Robert Napoli: And on the return to profitability?
Pete Graham: Again, we’re on a glidepath here. We took some pretty significant adjustments to the curves in the first quarter, less so this quarter and we’ll see where we go from here. We do our best each quarter to get the curves right and that’s about all I can say at this point in terms of forward-looking guidance.
Robert Napoli: Okay. And just may be for Vikram and this is like a big picture question as well. What should be the right return levels for — I don’t know if you think about it in return on equity over the long term, where should this company be earning? Where would you want to get it to?
Vikram Atal: I don’t believe, Bob, that we’ve sort of discussed or shared that information with the Street, right. So I wouldn’t want to be going there on this conversation now. Clearly, we’re not where we need to be when we’re not delivering profitability, so that’s my primary focus, at this point in time, is to get us back to a profitable situation.
Robert Napoli: Thank you. Maybe this just question. You talked about European competitors looking to sell books. I would imagine that you’re looking at those. Are there opportunities that you expect to execute on in Europe in the back half of this year as it relates to other companies selling their current portfolios?
Pete Graham: Yes, that wasn’t necessarily intended to signal any pending transactions by us, but just more an indication of stress in the marketplace in Europe. And that’s having more of an impact on pricing of deals, less aggressive behavior by some competitors. And market pricing adjusting to reflect increased cost of funds for everybody.
Robert Napoli: Thank you.
Operator: The next question comes from Mark Hughes with Truist. Please go ahead.
Mark Hughes: Thank you. Good afternoon. Does the forward curve assume some improvement in your US processes? Do you need some outsourcing or offshoring in order to hit the curves or will that be upside if you’re successful?
Pete Graham: In terms of the offshoring/outsourcing commentary, that’s really more cost thing at this point than overall cash generation. We do have some assumption in our curves of the initiatives that we’ve taken to start recouping value in that particular vintage occurring in the future.
Mark Hughes: How much was the — your 11% overperformance in Europe, can you say how much of that was the court system in Spain and is that a kind of onetime thing or will that flow through subsequent quarters?
Pete Graham: I think largely the Spanish thing was a catch-up. It’s probably the smaller piece of the overperformance versus some seasonality and onetime large payments in the Nordics and Poland.
Mark Hughes: I think, Vik, you had alluded to the fact that we’re not going to see this level of increase in coming quarters on purchasing. Would it make sense to hold off, wait till the supply-demand imbalance becomes presumably even more favorable in subsequent quarters? What was the thinking in terms of kind of pushing ahead this quarter when it sounds like you think things should be getting better?
Vikram Atal: We see a lot of transactions. We’re evaluating transactions almost on a daily basis with the volume we’re seeing now. And we’re being very disciplined about what pricing would be acceptable to us to ensure that it covers all of our costs and the potential increases in interest rates, et cetera. So we’ll keep looking at it. We were just trying to signal in that commentary not to do the simple math and necessarily assume that we’re going to be up around 50% from last year. But time will tell as to exactly where the business ends up for this year.
Pete Graham: And I’d say also, Mark, you’ve covered us for a long time. You know that pricing and price discovery is important for us. So we’ll continue to use the same discipline that we always do to sort of test into pricing as the market continues to evolve. We’re doing that on bids every week, every month as we move through this part of the cycle.
