Intrum AB – Year-end announcement 2023

• Seasonally strong end to a transitory year
• Income flat vs. strong Q4 ‘22 and up 3 per cent vs. FY ’22
• Full year EBIT increased to SEK 4,364 M vs SEK 154 M (inclusive of JV write down)
• EBIT includes SEK 541 M for the FY ’23 in respect of costs to execute the cost saving program
• Adjusted Income was up 8 percent vs. Q4 ’22 and 5 percent vs. FY ’22 primarily driven by M&A activity in Servicing segment
• Adjusted EBIT reduced by 1 percent vs. Q4 ’22 and 13 percent vs. FY ’22 driven by cost growth in excess of income
• Leverage ratio flat at 4.4x (including 0.1x favourable FX) and net debt declined by SEK 1.7 bn despite paying final instalment of dividend and M&A activity
• Progressed on several strategic initiatives: (i) agreed to sell portion of investment portfolio to Cerberus, (ii) exiting selected markets and (iii) achieved announced savings of SEK ~800 M on a run-rate basis

Financial results in brief, October-December 2023 (October-December 2022)

• Adjusted income increased to SEK 5,540 M (5,134)
• Adjusted EBIT decreased to SEK 1,899 M (1,927)
• Cash EBITDA decreased to SEK 3,732 M (3,786)
• External Servicing income growth of 17 percent
• Servicing adjusted EBIT margin of 23 percent (27)
• Investing book-value excluding revaluations stood at SEK 37 bn (37)
• Available liquidity at the end of the quarter was SEK 9.1 bn (16.9)

Full year 2023 (full year 2022)

• Adjusted income increased to SEK 20,000 M (18,960)
• Adjusted EBIT decreased to SEK 5,786 M (6,664)
• Cash EBITDA decreased to SEK 13,001 M (13,238)
• External Servicing adjusted income growth 10 percent
• RTM Servicing adjusted EBIT margin 16 percent (21)
• Net debt/full year cash EBITDA at 4.4x (4.1x)

Dividend proposal
The Board of Directors of Intrum AB do not intend to propose to the next Annual General meeting any dividend payable in 2024.

Presentation of the Year-end announcement
Andrés Rubio, President & CEO, Anders Blomqvist, Interim CFO and Emil Folkesson, CFO Office and Investor Relations Director, will present the results and answer questions in a webcast with teleconference at 9:00 a.m. CET. The conference will be held in English.

If you wish to participate via webcast, please use this link. Via the webcast you are able to ask questions in written.

To participate via teleconference, please use this link. After registration you will be provided phone numbers and a conference ID to access the conference. Via the teleconference you can ask questions verbally.

Comment by President & CEO Andrés Rubio
“2023 was characterised by serious external challenges and important internal transformation, including management changes, strategic changes and specific measures to drive long-term success. We presented our Strategic direction at the Capital Markets Day in September, to Simplify & Focus plus Grow and Transform our business, to become capital-light and client-centric with a continuous improvement culture to ensure best in class operations. We have taken significant steps towards these goals.

The tougher collection environment in 2023 increased the level of activity and therefore the cost to achieve the same amount of collections. This further highlights the importance of delivering on our strategic agenda and focusing on initiatives aligned with the three pillars: operational excellence, client focus, and capital-light.

With the asset sale to Cerberus, announced on 23 January, we delivered on an important milestone in our tactical agenda to de-risk with the reduction of our debt levels and raising sufficient liquidity to meet all of our upcoming debt maturities in 2024-2025, without relying on access to the debt capital markets. In addition, this transaction accelerates our development into a leading client service entity with a capital-light investment business and deepens our relationship with Cerberus, a leading NPL investor and one of our largest clients.

The fourth quarter demonstrated seasonal strength with adjusted income increasing by eight per cent, and five per cent for the year. Despite increased margin in the quarter, we need to continue to address the profitability of the servicing platform. By the end of 2023, we achieved our targeted SEK 800 M cost savings on a run-rate basis. We expect to exceed the SEK 800 M target in 2024 and also execute additional cost-cutting with supplementary measures necessary in the current inflationary environment.

Despite paying the last instalment of our 2022 dividend and closing the acquisition of e-Collect, our net leverage declined by nearly SEK 2 billion and the leverage ratio stayed at 4.4x (Q3 ’23: 4.4x), with the ratio positively impacted from FX by ~0.1x.  Pro forma for the expected liquidity from the announced asset sale our leverage decreases to SEK 49.1 billion, an approximate year-end debt figure last reported in 2020.

In the weaker economic environment, our services are needed more than ever, which was evident throughout the year by the high commercial activity level experienced by our Servicing segment. During 2023, we reached an all-time high volume of new contracts and signed annual contract value (“ACV”) of SEK 1,405 M (901) with significantly higher margins. External Servicing Income increased by 17 percent in the quarter and 10 percent for the full year, mainly driven by acquisitions. However, the impact of elevated costs is visible with profit margins down four and five percentage points for the quarter and year, respectively.

In our Investing segment we tactically moderated the investment pace during 2023, in line with our strategy, to extract cash and transform to a capital-light business model. During the year we deployed SEK 5,508 M (7,538) at 16 percent (13) expected return. The fourth quarter’s investments amounted to SEK 532 M (1,277) at 19 percent (16) expected return. For the full year we extracted net cash flows of SEK 5.4 billion vs. average of SEK 2.7 billion over the last three years.

When cost of living increases and consumer confidence falls, the collectability of our portfolios is clearly impacted. Despite this we collected 102 percent (108) of the active forecast during the year and 103 percent (111) in the quarter, which is a testament to the resilience in our back book and our industrial collections capabilities.

2023 was a year of change to lay the foundation for a stronger franchise. During the year we have increased our focus and accountability within the management group. We have taken important steps to improve our client centricity and seeded the foundation to more efficiently allocate capital and reduce our balance sheet intensity.

There is much more to be done and important measures to implement during 2024. I am excited to continue the journey we have embarked upon and would also like to thank all our employees for a stellar effort during a challenging and transformational year.”

For further information, please contact:
Emil Folkesson, CFO Office and Investor Relations Director
ir@intrum.com

This information is information that Intrum AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on 25 January 2024 at 07.00 CET.

Intrum is the industry-leading provider of Credit Management Services with a presence in 20 markets in Europe. By helping companies to get paid and support people with their late payments, Intrum leads the way to a sound economy and plays a critical role in society at large. Intrum has circa 10,000 dedicated professionals who serve around 80,000 companies across Europe. In 2023, revenues amounted to SEK 20.0 billion. Intrum is headquartered in Stockholm, Sweden and publicly listed on the Nasdaq Stockholm exchange. For more information, please visit www.intrum.com.