UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________
FORM 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 12, 2017
______________________
ENCORE CAPITAL GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
(Exact Name of Registrant as Specified in Charter)
______________________
Delaware (State or Other Jurisdiction of Incorporation) | 000-26489 (Commission File Number) | 48-1090909 (IRS Employer Identification No.) |
3111 Camino Del Rio North, Suite 103, San Diego, California (Address of Principal Executive Offices) | 92108 (Zip Code) | |
(877) 445-4581 (Registrant’s telephone number, including area code) | ||
______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
On June 13, 2017, the Company will deliver a presentation at the William Blair Growth Stock Conference. A copy of the presentation that will be used is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.
The information in Item 7.01 of this Current Report on Form 8-K, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission pursuant to Item 7.01, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
Exhibit Number | Description |
99.1 | Presentation dated June 13, 2017 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ENCORE CAPITAL GROUP, INC. | |
Date: June 12, 2017 | /s/ Greg Call |
Greg Call | |
Senior Vice President, General Counsel and Secretary | |
EXHIBIT INDEX
Exhibit Number | Description |
99.1 | Presentation dated June 13, 2017 |
WILLIAM BLAIR GROWTH STOCK
CONFERENCE
Ashish Masih
Tuesday, June 13, 2017
Exhibit 99.1
SAFE HARBOR
1
The statements in this presentation that are not historical facts, including, most
importantly, those statements preceded by, or that include, the words “will,” “may,”
“believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar
expressions, constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These
statements may include, but are not limited to, statements regarding our future
operating results, shareholder return, capital deployment and growth. For all
“forward-looking statements,” the Company claims the protection of the safe harbor
for forward-looking statements contained in the Reform Act. Such forward-looking
statements involve risks, uncertainties and other factors which may cause actual
results, performance or achievements of the Company and its subsidiaries to be
materially different from any future results, performance or achievements expressed
or implied by such forward-looking statements. These risks, uncertainties and other
factors are discussed in the reports filed by the Company with the Securities and
Exchange Commission, including its most recent report on Form 10-K, and its
subsequent reports on Form 10-Q, as they may be amended from time to time. The
Company disclaims any intent or obligation to update these forward-looking
statements.
2
Total Revolving Debt Outstanding
$1.0T1
Credit Card Net Charge-Off Rate
3.6%2
Approximate Revolving Debt Charged-Off Annually
$45B3
Issuers Outsource to Collection
Agencies and Law Firms
Issuers Sell to Debt Buyers
Primary Placements
Secondary Placements
Tertiary Placements
We estimate
approximately $15B
of Face Value
was sold in 2016
Issuers
Sell to
Debt
Buyers
1. Federal Reserve – March 2017, excludes debt secured by real estate
2. Federal Reserve – Q1 2017, not seasonally adjusted
3. Assumes 20% Recovery Rate to Estimate Gross Charge-Offs
IN Q1 2017, THE FEDERAL RESERVE REPORTED $1 TRILLION OF U.S.
REVOLVING DEBT, EXPECTED TO DRIVE $45 BILLION IN CHARGE-OFFS
ENCORE IS A TOP-TIER, GLOBAL PLAYER IN THE CONSUMER DEBT
PURCHASING AND RECOVERY INDUSTRY
3
15
Countries &
Puerto Rico1
1/5
U.S.
Consumers
1/8
U.K.
Consumers
1/10
Colombian
Consumers
Scale
Global Reach
~100M
Consumer
Accounts
$1.7B
2016
Collections
$5.8B
Estimated
Remaining
Collections
$0.9B
2016
Deployed
Capital
$9.8B
2016
Face Value of
Debt Purchased
1. Includes countries where the Company has operations or has purchased portfolios
WE HAVE GROWN OUR GLOBAL FOOTPRINT CONSIDERABLY SINCE
WE BEGAN BUYING DEBT IN THE LATE 1990’S
4
OUR SUPERIOR ANALYTICS AND DECISION SCIENCE ALLOW US TO
BETTER UNDERSTAND CONSUMERS
5
Hardship strategies
and removal from the
collections process
Remind consumers
through legal
messaging
Enforce legal contract
through formal
channels
Significant discounts
and many small
payments
Payment plans and
opportunities to build
longer relationships
Strong partnership
and recovery
opportunities
Willingness
to Pay
Ability to Pay
Low
High
High Low
Encore’s individual underwriting approach to portfolio valuation
accommodates our specialized operational strengths
WE MAINTAIN A SIGNIFICANT FOCUS ON DRIVING OPERATIONAL
EFFICIENCIES AND REDUCING COSTS
6
Overall Cost to Collect*
47.6%
43.7%
42.2%
40.0%
39.1%
38.6%
39.2%
38.5%
30%
35%
40%
45%
50%
2009 2010 2011 2012 2013 2014 2015 2016
⃰ Cost to Collect is defined and provided in Encore’s annual and quarterly filings with the SEC.
OUR ISSUER CERTIFICATION PROGRAM IS A KEY DIFFERENTIATOR
7
Cycle I:
Request for
Information
Cycle II:
On-Site
Audit
Cycle III:
Post On-Site
Follow-up
Requests
Cycle IV:
Audit Report
Received
Approval/
Certification
“Encore by far is the most transparent, prepared, and buttoned up of any debt buyer
we’ve audited. You have raised and set a new bar in the industry.”
- Top 5 Credit Card Issuer
In 2016, Encore successfully completed 41 audits and is approved by all major domestic
issuers
• The certifications received through these audits are a prerequisite for purchasing debt from issuers
• Encore has achieved certification from all major domestic issuers who sell their charged-off accounts
Issuer Review/Audit Process
8
Total Estimated Remaining Collections
0
1,000
2,000
3,000
4,000
5,000
6,000
March 2013 March 2014 March 2015 March 2016 March 2017
United States Europe Other
1,911
4,758
5,080
$M 5,665
5,849
ERC CONTINUES TO GROW, WITH END OF Q1 REPRESENTING OUR
HIGHEST LEVEL TO DATE
9
0
2,000
4,000
6,000
8,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Initial
Projections
Actual Cash
Collections
($MM)
Cumulative Collections - U.S. Core
Note: U.S. Core market is defined as all non-bankruptcy direct from issuer unsecured credit card and personal installment loan sales
ACTUAL CASH COLLECTIONS EXCEED OUR INITIAL PROJECTIONS
Our persistent focus on risk management and compliance has
become a competitive advantage
Our access to capital positions us well to benefit from
improving market conditions
Operational scale and cost leadership drive strong
profitability through the cycle
Our global operations enable us to refine collection
strategies to improve liquidations
Extensive investment in data analytics and behavioral science
underpins our pricing accuracy
ENCORE IS A GLOBAL MARKET LEADER IN THE DEBT PURCHASING
AND RECOVERY INDUSTRY
10
1
5
2
3
4