EX-99.2
3
d674030dex992.htm
EX-99.2
EX-99.2
ENCORE CAPITAL GROUP, INC.
ACQUISITION OF MARLIN FINANCIAL
GROUP
February 10, 2014
Exhibit 99.2
1
CAUTIONARY NOTE ABOUT
FORWARD-LOOKING STATEMENTS
The statements in this presentation that are not
historical facts, including, most importantly, those
statements preceded by, or that include, the
words "will,"
"may,"
"believe,"
"projects,"
"expects,"
"anticipates"
or the negation thereof, or similar
expressions, constitute "forward-looking
statements"
within the meaning of the Private
Securities Litigation Reform Act of 1995 (the
"Reform Act").
These statements may include,
but are not limited to, statements regarding our
future operating results, earnings per share, and
growth.
For all "forward-looking statements,"
the
Company claims the protection of the safe harbor
for forward-looking statements contained in the
Reform Act.
Such forward-looking statements
involve risks, uncertainties and other factors which
may cause actual results, performance or
achievements of the Company and its subsidiaries
to be materially different from any future results,
performance or achievements expressed or implied
by such forward-looking statements. These risks,
uncertainties and other factors are discussed in the
reports filed by the Company with the Securities
and Exchange Commission, including its most
recent report on Form 10-K, and its subsequent
reports on form 10-Q, each as it may be amended
from time to time.
The Company disclaims any
intent or obligation to update these forward-looking
statements.
Cabot marked Encore's entrance into the UK market
Marlin enhances capabilities, diversification and scale
THE MARLIN ACQUISITION BUILDS ON ENCORE'S UK PLATFORM
CREATED BY THE HIGHLY SUCCESSFUL ACQUISITION OF CABOT
2
•
United two market leaders and created a platform in the UK for
consolidation and diversification
•
Cabot investment has been highly successful to date
-
120-month gross ERC of £1.05 billion ¹
-
LTM portfolio purchases of £143 million ¹
•
Continued strong growth in the UK market expected
1. As of September 30, 2013
MARLIN IS A MARKET LEADING ACQUIRER OF NON-PERFORMING,
UNSECURED CONSUMER DEBT IN THE UK
3
Impressive growth track record
120-month gross ERC (£m)
Market leader in non-performing debt purchasing, with
litigation enhanced collections
•
Long-term, well-diversified ERC
•
Impressive track record of significant growth
Leading compliance track record
Key statistics as of September 30, 2013:
•
•
•
•
•
Source: Company information
1. Includes £50M funded by consortium partners
85
170
246
352
2010
2011
2012
Sep-13
Sophisticated, proprietary scorecard to identify optimal
litigation quality accounts
79% underpinned by long-term payment plans and 32%
secured on property
£2.2 billion face value of debt acquired for £264 million
120-month gross ERC of £352 million
462K customer accounts
LTM collections of £64 million
LTM
capital
deployment
of
£115
million
1
MARLIN PRESENTS A UNIQUE AND COMPELLING OPPORTUNITY
FOR CABOT TO ENHANCE ITS UK MARKET POSITION
4
Deep management
bench strength
Creates the UK
market leader by
ERC
Strong growth profile
Enhanced,
sustainable
profitability
•
Increases Encore's exposure to the high-growth UK market
•
Strong relationships with key vendor banks make Cabot+Marlin
well-placed to increasingly become the purchaser of choice
•
Creates the ability to optimize account scoring and collection
channel across both operations
•
Operational efficiencies and economies of scale
•
Cabot+Marlin can leverage the full extent of UK market growth
with complementary niches
•
Ability to sustain IRRs on future purchases through incremental
litigation collections and other synergies
•
Valuable additional talent pool with deep industry experience
Investment rationale
COMBINATION STRENGTHENS LEADING UK DEBT PURCHASER
5
Combined ownership structure
Key management team
Management
43%
43%
14%
Ken Stannard
Chief Executive Officer
Current Marlin CEO
Previously Managing Director,
Credit Cards, Lloyds Banking
Group
Managing Director, Capital One
UK Head of European
Operations, American Express
Chris Ross-Roberts
Chief Financial Officer
Current Cabot CFO
Previously Group Finance
Director, BPP Holdings
15 years of board level
experience
Stephen Mound
Director and Chief Operating Officer
Current Cabot COO
28 years of financial services
experience
Previously worked at the Co-
operative Bank and Littlewoods
Shop Direct Group
THE TRANSACTION WILL POSITION CABOT+MARLIN AS THE
LEADER IN THE UK DEBT PURCHASING MARKET
6
120-month gross ERC ¹
LTM portfolio purchases ¹
Source: Company information
1.
2.
£
millions
£
millions
2
2
Cabot+Marlin
Cabot
Arrow
Lowell
Marlin
Cabot+Marlin
Cabot
Arrow
Lowell
Marlin
1,403
1,051
627
531
352
258
143
122
121
115
As
of
September
30,
2013,
selected
peers
represent
UK
debt
purchasers
with
publicly
traded
bonds
Includes £50M funded by consortium partners.
THE TRANSACTION PRESENTS SUBSTANTIAL SYNERGY
OPPORTUNITIES ACROSS ALL OF OUR COMBINED OPERATIONS
7
Cabot's non-paying
back-book
Marlin's non-litigation
back-book
Combined front-book
Encore's India operations
Further operational efficiencies
Significant uplift to Cabot's 120-
month ERC with Marlin's litigation
capabilities expected
Encore, Cabot and Marlin's
expertise and sharing of industry
best practice
Opportunity for increased
operational leverage
Enhanced ability to compete for
portfolios and deploy capital
Application of Cabot
scorecards/models to Marlin
back-book
THE TRANSACTION HAS A FAVORABLE FUNDING STRUCTURE AND
FINANCIAL IMPACT TO ENCORE
8
Fully funded by debt
at the Cabot level
Transaction expected to be
accretive to Encore's 2014 EPS
•
No additional investment
from Encore
•
Marlin's existing bond will
remain in place
•
Equity consideration
funded primarily via new
bond issued by Cabot
later this year
-
Interim £105 million
bridge facility
currently in place
•
Capacity maintained
under RCF to execute
purchasing plan as usual
Gross transaction value of
£295 million
MARLIN PROVIDES AN ENHANCED PLATFORM FOR ENCORE'S
SUSTAINED WORLDWIDE EARNINGS GROWTH
9
1. Calculation of EPS excludes one-time transaction and integration costs and
non-cash interest associated with the Company's 2012 convertible debt offering
Marlin substantially enhances Cabot's
position in the UK market
Growth
Profitability
Encore EPS accretion
Well-placed to
leverage full extent of
UK market growth
IRRs protected even
as competition
increases
Helps achieve
Encore's 15% long-
term EPS growth¹

EX - 99 . 2 3 d674030dex992 . htm EX - 99 . 2 EX - 99 . 2 ENCORE CAPITAL GROUP , INC . ACQUISITION OF MARLIN FINANCIAL GROUP February 10 , 2014 Exhibit 99 . 2 1 CAUTIONARY NOTE ABOUT FORWARD - LOOKING STATEMENTS The statements in this presentation that are not historical facts , including , most importantly , those statements preceded by , or that include , the words " will , " " may , " " believe , " " projects , " " expects , " " anticipates " or the negation thereof , or similar expressions , constitute " forward - looking statements " within the meaning of the Private Securities Litigation Reform Act of 1995 ( the " Reform Act " ) . These statements may include , but are not limited to , statements regarding our future operating results , earnings per share , and growth . For all " forward - looking statements , " the Company claims the protection of the safe harbor for forward - looking statements contained in the Reform Act . Such forward - looking statements involve risks , uncertainties and other factors which may cause actual results , performance or achievements of the Company and its subsidiaries to be materially different from any future results , performance or achievements expressed or implied by such forward - looking statements . These risks , uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission , including its most recent report on Form 10 - K , and its subsequent reports on form 10 - Q , each as it may be amended from time to time . The Company disclaims any intent or obligation to update these forward - looking statements . Cabot marked Encore 's entrance into the UK market Marlin enhances capabilities , diversification and scale THE MARLIN ACQUISITION BUILDS ON ENCORE 'S UK PLATFORM CREATED BY THE HIGHLY SUCCESSFUL ACQUISITION OF CABOT 2 • United two market leaders and created a platform in the UK for consolidation and diversification • Cabot investment has been highly successful to date - 120 - month gross ERC of £ 1.05 billion ¹ - LTM portfolio purchases of £ 143 million ¹ • Continued strong growth in the UK market expected 1 . As of September 30 , 2013 MARLIN IS A MARKET LEADING ACQUIRER OF NON - PERFORMING , UNSECURED CONSUMER DEBT IN THE UK 3 Impressive growth track record 120 - month gross ERC ( £ m ) Market leader in non - performing debt purchasing , with litigation enhanced collections • Long - term , well - diversified ERC • Impressive track record of significant growth Leading compliance track record Key statistics as of September 30 , 2013 : • • • • • Source : Company information 1 . Includes £ 50M funded by consortium partners 85 170 246 352 2010 2011 2012 Sep - 13 Sophisticated , proprietary scorecard to identify optimal litigation quality accounts 79 % underpinned by long - term payment plans and 32 % secured on property £ 2.2 billion face value of debt acquired for £ 264 million 120 - month gross ERC of £ 352 million 462K customer accounts LTM collections of £ 64 million LTM capital deployment of £ 115 million 1 MARLIN PRESENTS A UNIQUE AND COMPELLING OPPORTUNITY FOR CABOT TO ENHANCE ITS UK MARKET POSITION 4 Deep management bench strength Creates the UK market leader by ERC Strong growth profile Enhanced , sustainable profitability • Increases Encore 's exposure to the high - growth UK market • Strong relationships with key vendor banks make Cabot + Marlin well - placed to increasingly become the purchaser of choice • Creates the ability to optimize account scoring and collection channel across both operations • Operational efficiencies and economies of scale • Cabot + Marlin can leverage the full extent of UK market growth with complementary niches • Ability to sustain IRRs on future purchases through incremental litigation collections and other synergies • Valuable additional talent pool with deep industry experience Investment rationale COMBINATION STRENGTHENS LEADING UK DEBT PURCHASER 5 Combined ownership structure Key management team Management 43 % 43 % 14 % Ken Stannard Chief Executive Officer Current Marlin CEO Previously Managing Director , Credit Cards , Lloyds Banking Group Managing Director , Capital One UK Head of European Operations , American Express Chris Ross - Roberts Chief Financial Officer Current Cabot CFO Previously Group Finance Director , BPP Holdings 15 years of board level experience Stephen Mound Director and Chief Operating Officer Current Cabot COO 28 years of financial services experience Previously worked at the Co - operative Bank and Littlewoods Shop Direct Group THE TRANSACTION WILL POSITION CABOT + MARLIN AS THE LEADER IN THE UK DEBT PURCHASING MARKET 6 120 - month gross ERC ¹ LTM portfolio purchases ¹ Source : Company information 1 . 2 . £ millions £ millions 2 2 Cabot + Marlin Cabot Arrow Lowell Marlin Cabot + Marlin Cabot Arrow Lowell Marlin 1,403 1,051 627 531 352 258 143 122 121 115 As of September 30 , 2013 , selected peers represent UK debt purchasers with publicly traded bonds Includes £ 50M funded by consortium partners . THE TRANSACTION PRESENTS SUBSTANTIAL SYNERGY OPPORTUNITIES ACROSS ALL OF OUR COMBINED OPERATIONS 7 Cabot 's non - paying back - book Marlin 's non - litigation back - book Combined front - book Encore 's India operations Further operational efficiencies Significant uplift to Cabot 's 120 - month ERC with Marlin 's litigation capabilities expected Encore , Cabot and Marlin 's expertise and sharing of industry best practice Opportunity for increased operational leverage Enhanced ability to compete for portfolios and deploy capital Application of Cabot scorecards / models to Marlin back - book THE TRANSACTION HAS A FAVORABLE FUNDING STRUCTURE AND FINANCIAL IMPACT TO ENCORE 8 Fully funded by debt at the Cabot level Transaction expected to be accretive to Encore 's 2014 EPS • No additional investment from Encore • Marlin 's existing bond will remain in place • Equity consideration funded primarily via new bond issued by Cabot later this year - Interim £ 105 million bridge facility currently in place • Capacity maintained under RCF to execute purchasing plan as usual Gross transaction value of £ 295 million MARLIN PROVIDES AN ENHANCED PLATFORM FOR ENCORE 'S SUSTAINED WORLDWIDE EARNINGS GROWTH 9 1 . Calculation of EPS excludes one - time transaction and integration costs and non - cash interest associated with the Company 's 2012 convertible debt offering Marlin substantially enhances Cabot 's position in the UK market Growth Profitability Encore EPS accretion Well - placed to leverage full extent of UK market growth IRRs protected even as competition increases Helps achieve Encore 's 15 % long - term EPS growth ¹