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American Express (AXP) Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Call

April 20, 2016 5:00 pm ET

Executives

Toby Willard - Head of Investor Relations

Jeffrey C. Campbell - Chief Financial Officer & Executive Vice President

Analysts

Christopher Brendler - Stifel, Nicolaus & Co., Inc.

Craig Jared Maurer - Autonomous Research US LP

Sanjay Sakhrani - Keefe, Bruyette & Woods, Inc.

Bob P. Napoli - William Blair & Co. LLC

Richard B. Shane - JPMorgan Securities LLC

David Ho - Deutsche Bank Securities, Inc.

Moshe Ari Orenbuch - Credit Suisse Securities (NYSE:USA) LLC (Broker)

James Friedman - Susquehanna Financial Group LLLP

Matt P. Howlett - UBS Securities LLC

Donald Fandetti - Citigroup Global Markets, Inc. (Broker)

Bill Carcache - Nomura Securities International, Inc.

Mark C. DeVries - Barclays Capital, Inc.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the American Express First Quarter 2016 Earnings Call. At this time, all lines are in a listen-only mode. Later, there will be an opportunity for your questions and instructions will be given at that time. And as a reminder, this conference is being recorded.

I'll now turn the conference over to Head of Investor Relations, Toby Willard. Please go ahead, sir.

Toby Willard - Head of Investor Relations

Thanks, Cathy. Welcome. We appreciate all of you joining us for today's call. The discussion contains certain forward-looking statements about the company's future financial performance and business prospects which are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements are set forth within today's presentation slides and in the company's reports on file with the Securities and Exchange Commission.

The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the first quarter 2016 earnings release and presentation slides as well as the earnings materials for prior periods that may be discussed, all of which are posted on our website at ir.americanexpress.com. We encourage you to review that information in conjunction with today's discussion.

Today's discussion will begin with Jeff Campbell, Executive Vice President and Chief Financial Officer, who will review some key points related to the quarter's results through the series of presentation slides. Once Jeff completes his remarks, we'll move to a Q&A session.

With that, let me turn the discussion over to Jeff.

Jeffrey C. Campbell - Chief Financial Officer & Executive Vice President

Well, thanks, Toby, and good afternoon, everyone. Overall, our first quarter results were consistent with the expectations we've provided just last month at Investor Day. As a reminder, we closed our presentation at Investor Day by highlighting our focus on accelerating revenue growth, optimizing investments and resetting our cost base. In addition, I made some specific remarks about Q1, including updates on volume trends and several significant quarterly items such as the close of the JetBlue portfolio sale and the modest restructuring charge, all of which came in about as we expected, and all of which I will describe in more detail later in my remarks.

Earnings per share was $1.45 during the quarter, which included a $0.05 impact for the restructuring charge, a $127 million pre-tax gain from the sale of the JetBlue co-brand portfolio, higher revenues and elevated investment levels. We did see an increase in FX-adjusted billed business growth from 5% during the fourth quarter to 6% in Q1, but there were a number of items that influenced first quarter performance, including a benefit from leap year and a drop-off in Costco-related billings as we move closer to the end of the relationship. As expected, we also saw a larger-than-usual year-over-year decline in our reported discount rate and the impact from a stronger U.S. dollar. The results also reflected healthy underlying loan growth, excellent credit performance and a strong balance sheet that enabled us to return a substantial amount of capital to shareholders.