have been undergoing the entire year. Specifically, we spent the first half of the year purposefully pruning some portions of the business that relied on more commodity-like offerings as we shifted our focus toward an intensive data-driven, people-based approach to digital marketing. As we demonstrated over the first half, these offerings are more profitable, evidenced by the growing improvement in EBITDA performance over the first two quarters, and then punctuated by adjusted EBITDA growth of 9% in Q3 on a pro-forma basis, with margins improving about 300 basis points over prior year. But we also believe that this approach, the data-intensive, people-based marketing, and personalization approach, offers the best opportunity for…

Your first question comes from the line of Dan Perlin with RBC Capital Markets.

Thanks. Good morning. I just have a couple follow-ups on Conversant. As we're mapping out, kind of the growth rate on expectations around next year, I want to make sure I understand this kind of roll in of new business versus the pruning and exit of the legacy business. So, it looks like you're calling for around $70 million or so, but I think the indication is that it could be as much as $85 million or better for the year of new business cross-sells. But it looks like the pruning was going to cost you guys about $40 million this year. Is that the right amount, and is there continued pruning expected? I thought there was kind of some indications that they might continue to be down on the display side some $10 million to $20 million next year. Charles L. Horn - Chief Financial Officer & Executive Vice President: So, Dan, your estimate for 2015 is pretty close. It's about what we're looking for. If you look into 2016, we wouldn't expect it to be near to that level on the display side of it. We'd expect to see good double-digit growth on the CRM side. We'd expect to see low-single digit, mid-single digit on affiliate, and then any pressure coming through on agency, we'd expect to mitigate it with growth in mobile and video. So, that's really what we're looking for in 2016. You roll it up, and you get high-single-digit growth in revenue.

Got it. And you now – I think you said 16 deals that you guys have won. How many of those are Epsilon? I think, inter-quarter, you had talked about 12 and 10 were, I think, from Epsilon. How does that stack up when we look at the total 2016?

Yeah. I think on the wins that we've had, first of all, a good number of Epsilon clients are shared clients with ADS Retail. So, sometimes, when we talk about them, they are actually both. But I think our penetration at this point is something like 70% Epsilon, 30% private label. And obviously, there's a lot of headroom in both of those businesses as we continue to move forward. About 80%, I would say, of the cross-sell wins that we've had are retail, and 20% in other verticals. So, those are expansionary for us as we look at next year, both deeper penetration into retail and then penetration into new verticals

Okay. And then, Ed, I just wanted to check something you said, this conversion of buying back two-thirds of the stock and then converting it into debt, low cost debt. It sounded like you were talking up the accretion that you maybe had originally given in year two, which I think, I want to say was $0.75 for Conversant. It sounded like you were kind of lifting that a bit. Is that correct? Charles L. Horn - Chief Financial Officer & Executive Vice President: It depends on how you look at it, Dan. If you look at the buybacks on a standalone basis, the answer would be no. If you look at the buybacks being directly to change the capital structure of Conversant, then the answer would be yes. Edward J. Heffernan - President, Chief Executive Officer & Director: Said differently, don't start creeping up our guidance before we even finish this year.

Okay. And then just one last one on Conversant. The – we get a lot of questions around the ability for Conversant with Epsilon combined actually to compete with Google and Facebook in terms of capturing the intent at the time of purchase. What's your response to that, I guess? And I'll hop off. Thanks. Edward J. Heffernan - President, Chief Executive Officer & Director: I mean, Dan, from my perspective, Google is all about search. Search is all about intent. We're really focused, and it will sound like we're beating the dead horse here. But we're really focused on commerce data and what people buy. And from our perspective, that is always going to be the best predictor of future behavior. So, certainly, all of those other channels, whether it be search or social, are meaningful to our CMOs when they think about marketing. But the landscape that we play in is really around what am I buying, who am I, and increasingly, where am I from a location perspective, which we can get at with our mobile footprint. So that's the piece we focus on.

Thank you.

Your next question comes from the line of Chris Brendler with Stifel. Christopher Brendler - Stifel, Nicolaus & Co., Inc.: Thanks. Good morning. Kind of focus on the Card business for a second. Just your comments around credit reserve, provisioning expense this quarter, and the expectation for probably higher losses next year. The delinquency trends, though, look really good to me in this quarter. I just wonder if you could comment on what you're seeing in the early-stage delinquency buckets and how you feel about credit. Because from my perspective, it looks like things are actually improving, not declining. Charles L. Horn - Chief Financial Officer & Executive Vice President: We would agree with you, Chris. We're really not seeing it come through the delinquency buckets. Really, what you're seeing is just that natural maturation of a portfolio that you start up in 2013. These loss rates could be 1% in 2013, 3% in 2014, and then 6% in 2015, and then dropping into a more normalized level the following year. So you don't really see that creep through your delinquency trends. It's basically just that aging with that trailing charge-off rate you charge off after six months. Surely, for the first couple of years, you outrun it. Catches up with you in year three. And then by year four, you see it decline a little bit into its more natural state. Christopher Brendler - Stifel, Nicolaus & Co., Inc.: Okay. Great. Thanks. And then on the Payment Protection product and the charge you took this quarter. Can you just give us a sense of what the run rate of revenue is in those products today and how quickly it will decline? Charles L. Horn - Chief Financial Officer & Executive Vice President: It's a small piece of what we…

Your next question comes from the line of Bob Napoli with William Blair. Bob P. Napoli - William Blair & Co. LLC: Thank you. Good morning. Just on Conversant, Bryan. Just to be clear, what do you feel like is the biggest differentiator that bringing Conversant on, adding it to Epsilon and the other products, what really differentiates your capabilities versus the market?

Sure, Bob. I mean, I think it goes back to what we were attracted to when we started talking to Conversant initially, which is a business that really is based on first-party transactional data. If you think about Epsilon and our business, we are, for the vast majority of our clients, managing in a lot of their consumer data and using that to drive marketing programs. What we did not have is significant scale in its channels. And as I think everyone is fully aware, so much of the spend is shifting out of traditional channels into those digital channels that we were missing out on the opportunity to sort of capture some of the potential value for our clients by leveraging the data that we were already managing to make that work in terms of driving return in the digital channel, specifically display and mobile and video. So, when you put Conversant and Epsilon together, you have a very natural match there: a Conversant platform, that's already built on first-party transactional data, an Epsilon relationship that's managing client data. So, those are sort of the critical ingredients for us to then begin turning on those marketing programs for clients in digital channels. What that effectively means is we're able to demonstrate to our clients a better return than they were using – than they were getting from buying from other vendors. So, it's a consolidation play where we attract more of that spend, and frankly, get better results for the clients. Bob P. Napoli - William Blair & Co. LLC: Was Conversant important in signing Wayfair or to the Toyota deals? Edward J. Heffernan - President, Chief Executive Officer & Director: Not for those two specifically, but there were number of shared clients that we have signed with Conversant…

Your next question comes from the line of Ashish Sabadra with Deutsche Bank.

Congrats on the solid results. It's good to see the turnaround with Conversant, as well as good momentum coming back into Epsilon. My question was more around Epsilon. Bryan, you talked about improvement or solid growth in technology, as well as the auto vertical. I also believe you had one large client which had pulled back. Can you just talk about how that's trending, and then how should we think about Epsilon growth – the core Epsilon growth going forward?

Sure. Yeah. I mean, we have seen good growth in technologies, as we mentioned earlier this year, and that's been a major driver. I think, it has always been kind of a legacy strength for Epsilon. Data has also been strong for us over the course of this year and the softness that we had to play through is in the agency vertical where we did have one significant client pullback. We've slowly been clawing our way back to growth with that client, and that's our plans. We roll into 2016 which should drive continued the mid-single performance for Epsilon.

That's great. A quick question for you, Charles, was around the reserve rate. The reserve rate in this quarter was 5.7% versus 5.6% last quarter. The spreads there between the reserve and charge-off has gone up 230 basis points compared to your normal 110 basis points. Is that just conservatism, building up a reserve as the receivables growth accelerate? Charles L. Horn - Chief Financial Officer & Executive Vice President: I think it's more of a situation we are getting ahead of the 30 basis points increase in loss rates we talked about. And then what you'll see in Q4, Ashish, you'll probably come down a little bit as the reserve rate as you have more transactors in Q4 versus revolvers. So, you always narrow the spread, the differential in Q4 a little bit over Q3. So, I think all you're really seeing in Q3 is we got ahead of that additional increase in the loss rates we talked about.

Yeah. That's great. And, Ed, just maybe a quick comment on the 2016 guidance. Usually, when you first come out with the first guidance for the next year, there is some conservatism baked in, and I just wanted to confirm, there is no change this time around. There is still conservatism baked into the guidance? Edward J. Heffernan - President, Chief Executive Officer & Director: Well, we feel that this is a very good base case, and we'll tweak it as things go, but we feel very comfortable putting these numbers out this early, and that means we feel pretty confident about it.

That's great. Edward J. Heffernan - President, Chief Executive Officer & Director: How's that for a non-answer?

No, no, I think it answered my question, but thanks, and congrats once again. Edward J. Heffernan - President, Chief Executive Officer & Director: Thanks. Take one more?

The final question comes from the line of George Mihalos with Cowen.

Great. Thanks for squeezing me in, guys. Bryan, just wanted to go back to Epsilon and sort of approach it more from a margin perspective. You've been growing EBITDA about a point ahead of revenue growth for the last two quarters. How should we think about that relationship going into 2016 for the overall business and then specifically for sort of legacy Epsilon?

Sure. I mean, this – Ed covered it earlier, has been a major focus for us this year, and that's our goal going forward is to kind of maintain that relationship. We have a significant offshoring initiative that we've talked about, I think, several times over the course this year that provides us opportunity in future years to continue that trend. And obviously, as we look at Conversant which has a nice margin profile, there's leverage in that business. So, we're planning to continue the same trend that we're on. Edward J. Heffernan - President, Chief Executive Officer & Director: Yeah. I would say that if we're successful, you're going to see core Epsilon, whatever the revenue growth is flow to EBITDA growth, I wouldn't expect a real expansion there because what we're getting from some of the labor plays that we're talking about is being offset by a very expensive hot skills set that we're bringing in. But we certainly don't want to go back to grow top line seven (1:00:13), grow nothing on bottom line. So, think of core as whatever we grow top, we should grow bottom, won't be much leverage after that. But the Conversant piece, as that starts getting bigger because it is growing faster than overall core Epsilon has much larger margins, and so the combined Epsilon/Conversant business should show margin expansion as we move forward.

Okay. Thanks for that. And just a quick follow-up for Charles. How should we be thinking about the gross yield modeling that going into 2016? And maybe talk a little bit about the opportunities you see or maybe don't see on the cobranded side going forward? Thank you. Charles L. Horn - Chief Financial Officer & Executive Vice President: I think you'll see a little bit of gross yield compression next year, obviously as we do a few renewals and obviously as we do a little bit of a change in mix in the co-brand versus private label. I wouldn't expect it to be as much as what it is this year. And I would expect that we'd find a way from an operating expense to mitigate a large portion of it. So, I'm not looking for big compression in EBITDA net margins in 2016 compared to 2015.

Great. Thank you. Edward J. Heffernan - President, Chief Executive Officer & Director: All right. Thank you, everyone. Appreciate your time. And we'll talk to you next time. Bye-bye.