MCS Groupe Bond Investors presentation
28/11/2018 1
November 29, 2018
MCS Groupe Bond Investors presentation November 29, 2018 - - PowerPoint PPT Presentation
MCS Groupe Bond Investors presentation November 29, 2018 28/11/2018 1 Disclaimer This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the securities laws of
28/11/2018 1
November 29, 2018
Confidential & Proprietary
28/11/2018 2
This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the securities laws of other jurisdictions. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the words "believes", "estimates", "aims", "targets", "anticipates", "expects", "intends", "plans", "continues", "ongoing", "potential", "product", "projects", "guidance", "seeks", "may", "will", "could", "would", "should" or, in each case, their negative, or other variations or comparable terminology or by discussions of strategies, plans, objectives, targets, goals, future events or intentions. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this presentation and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, competition in areas of our business, outlook and growth prospects, strategies and the industry in which we
that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. For a description of important factors that could cause those material differences, we direct you to the section of our Annual Report entitled "Risk Factors". Any forward-looking statements in this presentation are based on plans, estimates and projections as they are currently available to our
result of new information, future events or otherwise. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this presentation and in our Annual Report.
Confidential & Proprietary
Key Highlights for 2018 – in Sept-18 YTD
28/11/2018 3
NPL servicing activities.
reaching 3.2x).
seize attractive investment opportunities.
authorities and agreement by staff representative bodies.
secured floating rate notes due 2024. In addition, the RCF was up-sized from €40m to €50m.
additional equity as part of the transaction.
1 2 3 4
Confidential & Proprietary
21 31 14 2016 - 9M 2017 - 9M 2018 - 9M Portfolio Acquisitions 120m Gross ERC
Solid growth leading to strong deleveraging – MCS Group
28/11/2018 4
Portfolio Acquisitions and 120m Gross ERC
(€m) (€m)
Cash EBITDA and Cash EBITDA Margins Net Debt / Cash EBITDA (LTM)
(€m)
83.4 93.2 96.8 8.5 18.3 21.7 91.9 111.5 118.6 2016 2017 LTM Sept-18 Gross Collections Servicing Servicing as % of net revenue
Total Cash Revenues
12% 25% 325
2.9x 3.2x 2.7x Q3 2017 Q4 2017 Q3 2018 56.3 68.8 73.3 2016 2017 LTM Sept-18 Cash EBITDA Cash EBITDA margin
61% 62% 27% 62%
(1)
Continued strict investment discipline
1) Cash EBITDA margin calculated as Cash EBITDA as a percentage of Total Cash Revenues.
370 342
Confidential & Proprietary
37 35 2017 - 9M 2018 - 9M Portfolio Acquisitions 120m Gross ERC
Strong and resilient combined financial profile: pro-forma MCS&DSO
28/11/2018 5
Portfolio Acquisitions and 120m Gross ERC
(€m) (€m)
Cash EBITDA and Cash EBITDA Margins
(€m)
102.1 121.2 63.4 80.7 165.5 201.9 LTM Sept-17 LTM Sept-18 Gross Collections Servicing Servicing as % of net revenue
Total Cash Revenues
51% 416
76.3 95.2 50 100 LTM Sept-17 LTM Sept-18 Cash EBITDA Cash EBITDA margin
46% 54% 47%
(1)
1) Cash EBITDA margin calculated as Cash EBITDA as a percentage of Total Cash Revenues.
431
Net Debt / Cash EBITDA (LTM)
3.0x 3.2x Q2 2018 Q3 2018
Confidential & Proprietary
Conservative leverage profile vs. Peers & significant Servicing Contribution
28/11/2018 6
Net Debt / Cash EBITDA (LTM) (1) 3.2x 4.0x 3.8x 4.2x 4.2x 4.2x 5.4x Q3 2018 B2Holding Intrum Hoist Cabot Arrow Lowell
Source: Latest company filings (Q3 2018 pro-forma MCS&DSO investor reports and presentations). 1) Net debt / Cash EBITDA as of LTM Sept-18, unless otherwise stated. 2) Servicing revenue contribution as of LTM Mar-18, unless otherwise stated. 3) Net debt / Cash EBITDA as of LTM Jun-18. 4) Servicing revenue contribution as of LTM Mar-18.
(6)
Prudent target leverage ratio of 2.5x – 3.5x
Servicing revenue contribution (as % of net revenues)() 9% 54% 3% (4) 20% (4) 23% (4) 26% (7) Pro-forma MCS&DSO 54%
(5) (3) (3)
5) Excluding NRI. 6) Adjusted EBITDA Q3 2018 excluding Pro-Forma costs adjustments. 7) Servicing revenue contribution as of LTM Dec-17.
Confidential & Proprietary
MCS Group consolidated cash flows – in Sept-18 YTD
28/11/2018 7
Net cash flows from operating activities
Sept-18 YTD
Closing cash
Sept-18 YTD
convertible bonds, a share buyback and a cash dividend. 9 months €m sept-17 sept-18 Variation (%) Net cash flows from operating activities 39.9 48.3 21% Net cash flows for investment activities (33.2) (15.1)
Net cash from financing activities (31.5) (17.9)
Net change in cash and cash equivalents (24.8) 15.2
Opening cash and cash equivalents 62.2 52.0
Closing cash and cash equivalents 37.4 67.3 80%
Confidential & Proprietary
Pro-forma MCS & DSO ERC as of September 30, 2018
28/11/2018 8
280 81 MCS DSO
In €
325 91 MCS DSO
MCS & DSO combined 84M Gross ERC MCS & DSO combined 120M Gross ERC Evolution of MCS & DSO combined ERC
down 12% or €45 million, which is explained by the strict investment discipline observed over the last twelve months, our robust performance in terms of collections during the first months of 2018 and deliberate conservatism on portfolio revaluation.
369.8 325.0 60.8 91.1
MCS DSO
431 416 416 361
Confidential & Proprietary
28/11/2018 9
Confidential & Proprietary
Financial Performance MCS Group – in Sept-18 YTD
28/11/2018 10
Highlights
to €81m between Sept-17 YTD and Sept- 18 YTD
increase of gross collections by 6% in Sept-18 YTD from comparable period in 2017
than 28% (vs. Sept-17 YTD) owing to balanced contribution from both performing (particularly the CIF contract) and non-performing servicing activities
€0.6m during the first 9 months of 2018 from comparable period in 2017
business growth
(+10% YoY growth)
from 59% last year
Key Financials
9 months LTM €m sept-17 sept-18 Variation (%) sept-17 sept-18 Variation (%) Gross Collections 62.0 65.6 6% 83.1 96.8 17% Servicing Revenues 12.1 15.5 28% 14.4 21.7 51% Total Cash Revenues 74.0 81.1 10% 97.5 118.6 22% Professional fees and services (6.9) (6.3)
(9.4) (8.5)
Personnel costs (15.0) (16.7) 11% (19.0) (22.8) 20% Committed costs (8.2) (9.7) 17% (10.6) (14.0) 32% Total costs (30.1) (32.7) 9% (38.9) (45.3) 16% Cash EBITDA 43.9 48.4 10% 58.5 73.3 25% Cash distributions to SPV co- investors (2.3) (0.8)
(3.3) (1.2)
Attributable Cash EBITDA 41.6 47.5 14% 55.3 72.1 30% Cash EBITDA Margin 59% 60% 60% 62%
Confidential & Proprietary
Financial Performance pro-forma MCS & DSO– in Sept-18 YTD
28/11/2018 11
Key Financials
9 months LTM €m sept-17 sept-18 Variation (%) sept-17 sept-18 Variation (%) Gross Collections 77.2 84.9 10% 102.1 121.2 19% Servicing Revenues 53.2 60.3 13% 63.4 80.7 27% Total Cash Revenues 130.3 145.2 11% 165.6 201.9 22% Professional fees and services (18) (21) 15% (24) (28) 14% Personnel costs (36) (41) 12% (44) (54) 22% Committed costs (16) (18) 10% (21) (25) 20% Total costs (70) (79) 12% (89) (107) 19% Cash EBITDA 59.9 66.2 10% 76.3 95.2 25% Cash distributions to SPV co-investors (2) (1)
(3) (1)
Attributable Cash EBITDA 57.6 65.4 13% 73.0 94.0 29% Cash EBITDA Margin 46% 46% 46% 47%