Encore Capital Group Inc · NASDAQ:ECPG

Encore Capital — Investor Presentation (May 2011)

20 slides from Encore Capital's investor presentation, May 11, 2011

  1. Slide 1: Encore Capital Group Investor Presentation

    Exhibit 99.1 CAPITAL ENCORE Encore May 11,Capital 2011 GROUPGroup Investor Presentation

  2. Slide 2: Cautionary Note About Forward-Looking Statements

    CAUTIONARY FORWARD-LOOKING The “anticipates” These harbor achievements risks, each CAPITAL 2ENCORE statements as uncertainties statements for it may forward-looking GROUP or of be in the NOTE the may amended this and negation Company presentation include, other ABOUT STATEMENTS from statements there

  3. Slide 3: Investment Highlights

    •INVESTMENT CAPITAL 3ENCORE Analytic Favorable Operational Strong performance insights GROUP supply andHIGHLIGHTS financial inform andisdemand expected our leverage valuation dynamics to continue is increasing, and have operating existed largely strategies since due2008, to and thewith success allow

  4. Slide 4: A Leading Player in the Consumer Debt Buying and Recovery Industry

    Revenue As 5% •95% Global Debt Bankruptcy St San Phoenix, Delhi, Arlington, Call Ascension Headquarters/ CAPITAL 4ENCORE Acquired Purchase Robust Invested Process Proprietary Operational Cloud, ofDiego, Center Purchasing March India Capabilities business AZ Composition secured MN ~$1.9 IS GROUP TX a

  5. Slide 5: Strategic Decisions Made Over the Past Decade Demonstrate Our Ability to Foresee

    STRATEGIC Emerging Overconfidence Attractive 2001 Demand •Supply with CAPITAL 5ENCORE Hired Created Between In late 2008 2009, February Prudential 2002 first 2005, we first 1st Market we Opportunity 2005 GROUP 2003 statisticians built generation 2010, ramped DECISIONS and weand 2004 established and

  6. Slide 6: These Decisions Are Driving Strong Results

    THESE YOY ($000s, Q1 Collections Revenue Adjusted EPS *Purchases performance CAPITAL 6ENCORE Adjusted 10$0.44 Growth Q1except DECISIONS $87,338 EBITDA* 11 $81,632 GROUP $0.54 EBITDA $141,267 of 2009 EPS the $1.37 $110,303 2010 $90,675 Company. and $82,588 isARE $191,073 a$1.95 ratios) Annual non-GAA

  7. Slide 7: We Have Significantly Increased Both Operating Cash Flow and Cash Collections

    WE Adjusted ($ $650 Gross CAGR: *2007 performance ** CAPITAL 7ENCORE Adjusted millions) LTM HAVE $550 2008 Collections 19% 26% data EBITDA* GROUP $450 2009 EBITDA SIGNIFICANTLY of as the of $350 2010 Adjusted 03/31/2011 Company. and isLTM** $250 a Gross non-GAAP EBITDA $150 See INCREASED Collections

  8. Slide 8: While Enhancing the Future Value of the Company

    WHILE Annual ($ $1,600 ERC 2006 CAPITAL 8ENCORE millions, Net 2007 $1,400 Estimated ENHANCING Debt GROUP 2008 at end $1,200 2009 Remaining of period) $1,000 2010 THEQ1 FUTURE $800 Gross 2011$600 Collection VALUE $400 $200 (ERC) OF THE $0andCOMPANY Total Debt

  9. Slide 9: Our Current Estimate of Remaining Collections Is Conservative Given Our History

    WEmillions, Cumulative ($ Actual $- $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500 $2,750 $3,000 $3,250 $3,500 Initial Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 CAPITAL ENCORE 9Mar-11 BELIEVE projections cash Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-

  10. Slide 10: Market Dynamics Continue to Be in Our Favor

    MARKET Charge-offs Supply Demand Few Continued Consumer Our Significant Both CAPITAL ENCORE 10 models players in more our increasing, GROUP credit performance exit DYNAMICS regulatory industry continue remain with closely ofcontinues access large elevated albeit and managed toand players, remains pr

  11. Slide 11: Our Consumers Have Shown They Are Resilient

    OUR CONSUMERS Overall 11 Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan 2011 2010 2009 2008 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% 1.60% 1.70% payer rate for HAVE all active SHOWN inventory THAT THEY ARE RESILIENT DESPITE THE MACROECONOMIC ENVIRONMENT

  12. Slide 12: Consumers Partnered With to Retire Their Debt

    AS Consumers -Q 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2006 CAPITAL ENCORE 121 2001 A Q3 RESULT, Q2 2006 GROUP with 2001 Q4 WE whom Q3 2006 HAVE 2001 we Q1have Q4 2007 BEEN 2001 partnered Q2 ABLE Q1 2007 2002 TO to Q3retire ACCELERATE Q2 2002 2007

  13. Slide 13: We Have Taken a Leadership Role: Consumer Bill of Rights

    •–WE midland mcm CONSUMER In their productive stating new d. information, Article a. Employees’ b. c. options CAPITAL ENCORE 13Clearly Gives Positions No Cessation At if Our All When Before allHAVE any address. debt, the interest systematic that collection employees the 1: 2: consumers will debt cre

  14. Slide 14: Our Operational Strength Is Based Upon Four Strategic Priorities

    OUR OPERATIONAL ENCORE’S ANALYTIC CONSUMER COST PRINCIPLED CAPITAL ENCORE 14 LEADERSHIP GROUP STRATEGIC STRENGTH INTELLIGENCE INTENTSUCCESS PILLARS IS BASED UPON FOUR STRATEGIC PRIORITIES

  15. Slide 15: Our Analytic Insights Allow Us to Match Our Collection Approach

    OUR Willingness Is Ability Does Strong LOW HIGH Focus Offer Our Remind Hardship CAPITAL ENCORE 15 theattempts the ANALYTIC significant debtor on partnership toconsumers debtor payment strategies pay GROUP to willing to(Capability) pay contact have discounts INSIGHTS plans opportunities oftothe their

  16. Slide 16: Our Core Analytic Capability Extends Throughout Our Ownership Period

    OUR Core Collections Consumer Market Portfolio Pre-purchase Cross-channel Letter Agency Legal Call Direct Collection No Continuous CAPITAL ENCORE 16 effort effort Centers competency ANALYTIC effort Outsourcing effort Mail data effort valuation GROUP Agency behavior model operations feedback model an

  17. Slide 17: We Fundamentally Changed the Cost Structure of the Company

    WE Variable Global (%) India Total 25 20 50.2 51.5 15 47.6 10 543.7 40.0 *2007 CAPITAL ENCORE 1738 Represents 54HAVE 50 46 42 2008 CTC Call Call cost Center GROUP (RHS) 2009 FUNDAMENTALLY Centers salaries, to collect 2010 (LHS)* (LHS) variable Q1 * 2011compensation CHANGEDand THE employee COST STRUC

  18. Slide 18: Collections Driven by Our Analytics and Our India Center

    DRIVEN Collections ($ 2007 $126 $157 $186 $268 ~$340 U.S. India Percent CAPITAL ENCORE 18 millions) 2008 ofBY Total: GROUP 2009 from OUR2010 10% allANALYTICS call 19% 2011E centers 30% 44% AND 50% OUR INDIA CENTER, WITH THE LATTER PRODUCING HALF OF CALL CENTER COLLECTIONS

  19. Slide 19: Summary

    •SUMMARY CAPITAL ENCORE 19 Analytic Favorable Operational Strong performance insights GROUP supply and financial inform andisdemand expected our leverage valuation dynamics to continue is increasing, and have operating existed largely strategies since due2008, to and thewith success allow a few for

  20. Slide 20: Appendix: Adjusted EBITDA Reconciliation

    APPENDIX: Reconciliation (Unaudited, Three GAAP Interest Contingent Pay-off Provision Depreciation Amount Stock-based Adjusted 3/31/07 6/30/07 9/30/07 12/31/07 3/31/08 6/30/08 9/30/08 12/31/08 3/31/09 6/30/09 9/30/09 12/31/09 3/31/10 6/30/10 9/30/10 12/31/10 3/31/11 Note: CAPITAL ENCORE 20 The Month

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