Encore Capital Group Inc · NASDAQ:ECPG
Encore Capital — 4th Annual Credit Suisse Small/Mid Cap Conference 2013
20 slides from Encore Capital's conference presentation, Sep 18, 2013
Slide 1: Encore Capital Group, Inc. at the 4th Annual Credit Suisse Small/Mid Cap Conference
Exhibit 99.1 ENCORE CAPITAL GROUP, INC. THE 4TH ANNUAL CREDIT SUISSE SMALL/MID CAP CONFERENCE September 18, 2013
Slide 2: Cautionary Note About Forward-Looking Statements
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 thereof, or similar
Slide 3: Encore is a leading player in the consumer debt buying and recovery industry
ENCORE IS A LEADING PLAYER IN THE CONSUMER DEBT BUYING AND RECOVERY INDUSTRY We deploy capital to acquire ... and generate predictable cash delinquent consumer receivables... flows over a multi-year time horizon 1 in 7 American consumers 2-3x have accounts with us Total Cash Collections 3.1 million
Slide 4: With a strong domestic and international presence
WITH A STRONG DOMESTIC AND INTERNATIONAL PRESENCE Call Center Site Cabot HQ / Dublin, Ireland Call Center Sites Call Center Site St Cloud, MN West Malling, UK Stratford-upon-Avon, UK Call Center Site Warren, MI Headquarters / Call Center Site Call Center Site San Diego, CA Tampa, FL Call Center / Ca
Slide 5: Encore provides a principled and essential service
ENCORE PROVIDES A PRINCIPLED AND ESSENTIAL SERVICE Contingency Original creditor collection agency Relationship is Collection • 4-6 months • 84 months to transactional time frame recover financially • Attempt to collect during Pressure Partnership initial delinquency cycle • Consumer is “charged- •
Slide 6: Our business principles are built on treating consumers fairly and with respect
OUR BUSINESS PRINCIPLES ARE BUILT ON TREATING CONSUMERS FAIRLY AND WITH RESPECT • Acknowledging limitations of our consumers’ Understanding household balance sheets to align recovery plans our consumers • Deploying specialized surveys to test consumer satisfaction • Built specialized non-collections
Slide 7: Encore has delivered a track record of strong, sustainable financial results
ENCORE HAS DELIVERED A TRACK RECORD OF STRONG, SUSTAINABLE FINANCIAL RESULTS Cash Collections ($M) Cost to Collect 1 (%) -1100 BPS +22% Strong business 948 51.5 50.2 47.6 fundamentals... 761 43.7 42.2 40.4 487 604 355 398 07 08 09 10 11 12 07 08 09 10 11 12 Adjusted EBITDA 2 ($M) Earnings Per Share
Slide 8: Continued to build upon this performance with strong results this year
AND HAS CONTINUED TO BUILD UPON THIS PERFORMANCE WITH STRONG RESULTS THIS YEAR Year over year financial results Increase/ H1 2013 H1 2012 (Decrease) Collections $549 $472 16% Revenue $301 $268 12% Cost to collect 1 37.7% 38.9% (120 bps) Adjusted EBITDA 2 $352 $292 21% Adjusted EPS 3 $1.70 $1.54 10%
Slide 9: Encore has rapidly gained scale and positioned itself for sustained growth
ENCORE HAS RAPIDLY GAINED SCALE AND POSITIONED ITSELF FOR SUSTAINED GROWTH Estimated Remaining Collections in core receivables ($M) PROPRIETARY 9
Slide 10: This scale has been created by market leading investments
THIS SCALE HAS BEEN CREATED BY MARKET LEADING INVESTMENTS Capital deployed in core receivables PROPRIETARY 10
Slide 11: Encore has delivered industry leading total shareholder return over the past 5+ years
ENCORE HAS DELIVERED INDUSTRY LEADING TOTAL SHAREHOLDER RETURN OVER THE PAST 5+ YEARS Total Shareholder Return (Dec. 2007- Aug. 2013) (%) Encore Capital: 30% S&P SmallCap 600: 8% Russell 2000: 6% NASDAQ 2% Financial 100: PROPRIETARY 11
Slide 12: We have pursued deals and initiatives that align with our core business
WE HAVE PURSUED DEALS AND INITIATIVES THAT ALIGN WITH OUR CORE BUSINESS Secured Cover Outsourcing different services assets type of debt Focus on bankruptcy Performing Bankrupt assets accounts Expand geographically New asset International classes PROPRIETARY 12
Slide 13: The Asset Acceptance deal is well aligned with our strategy and adds $1 billion to our ERC
THE ASSET ACCEPTANCE DEAL IS WELL ALIGNED WITH OUR STRATEGY AND ADDS $1 BILLION TO OUR ERC Largely satisfies our 2013 purchasing goals with attractive returns Allows us to be selective in purchases for the remainder of the year Able to leverage best practices across the two platforms to drive synerg
Slide 14: We have made significant progress executing our plans for Propel
WE HAVE MADE SIGNIFICANT PROGRESS EXECUTING OUR PLANS FOR PROPEL Our plan What we've delivered 1 • Working to penetrate the • Developed & implemented Existing 80% of the Texas market model for direct mailing market that doesn't use tax lien • Started outbound calling transfers w/existing Encore faci
Slide 15: Cabot is the leading purchaser of debt in the U.K.
CABOT IS THE LEADING PURCHASER OF DEBT IN THE U.K. • Deploy Encore's superior analytical capabilities to the Leverage Cabot platform Encore's • Focus on improving account Market leader in U.K. debt management analytics segmentation and specialized • Over 14 years of collections growth collection str
Slide 16: Well positioned to maintain momentum and continue delivering top quartile TSR
WE ARE WELL POSITIONED TO MAINTAIN OUR MOMENTUM AND CONTINUE DELIVERING TOP QUARTILE TSR Top Quartile Total Shareholder Return Growth, Margin Expansion, Free Cash Flow, PE Multiple Expansion 1 2 3 4 Superior Operational Scale Strong Capital Extendable Analytics & Cost Leadership Stewardship Business
Slide 17: Appendix
APPENDIX eS oe PROPRIETARY
Slide 18: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA Reconciliation of Adjusted EBITDA to GAAP Net Income (Unaudited, In Thousands) Three Months Ended Note: The periods 3/31/07 through 12/31/08 have been adjusted toreflect the retrospective application of ASC 470-20. All periods have been adjusted to show discontinued
Slide 19: Reconciliation of Adjusted EPS to GAAP EPS
RECONCILIATION OF ADJUSTED EPS TO GAAP EPS Six Months Ended June 30, 2013 2012 Per Diluted Per Diluted $ $ Share Share Net income from continuing operations 30,460 $1.24 37,096 $1.44 Adjustments: Convertible notes non-cash interest and issuance 1,000 $0.04 cost amortization, net of tax Acquisition r
Slide 20: Reconciliation of Adjusted Operating Expenses
RECONCILIATION OF ADJUSTED OPERATING EXPENSES Reconciliation of Adjusted Operating Cost to GAAP Operating Expenses (Unaudited, In Thousands) H1 H1 2007 2008 2009 2010 2011 2012 2012 2013 GAAP total operating expenses, as $201,849 $216,900 249,782 $269,952 $328,566 $401,696 $194,203 $232,110 reported
Encore Capital Group — 4th Annual Credit Suisse Small/Mid Cap Conference 2013 on 6ix