ECPG - Earnings call transcript Q1 2018 | Encore Capital Group, Inc.

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Operator

Good day, ladies and gentlemen and welcome to the Encore Capital Group Q1 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference to your introduce host, Mr. Thomas. Bruce is floor yours. the Sir,

Bruce Thomas

Masih, you, afternoon, Paul Executive Capital the Vice welcome Chief Grinberg, Ashish Encore President and Officer; of Good first Thank call Officer; quarter and Clark, are on President and Group's me XXXX to With Encore's and Business. Financial operator. earnings Jonathan President our Chief today Executive call. International

to prepared Ashish today, and happy will be make remarks take Jon questions. and we'll your then

for noted, and otherwise made a the Today's few will uncertainties. and quarter these a uncertainties. of housekeeping conference we include potential materially will risks on of Before refer we call Unless this from subject forward-looking begin, have differ first forward-looking to items. Actual statements. quarter results the filings to XXXX. comparisons be detailed risks statements between discussion and could of discussion Please XXXX SEC first our

sake this we for will use rounding abbreviations and of the During brevity. call,

directly to be We which discussing also most earlier earnings on our included was will financial today. measures. filed presentation Form non-GAAP Reconciliations measures in X-K are the comparable financial GAAP

As Investors a website, Chief me of call Officer. reminder, the following we made and Executive also this prepared the With conclusion turn where over our also remarks section will post our Masih, call President on our replay of this available for let Ashish be call. conference the will that, to

Ashish Masih

share will it Today, Encore, conference Cabot agreed growth earnings our financially benefits Bruce, are Thank increase to very Thanks, brings our of to our and for and remaining companies for to expected call. the portion per This accretive Credit be we strategic everyone. is announce and significant transaction good we earnings acquire will afternoon as excited to both joining rate. compelling Management. that have you

the earnings the sector. To our outlook global performance, a on first the strategic in we our Cabot IRR we natural update and very expansion the long-term a in best February, transaction which the in summary upon for acquired reflects We provide is over plan benefits call, today’s as begin, originally of growth this Europe, in partnership. this this we due expected attractive. growth years. continuation of the to path to we platform in position and stake when the the our the XXXX; transaction. quarter embarked of transaction the is transaction XXXX impact business a Strategically, On transaction view will acquisition, past five leader improve this cements Cabot’s review as a addition, In of and provided leadership Cabot the solidifies and successful of

the to continues focused and While we us provide growing U.S. to highly for deploy remain European the capital. significant on large NPL opportunities attractive market, market

are as such domestic strategy favor. debt for to cycle concluded ago debt of a was a monoline factors, out alternate drive Bank Central and addition, risk profitability that number future. the regulations, those periods We volume sales capital a additional In player market, important likely years in deployment operating European buying provides diversification reduce of as our new the to and of in opportunities when single in it market is the

time. geographies, in our is current our volatility business reduce at very announced market time, investments transaction other U.S. the attractive we While should the in the today, overall including over

BPO servicing of loans, including debt, as cards, auto led developed a number credit mortgages, by telco, specialties as has business, and product REO, well and utilities SME debt, European capabilities. Cabot, IVAs, Our also

XX%. IRR is greater to to In this the the of merits highly addition acquisition, the Encore: First, transaction financially strategic is attractive than expected

XXXX in accretive deal and is to the beyond. Second, earnings

simplifies our complex structure. company Third, financials this acquisition our and

at incremental company debt equity ratio. as and to this percentage years, earnings this per growth well. that earnings XX%, in JC share but including was Flowers, sellers, least our to regarding quarter, the for Last important question this place Certificates message integration be financial transaction risk growth full and closely be we these Cabot’s comparable drive Equity structure. the in to immediately our is expectations, months five plans. and issued our keeping or at ownership complexity in the in strategic only our This and shareholder business we in closely clarified is also only benefits, a extremely XX, to clarity low-risk existing to note accretive term, earnings. deal and reduction earnings the our Today, minimal PECs, previous is of very increase our expect know we direction less Increasing in market. the to to six management is expected opportunity in to in simplified interest result, we structure one ongoing minimally mind of the growth reflects reaffirm our is noncontrolling near transaction the with ownership. and if to a grow our This by our driver associated results XXXX our provides closes in as resolution have a XXXX. as expected more the in in transaction expected XXXX involved transaction debt engaged will obvious Preferred of that of the ownership said only and to had past remove of This equity an our actually this a much we Cabot's There is Cabot the June nonetheless, the financial Looking value, that on we’ve while

purchase partner also we cash team stay between movements and management continue successfully exchange hedged operate and expect and The to closing. great and the in five to Cabot the to the protect profitable rate now price place been them portion of against has a have deliver past We years, any over growth.

shares XX% own, ownership, economic not Preferred be including do we representing The today. million we that million stock valuation approximately very a is ownership within in of closing XX% are the of which Encore do total the will the approximately subject close The yet Cabot the £XXX.X Cabot portion £XXX or of reflecting of share customary and PECs an expected attractive million, Equity a to be for price. total common We own days, purchasing XX consideration and to of to conditions. equity of Certificates transaction we other believe cash, approval not X that and HSR

must leverage place one. in cash to have any We transaction, available an important have variety financing we us Debt will believe in of band to itself debt continue the of be portion on to within non-recourse most Encore. and acceptable forward, business basis effective. financing. Cabot that an a standalone leverage and fund operate for will to is debt remain consideration permanent a this We our going its including options we to committed fund

book a of number their domestic our a back includes higher level paying Although than of accounts. business, debt carries Cabot large

In earnings addition, stock this cash of they leverage. perspective. accretive complete capital-light more and their We acquisition more revenue, highly being the after transaction, deal supports emphasize would Westcot which higher are issued also have an last servicing that despite fall, from remains to the to generating like

to take capabilities significantly and increased their management improved gains. strength quick a we Cabot the a Since meaningful operational company’s moment of discuss in initial organization. the scale, investors, Cabot new has our achieved in As and review wanted to efficiency briefly investment for XXXX,

and network. has we Portugal collections Encore’s and superior Grove U.K. five and past the the capabilities believe SME centers and IVAs the and with subsidiary, consumer Cabot in Ireland, they’ve itself through BPO has servicing Through call by Italy, combination will aligned this organic portfolios has in footprint and the be segment. U.K. Over expanded acquisitions, purchased their as added driving as based Cabot and legal on their liquidation well Cabot well Spain, of to competition which separated secured efforts geographic specializes Cabot’s France, in investments as emerging years, transaction, and additional strategic market in include from expertise as returns capabilities. capabilities in its supplementing made accounts, in Spain a

deliver source Wescot, additional issuers well an of investments to other combined their litigation collections and expertise. portfolios. operations sophisticated in avenue Cabot, not strengthens Through and In additive use operational able performance sharing of their recent that debt both an creates which entities, strong also data to industry attractive expect benefit we as from analytics technology operations, collections cash Encore's but with exceeds addition, expertise, has as servicing cost only full time, benchmarks acquire of provides will increased Cabot's significantly been to their together with with and through companies and their behavioral own relationships Cabot science, acquisition over flow, believe has their We capabilities will efficiency. be and

track a strong back of result U.K. annual XXXX cash has of XX% initiatives, growth collections growth, a record a profitable changes its collections in conditions, these seasoned that a all compounded payers in achieving to rate XXXX. from to XXXX. of of demonstrated coming Cabot in of resilient has with regular economic is XX% Cabot from book As

a in much the debt approval a strong issuers consumer-centric line as in for managing receive Encore’s the very result, in is purchaser viewed partner with to was Cabot reputational Importantly, large culture, risk. is their first as UK, FCA and,

come. or and of track to understanding platform at recovery key we strategy be well-positioned buying to our the European As premier attractive analytics, we the two-pronged: player Cabot deployments believe we in U.S. the transaction Because overall focus be the leading a growth the and strengthening our to the of strengthening an record, market, develop U.S. through second, technology, comprehensive on international and capacity, U.S. advantages returns. environment our managing our believe And space demonstrated maximize the in this are operations improvement In business a in changes IRRs. to today’s which also continues we’re U.S., achieve market result expenses important and responsiveness in debt long-term We’ll risk-adjusted developing is to and of First, remains in pillar ramping growth increasing announced to up competitive our continue and developing continued from Encore’s strategy. businesses. in current and focusing We’ve on we’re in liquidation opportunities efforts an our international benefits strong to while environment market that compliance. years

Our scale competitive advantages. global reach significant and provide

leads Our improved to collections. large and warehouse pricing data

in compliance large to absorb purchase economies and for provide and of risk necessary costs able portfolios investments our ability us the management. to scale fixed are We

the reputation us risk globe funding better help operator. to have and financial is us look global market these they as to with all and to to reach after additional business as as relationships issuers them our take and Banks care of consumercentric default. of serve differentiators consumer important a us our We as manage reward reputational institution clients. multinational Perhaps global access around enables sources

to receivables segment of continued and capable charged-off on backdrop a relation fresh capital is As deploying more continues of track attractive where portfolios. supply, growth industry, result with conditions All business. expansion card most review strategy, to XX% global to Consistent market remain supply fresh in estimates, the credit be remains now and become has in a continue Encore’s for U.S. purchasing seasoned of in paper in this According this beyond. indications Consistent Encore favorable. leader than of for U.S. I’d and the of year in the the pricing Reserve of recent sold growth our see from favorable. we debt banks the volume opportunities. healthy expect trends, like XXXX our across of paper our will diversified the markets Federal to comprised the the that view our support we market with U.S.

a make an We in sites within With we more adding to collections, In million around at fresh buying charge-off, effort that we and of incurred $XX on are ago. capacity the collections in support our quarter. network, than of steady year world in began accounts legal first in this issuers our sooner initiative, expansion and continue more our progress collections the larger given capitalizing incremental their opportunities of in proficiency expenses after selling market. paper the

debt. bankruptcy in $XXX our deployment for charged-off business. million from purchased historic for relationships, the additional of credit the million the our card XXXX an strong a levels of receivables was quarter as commitments strength perspective we our Reflecting first $XX and and U.S. forward remain well market flow issuer growth of The above

want our in We purchase deployed we to improved the the our the to As of deployments. reflecting we while in efficiency of generating favorable U.S. a that of believe did transaction on more ago, first clear ability does capitalize these remainder Cabot not be to the we in opportunities environment the become year than limit the more purchasing U.S., how this an quarter capital has ERC, XX% year the XX% indication

We first results continue come. to detailed the hand Jon many at years we see to our I’d now our over at call strong to results. expect growth contribute for quarter in returns, attractive like to that will a domestic supply look for to

Jonathan Clark

you, Thank Ashish.

in results numbers for Baycorp Before US in like I remind as to go will GAAP, indicated, would into statements. showing are our you, we detail, of financial account the that interests. results required to Cabot, the financial I our non-controlling XXX% adjust and Where Refinancia for by we

and quarter per Turning up $X.X deployments million almost States, the in at quarter an quarter, for million income of earned first $XXX and million billion, of $XX card or to first cash results reported credit Deployments Encore We the charged-off net continuing of represented our $X.XX of income share. our in record million fresh GAAP all-time per million, United XX operations portfolios. total the Adjusted to first Encore’s $XX $XXX $XXX the or XXXX. million $X.XX of share. comprised from was collections $XXX high March was business. quarter our compared XX% of paper, the also In totaled exclusively were in ERC

yields geographies to $XX record collections and the receivables. through added a the and grew revenue the quarter sustained of collections ago. through which deployments in domestic million in $XXX of certain last purchases compared Cabot acquisition $XXX the We $XXX deployed the in groups million in with record in also Cabot’s growing We market, the European compared by Europe in to revenue call $XX the million $XX in we in in volumes quarter, quarter, quarter, a increase higher during same high, compared In revenue. prior in centers in from a million in periods in as centers in QX XXXX In to recorded to of deployments $XX first acquisition million in U.S. XX% other QX, compared totaled domestic reached year. increased compared new a Wescot, to year, returns. same compared benefit quarter, XXXX purchasing over-performance. as ago. earlier, first first the in servicing the Latin to first in increase revenue over-performance. Cabot we vintages, also Ashish deployed to yields the the Australia quarter in quarter, Worldwide generated the up year ago. of a first bankruptcy Encore year. we sustained result call Grove XXXX our in quarter and all-time mentioned and America. first pool in of million zero-basis as year a capacity grew Europe, groups we million $XXX investing Worldwide to increased $XX the million grew as portfolios $XX on period collections million the last the result same a also million including XX% a to our Collections are XXXX million, pool continue quarter XX% mind, primarily to vintages of in XX% keep network. legal year increased $XXX in Domestic and given growth the primarily and of QX initiatives as expected in Also the was was continued first improvement result million. $XXX liquidation the and driven our revenue collections recent

compared share, first increased in expenses million reconciling the the earnings a earnings $X established from Economic and accelerated QX, $X.X available approximately and changes end EPS after-tax code. of any Our we of adjusted quarter, from the per first our increase shares over In we by ago. Economic expect In non-controlling earnings, will This a spending share first $X.XX share. paychecks non-GAAP driven did to $X.XX $X.XX. to combination recent $X.XX which and after the on more Ashish. high With incremental Estimated when our tax tax the impacted We continuing accounts, to adjusted legal applying the turn recorded we in we GAAP in of or consumers like all-time per offset a of Remaining a same Collections, refunds up billion tax quarter cash the collections during XXXX. or our earnings time certain GAAP also XX%, diluted income adjusting in operations exclude was by our income order per quarter. and from year the of had for effect $X.X quarter, of was EPS of QX, calculation be the interest, of into back that, recorded I’d remainder and it to not ERC, EPS fully of new end the at Notably, billion, to

Ashish Masih

I Thank the the about you, established level very summary, we’ve first see pipeline I years. excited purchasing strongest the ERC. new, Encore. in strong record are am large at several for Jon. horizon The high the cash receivables remains and on what seen amounts In in a in recorded supply of We of all-time U.S. returns quarter and we collections

for We’re a perspective and from position to from we these to a in buying expect time. continue strong benefit some favorable conditions capacity

Our X. we outcome. of years we’ve the hard culmination Day and Cabot acquisition of earnings financial remaining favorable benefits. believe to in This strategic acquisition accretive and work achieved the us The interest is provides is that a with transaction of very numerous from

be an is most growth see capable position of Cabot attractive across acquisition solidifying in expected This in leader in we months important June only at we XX%. capital of six of XX excess in to rate that where opportunities. The the compelling, deploying XXXX be global a expect a is will of year. the annual IRR industry, markets for keeping close, our mind as earnings we owners step Assuming transaction our XXX% XX%, our this in on least

open may lines be happy for Now any have. please you that the questions. to answer up Operator, we’d questions

Operator

Thank place the Instructions] your line that to a you. we number prevent you question, for on and [Operator that do background noise, you're And any gentlemen started again, mute moment questions. one to ladies keep once one ask

First Scharf. of from David line question the comes

Your open. line is

David Scharf

Is things, congratulations. pricing, simple on regarding consistent business, few you've supply here, the the last that good commentary very sounds there the take the question competition and the maybe with for what articulating we last continuation trends just of talking like. environment, David incremental it about much Couple you've the a of pretty positive real or US and been is collection, anything afternoon away should months? that Yes. six, quarters you, first nine been

Ashish Masih

and years. David question? Thanks with of kind it's your I seeing consistent we've last very the been for couple words think your for what

steady look you If bank pretty them in of way, But at charge-offs in them you recent factors you the our long-term way. for lending combined been in see a and one lending earnings both if at and increase pretty and see two increases and some look issuer in And and continuing. steady trend, announcements, their to each most the the industry all growing delinquencies. it's a has And offs. even outstandings are charge the if delinquencies a continuing you of positive trends consistent

it more nothing increasing increasing new. share flows that's very forward is as in rate highlighted relationships and on an where as new So been has consistent be previously, we sold our with see paper a than the a capabilities our percentage vendors; of is of and we'll total is, last fresh a more and banks. strong paper the The or the so thing sold so liquidation the year I've probably which pretty one

we something that's or as year forward continuing well. and the that last strengthened so going see And over so

David Scharf

and is list of to that consider saying that of to buyers investment respect the what Got the and the small and have your way? six, based it's of sense the ease and clock With a that banks is industry auditing any compliance on very back remain all you're probably approved or in new the ever up hint in the done, just there market years, remains buyers would last that entertain going five, over it. the seven there turning

Ashish Masih

of audits bank approach, based conduct to see, terms In what but onsite the we multi-day site. of on least from the with see them, coming personnel more they at large teams importantly are we the on bank's and those and conversations

not not level they is standards We and pull at years continue see have expect we to the any high seen did They bigger audit that back. ago. that six, very seven

so, we in this been protect own that not of They and their helping reputation and among want been So the of has US to I has and following think the or high consumers right, protect of no mostly who their the and standards. see them years recognition last in accounts buyers partner five and can we let-up the they're treating a can portfolios. handful market the any with reselling there

I regulatory that standards. the beneficial from OCC reducing is their and very have partnership So heard whether issuers front, those that up or is from own the anything we set the not think on regulators other on or on

in balance, I but also most and pretty terms liquidation, systems. healthy that, offer in a of compliance getting the way consumers appropriate that our the management given can we risk treating financial outcomes, think the it's

So I that, think backward I was see question, don't movement which your on any

David Scharf

how on mean, we refers on paying return And that the trying you you're as interpret acquisition. defining clarify for Cabot Got value IRR? the Right. to. I what couple is XX% it. cash that the to I understand that Can -- you're of this am should cash the equity just that XX%?

Ashish Masih

and ways, that's question. able did compare ways primary good a portfolios, in different business. can that as thing. the are different conservative our also be couple be we a It's same to our at we so know, Looked you of IRR, to investments calculated and and it

the to on XX% of in the well excess the more be of expect XX% XX% to range methodology. in depending we IRRs So the

the anything what And IRR to or that’s that that's add if methodology Jon, and want to so question. you that in is of that's, terms

Jonathan Clark

somewhat I at to a can because agree IRR using visited you've approach of of played do think David, number this you'd because unsatisfying a way we've times reinvestment if alternatives be different with business. for the traditional how a

And bit. to that appreciate. you so your tends value can little sure I'm do

a And So a when I'll to holders both just words, more we did steady In the equity state. well IRR so the as we scenarios it basis XX% a, cash traditional roughly for through, calculation this, that we don't with much of real-time releasing IRRs. call range as so with that came viewed a it went in as ended. other you to back we have on range XX% value up returns the

David Scharf

Cabot. it. Maybe then one at Okay, consolidated by basis get If a get more I'll on you financial Cabot, may got for divided back help look can I on non-controlling other in feel financials about queue. come maybe with I quarter us about? Jon interest that X.XX, look. the I this a it just QX and in with them earnings maybe of you breakeven to there if a about educate can how what were anomalies quarter million such X.X about know some was up after-tax think

Jonathan Clark

on balance the it, should at for is So can as is right? stuff look the texts you way complex, go think I the This that are assume you David sheet -- to going Yeah. away. both highly example, an

is non-controlling be You once your P&L, that's part again, be non-controlling goes sheet, obviously Cabot. going then that for vast reduced can And dramatically interests can our of on interest going reduced. to to to majority balance dramatically the assume be that the the

but right, I'm Cabot's income. enjoy if one heard of me sure the going is the to you've we're So, past, in leverage, financials XXX% this only say XX% be is about very things I in that, that percent their of of excited our

So be now to their able won’t fulfill income.

David Scharf

it. Got

you. thank Okay,

Operator

Thank you.

comes question SunTrust. the of Hughes Mark from next Our from line

line open. Your is

Mark Hughes

Yeah, you. thank afternoon. Good

was Ashish expenses you again? mentioned incremental had in of what million QX, XX in that

Ashish Masih

starting let -- a on US. few to is this a in compare growing well litigation just call in US said expansion step volumes previously, are That And and doing the capacity This geographies it the capacity things, back are not that just increasing the capacity. three growth well all we as is but ahead, portfolio ago, And they're as business. as different especially to we've steady as volumes we early been XXXX. as year centers have growing, in and service me purchase and capacity expansion again,

front and tends the to hire tend and imagine, Account for you Managers a be a It reasons. for takes can As to to to capacity loaded the expenses couple while train and of perform. be

So loading. it's a bit of front

have in for as a well also US more accounts, extra we mostly had then moderate some bit the rest that interesting increased QX expenses recouped is of opportunities expense buying XX litigation business. if as and you expense As litigation But to we have loaded. little more for and get litigation capacity operating the million front And occasionally the the will year.

Mark Hughes

Thank you about the XX%.

end base that's I the that numbers those $X.XX, with will share. think the three back initial loaded grow quarters math June. $X.XX, closing close quibble correct? in that, earnings we it that Cabot last earnings per the more or assume of do quarters $X.XX. Is $X.XX in a a you which little there? If provided assumed back even transaction year the guidance to was on with Nothing a I or XX% about implies in is be to And three of the

Jonathan Clark

zip the right in code? You're generally

Mark Hughes

Okay. attractive is for And evaluation the here Cabot you as then, seems is pretty like it say.

paid it valued you international through? it? the valuation Let have what me to if today. than you this There the it, IPO because implied might of portion seems valuation or look but are for prior What I like your the did at valuation process I motivated at lower them debt JC about they what think the for Flowers, valuation the buyers. was comparable What go

sort looks got just you what curious the Some like of deal? how – a pretty good

Ashish Masih

Thanks for that Mark.

process, from in XXXX. Flowers this details the to partners but, on comment been acquisition JC we of it's So beginning, difficult the have with from all the

comparable was the a Way then XXXX, in possible. didn't back desire had in it this journey. in look as valuations Cabot UK, it a the the were to So was acquire companies combination and fully and like Europe we of indicated

in So we market conditions, as IPO pull – equity given explored you pull but mean got that that we outcome the IPO November. that we process of I process. closed, the And know, the jointly

This very with So much before in then. post discussion well of Encore good were owners been that, a in as US XXXX Europe. Flowers, evaluations negotiation the known and and process back more partners JC our converged have they has we've who

that's So Cabot to the how Encore outcome solidifies it an as It's and it the and company good requires their outcome for with good position, for management And we ended it's business a Flowers this. exit, also them up a team. one. get the provides and

Mark Hughes

Thank you.

Operator

you. Thank

the next William Bob from question Blair. comes Napoli Our from line of

line open. Your is

Bob Napoli

afternoon. Thank you. Good

understand. guess sure I up, on Cabot follow two Just I the to deal make

that of So essentially shares laid out, stock you're cash $XXX that million, million you X million. XXX the

paying you're So that's of right? is million am a the million essentially that that XX% company, XXX – doing I about $XXX

Jonathan Clark

You're the Yes. right zip in generically code?

Bob Napoli

look would paid and So a different EVDRC a at, of ways on million, XXX is little what different a valuation look you at at is PE the now etcetera as that and basis? to a lot you there's How on how bit. did metrics, you would it this what PE a you look

Jonathan Clark

between the of IRR, deal up looked in right. And thing far higher of turns because first of in a I Well, be creative. basically we We would terms multiple Bob, the beyond round IRR, and at multiple, and a was evaluations terms -- way you was our of numbers Cabot. picked the most didn't, important evaluation also foremost, had by could if converged. which the think than We couple

you a less about turns just there, ours of and is So couple get

Bob Napoli

times of less the get on valuation to this a we'd couple you evaluation current deal? Your

Jonathan Clark

Yes.

x, if two minus we they'd times be x were So

Bob Napoli

is that… On XXXX estimates

Jonathan Clark

for You use those sure. can

Bob Napoli

the to right, the is funding thanks. funded? stock, it All helpful. be all the then is going of it with cash debt That's And portion,

Jonathan Clark

we year available We conservative that clear, relative earnings but rolled XX%, be We in viable sure to be growth terms In already terms have number up conservative. provided we might to that a on And doing. us. XX% mix I of provided a outlook of today. evaluating, accretion. in would to order that committed conservatism of alternatives still And say XX%, were a we to be financing make that, when our in we Well, have mix the we're year.

but decide as this, going number us. have very tell we terms of, soon we we're viable are And going we in of how front way optimize deciding While which you. to as we're a fund how will in still of to alternatives

Bob Napoli

XX% XX% that maybe this the you're in growth is suggests XX% earnings, basis? it's, an the creative clear that on the just annual on sorry, is which it, I'm to XX% to be that saying XXXX

Jonathan Clark

digit I can that at double assume think we're you accretion. Yeah.

Bob Napoli

a Okay, life then bit regulations, moving difficult? Thank any the And on you. there little or of is there CFPB all might anything that or make the life is easier the auto the I on guess right. has environment been US. use in in And that, final anything the just regulatory a little market make dialer's that might movement? more

Ashish Masih

of couple and fronts, BCFP or of of Bureau now, the mention, two I positive regulation. they messaging on A CFPB to as amount one not it's the change; to -- but things Consumer continues Protection, can a Financial approach that there huge as be known use just

to We finalized. that get are final for take proposed still awaiting the will a awhile industry regulations

we And movement, unreasonably ruling Bureau versus Dialer's as of is it's held soon be days, significant ruled hear was and capture Auto Appeals -- of and example. be of whatever The it very as DC might have. waiting would March been you the it's FCC the you balanced But a that or outstanding. ACA this circuit consumer. phone sometime to court for the that these of still there court finalized. kind get on when still balancing a waiting at topic for we that definition to will a so regulator, needs FCC And the After long is pretty it industries coming for iPhone long they The wait, happens that any process may them well, So case. much FCC mentioned, more has and broad. some continues of second were be

they So which communicate help the original clarify FCC opportunity to do phones is pretty be for they step FCC to phones. consumers actually XXXX an next and have, would the that the important expect with cell we ruling mobile way now its the phones, with businesses

hopefully improving So friendly to a clarification consumers, resolving we, debt the in an is important essentially changed step has and our more and that getting yet, liquidation. nothing but was approach which more contacting

movement. but more on positive come to So that,

Bob Napoli

the environment less question, competitive, I competitive competitive? guys or And US in Ashish you are players, -- you or mean, in last Paul at or seeing Okay. all any getting new are more Europe the in

Ashish Masih

US The In on the losses and answer change. so players will Europe have different major here I forth. with is he and the so one. same Paul strong and and there’s no us, with And answer they the US, and there with wins auctions relationships insurers

market steady the that continues The real have market grow. no pretty is we to the and So of change. share

to on market? Paul, European in So want you jump if the

Paul Grinberg

in relatively announcing are enable improve in we're On based technology and analytics There entire adjust landscape risk we've US, on deployments that the as which the remaining because of the our the our more the practices today best others. transaction some Like and the returns. focused that we're consistent. terms remain seeing and of than can above, different organization. acquisition competitive are European number liquidation to And we will deploying capital interest where getting as in markets of upon of operations certain best adjusted share just Cabot in us so possible markets, we're be competitive the multiple investments across we more been we're the side profit in competitive a with

we multiple as And not putting across us that so geographies. will been place globally, believe in in world all in types we've but competitors specific the that initiatives of of share just make parts stronger Europe, we

Bob Napoli

Thank Great. you.

Operator

comes And our Eric Hagen next the KBW. question of from line from

open. is line Your

Eric Hagen

Cabot’s result the Europe from some on some conversation of just Thank shed deal, you synergies from about maybe does perspective become Maybe just a as of counter-party a that more stronger afternoon. the deal from and Thanks. gentlemen. deal? Good the Cabot light in on synergies expanding the

Ashish Masih

a jump and Yeah, let me take Paul on in. then can dip

in Cabot for we have interest years an had So the the five controlled have and last board.

classic direction. them, them not of been it's something and we've new. closely strategy working acquisition on We've known with business So the a

So, Europe. they've in started they player to a expand UK were and originally

and which like as Europe Bankruptcies. platform are one platform Grove, which also segment, in has has in Grove well which Spain, Chapter another And Encore and Spain is also Now is a is very XX Italy. portfolios on as strong IVAs is which UK in

competitive well SME overall. you And the charge can strengthens as other So that banks our consumer and synergies competitive offs. the you of the to buy Spain position much -- secured of with us now more get in consumer in the the UK you and make as when do because expertise IVAs some really and regular combines markets that

in Paul well. So let jump I as

Paul Grinberg

it I well. think describes that that

of factor that, to financial the and take creation important that were into didn't synergies. one is think shared today I all the we in account note you metrics a that's around with IRR cost

have teams operations there's our So that while of and a the we is going Europe, opportunity in we we're to to grow belief are lot that combining need today.

the So combined both of the to Europe have a bunch We pools talent all get. our can we growth organizations us will of that talent And our eliminating in that of in returns don't costs. factor in model, there. need the think accelerate enable and we the

Eric Hagen

from? provide reversals X.X came you this, the just and a forgive me million That's about around those certainly the for little helpful but That's a quarter a if said allowance And synergies. color Thanks. Thanks. the helpful. in where cost

Jonathan Clark

they've The from their performance really, and Yeah. more curve four and take Eric really book to They to we quarters best started for Europe. to really an to every the, time continued in our initiative these been was quarter. They've The collect. continues job ago was, strong. than the to hold. improve last Cabot was last, take the doing exceed things have it's where ability expectations several a fabulous That years a

quarters, And good in tell a keep what but the, we the on we've are trajectory. those may you the curves. last what future can't several continually I hold, they So, raise

Eric Hagen

Okay.

that it of US, all And sorry the to Cabot? be was from dense, but came none

Jonathan Clark

Yes.

Eric Hagen

Okay, guys. thanks. Thank you

Operator

our line question Northland And of the you. Grondahl of comes Capital. Mike Thank from next

line open. Your is

Unidentified Analyst

Mike Thanks Hi, questions. for taking our this [ph] is Grondahl. for Mike

on on quarter all off talk previous the versus about returns those First new purchases maybe for year? you've look

Ashish Masih

Mike, You're across would you going repeat that soft. quite please? question

don't you mind? if So,

Unidentified Analyst

talk Sorry. purchases. on years? versus bit It's previous new how you Could on a those returns look little

Ashish Masih

for thanks that. the clarifying and question Great,

couple Our of returns to the on continue years. improve over steadily last

the -- we've the much notice multiples prior prepped years that you we book. we those quarters that's that better If quarter book, prior the same than that are

the So the these they are continue result multiple portfolios. of liquidation a market help continue than our result to improve also improvement and better years conditions to but and as I initiatives which a two improve ago, of which good as on

Unidentified Analyst

call versus center? XX that on incremental, think then about And million you. do how Got we that legal versus a

Ashish Masih

previously. as as we the the year. will rest the litigation to And recede expenses. Therefore court expenses in expenses absent from the had well will to Jon reaffirm and But from are are QX costs also just full when going a the we of as increase in QX, overall bit ago. had expense year include for of mentioned, in guidance and able to as facilities, transaction that be neutralize overall hiring, both, that for increase a capacity year So well those be compared as we a given overall legal

Unidentified Analyst

mean, revenue, other Okay. of rate if that? contribution that on run roughly their And then the is we out the million I for try revenue on quarter? just Wescot service XX to back

Ashish Masih

which partnership to But strategic at is opportunities. banks very service In and they to revenue year breaking the of Wescot is in purchasing able it or then leverage can to now break of terms terms included case say a for not was out their and they acquisition stage, But so going their we're QX were expenses to I improve are all at a ago. expenses, and point. Wescot, other this this revenues not because is out Cabot in

Unidentified Analyst

Okay, thanks.

Ashish Masih

Sure.

Operator

question Dodd James. our come the next Robert from Raymond line And you. from of Thank

open, Your line is

Robert Dodd

loans, as that Cabot, you expand it yours utilize US? utilize the this credit to mortgages mentioned Is and deal it their in to product your help your obviously remarks collect, cetera launched utilize you Is cards, for to included? in expertise, with product us. in On at the they've them expand, et prepared SEC intention offerings to

Ashish Masih

audience to thing the one wanted case just clarify in So doesn't little understand.

then you BPO meant, not capacity. as they're well to for I just all asset able products but those they're listed So and services provide those some knew offering purchase other as the when classes, broader audience, a what portfolio

and we'll to for other from each continue lot So learn look opportunities. a we definitely

what they're all a work you always different similarities. good could the think in point And lot what a are things, of kind a in UK little markets those of US. we've been in ways, and works I versus raise but certain bit discussing

the expect full well synergies learnings and accelerate sharing practices and future best of the we to will opportunities potentially -- provide So ownership near those better with near people acquisition and of in leadership as and in as term the and explore the kinds

Robert Dodd

the Q, at it And expenses if XX IPO to the included When I some assume that one-off in occurred it. Cabot those fair got at Encore cabinet it's page that to look Cabot I related Is occur numbers more, expenses – in or expense the Got one that and so way? for the can. obviously Cabot. some financials did in at

Jonathan Clark

Cabot. Yes, it at occurred

Robert Dodd

Thank got Okay, you. it.

Jonathan Clark

think Operator, for have I we question. time more one

Operator

of last the Mark line from question comes Our Hughes SunTrust. from

line open. Your is

Mark Hughes

you. rate of Tax very the Three, best for quick the balance Thank outlook, ones. what's the look year?

Jonathan Clark

Mid XXs.

Mark Hughes

center the XXs, XX would Mid there? of kind be

Jonathan Clark

that that believe would correct. I be the

Mark Hughes

upper was expense I went to school. Interest sequentially. bit

million. million to from You went XX XX.X

up rate, debt that little there? Your what's Is much. wasn't of that a floating on going bit

Jonathan Clark

gets say. debt, primarily so. the you You marked. would All important move Because this is Right. remember, have I all Apex that --

Mark Hughes

you I portfolios. when they'll able revalue the assume the then, And to be do deal,

have some do flexibility it be a… would to Perhaps evaluation. some We

Jonathan Clark

already out of the this them. US perspective, a to acquisition. an Here's not consolidate. is this from sheet. taking GAAP thing, interesting some acquisition, We right? Mark. confusion According already just, our We're balance US already… GAAP, own But an is We We not

Mark Hughes

asset? say the you So you wouldn't revalue

Jonathan Clark

Right.

I Just simple that the earlier in adjustments call. mentioned

Mark Hughes

very Okay. Thank much. you

Jonathan Clark

Mark. Thanks

Operator

Thomas you. further turn for to to remarks. I Thank the I showing like Bruce call am back Mr. closing questions. no

Ashish Masih

Thank quarter August. us for we you to a results call Hi, the that XXXX taking time Thanks this today. We’ll second forward and the early in is providing concludes look to you Ashish. join for again,

Operator

have in great and a conference. This thank today's you you all participating everybody may day. does disconnect program, Ladies the gentlemen, and for conclude

Encore Capital (ECPG) 8 May 182018 Q1 Earnings call transcript