ITJTY - Intrum AB (publ) (ITJTY) Q2 2024 Earnings Call Transcript

2024-07-18 15:03:05 ET

Intrum AB (publ) (ITJTY)

Q2 2024 Results Conference Call

July 18, 2024 03:00 AM ET

Company Participants

Andres Rubio - Chief Executive Officer

Emil Folkesson - Interim Chief Financial Officer

Conference Call Participants

Patrik Brattelius - ABG

Johan Ekblom - UBS

Markus Sandgren - Kepler Cheuvreux

Jacob Hesslevik - SEB

Corinne Cunningham - Autonomous

Wolfgang Felix - Sarria

Robert Dinic - Carnegie Investment Bank

Presentation

Andres Rubio

Thank you, operator, and good morning from a cloudy and somewhat wet Stockholm. I'm here as the operator indicated, with Emil, the acting CFO, and thank you for joining us this morning.

Before we jump into the heart of the presentation, I just wanted to take a little bit of a step back and set the stage. I think it's very important to see, and this quarter was a very active one.

We've been very busy across several fronts. We've accomplished a lot. And I think it's very important to always go back to what we set out to do and what we've done thus far. So everyone on this call is going to remember that less than a year ago in September of '23 at the Capital Markets Day, we set out some near-term and long-term goals.

Near term, we wanted to strengthen our financial profile. We wanted to cut costs, we want to deleverage. Long term, we wanted to lead with client-facing servicing. We want to shrink our proprietary investment portfolio, and we wanted to become an investment manager.

I think this quarter is really the first quarter where all of those initiatives really showed material progress. On the near-term progress, we strengthened our financial profile by completing the asset sale to Cerberus to raise meaningful liquidity.

That liquidity in part allowed us to agree a going concern restructuring with holders of the majority of our bonds and MTNs, where we're going to amend and extend our capital structure to align it with our business plan.

During the quarter, we also got up to SEK 900 million out of a total SEK 1.5 billion of cost reductions, making us more and more efficient as a platform. And we also de-levered on both an absolute and ratio basis, which we'll explain more.

In terms of the long-term progress, the more fundamental transformation of the company, servicing outperformed across all metrics, top line, bottom line across all our markets. I'll get to more detail on that.

Our investment portfolio has gone from SEK 37 billion to SEK 26 billion, while we're still collecting above 100% and throwing off very strong cash flow, but we are shrinking that book.

And, we signed, as you saw earlier this week, a long-term investment management agreement or investment agreement with Cerberus for future investments, whereby we are the minority of capital, but we're reloading and getting much more dry powder to go and attack the market over the coming 3 years with third-party capital being the majority in this case, Cerberus's capital.

And we get the benefit of servicing and investment management fees taking a very important step towards taking a capital-light approach to investing, which benefits our servicing and begins our journey on becoming an investment manager.

So, on all those fronts, we've made tremendous progress.

I think now we can jump in to the presentation, and I'll go through the first section, and then I'll hand it over to Emil and then I'll conclude it and we'll get to your Q&A. But on Page 3, you can see some of the highlights.

Top left, continued trend of increasing profitability in servicing and investing income, decreasing by shifting to capital light. Very importantly, I'll give you a bit of an update later on, on the initial results.

Last quarter, I talked about how the first few cases were being handled on the Ophelos in the Netherlands. Now we see some more meaningful data, although still a limited sample size, but very positive indications of potential cost reductions.

We also realized the cost savings, as I just said, of SEK 0.9 billion or SEK 900 million. Our goal is to get to SEK 1.5 billion. I'll talk more about that....

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