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Burford Capital Ltd (BUR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 Burford-only revenue fell to $65.7M, with a diluted EPS of -$0.06, versus $250.6M revenue and $0.45 EPS in Q4 2023; management emphasized the quarter’s strong cash fundamentals despite unrealized losses largely tied to discount-rate movements and the transfer of prior unrealized gains into realized gains .
  • Annual portfolio execution set records: FY24 net realized gains reached $327M (up 75% YoY), realizations totaled $641M (up 21% YoY), and cash receipts hit $699M, underpinning liquidity and capital flexibility .
  • Principal Finance delivered robust Q4 realized gains of $141.6M and an implied ROIC of 135%, while discount-rate backup (~52bps) masked strong case milestones in reported unrealized marks; management stressed non-cash nature of rate-driven movements .
  • Burford declared a final FY24 dividend of $0.0625 per ordinary share (subject to shareholder approval), payable June 13, 2025 to holders of record May 23, 2025, and previewed an April 3, 2025 Investor Day to detail “target realizations” and segment reporting evolution .
  • CEO flagged an adverse market reaction likely due to confusion over unrealized losses; reiterated confidence in portfolio quality, cash generation runway, and returns trajectory as the courts normalized post-pandemic .

What Went Well and What Went Wrong

  • What Went Well

    • “Blowout” cash year: realizations of $641M and net realized gains of $327M, with FY24 ROIC of 108% (2.1x MOIC), more than double the average annual realized gains over the prior four years .
    • Diversified performance: seven assets >$20M realizations (three >$50M), split across vintages including pre-2020, confirming breadth of outcomes and return durability .
    • Liquidity strengthened: Burford-only cash & marketable securities rose to $521M at YE24, aided by record $699M cash receipts and receivables collection discipline (97% of prior receivables collected during FY24) .

  • What Went Wrong

    • Reported unrealized losses in Q4 (rate backup ~52bps, plus transfer of prior unrealized gains into realized gains) overshadowed strong milestones; management clarified these are non-cash and not reflective of portfolio weakness .
    • Asset Management revenue declined YoY (FY24 $45M vs $64M FY23), driven mainly by lower profit-sharing from BOF‑C tied to underlying asset fair value movements .
    • Burford has not fully remediated its previously disclosed material weakness in controls over fair value measurement review precision; remediation measures are in place but require sufficient operating time to conclude effectiveness .

Financial Results

Metric (Burford-only Total Segments)Q4 2023Q3 2024Q4 2024
Total Revenues ($USD Thousands)250,615 226,033 65,692
Net Income ($USD Thousands)100,095 135,643 (12,968)
Diluted EPS ($USD)$0.45 $0.61 $(0.06)
Net Income Margin (%)39.9% (calc. from 100,095/250,615) 60.0% (calc. from 135,643/226,033) -19.7% (calc. from -12,968/65,692)

Segment Revenues (Burford-only):

SegmentQ4 2023 ($USD Thousands)Q4 2024 ($USD Thousands)
Principal Finance225,727 49,792
Asset Management & Other Services24,888 15,900

KPIs (Burford-only):

KPIQ2 2024Q3 2024Q4 2024
Realizations ($USD Thousands)156,746168,416253,425
Net Realized Gains ($USD Thousands)99,15356,490141,637
Cash Receipts ($USD Thousands)107,363 310,491 143,599
Implied ROIC (%)179% 52% 135%

Notes: management explained Q4 unrealized losses reflect discount rate movements (~52bps backup) and the transfer of previously recognized unrealized gains into realized gains; these are non-cash and do not affect terminal asset values .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Ordinary ShareFY2024 FinalNot previously specified$0.0625; payable Jun 13, 2025 to holders of record May 23, 2025, subject to shareholder approvalNew declaration
Formal Financial Guidance (Revenue/EPS/Margins)FY2025NoneNone providedMaintained practice of no formal numerical guidance
Reporting FrameworkEffective Jan 1, 2025Foreign Private IssuerUS Domestic Issuer with enhanced segment reporting (“Total Segments” = Burford-only)Transition and disclosure changes

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Cash generation & realizationsStrong 2Q; YTD24 net realized gains +36%; consistent quarterly cash receipts Record 3Q cash receipts ($310M); realizations and realized gains near annual peaks Record FY24 realizations ($641M) and cash receipts ($699M); strong Q4 realized gains Improving
Discount rate effects on marks2Q saw rate declines aiding fair value 3Q valuation discount rate dropped ~90bps Q4 rate backup ~52bps drove unrealized loss; non-cash Volatile but explained
YPF litigation statusJudgment context and prior 2023 impact acknowledged Continues to impact comparisons; enforcement ongoing Final judgment $16B; appeal pending; enforcement commenced; FV $1.5B Ongoing/legal
Reporting & segment disclosureBurford-only vs consolidated clarified Reinforced Burford-only (non-GAAP) and cash focus US domestic issuer; Principal Finance vs Asset Mgmt segments; “Total Segments” = Burford-only Structural change
Internal controls (SOX)——Material weakness remediation underway; not yet remediated Improving over 2025
Target realizations & origination mixActive new commitments; diversified case types Solid new business; definitive commitments up Emphasis on target realizations; higher expected realizations YoY; mix of monetizations vs high-octane cases Strategic focus

Management Commentary

  • “We had an amazing year… We brought in a very significant amount of cash, more than we ever had in our history… net realized gains were an annual record by a very wide margin.” — CEO Christopher Bogart .
  • “Realized gains were up 75% for the year to a new record… operating expenses down ~43% YoY, driven by lower long-term incentive compensation corresponding to FY23 unrealized gains (YPF).” — CFO Jordan Licht .
  • “Net realized gains at $327 million… more than double the average annual net realized gains over the prior four years; FY24 ROIC was 108%.” — CIO Jonathan Molot .
  • “A strong quarter can be masked by rate movements… overall the discount rate finished ~6.9% vs ~7.0% at YE23.” — CFO Jordan Licht .

Q&A Highlights

  • Unrealized losses were primarily discount-rate driven and the shift of prior unrealized gains into realized gains; non-cash and not indicative of negative portfolio events .
  • New commitments reflect a balanced mix: shorter-duration corporate monetizations (attractive IRRs) alongside longer-duration, higher multiple opportunities (IP, arbitration), with strong geographic diversity and recycling of capital .
  • Minimal regulatory risk expected from the U.S. administration; litigation finance is established, focus areas are disclosure rather than existential changes .
  • Debt maturities: ~$129M due Aug 2025 with gradual open-market repurchases; preference to access the U.S. 144A market; leverage at ~0.8x, well inside covenants .
  • Headcount broadly flat around 160 FTE with moderate, targeted increases as needed; continued disciplined expansion .

Estimates Context

  • S&P Global Wall Street consensus (EPS and revenue) for Q4 2024 was unavailable due to data-access limits at the time of this analysis; therefore, we cannot quantify beats/misses for Q4 2024 versus consensus. Values retrieved from S&P Global were unavailable at query time.
  • Given Burford’s pivot to “Total Segments” (Burford-only) reporting and the non-cash volatility of unrealized marks, sell-side models will likely continue emphasizing realized gains, cash receipts, and Principal Finance execution rather than GAAP consolidated volatility .

Key Takeaways for Investors

  • Focus on cash economics: FY24 record realizations ($641M) and net realized gains ($327M) confirm portfolio quality and court system normalization; Q4 implied ROIC was 135% despite reported unrealized headwinds .
  • Liquidity runway strengthened: YE24 cash + marketable securities at $521M, with $699M cash receipts in FY24 and 97% receivables collection from prior period, supporting upcoming maturities and ongoing deployments .
  • Discount-rate sensitivity is non-cash: Q4 unrealized losses reflect rate backup and transfer of prior unrealized gains into realized gains; terminal asset values and cash outcomes are driven by case milestones, where Q4 was strong .
  • YPF remains a significant potential upside with enforcement underway and appeal pending; FV of related assets was $1.5B at YE24; recognize litigation and enforcement risks until final resolution .
  • Segment clarity aids analysis: Principal Finance (balance-sheet portfolio) and Asset Management (fee-based) reporting under “Total Segments” improves visibility into shareholder economics; use Burford-only for performance assessment .
  • Controls remediation in progress: Material weakness over fair value review precision is being addressed; expect updates through FY2025 as controls operate and are tested .
  • Dividend declared: $0.0625 per ordinary share for FY24 final dividend signals capital discipline alongside growth, subject to shareholder approval and payable mid-June 2025 .