Burford Capital Ltd. Q1 FY2026 earnings call

• YPF Update: Disappointing court decision with a divided panel, filing en banc petition to have the case re-examined, arbitration as an alternative with the case well-set up for arbitration, noting arbitration is confidential and cost will be consistent with other complex cases, and YPF was a non-cash write-down but a cash profit was made. • Core Business Focus: The core business has a gigantic portfolio of global litigation matters, ~900 cases, diversified across metrics, with 35% of the portfolio from 2015 - 2019, undrawn definitive commitments over a billion dollars, historical cash realizations of $3.8 billion at high returns, and the origination engine being the leading platform in the industry with data, relationships, and global presence driving growth. • Liquidity and Debt: Liquidity position is strong with over $700 million in cash, consciously raised $500 million in January, historically brings in more cash than needed for costs, debt is a strategic part of the balance sheet, leverage is being managed strategically with plans to de-lever over time through growing the business, harvesting cash from the existing portfolio, managing operating expenses, and considering dividend and share repurchase strategies. • New Business: New business is proceeding at a steady pace with $133 million in new definitive commitments, $108 million in deployments, 600 million in unfunded discretionary commitments, and global expansion of business development with additions in Spain and Korea. • Portfolio Realizations: First quarter realizations were $97 million with 25 assets contributing, 6 of which generated $5M or more, 2 generating $20M or more, and 36 trials and merits hearings scheduled for 2026 showing potential for settlements or resolutions.

No specific detailed segment performance breakdown by product segment with absolute terms and revenue contribution % provided in a clear, tabulated manner within the given transcript. However, key points include discussion of YPF as a significant asset with a non-cash write-down but a cash profit made, and the core business having a large portfolio of litigation matters generating cash flow. The core business has 237 active assets (many multi-case arrangements, ~900 cases), with 35% of the portfolio from 2015 - 2019, undrawn definitive commitments over a billion dollars, and historical cash realizations of $3.8 billion with high returns. First quarter realizations were $97 million with 25 assets contributing, 6 of which generated $5M or more, 2 generating $20M or more, and 36 trials and merits hearings scheduled for 2026.

• YPF: Expectations of resolution in favor over time but with arbitration being a process that takes time. • Core Business: Expectations of accelerating cash realizations, continued growth of the business through new business, and de-levering through various actions including growing the business, harvesting cash, managing operating expenses, and potentially adjusting dividends. • Liquidity: Expecting accelerating cash generation to permit avoiding constraints on new business, and confidence in liquidity despite the occasional risk to new business growth rate. • New Business: Expecting healthy demand and a strong pipeline for new business throughout 2026. • Portfolio: Expecting more court activity in the balance of 2026 which could lead to settlements or resolutions, and continued diversification and growth in the portfolio.

• YPF Litigation Risk: Unpredictable risk of litigation with the divided court decision, although arbitration is an alternative, it takes time and is confidential. • Liquidity Risk Related to New Business: Occasional risk to the ability to do as much new business as desired if short on organic cash flow, but this is only a risk to future growth rate, not a liquidity risk. • Debt and Leverage Risks: Need to manage leverage over time, and potential impact of market dynamics on debt and equity ratios. • Settlement Rate Uncertainty: Uncertainty whether the increase in settlement rate is pandemic-driven or permanent, which could affect returns. • Market Volatility Risk: Impact of accounting valuations and market movements on share price volatility, especially related to large potential outcomes like YPF.

Q: Thinking forward, how does the YPF process change the approach to larger cases?

A: YPF was large in potential outcome but not in acquisition cost, open to large cases with client demand, and use sidecar vehicles for extra client demand.

Q: Change in case realizations from pre-COVID?

A: Weighted average life of concluded assets has gone up a little to 2.6 years from 2.3 years before COVID, and active deployed capital weighted average life is over 3 years.

Q: 5.2 billion of model realizations, assumed weighted average life?

A: No specific disclosed weighted average life as it's variable due to case type and throughput.

Q: Levers for managing operating expenses and harvesting cash?

A: Case management, working with clients and law firms on resolutions, and monitoring day-to-day and long-term expenses.

Q: Dividend cut pressure on shareholder base?

A: Consultations suggest relatively low focus on dividend from U.S. investors.

Q: 86% cases against Argentina in international arbitration?

A: Yes, 51 bilateral investment treaty arbitrations brought against Argentina with 86% in favor of the investor.

Q: Debt-to-equity ratio and sale of cases?

A: Comfortable with current leverage, open to secondary market for litigation risk but challenges with market pricing.

Q: Key person risk and portfolio doubling?

A: Excited about next generation moving up, and doubling the portfolio is achievable over time with current CAGRs.

Q: Cadence of commitments and repurchasing bonds?

A: Definitive commitments have a rhythm with litigation spend in peaks and valleys, and repurchasing bonds is a dynamic tool based on pricing, cash, and maturities.

Q: Valuing large potential outcomes like YPF?

A: Fair value based on market transactions, and accounting rules leave no choice but to value at market implied value.

Q: Accelerating legal costs and margins?

A: Litigation costs increase, but pricing includes multiple on money put out and percentage beyond, with incentive to monitor costs.

Q: Deleveraging and long-term growth?

A: Deleveraging activities should not hurt long-term growth as decision to not fund new business gaps with leverage was made before YPF, and able to fund growth organically.