Slide 1: Presentation Q1 2024
AXACTOR Presentation Q1 2024
Slide 2: Highlights, Financial update, Outlook, Q&A
Highlights Financial update Outlook Q&A
Slide 3: Financial highlights for the quarter
Financial highlights for the quarter Gross revenue declining by 4% y-o-y • On the back of a challenging macro situation and moderate investments in 2023 Cash EBITDA declining by 5% y-o-y • Includes EUR 1.0m in restructuring cost in Germany • Part of a larger improvement project in Germany with expec
Slide 4: The industry is under pressure on profitability
The industry is under pressure on profitability - Axactor top 3 on profitability in 2023 Return on equity to shareholders for selected peers in 20231 (Percent) -40% -30% -20% -10% 0% 10% 20% 30% Peer 1 Peer 2 Axactor Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 4 1) On continuing operati
Slide 5: Why is the industry under pressure on profitability?
Why is the industry under pressure on profitability? Key industry challenges… …Axactor response • Industry had easy access to cheap • Will aim for placing smaller bonds 1 Funding funding, which now is more costly more frequently to take down risk • Fierce competition has pushed • Exit 3PC where prof
Slide 6: Key profit improvement drivers going forward for Axactor
Key profit improvement drivers going forward for Axactor 1 • Accelerate accretive investments 2 • Reduce cost to collect 3 • Declining interest rates 6
Slide 7: 1. Accelerate accretive investments
1. Accelerate accretive investments - Market prices are becoming more attractive NPL investments for selected peers in Europe in 2023 (EUR million) 0 100 200 300 400 500 600 700 Peer 1 Status Axactor Peer 2 • Moderate NPL investments of EUR 116m in ‘23 and EUR 11m in Q1 ‘24 Peer 3 • Attractive price
Slide 8: 2. Reduce cost to collect
2. Reduce cost to collect - Competitive advantage on cost improved every year since 2020 Estimated NPL cost to collect Axactor and selected peers Estimated NPL cost to collect selected peers in 20231 65% 0% 20% 40% 60% 80% 100% 64% Peer 1 60% 61% 59% Peer 2 55% 57% Peer 3 50% Peer 4 43% 44% Peer 5 4
Slide 9: 2. Reduce cost to collect
2. Reduce cost to collect - Improvements last twelve months per market • Closed call center in Jyväskylä • 3PC and NPL separated to secure focus • All operations co-located in Helsinki • One management layer terminated • Exited loss making 3PC segment • Closed call center in Saarbrücken • Exited los
Slide 10: 3. Declining interest rates
3. Declining interest rates - Axactor will benefit materially if interest rates declines EURIBOR 3 months (Jan ’20 – Apr ’24)1 4% 3% A reduction in interest rates of 1pp will… 2% • …improve Axactor's cash flow and net financial result by EUR ~9.3m on an annual basis2 1% • …improve return on equity b
Slide 11: Highlights, Financial update, Outlook, Q&A
Highlights Financial update Outlook Q&A
Slide 12: Group: Gross revenue is down 4% y-o-y driven by both segments
Group: Gross revenue is down 4% y-o-y driven by both segments Gross revenue (EUR million) +6% -4% 89 91 87 84 85 82 83 13 78 15 15 13 15 79 • Gross revenue is down 4% y-o-y 13 13 12 13 • NPL gross revenue declining by 4% y-o-y • 3PC gross revenue declining by 7% y-o-y 73 74 78 72 65 69 70 70 67 • Di
Slide 13: NPL segment: A soft quarter on NPL
NPL segment: A soft quarter on NPL NPL Total income and CM% (EUR million, and %) -9% +12% 52 52 48 49 50 • Total income and margins down y-o-y on the 44 46 46 45 back of macroeconomic headwinds • Collection performance of 92% for the quarter 77% 76% 76% 78% • Satisfactory collection in southern Euro
Slide 14: 3PC segment: A soft quarter on 3PC but new attractive contracts signed
3PC segment: A soft quarter on 3PC but new attractive contracts signed 3PC Total income and CM% (EUR million and %) -4% -7% 15 15 15 13 13 13 13 13 • 3PC total income decline of 7% y-o-y 12 • 5pp of the decline is attributable to closure of 3PC in Sweden and Finland 46% 41% 41% 34% 35% 33% 33% 32% 3
Slide 15: Group: In summary a soft quarter on key metrics
Group: In summary a soft quarter on key metrics Total income EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) -9% 65 65 50% 51% 54% 53% 63 62 64 48% 49% 49% 50% +4% 60 59 34 34 46% -5% 57 57 33 60 30 30 31 30 58 58 54 55 55 28 51 26 49 49 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 16: ROE upheld at 6% last twelve months – despite increased cost of funding
ROE upheld at 6% last twelve months – despite increased cost of funding Return on equity to shareholders (%) 9% 7% 6% 6% 1% 2% -6% -6% -9% 2016 2017 2018 2019 2020 2021 2022 2023 LTM Q1-24 16
Slide 17: Highlights, Financial update, Outlook, Q&A
Highlights Financial update Outlook Q&A
Slide 18: Outlook for 2024
Outlook for 2024 • Experience a challenging collection environment which is expected to 1 Collection prevail throughout 2024 • Absorbed inflation and achieved OPEX reduction y-o-y last two 2 OPEX quarters. Expect to be able to continue the trend • Expect only modest reduction of cost of funding in 2
Slide 19: Highlights, Financial update, Outlook, Q&A
Highlights Financial update Outlook Q&A
Slide 20: Supporting information
Supporting information
Slide 21: NPL investment commitments of EUR 16m next 12 months
NPL investment commitments of EUR 16m next 12 months Quarterly NPL investments (EUR million) 93 80 69 47 40 33 Additional forward 24 flow agreements and 19 one-off acquisitions 11 expected to further 6 5 3 2 increase NPL investments Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 ’22 ’22 ’22 ’22 ’23 ’23 ’23
Slide 22: ERC increasing by 1% last twelve months
ERC increasing by 1% last twelve months ERC development Forward ERC profile by year (EUR million) (EUR million) +1% 2,545 2,523 2,563 2,586 2,620 2,555 309 298 2,367 283 2,259 2,279 252 219 191 171 155 139 126 107 91 79 71 63 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14
Slide 23: 3PC volumes by geographic region
3PC volumes by geographic region 3PC Total income split by geographic region 13% Q1’24 • Spain accounting for 52% of total income on 3PC Total income 22% 52% EUR 11.9m • Segment closed down in Finland and Sweden, with no active clients per year-end 2023 13% DEU ITA NOR ESP 23
Slide 24: Bond covenants (1/2)
Bond covenants (1/2) Loan-to-value - covenant ≤80% Secured Loan-to-value - covenant ≤60% (Net interest-bearing debt divided by total portfolio book value) (Secured net interest-bearing debt divided by total portfolio book value) 60% 80% 73% 73% 73% 73% 37% 38% 39% 72% 73% 73% 35% 72% 72% 35% 35% 35%
Slide 25: Bond covenants (2/2)
Bond covenants (2/2) Leverage ratio - covenant ≤4.0x Interest coverage ratio - covenant ≥3.0x (Net interest-bearing debt divided by LTM Pro-forma adjusted cash EBITDA (Pro-forma adjusted cash EBITDA divided by net interest expenses) 4.0 4.0 3.0 3.9 5.4 5.2 5.2 3.8 3.8 5.0 4.6 4.2 3.8 3.8 3.5 3.7 3.2
Slide 26: Terms and abbreviations
Terms and abbreviations Abbreviations 3PC Third-party collection AGM Annual general meeting APM Alternative performance measures ARM Accounts receivable management B2B Business to business Terms B2C Business to consumer Active forecast Forecast of estimated remaining collection on NPL portfolios BoD
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