Intrum (INTRUM) Q3 2024 earnings summary

Executive summary

• Q3 2024 was seasonally weak and income fell 5% year-over-year, but year-to-date performance remains on track with strong profitability in Servicing and a pivot to a capital-light Investing model.

• SEK 1.1 billion in cost savings realized by end of Q3 2024, with adjusted cost-income ratio down 2% year-over-year.

• Significant progress on recapitalization, including launch of prepackaged Chapter 11 with strong creditor support and partnership with Cerberus for portfolio acquisitions.

• Rollout of Ophelos AI technology in several countries, targeting half of servicing markets onboarded by end of 2025 and delivering cost efficiencies.

• EBIT dropped to SEK -127M from SEK 50M in Q3'23, mainly due to SEK 668M goodwill impairment in UK & Ireland and Norway.

Financial highlights

• Adjusted EBIT decreased 5% year-over-year to SEK 951M, but margin in Servicing rose from 12% to 18% in Q3.

• Year-to-date servicing margin at 17%, targeting close to 19% by year-end.

• Net income attributable to shareholders was a loss of SEK 1,210M, impacted by goodwill impairment and one-off costs.

• Leverage ratio increased to 4.2x from 3.9x last quarter, mainly due to lower cash EBITDA post asset sale.

• Cost base reduced by 16% to SEK 3,649M, with aggregate costs down 8% year-over-year.

Outlook and guidance

• Recapitalization transaction expected to be effective in early 2025, with prepackaged Chapter 11 approval anticipated by year-end 2024.

• Full effect of SEK 1.5 billion cost savings expected in 2025 as all initiatives are implemented.

• Servicing margin forecasted at 18.7–18.8% for full year, with medium-term target of 25% by 2026.

• Leverage ratio expected to remain stable around 4x until mid-2025, then decline towards 3.5x by 2026.

• IRR levels for new investments expected to remain high in coming quarters.