Intrum AB (publ)

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 wanted to deleverage. Long-term, we wanted to lead with client-facing servicing. We wanted 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 $900 million out of a total $1.5 billion of cost reductions, making us more and more efficient as a platform. And we also delivered 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 into more detail on that. Our investment portfolio has gone from $37 billion to $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 three years, with third-party capital being the majority, in this case Cerberus' 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 three, 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 Ophelos and 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 0.9 billion or 900 million. Our goal was to get to a billion and a half. I'll talk more about that. And our income grew and we extracted cash and our leverage ratio fell to 3.9. For those of you who saw me this morning at Dogged Industry, I was asked a question about that 3.9. I will get into more detail on it, but it's effectively an artifact. of the fact that our ratio is trailing 12-month EBITDA, which is an income statement item, which includes the income from that sold portfolio, but the current balance sheet item includes the proceeds and the deleveraging. What's going to happen and what we've indicated in our disclosure is that 3.9 is a meaningful step down. Over the next six to 12 months, that 3.9 is going to remain around 3.9, 4.0 as the historical Earnings from that sold perimeter of burn off or come off as we do our restructuring agreement. And as we grow, continue to grow our servicing and remain around three point nine to four zero. And then we'll continue down to the three and a half by twenty six and then below that beyond. On the strategic initiatives on the top right, we did the back book sale. We'll talk a little bit about that. We did the lockup agreement on the refinancing and recapitalization. Very important for having a capital structure that supports our business plan and long-term sustainable profitability. And we signed the investment agreement, which I'll get into more detail on. But much more importantly, we do this all with the foundation of a business that actually is performing quite well. Bottom left, external income and servicing grew by 10%. This is ahead of our expectations. EBIT grew by 23%. That means we are expanding our margin. We grew our bottom line more than our top line and our top line grew by more than we expected. So servicing is outperforming as an aggregate and across almost all markets. Positive rolling 12 months organic growth in the North and Middle Europe. Very meaningful 10% trailing 12 month organic growth in Middle Europe, which is our largest economic area. Our commercial success continues. Last year was a record year in ACV. Yet this quarter, we still outperformed last year 307 versus 257. So we continue to be winning in the marketplace. Our clients continue to need our services and they continue to recognize that we are probably the best provider of services in the market. And as a consequence of all this, our servicing adjusted EBIT margin increased to 19%. A year ago, it was 16%. So servicing is hitting all cylinders, but it still has much more to go. And I'll talk about this later as well. This improvement is without any major restructurings in the way we operate, without new products, which we're going to roll out. It's really due to leadership, focus, and ultimately the environment working to our benefit. On investing, we collected at above 100% despite the difficult collections environment, 102 to be precise. That very importantly is 116% of our original forecast. And this is both, both these numbers are on a smaller perimeter. Cash income and cash EBITDA did decrease because we are shrinking that business. We've all known that for a year and that's just the law of numbers. When we're shrinking the business, our EBITDA and our cash income will decrease. What's good is that during the quarter, other than a little bit of a blip in some minor costs and some JV income, We extracted exactly the amount of cash or just below the amount of cash we expected. And we continue to invest, albeit at lower volumes, at very high RRs. This is still proprietary investments. Going forward, starting next quarter, you will see these investments to not only be our own investments, but also investments we do jointly with servers. Going to the next page. Let's go through the three initiatives and then we'll get into the performance of the business. We did close the back book transaction. Everyone's aware of this. We announced this earlier this year. This was to raise significant liquidity, use that liquidity to deliver. We did pay off the twenty four bonds earlier this week. That liquidity and that ability to meet maturities over the near term gave us a better standing as it relates to renegotiating the long term recap of our capital structure. It validated our book value. We traded at nearly book value and it is a significant percentage of our portfolio, about a third. And this is consistent with our stated goal of a year ago of shrinking our proprietary investment book. In the context of wanting to shed assets and raise liquidity, we did it in a strategically beneficial manner as possible because we did it with servers, who is not only the top, one of the top NPL investors globally, it's one of our biggest clients. And now this actually, they are become our partner, not only on this deal, but also on the front book, they're going to become an even more important client for us and a very important partner in matching the one of the top MPL investors with the leading MPL servicer, who was also an investor, makes a perfect strategic match. This does shift assets from proprietary balance sheet investment to third party servicing income. Again, accelerating that capital light strategy and ultimately moving more towards not just capital light, but also an asset management business model. Now, looking at the next page, we did do the refinancing recapitalization. Here is just a description. Later on, I'm going to talk a little bit about some housekeeping and some logistical items for the benefit of the note holders and the MTN holders. But this deal was incredibly important to us. As we stated earlier this year, we wanted to realign our capital structure with our business plan. Ultimately, what we did in this is we had a reduction of our commitments, reduction in our leverage, and an extension of our maturities. We are going to repay the 24s and the secured term loan in 25. We are retaking 25s through 28s, reducing them by 10% and pushing them out to 27 to 30 in exchange for an uplift in economics and 10% of the equity. All of that is effectively, I think, a very good deal for the bondholders and a very good deal for us. Ultimately, we could not have structured what I call an going concern restructuring, which is what this is, without the underlying business, without recognition from all parties, particularly bondholders and the RCF banks, of the strength of the underlying business. And as evidence of that, we're even given new money from these. So these entities are increasing their exposure to us in order to facilitate further discounted buybacks and accelerate our deleveraging. This is exactly consistent with what we said earlier this year and is actually, I think, a balanced, good outcome for the bondholders, all the creditors, frankly, and a good outcome for the company. At the bottom, you see the link for those of you who are note holders on the line, who would like to sign up. Later on, I'm going to talk more specifically about the note holders. Going to the next page, the third initiative during the quarter on page six is the Frontville Capital Partnership. We signed a term sheet. That term sheet will be turned into a definitive agreement by year end. It's a three-year agreement where we're going to jointly approach the market. We will invest a minority, 30% or less. They will invest a majority, 70% or more. Ultimately, we are going to be responsible for origination, execution, underwriting, and portfolio management. We will jointly decide on larger investments. Once we get the definitive documentation in place, we will actually do a lot of the smaller investments on a batch basis. But anything that's of meaningful size, we jointly decide. Our balance sheet exposure is not going to increase, but our investment activity will. Our servicing activity will. Our investment management fees will start increasing. So ultimately, this is going to be a very important way of attacking what is a, I believe, an attractive investment market and one that will become more attractive over the next few years. with more firepower, but not having to increase our debt to use our own proprietary balance sheet to use this firepower to attack the investing market. It's completely consistent on the far right, as you see with what we said in the C&D, which is we wanted to leverage our existing investment capabilities, but using third party capital to grow it. This is entirely consistent with that and is a first step towards becoming an investment manager down the road with more with broader pools of capital and more limited partner type of capital. On page seven here, it's very important that all of you as stakeholders understand what we say we want to do and have confidence that we're going to do what we say we want to do. So here you see on the far left, we said we're going to overall under the heading of pivoting towards capital light, we say we're going to extract value. We have collected over the last year at 101 versus active forecast. We successfully exited five markets and we completed the back book sale. So we've done a meaningful extraction. You'll see that numerically expressed in one of the later graphs. We have taken advantage of the fact that we have an unparalleled investment platform for this asset class. And that's why together with servers, we've already submitted bids on eight deals. We've won two. We are actually increasing our investment activity and our average transaction size while maintaining investment discipline. So it's exactly the type of not financial leveraging, but operationally leveraging of our platform that we wanted to pursue. And ultimately, we are starting down the path of becoming an investment manager using third-party capital, the service investment over three years. When it's fully ramped up, it could be up to a billion a year, but fundamentally, this is an investing activity. It's going to be opportunistic and it's going to invest in the market when we see the right values in the market. And it will generate management income stream for us starting next quarter, And as it scales up, that'll be much more meaningful. From now on, going forward, we're going to look at not just servicing and balance sheet investing, but also investment management. Transitioning on page eight to our performance, our performance is a function of our own capabilities, but also the market. The market continues to be favorable, both on a cyclical as well as secular basis. Here you see that there was a slight increase in continued rise in MPLs, although it was very modest on a percentage basis. The total MPLs in the European system increased by approximately 10 billion. So that's a meaningful amount. And what that tells you is that even small amounts of increases in the percentage of the MPL ratio, and even when it is stable, our AUM continues to grow and we continue to be important to our clients in dealing with those MPLs. High borrowing costs are still here. The consumer is still under pressure. Bankruptcies still remain close to a record high. And wage growth is continuing to see whether or not the ECB is going to initiate monetary easing is still very much in question. All of this means that the amount of unpaid invoices and unpaid loans are going to continue to be stable to increasing. Our clients are going to continue to need us to deal with that. And we not only have a cyclical movement in the absolute volumes of these things, but we also have the secular trend, which is the outsourcing trend. Banks and companies increasingly are recognizing that we do this better than them. And therefore, even in a stable environment, a bigger percentage of these type of assets are going to be externalized. And as a leader, we're going to disproportionately benefit from that. As a consequence, what you see in the quarter, and that's the next page, page nine, is servicing is ahead on top line and on bottom line. Why is that? Well, you see it here. It continues to grow income or revenue. The margin, you can't see it that well, but it was 15% on a trailing 12-month basis at the end of Q1. Today, it's 16. That's a function of in Q2 24, as I said earlier, it was 19%. Last year, it was 16%. By year end, that trailing 12-month number will be closer to 19%. And we're very confident that we're going to hit that. We're very confident we're going to hit the 25% by 2026. What you see in the bottom is one of the drivers, organic growth, as I said earlier, some in Northern Europe, very significant in Middle Europe. Southern Europe is still a stock market, so it's still very large volumes that were transferred, predominantly loans that were working off. It's still our highest margin and our highest revenue region, but it isn't the growth region. New volumes do exist, but they don't exist in sufficient volumes to offset what is a working down of the perimeter. So that will reverse in the future, but ultimately at this point in the cycle, that's where we are. And then what you see in the bottom is one of the reasons, one of the many reasons, in addition to the tactical cost cutting and the focus is the new underwriting of business. The new underwriting, which is accelerating, as I said earlier, with ACVs higher than last year, even though last year was a record, In Northern Europe, it's in the 40s, relative to 17%. In Middle Europe, it's doubling at 32 versus 16. And in Southern Europe, it's consistent with past very high levels of profitability. All of these are reasons why we are very comfortable that we're going to hit in servicing the 10% CAGR at the top line through 26, as well as the 25% margin by 26. The next page is just some selected performance. This is broad based. As I said earlier, 14 out of our 20 markets have increased the margins year on year. Of the other six, two are our highest margin countries, which are more stable, not necessarily expanding. So it's a very broad based and comprehensive improvement in performance. Here you see three examples, one in each of our core regions. Sweden, which previously was a very challenged market for us, is growing top line and disproportionately growing EBIT, which shows you meaningful margin expansion. France was also a market where we changed leadership not recently. The growth in servicing income has been significant. EBIT growth has been very significant relative to history. And as a consequence, we've had margin expansion. Italy, which is in Southern Europe, which is not known for growth because of the phenomenon I described earlier, where we have very large historical balances that were transferred to us. Italy is growing top line. And this is why I said that eventually in these markets in Southern Europe, it is going to flip. Right now, we have too much historical stock that we're working down where new volumes aren't sufficient. But in Italy, they are just demonstrating very significant top line growth, very meaningful bottom line growth, and very meaningful EBIT expansion. What's very important is that these are each in one market in each of the main regions, as well as these are not markets where we did M&A. This is purely organic improvement in performance. Next, let's talk about cost reductions on page 11. You guys have already heard this from us. We did phase one and phase two. Phase one, we called project boost. Phase two, we called project fit. We had a target of 600, which we expanded to 800 in phase one. We now have an additional phase, which we initiated earlier this year, which is 700. To date, we have achieved 900, which is the second graph on the bottom from left to right. By year end, we will achieve an additional 300. So that's going to be 1.2. During 25, we'll reach the full 1.5. This is very important. We need to continue to be efficient. And half of this is roughly in the markets. Half of it is in the center. This is also consistent with our change in enterprise operating model, another element of our transformation where we're devolving more responsibility to the markets and we're shrinking the center and making it more an effective supporter of the markets. That's an important thing for long-term development. And this cost cutting is commensurate with that. And overall, we just need to be more mindful of efficiencies because we still do operate in an inflationary environment. Next page, page 12, we're transitioning over to investing, our proprietary investing book. As you can see here, as of Q3 last year, as per our stated strategy, even before our capital markets day, we reduced our investments. That means that we were extracting on a quarterly basis value from our book. And then obviously the sale of the back book has added to that. So in the trailing 12 months, We've expanded, we've extracted more than 8 billion, and we've used that to reduce leverage, which is one of the reasons we are where we are now in leverage relative to the last year to two years. When you look at the next page, this page 13, despite the fact that we're shrinking the book, that it shrank 14 or 15% before the sale of assets, with the sale of assets, it's going to shrink more than a third, like 35, 36%. It still is collecting very well with RTM gross cash collections just slightly down, and it's still collecting above 100%. It's 116% as I said earlier of original underwriting forecast. So this business continues to throw off a tremendous amount of cash and it continues to demonstrate real resiliency. Our point here is that now that we've shrunk it down to the level of call it from 37 billion down to about 25, 26 billion, it will be stable to slightly down. We won't be shrinking it by as much going forward. We will be more harvesting it and trying to figure out where our investments land going forward in the context of the service agreement. So now the last page, and then I'll hand it over to Emil to do the financials, is something that's, as everyone knows, is one of my favorite things to talk about, which is the why. Why does Interim exist? What do we do that actually gets us up in the morning? Certainly what gets me up in the morning? It's because we play a critical role in the economy, in frankly, the financial, the sustainability of the financial ecosystem. What does that mean? We help individuals get out of a difficult situation. These are the consumers. We have 30 million in our book, roughly speaking, today. Historically, we've dealt with over 100 million consumers. In the last 12 months, we've helped just under 5 million of those individuals become debt-free. That means they can reintegrate into society, get a bank account, get a credit card, et cetera. They have dealt with a difficult situation. Despite the fact that we're dealing with them at a very delicate moment on a very delicate subject, we still have very high ratings from them, 4.3 out of 5. What this means by doing this in this fashion, what it means is we deliver for our clients. All-time high trailing 12-month collections are $122 billion, of which $14 billion is for ourselves. The other $108 billion is for clients. Why are we this successful in dealing with consumers and helping them, but also at the same time delivering for our clients? It's the values on the far right of this page. We deal with these consumers on an industrial level, by the way, in terms of across 20 countries, across 25 million consumers, 160 million actions a year. We deal with these consumers with empathy, understanding their situation. We deal with them in a completely ethical fashion that is non-negotiable in terms of this industry. We dedicate resources to them. We have 10,000 people in 20 countries, of which 5,800 or so are in collections activities. And we provide them with solutions, payment plans, one-off payments. We understand their situation. We understand their limitations. That's ultimately why we exist. Everything else is a derivative of this. And this is one of the reasons that I get up in the morning. So with that, I'll hand it over to Emil to deal with the financials. And then you'll come back to me with some concluding remarks.

Thank you, Andres. And good morning, everyone. So please turn to page 16. When we conclude a very eventful quarter for interim, the two businesses, as you've heard described, has continued to perform in line with our expectations. So the underlying good performance is, however, somewhat muted by the delayed collections or temporarily delayed collections in our JVs in Southern Europe. All in all, this sums up to the sixth consecutive quarter with growing adjusted incomes. Adjusted income was 5 billion for the quarter, up 1% compared to last year, and this is primarily driven by the growth in our servicing sector. As we shift the relative size of our income streams from capital-intensive high-margin investing business to capital-light lower-margin servicing, the group's total adjusted EBIT margin will naturally be smaller over time. As said, this quarter servicing income grew by 10% and investing had a negative growth of 10%. This combined with the temporary delays in JV collection drove our EBIT to decrease by 4% versus Q2 last year and adjusted EBIT to decrease by 15%. The leverage ratio decreased to 3.9 times net debt to cash EBITDA during the quarter. The leverage ratio calculations includes the trailing 12 months cash EBITDA contribution from the assets we sold to servers by the end of June. and the net that has decreased by the organic cash we generated in the quarter, and the net proceeds from the back book sale. Our expectation, and then including the effects from the liability restructuring, is that the leverage ratio will be around four times towards the end of the year. Turning to page 17 in our servicing segment. We had extremely strong external income growth in the quarter, up 10% to just about 3 billion, and that's mainly driven by the acquisitions that were closed during last year. Total income for the quarter came in at 3.7 billion, 7% above last year. We also continue to see a trend of increasing adjusted EBIT margins, and this is driven by the cost initiatives, the focus, and the impact from the higher margin servicing contract that was signed during the last year. Adjusted EBIT for the quarter is up 23% to 692 million, with an increase in adjusted EBIT margin of circa 3 percentage point to 19%. And in the graph to the right, you can also see that our RTM adjusted EBIT margin of 16% have started to increase and is starting to bottom out. And we expect this to continue throughout the year. And equally important, This is broad-based. It's 14 out of the 20 markets, which accounts for circa 70% of our income, have increased the margin compared to last year. And as you saw on the page six, on an RTM basis, we have grown 1% in Northern Europe and 10% in the large and super important Middle Europe region. For the full segment, though, this is offset by the natural decay and when we work out the cases that we have in Southern Europe. Turning to page 18, our investment business continued to show a very resilient cash collection. Despite the tough operating environment, we collected 102% versus the active forecast and 116% against the original underwriting forecast during the quarter. As a function of the smaller book and the slower investment pace, we will see a natural reduction in our adjusted income and adjusted daily going forward. Adjusted income and adjusted EBIT decreased 12% and 13% respectively during the quarter. And the reduction in adjusted EBITs was further impacted by the temporary delayed collections and increasing costs, both due to higher activity level to working on an aging book and inflation in combination with investment in legal activities that will drive future collection later in the year. If you look at the cash EBITDA, which adjusts for these non-cash items, the margin is less impacted and demonstrates the high cash generation that we continue to have from the investing segment. During the second quarter, organically, we extracted 2 billion from the segment. And over the last 12 months, we extracted 8.4 billion. The new investments of 425 million in the quarter were made at an 18% underwriting IRR and were predominantly from forward flow contracts across our footprint. And the full year's capital deployment is expected to be around 2 billion as previously announced. Please go to the next page and the progress of our cost program. This is the slide that we have showed the last couple of quarters for the cost program development with an RTM cost base from Q1 2023, which was the cost baseline for the first phase that we called Pride Boost of our cost reduction initiatives. During the second quarter, We have realized an additional 400 million Swedish krona and implemented an addition of 200 million savings. In total, to date, we have achieved 900 million of the 1.5 billion identified and expected the full effect of the cost program to be achieved in the beginning of 2025. In the graph to the left-hand side, we are visualizing the impact compared to the baseline cash cost. The first bar, It's the actual realized saving to date of 900 million. The second bar shows that like for like organic reduction of our income, the cost base is further down 500 million. As we acquired the high-end Aero platforms during 2023, the cash cost has increased by 1.7 billion compared to the baseline. And the fourth and the fifth bar, inflation and currency effects, are adding a significant amount of cost for the periods of 1.3 billion. And that sums up to total cash cost increase comparing the Q2 trailing 12 months in 2024 to Q1 trailing months in 2023 of 1.7 billion. So if we're looking at the next page, we're trying to illustrate the cost evolution versus full year 2023. The graph is the same, so they have the same bars as on the previous page. And as you can see, combining the cost savings achieved during only 2024 of 600 million plus the inflation during the same period, the underlying cost base are actually decreasing. In terms of progress, we expect to realize the additional 300 million in 2024 and the last bit of the program in early 2025. Next page, please. So on my last page, if we look at the net debt development in the quarter, we had an organic cash flow generation across the platform of 1.1 billion. Adding the 7.2 billion of net proceeds from the back book sales, and then we have some investing currency effects, which is minor in the quarter, that takes you to a net debt reduction of 8.5 billion in the quarter. Below that, you can see that consistently since mid-2022, our underwriting IRR has increased. And the last quarter we underwrote, as we have mentioned a couple of times, the 425 that we invested of 18% unlevered returns. By the end of the quarter, the net liquidity stood at 10.5 billion. With that, Anders, I'll hand it back to you for some final remarks.

Perfect.