- Net Realized Gains: $327 million, a 75% increase from the previous year.
- Return on Invested Capital (ROIC): 108% for 2024, above historical averages.
- Portfolio Growth: 15% CAGR over the last five years, with 2024 growth at 8%.
- Cash Receipts: Nearly $700 million in 2024, ending the year with over $500 million in cash and securities.
- Operating Expenses: Decreased by approximately 43% from 2023.
- Debt Outstanding: Approximately $1.8 billion, with $350 million due in the next 20 months.
- Asset Management Cash Basis Receipts: $26 million in 2024, compared to $32 million in 2023.
- Fair Value of Portfolio: Over $5 billion for Burford-only, around $7.5 billion group-wide.
- Unrealized Gains: Negative for the year, impacted by discount rate movements.
- Return on Equity: 14% rolling average, progressing towards a 20% target.
- Warning! GuruFocus has detected 8 Warning Signs with BUR.
Release Date: March 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Burford Capital Ltd (NYSE:BUR) achieved record-high cash realizations in 2024, marking the highest in its history.
- The company reported a significant increase in net realized gains, doubling the level from the previous year.
- The portfolio has been growing at a 15% CAGR over the last four to five years, indicating strong and consistent growth.
- Burford Capital Ltd (NYSE:BUR) maintained a diversified portfolio with a global reach and various asset classes.
- The company successfully transitioned to a US domestic filer, enhancing its financial reporting and transparency.
Negative Points
- Unrealized losses were reported in the fourth quarter of 2024, primarily driven by discount rate volatility.
- Operating expenses were high in 2023 due to long-term incentive compensation, although they decreased in 2024.
- The YPF-related assets remain unresolved, with ongoing appeals and enforcement processes, creating uncertainty.
- The transition to US domestic filer status required significant changes in financial reporting, which may have caused initial confusion.
- The company faces challenges in balancing high levels of portfolio activity with generating new business.
Q & A Highlights
Q: Can you clarify if the unrealized losses in the quarter were primarily driven by discount rates? A: Yes, the unrealized losses were driven by two factors: the discount rate and the movement from unrealized to realized gains. When there are many realized gains, it can lead to a reduction in fair value. - Jordan Licht, CFO
Q: Can you provide more color on the nature of new commitments and their risk-adjusted returns compared to the past? A: We continue to see a diverse range of attractive opportunities, with more diversity in geography and subject matter than historically. The US commercial space is generating larger opportunities, often with lower risk and shorter duration, while international arbitration and IP cases offer higher potential multiples. - Jonathan Molot, CIO
Q: Is there any impact from the new US administration on your business, and can you comment on the RA4 intervention in the YPF case? A: We don't see any significant impact from the US administration on our business. The RA4 intervention is not a concern, and we believe the court should disregard it. - Christopher Bogart, CEO
Q: Has the increase in average legal awards in the US affected your portfolio's ROIC, or is it due to individual case variability? A: The increase in ROIC is more about the variability in individual cases rather than a broader trend in legal awards. Our portfolio has grown in size and quality, leading to higher outcomes. - Christopher Bogart, CEO
Q: What are your plans for headcount growth, and are there any updates on the YPF case timeline? A: We expect moderate headcount growth over time, focusing on strategic hires. Regarding YPF, we're waiting for an oral argument date, and the timeline is consistent with the court's average. - Christopher Bogart, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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