For Q1’22, we expect a cash-EBITDA of EUR 48m and EBIT of EUR 21m, up 9% and 21% y-o-y, respectively. The expected growth is mainly driven by higher 3PC revenue (+18% y-o-y), which we expect to continue on its positive trend due to an expected increase in loan default rates in Europe post the pandemic. In addition, Axactor will add its Italian debt collection agency Credit Recovery Service (CRS) from Q1’22 (expected revenue of EUR 1.5m/quarter). For gross collection, we have scrutinized the previous estimated remaining collection (ERC) curves that have been missed by some 5-10% on average in the last quarters, and we expect a gross collection of EUR 64m vs the current ERC curve of ~EUR 68m.
Lower cash-EBITDA expectations reduce estimates
We trim our gross collection estimates by 6%, 7% and 4% for ’22e-’24e, respectively, due to a lower expected money multiple (MoM) from new portfolio purchases following the trend from the latest quarters and from our revised collection curve, lowering estimated collection and the corresponding cash flow. We increase our expected 3PC costs as the added CRS business will likely have lower margins (~15% EBITDA margin). In terms of portfolio purchases, we estimate EUR 220m in ‘22e, EUR 236m in ‘23e and EUR 240m in ‘24e. Due to our revised estimates, our expected cash-EBITDA is lowered by 11%, 12% and 9% for ‘22e-’24e, respectively, and our adj. EPS is -31%, -37% and -37%.
We estimate 15% in 2022-24 cash-EBITDA growth
Despite lower estimates, we expect decent underlying growth (excl. REOs) of 8% in reported EBITDA and 15% in cash EBITDA (2022e-24e) as we believe both collection and 3PC revenue will pick up. We estimate REOs to be out of the books by Q2’23 and EBITDA margins to improve from the poor levels in 2021. Further, we expect Axacto ...
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