Lowell First Quarter Results 2022
Lowell, a European leader in credit management services, today announces its results for the 3 months ended 31 March 2022.
Commenting on today’s announcement Colin Storrar, Group Chief Executive Officer, said: “These results demonstrate a quarter of sustainable growth and continued strength of our Cash EBITDA margin. Our strong capital deployment in the first quarter of the year provides a strong foundation for growth, alongside our continued focus on disciplined balance sheet management.”
- LTM Cash EBITDA up 7% to £533m (£498m)
- +400bps LTM Margin accretion to 60% (56%) reflecting delivery of cost actions
- Collection performance in line with forecast
- £557 of LTM portfolio acquisitions (£257m) supported by Q1-22 purchases of £188m
- £118m LTM free cash generated
- Strong Q1-22 performance across all regions
- Leverage continues to be managed within guided range at 3.8x
- Substantial available liquidity1 of £371 million
(Note: comparable numbers for LTM Q1-21 in brackets)
The business continues to deliver as a leading pan-European debt purchaser, and we are excited by the level of capital we have been able to deploy in Q1 and the pipeline for the rest of 2022. We expect to invest >£400m in portfolios across FY22; investing above our replacement rate and at attractive returns whilst maintaining focus on our balance sheet discipline.
Group Financial Performance
Collection performance in line with forecast at 98% of Dec-21 static pool. Underlying UK collection performance remains strong, with UK paying base performing at 99%2 of expected collections and default rate remaining low at 4.5%. Headline collection shortfall reflecting impact of lower litigation selections across Q4-21 with collections expected to be deferred and not lost.
Record £533m LTM Cash EBTIDA delivering 7% LTM growth, reflecting strong performance across all the Group’s regions.
Cash EBTIDA growth delivered against relatively flat year-on-year Cash Income. Strengthened margin performance, at 60% on an LTM basis, reflects the encouraging cost control and actions taken across prior periods.
The comparative periods benefit from very strong Q1-21 UK collection performance of 118% which reflected the recovery of delayed collections due to management actions taken in 2020 relating to COVID-19. The LTM comparative period also benefits from the strategic asset sale in the Nordics (Q3-20). Underlying Cash Income demonstrated year-on-year growth.
Significant Purchasing Activity and Pipeline Visibility
Purchases have increased 117% year-on-year to £557m on an LTM basis with £188m during the quarter. The purchasing environment is attractive, providing a broad range of opportunities across all regions. The strong pipeline of opportunities allows the Group to be selective over future purchases to optimise returns.
Following significant Q1-22 capital deployment, softer purchasing volumes are expected across the next 6 months. The Group remains focussed on its guidance of >£400m purchases in 2022.
Strong Liquidity and Balance Sheet Discipline
As at March 31, 2022 we have available liquidity of £371m and leverage at 3.8x continues to be managed within our guided range of 4.0x – 3.5x.