ENCORE CAPITAL GROUP, INC. ACQUISITION OF MARLIN FINANCIAL GROUP February 10, 2014 Exhibit 99.2 |
1 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 expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements may include, but are not limited to, statements regarding our future operating results, earnings per share, and growth. For all “forward-looking statements,” the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including its most recent report on Form 10-K, and its subsequent reports on form 10-Q, each as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements. |
Cabot marked Encore's entrance into the UK market Marlin enhances capabilities, diversification and scale THE MARLIN ACQUISITION BUILDS ON ENCORE’S UK PLATFORM CREATED BY THE HIGHLY SUCCESSFUL ACQUISITION OF CABOT 2 • United two market leaders and created a platform in the UK for consolidation and diversification • Cabot investment has been highly successful to date – 120-month gross ERC of £1.05 billion ¹ – LTM portfolio purchases of £143 million ¹ • Continued strong growth in the UK market expected 1. As of September 30, 2013 |
MARLIN IS A MARKET LEADING ACQUIRER OF NON-PERFORMING, UNSECURED CONSUMER DEBT IN THE UK 3 Impressive growth track record 120-month gross ERC (£m) Market leader in non-performing debt purchasing, with litigation enhanced collections • Long-term, well-diversified ERC • Impressive track record of significant growth Leading compliance track record Key statistics as of September 30, 2013: • • • • • Source: Company information 1. Includes £50M funded by consortium partners 85 170 246 352 2010 2011 2012 Sep-13 Sophisticated, proprietary scorecard to identify optimal litigation quality accounts 79% underpinned by long-term payment plans and 32% secured on property £2.2 billion face value of debt acquired for £264 million 120-month gross ERC of £352 million 462K customer accounts LTM collections of £64 million LTM capital deployment of £115 million 1 |
MARLIN PRESENTS A UNIQUE AND COMPELLING OPPORTUNITY FOR CABOT TO ENHANCE ITS UK MARKET POSITION 4 Deep management bench strength Creates the UK market leader by ERC Strong growth profile Enhanced, sustainable profitability • Increases Encore's exposure to the high-growth UK market • Strong relationships with key vendor banks make Cabot+Marlin well-placed to increasingly become the purchaser of choice • Creates the ability to optimize account scoring and collection channel across both operations • Operational efficiencies and economies of scale • Cabot+Marlin can leverage the full extent of UK market growth with complementary niches • Ability to sustain IRRs on future purchases through incremental litigation collections and other synergies • Valuable additional talent pool with deep industry experience Investment rationale |
COMBINATION STRENGTHENS LEADING UK DEBT PURCHASER 5 Combined ownership structure Key management team Management 43% 43% 14% Ken Stannard Chief Executive Officer Current Marlin CEO Previously Managing Director, Credit Cards, Lloyds Banking Group Managing Director, Capital One UK Head of European Operations, American Express Chris Ross-Roberts Chief Financial Officer Current Cabot CFO Previously Group Finance Director, BPP Holdings 15 years of board level experience Stephen Mound Director and Chief Operating Officer Current Cabot COO 28 years of financial services experience Previously worked at the Co- operative Bank and Littlewoods Shop Direct Group |
THE TRANSACTION WILL POSITION CABOT+MARLIN AS THE LEADER IN THE UK DEBT PURCHASING MARKET 6 120-month gross ERC ¹ LTM portfolio purchases ¹ Source: Company information 1. 2. £ millions £ millions 2 2 Cabot+Marlin Cabot Arrow Lowell Marlin Cabot+Marlin Cabot Arrow Lowell Marlin 1,403 1,051 627 531 352 258 143 122 121 115 As of September 30, 2013, selected peers represent UK debt purchasers with publicly traded bonds Includes £50M funded by consortium partners. |
THE TRANSACTION PRESENTS SUBSTANTIAL SYNERGY OPPORTUNITIES ACROSS ALL OF OUR COMBINED OPERATIONS 7 Cabot's non-paying back-book Marlin's non-litigation back-book Combined front-book Encore's India operations Further operational efficiencies Significant uplift to Cabot's 120- month ERC with Marlin's litigation capabilities expected Encore, Cabot and Marlin's expertise and sharing of industry best practice Opportunity for increased operational leverage Enhanced ability to compete for portfolios and deploy capital Application of Cabot scorecards/models to Marlin back-book |
THE TRANSACTION HAS A FAVORABLE FUNDING STRUCTURE AND FINANCIAL IMPACT TO ENCORE 8 Fully funded by debt at the Cabot level Transaction expected to be accretive to Encore's 2014 EPS • No additional investment from Encore • Marlin's existing bond will remain in place • Equity consideration funded primarily via new bond issued by Cabot later this year – Interim £105 million bridge facility currently in place • Capacity maintained under RCF to execute purchasing plan as usual Gross transaction value of £295 million |
MARLIN PROVIDES AN ENHANCED PLATFORM FOR ENCORE'S SUSTAINED WORLDWIDE EARNINGS GROWTH 9 1. Calculation of EPS excludes one-time transaction and integration costs and non-cash interest associated with the Company's 2012 convertible debt offering Marlin substantially enhances Cabot's position in the UK market Growth Profitability Encore EPS accretion Well-placed to leverage full extent of UK market growth IRRs protected even as competition increases Helps achieve Encore's 15% long- term EPS growth¹ |