Encore Capital Group Inc · NASDAQ:ECPG
Encore Capital — Investor Presentation (September 2005)
24 slides from Encore Capital's investor presentation, Sep 27, 2005
Slide 1: Business Update September—October 2005
Exhibit 99.1 Business Update September—October 2005
Slide 2: Cautionary Note About Forward-Looking Statements
CAUTIONARY FORWARD-LOOKING Certain and expressed 2004 In any 1 light other andof statements all factors person or theother implied significant NOTE or which reports inentity by this ABOUT may such STATEMENTS uncertainties presentation filed that cause forward-looking the byFORWARD-LOOKING objectives
Slide 3: Public Background
Public Background – the Collections (As 2000 0.1x 0.8x 2.1x 3.4x 3.9x 4.0x (LTM Legal Sales Other Collection ¹Industry 2As Since purchasing of of2001 7.8% collections 1.2% ended June company June that leader Channels agencies sites 2002 to 30, time, 30, June Purchase and in 2005) 48.9% 2005 since 20
Slide 4: Strategic Vision
Strategic Leverage Continue Build – 3 Acquire Recruit Differentiated Strategic Organic newVision to top analytics attractively growth businesses acquisitions grow level analytical the (e.g., managers to profitable build centered priced Healthcare (e.g., capabilities theportfolios to Ascension around
Slide 5: Investment Highlights
Investment Recent returns 4 acquisitions Experienced Highlights diversify managementassetteam base and enhance growth Attractive industry dynamics Differentiated analytical acquisition and collections approach Track record of generating superior financial
Slide 6: Experienced Management Team
Experienced Name/position Carl Vice J. President Paul Ron Erich EVP Fritz Alison Robin SVP, John SVP Eric VP 5 Brandon &von Eckhardt C. Grinberg & Chairman and Treiman Heirich Human General Ramsey Chief Pruitt James GM CIO Gregory Dohlen, CFO and Black of Credit Hollywood Former Management CFO Resou
Slide 7: Industry Dynamics: Consumer Credit and Purchased Debt
Industry Consumer 6% Purchased ($ 20% $4.4 1995 Source: 6 billions) annual $27.6 annual 2000 Historical Nilson Dynamics Credit Debt growth $64.0 2005E $1,174 growth Report $70.0 Card 2010E data $1,743 (Issue: Charge-Offs from $2,239 Federal 835,$2,786 June Reserve; 2005) forecasted data from Global
Slide 8: Industry Dynamics: Fragmented Buyers
Industry Few Highly Credit – 7 Most Emergence large originators fragmented buyers Dynamics sophisticated ofhave tend new have industry to limited charged-off specialize increasingly competitors analytic within receivable more asought tools particular than and to 6,500 asset range outsource asset cla
Slide 9: Industry Dynamics: Top Asset Purchasers
Industry Top ($ Asset Asta Portfolio Face Capital 2004 $103 $89 $61 $104 Source: 8 millions) $49 $40 public Funding value 2005 $141 $57 Acceptance invested Company Dynamics Recovery YTD consumer $6,122 filings $4,172 debt $3,600 purchasers $3,250 for LTM ended June 30, 2005
Slide 10: Encore's Focus: Buy, Collect, Manage
Encore’s Focus Strong Consumer Multiple Strategic Buy Collect Manage Demand 9 Right on management Well Expenses Professional collection Differentiated Growth innovation level analytics strategies team and Approach Ethical Behavior to Business
Slide 11: Buy: Purchase Distribution and Analytics
Buy Purchase Months 0 7 13 19 25 37+ Total Balanced Account – Recent ¹Strong 10 All Applies ––12 Provides Enables 6$3.6 Right 18 24 36 purchases $2.2 $15.4 $1.7 relationships Jefferson $2.1 $0.9 $4.9 Since level 23% distribution¹ acquisition to us 14% ability 11% 100% alternative 14% 6% 32% toCharge
Slide 12: Recent Deal Overview: Jefferson Capital Purchase
Recent Deal Purchased Purchase Concurrently Secures Benefits Essentially – Increases Allows 11Allows Initial 5-year New Overview collection Jefferson the large, portfolio forward for price earnings charged-off company fulfills selectivity entered profitable ofCapital flow site with $142.9mm purchase
Slide 13: Collect: Encore's Consumer Collection Approach
Collect Encore’s Consumer Proprietary Call Legal Third-party Mailing Account Continuous 12 center outsourcing Well collections sales collection analysis collections account agency feedback – to Analytical third-parties collections outsourcing systems allocation Collection software Approach
Slide 14: Collect: Monthly Collections
Collect Monthly ($ Q1 ¹2002 13 Excludes thousands) Q22003 Q3 Well collection Q4 sale 2004 –$19.8 Q1 Collections of2005 portfolio Q2 dollars $21.4 Q3 Q4$23.1 Efficiency per ofQ1rewritten employee $22.5 Q2 Q3$25.0 consumer Q4 Q1$23.2 Q2notes $23.0for $22.3 $4.0$27.4¹ million$25.2 $27.3 $25.4 $31.3 $33
Slide 15: Collect: Total Monthly Collections by Channel
Collect Total ($ Jan-02 New 14 millions) channels monthly May-02 Well$25.0 – collections General New Sep-02 $20.0 Channels outbound Jan-03 $15.0 by channel May-03 $10.0 calling $5.0 type Sep-03 $0.0 Jan-04 May-04 Sep-04 Jan-05 May-05
Slide 16: Manage: Gross Expenses and Cost per Dollar Collected
Manage Our Gross ($ Cost Q1 2002 15 millions) Q2 cost per 2003 collections Q3 Expenses dollar perQ4 2004 dollar Q1 collected 2005 Q2 –collected Stable Q3$33.8 Q4 Cost has Q1$35.8 Base remained Q2 Q3$38.7 Q4stable $40.4 Q1 Q2while $47.1collections $46.7 $49.1have $47.7 grown $64.0 by$57.4 108%$59.9 $
Slide 17: Professional Collectors and Ethical Behavior
Professional Significant Encore Hiring Training Compensation – Experienced 16 2004 2000 71% 20% Behavioral 6Background Unlimited Reward months callconsistency focus of center earnings and collectors test concentrated checks Ethical iscollector placed potential retention Behavior on development hirin
Slide 18: Organic Growth: Active Penetration of Asset Classes
ActiveTelecom Penetration Organic Strategic Builds Allows Affords Future Auto Other 17 asset Areas Approach upon entry significant expansion Growth Rationale classes into core of into Utilities Opportunity secured to credit growing /into cross-selling Broaden consumer Student medical card bankruptcy
Slide 19: Ascension Capital Group Acquisition
Ascension Location: Total Provides Leading ¹Strong 18 Assuming estimated cross-selling position an Arlington, Acquisition Capital all additional secured market inGroup, the opportunities Texas growing Provides bankruptcy size: largely Ltd. Number $1.2 untapped and Entry –with accounts $1.4 profitabl
Slide 20: Bad Debt Opportunity: Healthcare and Credit Card
Bad ($ Healthcare Credit Source: 19 billions, billions) debt card Nilson indebt sold—2004 Opportunity 2005E) $1 debt (not statute $39 reports, (publicly including $120company –disclosed) resales) $160 $250 websites, – $270internal analysis, press releases
Slide 21: Access to Capital: Credit Facilities
Access ($ Previous Banco New Initiated: JPMorgan California Guaranty Citibank First Standard Bank Manufacturers ¹Total 20 Excludes millions) Bank Facility $75.0¹ $200.0¹ ofPopular Leumi toAmerica Scotland 15.0 Facility Federal June Bank Capital Bank $27.5 $35.0 15.0 accordion 5.0 USA 30, 7, Bank 10.
Slide 22: Strong Revenue and Net Income Growth
Strong Revenue $18.2 Net ($ 2002-05¹ $0.2 Q1 2002 ¹Note: 21 H1millions) Q2 Income $0.7 2005 2003 Excludes $20.1 Financial Q3CAGR $2.5 annualized Q4 2004 $24.4 Q1 $1.5 one-time 2005 Results =Q2 $27.6 39.7% 108.6% $3.8 Q3$3.3 $28.1 items Q4 Q1 $3.1 $28.4 Q2$4.4 Q3 $29.5 $6.0 Q4 $31.5 Q1 $5.6 Q2$5.9 $4
Slide 23: Strong Balance Sheet
Strong Stockholders’ 2002-05 $19.5 ($ Total 0.6x 0.7x 2002 1.6x 22 millions) $66.6 $179.9 2003 Debt debt $71.4 Balance CAGR /2004 equity $96.0 Equity Sheet =Q2101.8% $113.1 $47.7 20052.4x $41.2
Slide 24: Investment Highlights
Investment Recent returns 23 acquisitions Experienced Highlights diversify managementassetteam base and enhance growth Attractive industry dynamics Differentiated analytical acquisition and collections approach Track record of generating superior financial
Encore Capital Group — Investor Presentation (September 2005) on 6ix