The thing which irks me is the way they refer to EBITDA. PNC noted 25.3m in collections and 13.7m in Q1 normalised EBITDA, so 11.6m in normal business costs. But hang on, thats 25.3m in liquidations/collections, not REVENUE.
Debt collectors collect a portion of the principle paid for the debt and excess to that is deemed revenue, usually around 50/50. Sure enough, look at the PDP investment made in Q1, 10.6m which is 42% of collections. In other words, enough purchases to replace the principle being repaid and maintain the scale of the business.
So hpw much revenue did PNC actually make? Well, maybe 14.7m or 58% of collections (lets say 42% is amortised to recognise principle repaid). So 14.7m less 11.6m in normal costs leaves 3.1m in actual EBITDA. Given the annual interest bill is over 20m, surely this means PNC is losing money?
PNC Price at posting:
80.0¢ Sentiment: None Disclosure: Not Held
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