Cabot Confidence
Q: Are Cabot issues behind us?
A: Management explained that recent restructuring actions – including revised ERC estimates and exiting underperforming markets – have put Cabot on a more predictable path, signaling that past issues are now behind them.

ERC Reduction
Q: What is the ERC reduction amount?
A: They reported a $453 million reduction in expected recoveries in Q4, which translates to about a $129 million revenue impact driven largely by older U.K. vintages.

Market Purchase Mix
Q: What mix of purchases is expected?
A: Despite an unusual $200 million purchase by Cabot in Q4, management expects a reversion to historical trends—predominantly 80% MCM—with overall global purchases exceeding $1.35 billion in 2025.

Stock Repurchase Outlook
Q: Will share repurchases resume soon?
A: With leverage declining from 2.9x to 2.6x and nearing the midpoint of its target range, management anticipates resuming stock repurchases in 2025 based on strong collections performance.

Goodwill Breakdown
Q: What is the split in remaining goodwill?
A: Management detailed that remaining goodwill stands at roughly $350 million for Cabot and $150 million for MCM, reflecting prior impairment events.

US Pricing Stability
Q: How is U.S. pricing performing?
A: They highlighted that U.S. pricing remains stable amid record portfolio supply, which, combined with strong returns, supports ongoing collections growth.

G&A Expense & Adjustments
Q: What drove the G&A expense spike?
A: The increased G&A in Q4 was due to restructuring exit costs and a $19 million IT asset impairment, which were excluded from cash efficiency calculations.

Vintage Adjustment Details
Q: Which Cabot vintages were adjusted?
A: The adjustments primarily affected older vintages—from 2013 to 2015 and pre-COVID pools—where recoveries were discounted more heavily.

US Legal Collections Costs
Q: Are legal collections costs rising?
A: Legal collection costs remain in the high $60 million range; however, the reliance on legal channels is at a record low 36% as digital and call center efforts drive improved efficiency.

European Market Exits
Q: Why exit Italy but stay in UK/Spain?
A: Italy was exited due to smaller operations and heightened competitive pressures, while the U.K. and parts of Spain continue to offer favorable, homogeneous unsecured portfolios supported by large sellers and robust regulatory frameworks.

IT Impairment Reason
Q: What led to the IT asset impairment?
A: The $19 million IT impairment was a write-off for technology projects in the U.K. servicing business, reflecting part of the broader restructuring efforts.

Receivables Revenue Growth
Q: Will revenue lag cash collections growth?
A: Management noted that due to a mix of different interest rates and basis adjustments, revenue growth may be slower than the 11% collections growth, though the gap is expected to narrow over time.

Cash-Over Collections Figure
Q: What was Q4 cash-over collections?
A: Q4 cash-overs were confirmed at $26 million, driven primarily by strong MCM performance, though future levels remain uncertain.

EPS Baseline
Q: Is a $9.42 loss a future baseline?
A: The $9.42 reported loss in Q4 serves as a baseline influenced by one-time non-cash adjustments; future EPS will reflect ongoing collections growth and higher interest expense.