Credit Corp (CCP) released their first half results for FY23 this morning. From their release:

CCP attributed the decrease in NPAT (compared to CCP) to:

• up-front loss provisioning and marketing expense from rapid loan book growth;
• costs arising from increased US resourcing; and
• run-off in the core AU/NZ debt buying segment.  

I think overall it was a poor half on the surface for CCP but this could be laying the foundation for future growth especially in the US. Just on the lending side, they are expecting 2HFY23 NPAT to be $25-30m (up from $4.3m in 1HFY23).

Guidance remains unchanged:

Will continue to hold but will need to see their investments pay off especially in the second half of this year.

Full presentation here

Disc: Held IRL. Not held on Strawman.

Credit Corp Group (CCP) today announced its FY22 results. From their release:

• 9% increase in net profit after tax (NPAT) to $96.2 million
• Record annual investment:
• US purchased debt ledger (PDL) outlay 80% above previous peak (FY2020)
• Gross lending volume 24% above prior record (FY2019)
• 16% increase in US segment NPAT
• Recovery in lending segment earnings and loan book

Management also provided guidance for FY23:

Overall a fairly good result for CCP. I see this business as counter-cyclical given their business of debt collections. Management did flag that overall AU/NZ debt purchasing has not recovered to pre-covid levels and thus most of the growth in the business has been through the increase in US debt purchasing. This has also run into issues in regards to staffing in a tight labour market although management have made the move to use offshore (Philippines) staff to make up the numbers.

Free cash flow was negative as a result of acquisitions (Radio Rentals in particular) although management do expect FCF next year to exceed $100m providing them with sufficient cash for potential acquisitions.

Outlook implies not a lot of growth for the coming year although I feel management are always quite conservative in their guidance.

Disc: Held IRL, not held on Strawman.

Acquisition of Radio Rentals from Thorn Group

• Credit Corp Group (ASX:CCP) announced they have acquired the assets of Radio Rentals, an appliance rental business, from Thorn Group for around $60m.
• This gives CCP exposure into online retail by instalments.
• The deal is expected to be completed in Dec 2021

They have also upgraded guidance with NPAT guidance rising to $92-$97m (up from $85-$95m) as a result of this acquisition.

Disc: Held IRL, not held on Strawman