Jefferson Capital, Inc. Common Stock Q4 FY2025 earnings call

• Completed first follow-on offering post-IPO on Jan 9th, improving float and liquidity and reducing JC Flowers ownership to 53%. - Delivered record collections of $245 million, record deployments of $381 million, estimated remaining collections at $3.4 billion. - Bluestem portfolio purchase closed on Dec 4th, expected to be meaningful contributor to financial results in 2026. - Market update: elevated delinquency trends across non-mortgage consumer asset classes, depleted personal savings, increase in insolvencies in US and Canada, low unemployment. - Long-term financial results: 27% revenue CAGR, 37% net operating income CAGR, 43% net income CAGR from 2019-2025. - Key performance trends: collections driven by strong deployments, legal channel collections increasing, portfolio purchases $381 million up 6%, estimated remaining collections $3.4 billion up 23% y/y, 274 million of deployments locked in through forward flows. - Operating efficiency: best-in-class, cash efficiency ratio 71%, mostly variable cost structure, utilizes Champion Challenger performance measures. - Financial details: Q4 revenue $155M up 30% y/y, operating expenses $84M up 30% y/y, adjusted pre-tax income $51M up 15% y/y, adjusted cash EBITDA $178M up 34% y/y. - Full-year results: record revenue, net operating income, adjusted pre-tax income, adjusted cash EBITDA; cash efficiency ratio 74%; net debt to adjusted cash EBITDA 1.9 times; amended senior secured revolving trade facility, increased committed capital, improved terms. - Capital allocation: primary focus on deploying capital to purchase portfolios at attractive risk-adjusted returns; declared regular quarterly dividend of $0.24 per share; repurchased 3 million shares for $59 million in Jan.

Fourth quarter collections were $245 million, up 41% vs prior year; record deployments of $381 million, up 6% vs Q4 2024; estimated remaining collections at $3.4 billion, up 23% y/y; revenue for the quarter was $155 million, up 30% y/y; cash efficiency ratio was 71%; Adjusted EPS for the quarter was 69 cents. Full-year 2025 saw highest annual collections, deployments, and ERC; cash efficiency ratio was 74%; net debt to adjusted cash EBITDA improved to 1.9 times.

• Expect Bluestem to be a meaningful contributor to financial results in 2026. - Plan to keep 2026 bonds outstanding as long as possible to take advantage of attractive 6% coupons. - Primary focus on deploying capital to purchase portfolios at attractive risk-adjusted returns. - Earmarked $300 million of capacity to repay 2026 bonds in May 2026.

• Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested. - Risks and uncertainties further disclosed in company's most recent filings with SEC. - Business subject to pronounced seasonality. - Impact of macroeconomic factors like energy costs and employment on delinquencies and charge-offs, but minor impact on liquidation rates on charge-off accounts.

Q: Thoughts on macro uncertainties and purchasing environment?

A: Minor movement in energy costs and employment likely impacts delinquencies and charge-offs, not liquidation rates on charge-off accounts.

Q: Trends among sellers in forward flows and deployment planning?

A: Don't target specific percentage of deployments for forward flows, returns focused; forward flows more prevalent in US, less in other markets; auto sector has limited forward flows but hopeful for more.

Q: Characterization of supply increase and return profiles?

A: Supply increase has seasonality, returns stable, win rates steady.

Q: Tax rate for adjusted number and share buybacks?

A: 24.5% tax rate for 2026; $3 million share repurchase was tactical, focus on deploying capital now, will evaluate open market repurchases later.

Q: Deployment characteristics and pipeline?

A: Increase in insolvency deployments, attractive returns in Bluestem and CONS; pipeline includes runoff portfolios, eager to evaluate opportunities, no certainty on any one.

Q: Pricing in prime credit cards and AI impact?

A: Prime credit card pricing consistent, win rate steady; AI impact on supply performance early, hard to know, elevated unemployment needed to cause concern.

Q: Tax season impact and efficiency ratio?

A: Things in line with expectations, continue to expect underwritten forecast; efficiency ratio has historical trend of cost to collect improvement, ongoing initiatives to improve but not discussing specifics.

Q: Process improvements in legal channel and legal returns?

A: Process improvements in preparing accounts for suit, compressed timeframe and secondary compression; legal channel volume corresponds to underwritten expectations, not inconsistent with expectations.

Q: Walking away from market parts for price or return?

A: No, not walking away from any parts of the market for price or return thresholds not attractive.