Encore Capital Group Inc · NASDAQ:ECPG
Encore Capital — Roth Capital Partners 17th Annual Growth Stock Conference 2005
22 slides from Encore Capital's conference presentation, Feb 28, 2005
Slide 1: Roth Capital Partners 17th Annual Growth Stock Conference
Roth Capital Partners 17 th Annual Growth Stock Conference February 22, 2005 1 NASDAQ: ECPG
Slide 2: Cautionary Note About Forward-Looking Statements
Certain Statements in This Presentation Constitute “Forward-looking Statements” Within the Meaning of the Private Securities Litigation Reform Act of 1995. Such Statements Involve Risks, Uncertainties and Other Factors Which May Cause Actual Results, Performance or Achievements of the Company and It
Slide 3: Encore Capital
50 year old purchaser and manager of consumer receivables portfolios Unique business model Excellent financial and operating results Strong drivers for growth 3 E NCORE C APITAL
Slide 4: Investment Highlights
Growth Industry No barriers to entry - high barriers to long-term success Demonstrated ability to buy right and collect well Process company focused on debt collection Innovations and analysis Multiple collection channels reduces need to acquire new portfolios & increase outbound collection staff Ne
Slide 5: Compelling Fundamentals
Source: Federal Reserve Board, December 7, 2004 $ in billions Non-mortgage consumer debt and charge-off rates Traditional consumer debt continues to grow Other types of consumer receivables are beginning to be sold Automobile deficiencies Telecom Utilities Medical Health club 5 C OMPELLING F UNDAMEN
Slide 6: Business Drivers
Buy Right Collect Well Manage Expenses Challenge Everything Demand Professional and Ethical Behavior 6 B USINESS D RIVERS
Slide 7: Encore's Competitive Advantages
Consumer level analytics Multiple collection strategies Proprietary and dynamic account management software 7 Encore’s C OMPETITIVE A DVANTAGES
Slide 8: Buy Right
Account level valuation provides several competitive advantages Note: All purchases since mid-2000 through 9/30/04. Month Since Charge - off Face Value ($ in Billions) % of Total Face Purch. 0 - 6 $ 2.1 21% 7 - 12 $ 1.0 10% 13 - 18 $ 2.0 20% 19 - 24 $ 0.8 8% 25 - 36 $ 1.9 19% 37+ $ 2.2 22% Total $ 1
Slide 9: Strong Collection Growth
* 1Q ’04 total includes $4 million sale of rewrite business 9 Strong Collection Growth
Slide 10: Collect Well - Unique Liquidation Strategies
Continuous innovation is driving our collection growth 10 C OLLECT W ELL - U NIQUE L IQUIDATION S TRATEGIES
Slide 11: Collect Well - Results
Collection innovation drives our performance improvement ($ in Thousands) (Employees) 11 C OLLECT W ELL - R ESULTS
Slide 12: Strong Financial Results & Momentum
*Excludes one-time items. ($3.7) ($3.9) ($1.0) ($2.2) $4.4 $3.1 $3.3 $3.8 $6.0 $5.6 $5.9 $0.2 $0.5 $1.6 $1.5 ($ in Millions) 12 S TRONG F INANCIAL R ESULTS & M OMENTUM
Slide 13: Strong Financial Results & Momentum
*Pretax Income excludes one-time benefit and charges. The real earnings power not yet realized 13 S TRONG F INANCIAL R ESULTS & M OMENTUM
Slide 14: Strong Financial Results & Momentum - Balance Sheet Improvement
14 S TRONG F INANCIAL R ESULTS & M OMENTUM - B ALANCE S HEET I MPROVEMENT
Slide 15: Actual Results
Our returns are consistently strong. 36 months 24 months 12 months 6 months 97 $3.8 Billion $1.2 Billion $6.9 Billion $ 8.5 Billion Total Face Value 41 171 205 # of Portfolios 0.8x 1.4x 2.6x 3.3x 15 A CTUAL R ESULTS
Slide 16: Average Monthly Collections per Employee
Our Average Monthly Collections per Employee are very favorable. ECPG 1 Monthly Collections per Avg. Total Employees $181,301 2004 YTD Gross Collections (in thousands) 737 Average # of Total Employees 1 Data from 10-Q filing for the period ending September 30, 2004 (9-month period). 16 $27,300 Key M
Slide 17: Annualized Portfolio Turnover
Strong Collections and Judicious Portfolio Buys Create Strong Turnover ECPG 1 Annualized Portfolio Turnover $241,735 Annualized Gross Collections (in thousands) $166,695 Total Inventory (in thousands) $76,328 Annualized Purchases (in thousands) $90,367 Portfolio BOY (in thousands) 1 Data from 10-Q f
Slide 18: We Are Amortizing Our Portfolio Quickly
$334,400 Implied Gross Collections to Realize Book Value (in thousands) $20,144 Avg. Monthly Collections 2004 (in thousands) ECPG 1 Months Remaining to Amortize Book 27% YTD Amortization Rate $90,367 Portfolio January 1, 2004 (in thousands) 1 Data from 10-Q filing for the period ending September 30,
Slide 19: Competitive Comparison: Recent Vintages Are Consistently Strong
Recent Vintages Are Consistently Strong Ratio of Total Collections to Purchase Price by Year of Origin 1 Data from 10-Q filings for the period ending September 30, 2004 (9-month period). 19 C OMPETITIVE C OMPARISON
Slide 20: Management Team
Former CFO of Stellcom, Inc.; Former EVP and CFO of Telespectrum Worldwide Inc.; Former Partner of M&A Services at Deloitte and Touche Paul Grinberg SVP Finance Former Director of Service Strategy at Gateway, Inc. Anna Hansen SVP Collection Operations Former VP of Decision Science for Associates Hom
Slide 21: Future Prospects
Growth Opportunities Innovations and analysis Significant reduction in effective interest rate driven by new financing Continued penetration of alternative asset classes Ample liquidity for complementary acquisitions. Challenges Higher prices for purchased receivables Implementation of SOP 2003-03 M
Slide 22: Roth Capital Partners 17th Annual Growth Stock Conference
Roth Capital Partners 17 th Annual Growth Stock Conference February 22, 2005 22 NASDAQ: ECPG
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