Encore Capital Group Inc · NASDAQ:ECPG
Encore Capital — Investor Presentation (November 2011)
17 slides from Encore Capital's investor presentation, Nov 2, 2011
Slide 1: Encore Capital Group
Exhibit 99.1 November 2, 2011 ENCORE CAPITAL GROUP
Slide 2: Cautionary Note About Forward-Looking Statements
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 “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expre
Slide 3: Investment Highlights
3 INVESTMENT HIGHLIGHTS • Investments made over the past few years have driven significant improvements in collections, cash flow and earnings • Difficult regulatory environment being managed proactively • Demonstrated ability to raise and profitably deploy capital in favorable and unfavorable busin
Slide 4: Encore is a Leading Player in the Consumer Debt Buying and Recovery Industry
4 Call Center / Technology Site Call Center Site Ascension Call Center Site Headquarters/ Call Center Site Call Center Site 2012 ENCORE IS A LEADING PLAYER IN THE CONSUMER DEBT BUYING AND RECOVERY INDUSTRY Global Capabilities St Cloud, MN Arlington, TX Phoenix, AZ Delhi, India San Diego, CA Debt Pur
Slide 5: Encore Has Generated Strong Results Despite the Macroeconomic Downturn
5 ENCORE HAS GENERATED STRONG RESULTS DESPITE THE MACROECONOMIC DOWNTURN ($ millions) * Adjusted EBITDA is a non-GAAP number. The Company considers Adjusted EBITDA to be a meaningful indicator of operating performance and uses it as a measure to assess the operating performance of the Company. See R
Slide 6: Our Consumers Have Shown Resilience Through Increased Payer Rates
6 Metric Recent trend • Payer rates • Modestly upward • Average payment size • Stable • Payment style • More payment plans • Broken payer rates • Mild improvement • Settlement rates • Stable OUR CONSUMERS HAVE SHOWN THAT THEY ARE RESILIENT AS EVIDENCED BY THE INCREASE OF PAYER RATES Overall Payer Ra
Slide 7: We Have Fundamentally Changed the Cost Structure Over Four Years, Led by India
7 WE HAVE FUNDAMENTALLY CHANGED THE COST STRUCTURE OF THE COMPANY OVER THE PAST FOUR YEARS, LED BY OUR INDIA CENTER Overall Cost-to-Collect Collections from all Call Centers Percent of Total from India $126 $157 $186 $268 ~$340 10% 19% 30% 44% 50% ($ millions)
Slide 8: Diversified Purchase Activity and Conservative Projections Have Resulted in a Reservoir of Future Collections
8 DIVERSIFIED PURCHASE ACTIVITY AND CONSERVATIVE PROJECTIONS HAVE RESULTED IN A RESERVOIR OF FUTURE COLLECTIONS
Slide 9: Our Business Model Provides the Consumer With Time to Recover
9 OUR BUSINESS MODEL IS CRITICALLY IMPORTANT, AS IT PROVIDES THE CONSUMER WITH TIME TO RECOVER Timeframe Process and relationship with consumers Outcome • Charge-off threshold extends a maximum of 6 months Transactional • Attempt immediate resolution during delinquency cycle (days 30 – 180) • Consum
Slide 10: Leadership Stance: Industry-First Consumer Bill of Rights
10 WE HAVE TAKEN A LEADERSHIP STANCE BY OUTLINING OUR CORE PRINCIPLES IN AN INDUSTRY-FIRST CONSUMER BILL OF RIGHTS
Slide 11: Since 2000, 95% of Our Portfolio Purchases Have Been Profitable
11 Since 2000, 95% of our portfolio purchases have been profitable PURCHASING ACCURACY AND OUR ANALYTIC OPERATING MODEL HAVE LED US TO CONSISTENTLY OUTPERFORM OUR PEERS Cumulative Actual Collection Multiples by Vintage Year as of June 30, 2011 (Total Collections / Purchase Price) Source: SEC Filings
Slide 12: We Have Consistently Outperformed Our Peers and the S&P 500
12 WE HAVE CONSISTENTLY OUTPERFORMED OUR PEERS AND THE S&P 500 Source: FactSet (10/28/2011) Total Return 1-Year (%) 3-Year (%) 5-Year (%)
Slide 13: We Are Well Positioned to Capitalize on a Changing Environment
13 WE ARE WELL POSITIONED TO CAPITALIZE ON A CHANGING ENVIRONMENT • Diversified purchase model – Ability to increase purchases is a result of having capabilities across asset classes, age and balance • New operational initiatives – Insourcing of legal function over time will drive increasing margin
Slide 14: Appendix
APPENDIX
Slide 15: Appendix A: Cumulative Collections by Portfolio Vintage
15 APPENDIX A: CUMULATIVE COLLECTIONS BY PORTFOLIO VINTAGE Cumulative Collections through September 30, 2011 (000’s) Year of Purchase Purchase Price <2005 2005 2006 2007 2008 2009 2010 2011 Total CCM <2005 $385,474 $749,791 $224,620 $164,211 $85,333 $45,893 $27,708 $19,986 $12,084 $1,329,626 3.4 200
Slide 16: Appendix B: Reconciliation of Adjusted EBITDA
16 APPENDIX B: RECONCILIATION OF ADJUSTED EBITDA Reconciliation of Adjusted EBITDA to GAAP Net Income (Unaudited, In Thousands) Three Months Ended Note: The periods 3/31/07 through 12/31/08 have been adjusted to reflect the retrospective application of ASC 470-20 3/31/07 6/30/07 9/30/07 12/31/07 3/3
Slide 17: Appendix C: The Company's Financial Results Over the Past Two Years
17 APPENDIX C: THE COMPANY’S FINANCIAL RESULTS OVER THE PAST TWO YEARS HAVE BEEN STRONG 2010 2009 YOY Growth Annual Variance 604.6 116.8 24% 487.8 Collections 381.3 64.9 21% 316.4 Revenue 346.7 82.1 31% 264.6 Adjusted EBITDA* 362.0 105.3 41% 256.6 Purchases 1.95 0.58 42% 1.37 Diluted EPS ($M, except
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