American Express Reports Fourth-Quarter Earnings Per Share of $2.03 and Full-Year EPS of $7.99; Adjusted Full-Year EPS of $8.201

Strong 2019 Revenue Growth Reflects Higher Card Fee Income, Card Member Spending and Net Interest Income

American Express Company (NYSE:AXP) today reported fourth-quarter net income of $1.7 billion, or $2.03 per share, compared with net income of $2.0 billion, or $2.32 per share, a year ago. The year-ago period included $496 million, or $0.58 per share, of certain discrete tax benefits.

(Millions, except percentages and per share amounts)

 

Quarters Ended

December 31,

Percentage
Inc/(Dec)

Years Ended

December 31,

Percentage
Inc/(Dec)

2019

2018

2019

2018

Total Revenues Net of Interest Expense

$

11,365

$

10,474

9

$

43,556

$

40,338

8

Net Income

$

1,693

$

2,010

(16)

$

6,759

$

6,921

(2)

Diluted Earnings Per Common Share2

$

2.03

$

2.32

(13)

$

7.99

$

7.91

1

Adjusted Diluted Earnings Per Common Share1

$

2.03

$

1.74

17

$

8.20

$

7.33

12

Average Diluted Common Shares Outstanding

   

 

816

   

 

852

(4)

   

 

830

   

 

859

(3)

Fourth-quarter consolidated total revenues net of interest expense were $11.4 billion, up 9 percent from $10.5 billion a year ago. This growth continued to be driven by a well-balanced mix of growth in fee, spend and lend revenues, consistent with the high levels of revenue growth the company has delivered for over two years.

Consolidated provisions for losses were $1 billion, up 7 percent from $954 million a year ago.

Consolidated expenses were $8.4 billion, up 9 percent from $7.7 billion a year ago. The rise reflected growth in rewards and other customer engagement costs, driven primarily by increased Card Member spending and higher usage of card benefits, as well as higher operating expenses.3

The consolidated effective tax rate was 14.8 percent, up from (9.8) percent a year ago. The year-ago period reflected the $496 million tax benefit mentioned above, which resulted from changes in the tax method of accounting for certain expenses; the resolution of certain prior years’ tax audits; and an adjustment to the company’s provisional tax charge related to the Tax Cuts and Jobs Act.

The current quarter included income tax and other tax-related benefits that the company employed to fund incremental business growth initiatives and to improve operating efficiencies.

For the full year, the company reported net income of $6.8 billion, compared with net income of $6.9 billion a year ago. Earnings per share was $7.99, compared with $7.91 a year ago. Adjusted earnings per share was $8.20 (excluding the impact of a litigation-related charge in the first quarter of 2019), compared with $7.33 a year ago (excluding certain discrete tax benefits in the fourth quarter of 2018).1

Revenues net of interest expense for the full year were $43.6 billion, up 8 percent (9 percent FX-adjusted4) from $40.3 billion a year ago.

Consolidated expenses for the full year were $31.6 billion, up 9 percent from $28.9 billion a year ago.

“We once again delivered steady, consistent performance in the fourth quarter, marking our 10th straight quarter of FX-adjusted revenue growth at or above 8 percent,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “These results demonstrate the success of our strategy to generate sustainable, profitable growth across the enterprise over the long term.

“During 2019, we added 11.5 million new proprietary cards and continued to deliver solid billings growth. Almost 70 percent of our new Card Members are choosing our fee-based products, helping to drive card fee revenue growth of 17 percent. And, we delivered solid loan growth while maintaining industry-leading credit metrics.

“I am also pleased to report that we achieved our goal of virtual parity merchant coverage in the United States as of year-end 2019. We set this ambitious goal in 2016 recognizing the integral role of our merchant network in driving our growth, and we remain committed to continuing to increase our coverage globally.

“Across our businesses, we continued to make investments to increase our share, scale and relevance. In the premium consumer space, we refreshed a number of our card products and cobrand portfolios globally, and we applied our successful product strategy to our business card portfolio with the launch of several small business Platinum cards and a new Corporate Card program for large enterprises. In total, we have launched or refreshed over 50 proprietary products globally across our commercial and consumer businesses in the past two years, resulting in greater engagement and strong new card acquisitions.

“On the digital front, we are focused on integrating the new capabilities we recently acquired, and we’re seeing increased customer engagement across our digital channels. In fact, 81 percent of our active Card Members are digitally engaged with us either on our app or website.5

“For 2020, we expect revenue growth in the range of 8 to 10 percent on an FX-adjusted basis and earnings of $8.85 - $9.25 per share. Our consistent performance, along with our continued investments in product innovation and growth opportunities, gives us confidence that we have a long runway for steady growth over the long term.”

Global Consumer Services Group reported fourth-quarter net income of $846 million, up 21 percent from $702 million a year ago.

Total revenues net of interest expense were $6.2 billion, up 10 percent from $5.6 billion a year ago. The rise primarily reflected higher net interest income, Card Member spending and card fees.

Provisions for losses totaled $781 million, up 8 percent from $726 million a year ago.

Total expenses were $4.4 billion, up 6 percent from $4.2 billion a year ago. The increase reflected growth in rewards and other customer engagement costs, driven primarily by higher Card Member spending and higher usage of card benefits.

The effective tax rate was 13.7 percent, up from 3.4 percent a year ago.

Global Commercial Services reported fourth-quarter net income of $617 million, down 1 percent from $624 million a year ago.

Total revenues net of interest expense were $3.5 billion, up 7 percent from $3.3 billion a year ago. The increase primarily reflected higher Card Member spending, net interest income and card fees.

Provisions for losses totaled $235 million, up 5 percent from $223 million a year ago.

Total expenses were $2.6 billion, up 9 percent from $2.4 billion a year ago. The rise reflected growth in rewards and other customer engagement costs, including client incentives, driven by increased Card Member spending, as well as higher operating expenses.

The effective tax rate was 14.8 percent, up from 10.6 percent a year ago.

Global Merchant and Network Services reported fourth-quarter net income of $549 million, up 10 percent from $501 million a year ago.

Total revenues net of interest expense were $1.7 billion, up 3 percent from $1.6 billion a year ago. The rise primarily reflected increased Card Member spending.

Total expenses were $1 billion, up 2 percent from $995 million a year ago.

The effective tax rate was 17.1 percent, down from 20 percent a year ago.

Corporate and Other reported fourth-quarter net loss of $319 million, compared with net income of $183 million a year ago. The year-ago period included a portion of the above-mentioned discrete tax items.

_________________________________

1 Adjusted diluted earnings per common share, a non-GAAP measure, excludes the impacts of a litigation-related charge in Q1’19 and certain discrete tax benefits in Q4’18. See Appendix I for a reconciliation to EPS on a GAAP basis. Management believes adjusted EPS is useful in evaluating the ongoing operating performance of the company.

2 Diluted earnings per common share (EPS) was reduced by the impact of (i) earnings allocated to participating share awards and other items of $12 million and $16 million for the three months ended December 31, 2019 and 2018, respectively, and $47 million and $54 million for the years ended December 31, 2019 and 2018, respectively, and (ii) dividends on preferred shares of $20 million and $19 million for the three months ended December 31, 2019 and 2018, respectively, and $81 million and $80 million for the years ended December 31, 2019 and 2018, respectively.

3 Operating expenses represent salaries and employee benefits, professional services, occupancy and equipment, and other expenses.

4 As reported in this release, FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translations into U.S. dollars (e.g., assumes the foreign exchange rates used to determine results for the year ended December 31, 2019 apply to the period(s) against which such results are being compared). Management believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates. FX-adjusted revenues constitute non-GAAP measures.

5 Digital Engagement represents Card Member accounts with spend greater than $0 and at least one American Express website or mobile app visit vs. all Card Member accounts with spend greater than $0, for full year 2019.

About American Express

American Express is a globally integrated payments company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, instagram.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.

Key links to products, services and corporate responsibility information: charge and credit cards, business credit cards, travel services, gift cards, prepaid cards, merchant services, Accertify, InAuth, corporate card, business travel, and corporate responsibility.

This earnings release should be read in conjunction with the company’s statistical tables for the fourth quarter 2019, available on the American Express website at http://ir.americanexpress.com and in a Form 8-K furnished today with the Securities and Exchange Commission.

An investor conference call will be held at 8:30 a.m. (ET) today to discuss fourth-quarter and full-year earnings results. Live audio and presentation slides for the investor conference call will be available to the general public on the above-mentioned American Express Investor Relations website. A replay of the conference call will be available later today at the same website address.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address American Express Company’s current expectations regarding business and financial performance, including management’s outlook for 2020, among other matters, contain words such as “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements, include, but are not limited to, the following:

A further description of these uncertainties and other risks can be found in American Express Company’s Annual Report on Form 10-K for the year ended December 31, 2018, the company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2019 and the company’s other reports filed with the Securities and Exchange Commission.

American Express Company

(Preliminary)

Appendix I

 

 

 

 

 

 

 

 

 

 

 

Reconciliations of Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4'19

 

Q4'18

 

YOY %
Change

 

YTD'19

 

YTD'18

 

YOY %
Change

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share 

$

2.03

 

$

2.32

 

  (13)

 

$

7.99

 

$

7.91

 

       1

Q4'18 discrete tax impacts (1)

 

            -

 

 

  (0.58)

 

 

 

 

            -

 

 

  (0.58)

 

 

Q1'19 litigation-related charge (pre-tax)

 

            -

 

 

            -

 

 

 

 

     0.27

 

 

            -

 

 

Q1’19 tax impact of litigation-related charge

 

            -

 

 

            -

 

 

 

 

  (0.06)

 

 

            -

 

 

Total impact of adjustments

 

            -

 

 

  (0.58)

 

 

 

 

     0.21

 

 

  (0.58)

 

 

Adjusted diluted earnings per common share

$

2.03

 

$

1.74

 

     17

 

$

8.20

 

$

7.33

 

     12

(1) Q4’18 discrete tax benefits reflect changes in the tax method of accounting for certain expenses, the resolution of certain prior years’ tax items and an adjustment to the company’s 2017 provisional tax charge related to the Tax Cuts and Jobs Act.

 

Media:
Marina H. Norville, marina.h.norville@aexp.com, +1.212.640.2832
Andrew R. Johnson, andrew.r.johnson@aexp.com, +1.212.640.8610

Investors/Analysts:
Rosie C. Perez, rosario.c.perez@aexp.com, +1.212.640.5574
Melanie L. Michel, melanie.l.michel@aexp.com, +1.212.640.5574