Q1 2019 presentation - Axactor · presentation Axactor SE April 26, 2019. Q1 2019 - Key highlights...
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Q1 2019 presentation Axactor SE April 26, 2019
Transcript of Q1 2019 presentation - Axactor · presentation Axactor SE April 26, 2019. Q1 2019 - Key highlights...
Q1 2019 presentation
Axactor SE
April 26, 2019
Q1 2019 - Key highlights
• Revenue more than doubling and with continued margin expansion
• EUR 8 million Earnings Before Tax – up 47% from Q4 2018
• CAPEX of EUR 69 million invested in NPL portfolios – mainly forward flow contracts
• Released EUR 100m of additional funding from RCF accordion option and EUR 50m from Bond Tap
• 2019 planned CAPEX deployment of EUR 400-450m
2
41 91
Q1 2018 Q1 2019
6 22
17%
30%
Q1 2018 Q1 2019
+263%
1,473
Gross revenue(EUR million)
EBITDA and margin Cash EBITDA ERC (EUR million)
18 59
Q1 2018 Q1 2019
726
1 473274
244
1 001
1 717
Q1 2018 Q1 2019
NPL REO
+121% +225%+72%
Attractive European NPL market
3
• Q1’19 NPL gross revenue of EUR 52.4m (20.9)
• NPL contribution margin of EUR 27.1m (10.4) or
77% of net revenue (67%)
• Steady flow of new portfolios coming to the market
• Attractive opportunities in all Axactor markets
• Declining portfolio prices - “Axactor markets”
trading at 12-14% IRR
The REO sales growing
4
• Q1 REO gross revenue of EUR 24.7m (8.7)
• Sales growth of 22% vs Q4’18 - and return to
profitability
• REO contribution margin of EUR 2.8 or 11%,
up from EUR -0.8m (-4%) in Q4’18
• Prioritizing margins over sales volumes and
expecting positive sales trend to continue in
Q2’19 9
22
1920
25
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
REO gross revenue
(EUR million)
Improved funding
5
• ~EUR 185m in increased funding capacity
• EUR 100m accordion option in February
• EUR 50m bond tap option in March
• EUR 15m equity investment and
• EUR 20m loan from Geveran to Axactor
Invest 1 in April’19
• Upgrading 2019 investment level from
EUR 350-400m to EUR 400-450m
Mezzanine loan GeveranEquity Axactor
Equity Geveran RCF Facility
120 120
120
20
140
30
15
4530
1545
Pre-upsize Post-upsize
Axactor Invest 1 funding (EUR million)
300
350
Revenue growth and margin improvement
6
Gross revenue development
(EUR million)
41
67
57
75
91
0
10
20
30
40
50
60
70
80
90
100
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
EBITDA (EUR million) and
EBITDA-margin
6
1110
20
22
17%
20%21%
29%30%
0
5
10
15
20
25
30
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
Cash EBITDA
(EUR million)
18
41
33
45
59
0
10
20
30
40
50
60
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
NPL and REO growth from Q4 to Q1
7
• NPL collection up 32% from Q4’18, driven by large
investments in Q4’18
• REO sales up 22% from Q4’18
• 3PC with 22% y/y growth
• Stable ARM business before roll-out to new markets
41
67
57
75
91
0
10
20
30
40
50
60
70
80
90
100
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
NPL portfolios REO portfolios 3PC ARM
Gross revenue per segments (EUR million)
More balanced geographical footprintREO portion set to decline over time
8
Q1-2019
Gross revenue
EUR 90.7m
ESP; 32%
NOR; 13%
DEU; 10%
SWE; 5%
ITA; 7%
FIN; 6%
REO; 27%
ESP; 30%
NOR; 11%
DEU; 12%
SWE; 11%
ITA; 10%
FIN; 12%
REO; 14%
Q1-2019
ERC
EUR 1,717m
NPL portfolio
Strong NPL growth – solid collection performance
10
NPL gross revenue development (EUR million)
91 %
100 %
96 %
101 %
103 %
105 % 105 % 105 %104 %
80 %
85 %
90 %
95 %
100 %
105 %
110 %
Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119
Actual collection vs. original business case (LTM, rolling)
21
31
25
40
52
0
10
20
30
40
50
60
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
NPL: Investments set to increase through 2019
11
47
17
69
329
69
0
50
100
150
200
250
300
350
400
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
ESP NOR DEU SWE ITA FIN
• CAPEX deployment in several NPL forward
flow contracts
• Acquired new Spanish NPL portfolio in April:
• Outstanding balance of EUR 77m across 22,000 claims
Quarterly NPL investments (EUR million)
NPL: Forward flow build-up
12
23
19
2526
27 27
24 2423 23 23
22
0
5
10
15
20
25
30
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
Actual FF investments Estimated FF from signed contracts
Estimated FF from signed contracts (EUR million)
• Graph illustrates already contracted volumes
• Additional volumes (on top) from renegotiations/
renewals with improved IRRs
• Estimated forward flow volume of EUR 286m from
signed contracts in 2019, of which EUR 219m
remaining (rest of 2019)
NPL ERC: Growing and more diversified
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ERC development (EUR million)
726 729
821
1 388
1 473
0
200
400
600
800
1 000
1 200
1 400
1 600
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
ESP NOR DEU SWE ITA FIN
211201
151
132
117
10594
8475
6760
5347
4234
0
25
50
75
100
125
150
175
200
225
250
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15
ESP NOR DEU SWE ITA FIN
Forward ERC profile by year (EUR million)
REO portfolio
REO sales growth
15
REO gross revenue development (EUR million)
9
22
1920
25
0
10
20
30
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
• Q4 issues with notary & stamp costs resolved
• First small bulk sale closed in Q1
• Continued ramp-up of sales expected in Q2
• Margin prioritized over sales volume
REO ERC: Protecting margins – flatter sales curve
16
123
68
37
16
0
20
40
60
80
100
120
140
Y1 Y2 Y3 Y4
REO ERC per year (EUR million)
• REO sales of EUR 24.7m in Q1’19
• 555 units at average price of EUR 44k
• 5,773 units remaining in inventory
• Good cash-flow
• Remaining ERC lowered by EUR 6m (2.5%)
• Asset value largely intact. However, discounts
slightly higher than business case
• Prioritizing margins over volumes
• Expecting a flatter ERC curve going forward
Total REO ERC Q1 2019:
EUR 244m
The REO exposure will be quickly reduced going forward
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• No new REO portfolio acquisitions
• Current REO portfolio to be halved over next 12
months
• Investments in NPL will reduce the share of REO ERC
further in 2019
0
500
1000
1500
2000
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
ERC by segment
NPL
73%
REO
27%
NPL
86%
REO
14%
3PC & ARM
Growing the platform business
• 3PC sales up 22% y/y
• Collection platforms established in all six markets
• Product synergies in terms of business origination,
collection execution and data generation
• Customer relationships with leading financial
institutions, including nine of the top 10 Spanish
banks
• Increasing contribution of cash rich and capital light
earnings for reinvestments
• ARM platform to be rolled out to more markets
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1
0
5
10
15
Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119
3PC ARM
Gross revenue (EUR million)
19
Financials
-5
0
5
10
15
20
25
30
35
40
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
NPL portfolios REO portfolios 3PC ARM
Contribution per segment
21
• NPL: Continued contribution growth
• 77% contribution margin of net revenue
• REO: Return to profitability
• 11% contribution margin in Q1’19 vs. -4% in Q4’18
• 3PC: Steady y/y improvement – normal seasonality
• 27% contribution margin
• ARM: Marginal changes
• 42% contribution margin
Contribution per segment (EUR million)Excluding unallocated overhead cost
Cost efficiency increasing with scale
22
30 %
25 %
21 %
18 %17 %
0
50
100
150
200
250
300
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19
Net revenue EBITDA Local SG&A, IT and corporate cost
Revenue, Local SG&A, IT and Corporate costs, LTM
• One Axactor - Clear strategy with focus on
streamlined organization secures scalable platform
• Standardization reduces costs and improves cross-
border cooperation
• Expect to leverage scale benefits further over the
coming years
Net finance, tax and net profits
• Total net financial cost of EUR 11.9m
• Interest cost of EUR 10.9m, of which EUR 1.5m
amortized loan fees
• Average blended interest costs of 5.0%
• Negative net FX impact of EUR 0.4m
• Tax expense of EUR 3.3m
• 42% effective tax rate
• Some entities not yet in position to recognize tax
losses
• Net profit of EUR 4.6m
• EUR 2.0m to equity shareholders
• EUR 2.6m to non-controlling minorities
Condensed Income statement Key comments
For the quarter end/YTD Full year 2018EUR thousand 31 Mar 2019 31 Mar 2018EBIT 19,875 4,757 40,298
Financial revenue 16 91 453Financial expenses -11,919 -5,541 -34,591Net financial items -11,903 -5,450 -34,138
Profit/(loss) before tax 7,972 -693 6,160
Tax (expense) -3,348 -303 -3,770
Net profit/(loss) after tax 4,624 -996 2,390
Net profit/(loss) to Non-controlling interests 2,584 425 -2,103Net profit/(loss) to equity holders 2,040 -1,421 4,492
Earnings per share: basic 0.013 -0.001 0.029Earnings per share: diluted 0.012 -0.001 0.026
Balance sheet structure
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360296 328
787
467
737
51
79
43
Q1-19 Q1-18 YE 2018
Other
IB debt
Equity
962
547
929
82
78
82
29
20
26
125
198
71
Q1-19 Q1-18 YE 2018
Cash
Other
Intangibles
Portfolios
Equity & Liabilities (EUR million)Assets (EUR million)
1,198 1,198
842 842
1,108 1,108
Debt maturity profile
• Net interest bearing debt of EUR 667 million
• EUR 100m released of accordion option with Nordic banks in February, EUR 50m remaining
• EUR 50m bond tap option executed in March, EUR 50m remaining
• EUR 15m equity injection and EUR 20m new mezzanine loan from Geveran to Axactor Invest 1 in April
• Axactor 1 will reinvest running cash flow
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31.12.2018 31.12.2019 30.12.2020 30.12.2021 30.12.2022 30.12.2023
Revolving Credit Facility, EUR 300m + EUR 50m accordion
Axactor Invest 1, EUR 120m senior debt facility
Bond, EUR 200m + EUR 50m tap option
Reolux/Nomura, EUR 89m outstanding balance
Axactor Invest 1, EUR 140m mezzanine
Option
Summary & Outlook
Q1 Summary
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• Solid financial performance in Q1
• 22% y/y growth in 3PC
• Continued strong collection performance
• Growth in REO sales and profitability
• Improved financial capacity
• Continuing to drive efficiency and cost
improvement through ‘One Axactor’
• Finland integration on track
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• Attractive NPL market – increasing IRRs
• Increased NPL capex guiding (EUR 400-450m)
• Expect continued growth in the 3PC market
• Continued profitable growth and margin
expansion
Outlook
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AXACTOR Confidential 29
Appendix
For the quarter end/YTD Full year 2018
EUR thousand Note 31 Mar 2019 31 Mar 2018
Interest income from purchased loan portfolios 6 28,989 17,442 74,536
Net gain/loss purchased loan portfolios 6 6,371 -1,802 10,599
Other operating revenue 38,289 20,160 121,774
Total Revenue 3,4 73,649 35,800 206,909
Cost of REO's sold 7 -19,302 -6,123 -54,491
Personnel expenses operations -9,433 -8,086 -32,585
Personnel expenses other -6,102 -5,274 -19,548
Operating expenses -16,671 -10,219 -53,978
Total operating expense -51,508 -29,702 -160,602
EBITDA 22,140 6,097 46,306
Amortization and depreciation -2,266 -1,341 -6,009
EBIT 19,875 4,757 40,298
Financial revenue 5 16 91 453
Financial expenses 5 -11,919 -5,541 -34,591
Net financial items -11,903 -5,450 -34,138
Profit/(loss) before tax 7,972 -693 6,160
Tax (expense) -3,348 -303 -3,770
Net profit/(loss) after tax 4,624 -996 2,390
Net profit/(loss) to Non-controlling interests 5 2,584 425 -2,103
Net profit/(loss) to equity holders 2,040 -1,421 4,492
Earnings per share: basic 0.013 -0.001 0.029
Earnings per share: diluted 0.012 -0.001 0.026
P&L statement
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EUR thousand Note 31 Mar 2019 31 Mar 2018 31 Dec 2018
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Share Capital 81,115 79,377 81,115
Other paid-in equity 200,485 196,946 200,298
Retained Earnings -12,132 -20,142 -14,172
Reserves -1,675 -384 -2,817
Non-controlling interests 92,605 40,077 63,746
Total Equity 360,398 295,873 328,170
Non-current Liabilities
Interest bearing debt 8 579,436 432,303 567,829
Deferred tax liabilities 10,925 5,670 11,124
Lease liabilities 9 3,641 0 0
Other non-current liabilities 991 3,072 1,180
Total non-current liabilities 594,992 441,045 580,132
Current Liabilities
Accounts Payable 4,046 3,504 4,522
Current portion of interest bearing debt 8 207,572 34,660 169,296
Taxes Payable 5,076 1,862 1,610
Lease liabilities 9 2,253 0 0
Other current liabilities 24,026 65,050 24,172
Total current liabilities 242,973 105,076 199,600
Total Liabilities 837,964 546,121 779,732
TOTAL EQUITY AND LIABILITIES 1,198,363 841,995 1,107,903
EUR thousand Note 31 Mar 2019 31 Mar 2018 31 Dec 2018
ASSETS
Intangible non-current assets
Intangible Assets 18,992 18,522 19,170
Goodwill 56,281 54,260 55,577
Deferred tax assets 6,852 5,186 7,564
Tangible non-current assets
Property, plant and equipment 2,851 2,491 2,683
Right-of-use assets 9 5,874 0 0
Financial non-current assets
Purchased debt portfolios 6 781,361 353,969 728,820
Other non-current receivables 294 843 293
Other non-current investments 778 170 778
Total non-current assets 873,283 435,441 814,885
Current assets
Stock of Secured Assets 7 181,121 192,694 200,009
Accounts Receivable 8,931 7,817 9,459
Other current assets 9,832 8,311 12,774
Restricted cash 5,309 1,825 3,184
Cash and Cash Equivalents 119,887 195,907 67,593
Total current assets 325,080 406,554 293,018
TOTAL ASSETS 1,198,363 841,995 1,107,903
Balance sheet statement
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Axactor SE ***
(Norway)
Axactor Platform Holding AB
(Sweden)
Axactor Finland Holding Oy (Finland)
Axactor Finland Oy
Axactor Finland SW Oy
(to be discontinued)
SPT Latvija SIA (Latvia)
SPT Inkasso OÜ (Estonia)
UAB Isieskojimu kontora(Lithuania)
(to be discontinued)
Axactor Norway Holding AS
(Norway)
Axactor Norway AS
Axactor Germany Holding GmbH
(Germany)
Axactor Germany GmbH
Heidelberger Forderungskauf GmbH
Taloa Equity Management GmbH
VABA GmbH
Axactor Mobile Services Germany GmbH
Heidelberger Forderungskauf II GmbH
Axactor España, S.L.U.
(Spain)
Axactor España Platform S.A.
Axactor Sweden Holding AB
(Sweden)
Axactor Sweden AB
Axactor Capital Sweden AB
(to be discontinued)
Axactor AS ***
(Norway)
Axactor Portfolio Holding AB
(Sweden)
Axactor Capital Luxembourg S.à r.l.
Axactor Capital Italy S.r.l
Axactor Capital AS**
Reolux Holding S.à r.l.
Beta Properties Investments S.L.U
Borneo Commercial Investments S.L.U.
Alcala Lands
Investments S.L.U.
PropCo Malagueta S.L.
Proyecto Lima S.L.
Axactor Italy Holding S.r.l.
(Italy)
Axactor Italy S.p.A.
Axactor Incentive AB (Sweden)
(to be discontinued)
Axactor Invest 1 S.à r.l.* (Luxembourg)
75%
75%
Legal organization April 2019
50%
50%
• *50% of the shares in Axactor Invest 1 S.à r.l. and Reolux Holding S.à r.l. is held by Geveran Trading Co. Limited (Cyprus).
• *Geveran Trading Co. Limited also holds shares of Axactor SE
• **Shares of Axactor Capital AS transferred from Axactor Norway Holding AS to Axactor Portfolio Holding AB
• ***Axactor SE and Axactor AS planned to be merged during Q2
