Slide 1: Encore Capital Group, Inc. Q2 2016 Earnings Call
Encore Capital Group, Inc. Q2 2016 EARNINGS CALL Exhibit 99.1
Slide 2: Cautionary Note About Forward-Looking Statements
PROPRIETARY 2 CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS The statements in this presentation that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation there
Slide 3: Encore Update
TT ENCORE UPDATE encore PROPRIETARY 3
Slide 4: Disciplined Pricing, Stable Supply Characterize U.S. Market
PROPRIETARY 4 DISCIPLINED PRICING, STABLE SUPPLY CHARACTERIZE U.S. MARKET Debt buyers continue to exhibit pricing discipline – booking business at higher returns than last year Consumer-centric liquidation programs performing above expectations as liquidations and consumer satisfaction increase
Slide 5: Our European Business Continues to See Higher IRRs and More Growth Opportunities in Spain
PROPRIETARY 5 OUR EUROPEAN BUSINESS CONTINUES TO SEE HIGHER IRR’s AND MORE GROWTH OPPORTUNITIES IN SPAIN As reported, Cabot is the first large debt buyer to achieve Financial Conduct Authority (FCA) authorization Approval carries new expectations which are reshaping and extending already lengthy
Slide 6: Growth of Our Business in Latin America Will Be Dependent upon Performance and Comfort Level
PROPRIETARY 6 GROWTH OF OUR BUSINESS IN LATIN AMERICA WILL BE DEPENDENT UPON PERFORMANCE AND COMFORT LEVEL We remain optimistic about our prospects in Latin America, although we have now prioritized Mexico over Brazil In Colombia, Refinancia’s returns are meeting expectations – market supply exp
Slide 7: Future Platform Initiatives
PROPRIETARY 7 FUTURE PLATFORM INITIATIVES Encore Asset Reconstruction Company (EARC) continues to prepare for business launch, subject to Reserve Bank of India license approval Indian NPL market continues to grow at a 28% CAGR Few meaningful players in the market Banking regulations encourag
Slide 8: Encore's Leverage Ratio Is Significantly Impacted by the Consolidation of Cabot's Debt
PROPRIETARY 8 ENCORE’S LEVERAGE RATIO IS SIGNIFICANTLY IMPACTED BY THE CONSOLIDATION OF CABOT’S DEBT ON OUR BALANCE SHEET Debt and Debt Ratios1 Although we fully consolidate Cabot’s debt on our balance sheet, their debt is non-recourse to Encore Encore With Cabot at 6/30/16 Without Cabot at 6/30/16
Slide 9: CFPB Publishes Outline of Proposed New Industry Rules
PROPRIETARY 9 CFPB PUBLISHES OUTLINE OF PROPOSED NEW INDUSTRY RULES IN PREPARATION FOR UPCOMING SMALL BUSINESS PANEL Outline of proposed new rules provides clarity and removes uncertainty that was over-hanging the company and industry We’ll continue to evaluate the proposed new rules as they are
Slide 10: Detailed Financial Discussion
10 Detailed Financial Discussion
Slide 11: Encore Delivered GAAP EPS Growth of 18% and Economic EPS Growth of 7% in the 2nd Quarter
PROPRIETARY 11 ENCORE DELIVERED GAAP EPS GROWTH OF 18% AND ECONOMIC EPS GROWTH OF 7% IN THE 2ND QUARTER Economic EPS** $1.29 GAAP EPS* $1.14 GAAP Net Income* $30 million Adjusted Income** $33 million Estimated Remaining Collections of $5.5 billion * From Continuing Operations Attributable to Encore
Slide 12: Q2 Deployments Reflect a Diverse Global Business
PROPRIETARY 12 Q2 DEPLOYMENTS REFLECT A DIVERSE GLOBAL BUSINESS Q2-2016 Deployments $M United States $129 Europe $86 Other $18 Total $233
Slide 13: Q2 Collections Reflect Steady Execution and Growth of Our International Business
PROPRIETARY 13 Q2 COLLECTIONS REFLECT STEADY EXECUTION AND THE GROWTH OF OUR INTERNATIONAL BUSINESS Collections by Geography 0 100 200 300 400 500 2 0 1 4 2 0 1 5 2 0 1 4 2 0 1 5 2 0 1 5 2 0 1 6 2 0 1 5 2 0 1 6 Q3 Q4 Q1 Q2 Collection Sites Legal Collections Collection Agencies $M 0 100 200 300 400 5
Slide 14: Lower Costs Led to Improved Cash Flows
PROPRIETARY LOWER COSTS LED TO IMPROVED CASH FLOWS 14 * Please refer to Appendix for reconciliation of Adjusted EBITDA to GAAP $M Quarterly Adjusted EBITDA* TTM Adjusted EBITDA* 247 264 238 246 263 287 274 279 0 50 100 150 200 250 300 350 2 0 1 4 2 0 1 5 2 0 1 4 2 0 1 5 2 0 1 5 2 0 1 6 2 0 1 5 2 0 1
Slide 15: Our Quarterly Revenue Growth Was Driven by Our International Business
PROPRIETARY OUR QUARTERLY REVENUE GROWTH WAS DRIVEN BY OUR INTERNATIONAL BUSINESS Revenue by Geography 15 0 50 100 150 200 250 300 350 2 0 1 4 2 0 1 5 2 0 1 4 2 0 1 5 2 0 1 5 2 0 1 6 2 0 1 5 2 0 1 6 Q3 Q4 Q1 Q2 United States Europe Other $M 289 283 279 291 278 289 265 268
Slide 16: Cost-to-Collect Declined Through Improved Liquidation Programs and Strategic Cost Management
PROPRIETARY COST-TO-COLLECT DECLINED THROUGH IMPROVED LIQUIDATION PROGRAMS AND STRATEGIC COST MANAGEMENT 16 Overall Cost-to-Collect* 39% 39% 40% 42% 39% 38% 38% 37% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2 0 1 4 2 0 1 5 2 0 1 4 2 0 1 5 2 0 1 5 2 0 1 6 2 0 1 5 2 0 1 6 Q3 Q4 Q1 Q2 ⃰ Cost-to-Collect = A
Slide 17: While ERC Declined 3% in U.S. Dollars, It Grew 6% in Constant Currency Terms
PROPRIETARY 17 WHILE ERC DECLINED 3% IN U.S. DOLLARS, IT GREW 6% IN CONSTANT CURRENCY TERMS Total Estimated Remaining Collections 0 1,000 2,000 3,000 4,000 5,000 6,000 June 2013 June 2014 June 2015 June 2016 United States Europe Other 2,741 4,899 5,684 $M 5,537
Slide 18: Encore Delivered Economic EPS of $1.29 in Q2
PROPRIETARY ENCORE DELIVERED ECONOMIC EPS OF $1.29 IN Q2 18 * Please refer to Appendix for reconciliation of Adjusted EPS / Economic EPS measurements to GAAP $1.14 $0.03 $0.02 ($0.09) ($0.05) $1.29 $1.29 $0.11 $0.13 Net income per diluted share from continuing operations attributable to Encore Conve
Slide 19: Summary
PROPRIETARY SUMMARY U.S. Market • Market participants continue to exhibit pricing discipline – returns are higher than last year • Issuers compete for debt buyer capital, effectively lowering prices Cost Management • We are emphasizing strategic expense management and reducing costs in our businesse
Slide 20: Q&A
= encore i “CAPITAL GROUP — Q&A
Slide 21: Appendix
= encore “CAPITAL GROUP —_ Appendix
Slide 22: Non-GAAP Financial Measures
PROPRIETARY 22 NON-GAAP FINANCIAL MEASURES This presentation includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company has included information concerning
Slide 23: Reconciliation of Adjusted Income and Economic / Adjusted EPS
PROPRIETARY 23 RECONCILIATION OF ADJUSTED INCOME AND ECONOMIC / ADJUSTED EPS Reconciliation of Adjusted Income and Economic / Adjusted EPS to GAAP EPS (Unaudited, In Thousands, except per share amounts), Three Months Ended June 30, 2016 2015 $ Per Diluted Share – Accounting Per Diluted Share – Econo
Slide 24: Reconciliation of Adjusted EBITDA to GAAP Net Income
PROPRIETARY Reconciliation of Adjusted EBITDA to GAAP Net Income (Unaudited, In $ Thousands) Three Months Ended 9/30/14 12/31/14 3/31/15 6/30/15 9/30/15 12/31/15 3/31/16 6/30/16 GAAP net income, as reported $ 30,138 $ 27,957 $ 29,967 $ 25,185 ($ 9,364) $ 1,596 $ 26,607 $ 30,833 (Income) loss from di
Slide 25: Reconciliation of Adjusted Operating Expenses to GAAP Operating Expenses
PROPRIETARY Reconciliation of Adjusted Operating Expenses to GAAP Operating Expenses (Unaudited, In $ Thousands) Three Months Ended RECONCILIATION OF ADJUSTED OPERATING EXPENSES 9/30/14 12/31/14 3/31/15 6/30/15 9/30/15 12/31/15 3/31/16 6/30/16 GAAP total operating expenses, as reported* $ 184,064 $
Slide 26: Impact of Fluctuations in Foreign Currency Exchange Rates
PROPRIETARY (Unaudited, In Thousands, except per share amounts) IMPACT OF FLUCTUATIONS IN FOREIGN CURRENCY EXCHANGE RATES Three Months Ended 6/30/16 As Reported Constant Currency % Change Revenue $ 289,442 $ 298,688 3% Operating expenses $ 197,695 $ 203,303 3% Net income* $ 29,588 $ 30,399 3% Adjust