Slide 1: Q3 2022
Q3 2022 27 October 2022
Slide 2: Q3 highlights, Financial update, Outlook, Q&A
Q3 highlights Financial update Outlook Q&A
Slide 3: Financial highlights for the quarter
Financial highlights for the quarter Continued EBITDA margin expansion – reaching 51% for the quarter • EBITDA of EUR 30m, up from EUR 13m last year Cash EBITDA growth of 22% y-o-y • Cash EBITDA of EUR 54m, up from EUR 44m last year Profit after tax of EUR 10m, up from EUR -2m last year • Stable ann
Slide 4: Axactor is pursuing a strategy based on three strategic levers
Axactor is pursuing a strategy based on three strategic levers Blending the book • Solve old claims with low gross IRR and replace them with new higher gross IRR claims • Accelerate blending and secure growth through investing significantly above replacement capex Cost leadership • Axactor was incep
Slide 5: Third quarter is a continuation of the growth seen throughout 2022
Third quarter is a continuation of the growth seen throughout 2022 NPL ERC and company acquisitions (EUR billion) +11% -1% 2.3 2.4 2.2 2.3 2.2 2.2 2.2 2.1 2.1 2.1 2.0 2.1 1.9 1.7 1.4 1.5 0.8 0.7 0.7 0.6 0.4 0.5 0.5 0.3 0.3 0.1 0.1 0.0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 6: NPL gross IRR on the total book is steadily increasing
NPL gross IRR on the total book is steadily increasing - Current market prices significantly more favorable compared to the total book Gross IRR on the total NPL book1… …and per vintage 24% • The single most important profit 22% improvement initiative 20.9% 20.2% 20% Medium term average expected to
Slide 7: NPL investment estimate of EUR 250-300m for the year reiterated
NPL investment estimate of EUR 250 - 300m for the year reiterated – securing material growth on NPL NPL investments (EUR million) 500 462 450 398 NPL investment estimate of EUR 250 - 300m 400 for the year 350 300 • Invested EUR 69m during the quarter Estimate 2022 232 250 206 208 • Need to close add
Slide 8: Axactor with record low NPL cost-to-collect YTD 2022
Axactor with record low NPL cost-to-collect YTD 2022 - Materializing in an EBITDA percentage among the best in the industry Axactor NPL cost-to-collect per year1 NPL cost-to-collect selected peers1,2 EBITDA estimates selected peers3 59% Axactor 38% Axactor 50% Peer 1 49% Peer 1 43% 48% 45% Peer 2 52
Slide 9: Financial results in perspective
Financial results in perspective - Positive development on all key financial metrics YTD NPL investments Gross revenue EBITDA Cash EBITDA Profit after tax (EUR million) (EUR million) (EUR million) (EUR million) (EUR million) +223% +358% +8% +51% +12% 195 248 88 161 30 229 143 58 60 7 YTD YTD YTD YTD
Slide 10: Q3 highlights, Financial update, Outlook, Q&A
Q3 highlights Financial update Outlook Q&A
Slide 11: Group: Continued growth on gross revenue y-o-y
Group: Continued growth on gross revenue y-o-y Gross revenue (EUR million) +17% -5% 87 81 83 82 79 78 74 14 76 13 70 15 13 • Gross revenue is up 17% y-o-y from a weak 12 14 13 11 11 quarter last year • NPL gross revenue growth of 17% y-o-y 70 73 69 • 3PC gross revenue growth of 20% y-o-y 63 68 64 64
Slide 12: NPL segment: Total income growth of 63% with stable margins
NPL segment: Total income growth of 63% with stable margins NPL Total income and CM% (EUR million, and %) NPL Total income CM % +63% -33% 46 46 42 44 Total income growth drivers 40 41 • Gross revenue growth of 17% 30 28 77% 76% 79% 76% 77% 78% • Collection performance of 99% 66% • Reduced amortizati
Slide 13: 3PC segment: Total income growth of 20% compared to last year
3PC segment: Total income growth of 20% compared to last year 3PC Total income and CM% (EUR million and %) +20% -4% 15 14 14 13 13 13 • Total income growth of 20% y-o-y driven by the 11 12 11 acquisition of C.R. Service 44% 37% 47% • Marginal organic growth on 3PC driven by Spain 40% 41% 34% 35% and
Slide 14: Group: Continued EBITDA margin expansion and Cash EBITDA growth
Group: Continued EBITDA margin expansion and Cash EBITDA growth of 22% compared to last year Total income EBITDA and EBITDA-margin Cash EBITDA (EUR million) (EUR million and %) (EUR million) +51% 52% 48% 50%51% -27% 60 47% 33% 57 59 38% +22% 28% -10% 53 52 54 30 30 58 27 28 55 25 52 54 44 20 49 49 4
Slide 15: Rising interest rates expected to increase interest expense by EUR 2.1m
Rising interest rates is expected to increase interest expense on borrowings with EUR 2.1m in Q4 Quarterly interest expense on borrowings (EUR million) Q3 actual 14.0 Estimated changes in Q4 2.1 • Estimated based on the interest rates set for Q4 and based on the draw per 30 September1 Q4 estimate 16
Slide 16: Annualized ROE for the quarter in line with YTD results
Annualized ROE for the quarter in line with YTD results underpinning the stable financial results in 2022 Return on equity to shareholders (%) 10% Continuing operations 6% 9% ROE to shareholders 1% 2% -6% -6% -9% 2016 2017 2018 2019 2020 2021 YTD ’22 16
Slide 17: Axactor has a robust balance sheet positioned for growth
Axactor has a robust balance sheet positioned for growth Equity • Satisfying equity ratio of 29% Liquidity • Available cash of EUR ~20m • Unused funding line of EUR ~100m on the revolving credit facility Covenant headroom • Satisfying headroom to bond covenants • Loan to value of 72% vs. the covenan
Slide 18: Q3 highlights, Financial update, Outlook, Q&A
Q3 highlights Financial update Outlook Q&A
Slide 19: Outlook
Outlook Increased cost of funding1 • Expect interest expense on borrowings to increase by EUR 2.1m from third to fourth quarter • 1pp further increase in interest rates is estimated to increase quarterly interest expense on borrowings by EUR 1.8m Mixed outlook on backbook collections • Rising inflat
Slide 20: Financial targets
Financial targets Axactor is pleased to announce that financial targets will be published on 11 January 2023 The targets will be presented in a global investor webcast at 10:00 CET Furthermore, the company invites all debt and equity analysts to a physical lunch meeting at 12:00 CET 20
Slide 21: Q3 highlights, Financial update, Outlook, Q&A
Q3 highlights Financial update Outlook Q&A
Slide 22: Supporting information
Supporting information
Slide 23: NPL investment commitments of EUR 113m next 12 months
NPL investment commitments of EUR 113m next 12 months Quarterly NPL investments (EUR million) 80 69 54 47 Additional forward flow agreements and 37 35 one-off acquisitions 32 30 30 expected to further 22 increase NPL 16 16 investments 12 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ’20 ’20 ’21 ’21 ’21 ’21
Slide 24: ERC increasing by 11% y-o-y driven by increased NPL investments
ERC increasing by 11% y-o-y driven by increased NPL investments in 2022 ERC development Forward ERC profile by year (EUR million) (EUR million) +11% 2,367 300 2,259 2,279 285 2,160 2,169 2,159 2,119 2,130 2,141 253 223 197 174 157 142 128 115 104 93 76 67 55 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Y1 Y2 Y3 Y4 Y5
Slide 25: 3PC volumes by geographic region
3PC volumes by geographic region 3PC Total income split by geographic region 7% 1% 16% Q3’22 • Spain accounting for 46% of total income on 3PC Total income EUR 13.0m 17% 46% • Italy share of Total income increased to 17% following the acquisition of C.R. Service 12% FIN DEU ITA NOR ESP SWE 25
Slide 26: Discontinued operations
Discontinued operations - REO book value reduced to EUR 13m ultimo Q3 REO Total income and net profit1 REO book value REO number of units (EUR million and %) (EUR million) Total Income Net profit 12 78 2,957 75 10 2,553 9 9 65 8 8 2,259 51 1,908 5 4 42 1,640 2 1,322 1,106 27 946 21 835 2 4 16 -3 -5
Slide 27: Bond covenants (1/2)
Bond covenants (1/2) - Secured LTV is increasing as bond repurchase is funded by drawing on the secured RCF Loan-to-value1 - Covenant ≤75% Secured Loan-to-value1- Covenant ≤65% (Total portfolio book value divided by net interest-bearing debt) (Total portfolio book value divided by secured net intere
Slide 28: Bond covenants (2/2)
Bond covenants (2/2) - Leverage ratio increasing due to 1) investment ramp-up and 2) discontinued operations Leverage ratio1 - Covenant ≤4.0x Interest coverage ratio1- Covenant ≥4.0x (Net interest-bearing debt divided by LTM Pro-forma adjusted cash EBITDA (Pro-forma adjusted cash EBITDA divided by n
Slide 29: 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 B2C Business to consumer BoD Board of Directors Terms BS Consolidated statement of financial position (balance
Slide 30: Slide 30