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Welcome to Burford Capital first quarter 2026 financial results conference call and audio webcast. Please note that this call is being recorded. After the speakers prepared remarks, there will be a question and answer session. If you'd like to ask a question by that time, please press star followed by one on your telephone keypad. Thank you. I'd now like to hand the call over to Josh Wood, Head of Investor Relations. Please go ahead.

Thank you, Ellie, 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, Christopher Bogart, our Chief Investment Officer, Jonathan 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 those 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 call today. I'm starting on slide eight. First of all, we're going to talk about YPF, give you a full update there. I'm gonna take you through an update on the core business. We're gonna talk about liquidity and debt and give you some thoughts about what lies ahead. John and Jordan will go on and talk about the quarter a bit. We may go a little longer than usual in our remarks, we can reserve lots of time for your 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 on 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 was disappointing, and it's something that we expect to turn around, but it is an entirely non-cash event. In fact, we have made a nice cash profit from it. Let's start by talking about YPF on slide 9. As I said, YPF was obviously disappointing, and it was very frustrating to us.

Loretta 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. We should have been in that 96%. Unfortunately, we had a divided panel. The three judges split 2 to 1 against us, with what we believe is quite a weak decision with poor reasoning. Later today, we're gonna be filing our en banc petition, which asks the entire court to take a look at the case again. In our briefing, later today, which will be public when it's filed, we go on and we call that decision egregiously wrong and indefensible. The reality is that that's litigation.

Every lawyer has won cases that he or she should have lost, and every lawyer has lost cases that he or she should have won. 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. Look, our process does a very good job of screening out bad cases, but that doesn't mean that we can forever forego that level of unpredictable risk. That's simply the way that litigation works. While we will try hard to get a different result in the, in the U.S. courts, statistically, that's something that is realistically difficult to obtain. That takes us to arbitration. Arbitration, here is a process that will let us advance essentially the same claims for the same damages.

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 resulted in a pro-investor outcome. Once there is an arbitration award, the vast majority of arbitration awards are satisfied. This is not something that is pie in the sky. This is a very real alternative.

For those of you who have been following this case since its beginning, if you go all the way back to 2015 when we first started this litigation, we said at the time that keeping the case in the U.S. courts was a significant risk. That if we were unsuccessful at 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 bit of, a fair number of questions about the process here.

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. The other question we get a fair bit is around cost. You know, a bunch of the cost that you have seen us invest in the YPF case was structural. In other words, cost to obtain the interests in the first place. It wasn't litigation cost. Those structural costs don't need to be repeated. 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-$20 million range on an arbitration matter.

That's really where we sit with respect to the next steps on YPF and its litigation. 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. Let's turn to slide 10 and talk a little bit about YPF and money. 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. I really would continue to emphasize that that's entirely a non-cash matter. If you look purely at the cash side of YPF, this has been a very successful investment. We've made a cash profit on it of more than $100 million.

As you can see from our comments here about how going forward this affects our financial statements, there aren't many milestones in arbitration. 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 through yourself and Jordan will be happy to take questions on it. That's sort of where we are. We have a high level of confidence that sometime 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. It's something that's going to take a little bit of time and require some amount of patience.

What that really does for us, while we're obviously unhappy about the YPF result, is it changes the narrative around Burford. You know, 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. 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. 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. That lets us, I think, close that chapter, turn the page and start thinking more about Burford and its core business.

Let's start doing that on slide 11. 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. 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 large shareholders wrote to us recently and they said, "The business ex-YPF is performing really well and we see the stock as wildly undervalued." 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 of them.

They move along the litigation conveyor belt to maturity fairly rapidly and they generate substantial cash flow and strong returns. Because we have the market leading global origination engine, we add materially to that portfolio every year. 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 multi-case arrangements. In actual fact, we have somewhere around 900 cases. A case for us means a substantial complex piece of high value litigation. We're not counting plaintiffs. If we did, because some cases had many plaintiffs, we would be in the many thousands. In short, this is an enormous collection of high value litigation, by far the largest in the world, we believe. 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. 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. They will resolve over the next bit of time, and they will be a desirable source of cash as they do. Let's also look on the left at those undrawn definitive commitments, more than GBP 1 billion now. That's basically something approaching another GBP 2 billion of future cash proceeds as that capital flows out into cases and then returns at our historical rates of return. We already have those cases.

We don't need to do any work to find them. It's a very interesting portfolio from a financial perspective. Speaking of returns, let's have a look at slide 13. 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. In short, we know how to do this, and we have been brought. We have a large portfolio as shown on the right, that translates into accelerating realizations as shown on the left-hand graphic. The all-important question here is around cash, and let's have a look at slide 14. This year is going nicely. We have sight of $280 million in cash already this year.

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 to simply sit and gather dust. Once a 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. Of course, one of the possible outcomes in litigation is that you can lose.

Our whole business is designed to help us minimize losses and pick good cases. That is literally the thing we spend the most time on. 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. As you can see on the right-hand graphic here, it works. Our loss rate, that blue line, is low and stable. If you don't lose, you're going to make money from a case. There are just two questions. How much and when? The how much question depends on whether you settle or whether you win a trial. When you settle, you make somewhat less money for obvious reasons, because you're not taking trial risk anymore, and the defendant expects a discount for de-risking the case.

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 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. We're not complaining about that because settlements happen faster than trials, and they de-risk our positions. In short, this is a very good business, but it is not an easy business. We have spent a lot of time building a high-quality, unique mouse trap, and we are now seeing the benefits of it.

Turning to the when question, this is the vexing part to public investors who like predictable quarterly results and forecast models. This business just can't provide them the way that we would like to. We can provide a lot of predictability around outcomes. As to when the conveyor belt will do its thing, there are too many variables at work, including today, the question of how clogged up the road in front of us is. Our concluded weighted average lives, as you can see, have been pretty consistent and pretty short. The weighted average life of our active capital is longer, as you can see in the bullet on the side, you know, over three years instead of in the middle of the two-year range. It too has been relatively stable.

There isn't really any question that a lot of cash is gonna show up, and it's gonna show up in a reasonably short period of time. Precisely when is harder to say. It would be easier for you and easier for us if that were different. Then, you know, 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? Our modeling says the answer to that question is more than $5 billion. Again, this is not including YPF. The obvious question is why we are modeling 110% ROIC when our historical ROIC is 82%. 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 ROICs across a significant number of small cases turned out to be pretty weak and certainly dragged down our overall returns. Second, we don't yet know if the settlement rate changes we have seen in the last few years are permanent or transitory. 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.

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 have been growing the business significantly, as you can see on the left, the 17% 5-year CAGR, new business generates yet more cash. What we've done here on the right-hand side of the slide is a quick and dirty calculation to illustrate the point. If we have sort of an $800 million new commitments year, and that's perfectly within range for us, ultimately, we'll deploy somewhere around 80% of that commitment. 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. 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, the simple answer is that growth de-levers this business pretty darn quickly. Turning to slide 17, everything that I have been talking about until now is cash. I run the business, and I like to talk to investors on a cash basis, not an accounting basis. 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, that has taught me that accounting numbers are often disconnected from reality. The second is more specific to Burford Capital. There aren't yet comprehensive accounting standards for this asset class, a number of the current accounting choices seem to me to be not very sensible or not very helpful to investors. I focus on cash and not accounting. Here's an accounting slide for those of you who want to look at the accounting numbers. 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.

On an accounting basis, there is an enormous amount of runway here to generate P&L income that will grow shareholders' equity. 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 gonna 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. What all that translates into is the kind of growth that you see in the graphic on the right. It's not just, turning to slide 19, it's not just that we have been successful at doing this and that we're good at doing it.

It's also that there is a structural dynamic going on with corporations that drives the acceleration of their adoption of our products. This data is might be interesting to you. This is from The American Lawyer. 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. What you can see there is basically an explosion of revenue and profits. The chart on the right, just to linger on that is the millions of dollars per partner in law firm profits. These big law firms have gone from sort of $3 million and $4 million of profit per partner to $6 million and $7 million of profit per partner.

That's an average of every partner in the firm. 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. That's great for the law firms, but what does it do for the corporate clients? 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.

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. 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. Let's turn to liquidity and leverage. I'm going to start on slide 20. We've had lots of questions about these topics, and I want to lay out the 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. 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 was 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 non-cash. 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. As we reported previously, we had already concluded before the YPF outcome that the business no longer needed to do that going forward. 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. 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 the 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 us some time on the nuts and bolts of our debt arrangements. 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 gonna work over time to redress 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 1.25 times. 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. The fact that our incurrence covenant is at 2x is certainly a relevant criterion. The bottom line message here is the following: We intend to de-lever over time, but we are not alarmed by the current posture of the business. 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 one notch to BB- minus with a stable outlook. How are we gonna do that? Slide 22.

The core answer is that we are gonna continue to grow the business. 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. 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. 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 dividends, 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 it and do not run their portfolios for income. While we appreciate that some investors do attach significance to a dividend, we would also note, as the slide shows, the de-levering impact of not paying one. 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, and 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 de-lever 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. As we say internally, onwards.

While I've gone on for quite a long time, I will now turn you over to John 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's presentation that I just want to focus a little more on. Number one is new business, which is proceeding at a steady pace. As Chris said, that is the driver of growth and that 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. Third, a word about just a reminder of how strong the portfolio is as demonstrated by the track record we've experienced over time. First, new business. The new business reflects a steady pace. You know, the business development team is humming.

We did $133 million of new definitive commitments, which is a solid start to the year and consistent with the recent first quarter average. The $108 million of deployments are likewise consistent with our recent pace. As Jordan Licht noted, you know, if you look at the average right over the last Jordan Licht hasn't noted yet. Jordan Licht will note over the last 8 quarters, you'll get a sense that that's right on target. We have, as Christopher Bogart mentioned before, a $1 billion, one of unfunded definitive commitments, which continue to drive deployment. As Christopher Bogart said, we don't have to go out and find those matters. We found those matters. We've underwritten, we're in them, the money will go out to generate returns going forward.

That balance, that number is up by more than 40% if you look at compared to 5 quarters ago at the end of 2024. We have grown the portfolio, and that's a significant amount of capital that's going out to deliver returns for us. While we tend to focus on definitive commitments, it's important not to forget about discretionary commitments. We have $600 million around of unfunded discretionary commitments. 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. We find it is much more efficient.

We end up with much better matters, close them more easily when we have an existing relationship and a portfolio set up. When we see something good, we work together with our counterparty to bring it in. We continue to expand our business development globally. We've added people on the ground in Spain and Korea. I'm very excited about how the new business machine is churning basically on all fronts in each of our pipelines, in each of our geographic locales. The second question is: what about the portfolio? You know, 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 the diversification of our business. There were 25 assets contributing to that quarterly figure.

Six of those 25 generated $5 million or more. Two of the 6 generated $20 million or more. Nine of them were from pre-COVID vintages. Remember, Chris talked about the slide as 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 numbers of trials and hearings that are projected to take place or in a position to take place this year, because those are significant catalysts for settlements or resolutions. When we look at the book, 36 trials and merits hearings scheduled during 2026 across our 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 gonna all happen.

Things get pushed, it's a positive indicator. You know, 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 2026. For comparison, in 2025, there were 14 assets that generated 10 million or more, and in 2024 there were 16. 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 maturing 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, in this business, but the portfolio over time has delivered on a consistent basis, that we've had $3.8 billion-plus of cumulative realizations. That figure'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 has, you know, how those two have related to each other, and time will tell if that's a temporary or is a more structural feature. You know, 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. The overall portfolio is very sound, and I'm very excited about it. With that, I will turn it over to Jordan.

Thank you, Chris and John, 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 John just spoke about. We've spent a good portion this morning discussing our disappointment with the recent activity in our YPF-related assets. As you would expect, the judgment reversal had a significant non-cash impact on our financial results. Those numbers will understandably overshadow much of the first quarter activity. Rather than walking through, though, each page of our two segments, the Principal Finance and Asset Management segments, I'm gonna focus on the key highlights and themes associated with the quarter on page 25.

I'll also call out several non-cash items that affected the income statement on some different lines, and I'll, you know, make sure to note what those impacts were as we go through it. Then, at the end, we'll open up for Q&A. John 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 2024 and 2025. 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. It's still an encouraging beginning to the year, reflecting, as John mentioned, the diverse set of cash-generating assets, including two that produced $20 million or more in 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. As John 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, though this period. First, discount rates used to net present value 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 the rate, 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-based compensation was impacted by the decline in our share price during the period. I want to spend a few moments explaining the $19 million charge related to case-related expenditures. These expenditures relate to a previously deployed cost that has been capitalized into the fair value of our assets. Given our ownership position, these costs could 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 modestly since when we first issued these bonds in 2017.

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. 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 the pound appreciation. Overall, liquidity remains strong with $740 million of cash and marketable securities at quarter end. Let's now 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 active 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 these debt indentures. All of that is public and available on our IR website.

The incurrence test is 2.0 times debt to equity compared to our current level of 3.5 times. 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 open up for Q&A.

Thanks very much, Jordan. 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. That's really where we're gonna be focusing on the years to come.

Thank you. We are now opening the floor for question and answer session. If you'd like to ask a question, please press Star followed by 1 on your telephone keypad. That's Star followed by 1 on your telephone keypad. We will pause for a brief moment to wait for the questions to come in. Your first question comes from the line of Timothy D'Agostino of B. Riley Securities. Your line is now open.

Good morning, thanks for taking the questions and thanks for the opening remarks. I guess, you know, thinking forward, when you all think about approaching larger cases or, you know, 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 that, I guess, that unicorn bracket that, you know, are way larger than what you quantify as large cases? I know that's usually around $100 million. Thank you.

Sure. I guess that 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. Yeah, we've got, in round numbers, $100 million invested in YPF, but that's over an 11-year period of hard-fought litigation. I don't know that I You know, I don't think that I would regard another EUR 15 million investment, which was our original disbursement in YPF. I don't think I would necessarily regard that as a, as a unicorn case, even if it came with the potential of a very high asymmetric return.

You know, we are certainly open to doing cases like that from time to time when they present themselves. You know, 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. You know, you know, we've done transactions for clients that have exceeded $300 million in size. Those cases don't necessarily have the same kind of asymmetric returns. They may simply be, you know, strong cases that clients want to monetize. You know, our approach to them 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. To the extent that there is client demand for more capital than that, we have tended to meet that extra client demand using sidecar vehicles. Most recently with our sovereign wealth fund partner and previously with some other private investors as well. I think that's how we would continue to look at that slice of the market.

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

The, you know, the actual number is, you see it on slide 14. What that shows is that the concluded weighted average life has gone up a little bit. You know, it's now sitting at 2.6 years, up from 2.3 years before COVID. 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. Presumably that will continue to go up a little bit because we haven't, of course, resolved all of those cases. You know, even though it feels, you know, anecdotally like things are slower and taking longer, and I think there are certainly anecdotal examples of that.

As I pointed out earlier, we've still got, you know, 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.

Okay, great. Thanks. Taking the questions today.

Sure. Thank you.

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

Thank you. First set of questions are around the $5.2 billion of kind of modeled realizations. I think you just represented the slide from February. I'm assuming the expectations would be staying there. Could you just confirm that? Also, could you discuss what kind of the assumed weighted average life is in that?

I'm gonna defer to John and Jordan on this. I am not certain that I know the weighted average life. I don't and if I do, I'm not sure that it's something that we've said publicly. John and Jordan, do you have any comments on that?

Yeah. We don't As you know, we don't actually disclose a duration estimate associated with our cash flows.

Okay. Is there, I mean,

It sort of goes back to what I said earlier, you know, the how much versus when dichotomy 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.

Yeah. No, understood. 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 finance asset?

Well, what we do when we model that stuff is we model a very wide range of outcomes. In every case, you're gonna have outcomes that include early settlement, later settlement, trial, appeal, and so on. What that does is it gives you actually quite a wide range of sort of scenario outputs that we then weight by probability. The reason, you know, I don't have that number to mind, to hand, and the reason that Jordan doesn't either, is because, you know, there's such variability in case type, and in throughput of where you're headed.

Like, obviously, you know, if you have a case that's filed and then, you know, goes through class certification, which is gonna 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. The, you know, we've published the fact that ICSID says it's got a 4.4-year average, followed by 26 months of annulment if you wanna go for annulment. If you're modeling an ICSID case, if the case doesn't settle rapidly, then you've got obviously a considerably longer duration. It doesn't really work to say, I don't think that it's that helpful to say, "Yeah, portfolio-wide, here's the number," because of the degree of ease and credit variability.

Okay. Understood. Just changing tack here. You mentioned, I think in the presentation, both the ability to aggressively manage operating expenses and also to harvest cash. Could you tell me about the different levers that you have in mind?

Sure. Jordan, do you wanna address that?

With respect to managing the operating expenses, it's something that we've been doing continuously as we monitor and, you know, the cash that goes out the door, whether that's with respect to, you know, day-to-day operating expenses or our long-term growth aspirations. I think that, you know, overall though, you know, 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 aren't extremely active partners to our clients, whether that's corporates or law firms, in thinking through opportunities in which to manage resolutions.

That's something, you know, case management is something that we have done historically and will continue to do as we go forward.

You know, I think we've talked in the past about that even in cases where we obviously don't control settlement, the counterparty of lawyers will come to us to model the potential outcomes. Granularity on particular matters, and they can find that quite helpful and useful in figuring out what's an acceptable strategy towards settlement and to get to yes sooner.

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

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

Got it. Thank you.

Thank you.

Your next question comes from the line of James Bayliss of Berenberg. Your line is now open.

Hi. Morning, guys. Just in terms of quick questions from me. First one, I think earlier on the call you mentioned, forgive me if this is wrong, around 86% of cases against Argentina saw them pay out historically. Does that include international arbitration? If it doesn't, what would that be? 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. Would you also consider a sale of a bundle of cases if there was a buyer out there?

Sure. Taking them in order, the 86% number is in fact international arbitrations. That represents. You can get decent public data on this. There have been, if memory serves, but the number's in the slide, there have been 51 international arbitrations brought against Argentina. 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. You know, you might have an arbitration clause in your employment arrangements or in your, you know, you've got an arbitration clause when you, when you sit down in an Uber. You can't sue Uber in court, you've got to go to arbitration. Those are commercial arbitration.

Those are simply an alternative to litigation where you've got a dispute between two private parties and you're choosing an alternative dispute 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. I believe a treaty entered into between two sovereigns, in our case, one between Argentina and Spain, because Petersen is a Spanish entity, and one between Argentina and the U.S. because of Eton Park. Those treaties permit claims under what is called a public international law regime administered by the World Bank or by the UN or so on. 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.

That's the denominator, is the 51 Bilateral Investment Treaty arbitrations brought against Argentina and 86% of those, it's reported, have had resolutions in favor of the investor. On the directory, question and sale cases, like, you know, 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. That's how you saw us take profit off the table in YPF. You know, that still remains, I think, one of the largest secondary transactions ever done in the space. 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, you know, where investors are still here, in my view, regularly trying to overprice secondary capital for those transactions. We're certainly open to it, but it's not as fluid as one might wish. It's an area that we continue to devote time and effort to.

Got it. Thank you very much.

Thanks.

Your next question comes from the line of Hal Parr of Bank of America. Your line is now open.

Hi, gents. Thanks for taking my questions. Just two from me. 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? Then my other question is just about the shape in terms of that doubling of the portfolio aspiration. You won't give, you know, specifics on timing, but 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 multi-year view? Thanks.

Sure. On the people point, no, and quite the 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. You know, while it's always sad to say goodbye to people that you've worked with for a long time, you know, Craig Arnott has been at Burford for a decade, but he and I actually started working together all the way back, believe it or not, in 1995, when we practiced law together. It's always sad when that happens, but at the same time, it opens the door to our next generation really coming along and moving up.

I'm actually quite excited by the prospect. In terms of doubling the portfolio, you know, I think if you look at the new business numbers that we highlighted today, 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 lofty to do over the course of 5 or 6 years. We have been producing CAGRs that are well in excess of what we would need to produce to just be able to meet that goal. I think that is frankly a largely a business as usual undertaking, while obviously continuing to pay attention to the market dynamics.

Great. Thanks very much.

Your next question comes from the line of Ryan Shelley of Bank of America. Your line is now open.

Hey, guys. Thanks for the color, and appreciate the longer call today. My first question's around the kind of the cadence of commitments. Are you able to provide any color on how you can time those commitments and on when you need to fund them? Just as we think about operating expense going forward here, given where the commitments sit today. Thanks.

Yeah. 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.

Yeah.

So those are commitments to existing cases that we expect to finance over time, and those have been pretty consistent. You know, again, back to the conveyor belt, you know, you have a pretty good sense when you start the case of the rhythm that it's gonna follow and when the spend is gonna go out. You know, litigation spend comes in peaks and valleys depending on what's going on in a 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, we've published those numbers for years, you know, you don't see a massive percentage of that number going out in any given year. You know, I want to say numbers in the 20%. Give or take.

That's sort of what it looks like. The, the other piece of commitments is of course, new business that we do. That new business, as John pointed out earlier, is entirely within our control. We can do lots of it, we can do none of it, depending on what we think at any point are risk tolerance and our cash position and liquidity is.

I would only add to that we have relationships with some firms where the pace at which the $ go out is actually built into it. The 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'll still be caps on stages to make sure that you don't use up the budget too quickly. 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. Thanks. Very helpful. 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, you know, what you would need to be in order to go out and do that? Is that something you'd be considering today, or are there any hurdles before you'd be, you know, consider doing that?

Jordan, you want to take that?

Sure. Look, we've always been active in managing our maturities and purchasing bonds in the open market. If you look at the two last U.K. issuances, we spent some of our cash in advance of redeeming those 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. I guess it's a dynamic view that we continually have compared to, you know, our growth and et cetera. I don't think there's a hard and fast rule, but it's a tool that we've used, you know, over the last several years that I've been here.

Got it. Thanks again.

Okay, this is Josh. I'm gonna 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. Given that people want to look at the accounting, there's not much you can do. You know, we fair value our assets. We engaged in a market transaction with the YPF assets that set a, you know, a clear, you know, market valuation mark that was very high. The, you know, the accounting rules leave you no choice but to take the asset onto your books at that point at a value that's implied by the market transaction. The other valuation rules, including, you know, writing assets up over time based on the passage of time and so on, you know, come in and do their own work.

No, I don't think there's anything you can do differently about that. I do think that at, you know, 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, you know, the simple fact of the matter is, if you were going to do a probabilistic analysis walking into the Second Circuit, you know, you would have said that your odds of reversal were in the, in the single digits. You know Judge Loretta Preska's reversal rate was 4%. The whole Southern District reversal rate is 6%. The market wasn't irrational in how it was valuing the asset. It was just a, you know, a low probability, high impact event that occurred.

Okay. Second webcast question. Your slide 19 shows accelerating legal costs, which you say drives companies towards litigation finance. We're paying these increased costs, so unless we're increasing pricing, doesn't this reduce margins?

John, do you want to take that?

Yeah, yeah, I'm happy to take that. I sort of alluded to it in answering the prior question. I went beyond the question, I guess, and 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'll be a component as well where it's a percentage of the net beyond that. 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 client to come up with budgets that we can predict and that we can hold the lawyers to. We also build it in so that the more the lawyers spend, the larger our profit, which means that we and the client have a strong incentive to monitor the costs and make sure that the lawyers aren't overspending. You know, I'd say that basically the litigation does get more expensive as billing rates go up, and that is a reason why there's greater demand for our capital. But we are able to deal with that additional cost by making more capital. As the question says, it does become inherently more expensive. Every $1 a lawyer spends is gonna mean a profit to us as well as the lawyers' built-in profit.

Okay, 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?

I hope I think and hope the answer to that is no. 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. You know, we put it out in a release a while ago, in fact.

The reason for that is basically that we thought that the portfolio was large enough and the cash generation ability of the portfolio was substantial enough that we didn't need to give people the easy out anymore of just saying, "Oh, well, let's just go and take out some more debt because we've got this deal that we wanna do." 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, you know, there's always the risk of some timing mismatch there, because the incoming cash, you know, isn't the most predictable thing in the world.

That's really the only area of risk that we hit there, I think. 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. Also the structure that the question implies that basically, you know, in Christopher's 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, you know, our weighted average life hasn't changed dramatically, even if COVID slowed it down.

It does sort of explain the moats that we've historically described around our business, that it's 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 relationships and the underwriting team to be able to do it. Generally, to keep the machine going, you have to raise more capital before the money comes back. That's why over the years, we've seen entrants raising too and spending capital, and when they go to raise a 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.

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. That's really a pretty privileged position to be in. That has nothing to do with YPF. 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. There are also lots of opportunities to engage with us, both at investor conferences that are coming up and in one-on-one format. We know this has been a shocking and disappointing time for the last few months.

You know, 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 it's capable of generating from the portfolio that we have been building a little bit out of sight and out of mind, of the market for the last, for the last half dozen years. 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.