Credit Corp Group Limited · ASX:CCP
Credit — H1 FY2022 Earnings Presentation
23 slides from Credit's earnings presentation, Feb 1, 2022
Slide 1: Credit Corp Group H1 FY2022 Results
es Credit Corp Group ™. © BUILDING HIF Y2022 ‘A. MOMENTUM RESULTS ra 1 February 2022 Thomas Beregi, CEO | Michael Eadie, CFO
Slide 2: Leadership in the credit impaired consumer segment
Leadership in the credit impaired consumer segment … ANALYTICS & DISCIPLINE OPERATIONAL EXCELLENCE SUSTAINABILITY & COMPLIANCE Australian / NZ debt buying Largest database Highest asset turnover 1 No adverse orders or undertakings History of pricing accuracy Lowest cost to collect 2 Low
Slide 3: … has delivered sustained growth …
… has delivered sustained growth … NPAT AND RETURN ON ASSETS $ 105m 18.0% 16.0% $ 90m 14.0% $ 75m 12.0% $ 60m 10.0% $ 45m 8.0% 6.0% $ 30m 4.0% $ 15m 2.0% - - FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Projected 1 Total NPAT (LHS) COVID adjustments NPAT (LHS) ROA (RHS) FY2022 1. Midpoint
Slide 4: … and a solid start to the year …
… and a solid start to the year … H1 FY2021 H1 FY2022 Var % AU/NZ debt buying $113.3m $118.8m 5% US debt buying $37.3m $42.8m 15% AU/NZ lending $37.4m $42.3m 13% Revenue total $188.0m $203.9m 8% 8% AU/NZ debt buying $27.5m $29.0m 5% growth in NPAT US debt buying $8.0m $10.5m 31% AU/NZ lending $6.7m
Slide 5: … with record investment to support ongoing growth …
… with record investment to support ongoing growth … PDL INVESTMENT AND LENDING VOLUME $ 350m Record half-year investment $ 300m (including the Radio Rentals $ 250m book) in challenging conditions $ 200m $ 150m Highest Aus/NZ direct from issuer purchasing since pre-pandemic $ 100m $ 50m Strong
Slide 6: … and the financial capacity to seize investment opportunity
… and the financial capacity to seize investment opportunity FACILITY HEADROOM AND GEARING $ 396m 50% $ 400m $ 372m $ 350m $ 350m $ 313m $ 300m 40% $ 300m $ 250m Undrawn debt headroom intact despite $ 212m 30% record half-year $ 200m $ 150m $ 120m $ 100m 20% $ 50m - 10% FY2018 FY2019 FY2020 FY2021
Slide 7: Solid debt buying operations metrics …
Solid debt buying operations metrics … Strong Aus/NZ collections despite rolling over prior year stimulus Solid US result impacted by labour market conditions in the first quarter Growth in operational capacity from Sep-21 H1 FY2022 ∆ H1 2021 1 AU/NZ Collections 3 $191m 6% debt buying Producti
Slide 8: … have contributed to a strong PDL investment outlook
… have contributed to a strong PDL investment outlook PDL INVESTMENT $ 300m FY2022 purchasing $ 250m guidance $300 - $320m $ 200m On track for record $ 150m FY2022 purchasing investment in challenging pipeline of $293m market conditions $ 100m contracted at February 2022 $ 50m - FY2019 Actual FY20
Slide 9: US NPAT growth driven by purchasing …
US NPAT growth driven by purchasing … PDL supply remains tight Elevated purchasing reflects increased share and new relationships US NPAT and US COLLECTIONS (A$m) US PURCHASING (A$m) $200m $12m $90m $150m $8m $60m $100m $4m $30m $50m $0m $0m $0m H1 H2 H1 H2 H1 H2 H1 FY2018 FY2019 FY2020 FY2021 F
Slide 10: … with a positive outlook for supply …
… with a positive outlook for supply … US unsecured credit balance recovery accelerating, which should increase PDL supply in the medium term US REVOLVING CREDIT MARKET $ 900bn 5% $ 850bn 4% $ 800bn 3% $ 750bn 2% $ 700bn 1% $ 650bn $ 600bn - 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2
Slide 11: ... supported by Credit Corp’s competitive platform
... supported by Credit Corp’s competitive platform Key efficiency and effectiveness metrics continue to benchmark strongly against US publicly traded debt buyers Asset turnover 4 Cost to collect CCP 0.9 34.5% 1 ECPG 1.1 33.7% 2 PRAA 0.9 34.4% 3 1. H1 FY2022 CCP US debt buying segment only 2. Calc
Slide 12: An acceleration in lending volume …
An acceleration in lending volume … Record monthly volume in December produced the highest loan book balance since pre-pandemic CONSUMER LENDING BOOK AND REVENUE LENDING VOLUMES INDEXED TO PRE-COVID $ 230m COMPARATIVE PERIOD 1 $ 212m $ 200m $ 184m 137% $ 181m Demand recovered with March $ 176m $
Slide 13: … has impacted first half lending NPAT
… has impacted first half lending NPAT Up front provisioning has suppressed segment NPAT Second half NPAT to benefit from higher starting book CONSUMER LENDING NPAT $ 16m $Demand 12m recovered with March quarter application volume exceeding the prior year $ 8m customer loan amounts New excee
Slide 14: Further activity to sustain long-term growth
Further activity to sustain long-term growth Cumulative loan volume of $1 million to 31 Dec 2021 US Consumer Lending Pilot commenced in two states, expanding to seven over coming months (population: 50 million) Product relaunched in Q4 FY2021 Auto Lending Volume of $11 million during H1 FY20
Slide 15: On track for strong FY2022 earnings growth
On track for strong FY2022 earnings growth FY2022 guidance Issued 30 Nov 2021 Upgraded 1 Feb 2022 Ledger investment $280 - $300 million $300 - $320 million Net lending $45 - $55 million $45 - $55 million NPAT $92 - $97 million $92 - $97 million 1 EPS (basic) 137 - 144 cents 137 - 144 cents 1 Credit
Slide 16: Appendices: Key Operating Metrics
Appendices: Key Operating Metrics Appendix 1: Operating cash flow and gearing Appendix 2: Pricing discipline and accuracy Appendix 3: Collections life cycle Appendix 4:Productivity Appendix 5: Payers base Appendix 6: Operational and total headcount Appendix 7: Industry leading compliance and sustain
Slide 17: Operating cash flow and gearing
APPENDIX 1 Operating cash flow and gearing Operating cash flows and gearing Jun 2020 Dec 2020 Jun 2021 Dec 2021 Operating cash flow $212.3m $196.1m $217.4m $221.8m Tax payments ($7.8m) ($5.1m) ($22.4m) ($16.8m) PDL acquisitions, net lending and ($94.1m) ($197.8m)1 ($123.2m) ($238.0m)2 capex Net oper
Slide 18: Pricing discipline and accuracy
APPENDIX 2 Pricing discipline and accuracy PRICING DISCIPLINE AND ACCURACY Cumulative collections $ 4.0b Actual cash $ 3.0b collections $ 2.0b $ 1.0b Initial projections 1 - 1. For all PDLs held at June 2008, initial projections represent the forecast at June 2008 Credit Corp Group H1 FY2022 Results
Slide 19: Collections life cycle
APPENDIX 3 Collections life cycle PDL COLLECTIONS BY VINTAGE PDL collections by vintage 9%1 $ 160m $ 140m $ 120m 30% 31% 33% 34% 32% 34% $ 100m 29% 30% 30% 34% 31% 32% 15% 30% 32% 32% 32% 33% 14% 16% $ 80m 18% 16% 11% 13% 14% 17% 16% $ 60m 17% 17% 15% 15% 10% 23% 18% 15% 12% 22% 21% 25% 23% 19% 21%
Slide 20: Productivity
APPENDIX 4 Productivity PDL COLLECTIONS PER HOUR $ 350 $ 300 YTD Dec-21 average 12m to Dec-21 $ 250 FY2022: $314 1 $ 200 12m to Dec-20 FY2021: $284 1 $ 150 $ 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1. Prior year restated for H1 FY2022 YTD average exchange rate Credit Corp Group H1 FY2022
Slide 21: Payers base
APPENDIX 5 Payers base PORTFOLIO SUMMARY: AU/NZ DEBT BUYING ONLY Total portfolio Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Face value $6.4b $7.8b $7.7b $8.6b $8.5b $8.1b Number of accounts 786,000 1,268,000 1,193,000 1,392,000 1,326,000 1,252,000 Payment arrangements Face value $1,300m $1,400m $1,35
Slide 22: Operational and total headcount
APPENDIX 6 Operational and total headcount PERIOD END HEADCOUNT (FTE) PERIOD END HEADCOUNT (FTE) 2,000 Dec-20 Jun-21 Dec-21 1,800 Debt buying 1,600 1,281 1,261 1,285 operations 1,400 Agency 222 218 223 1,200 1,000 Lending 110 111 129 800 Support 137 143 147 600 400 Total 1,750 1,733 1,783 1 Jun-20 J
Slide 23: Industry leading compliance and sustainability
APPENDIX 7 Industry leading compliance and sustainability FY2021 AUS EDR rate 1 12 months to Sep-21 US dispute rate 2 Credit Corp Credit Corp Publicly traded Other debt buyer A Continued industry leadership debt buyers Publicly traded Lowest EDR rate in AU 1 and low US dispute debt buyer B rate