Intrum AB (publ)

Thank you so much. Good morning, everyone. This is Anders Engdahl. With me today also, as the operator said, I have Michael LaDonna, our CFO, as well as Emil Folkesson, our head of IR, for questions later on. We turn to page three of the presentation, the highlights of Q1 2021. I'm pleased to present a robust first quarter, especially in light of the pandemic that continued to affect the operating conditions across our markets. But more importantly, during the second half of the quarter and into April, we see very strong underlying momentum building up across most of our markets. Overall, the result of the quarter was supported by the diversification of our business, where a somewhat softer CMS performance was outweighed by strong performance in portfolio investment and strategic markets. This continued robust performance allowed us to deliver continued growth in our key cash metrics, where our cash revenue grew 6% on a current currency basis, our cash EBIT grew 24% year-over-year, and our rolling 12 months cash EPS exceeded 30 krona per share for the first time. Also, our rolling 12-month cash rowing is now up to 8.2% versus 6.6% in the first quarter 2020, demonstrating further progress towards our medium-term financial target. The leverage ratio increased somewhat to 4.1 due to unfavorable FX development in the translation of our net debt at the end of the quarter, despite underlying deleveraging. Looking across our markets, we see clear signs of recovery starting to come through, supported by improving business and consumer confidence. This was, for example, evidenced by the very strong results seen in our real estate servicing business in Spain, as well as the increasing level of new inflows in CMS that started to emerge towards the second half of the quarter. We believe that we passed an inflection point during the quarter, and we see a very positive momentum across all of our markets. In our servicing business, we see continued growth in our pipeline and we signed the record level of new business during the quarter. And across our footprint, we see increasing demand for our services as our clients look to address their NPM servicing needs. In portfolio investments, we invested 1.7 billion in new portfolio acquisitions at return levels substantially above the pre-COVID levels. continuing the trend from 2020 or investing at attractive mid-teen returns. We expect to continue to gradually increase the deployment pace during 2021 against this favorable returns backdrop. I'm also proud that Instrum was awarded the best-in-class sustainability risk rating from Sustainalytics. Not only were we rated number one in our industry sub-segment, but among the top 4% globally among all the more than 13,000 companies rated. This is a strong endorsement of our clear and defined sustainability framework and targets, as well as the work we've done for many years in relation to our ethical collections agenda. Furthermore, we're well on track with our one-inch transformation program, where we delivered a number of important milestones during the quarter. I'm happy to see that we are well ahead of schedule in respect of case migrations to the new platform and that our SDE cost to collect KPI remains on target. We move to page four. Looking at the servicing side of the business, overall the servicing business displayed mixed performance across markets. But during the quarter, a positive underlying trend emerged, supporting sustainable servicing growth across our footprint. We saw a meaningful improvement in consumer confidence of 7% year-over-year, which is supportive of a gradual return to a normalized post-COVID environment. The pace of vaccination, while somewhat varying across countries, is an important driver of improvement in sentiment. In terms of post-COVID opportunity sets, we continue to expect a significant increase in post-COVID MPL formation on our bank clients' balance sheets, which we expect to translate into greater new volume flows towards the later part of 2021 and into 2022. As mentioned earlier, we saw an important turning point in terms of new case inflows in CMS during the quarter, and we expect to see a gradual return to normalization during the coming quarters through 2021. This we expect will support a positive revenue development and margin improvement during the year. Furthermore, we are constructive regarding the outlook for strategic markets where the operating environment is rapidly improving and the improvement in sentiment is already showing positive effects as seen, for example, in the level of real estate sales in Spain. We move to page five, portfolio investments. On the portfolio investment side, we see increasing portfolio sales activity from our clients, which we expect to continue accelerating through the year. We also continue to see attractive underwriting returns well above pre-COVID levels. Many sellers postponed sales activity during 2020, and now we see sellers coming back to market. Given the combination of pent-up postponed supply and volume build-up due to the pandemic, we expect the portfolio sales market to remain very active this year and next. From an interim perspective, we expect to revert to normalized investment level in 2021, meaning that throwing capital in excess of our replenishment rate is sufficient to grow the investment business at a rate consistent with our medium-term financial targets of double-digit growth. as well as delivering on our deleveraging target of reaching two and a half to three and a half times by the end of 2022. We move to page six. As I said, I'm extremely pleased with our best-in-class sustainability risk rating awarded to Imstrum by Sustainalytics. This rating is a testament to the hard work the whole organization has been doing to lead our industry in terms of fair and ethical behavior, and are clear and well-defined sustainability targets. To us at Intrum, the S in ESG is at the core of what we do, and we see that we have an important role to play to support societies as they are setting the path back to recovery post-pandemic. We move to page seven. Our one interim transformation program implementation is proceeding according to plan and is well on track, and I'm pleased to say that we are off to a very good start. As of the end of Q1, our case migration KPI is well ahead of plan, and our FTE cost to collect KPI is on track. We've also continued to ramp up our activity level in our multi-language contact centers in Athens and Bucharest, which we opened during the quarter. And we expect to have our center in Malaga open before the end of the second quarter. We have also now made very good progress on our data and analytics efforts to ensure that we have all the data accessible in one global data hub. This allows us to now be able to start leveraging advanced analytics across our footprint to support our global operating model. And with that, I hand it over to you, Michael, to talk us through the numbers in more detail.

Thank you, Anders, and good morning. I'm now looking at page 10, group key financials. Q1 was a robust quarter. We continue to improve our cash metrics quarter over quarter, as well as in a rolling 12-month versus full-year basis. This positive development is particularly noteworthy in the context of the COVID-19 pandemic continuing to impact the economies and societies we operate in. Cash revenues grew by 6% in constant currency, quarter over quarter to 5.2 billion, and were flat, including the currency effect. Cash EBITDA increased by 3% to 2.7 billion. On a rolling 12-month basis, cash EBITDA came in at 11.686 billion, a small improvement compared to full year 2020. Cash EBIT for the quarter came in at 1.365 billion, up 24% from Q1 2020. Cash EPS was 5.7 SACs per share for the quarter and 30.2 SACs per share for the rolling 12 months. Cash ROIC for the quarter was 7.8%, while on a rolling 12-month basis, we continue to improve our returns and are now at 8.2% compared to 6.6% at the end of Q1 2020. The leverage ratio, adversely affected by the FX development during the quarter, increased by 0.1 times to 4.1 times compared to full year 2020. This development is entirely due to the FX movement during Q1, which increased net debt by 0.9 billion, outweighing underlying the leveraging of 0.3 billion, as well as the increase in rolling 12-month cash EBITDA. While we're still impacted by the ongoing pandemic, continuous improvement throughout Q1 and good momentum, supported by the increasing economic and consumer sentiment that Anders mentioned earlier, are indicators that we may now have reached a turning point towards gradual normalization. Now turning to page 11 and our continued growth in recurring cash earnings. Overall, we see a very positive growth trajectory over the last five quarters, as well as good momentum for the remainder of the year. Cash revenue is up 3% year over year to 21.4 billion and cash EBITDA 6% to 11.7 billion. Again, highlighting the operating leverage inherent in our size and scale. Cash EBIT and recurring cash earnings have increased even more significantly year over year. with lower replenishment capex also due to a rolling 12-month money-on-money multiple expansion to 2.18 times. Looking into the operational drivers behind these developments, we see a softer CMS contribution more than offset by portfolio investments and strategic markets. Summing up, we again see a trend of continuous improvement in recurring cash earnings with significant growth year-over-year. Now focusing on the segments. I'm looking at page 12. CMS, again, experienced somewhat lower case volume inflows and aggregates due to COVID-19 and an adverse effects development negatively impacting cash revenues, which went down 9%, 5% in constant currency, quarter over quarter to 1.038 billion. However, as mentioned before, we also saw a relative improvement during the latter part of the quarter and feel that an inflection point may have been reached. Cash EBITDA reduced to $412 million in Q1, down 17% quarter-over-quarter. For cash EBIT, we observe a similar development with $396 million for the quarter, down 11%. Segment cash ROIC decreased by half a percentage point to 8.3% quarter-over-quarter. Profitability is currently also impacted by the lower share of fresh cases in the overall claim mix. We expect revenues as well as profitability to recover as volume inflow is restored. Turning to page 13. Strategic markets continue to improve and had a strong quarter despite the continued impact of the COVID-19 pandemic on Italy, Spain, and Greece. Of particular note is the positive contribution from real estate servicing in Spain, as mentioned by Anders earlier. Cash revenues increased by 21% to 1.346 billion quarter over quarter against foreign exchange headwinds. Growth at constant currency came in at 28%. Cash EBIT also more than doubled to 645 million quarter over quarter. The quarterly segment cash flow therefore increased from 7.1% in Q1 2020 to 16.3% in Q1 2021. Also looking at rolling 12-month figures, I would like to again highlight the growth trajectory across all cash metrics. Focusing on portfolio investments, I'm now on page 14. The portfolio investment segment showed increasing momentum throughout the quarter, following a strong end to 2020. Overall portfolio investments exceeded collection expectations, the active forecast, by 5% for the quarter. Cash revenues reduced by 5% to $2.864 billion quarter over quarter, a 1% growth in constant currency. Cash EBITDA decreased by 7% to $2.089 billion for the same period. Cash revenues and cash EBITDA were negatively impacted by a reduction in cash flow from joint ventures quarter over quarter. Cash EBIT was flat quarter-over-quarter and came in at $830 million, supported by lower replenishment capex also due to a higher rolling 12-month money-on-money multiple. Q1 portfolio investments of $1.739 billion were well ahead of the replenishment level as well as the investment level observed in Q1 2020 and came at attractive returns significantly above pre-COVID comparables. Now looking at page 15. The difference between our cost of funds and the last 12-month average unlevered underwriting IOR continues to widen and now stands at four and a half times. Interim bonds have continued to perform well in a generally positive market, highlighting the strength of our credit. At the end of Q1, we had available liquidity of 18 billion and no significant upcoming debt maturities before 2024. Turning to page 16 and focusing on progress towards the new medium-term financial targets. Rolling 12-month cash ROIC is continuously improving and now stands at 8.2% versus a target of greater than 10%. Recurring consolidated rolling 12-month cash EPS is exhibiting strong growth and now stands at 30.2 SAC per share, supportive of our target of more than 10% growth on average per annum. The leveraging is progressing on the trajectory to reach the 3.8 times area at year-end 2021 and meet our target of a leverage ratio between 2.5 and 3.5 times by year-end 2022. The slight uptick in Q1, as mentioned before, is due to an adverse foreign exchange development outweighing underlying deleveraging and increase in the rolling 12-month cash EBITDA. In summary, progress towards achieving our medium-term targets is fully on track. And now back to you, Anders, for some final remarks.

Thank you, Michael. If we move to page 18, just to summarize. So overall, as also Michael pointed out, I'm very happy about the robust performance in the first quarter, which was supported by the diversification of our business, where somewhat softer CMS performance was more than outweighed by strong performance in portfolio investments and strategic markets. Looking at our agenda going forward, we will, during 2021 and beyond, continue to address our strategically important ESG agenda continue to build it in as an integral part of our business globally. We are committed to reaching the targets we set out and I look forward to continuing to update you on them as we progress. The One Interim transformation program is a fundamental change for us as a company and we remain firmly on track. One Interim means a complete overhaul of how we operate as a company, a complete redesign of our operating processes, and how we deliver our services to our clients. We're doing that by leveraging technology, data, and analytics to be able to strengthen our value proposition, improve our efficiency, and enhance our competitive position. The transformation enhances our client relevance. It underpins our ability to compete and win more business organically, and it supports our growth agenda. Combined with a positive economic outlook and increasing client demand, we believe Interim is well positioned for sustainable long-term organic growth. So to summarize, this was a strong quarter given the continued pandemic operating conditions, but more importantly, we see strong momentum in the underlying business across all our segments. In terms of near-term outlook for our three segments, I would highlight For portfolio investment, we expect to continue to see strong collection performance, as well as accelerating investment pace at attractive mid-teen returns, supporting double-digit growth. In CMS, the positive new case inflow trend that emerged during the quarter, we expect to drive revenue growth and restore margin levels over the coming quarters. We also see client demand continue to increase, driving continued pipeline growth and new contract signings. And in strategic markets, with the operational conditions rapidly improving, a normalization will allow us to exploit the full potential of our market-leading southern European franchise. And with that, I think we conclude the presentation and we'll go to Q&A.