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Lowell posts “resilient” collections performance, as cash EBITDA rises

Debt purchaser Lowell has posted results showing a steadily improved collections performance for the three months to September, as the business resumed legal collections and increased outbound contact with customers. 

Lowell’s quarterly results update shows how collections activity and performance is picking up after a pause during the initial stage of the pandemic, and that the business saw a cash EBITDA increase of nine percent, compared to the same three-month period in 2019.


In real terms, this was an increase to £521m from £479m as at September 2019. Since Q1 2020 it has increased from £508m.


The update also showed that portfolio acquisitions decreased by 17% since September 2019, to £302m as at September 2020, from £366m at the same time last year. Its quarterly cash income decreased marginally by three percent, year-on-year, to £912m.


According to the update, collections have continued to demonstrate resilience with performance against its December 2019 ‘static pool’, at 93%. The ‘static pool’ term used in Lowell’s results, reflects the collections expectation on the assets by assessing performance of portfolios at year end.


Lowell explained that its UK business has seen the largest impact on collections, principally driven by the management actions undertaken this year in Q2, to protect its customers during the early stages of the pandemic.


This included temporarily reducing outbound customer contact activity and pausing new litigation activity. This accounts for around 90% of the impact to UK collections.



Since June 2020, Lowell’s UK division has increased outbound consumer contact activity to volumes more in line with Q1 this year, prior to the outbreak of Covid-19. Since August 2020, it has also resumed new legal collections.


Both these factors resulted in an improvement in the UK collections, with performance against expectations improving to 86% in September 2020 from 83% in July 2020.


Lowell explained that the collections process is underpinned by affordable repayment plans, which account for about 80% of UK collections, together with a stable paying base of customers that has performed at 96% of expectations during 2020.


In the three months to September 30 2020, Lowell’s UK collections performed at 102% of its June 2020 forecast.


Capital structure

As at September 30 2020, Lowell’s leverage had improved to 4.6x, and £180m capital was deployed on portfolio acquisitions. The update explained Lowell is on track to deploy around £300m in 2020. Lowell’s drawings under its revolving credit facility reduced to £252m from £403m as at 30 June 2020, and it has available liquidity of around £300m.


The update said: “We continue to evaluate opportunities to optimise our capital structure, including through monitoring the capital markets.”


Lowell also said it doesn’t expect the COVID pandemic to have a significant impact on its 120-month estimated remaining collections figure, because it has treated collections as deferred rather than lost, the board believes the firm will be able to achieve projected collections over the 120-month period.


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