Q1 2024 PRA Group Inc Earnings Call
Yeah.
Okay.
Yeah.
Good evening and welcome to B R. E groups first quarter 2024 acclaimed fence call all participants will be in listen only mode.
Speaker Change: Do you need assistance, please signal a conference specialist.
The Starkey followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask question. You May Press Star then the number one on your batch don't phone to withdraw your question. Please press Star then the number two.
Please note that this event is being recorded.
I'd now like to turn the call over to Mr. Nick you, Mr. Ahmed Vice President Investor Relations for B R. E group. Thank you. Please go ahead.
Yeah.
Yeah.
Thank you good evening, everyone and thank you for joining US with me today are Victor <unk>, President and Chief Executive Officer, and where cash cycle Executive Vice President and Chief Financial Officer.
We will make forward looking statements during the call, which are based on management's current beliefs projections assumptions and expectations.
We assume no obligation to revise or update these statements.
We caution listeners that these forward looking statements are subject to risks uncertainties assumptions and other factors that could cause our actual results could differ materially from our expectations.
Please refer to our earnings press release issued today.
Our SEC filings for a detailed discussion of these factors.
The earnings release.
Speaker Change: The presentation that we've always used during today's call.
<unk> filings can be found in the Investor Relations section of our website at Www Dot PRA group Dot com.
Additionally, a replay of this call will be available shortly after its conclusion and the replay dial in information is included in the earnings press release.
All comparisons mentioned today, what we have.
Three in Q1, 2024, and Q1 2023, unless otherwise noted.
Our Americas results include Australia.
Speaker Change: During our call, we will discuss adjusted EBITDA and debt to adjusted EBITDA for the 12 months ended March 31, 2024 at December 31 2023.
Please refer to today's earnings release, and the appendix of the slide presentation used during this call for a reconciliation of the most directly comparable U S. GAAP financial measures to these non-GAAP financial measures.
And with that I'd now like to turn the call over to Victor <unk>, President and Chief Executive Officer.
Thank you Jim and thank you everyone for joining us this evening.
Building on the momentum from last year, we began 2024 unexploited note with the first quarter demonstrating continued progress on driving the turnaround and rebuilding profitability.
As I will outline in a mall.
The strategic initiatives and our U S business remains firmly on track.
We also continue to strengthen our leadership team.
Upon my appointment as CEO in March of last year, I assume direct oversight of all U S operations accelerate the company's turnaround.
An important transitional year.
And all the success to date and focusing on the next stage of our journey towards operational excellence.
Please it's Steve Mackey. He has recently joined as our new Global operations Officer.
Steve is an experienced leader in the consumer finance industry, bringing more than three decades of operational expertise.
I expect him to play an instrumental role in delivering against our strategic priorities.
In addition earlier this year, we appointed Keith warning.
Global Chief risk and compliance officer.
He has more than 30 years of compliance legal and operational risk leadership experience across multiple credit reporting and consume.
Banking enterprises.
Speaker Change: I would now like to spend a few minutes, providing an update on October.
As a reminder.
Going back to enhance profitability is supported like treat goodness.
First optimizing investments, which allows us to increase yahtzee and portfolio that guidance.
Second driving operational execution, which focuses on maximizing cash collected but got uninvested.
And truly managing expenses, which is geared to optimizing our cost structure.
Speaker Change: First optimizing investments.
We continue to capitalize on the significant growth in U S portfolio supply driven by credit normalization.
Industry credit card balances exceed $1 billion today up from $850 million pre pandemic.
Speaker Change: Delinquency and charge off rates have also climbed over the past couple of years recently, reaching three 1% and four 2%, respectively compared to two 7% and three 7% prepaid debit.
As shown by the chart on the left of the slide there is a strong correlation with the U S credit card charge off rates in our U S portfolio purchases.
Apply in the U S continues to build we expect another strong year for you.
Speaker Change: Portfolio purchases.
Moving to Europe with rock gauge will expand on in his remarks, we did start to see the normal volume of portfolios for sale during the first quarter.
However, we have recently seen a sizable uptick in market volumes and we expect that our investments in the second quarter will align more closely with a long term trend noted.
All right John.
We remain disciplined with regards to pricing and are strategically deploying capital into markets, where we see the most attractive to us.
In addition to pricing new purchases appropriately we continue to realize year over year pricing improvements from the large forward flows that we repriced last year.
As Rakesh will highlight data the combination of increased purchases and improved pricing is positively impacting portfolio.
Turning now to the second pillar driving operational execution.
With regard to initiatives across our call centers in the U S. We have continued to refine and optimize Dino strategies reconfigured uplifts to align with seasonal increases in customer liquidity.
Speaker Change: <unk> capacity to support portfolio growth and driven expanded customer reach.
Additionally, a new customer contact strategy that we rolled out in the fourth quarter of 2023 continues to deliver successful results.
We have previously referenced a significant opportunity associated with our existing inventory of legal judgments.
Which is estimated to be in excess of $100 million of incremental cash collections in the 'twenty to 'twenty four 'twenty 'twenty six time period.
These opportunities range across various stages of the U S legal process, but most significantly being generated by the improved effectiveness of our wage garnishment processes.
The chart on the slide indicates our relative volume of annual wage garnishment fires across our U S business and highlights on the expectation that wage garnishment filings in 2024, when more than doubled from our pre pandemic baseline.
Speaker Change: Furthermore, we are encouraged by the pace at which we are realizing cash from wage gone instruments.
Speaker Change: The lift we are seeing from this specific process along with the additional improvement across the overall legal collection processes indicate that the overall size you're going to be opportunities associated with our U S. Legal processes is likely to exceed our initial estimates.
Speaker Change: As a reminder.
Speaker Change: All of these initiatives whether in the call center all of the legal channel should impact not only the cash we can generate from our existing portfolios, but also from new portfolios purchased in the future.
Speaker Change: Over time, this should make us more profitable and a more competitive buyer.
Yes.
The third pillar to our business turnaround is managing expenses.
The key to this pillar is reducing the marginal cost upgrade business.
Speaker Change: Our last earnings call I talked about the various factors that are expected to contribute to increased costs, including growth in account volumes investments in our EBIT channel and inflationary impacts.
Each of these remains a factor influencing the level of other expenses for the first quarter of 2024 and over the balance of the year.
Our expenses in the first quarter reflects the impact of our cost management program, including tangible progress on working with well recognized global service providers to outsource processes to low cost locations and establish offshore call centers.
Speaker Change: As previously noted we would be evaluating both the efficiency and effectiveness of these resources through the balance of the year, so actually determine applicable for the strategic actions.
Speaker Change: In summary, each of the three pillars supporting our drive to enhance profitability is tracking to our expectations.
And with that I feel like a lot of brackish for a financial summary of our first quarter results.
Speaker Change: Thanks Vic.
Purchased $246 million of portfolios during the quarter up 7% year over year.
In the Americas.
Speaker Change: We invested $197 million in the quarter up 48% year over year.
And in the U S. We deployed $187 million, which was up 71% year over year.
This reflected our second highest Q1 U S investment level in company history.
The year over year increase was primarily driven by the monthly amounts purchased.
Under our forward flow arrangements.
Speaker Change: Pricing also continued to improve.
As seen by our Americas core vintage, which was reported at $2. One one times at the end of Q1 2024.
Two 197 times for the full year 2023.
Moving to Europe.
Speaker Change: We have an efficient profitable and well diversified business.
In contrast to the challenges that some of our competitors are facing.
Speaker Change: Our European operations remains strong and differentiate it.
Long track record of healthy investments in ERC growth.
Disciplined underwriting and purchasing approach and a management team that has remained stable for years.
During the quarter, we invested $49 million in Europe.
Which was influenced by the low availability of market volumes.
As a reminder, the investment opportunities are less predictable in Europe.
Speaker Change: The market is more spot driven brand in the U S market.
Total volumes in general are still below pre pandemic levels, and we haven't seen large spot transactions similar to those that have come to market previously.
What we are seeing is an uptick in market volumes at the start of the second quarter.
With our purchases shaping up to be meaningfully stronger than the level, we experienced in the first quarter.
Moving onto our financial results.
Total revenues were $256 million for the quarter.
Speaker Change: Total portfolio revenue for the quarter was $254 million.
Portfolio income up $202 million.
Changes in expected recoveries of $52 million.
As a reminder portfolio income as the yield component of our revenue.
You can see on the chart on the left but the first quarter what was the third quarter in a row that portfolio income has grown year over year.
Driven primarily by higher recent purchases and improved returns, especially in our U S business.
We expect this strength to continue due to purchases and pricing changes already made as well as additional projected investments that are expected to grow the portfolio.
Turning to the chart on the right.
In addition to our portfolio income.
Speaker Change: Our total portfolio revenue includes changes in expected recoveries, which.
<unk> encompasses a combination of cash over performance or underperformance in the current period and the net present value of expected changes in our ERC.
Looking at this quarters results $36 million of the $52 million was attributable to cash over performance.
We experienced strong U S performance across most vintages this quarter, especially in some of our older ones.
It reflects the impact of a cash generating initiatives.
Speaker Change: We also experienced strong over performance in Brazil.
The other $16 million of the overall $52 million came from changes in expected future recoveries.
To the extent, our strategic operational initiatives create incremental ERC.
The impact would flow in large part through our income statement as changes in expected recoveries.
Speaker Change: During the quarter, our cash collections exceeded expectations on a consolidated basis by 8%.
With the Americas over performing by 9% and.
In Europe over performing by 5%.
Operating expenses for the quarter were $189 million.
This amount included $6 million related to our corporate legal spend and consulting expenses.
We believe our outsized in nature.
Compensation and employee services expenses decreased $9 million.
Speaker Change: Primarily due to the $7 $5 million in severance expenses, we incurred in the prior year period.
After adjusting for the severance expense.
Speaker Change: Compensation and employee services expenses still declined year over year.
Even though we have added to our U S call Center employee base to service the larger volume of accounts.
Driven by higher portfolio purchases.
Okay.
Speaker Change: Legal collection fees increased $3 million, driven mainly by higher external legal collections within our U S core portfolio.
Speaker Change: Legal collection costs also increased $3 million driven by a higher volume of lawsuits filed in Europe.
As well as costs associated with our legal cash generating initiatives in the U S.
As a reminder, there is a timing lag when we invest in our legal channel.
Typically there is an upfront cost base to the court when a lawsuit filed which is then followed several months later by cash collections starting to build.
Agency fees, which are variable and largely driven by our cash collections in Brazil.
Speaker Change: Up $2 million this quarter, reflecting continued strong cash collections growth in that market.
Speaker Change: Outside fees and services were relatively flat, which included the previously mentioned 6 million outside its expenses incurred during the quarter.
In the first quarter of last year, we incurred $7 $6 million.
Certain case specific litigation expenses that largely did not reoccur this year.
Communication expenses were up $2 million this quarter, primarily due to expanded account volumes.
Okay.
As you can see most of the increase in our operating expense line items this quarter, whether from legal fees and costs agency fees or communication expenses is tied to growth in our portfolio and the investments, we're making to support our cash generating initiatives.
Our cash efficiency ratio was 58% for the first quarter compared to 54, 3% in the prior year period.
Net interest expense for the first quarter was $52 million, an increase of $14 million, reflecting higher debt balances and increased interest rates.
Our effective tax rate for the quarter was 17%.
We continue to expect our effective tax rate to be in the low 20% range for 2024, depending on income mix and other factors.
The $8 million adjustment for net income attributable to Noncontrolling interest was higher this quarter due to the strong performance in Brazil.
Net income attributable to PRA was $3 million or nine in diluted earnings per share.
Cash collections for the quarter were $450 million up 9% from the prior year period.
Up 7% on a constant currency basis.
Americas cash collections increased 11%.
Or 10% on a constant currency basis, driven primarily by higher collections in the U S and Brazil.
U S cash collections increased 9% for the quarter due to higher portfolio purchases.
Speaker Change: The positive impact of our cash generating initiatives.
On a sequential basis U S core cash collections increased 23% in Q1 2024.
Compared with single digit sequential growth in Q1, 2022, and Q1 2023.
Speaker Change: The strong double digit sequential increase is due to higher portfolio purchases and the positive impact of our cash generating initiatives.
Which was supplemented by tax seasonality.
European cash collections increased 6%.
3% on a constant currency basis.
Speaker Change: At this time, the consumer environment in both the U S and Europe are largely similar reflecting key economic factors, including inflation.
Although we are seeing fewer large onetime payments in the U S and some markets in Europe.
Our level of customer engagement and the proportion of customers paying us.
Speaker Change: Both remained fairly steady.
ERC at March 31 was $6 5 billion.
<unk> was up 15% compared to $5 7 billion.
At March 31 last year.
Speaker Change: On a sequential basis ERC increased a $100 million.
We expect to collect one $6 billion off our ERC balanced during the next 12 months.
It's important to note that this number only reflects the amounts we expect to collect on our existing portfolio.
It does not include cash we expect to collect from new purchases made over the next 12 months.
Based on the average purchase price multiples, we recorded in the first quarter, we would need to invest approximately $791 million globally over the same timeframe to replace this run off and maintain current ERC levels.
Keep in mind that this replenishment amount decreased over recent quarters, because our multiples have improved.
In this environment of increasing supply in the U S. We expect that we can exceed this investment level and continue growing ERC during 2024.
Yeah.
Our leverage ratio remains within our target range with a debt to adjusted EBITDA of $2 83 times as of March 31.
Our long term goal is to have our sustained leverage b in the two to three times range and as you can see on this slide we have had we have been successful in doing so even with portfolio investments growing over the past several quarters.
Okay.
In terms of our funding capacity, we had $3 $1 billion in total committed capital to draw under our credit facilities.
And all three of our credit facilities, we have deep banking relationships, most of which stretch back over a decade.
Our bank clients have margins ranging from 235 to 380 basis points over benchmark.
To provide an attractive cost of capital.
As of March 31, we had a total availability of $1 2 billion comprised of $367 million based on our current ERC and $855 million of additional availability that we can draw from subject to borrowing base.
Debt covenants, including advance rates.
Speaker Change: Lastly, given we have our 2025 senior notes maturing in the fall of next year, we are actively monitoring the capital markets.
Speaker Change: We believe the capital available under our credit facilities and cash generated from our business and access to capital markets in both the U S and Europe position us to take advantage of the continued belt and portfolio of supply.
With that I'll turn it back to Vic.
Vic: Thanks Rakesh.
Taking into account, our recent performance and outlook for the remainder of the year.
We reiterate each of our financial and operational targets outlined on the slide.
Vic: Strong portfolio investments.
Vic: <unk> digit cash collection growth and modest expense growth, resulting in 60% plus cash efficiency.
Speaker Change: And a return on average tangible equity between six and 8%.
It is important to remind everyone that this aro <unk> target is waiting to be generated towards the second half of 2024.
Reflecting the additional momentum we expect to gain through the year.
The scale on initiatives.
While it remains premature for us to forecast how this metric will evolve to an entire business cycle. We do expect to continue to see additional uplift beyond this range as we move past this year.
In closing I am encouraged by the speed with which the team that is extracting the value embedded within our existing business.
Speaker Change: Investing efficiently and with discipline and executing on initiatives to optimize operational performance.
Speaker Change: There will be no letup in the dry and the urgency with which we are working to regain our position as a high performing company.
Thank you as always for your continued support.
Speaker Change: That we are now ready for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your telephone keypad.
Speaker Change: Hey, Tom that Johan has been raised and should you wish to cancel your request. Please press star two if you are.
Speaker Change: Using a speaker phone please lift the handset before Betsy entities. Once again that is star and once you ask your question. Your first question comes from the line of David Scharf from JMP. Please go ahead.
Great. Good afternoon, thanks for taking my questions.
David Michael Scharf: I'd actually like to start out with.
David Michael Scharf: Topic that.
David Michael Scharf: It doesn't get a lot of focus and most of these calls.
David Michael Scharf: But the Noncontrolling interest expense is well over half of.
Pre tax and after tax can you just remind us.
About.
The ownership structure in Brazil.
Whether there are any abilities to.
David Michael Scharf: Take complete ownership of bad entity.
And maybe just a recap of why it's performing so well and whether there was anything onetime in nature, because it really impacted the results this quarter.
Yes, thanks for that question so look.
We've been very happy with our Brazil investment we've been there for quite a while and the structure that we have.
David Michael Scharf: Been a joint venture and we get.
Well, a little over half of <unk>.
David Michael Scharf: Income from that.
Joint venture and Thats, why you have that NCI line item.
Look that market has evolved we've got really good partners, who have to manage that business in conjunction with us.
In the past it was more of a consumer market, we've been focused lately much more so on the auto market.
And that's a very concentrated market from a both a buyer and seller perspective with very healthy economics, but we've also been very disciplined in our investments in that market.
David Michael Scharf: So overall it is something that.
David Michael Scharf: We've been very pleased with and with respect to consolidation.
It is something that.
We've been working with our partners for years and at this point in time.
We continue to work in conjunction with them to do it.
Valuate all opportunities in that market and then if there is something else that you wanted to add around Brazil as well.
<unk> powered adequately.
Got it.
Speaker Change: Thank you and maybe just a follow up.
Shifting to <unk>.
Europe.
I understand that the the commentary about the second quarter at the picking up meaningfully from one just trying to.
I understand what the broader messages.
It is it that you're starting to see.
A lot more visibility into spot deals for the rest of the year and that activity some of the nonperforming loan for sale from banks.
It's starting to increase or where you're just making a very high.
Isolated.
Speaker Change: Comment about the second quarter activity.
Speaker Change: I can't speak to that.
Expectations for the full year, David because obviously as you know is spot.
Spot driven market that you know.
Speaker Change: That is across time.
Speaker Change: We did see in the first quarter as we reflected in our remarks, both myself and luggage is that there was a relatively muted level of market supply.
So it wasn't that we pulled back from a market that was really a muted market supply and be caught out appropriate share.
Speaker Change: What was available, but we are seeing is tangible pick up.
Speaker Change: In supply that we are evaluating as we speak and.
That gives us.
Speaker Change: With confidence.
To indicate where we think our second quarter, let's just volumes of land, which is more in line with B dubs.
The line across the chart, that's probably is the $110 million range right.
100 $110 million.
Where we have line of sight to at this time and then we'll see how the how the year progresses beyond that.
Got it and maybe just a quick follow up on that comment.
Speaker Change: Given.
Speaker Change: Sort of some of the well publicized.
Headwinds that some of the large competitors in Europe have been facing into are reflected in their public debt prices.
Are you seeing just as robust.
Bidding processes.
Speaker Change: And this in the second quarter.
In addition to the supply or are you starting to see a little more lenient competitive.
Backdrop.
Speaker Change: I wish it was getting more lead you see it's a highly competitive market. After competitors that we are not to the best of my knowledge.
Seeing a.
<unk> seen an.
An impact right from any competitors, having to put them back because they are internal challenges.
Got it got it one can only hope.
Okay.
Okay.
Thank you and your next question comes from the line of Mark Hughes from Julie. Please go ahead.
Yeah. Thanks, good afternoon.
Rakesh.
Mark Douglas Hughes: You had mentioned the.
Performance Bye bye.
By area, 9% over performance in the Americas, 5% Europe.
The over performance and good performance in the U S. Specifically.
Yes, so I just wanted to clarify that and looking at the right line item. So when youre looking at the 9% that's one was a quarter over quarter.
So when you compare to the accounting curves.
Total consolidated 8% over performance Americas, 1%.
<unk>, 5%. So look this is obviously a much healthier than what we had seen in the past with respect to U S and it really leads us to believe that our cash initiatives are starting to bear fruit and one of the things that I mentioned also.
Yes.
Our older vintages typically the older vintages vintages tend to run off Mark and what we saw this quarter is that we're starting to collect more from those older vintages that we had in the past and that just gives us confidence.
Mark Douglas Hughes: The various initiatives that we have been.
Yes implementing are starting to.
Have a positive impact on our results.
Understood and then.
Speaker Change: And you may not want to disclose at this level of detail, but I'm just sort of curious in the U S.
How the performance was there.
The Americas and Europe number or.
Speaker Change: How would you said.
Okay.
Yes look.
Cash performance in the U S. Even in our core business I would say it was healthy.
Yes, definitely better than what we had seen in the past and in line with what we have said in terms of how our revenues would flow that the initiatives that we're implementing will flow through that change in expected recoveries line item.
Speaker Change: And so in the Americas.
Speaker Change: For example, we had.
Speaker Change: It's a very healthy.
Recoveries received in excess of forecast so fat.
$36 million that we mentioned in the Americas, including in the U S.
We're looking at double digits.
Speaker Change: Our U S core business in terms of.
Speaker Change: Cash over performance.
Very good. Thank you for that you mentioned that the.
An important driver of the better collection multiple for the 24 paper so far.
Improvements in your poor low pricing.
How has that trend been lately.
Speaker Change: Since then.
We renegotiated and you're renewing them would.
Speaker Change: Would you say is the.
Speaker Change: Great of improvements still going up.
Speaker Change: Somewhat stabilize.
I think I'll take that in two parts.
One is that you know when you're comparing first quarter of this year to first quarter last year.
Speaker Change: Need to factor in that.
Through the latter half of 2023.
Speaker Change: We took.
The perspective of repricing, a number of our forward flow as well.
Speaker Change: And medium term forward flows.
So youll see the effects of those pricing changes flowing through in our results.
And secondly, as I think we reiterated through our conversations in 2020.
We have ensured that we have a dynamic.
Pricing framework.
Speaker Change: And as we reflect the appropriate market conditions.
As we sort of renewal or enter into new forward flows and that perspective is continuing into 2024, So we see.
Expanded supply.
You know that.
The demand in terms of the debt buyer universe in the U S is fairly constant.
And that provides us.
And the opportunity to make sure that our pricing is appropriate reflective of.
Market competition and market conditions.
Yes, and Mark if I could just add to that like I just mentioned earlier that the multiples. We're seeing in our America score was at $2. One one and as you know is that the U S as more of us.
Forward flow market and if you go back just a 23% last quarter.
At $2, one one is higher than what we saw in the previous couple of quarters. So continued improvement as we move it through 'twenty four.
Okay.
And then the the.
Speaker Change: The wage garnishment could you talk a little bit more about that does that present any kind of.
Speaker Change: The regulatory risk perhaps.
I assume these garnishment sir.
Pretty standard are well established.
Is there any reason to be concerned on that front.
No there's nothing no regulatory concern.
On that as well.
Standard when established.
Elements of the U S legal process and we've just been working hard.
On that as well as other cash initiatives to ensure that we are optimizing where we need to be optimizing so no issues on that.
Speaker Change: Yeah.
And final question, the 60% efficiency target.
I hear you that it sounds like there is maybe $7 million.
Alright, I'm, sorry, 6 million debt.
I think you've described outsized in nature, perhaps not the not recurring.
Given that we started at 58 and I think the goal of 60% for the full year backend loaded with one and say that the.
Speaker Change: Trajectory of the run rate when we get into 2020.
Speaker Change: Five is going to be above that 60.
60%.
And therefore.
When we think about 2025 is being improved off of that 60% level.
Speaker Change: I want to be careful.
Speaker Change: If we don't get ahead of ourselves with regard to outlining.
Particular ratio for 2025.
I think candidly.
Myself and the entire team is very focused on making sure we are delivering against the.
It would be operational and financial obviously sort of signaled to the market for 24 and as we get through the rest of this year, we will certainly come back to you as soon as we have a view on 2025 with BP and this.
Speaker Change: At this point.
Speaker Change: Quite comfortable with regard to what we've signaled on the improvement and cash efficiency.
As a metric.
Speaker Change: Through the balance of this year.
Very good thank you.
Thank you.
Thank you once again should you have a question. Please press star followed by the one on your telephone keypad.
And your next question comes from the line of Robert Dodd from Raymond James. Please go ahead.
Hi, guys congrats on the quarter on all the legal.
Speaker Change: Sure.
All of that on the call and the press release I mean, you spent.
Robert James Dodd: Higher number.
No in Europe, it can be front end loaded right. So should we read.
A lot of catching up so to speak was done in Q1, and legal expenses or might not stay at that level or is this.
How does the new base number.
Robert James Dodd: In terms of how much you're willing to invest in legal on a.
Robert James Dodd: Quarterly pace.
Yes look I would say that in Europe.
It was a little bit of a catch up to do because we had some of the courts back work closed last quarter. Robert So that's why we have.
Robert James Dodd: The European commentary around.
Higher volume this quarter in Europe.
Robert James Dodd: Other than that I think you should look at the fact that in the U S. We continue to invest more in the legal channel, but I want to be cautious in how we portray that because as we said that the cash compensated over a longer period of time and really the runoff.
As we look at that legal cost investment of that cash efficiency really is an output of the investments, we're making to drive higher cash and so we're going to reiterate what we mentioned last quarter and this quarter, which is the way to think about our business and where.
Robert James Dodd: We're headed in 'twenty four with our target is double digit growth in cash collections.
With a modest growth in our cost base, resulting in just in a marginal increase in our in our cost.
So you should deliver significant improvement into the net income line item that we've been talking about driving to that 6% to 8% ROA ETE.
So I just wanted to make sure not to get caught up in one line item, but that's how we think about our business.
Understood understood. Thank you flip.
Robert James Dodd: Terrific Caribbean back you've kind of addressed this at the beginning of the Q&A.
I mean, the volumes, although I think.
You said pretty clearly the competition still.
Robert James Dodd: <unk>.
Aggressive.
Should we expect you to be <unk>.
Maine.
Robert James Dodd: Emphasized somewhat I mean, if volumes even in Q2.
It is probably going to be down still pretty substantially year over year.
And it kind of it sounds like the competition is still as aggressive if not more so supply is a little tight.
Robert James Dodd: Is that just something with the other way.
Although ics, even with all your initiatives.
Is it more module market than you would've thought.
It's not.
Not not at all Robert Northern Europe as it is a very attractive market for us we have <unk>.
Great set of relationships across the region.
We have talked about our business in different markets in the past.
It's really the first quarter was purely.
It is not at all.
Robert James Dodd: <unk>.
A very muted level of market supply.
And we believe over the balance of the second quarter.
Hopefully for the rest of this year, but going forward we see.
See it as a.
Very attractive market space for us notwithstanding challenges that might be faced by.
By other participants in the marketplace.
Yes, Thanks, Robert Yeah.
Go ahead.
Europe has come off a couple of times look up that market is very fragmented you've got a regional players local players in there.
I always.
Provide stiff competition for us so with respect to the market we continue to remain disciplined.
Diversification across 13 countries everywhere and it's a significant differentiator in our view and the other thing around just supply one data point that we look at also is just that.
Two loans that are sitting on the balance sheet of banks, our stage two loans that.
That are sitting on the balance sheet of the banks and their double of what they were from a pre pandemic level and so that gives us some confidence that at some point.
Yes.
There should be greater supply coming to market, but it's just hard to predict because it's more of a spot market as wechat.
Speaker Change: Got it thank you.
Thank you.
This concludes our question and answer session I would like to turn the conference back to President and CEO.
<unk> for closing remarks.
Thank you everybody for supporting Us and looking forward to continued conversations through the balance of this year. Thank you again.
Okay.
This concludes our conference for today. Thank you all for participating you may all disconnect.