Axactor reports on key figures for the 1st quarter of 2020

Gross revenue declined 13% to EUR 79.2 million compared to the same quarter last year, mainly due to a 53% reduction of REO revenues. The closure of public notary offices in Spain hindered completion of already entered REO sales contracts, settlement of secured assets, and some large ticket NPL settlements. Net revenue decreased by 25% to EUR 55.6 million, reflecting also increased NPL amortization. EBITDA was EUR 14.1 million and cash EBITDA EUR 48.2 million in the first quarter 2020, whereas net profit amounted to EUR 3.4 million.

“Given the current extraordinary measures to contain the coronavirus, we expect the negative effects to deepen in the second quarter. We have already implemented a wide range of cost saving initiatives to align operations with the currently lower activity level, including both temporary workforce and salary reductions”, says Tsolis.

Looking further ahead, the collection performance will depend on the depth and length of the economic setback, and the impact on unemployment levels and the debtors’ disposable income and debt service abilities. The company is working to assess the impact on its valuation models, with the indication that the Financial Statements for the first half year 2020 may be charged with impairments. These potential impairments may challenge the covenants of the company’s outstanding bond and other financing arrangement.

Axactor invested EUR 89.9 million in portfolio acquisitions in the first quarter of 2020, and currently holds back on new investments to preserve cash and safeguard business continuity. The investment guidance for the full year 2020 has been suspended.

Axactor raised new equity through a private placement in February, generating gross proceeds of NOK 515.5 million. After the end of the quarter, the liquidity position was further secured through the extension of the EUR 425 million Revolving Credit Facility and EUR 75 million accordion option by one year until December 2021. The extension is conditional on refinancing of Axactor’s EUR 200 million bond maturing in June 2021, before the end of the first quarter 2021.

Axactor expects the current situation to boost demand for 3PC services from the second half of 2020. The changing market environment is also expected to generate a significant downward shift in the pricing of NPL portfolios, as the supply of new NPLs is expected to increase and the availability of funds to support potential buyers likely will be more limited. This may open new and profitable growth opportunities for the company in the longer run.