Burford Capital Limited (BUR) Q1 2026 Earnings Report, Transcript and Summary

Hello, and welcome to Burford Capital First Quarter 2026 Financial Results Conference Call and Audio Webcast. Please note that this call is being recorded. [Operator Instructions] I'd now like to hand the call over to Josh Wood, Head of Investor Relations. Please go ahead.

Thank you, Ali, and good morning, everyone. Thank you for joining us to discuss Burford's First Quarter 2026 results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, John Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, and we also filed our Form 10 Q. If you've not already, you can find these materials on our Investor Relations website at investors.burfordcapital.com. Before we get started, just a reminder that today's call may contain forward-looking statements that involve certain risks, uncertainties and other factors that could cause actual results to differ materially from those discussed during the call. For information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also be referring to certain non GAAP financial measures during the call. Please refer to today's earnings materials and our filings with the SEC for additional information, including reconciliations of these non GAAP financial measures to the most directly comparable GAAP measures. With that, I'll turn the call over to Chris.

Thanks very much, Josh, and thanks to all of you for joining us today. We're going to do things a little bit differently than our usual quarterly earnings calls today. And I'm starting on Slide 8. First of all, we're going to talk about YPF, give you a full update there. And then I'm going to take you through an update on the core business. We're going to talk about liquidity and debt and give you some thoughts about what lies ahead. John and Jordan will then go on and talk about the quarter. We may go a little longer than usual in our remarks, but we can reserve lots of time for questions, and we're able to go beyond an hour if people would like us to do that. Let me start, though, by framing just the key message that I think it's important that everyone take away from today and this presentation and this set of results. Burford is the clear acknowledged market leader in a growing, high-return, uncorrelated industry. We have a very large portfolio that is generating meaningful cash. The YPF loss is disappointing and it's something that we expect to turn around, but it is an entirely noncash event. And in fact, we have made a nice cash profit from it. So let's start by talking about YPF on Slide 9. So as I said, YPF was obviously disappointing, and it was very frustrating to us. Judge Preska, the trial judge in the Southern District of New York, who wrote the judgment a couple of years ago, is a very fine judge and has a 4% reversal rate at the Court of Appeals. And we should have been in that 4%. Unfortunately, we had a divided panel, the 3 judges split 2:1 against us with what we believe is quite a weak decision with poor reasoning. Later today, we're going to be filing our en banc petition, which asks the entire court to take a look at the case again. And in our briefing later today, which will be public when it's filed, we go on what we call that decision egregiously wrong and indefensible. But the reality is that that's litigation. Every case, every lawyer has one case that he or she should have lost. And every lawyer has lost cases that he or she should have won. And frankly, it's that idiosyncratic risk of litigation that lets us generate high returns, and that creates barriers to entry against potential entrants who don't have tolerance for that kind of risk. And look, our process does a very good job of screening in bad cases, but that doesn't mean that we can forever forgo that level of unpredictable risk. That's simply the way that litigation works. And while we will try hard to get a different result in the U.S. courts, statistically, that's something that is realistically difficult to obtain. So that takes us to arbitration. Arbitration here is a process that will let us advance essentially the same claims for the same damages. And the case is very well set up for arbitration. We are experts in doing this. We believe that we're the largest provider of finance to international arbitration in the world. We have, in fact, arbitrated successfully against Argentina before in a case involving the expropriation of two of Argentina's flag carrier airlines. Argentina loses very regularly when it goes to arbitration. 86% of the more than 50 cases brought against it have been -- have resulted in a pro investor outcome. And once there is an arbitration award, the vast, vast majority of arbitration awards are satisfied. So this is not something that is pie in the sky. This is a very real alternative. And for those of you who have been following this case since its beginning, we will always go back to 2015 when we first started this litigation. We said at the time that keeping the case in the U.S. courts is a significant risk and that if we were unsuccessful in doing that, then we had this arbitration avenue available to us. It's just disappointing that we had to go all the way through this U.S. court process before turning and going to arbitration because this is also going to be a process that will take some amount of time. We've had a fair number of questions about the process here. And so in addition to this one slide that you see on the screen, there are several slides in the appendix that have more granular detail about the process and how this works. And the other question we get a fair bit is around cost. A bunch of the costs that you have seen us invest in the YPF case were structural, in other words, costs to obtain the interest in the first place. It wasn't litigation cost. Those structural costs don't need to be repeated. And so going forward, the cost of this case will be consistent with any other complex arbitration case. There's nothing close to $100 million to spend here. Historically, we've spent in the $10 million to $20 million range on arbitration matters. But that's really where we sit with respect to the next steps on YPF and its litigation. And they're going to be kind of quiet because arbitration is an inherently confidential process, and there's not a lot of updating that goes on during it. So let's turn to Slide 10 and talk a little bit about YPF and money. So as you've all seen, and as you were expecting, given the guidance that we gave right after the decision came out, we have applied our valuation policy, and we've taken a very substantial write down of the YPF asset value. But I really would continue to emphasize that that's entirely a noncash matter. If you look purely at the cash side of YPF, this has been a very successful investment. We've made a cash profit of more than $100 million. But as you can see from our comments here about how going forward this affects our financial statements, there aren't many milestones in arbitration. And so you're not likely to see for the next several years much financial statement activity in the case. Let me give some details here that you can read for yourself, and Jordan will be happy to take questions on it. But that's sort of where we are. We're at the -- we have a high level of confidence that some time from now in the future, we're going to be coming back to you with good news from an arbitration award, good news from an arbitration tribunal. But it's something that's going to take a little bit of time and require some amount of patience. And so what that really does for us, while we're obviously unhappy about the YPF result, is it changes the narrative around Burford. For the last few years, YPF has really dominated the Burford story. Many of my meetings with investors would open with YPF, and lots of those meetings never really made it past the discussion of the case. And that was understandable. It was very public, it was very large, it was complicated, and it required a fair bit of effort to properly understand. But now, while we believe the case will resolve in our favor, as I said, it's going to take a number of years, and there's nothing really to discuss in the interim. So that lets us, I mean, close that chapter, to turn the page and start thinking more about Burford and its core business. And let's start doing that on Slide 11. So we're happy now to be able to focus you on the core business because we've got an amazing core business and it, quite frankly, has been neglected by the market for some time. So before we turn to quarterly results, I want to spend a little bit of time refocusing on that core business and trying to get you to understand and share our excitement about it. One of our largest shareholders wrote to us recently and they said the business ex YPF is performing really well, and we see the stock as wildly undervalued. And that's a sentiment that the management team agrees with. The core business that we have is a gigantic portfolio of litigation matters globally, hundreds and hundreds of them. They move along the litigation comparable to maturity fairly rapidly, and they generate substantial cash flow and strong returns. And because we have the market leading global origination engine, we add materially to that portfolio every year. So let's turn to Slide 12 and take a look inside it. We say that we have 237 active assets, but many of those are multicase arrangements. In actual fact, we have somewhere around 900 cases. And a case for us means a substantial complex piece of high value litigation. We're not counting plaintiffs. If we did, because some cases have many clients, we would be in the many thousands. So in short, this is an enormous collection of high value litigation, by far the largest in the world, we believe. And we expect that it's going to produce billions of dollars of cash over time. The cases are widely diversified across any metric you'd care to use, as you can see from the graphic here. I'd make a couple of important points on this slide. First of all, looking at the bar on the right, 35% of that portfolio is from 2015 to 2019. Those are old cases. But for the pandemic, we believe many of them would have resolved by now. But they will resolve over the next bit of time, and they will be a desired source of cash as they do. And let's also look on the left at those undrawn definitive commitments, more than $1 billion now. That's basically something approaching another $2 billion of future cash proceeds as that capital flows out in the cases and then returns at our historical rates of return. And we already have those cases. We don't need to do any work to find them. So it's a very interesting portfolio from a financial perspective. Speaking of returns, let's have a look at Slide 13. And let's just remind ourselves of what Burford has already been able to achieve. $3.8 billion of cash for the balance sheet, and in fact, more than $6 billion group wide, at high returns. So in short, we know how to do this. And we have been brought. We have a large portfolio, as shown on the right, and that translates into accelerating realizations, as shown on the left-hand graphic. So the all important question here is around cash. And let's have a look at Slide 14. So this year is going nicely. We have sight of $280 million of cash already this year. But let's step back from short term quarterly numbers, and let's look at the basic model. Most of you have heard me describe litigation before as a conveyor belt. What I mean by that is that it is a rules based process that doesn't permit cases simply to sit and gather dust. Once the case is filed, the system moves it forward through a set of consistent activities and ultimately gets it to a resolution. Every litigation case comes to an end. Unless they're abandoned, and we have never had a client abandon a case, they're simply too large, these cases that we do. The conveyor belt takes each case to trial unless the case settles along the way. Now of course, one of the possible outcomes in litigation is that you can lose. But our full business is designed to help us minimize losses and pick good cases. That is literally the thing we spend the most time on. And we do that with scores of experienced lawyers around the world, with a substantial data science and quantitative analytics function, with proprietary data, and applying our very considerable judgment and experience. And as you can see on the right hand graphic here, it works. Our loss rate, that blue line, is low and stable. So if you don't lose, you're going to make money from a case. There are just two how much and when. The how much question depends on whether you settle or whether you win at trial. When you settle, you make somewhat less money for obvious reasons because you're not taking trial risk anymore and a defendant expects a discount for derisking the case. So there is a direct correlation between settlement rates and returns, as you can see on the graphic in the middle of the page. As we've said before, we're not sure if the increase in our settlement rate is pandemic driven, with courts pushing cases to settle to try to reduce the pandemic backlog, or if it is more permanent because the cases we are doing are ever larger and thus present more trial risk for defendants. We'll see as time passes. But we're not complaining about that because settlements happen faster than trials and they derisk our positions. In short, this is a very good business, but it is not an easy business. We spent a lot of time building a high quality, unique moat, and we are now seeing the benefit of it. Turning to the when question, this is the vexing part to public investors who like predictable quarterly results and forecast models. And this business just can't provide them the way that we would like to. We can provide a lot of predictability around outcomes. But as to when the conveyor belt will do its thing, there are a number of variables at work, including today the question of how clogged up the road in front of us is. But our concluded weighted average lives, as you can see, have been pretty consistent and pretty short. And the weighted average life of our active capital is longer, as you can see in the bullet on the slide, over 3 years instead of in the middle of the 2 year range, but it too has been relatively stable. So there isn't really any question that a lot of cash is going to show up, and it's going to show up in a reasonably short period of time, but precisely when is harder to say. It would be easier for you and easier for us if that were different, but then commercial banks could do this business as well. Slide 15, you've seen before, and it tries to give you some insight into that important how much question. How much cash are we going to be able to generate? And our modeling says the answer to that question is more than $5 billion. And again, this is not including YPF. Now the obvious question is why we are modeling 110% ROIC when our historical ROIC is 82%. And the answer is in two parts. First, the mix of the current book is different than the mix of the historical book. We have learned some lessons along the way and we are better investors today than we used to be. As one example, we have learned not to do small cases. Our ROIC across a significant number of small cases turned out to be pretty weak and certainly dragged down our overall returns. And second, we don't yet know if the settlement rate changes we have seen in the last few years are permanent or transitory. But whatever the precise number will end up being, it still represents a massive amount of incoming cash in a world where we have only $1.7 billion in net debt. There really isn't any plausible scenario in which the portfolio's output isn't meaningfully greater than the debt. And if you then not only look at the freeze frame portfolio, the existing portfolio, which is what Slide 15 tells you, and we turn to Slide 16, this shows you the next level of this story because the portfolio isn't static. We've been growing the business significantly, as you can see on the left, a 17% 5 year CAGR. And new business generates yet more cash. So what we've done here on the right hand side of the slide, it was a quick and dirty calculation to illustrate the point. If we have sort of an $800 million of new commitments a year, and that's perfectly within range for us, ultimately we'll deploy somewhere around 80% of that commitment. And if you apply a ROIC to that, which is consistent with history or our modeling, you can see the outcome. In other words, every year, we're adding well over $1 billion of future cash flow to the mix. So we have the big static portfolio and then every single year, we're growing the incremental cash that we expect to get out of this. I will talk about leverage in a little bit, but the simple answer is that growth delevers this business pretty darn quickly. So turning to Slide 17. Everything that I have been talking about until now is cash. I run the business, and I'd like to talk to investors on a cash basis, not an accounting basis. And many of you have heard me say that for years, with, frankly, a somewhat critical view of accounting terminology at the same time. There are two reasons for my critical eye. One of them is, I suppose, that I've been in and around complex litigation for 35 years now. And that has taught me that accounting numbers are often disconnected from reality. But the second is more specific to Burford. There aren't yet comprehensive accounting standards for this asset class. And a number of the current accounting choices seem to me to be not very sensible or not very helpful to investors. So I focus on cash and not accounting. But here's an accounting slide for those of you who want to look at the accounting numbers. And this slide makes a very important point. Our balance sheet is only carrying our assets at a 22% return. That is 60 points less than our historical returns, almost 90 points less than our modeled future returns. So on an accounting basis, there is an enormous amount of runway here to generate P&L income that will grow shareholders' equity. So that's the portfolio. Let's turn to Slide 18 and touch very briefly on the origination engine. We have the leading origination platform in the industry. And we've just laid out a bunch of the data points here. I'm not going to go through them in detail. You've heard them from us before. We have lots of people. We have data. We have strong relationships. We have global presence, marketing and business development. And what all that translates into is the kind of growth that you see in the graphic on the right. Turning to Slide 19. It's not just that we have been successful doing this and that we're good at doing that. It's also that there is a structural dynamic going on with corporations that drives the acceleration of their adoption of our products. And so this data might be interesting to you. This is from The American Lawyer. So these are statistics about the very largest of the law firms, the Am Law 10, so the 10 largest law firms by revenue, and then the Am Law 25. And what you can see there is basically an explosion of revenue and profits. The chart on the right, just a lever on that. That is the millions of dollars per partner in law firm profit. So these big law firms have gone from sort of $3 million and $4 million of profit per partner to $6 million, $7 million of profit per partner. That's an average of every partner in the firm. And how have they been doing that? They've been doing that by being able to push through double digit increases in their billing rates to their corporate clients. Now that's great for the law firms, but what does it do for the corporate clients? Well, it has an extraordinary consequence because it means that corporate clients who want to use those law firms are having to divert more and more capital from their operating businesses, which generates for them a return and a multiple, to a collateral activity like litigation, which does neither of those things. It's, in fact, injurious to their business to do it. So they do it because they need to, but not because they particularly want to. We are the solution to that problem. And that is why our business has grown the way that it has over time. And this trend shows no signs of abating. And that is why every single year, we have more frustrated corporate clients come to us and use our capital for this very reason. Now let's turn to liquidity and leverage. I'm going to start on Slide 20. We've had lots of questions about the topics, and I want to lay out our position very clearly to dispel any market uncertainty. Our liquidity position is very strong. We consciously raised $500 million in January to buttress our position, and we sit today with more than $700 million of cash in the bank. We have historically brought in much more each year in cash than we need to cover our cash costs, including OpEx and interest. Moreover, as I've laid out in earlier slides, we believe our cash realizations are likely to increase over our historical levels. And by the way, not to keep beating the accounting dead horse, but our reported GAAP operating expenses are generally a good deal higher than our actual cash operating expenses. For example, compensation is our largest expense, and a significant portion of our compensation is through share based or carry based long term incentive programs. Those produce current levels of GAAP OpEx, but are largely noncash. Jordan will detail some other items on the P&L that don't have any cash impact on us in a few minutes. I would also underline that we have not been reliant on cash from the YPF case, nor was YPF included in any of our forward looking cash flow modeling. There was simply too much uncertainty around it. As you can see from the graphic in the center, the last time YPF produced any cash for us at all was in 2019, 7 years ago. We have, in the past, tapped the debt markets to fund gaps between new business opportunities and organically generated cash flow. But as we reported previously, we had already concluded before the YPF outcome that the business no longer needed to do that going forward. And the team has been operating on the basis that we need to fund new business organically. That does present the occasional risk to our ability to do as much new business as we would like, as if we are short on organic cash flow, there is a world in which we would have to constrain new business. But that is only a risk to our future growth rate. It is not a challenge to our liquidity, as the solution is simply not to do the new business if we don't have capital available to do it. To be sure, we would like not to face that issue, and we believe our accelerating cash generation will permit us to avoid it, but it is not a liquidity risk. Slide 21. In a few minutes, Jordan will spend some time on the nuts and bolts of our debt arrangements. But let me speak about leverage strategically. We believe strongly that balance sheet investing, including the use of debt, is the right way to engage in this business and that it is substantially preferable to the use of third party investment fund capital. We've described in detail in the past the reasons for that view. The exception to that view is our strategic relationship with our sovereign wealth fund partner, which has a different economic structure. And that is a relationship we expect to continue. With the sharp decline in the balance sheet carrying value of YPF, again, notwithstanding our long term confidence in the ability of the YPF case to produce a very substantial cash return, we now have a higher debt equity ratio than we would like, and we are going to work over time to address that. When we have spoken before about leverage, we have made the point that the management team are the largest shareholders of this business, and we are very conscious of the ability of some debt funds to behave badly if they obtain the ability to do so. We have always been very alive to trying to ensure that our--and thus your--equity value was not at risk that way through sensible levels of debt, laddered maturities, long dated issuances, and through the design and structure of the debt instruments themselves, all of which are unsecured and all of which are free of any meaningful maintenance covenants. We've previously spoken of having a comfort level of a debt equity ratio around 1.25x. However, that was in the context of more than 40% of our assets being in a single matter. With the effective elimination of that concentration, our asset base is now widely diversified, as I demonstrated earlier, and is capable of supporting a higher level of leverage. We have not yet settled on a precise leverage target, as we would today be above whatever that might be, but the fact that our incurrence covenant is at 2.0x is certainly a relevant criteria. But the bottom line message here is the following. We intend to delever over time, but we are not alarmed by the current posture of the business. And we'd remind investors that the rating agencies agree. Moody's did not alter our debt rating after the YPF event, keeping us at Ba1, and S&P lowered us in March to BB with a stable outlook. So how are we going to do that? Slide 22. The core answer is that we are going to continue to grow the business, and we're going to be even more focused on harvesting cash from the existing portfolio. I spent quite some time earlier demonstrating the cash generative power of the current portfolio. And while equity investors may find our quarterly volatility frustrating, any reasonable view of the timing of cash flows from the portfolio would be considerably faster than our debt maturities. And I also showed how significant the cash generative impact of even routine levels of new business can be. We will also look hard at cash conserving actions. We've been in discussions with shareholders for several years about the dividend. And while no decision needs to be taken today, there is a genuine market question about its benefit. We don't trade on its yield, and many investors do not particularly value us and do not run their portfolios for income. So while we appreciate that some investors do attach significance to a dividend, we would also note, as the slide shows, the delevering impact of not paying it. We also reiterate our longstanding position that share repurchases are not appropriate at this point. We also have in mind a number of ways to manage operating expenses. We have announced this morning the departure of Craig Arnott, our CIO International. That was his choice, not ours, as he seeks out an unrelated final chapter, but it nevertheless reduces our compensation expense. We have some other streamlining in mind as part of both a more streamlined structure and a demonstration of our deep bench. Travis Lenkner is going to become the Chief Operating Officer and work hand in hand with Jordan on those initiatives. Slide 23 talks about growth. As I've indicated, the best way to delever this business and to enhance its equity value is to continue to grow it. We have the people, we have the market position, we have the know how, and we have real demand for our offering. And we believe that we can make the financial construct work. So as we say internally, onwards. And while I've gone on for quite a long time, I will now turn it over to Jon and Jordan for some brief remarks about the quarter, after which we'd be happy to take your questions and happy to stay on past the hour if there's a desire for us to do so.

Thanks, Chris, and thanks to you all for joining. I'm going to talk about three things that were in Chris' presentation, but I just want to focus a little more on them. One is new business, which is proceeding at a steady pace, as Chris said, and is the driver of growth and replaces the matters that come off and generate revenue. Second is the portfolio matters that are positioned to deliver the higher levels of realizations Chris referred to. And third, a word about just a reminder of how strong the portfolio is, as demonstrated by the track record we've experienced over time. So first, new business. The new business reflects a steady pace. The business development team is humming. We did $133 million of new business commitments, which is a solid start to the year and consistent with the recent first quarter average. The $100 million of deployments are likewise consistent with the recent pace. And as Jordan noted, if you look at the average over the last 8 quarters, you'll get a sense that that's right on target. We have, as Chris mentioned before, $1.3 billion of unfunded definitive commitments, which continue to drive deployment. And because Chris said, we don't have to go out and find the matters, we found those matters, we've underwritten them, we're in them, and the money will go out to generate returns going forward. And that balance, that number is up by more than 40% if you compare it to 5 quarters ago, at the end of 2024. So we have grown the portfolio, and that's a significant amount of capital that's going out to deliver returns for us. And while we tend to focus on deployments, it's important not to forget about discretionary commitments. We have $600 million or more of unfunded discretionary commitments. Well, what are those? We don't have to put that money out. We still underwrite additional matters, but they reflect strong relationships we've built with counterparties, corporates, but particularly law firms, and the opportunity to grow through adding new cases, new matters to portfolios. And you find it is much more efficient. We end up with much better matters, closing more easily when you have an existing relationship and a portfolio set up. And when we see something good, we work together with our counterparty to bring it in. And we continue to expand our business development globally. We've added people on the ground in Spain and Korea. So I'm very excited about how the new business machine is turning basically on all fronts in each of our pipelines in each of our geographic locales. So the second question then is what about the portfolio, what is delivering, what is poised to deliver. We had $97 million in realizations in the first quarter. It's not a big quarter, but it still exhibits to the diversification of our business. There were 25 assets contributing into that quarter. We said that 6 of those 25 generated $5 million or more. Two of the 6 generated $20 million or more. Nine of them are from pre COVID vintages. Remember, Chris talked about the slide of the pre 2020 stuff, demonstrating the older book is moving. Even if it's taken longer and COVID slowed it down, it is happening. One thing that's noteworthy is the number of trials and hearings that are projected to take place or are in a position to take place this year because those are significant catalysts for settlements or resolutions. We have - when we look at the book, 36 trials and merit hearings scheduled during 2026 across those various portfolios. And that's up significantly. If you look back same time last year, there were 23 scheduled for the remainder of the year versus 36. It doesn't mean that's all going to happen, things get pushed, but it's a positive indicator. And slicing it a different way and stepping back, like we look at our portfolio, we see 23 different assets that have the potential to generate double digit millions or more in realizations in '26. And for comparison, in 2025, there were 14 assets that generated $10 million or more, and in 2024, there were 16. And again, I'm not saying that all 23 will deliver. We find sometimes things that could deliver don't, and sometimes things that we weren't expecting to deliver end up resolving earlier than expected. But there's a lot going on. As Chris said, we have a mature portfolio with a lot of great stuff in it. Stepping back to the track record over time because, as Chris said, there may be quarterly volatility in this business, but the portfolio over time has delivered on a consistent basis. You've had $3.8 billion plus of cumulative realizations. I think that's more than doubled since 2020. Over that time period, the realized loss rate cumulatively has remained remarkably consistent in that 10% range. We've noted how the interplay of ROIC and settlement rate in recent years is how those two are related to each other, and time will tell if that's temporary or is a more structural feature. But the takeaway is we continue to add new matters fueling our growth and the potential for the future. We continue to see the portfolio turning, and we have lots of matters that are mature enough to be delivering results in the near term. And the overall portfolio is very strong, and I'm very excited about it. So with that, I will turn it over to Jordan.

Thank you, Chris and Jon, and thank you to everyone for joining us this morning. I want to reiterate, but without repeating, I see many of the same strengths in the Burford origination platform and portfolio that Chris and Jon just spoke about. We spent a good portion this morning discussing our disappointment with the recent activity in our YPF related assets, and as you would expect, the judgment reversal had a significant noncash impact on our financial results. Those numbers understandably overshadow much of the first quarter activity. Rather than walking through each page of our two segments, the Principal Finance and Asset Management segment, I'm going to focus on the key highlights and themes associated with the quarter on Page 25. I'll also call out several noncash items that affected the income statement on some different lines, and I'll make sure to note what those impacts were as we go through it. And then at the end, we'll open up for Q&A. Jon just spoke about his excitement around the global origination franchise, and let me add some perspective by walking through some of the related figures. New definitive commitments were $133 million, which is 25% higher than the first quarter average of '24 and '25. That's a strong start to the year, and we expect healthy demand and a strong pipeline as we move throughout 2026. Definitive commitments naturally translate into deployments. We deployed $108 million in the first quarter, broadly in line with our quarterly average. Realizations were $97 million in the first quarter. That's lower than last year's start, which benefited from a nearly $100 million single asset realization, but it's still an encouraging beginning to the year, reflecting, as Jon mentioned, the diverse set of cash generating assets, including two that produced $20 million or more realizations. Realizations become receivables, receivables ultimately convert to cash. As Chris noted at the start of the call, we believe we have visibility to more than $280 million in cash receipts so far this year. And as Jon mentioned, there's a significant amount of anticipated court activity still to come over the balance of 2026. Capital provision income had a few headwinds through this period. First, discount rates used to net present value of our assets increased by nearly 50 basis points, accounting for about half of the negative impact. As I mentioned before, under our fair value accounting, changes in rates in the broader rate environment affect our assets in a way that can resemble a bond portfolio. In addition, capital provision income was negatively impacted by changes in duration and certain observable milestones. Turning to operating expenses. There are a couple of items to highlight. You'll see movement in the long term incentive line, or what we call carry, that naturally tracks changes in the fair value of assets. In addition, our deferred share based compensation was impacted by the decline in our share price during the period. But I want to spend a few moments explaining the $19 million charge related to case related expenditures. These expenditures relate to previously deployed costs that have been capitalized into the fair value of our assets. Given our ownership position, these costs should have been expensed. Going forward, we'll continue to track the cumulative amount of expenses associated with these assets and provide continued visibility into whether they relate to active assets or concluded cases. These are all active cases when looking at the $19 million of costs. And these costs will also be treated as deployed costs when we look at our ROIC and IRR metrics. We raised $500 million of incremental debt in January and redeemed the remaining outstanding U.K. issuance. Before I say more about the capital structure, it's worth noting that the redemption did impact the income statement. More than $12 million of the $60 million of foreign exchange impact recorded in the income statement related to this redemption. Overall, GBP rates have increased mostly since when we first issued these bonds in 2017. And historically, that rate impact was recognized below the line in other comprehensive income, or OCI. This period, with the redemption, it was crystallized in the first quarter, but it's been recorded over time in OCI in the prior periods. And it's also important to note that over the life of these bonds, with rate movement, our GBP denominated assets in the portfolio, as well as some of our marketable securities, have also benefited on the positive side with pound depreciation. Overall, liquidity remains strong with $740 million of cash and marketable securities at quarter end. Let us switch to Page 43 and wrap up with a few comments on our capital structure and then turn to Q&A. A few key points to highlight. We have an unsecured laddered maturity schedule that's been deliberately constructed to support our portfolio. As discussed, we've had no maturities due until 2028 following the proactive redemption of our 2026 maturity earlier this year. Weighted average life of our debt capital is 5.5 years compared to the weighted average life of concluded assets and asset deployments of 2.6 and 3.4 years, respectively. The redemption of the 2026 bonds also eliminated our remaining maintenance covenants. Our outstanding debt now consists entirely of 144A notes with incurrence covenants only. In practical terms, that means we're limited to how much additional debt we can incur at certain debt to equity levels, but we retain flexibility to refinance existing issuances and a variety of other flexibility under various baskets created under the debt indentures. All of that is public and available on our IR website. The incurrence test is 2.0x debt to equity compared to our current level of 1.35x. And while, as Chris mentioned, we intend to delever over time, we remain comfortable that a balance sheet model supported by leverage is appropriate for this asset class. We believe our current leverage is manageable given our mature and diversified portfolio. With that, I would like to turn it back to Chris for any closing remarks, and then we can open up for Q&A.

I think we've gone on for more than 45 minutes. And so rather than me prattle on for longer, I think it would be better for us just to go ahead and take your questions. We are--as you can tell from all 3 of us--we are excited about what lies ahead and the ability to showcase the strength of the core business to you, and that's really where we're going to be focusing on in the years to come.

[Operator Instructions] Your first question comes from the line of Timothy D'Agostino of B. Riley Securities.

I guess thinking forward, when you all think about approaching larger cases or unicorn cases such as YPF. Given the process of YPF, how does that change your approach to those larger cases especially ones that again are kind of in -- I guess, that [uniform] bucket that are way larger than what you quantify as large cases. I know it's usually around $100 million.

Sure. I guess I would divide the world into two pieces a little bit because YPF was large in the sense of its potential outcome. But it wasn't especially large in terms of what it cost us to acquire the ability to provide financing and then the financing itself. And so yes, we've got, round numbers, $100 million invested in YPF, but that's over an 11-year period of hard-fought litigation. So I don't think that I would regard another EUR 15 million investment, which was our original disbursement. I don't think I would necessarily regard that as a unicorn-type case, even if it came with the potential of a very high asymmetric return. And we are certainly open to doing cases like that from time to time when they present themselves. The reality is, as you can see, because YPF was effectively the largest judgment in American history, there aren't that many of those cases. The other side of the bucket is when we have clients who want us to put very substantial amounts of capital to work in their cases. We've done transactions for clients that have exceeded $300 million in size. But those cases don't necessarily have the same kind of asymmetric returns, they may simply be strong cases that clients want to monetize and our approach has always been the same. We set whatever our balance sheet risk tolerance is for the case or for the category of cases that we're pursuing. And to the extent that there is client demand for more capital than that, we have tended to meet that extra client demand using [separate] vehicles. Most recently with our sovereign wealth fund partner and previously with some other private investors as well. And I think that's how we would continue to look at that slice of the market.

Okay. Great. That's super helpful color. And then just a second one, if I can ask. Over the past couple of quarters, obviously, it's been talked about the backlog to recover from COVID cases. I guess as we think about going forward, could you just remind us of, I guess, the change in case realizations from the pre-COVID time to where you stand now? Like how much longer is it taking on average for cases to either settle, adjudicate to win, or be lost compared to the cases that were maybe back in 2017? Just to get a better understanding.

Yes. It's -- so the actual number is -- you see it on Slide 14. And what that shows is that the concluded weighted average life has gone up a little bit. It's now sitting at 2.6 years, up from 2.3 years before COVID. But if you look at the bullet that I pointed to earlier, the weighted average life of the active deployed capital is now 3.4 years. And presumably, that will continue to go up a little bit as we -- because we haven't, of course, resolved all of those cases. So even though it feels anecdotally like things are slower and taking longer, and I think there are certainly anecdotal examples about, as I pointed out earlier, we've still got a decent percentage of the portfolio in pre-pandemic cases, when you actually look at the hard numbers, we've added a year or so right now to weighted average life.

Your next question comes from the line of Mark DeVries of Deutsche Bank.

First one of the questions are around the $5.2 billion of kind of modeled realizations. I think you just referenced it for February, I'm assuming the expectations are still there? And could you just confirm that? And also, could you discuss what kind of the assumed weighted [outlook] is for that?

I'm going to defer to Jon and Jordan on this. I am not certain that I know the weighted average life -- and if I do, I'm not sure that it's something that we've said publicly. But Jon or Jordan, do you have any comments on that?

Yes, we don't -- as you know, we don't actually disclose a duration estimate associated with our cash flows.

It sort of goes back to what I said earlier, how much versus when in the business. We're comfortable talking about how much, and we're pretty good at it. We're less able to do a good job on the when part.

Yes. No, understood. But is there a reason to think it's meaningfully different than, I guess, the 3.6 years you assume in the fair value of the capital provision asset?

Well, what we do when we model that stuff is we model a very wide range of outcomes. And so in every case, you're going to have outcomes that include early settlement, later settlement, trial, appeal and so on. And so what that does is it gives you actually quite a wide range of sort of scenario outputs that we then weight by probability. And so the reason I don't have that number to hand, and the reason that Jordan doesn't either is because there's such variability in case type and in throughput of where you're headed. Like obviously, if you have a case that files and then goes through class certification, which is going to take less than a year, loses class certification and then settles, that's a very different dynamic than the case that you think is going to go -- well, let's take arbitration. I think the ICSID process has got a 4.4-year average followed by 2 to 6 months of enforcement if you want to go for nominal. And so if you're modeling an exit case, if the case doesn't settle rapidly, then you've got obviously a considerably longer duration. So it doesn't really work to say, I don't think it's that helpful to say, yes, portfolio-wide here is the number because of the degree of idiosyncratic variability.

Okay. Understood. Just changing tack here. You mentioned in the presentation both the ability to aggressively manage operating expenses and also to harvest cash. Could you talk about the different levers that you have in line?

Yes. Look, ultimately, with respect to managing the operating expenses, it's something that we've been doing continuously as we monitor the cash that goes out the door, whether that's with respect to day-to-day operating expenses and our long-term growth aspirations. I think that overall, though, our focus, obviously, given that those numbers are not as large when you think about the potential of revenue and realizations, the focus really is on continuing to see the portfolio perform. And then how we harvest cash from the existing portfolio, we don't necessarily control the cases, but that doesn't mean that we are extremely active partners to our clients, whether that's corporates or law firms, in thinking through opportunities in which to manage resolution. Case management is something that we have done historically and we'll continue to do as we go forward.

And I think we've talked in the past about, but even in cases where we obviously don't control settlement, the counterparties or lawyers will come to us to model the potential outcomes, whether it's granularity on particular matters, and they confirm that quite helpful and useful in figuring out what's an acceptable strategy towards settlement and to get to yes sooner.

Got it. And then just one more if I could slip it in. Sounds like cutting the dividend is at least on the table here. I think when it was raised in the last earnings call, you kind of mentioned that you've got a class of investors that kind of need some yield to hold your shares. Have you looked into how meaningful of your shareholder base that is and what pressure you would have on the stock if you did cut the dividend?

Yes, the consultations that we've had, including with our advisers, suggest that that's not a particularly dramatic portion of our shareholder base at this point. We've seen quite a lot of rotation in the last 5 years since we added the New York Stock Exchange listing. And so if you look now at liquidity and trading volume in the shares, it's very heavily U.S.-weighted today. And the consistent feedback we've had from U.S. investors is a relatively low level of focus on the dividend.

Your next question comes from the line of James Allen of Berenberg.

Just in terms of a couple of questions from me. So first one, I think earlier on the call, you mentioned -- forgive me if this is wrong -- around your 86% of cases against Argentina saw them pay out historically. Does that include international arbitration? And if it does, what would that be? And then secondly, just with regards to the debt-to-equity ratio, it sounds like you're quite comfortable on that, but you obviously will have to pay it down over time through kind of aggressively managing your OpEx, et cetera. But would you also consider a sale of a bundle of cases if there was a buyer out there?

So sure. So taking them in order, the 86% number in fact is international arbitrations. So that represents -- and you can get decent public data on this -- there have been, if memory serves, the numbers on the slide, there have been 51 international arbitrations brought against Argentina. And just so that we're clear about what we're talking about, because a lot of people think about arbitration as being simply an alternative to litigation. So you might have an arbitration clause in your employment arrangements, or you might have an arbitration clause when you sit down in an Uber, you can't see it but you've agreed to go to arbitration. Those are commercial arbitrations. Those are simply an alternative to litigation where you've got a dispute between two private parties and you're choosing an alternative resolution mechanism. That's not what we're talking about here. What we're talking about here are arbitrations that are brought under what are called bilateral investment treaties. So these are treaties between two sovereigns. In our case, one between Argentina and Spain, because Petersen is a Spanish entity, and one between Argentina and the United States because of Eton Park. And those treaties permit claims under what is called a public international law regime administered by the World Bank or by the UN, and so on. So we're talking about a special kind of arbitration that yields an award against a country that, as you heard me say, is generally satisfied. So that's the denominator, the 51 bilateral investment treaty arbitrations brought against Argentina, and 86% of those, as reported, have had resolutions in favor of the investor. On the debt-to-equity question and sale of cases, we're fans -- and I've talked about this for years -- we're fans of creating, building and being able to make use of a vibrant secondary market in litigation risk. And that's how you saw us take profit off the table in YPF. That still remains, I think, one of the largest secondary transactions that was done in the space. So we're totally open to it. The challenge is whether the market is there and pricing, because we haven't seen the secondary market move to the kind of efficiency that you see in, let's say, private equity secondaries, where investors are still, in my view, regularly trying to overprice secondary capital for those transactions. So we're certainly open to it, but it's not as fluid as one might wish, and it's an area that we continue to devote time and effort to.

Your next question comes from the line of Hal Potter of Bank of America.

Just two for me. So on your managing of operating expenses, you called out potentially some early retirements. My question really is about to what extent are you concerned about key person risk and the potential knock-on impact on the rest of the business going forward? And then my other question is just about the shape in terms of doubling of the portfolio aspiration and then specifics on timing. If we're thinking that there's no more leverage to fund it, at least in the short term, is there a kind of kink upwards that you're expecting on that multiyear view?

Sure. So on the people point, no, and quite contrary actually. We've talked for a while about the bench that we've been able to build at Burford. We're really, really, really thrilled with the quality of the team and with the next generation of people coming along. And so while it's always sad to say goodbye to people that you've worked with for a long time, Craig Arnott had been at Burford for a decade. But he and I actually started working together all the way back at Latham when we practiced law together. So it's sad when that happens, but at the same time, it opens the door to our next generation really coming along and moving up. And so I'm actually quite excited by that. And in terms of doubling the portfolio, I think if you look at the new business numbers that we highlighted today, it's -- to be honest, while it sounds like a lofty goal to double the portfolio, to double the size of the business, it's actually not that difficult to do over the course of 5 or 6 years. And we have been running CAGRs that are well in excess of what we would need to produce to just be able to meet that goal. So I think that is frankly largely a business-as-usual undertaking, while obviously continuing to pay attention to the market dynamics.

Your next question comes from the line of Brian Shelley of Bank of America.

My first question is around kind of the cadence of commitments. Are you able to provide any color on how you can time those commitments when you need to fund them? And just as we think about operating expense going forward here, given where the covenants sit today?

Yes. So I think let's break that into two pieces. My suspicion is that you're probably talking about the definitive commitments that we've identified. So those are commitments to existing cases that we expect to finance over time. And those have been pretty consistent. Again, back to the conveyor belt, you have a pretty good sense when you start the case of the rhythm that it's going to follow and when the spend is going to go out. Litigation spend comes in peaks and valleys depending on what's going on in the case, but there is certainly a relatively large component of the spend that comes towards the end as you prepare for and go to trial. And if you look across history, and we published those numbers for years, you don't see a massive percentage of that number going out in any given year. I want to say numbers in the 20s %, give or take, so that's sort of what it looks like. Now the other piece of commitments is, of course, new business that we do. And that new business, as Jon pointed out earlier, is entirely within our control. So we can do lots of it, we can do none of it, depending on what we think at any point, our risk tolerance and our cash position and liquidity.

I would only add to that, we have relationships with some firms where the pace at which the dollars go out is actually built into it. Firms instead of billing by the hour will bill us by the month or by stage of case, and if the stage gets delayed, then they'll postpone the monthly billing. Or for those who are billing by the hour, there will still be caps on stages to make sure that you don't use up the budget too quickly. And conversely, we will -- when it comes to our returns -- have a component built into those returns that is IRR-based or multiple-based, so that to the extent you're putting out money, your potential returns go up as well.

Got it. Very helpful. And one more quick, if I could. In the presentation, you mentioned the possibility around repurchasing some of the bonds in the open market. Can you talk about what you would need to be able to do that? Is that something you'd be considering today? Or are there any hurdles before you consider doing that?

Sure. Look, we've always been active in managing our maturities and purchasing bonds in the open market. If you look at the last two U.K. issuances, we spent some of our cash in advance of redeeming these bonds when we saw attractive pricing. I think that it's something that we are constantly looking at relative to the pricing that we see, the cash on balance sheet, the forward look of our cash and expenditures, and then how the maturities are playing out. So I guess it's a dynamic view that we continually have compared to our growth, et cetera. So I don't think there's a hard and fast rule, but it's a tool that we've used over the last several years that I've been here.

This is Josh. I'm going to jump in really quick. I think we have just a few minutes to take a few questions from the webcast. The first one is: given the current YPF outcome, what would you do differently in terms of valuing such a large potential outcome? Is there a case for a more conservative valuation or a cap on potential value to reduce the impact on share price volatility from unfavorable outcomes?

Well, what I would do is look at the cash and not the accounting, but given that people want to look at the accounting, there's not much you can do. We fair value our assets. We engaged in a market transaction with the YPF assets that set a clear market valuation mark, but it was very high. And so the accounting rules leave you no choice but to take the asset on your books at that point at a value that's implied by the market transaction. And then the other valuation rules, including writing assets up over time based on the passage of time and so on, come in and do their own work. So no, I don't think there's anything you can do differently about that. And I do think that if you examine the value of the YPF asset at various points in time, I think it did accurately reflect what the fair value, what the market value of the asset was. The simple fact is that if you were going to do a probabilistic analysis walking into the Second Circuit, you would have said that your odds of reversal were in the single digits. Preska's reversal rate was 4%, the whole Southern District reversal rate was 6%. So the market wasn't irrational in how it was valuing the asset -- it was just a low-probability, high-impact outcome.

Okay. Second webcast question. Your Slide 19 shows accelerating legal costs, which you say drives companies towards litigation finance, but we're paying these increased costs, so unless we're increasing pricing, does this reduce margins?

Yes, yes, yes, I'm happy to take that. I sort of alluded to it in answering your prior question, and maybe Jon sort of started to answer this, which is we virtually always have a component in our pricing that is a multiple on or an IRR on the money we put out. There will be a component as well where it's a percentage of the net beyond that. But we're very mindful of it. And in particular, with high-priced, big-ticket litigation where we are concerned about the spend, we not only work very hard with the lawyers and clients to come up with budgets that we can predict and that we can hold the lawyers to, but we also build it in so that the more the lawyers spend, the larger our profit, which means that we and the clients have a strong incentive to monitor the cost and make sure that the lawyers aren't overstating. So I'd say that basically, the litigation does get more expensive as billing rates go up, and that is the reason why there is greater demand for our capital. But we are able to deal with that additional cost by making our capital more expensive, as the question says, it does become inherently more expensive. Every dollar of spend is going to need a profit to us as well as the lawyers' built-in profit.

Okay. And we'll do one last webcast question. Will deleveraging activities hurt your long-term growth? If YPF had not been written down, could you have taken on more cases than you now will?

So I think and hope the answer to that is no. And as I said earlier, we had decided some months ago that we were not going to continue to close new business funding gaps with leverage. We made that decision long before the YPF decision, and we put that in a release a while ago, in fact. And so the reason for that is basically that we thought that the portfolio is large enough and the cash generation ability of the portfolio was substantial enough that we didn't need to give people the out anymore of just saying, "Oh, well, let's just go and take out more debt because we've got this BA1." So we believe that we're at the size and stage where we don't need to do that, where we should be able organically to fund the growth that we want to do. Now, as I noted, there's always the risk of some timing mismatch there because the incoming cash is not the most predictable thing in the world. And so that's really the only area of risk that we hit there, I think. But otherwise, I think that the plan should work itself out.

I might add to that just an observation. In the same way that we said before that the high price of litigation is what creates demand structurally for our capital from the clients who would otherwise pay those costs and who end up not only having to pay them, but pay our returns on them in the end, but out of recoveries. But also, the structure that the question implies, that basically in Chris' response, there is a lag time between putting the money out and getting it in, although a relatively predictable lag time across the whole book, meaning our weighted average life hasn't changed dramatically even if COVID slowed things down. That sort of explains the moat that we've historically described around our business. It is very hard to start up a business like the one we've built because to start it up, you have to raise capital, you have to deploy capital, and have the relationships and the underwriting team to be able to do it. And generally, to keep the machine going, you have to raise more capital before the money comes back. And that's why over the years, we've seen entrants raise initial capital, and when they go to raise the second fund, they've had a hard time keeping up because they don't yet have the performance or the cash back for investors to reinvest. And as Chris said, we've gotten to a size and scale where we can use the money coming in from prior cases to fund the new commitments. And that's really a pretty privileged position to be in. That has nothing to do with YPF, and so in fact, it highlights the competitive advantage we have.

Thank you so much. I'd now like to hand the call back to Christopher Bogart for closing remarks.

Thanks very much. We really appreciate your time. We ran well over time, I know. To the extent that we did not get to your question, we have a call coming up for retail shareholders where we're happy to take a whole lot more of your questions, and details about that will be forthcoming. And there are also lots of opportunities to engage with us, both at investor conferences that are coming up and in one-on-one format. So we know this has been a shocking and disappointing time for the last few months, but it's time for us to turn the corner and to really now not have my investor meetings start with YPF and instead for us to be able to show you just how potent the core business is and how much cash we think that is capable of generating from the portfolio that we have been building a little bit out of sight, out of mind of the market for the last half dozen years. So we're very excited about what that has to offer, and we're excited to be sharing it with you as we go forward down the road here. Thanks to you all.

Thank you for attending today's session. You may now disconnect. Goodbye.