Axactor (ACR) Q3 2024 earnings summary

Executive summary

• Gross revenue increased 2% year-over-year to EUR 86.1 million, but declined 3% when adjusted for a EUR 4 million portfolio sale in Spain; total income fell 15% due to higher NPL amortization and negative revaluations.

• Cash EBITDA rose 6% year-over-year to EUR 59 million, driven by cost reductions and portfolio sale; EBITDA margin was 48% with EBITDA at EUR 27 million, down from EUR 34 million last year, including EUR 0.8 million restructuring cost in Italy.

• Operating expenses fell 5% year-over-year, with cost initiatives and restructuring in Italy contributing to improved efficiency.

• Net profit after tax was EUR 0.6 million, down from EUR 6.1 million, with annualized ROE to shareholders at 0%, reflecting industry-wide pressure from high interest rates and challenging collections.

• NPL investments for the quarter were EUR 12.6 million, bringing year-to-date investments to EUR 94 million.

Financial highlights

• Gross revenue: EUR 86.1 million (+2% y/y); total income: EUR 54.9 million (-15% y/y), impacted by negative revaluations and higher amortization.

• Cash EBITDA reached EUR 59 million, up 6% year-over-year, supported by lower operating expenses and a portfolio sale.

• EBITDA margin stood at 48% due to strict cost control; EBITDA of EUR 27 million, down from EUR 34 million last year.

• Net profit after tax: EUR 0.6 million (vs. EUR 6.1 million y/y); EPS: EUR 0.001 (vs. EUR 0.020 y/y).

• Operating expenses: EUR 28.3 million (-5% y/y); cost as % of gross revenue: 33% (35% y/y).

Outlook and guidance

• Challenging collection environment expected to persist through 2024 and into 2025, with cost inflation to be absorbed through further OpEx reductions.

• Modest reduction in funding costs expected in the short to mid-term.

• NPL investments for the year expected between EUR 100–150 million, with EUR 94 million invested year-to-date.

• 3PC segment expected to continue positive margin trend into 2025, especially in Norway.

• Compliance with all financial covenants as of end Q3, but limited headroom on leverage and interest coverage ratios.