Credit Corp Group Limited · ASX:CCP
Credit — FY2024 Earnings Presentation
25 slides from Credit's earnings presentation, Jul 30, 2024
Slide 1: FY24 Results
30 July 2024 FYQ2U Results j THOMAS BEREGI MICHAEL EADIE rh Chief Executive Officer Chief Financial Officer
Slide 2: Focus on core competencies in the credit impaired consumer segment
Focus on core competencies in the credit impaired consumer segment… Analytics and discipline Operational excellence Responsibility & compliance AUSTRALIAN / NZ DEBT BUYING • Large database • High asset turnover 1 • Low dispute rate TARGET • History of pricing accuracy • Low cost to collect 2 • $1.3b
Slide 3: ...has delivered improved performance over the course of the year
…has delivered improved performance over the course of the year… • US recovery • Lending growth NPAT ($m) 1 60 50 40 H1 FY24 30 20 H2 FY24 10 - Australian / NZ debt buying US debt buying Australian / NZ lending Group and collection services 1. Excluding impairment of US PDL book of $65 million (pre-
Slide 4: ...in challenging conditions
…in challenging conditions Segment Assessment of market conditions Credit Corp response US debt buying • Collection environment more challenging since late FY23 • Operational improvement focus • Uncertainty as to outlook for US credit-impaired consumers • Concentrate purchasing on familiar assets wi
Slide 5: A solid FY24 result
A solid FY24 result FY23 FY24 Var % 1,2 1,2 Australian / NZ debt buying and collection services $224.8m $231.9m 3% 2 2,3 US debt buying (pre-impairment) $100.8m $108.6m 5% Australian / NZ lending $147.8m $179.1m 21% Revenue total $473.4m $519.6m 10% Australian / NZ debt buying and collection service
Slide 6: Improved US operational performance
Improved US operational performance… • Sustained lift in productivity despite moderation in purchasing • Record quarterly collections for Q4 US Productivity Per Hour (US $) US Collections and Arrangement Book (US $m) 250 +6% 40 300 200 30 150 20 250 100 10 50 - 200 Q1 Q2 Q3 Q4 - Jul Aug Sep Oct Nov
Slide 7: ...has combined with favourable supply conditions
…has combined with favourable supply conditions… • US unsecured credit volumes remain significantly above pre-COVID levels although growth is moderating • Charge-off rates lag volume and are likely to continue to grow for 6-12 months US revolving credit market (U$b) and Quarterly Charge-Off Rates (%
Slide 8: ...to deliver a strong FY25 US investment pipeline
…to deliver a strong FY25 US investment pipeline • More than 50% of FY25 expected purchasing already contracted • FY25 pipeline comprises a high proportion of familiar assets with shorter cash payback periods US PDL Investment Volumes ($m) 250 200 150 100 FY25 purchasing pipeline of 50 $106 million
Slide 9: Consumer lending book growth in FY24
Consumer lending book growth in FY24… • Record opening book • Book growth expected to moderate in FY25 Consumer Lending Book and Annualised Revenue ($m) 500 400 300 200 100 - FY21 FY22 FY23 FY24 FY25 projection Gross loan book (excl. provisions) Annualised revenue Credit Corp Group Results Presentat
Slide 10: ...will convert to earnings in FY25
…will convert to earnings in FY25 • Record opening book will drive significant segment earnings growth Consumer Lending NPAT ($m) Lending volume ($m) 60 500 +27% 50 400 40 300 30 200 20 100 10 - - FY21 FY22 FY23 FY24 FY25 FY21 FY22 FY23 FY24 FY25 guidance midpoint projection Credit Corp Group Result
Slide 11: AU/NZ direct-from-issuer investment highest since FY20
AU/NZ direct-from-issuer investment highest since FY20… • AU/NZ run-off has now stabilised with investment levels sufficient to hold collections and the cost-to-collect AU/NZ PDL Investment Volumes ($m) AU/NZ Collections ($m) and Cost to Collect (%) 250 400 100% 200 300 75% 150 200 50% 100 100 25% 5
Slide 12: ...has been supported by our leading position in responsible practices
…has been supported by our leading position in responsible practices H1 FY24 AU EDR Rate 1 12 Months to Mar-24 US Dispute Rate 2 Credit Corp Credit Corp Publicly traded debt buyer A Other debt buyers Publicly traded debt buyer B - 1 2 3 4 - 1 2 3 4 Rating of Banks and Debt Buyers by Financial Counse
Slide 13: A platform for a return to growth in FY25 has been established
A platform for a return to growth in FY25 has been established… NPAT ($m) and Return on Equity (%) NPAT by Segment ($m) 120 30% 120 100 25% 100 +17% 80 20% 80 +25% 60 15% 60 +27% 40 10% 40 20 5% 20 - - - 2 3 4 FY18 FY19 FY20 1 FY21 FY22 FY23 FY24 FY25 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 guidance
Slide 14: ...with a strong purchasing pipeline
…with a strong purchasing pipeline… PDL Investment Volume ($m) 450 360 270 FY25 purchasing guidance $200 million - $250 million 180 FY25 purchasing pipeline of 90 $144 million secured at July 2024 - FY19 FY20 FY21 FY22 FY23 FY24 FY25 pipeline AU/NZ direct-from-issuer US debt buying AU/NZ secondary:
Slide 15: ...and the borrowing capacity for additional opportunistic investment
…and the borrowing capacity for additional opportunistic investment • Facilities expanded to $505 million: – $255 million syndicated corporate facility extended to July 2029 – $250 million consumer lending warehouse extended to October 2028 • Increased margin reflects tenor Cash Facilities ($m) and
Slide 16: Outlook for solid earnings growth in FY25
Outlook for solid earnings growth in FY25 • Growth in NPAT of 11 - 23% against FY24 underlying result FY25 Guidance Ledger investment $200 - $250 million Net lending $45 - $55 million NPAT $90 - $100 million EPS (basic) 132 - 147 cents Credit Corp Group Results Presentation FY24 — 16
Slide 17: Appendices: Key Operating Metrics
APPENDICES: KEY OPERATING METRICS Credit Corp Group Results Presentation FY24 — 17
Slide 18: Appendices: Key Operating Metrics
APPENDICES: KEY OPERATING METRICS APPENDIX 1: Operating cash flow and gearing 19 APPENDIX 2: AU/NZ & US debt buying operational metrics 20 APPENDIX 3: Payers base 21 APPENDIX 4: Productivity 22 APPENDIX 5: Collections life cycle 23 APPENDIX 6: Operational and total headcount 24 Credit Corp Group Res
Slide 19: Appendix 1: Operating cash flow and gearing
Appendix 1: Operating cash flow and gearing Operating cash flow and gearing FY21 FY22 FY23 FY24 PDL collections $492.1m $535.2m $493.8m $463.7m Lending income $78.9m $93.7m $147.8m $179.1m Other income $29.9m $38.3m $50.3m $92.8m Interest expense / income ($4.3m) ($4.7m) ($15.6m) ($23.8m) 1 Operatin
Slide 20: Appendix 2: AU/NZ & US Debt buying operational metrics
Appendix 2: AU/NZ & US Debt buying operational metrics AU/NZ Debt Buying FY24 Δ FY23 Collections $264m (13%) Productivity $312 per hour 1% Operations headcount 1 613 (12%) Payers book (face value) 1 $1,316m (2%) US Debt Buying FY24 Δ FY23 2 Collections $200m 3% 2 Productivity $291 per hour 14% Opera
Slide 21: Appendix 3: Payers base
Appendix 3: Payers base Portfolio summary: Debt buying AU/NZ Combined AU/NZ/US 1 Total portfolio Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Face value $8.5b $7.9b $11.8b $12.7b $12.8b $12.9b $13.0b Number of accounts 1,326,000 1,252,000 2,863,000 2,993,000 2,952,000 2,904,000 2,820,000 Payment
Slide 22: Appendix 4: Productivity
Appendix 4: Productivity Productivity per Hour (A$) 1 400 YTD JUN-24 350 average FY24: $302 300 FY23: $282 250 200 150 100 50 - Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 12m to Jun-23 12m to Jun-24 1. Combined AU/NZ and US segment productivity Credit Corp Group Results Presentation FY24 — 22
Slide 23: Appendix 5: Collections life cycle
Appendix 5: Collections life cycle PDL Collections by Vintage ($m) 1 160 (7%) 2 140 120 29% 33% 34% 33% 30% 32% 33% 37% 33% 32% 100 33% 33% 40% 39% 40% 35% 41% 44% 32% 34% 40% 34% 12% 12% 19% 44% 34% 18% 80 13% 19% 14% 20% 15% 15% 15% 15% 13% 16% 16% 18% 16% 14% 17% 17% 60 25% 17% 18% 17% 20% 17% 16
Slide 24: Appendix 6: Operational and total headcount
Appendix 6: Operational and total headcount Period End Headcount (FTE) 2,500 Jun-23 Dec-23 Jun-24 2,000 Debt buying operations 1,255 1,184 1,142 Collection services 571 1 613 1 628 1 1,500 Lending 231 253 254 1,000 Support 204 1 213 1 207 1 500 Total 2,261 2,263 2,231 Support % 9% 9% 9% - Jun-23 Dec
Slide 25: For more information please contact
For more information please contact: THOMAS BEREGI MICHAEL EADIE Chlef Executive Officer Chief Financial Officer | Tel +61 2 8651 5777 Tel +61 2 8651 5542 AA tberegi@creditcorp.com.au meadie@creditcorp.com.au