Bread Financial CFO Perry Beberman says the company’s Q3 results are “a validation that we have largely fixed our balance sheet, and now we’re just in that last stage of some optimization opportunities.”
That includes retaining a focus on responsible, profitable growth, and targeting expansion into new verticals, such as home furnishings. During the third quarter, the Columbus, Ohio-based financial services company — which offers payment, lending and savings solutions — signed several brand partnerships with companies in the sector including Bed, Bath & Beyond; Furniture First; and Raymour & Flanigan, according to its earnings report.
The new partnerships are examples of Bread’s ongoing plan to further diversify both its customer and partner base, with verticals such as home furnishing representing higher ticket spending — enabling the company to expand its spectrum of target customers as well, Beberman said.
“Strategically, our vertical and product expansion efforts continue to have a positive impact, both on risk management and in income diversification across our portfolio,” he said in an interview.
A debt ‘game plan’
For the company’s third quarter, Bread Financial reported $188 million in net income— reflecting an impact from the prior year of $91 million from repurchased debt — and saw total non-interest expenses fall by $98 million, or 17% year-over-year, according to its Oct. 23 earnings presentation. The company also continued to make progress on its goal of improving capital and liquidity, reporting total liquid assets of $7.8 billion, compared to $7.6 billion for the prior year period.
Prior to the release of its Q3, Bread Financial also received a credit rating upgrade from Moody’s, “a real external validation of the strength of our company and the work that we've been doing,” Beberman said.
The company has also continued its focus on paying down its debt. Since arriving as CFO five and a half years ago, a top priority for Beberman has been developing a “game plan” regarding Bread Financials’ debt — something that speaks to a “a maniacal focus on strengthening this balance sheet and ensuring that we get our capital stack and our debt structure in line with [our] peers,” he said.
That’s included recent moves such as announcing the pricing of a private offering of $500 million in senior notes on Oct. 28. The offering is expected to generate approximately $493 million in proceeds, and will be tapped alongside $275 million of cash on hand to redeem outstanding 9.750% Senior Notes due 2029, “of which there is $719 million aggregate principal amount outstanding,” the company said.
The right opportunity at the right time
The company’s latest quarterly results represent a new turn in a multi-year transformation initiative that has been ongoing since Beberman joined Bread Financial — then Alliance Data — as its CFO in July 2021, according to a press release at the time. He joined the company after a 16-year span at Bank of America, serving in executive roles including nine years as its senior vice president and CFO of U..S consumer & GWIM Credit Card, according to LinkedIn.
Bread’s transformation has focused on streamlining the company’s operations, spinning off units as it looked to become solely focused on financial services. Beberman’s task as finance chief has been to right-size and strengthen a challenging balance sheet, through actions such as “getting our leverage rate down to where it needs to be, improving our capital ratios — they were anemic before,” he said.
Still, Beberman, has always loved a challenge, he said.
“People say to me, ‘how in the world did you ever take that job, knowing how challenging that balance sheet was?’” he said. “And I always say, ‘well, if it was a perfect balance sheet, they wouldn’t have been looking for a new CFO.’ So it was the right opportunity at the right time.”
