ITJTY - Intrum AB (publ) (ITJTY) Q4 2023 Earnings Call Transcript
2024-01-25 13:10:26 ET
Intrum AB (publ) (ITJTY)
Q4 2023 Results Conference Call
January 25, 2024 03:00 AM ET
Company Participants
Andres Rubio - CEO
Anders Blomqvist - Interim CFO
Emil Folkesson - Head of the CFO office and Investor Relations Director
Conference Call Participants
Jacob Hesslevik - SEB
Patrik Brattelius - ABG Sundal Collier
Ermin Keric - Carnegie
Wolfgang Felix - Sarria Limited
Haris Papadopoulos - Bank of America
Angeliki Bairaktari - JPMorgan
Lancelot Berlemont - H.I.G. Capital
Lars Dueser - Deutsche Bank
Presentation
Andres Rubio
Good morning, everyone, and welcome to the presentation regarding the results for the fourth quarter of December -- fourth quarter ended December 2023. I'm here in Stockholm with Anders Blomqvist, our Interim CFO, who came-in in December; and also Emil Folkesson, who is the Head of the CFO office and Investor Relations Director.
Before I get into the details of the presentation, I just wanted to give a little bit of an overview from my perspective as to the quarter. I think that the fourth quarter and also the conclusion of '23 was a very strong end to what was a challenging and transitory year. Despite a very difficult comparison with a very strong '22 and particularly fourth quarter '22 and also the overall economic backdrop and difficult in collectability, which I'll get into more detail later in the fourth quarter.
We had a very positive result. And it shows the strength and resilience of our business and also the drivers of our business. At the top line, we've had growth driven by acquisitions, but also organic growth in the middle and north of Europe. And our profitability figures of adjusted EBIT and EBITDA are essentially flat, only slightly down, despite the significant headwinds.
Just as importantly, we entered '24 with significant momentum in combating our 2 main headwinds. Inflation continues to impact our costs. During the quarter, we hit SEK 800 million of run rate on our cost reduction program. We will expand upon that. And also on deleveraging. Despite the fact that we paid the final installment of the dividend and we completed an acquisition, we were still able to reduce our net leverage and continue on the path of deleveraging.
So if we can go to Page 3, please, the just highlights. So on the top left, you can see that we continue to perform on all our key strategic initiatives. In '23, we shifted a significant focus and coordinated focus on the commercial development of servicing. That resulted in an all time high in the annual contract value of new business. We hit the SEK 800 million on a run rate basis, I've already mentioned on the cost base. And we've also rolled out client profitability tool to 3 new markets during the quarter, all of which are important initiatives to continue to add to our profitability and to our top line.
The quarter on the top right, as I said, top line growth. And right now, I think it's a wonderful environment for our top line. There's going to be increased demand for our services going forward. And the quarter certainly demonstrated that. It was driven by M&A, but it's also driven by organic growth in the Middle and North of Europe.
The cash EBITDA and EBIT in line with what was already a strong Q4 '22. So very good comp despite the more difficult environment. On the investing side, we are -- our strategies to extract cash. We extracted SEK 5.4 billion from investing, and also our leverage ratio remained stable.
Specifically on the businesses in the bottom left, you get into a little bit more of a detailed picture as to the trends as well as the challenges. On servicing our assets management -- our assets under management, excuse me, are growing substantially, not surprisingly. Our ACV signings are already high or -- hit a record for the year, but also we're significantly up quarter-on-quarter.
Our external income, which is our client service business, is up significantly, driven by M&A primarily. And our servicing adjusted EBIT is down. And that's where we have the prime, one of our prime challenges, which is inflation continues to increase our costs. That manifests itself in our servicing business, which is the operational element of our business. And we need to continue to combat that. In the quarter, we had a very strong 23% margin, but last year was 27%. For the year we had 16%, but last year was 21%. This is part -- this is one of our headwinds, which we are combating head on....
Intrum AB (publ) (ITJTY) Q4 2023 Earnings Call Transcript