Intrum AB (publ)

Welcome to the Intram Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing hash 5 on their telephone keypad. Now I will hand the conference over to President and CEO Johan Akerblom and CFO Massey Yazdi. Please go ahead.

Good morning everyone. Thank you for listening. It's great to have you back for another quarterly earnings call. Today we have a new setup. I am obviously in the new position and I also want to sort of say hello to Masi who's been with us now for What is it? Eight weeks, roughly, almost. And yeah, we will go through the Q3 results in normal order. We will take you through the presentation and then we'll open up for Q&A at the end. If we start with the quarterly, I think the quarter as such, it is a bit messy when you start looking at it. But a few things to highlight. I mean, on the underlying, we have a higher servicing income. The underlying business is in general performing well. The adjusted EBIT has been increasing 30% year on year. And we continue to report net profits. This is the third quarter in a row. And the leverage ratio is going in the right direction. And the investing volumes are increasing if we compare to Q1 and Q2 early this year. On the servicing side, we have now reached the 25% on an adjusted EBIT margin, rolling 12 months. And on the investing side, I think the collections, they are slightly above the forecast again. However, the income is down, but I mean, that is on the back of the lower, the book that we have, which is now at 22 and a half billion. If we go to the servicing a little bit more specific, I mean, this is the first quarter where we have an organic growth since 2022. I think it was Q3 2022 the last time. So we now are actually not only improving the margins, we're also having a top line that is going in the right direction. We did grow in 10 out of 16 servicing markets. The pipeline is increasing. So we've had a lot of focus on the top line. I think we discussed this earlier with you. And we continue to now see, hopefully, a bit of results from that. We're working closely with the entire sales organization. We're adding new people. We are upgrading. We are working with target lists, pipeline. We're working closely with churn. And the good thing is that there's still potential from our pricing program that should trickle through going into 2026. And we also see that the margin that we get on the new deals is higher than the current margin. On top of that, we also have now started and that will be something we'll probably speak about a little bit more when we get to the Q4. You know, what kind of ancillary business is there out there and what's the growth potential? Moving to the investing side, I think here it's a bit of a, I mean, the good thing is it's a quarter where we see the investments increasing. So we're now 303 million. The IRR remains at a very high and comforting level. And I think for us, it's very important that the discipline on price is always going to be more important than the volume as such. Of course, we want to increase the volumes, but we will never increase the volumes on the back of being undisciplined on the pricing. We see that we are successful in smaller deals, but on the bigger deals, I think there is an overall market pressure on the downward side. And we have not gone all the way to meet that where the market is. We'll see where the market takes us going forward. And we're also working closely with Cerberus. So half of the more than half of the deals has been done with them. we now have deployed 2.9 billion since we started in total um and and the good thing is i mean we continue to extract value out of the portfolio so performance index remains above 100 and if you compare to the original curve original forecast we're now at 109 in the quarter i think with that i'm handing over to masi he'll take us through the financials a little bit more details

Yes, thank you, Johan, and good morning to everyone. I thought I'd start with going through all the one-offs we have. I think it's natural, both me and Johan, you in our positions, to do a thorough analysis of the balance sheet. What we've tried to do here is to apply a more conservative approach, as well as trying to minimize items affecting comparability going forward. So therefore, this quarter, we have a pretty messy quarter in terms of write downs of impairments and goodwill and also some one-off tax items. So as you can see, the reported EBIT is almost minus 600 million. If you move that to the net income to shareholders, that is impacted by the gain we had on recapitalization of 2.3 billion. And we have underlying financial expense of 838 million. We have a couple of one-off tax items and underlying tax of 158, which takes you to the almost 400 million net profit. Then we have a goodwill impairment related to Spain, where the development has been more negative than was assumed in our goodwill calculations, and therefore we have that impairment. And then we have some other impairments, mainly of client contracts on the balance sheet that we have now written down. So overall, a messy quarter, a lot of one-offs, but as I said, we have taken a conservative approach on the balance sheet and we're hoping that you'll see much less of IECs going forward. If I move to the next slide, slide nine, and look at the key financials for the group, as you've probably seen, income is down 3% compared to a year ago. More than half of that is FX related. At the same time, the cost trend continues to be positive, as you can see, and the cash generation has improved compared to a year ago. The leverage ratio has been restated. Again, here a bit more conservative approach. We're looking at the nominal value of debt rather than the book value, which means that the leverage ratio is higher than it otherwise would have been had we used the old definition. With the old definition, it would be at 4.4. And I should also mention that full year 2024, without the discontinued operations, it would have been at 5.3. So we are moving in the right direction in terms of leverage. but obviously want to move this even further going forward. If I move to the next slide and look at the underlying cost trend, you can see that we've had a strong cost discipline also in Q3 and the run rate is now 12.5 billion in terms of costs and costs are down 10% compared to the same quarter last year. And that is mainly driven by a reduction of FTEs down about a thousand people compared to a year ago. Moving into servicing, as Johan said, encouraging to see that we have organic growth in the quarter. The total income is flat, but that is completely driven by FX of a 3% negative effect offset by organic growth of 3%. A lot of the one-offs is in the servicing business, so the EBIT is distorted by that. But if you look at the adjusted EBIT, it's up 27% and it's also up 30% so far in 2025 versus the same period in 2024. We want to double click on the leverage we have. What's happened in this company last couple of years is a quite large shift in the composition of the business. If you look at the bars, you can see that two years ago, 24% of the cash generation was coming from the servicing business. That has almost doubled to 43%. In our view, I think the general conception is that servicing is less risky than the investment business, which means that the cash flows generated from that business should be able to cope with a higher leverage. Here, we have assumed that our investment business has an LTV of 80% that should be financed by debt of 80%. And if we assume that the remainder of the debt on the balance sheet is in the servicing business, you can see that the leverage ratio for the servicing business is actually coming down quite a lot especially the last few quarters given the fact that the cash generation from the servicing business has improved quite a lot um i think if anything this this chart shows that we want to going forward take into account the riskiness of our business when we set our leverage targets so that it takes into account if we continue to de-risk and have a larger share of our revenues and profit coming from servicing. Moving into the next slide, slide 13, investing. You've seen this, but the income is down. This is partly FX, but largely due to the lower investments compared to the amortizations we have. So a smaller book value leads to lower income. We are collecting well on this portfolio, which means that income is down slightly less than the book value. Nevertheless, as Johan said before, we have done more investments this quarter. We want to do even more going forward. But we want to strike a good balance between pricing, discipline, and volumes. Moving to slide 14, looking at the depth and maturity profile, you can see that net debt is now at just below $45 billion. We have about $5 billion of cash. Two of that is restricted. It could be used to buy back assets. Bonds, the remaining cash is free will. And you can see the maturity profile with about 12 billion of maturities in 2027, of which about half is the new money and notes we've issued. I think with that, I'll hand back to Johan and he'll do a couple of final remarks before we open up for Q&A.