ECPG - Earnings call transcript Q2 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 introduce our host for today's conference, Mr. of President Vice Thomas, Investor Relations. Bruce may you begin. Sir,

Bruce Thomas

President Executive welcome Thank call. of Group's Officer; by Capital Cabot Good Masih, the our With based Clark, Grinberg, Chief Officer; Credit phone and Ken and you, UK. afternoon, Financial International in to our Ashish second are on call Encore of Chief the Management, Encore's Business and Executive Stannard, Jonathan Vice operator. me today and quarter Paul President XXXX and President earnings the CEO subsidiary

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

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

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

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

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

Ashish Masih

condition collections, in for and our results positions the for This major XXXX quarter conference for Thank estimated for performance the serve continued markets. is our financial of indicative remaining Today good revenues future that portfolio call. collections. Encore of everyone. and of announced growth second afternoon purchases, you we Bruce, markets our included records and optimism supports those Thanks, and the joining

will we benefit of for transformational short the event Encore the term. reinforced term the Encore. Our completion long in and a believe been which optimism has is Cabot of the both acquisition by also transaction This

We have strategies our now clear and future two from becoming for to United share freedom its now our States we Kingdom; implement proprietary brings the investor We United an Cabot are have world's being information leader in markets shifted the XXX% even to certainty and which industry. owner our more to in together. largest in and both the a

and was second like in a million We come. expect that long anchored favorable which markets and to highlight these lasting operating flows quarter new for performance to company by will Encore's measures. of areas I'd years financial generate records cash returns few several were consecutive in $XXX deployments Encore's million $XXX our acquired to those portfolios collections Global periods associated were XX% collections. Global quarter which up quarter purchasing XX% the representing of record in largest we excluding acquisitions. history to platform second up representing

consecutive in capacity operational to a over of collections. added Europe collections focus collections servicing XX% $XXX fifth the quarters revenues quarter the drive in past we several new drive Europe continued that We in and as up revenue for innovation additional Additional in helped global increase million. improved helped and generated level U.S. record the revenues the and on

of Remaining the the all-time also at a Estimated billion. XX% high Collections to or reached ERC Our quarter new end $X.X second growing

capacity. of adjusted valuable in We I'm enables when operations business. activities debt strong M&A was debt share. reducing per earned believe number million, or collections investing Adjusted per performance capital cash additional capital Encore of portfolios As $XX of a a GAAP pleased $XX to This share. cash income $X deploying applied million is with this important as principal income and of to EBITDA collections the or combined balance generation. and net of highlight such result from an for purposes, particularly the return continuing generation measure Encore's innovation to or $X.XX

of France. new adjusted the color geographic the organic collection Management of acquisitions Cabot With leader Ireland. significant of asset growing is across important deployments footprint many source types flow expertise record over Portugal, is unsecured year like the we M&A of past in also a record SME I'd strategic classes and which achievement completing more a EBITDA transaction. Our a of including accounts. on Cabot. fully includes X,XXX and the bit and has secured over Cabot's An combination while industry our Cabot a people efforts level own. Spain, now UK flexibility Cabot to cash provide given Through and for consumer and Credit has now us

Cabot operational superior collections is a has science on annual also on significant their approach achieving but made strengthens addition attractive after has has differentiated data Cabot has Cabot to XX% its investments competition relationships excellence a itself servicing in capabilities record the use expertise changes other servicing behavioral of to and back flow developing longtime particularly season years to not and in debt portfolios. driving substantial strong returns with to and they've BPO growth conditions. including acquire Built over only legal avenue cash and Westcot. resilient economic also operations their Cabot's of XX an network. creates of a in combination debt source cash acquisition through and sellers centers their XXXX based product business XXXX. an track The by of produced book of of of from banks customer experience collections profitable provides the compounded call In and rate analytics Cabot's from growth that first additional

believe and market Cabot key recovery As positions their track of is a UK. in in result we and geographies this premier the buying debt the record platform

is Encore Cabot complete in to its returns the XXX% that Now acquisition stockholders. investments of on the belongs Cabot and made

best to geographic as for product leadership the of addition its diversity in due breadth Cabot leader a capital light global the and a solidifies long-term we and the In platform transaction Strategically and sector. servicing capabilities. its growth our view as position in Europe

the through in collaboration player the increased. addition significantly risk Cabot the U.S. we a the with have has of as mono-line reduced transaction operating Since announcement level In Cabot Cabot of a transaction the of

of share and engaged decision digital working best regarding servicing strategies. capabilities in analytics, ownership supplementing Cabot's Spain Encore's teams other and in and call additional fully add expertise, operational to UK, have excellence, subsidiaries We also and the people portfolio science, Italy. practices we'll in collections product European increase capabilities IVA expertise are

and purchase have portfolios. For increasing thus combined Cabot see of SME and Spain the complementary value example, we in in classes, and we the leveraging businesses strengths consumer asset now Grove the

this result Cabot we to by of transaction six XXXX reflects is XXXX In complexity low-risk by ownership and least financial highly full also in months for team financials to results and of deal extremely growth simplifies a the our structure. have PECs direction we equity strategic of be the acquisition compared issuance per less acquisition X.X transaction share earnings and We in the grow a to this the beyond engaged This closely merits strategic and of to had the Encore's XX% Encore. XXXX. accretive or management Cabot five at incremental financially preferred shares. approximately attractive much and a Cabot past the know This and in earnings previous expect million with opportunity well. than the in non-controlling interest the very is the is as years associated we earnings to addition in in the certificates this as management to company Keep that removing of ownership a mind additional and believe

our about with we For Cabot. excited all these reasons future are

through Turning record collections over to quarter in the the the several quarter the and benefit and of to vintages in have issuing comprise our the U.S. This beyond. driven expansion. revolving in years fresh XXXX were other more U.S. were grow U.S. of particularly end paper According we past our healthy strong. Federal this of is U.S. all-time quarter. strong was more of to expect credit with of continues perspective Through particularly performance prior From XXXX estimates debt of continue Consistent on charged-off any in are to a and the improving during the of QX million in a XXXX our remain we year. the business. focused track which receivables in positioned cards again second on portfolios market year during XX% operational expectation an XXXX years. success segment perspective The banks growth pricing deployment than to $XXX long-term percentage XXXX $XXX capacity highest comprised to now be paper because Reserve in ability in purchase well U.S. operations earnings with we largely as commentary and whole and recent in trends released The U.S. Collections recent our million high. trend. innovation recently May on deployed purchased the and the we supply fresh favorable. this we the a Based strong credit industry has market figures to expanding and by the on than U.S. reached as at purchasing Consistent QX. sold to from in and level the will collect remains supply an this three from was reports from efficiency for remains in the

U.S. result our expanded operational of ever of cycle. the improving a returns liquidations position is success the we have still the capture we that and of in in attractive best in the are as capacity we fact, I favorable to in now In believe our early believe a phase available portion which market been

call to Clark, the acknowledge moment John Grinberg. like I'd Paul a to hand I Before to take off

have that release career press investments fact end ways. and largely XXXX his in and that him to company vision the As best mark is today made distinguished after based the our on in and on with at for has many the and Paul grateful I'm of diversity in we a operations XX-year company. mentioned Paul all now world has decided company. around a left Paul's has indelible retirement. retire The this the service wish an his stronger passion

Ken the and has with As transition servicing and European more XX expansion of and Ken Stannard, leader years. Cabot of the part half successfully financial strong of responsibility the four Ken services a years will growth Cabot's our CEO industry. over a product in its geographic than of is the the experience guided last for businesses. European all assume

he to the that look the John is future interests hand quarter Encore' to a detailed I'd our in call we direct to like the results. now confident As over choice at second to for ideal I'm look manage Europe. and

Jonathan Clark

Thank you Ashish.

for Cabot that I financial to Before like will remind of GAAP detail in U.S. We're adjust Refinancia to I for when $XXX portfolios. XXX% results interest. numbers would $XXX our and total of we exclusively go by the our quarter second the showing results charged-off the of Deployments we into required you indicated We in paper the were statements. $XXX financial as million the of in fresh totaled non-controlling card million U.S. almost up in during compared that credit represented quarter XX% QX; account million XXXX. to comprised deployed second

zero Latin totaled a second the in second to deployed receivables. in quarter the to bankruptcy in through $XX deployed European million Australia in compared We in during Worldwide $XXX the year XX% million quarter also including ago. a and $XX second collections collections. in was million. QX $XXX million We driven quarter year the prior $XXX included acquisition the the million million purchasing $XXX $XX.X same grew increase the the Cabot's also of pool in Grove of in in Collections in Wescot $XX Europe million improvement year from revenue centers ago. increased XXXX in the in benefit results to quarter prior XXXX quarter compared in European to basis XX% geographies primarily and acquisition of added $XXX high over from of XXXX $XXX quarter operational quarter servicing result million deployments of we $XX call ago. and purchases the in U.S. the portfolios including in record XX% of volumes innovation strong to a additional $XX U.S. generated periods primarily XXXX of revenue which other year revenue. actions quarter America. deployments increased QX in Cabot Cabot grew year. over the a to Encore and period to by the allowance compared and all-time as million charges continued yields also the in million we as also second as vintages performance. our second quarter and in our grew capacity, new revenue groups to sustained compared in and sustained second yields last the last certain reported versus revenue In compared year. performance. by through returns. million same Revenue was reversal Worldwide pool reversal reaching collections in increased same Europe continue domestic growing recent in $XXX driven higher QX to XX% on with million million quarter groups a vintages In the compared performance second the we and second collections

per GAAP a earnings ERC million a In or for the operations compared earnings In the at to record ago. second share. and the it With non-GAAP our end GAAP quarter same income was earnings continuing of quarter. $X.XX. of interest Our and $X back share billion the not Ashish. calculation $XXX year XX% Estimated EPS diluted Remaining reported adjusted EPS second I our effect our in second exclude of $X.X quarter adjusting from applying Collections the to shares the that EPS also recorded like end quarter $X.XX we of was would reconciling for over or we economic per economic turn of from non-controlling the and tax the to after We any fully adjusted our did up

Ashish Masih

addition and second all Thank In and cash collections, trailing to flow. We the and you summary Encore's we all-time future quarter in months record capitalize well-positioned reported generating about are to recent on in of high excited financial John. performance record new purchasing, revenues opportunities. cash XX I'm ERC operational

large strategic acquisition of favorable us very The we and interest a financial provides is event Our strong and transformational for remains opportunities. Cabot remaining the and receivables and purchasing of benefits purchasing market of and Encore's U.S. a history in it are in number with returns. amounts debt

capacity had best opportunity we ability to the collections and through ever market. us position liquidate the portfolios our Our in expanded have innovation our U.S. capture attractive available returns arguably the with to

of XXXX we least for earnings our that six the to in most million be where industry; Cabot X.X months solidified XX% in annual issued expect be We shares. After per of returns. additional leader of owners year will XXX% rate we across position markets acquisition we have completing see our Cabot mind less and capital of growth share keeping than we global a capable our the in at attractive as our deploying

line Operator bear happy the answer may for lines questions be call so you a note any and the the off questions. to any us responses. may remote up Ken have. just us Please moment to we'd please hand Paul Now that as for that are in with to take it on location of them the a open

Operator

line [Operator from Securities. of Instructions] question from JMP first the Our David comes Scharf

Your line is now open.

David Scharf

and afternoon Good the closing Yes. congratulations deal. on

up-to-date you been UK as operations because much other consumer the Cabot in Regarding bring other secondly credit existing portfolio balances market geographies there's traditional the can this European then us in portfolio maybe, what so of the I about loans? only are the unsecured as of on is discussion how receivable percentage competitive and far of versus the types of the what those and percentage receivables card consists versus Europe asked

Ashish Masih

thank both question. questions. jump Ken David the to the I'm the you in going let for on

in he's position I think to answer. better

Ken Stannard

hear can me. the question. Hopefully This Yes. is Stannard. you for Ken Thanks

the So remaining. is majority ELC of still our

but the in that growing versus So [indiscernible] as majority just is and [indiscernible] quarter Europe of our strong in [indiscernible] as the deployment is in is the of UK. and proportion grows our Cabot with the XX/XX in over about and the XX% number backbone deep last UK overseas

is XX% I the So number gave.

just total [indiscernible]. We card collections it's original credit ERC card our we I so be think so the from, personal Europe [indiscernible] loans a our message XX% not unsecured added of the of of have proportion and the the that balances. will in over-drafts do the part of card terms of credit In from unsecured also loans fire credit part

David Scharf

and Got when comments consumer in Europe environment with particular you maybe in competitive reason secured? mean the anecdotal that and distinctions card a between I Ken credit other to we is it. see it asset That's classes the I follow-up unsecured hear helpful about pricing do and ask as loans

Ken Stannard

medium but Yes. debt it's fact card small credit. overdrafts or are a greater you're that the between issued when substantial. not differences debt differences asset a enterprise - loans I credit difference There's definitely classes original loan creditor unsecured where secured buying and between is secured the mean buying potentially the in you're a or

So asset we the the or buying collection other a telecom credit I some or was and whether a buying market deep unsecured that buying and financial that be services debt $XXX you're between balance point. at methodology. do want debt I realize with biggest the that loan differences you at [indiscernible] contract $X,XXX of say the there's data cancelled would very phone difference from one a type always discounts. types mean the from to industry of card within a it's so telco [indiscernible] trade curves long debt quickly different very a One

So different types experience data both. different for whoever techniques from

David Scharf

Got maybe helpful it. Jonathan. ones That's and couple a just quick then

the rough seen I kind costs deferred in the legal was? or expense of First for you what the the do have quarter yet capitalized a haven't court XX-Q number

Jonathan Clark

to that have right tips. don't the number up going I get See here. at we if it are

David Scharf

And queue. then in lastly then just back and I'll get

to clarify… Just

Jonathan Clark

June cost XX David you're it's court net at that's what XX the million for. looking

David Scharf

amount in was the the capitalized that was? actually Well quarter what’s

Jonathan Clark

that I capitalized. have don't here. That was

David Scharf

you provide guidance last to Okay. are the touched adjusted this the GAAP referring EPS be when year XX% growth we figure? lastly And quarter, rate just this you then know for on clear the or I to

Ashish Masih

for works ironically Actually it both.

David Scharf

a recorded that already integration on second cost add guess the are and in interest basis obviously backs of lot there other the traditional EPS intangible restructuring or the a have transaction inherent in adjusted non-cash that? been more amortization in in go-forward and I some we've the got Okay are half costs

Jonathan Clark

There minimum not on David will be quarter first one we be say sure of but will and a some this saw hedged, I at you'll one my today charge adjustments there done them I'm another yet. trailers finger all the you on I the can right put hedge that have because

like so I'd something million pre-tax another say in QX. And $X.X

that So things that beyond. like be will might there trail

David Scharf

it. Got

Okay. Thank you.

Operator

SunTrust. of And from our the question Hughes comes next Mark line

line Your now is open.

Mark Hughes

what should of afternoon. you. then in year the back Gentlemen Thank think the of year? the and half in rate Good for we tax terms about next

Ashish Masih

Well, mid-XXs my think year. but to the next rate tax year for beyond I is way about scope think [indiscernible]. We're the is right of the balance the the

Mark Hughes

from expenses? Okay reversal and would offsetting impact the the refreshment but you effect any -- there that then other the on EPS are tax

Ashish Masih

-- just No. Mark and if pretty much it's course depending Cabot it. you've you're, share your it's our got of taxes if of it's that in just only that's

Mark Hughes

mind, in thought that quarter? do with you impact the have the then And reversal the in EPS

Ashish Masih

was European which XX.X the I were XX%. for as said reversals Well, million about it

Mark Hughes

Okay.

Ashish Masih

we think bullish basis. it's IRR. it from of the sometimes actually aware as impairment sight I bullish. said I very don't think we Right? your mind if a increases thinking an be didn't when lose are that about I'm that else that in sure at So reversals it's well mind, where you because indicator nothing right impairment are Mark too and least think And conceptually extraordinarily I reversals we portfolios what That's too these does on should actually bear to get all a people little fact if and just raising effectively if performing be it I have I bit it important very you're happens would existing think because focused the it's

periods you'll is have So your generate otherwise would other higher. basis all because equal being revenue subsequent you now in more than things

Mark Hughes

has ongoing there. Right. point positive of That's future in point. That a recognition terms good an revenue impact your is

Ashish Masih

Yes.

you're these rather this think a a little hung you've done right. What say short-sighted it is portfolio Well things and too the your that one-time more the bit recognize going I I equal revenue to forward it's people is get said a reversals I not perspective fact that you've impairment off on they one-time going somehow being all would and thing. thing. are increased other basis

to an some it's an about you think So IRR. from I when having where more impairment a you might be sit at you're and it to from reluctant bit and than reverse an you're taking so scars impairment wearing raise least

pool have to the you the pretty performing feel right. about So way good is

Mark Hughes

That's right.

interest kind capital with terms rate run of a look your associated me the the extends from what of with Cabot but Your interest their give of sense expense? XQ in of retirement that you here was closing can like PECs

Ashish Masih

cut we rates including when kind I because whole it think expect slew course a at probably of just this be, look things we etc. interest of of You're it wouldn't what we is of to

pointed lighter quarter actually still million-ish. I of out So bit something XX through. it as in there to about bit going think And of to net that's to away. interest lead let's a call you're it think about net That's so the now being going you of little think that when little there PECs the PECs run rate have to

Mark Hughes

would lighter XX QX it you're be saying? In than

Ashish Masih

interest just OpEx a XXs Yes. - we're right. so QX be if you is and which basically of if taking back month about this is know Because think we let's you're the million with envelope XX probably just going if it's doing love quarter high I you with doing to it's QX say in to bit guys so lower it's X at a million math a you're kind in the what you're

have quarter We [indiscernible]. of full

Mark Hughes

Right.

Okay. Understood.

thank Okay you much. very

Operator

Hogan the Blair. comes Brian Instructions] next William Our [Operator from from question line of

Your is now line open.

Brian Hogan

Good afternoon.

the have you realm? market able the Cabot those exchange given you using back and U.S. over back in practices practices that that remarks how best open what kind to leadership there then there? in the have do you environments competitive returns and to you. expecting Cabot learning with you'll be and mentioned You been returns from expect and what confidence and in obviously and them goes up best for the European generating your and your learn exchange is more what exchange position or ideas of And What you're and those the take over there prepared

Ashish Masih

for thanks Brian the question.

So for with very well. five we've through involved and years been management known and strategic direction we've the and Cabot board the as

other kind on been and of not. fully of would learning that information and be and sharing hesitation future from it the we've kind owned full about but some whether I So or steroids put as best future of Cabot said IPO about or be or there will practices or ownership given the kind each of would no

Cabot now that operations is So just digital it's which things. front me list generic business that areas models, let those been best fully on part and in of of the are capabilities One practice innovating signs, in U.S. call a of kind best Encore and some has a both sharing practices the them. analytics, we're general range decision of lot whole is sharing and more

also with well started debt market Spain immediately best servicing of what's in has happening two in Now is those so the we’ve as and of Cabot in Encore as come terms and and synergies practices the combining that. purchasing had European that the operations presence and leveraging has

combine strengths and the you For relative would two looked are already SME consumer that example, higher we seeing have now. at of portfolio's are the when higher appear their and value you separately the

a terms are rigorous very very of an and terms committee of example that's risk that committee So seeing in returns management in disciplined based and decisions of investment type process have the on process. our investment that's we we second investment

favorable it returns. portfolios that of unique in good in differentiated a platform capabilities portfolios to very advantage market and U.S. on debt and the seeing purchasing kind being sale. of for be companies. of may competitive and UK provides which continues has Cabot non-paying very both terms is it many take types leader the unlike The It and paying we're portfolios, servicing of up So also to put and has

as So compared particularly starting Europe in in returns in strong markets to well and to picture earning their going story. a it's as this some get grow for time the perspective described peers on Spain very the provide to and the find emerge us Cabot player it's we a in differentiated a you jump of I over let very with and and platform full so point good as his Ken I UK at

Brian Hogan

Sure.

Ken Stannard

Thanks a there. Ashish think summary did good I and you

Spanish the the able SME me an build Cabot's the collections very every business businesses. bidding I'll learnings between one, we into we're from build the in assumptions certain just amazing your amount business and business of the Let of exchange the amicable day example to of think off portfolios. sides on and for from on growth cross of our I start within strongly also where repeat portfolios from with side I'm because able are me amicable [indiscernible] and learn seeing our processes compliant the modeling to the in them upside those on we're

our liquidation So Spanish just we're going to market. and effectiveness in competitiveness the be - it's going to our enhance

we multi-channel the areas and have are in job of the on digital peel Atlantic but we the have and implemented that done layers implementing and a in digital example UK of UK and the than better producing the great vice-versa back between digital they some So see the a -- different populations. across connectivity are great different we onion when we of and our that's in parts U.S. liquidation and greater some process in are States sub-channels for in working the

effectively them other -- where geographies. different those pick on roll we're to out of and of best lots the of there doing up huge can So and be organization is to we the able going to globally across we're amounts learning tests

add think that in was talking have us improvements operational forecast. on whole of about driven continuing led our to within year-in-year-out confidence terms about have a a I that ERC series really business that the deliver UK UK starting Jonathan reversals see was year-in-year-out that that the before you're is of over motherships In that to talking history to Ashish and we driven business initiatives improvement by the

enabling So important website on can on returns therefore and Cabot go and leading to able at capital you deliver margins. that's to that we're detail very market were to us presentations look and deploy see our the you more that if that

and been like our few that in So to market unlike independent liquidation the assets a competition. is margin UK European we XX% the from also period benchmarking, over perspective do be higher have above appears significantly when to in year EBITDA to proves able XX% boarding than on to since

So enhancement the greater story through and and of markets where the effectiveness in of enabling competition shining longer. I a that sort been UK those Cabot and is Ireland continued our ever specifically we've think in is that operational returns

Brian Hogan

if and do there answer Thanks for in very you view you and those competition discussion competitive really will detailed of Europe? I the then guess competition advantages using how the

Ken Stannard

think across It's a a that years. the in has to five grown continues It's enormously ECB speed all impaired a from environment. the little sell sell I more actually regulators to on last are over a outsource to and provide and under ten to jurisdictions bit required for of the banks pressure and Europe because grow competitive market and loans definitely It their and continuing balance sheet. guidance requirements

is have. market is The in size are The that numerous though strategic advantage each we us benefit we So and key the difference our there is the competitors growing. market. from competition for and

the twice of UK market. in So more size than we anybody UK the the in are

assets. it be non-pay whether or We have assets buying advantages paying

ten advantages years. have scorecards litigation data and build required We last the over to the in

and compliant We have paying scale advantages to ability in and our of assets invest in technology on collections payments. the collecting the that optimizing through enables operation

the stepping us the return. able the being us whatever be best platform competitors collections platform cycle for delivering incremental key to ahead we and and we're because will having the So best survive to and bring is with collections always

in competitive other operations read where So talk also they Europe, that's because to talk cases Cabot competitors in in fact they're focusing think pricing they'll be that in have trying their of the most about the in environment compete enhance an that own against on I to major about and you'll trying able European the the subtext they're where to that market advantage. we

Brian Hogan

just to seen commentary updates there? commentary late of is been I've Shifting you you. in Thank the it's the environment some right. kind but some provide seen as regulatory All quiet any of I there? core cases which some U.S., can but think

Ashish Masih

Yes.

right. absolutely with outlook last are you're quiet levels maybe been regulatory think So terms few or there's fairly and two the consistent. quarters It's would of which in Brian kind and I three of say I consistent

which their on debt major audit our the the we and few guiding passed through That's go years and banks very differentiation in terms audits their that's many over of is platform what against for went of regular them. that the what industry regulator XX year and OCC through creates U.S. of in we one over other expectations drives is buyers impacts last basis. which a Last certification the and our banks here stable all So been processes

process sometime ago plan The year and rule-making proposed looking and it's If the given a one will regulator several at that it's perhaps second issue take that consumers seen also months we for the interest or a of still happens notice even point as but we get the they in view long around weeks a at at BCFP is or obviously of looking of of couple few CFPB was regulatory that maybe and balanced believe a what something I quarters. in a much from heard XXXX it have and balanced way. the more now ago being known to that the for that to BCFP finalized timeframe rules May

or changes and for use reaching we be asked regulatory us those case to and very consumers to was auto-dialing is important The the that cellphones. on the the commentary you have it that impact for consumers. have the provided as third which There and of consented after many element for a including is are or of and waiting auto-dialers a TCPA generally that's mentioned that come court interest to more who able any have clarification cell it's reach phones consumers more makes may not FCC from to because easier FCC

get So call nothing we once the that of had clarification last that improve either has since that changed we really on fronts. on quarterly front will but some the

Brian Hogan

of news Europe? Any geographies in other regulatory particular

Ashish Masih

sellers regulated and to Cabot front their the that and focused in for really be FCA example buyer excels. the them first treatment banks very large well. come with operate In a UK, on consumer very It audit do other where on was they the markets focused well are who and Cabot is FCA that's regulator, or active very on geographies large as and by consumer continues licensed treatment and we debt to especially

any a and where anything less big and jump I entry UK So that's and front. the on the creating regulatory more see little we can the and European Ken let front. in fairly don't see -- those U.S. that bar regulations a bit in more on unique the enter for changes invest high again in and regime if there's in UK Europe In I are players but or stringent stable more some try portfolios being and to

Ken Stannard

No.

in also very practices. think on UK that to part comment of the accurate regulator's that example I relationship look The would have is deep the is thing Ashish. our for I regularly at invite we in we one Thanks.

that's very because before a how In workshop at a FCA the data disputes In to to weeks time where and looking practices things authorization industry is Ireland just have tomorrow us doing think first unsecured industry the servicing our the we protection on mark we're set understand a of of that Kent, they few strong our fact secured last recently field increased been just disputes us the intently under us encouraging also every good protected think outsourcing. mentioned news we been a the sure for have the I we because other that to on you encourage think there six occupied business and in quite playing banks the of leveling and make our over we've for I way and it think improving I practices to the are all and expect it's look good of corner want continent months European to last to in it's I they they're [rate] GDPR the that the spending that encourages one and and relationship regulation the in where the have. and I as we would areas how standards help in regulation is to come to advice from

Brian Hogan

what last in is one on? revenue whatever trajectory and Right be revenue the for there of should service growth me may one kind and be it other

Ashish Masih

given acquisition Brian on Cabot's our acquisition growing on it Wescot. or so is that one

So a bank a and strong see it's leading a growth will and related from very to and a year-over-year servicer business. provider It's comparison you BPO institutions. the service

a needing say breakdown in in a good Needless of market steps those very numbers from terms players banks growth specific provides to not in We a of have expectations those to trusted and of that operations is any it good is it or the provided quantitative where very with over going. numbers where and Wescot and partnership bringing lot take back that's of UK capacity operations. a

Brian Hogan

All right. Thank you for your time.

Ashish Masih

Brian. Thanks

Operator

line Raymond comes of from the James. our Dodd from And Robert next question

Your line now is open.

Robert Dodd

you strong U.S. guys. in I talk should Obviously very to put a Maybe Hi for the about take second. purchases.

adjust this as of Can and talked about U.S.? collections your are seeing more and expectations plans quarter, volume that for from comes to you us give what color the volume last more different come capacity expansion the you on. and approach more characteristics You've your fresh new to managing quarter given any kind dynamically to the paper may this in there also about the banks in if you're future cause

Ashish Masih

great Robert thanks It's for question. a question. the

we the more the in a we lot the we're and sales are fresh to litigation time and a purchasing wouldn't because and we've the this is from office increase our train and India, early allows our good more your successful their and kind other there that play started our four litigation. see focusing of I the much in internal capacity or growing expect of in developing kind of in and plans and managers been terms capacity to retain portfolios is settle opposed doing measured finding conversation long-lasting collections payment in share well plan in and through slow but centric call more success very takes three and that business or and centers forward is as emphasis year. of a and puts way second signing growing come consumer are rather do center remainder resilient. continue model or and because center a we a cycle are which started capacity what given we terms debts it but increase continues U.S. cycle we’re through hire operation. measured for Rica very continue pace. of finding in a get operation will in And Costa XXXX payment that just U.S. in our started of that very we the which thing using have a of locations on of a call in that we to production increasing in And also in capacity geographies in back earlier it part question lot all in the call later a takes call And And other it's three as the it's steady manner. fresh are our very the of consumers So too putting are year into on in at doing expenses you for account to flows probably good but to

So the the that we managers, positive consumers differences to better with able we that outcome cost have they without two able understand in for collect financial to through. that conversation what our to to to connect detailed for as -- plan agreed also their good up it's a is just of the sense account understand feel and but extremely payment situation one makes given one have and a us channels thinking they're are then opposed

that's consumer - being call model calls and our time some a So the take of That's that's an output three talk the focus the that's all consumers, to long. capacity centric of the of geographies. some expansion -- are driving we our our to in of

Robert Dodd

every supply that that that you continue liquidity you being Great. between Do you confident domestic supply that advantage supply fact your feel comes any ramp confident more market? to to the comes something events. -- take any up and feel get that that relative Great. position Really the time of domestic that XXX if is enough buy you mean kind that revolver on obviously available to the obviously does million of appreciate follow-up color seen I do we've and

Ashish Masih

John going in. jump we to Yes and are was

Jonathan Clark

answer, simple The yes.

Robert Dodd

Absolutely. Thank you.

Operator

And the Mark Hughes. line we a have follow-up from of

Your line is now open.

Mark Hughes

the numbers? internally growth that Wescot seem strong quite share about You doing lately. organic any Can are growth you talking well. How it there is

Ashish Masih

se in point not color Ken any well jump stage. shared but Mark have with this but numbers we disclosed growing again per not any let have I numbers will at We because this it at without that is and

Ken Stannard

Yes.

the I organic tell European growth average that you Mark organic above is for growth is So can what the probably Wescot's business.

market outsourcing give have a to stage [indiscernible] the been one in our early in UK. the of it's creating bit that just businesses little in successful very we collection fastest and in color you growing services financial for so So of literally

of given banks early big a a it's and deepening number and because amongst have higher long a clients resource proportion manner of think adequate wanting of give and we've effective we collections as We do in got now a the street quality with up so us our I be and the to their that's relationship high facilities those to way early ramping very bank us stage of our that a that will - clients. really stage proportion having collections their a

Mark Hughes

Thank you.

wouldn't extending has sushi I luck opportunity by the and Paul I restaurant. let go to without with hope to he last want think that congratulations my I

Ashish Masih

Thank you I Mark. it. appreciate

Operator

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

open. now is line Your

Eric Hagen

afternoon. Thanks. Good

questions have well. answered my of lot a think asked been I and

there a how item ahead rates? rising risk curious up flow I line? the that are I we cash interest mean of of about just place that to expense, think follow on interest mean I'm any Just should in reduce Thanks. hedges

Ashish Masih

versus floating the floating keeps want as to I ours in fixed me say is just -- fixed in unhedged. cap call currently hedges percentage what in is in U.S. our some - the Encore and side. to have little are [indiscernible] and are floating -- do a There Eric less but Cabot rate Cabot instruments much there is rate on of is place today our in some rate the we

Eric Hagen

it. Got

were is the Okay shares JC now you [Flowers] deal and can Thanks. on is remind then issued the just to to the up that that for us them? what follow closed lock-up just

Ashish Masih

is it's and the XXX half for days It is days. for XXX shares Yes. remainder

Eric Hagen

you. Thank XXX. Great.

Ashish Masih

closing. On

Eric Hagen

you. Thank Right.

Ashish Masih

Sure.

Operator

follow And we Scharf. from a have up of David the line

is line now Your open.

David Scharf

second the few flows possibly Are in one you becoming those expectations A domestic the is put what more in the in more relation we place. extras to few about quarters in I you terms saw just of last purchasing forward can in relative on And half that Thanks. commented first to the visibility prevalent? know for and half.

Ashish Masih

sense holder much quite exclusively The and their and or where all been some to because right now them main extent are forward issuers successful especially we've that's flows they're off use and charge pretty the more prevalent and not make they card fresh billing off. clearly system coming in they portfolios as

what have that's and we U.S. the year say will confidence have the in gives that's we what So that us end the highest at to level had up ever we a purchasing than

and if something I'm now I disclosed In either. we've right have that not terms percentages of sure not that's

David Scharf

on on follow they concentrated since had was the Europe. there I you that definitely and a $XXX Jonathan up like back that been maybe quarters roughly it. mean. big of but million have looking cumulatively in reversals at Got helpful over reversals it seven lot the has looks then directionally commentary what is qualitative the last And of that million was and charge allowance XX it Cabot

about curves to think million of shouldn't us reversal four perform the not you charge theory Just a to of the there how give be of in the since to they'll is try to between you're next XX summers to six bad think of and sense more accumulative that a every end thinking daylight any million at maybe quarter you ago is for the quarters. or but kind charges then XX,XXX adjust the reversals the where way kind two Delta

Ashish Masih

question That's a good David.

but in If have we little the envelope more over charge of little QX with your European today here precision just allowance stated it you now the it. look on million would as doing [indiscernible] $XX $XX I at start off a for you back amsitting if to a XXXX would and we portfolio started that booked of that we you would if you we book would were know the have if have momentum competently as through we to had continues correctly work think that we

don't I'd momentum they any So you're on don't year-on-year. opportunities pool it and at allowance will like without you up an Europe allowance do still know where road regardless to for you or it'll as a but a if credit tell existing any know giving the adjusted think I'll will not. from continue and to XX% that that charges lift come if I've we be in group or the curves whether will that charge net look of curve portfolio

and previous lot through tell a but love believe remaining a do allowance are be I to that of of this you reversals would regardless believe sign. way reversals know getting able you to we're So growth very I to do XX million work our charges for know I I bullish going for we're I we guys at don't we know I while any would perform kind don't may you tell a were be in good I that again. slow bought a know. or be would quarters not all now. the place that of I again see to and going

against but the bet them won't I put right. I bank in So can't

David Scharf

you it's but well QX you hey there looking you housekeeping plug share these an [flowers] I to just days. the as out through diluted some acquisition accounts -- you Fair the just as us whole for in the quarter. the average mean right when for like don't what to number when a look QX the basically what actually the in what cap in have wait can just to going give there. final then in -- enough, Could but then the shares convert post there's on throw new No.

Ashish Masih

-- me Let I do have math see what that you only is simple this have I do front yes. don't can of in really yourself don't -- I can me kind of the right you're it part Cabot to XX XX right a at at we're mean for diluted for transaction. for another get you're to net then JC issued I fully of and we where basically as shares Flowers I

any that really have I don't Beyond --

David Scharf

The the convert latest? anything add doesn't either

Ashish Masih

not Well, not I right. we're in think well the we -- are money

David Scharf

Right.

it. Got be. won't I So

Okay. Perfect. so much. Thank you

Ashish Masih

Sure.

Operator

I questions. for I'm will remarks. no further just any the Ashish Masih back over call At to time showing Thank you. closing this

Ashish Masih

time XXXX third for the in Thank We quarter the you really for join early November. look today. call concludes taking it appreciate a you. all providing and us. to results That Thank to we forward

Operator

in today's and participation Ladies gentlemen you conference. for your thank

Encore Capital (ECPG) 8 Aug 182018 Q2 Earnings call transcript