Fourth Quarter and Year End 2014 Financial Results Investor Call

1. Financial Results
Year End 2014
March 3rd, 2015
Time: 8:30am MTN
Domestic: (877) 201-0168
International: (647) 788-4901
Confirmation Code: 91157337

2. Safe Harbor Provisions
2
Certain
statements
made
in
this
presenta/on
are
forward-­‐looking
statements
under
the
Private
Securi/es
Li/ga/on
Reform
Act
of
1995.
These
can
be
iden/fied
by
words
such
as
"intend,"
"believe,"
and
"expect,"
and
phrases
using
those
or
similar
terms.
Specifically,
statements
rela/ng
to
projec/ons
of
future
proceeds,
revenue,
income,
profitability,
cash
flow,
non-­‐GAAP
financial
measures
such
as
Adjusted
EBITDA
and
Es/mated
Remaining
Proceeds,
also
known
as
“ERP”,
and
our
ability
to
expand
and
u/lize
flexibility
under
our
credit
facility
are
forward-­‐looking
statements.
These
forward-­‐looking
statements
are
not
guarantees
of
our
future
performance
and
are
subject
to
risks
and
uncertain/es
that
could
cause
actual
results
to
differ
materially
from
the
results
contemplated
by
the
forward-­‐looking
statements.
Factors
that
could
affect
our
results
and
cause
them
to
materially
differ
from
those
contained
in
the
forward
looking
statements
include
those
that
we
discuss
in
“Risk
Factors”
or
comparable
headings
in
our
most
recent
Annual
Report
on
Form
10-­‐K.
Adjusted
EBITDA
and
ERP,
as
presented
today
and
in
our
earnings
release
we
issued
this
morning,
are
supplemental
measures
of
our
performance
and
purchased
debt
asset
value,
respec/vely,
that
are
not
required
by,
or
presented
in
accordance
with,
accoun/ng
principles
generally
accepted
in
the
U.S.,
also
known
as
“GAAP.”
They
are
not
measurements
of
our
financial
performance
or
asset
value
under
GAAP
and
should
not
be
considered
as
alterna/ves
to
net
income,
asset
value,
or
any
other
performance
measures
derived
in
accordance
with
GAAP,
or
as
alterna/ves
to
cash
flows
from
opera/ng
ac/vi/es
or
a
measure
of
our
liquidity.
We
believe
adjusted
EBITDA
is
representa/ve
of
our
cash
flow
genera/on
that
can
be
used
to
purchase
charged-­‐
off
receivables,
pay
down
or
service
debt,
pay
income
taxes,
and
for
other
uses.
ERP
represents
the
expected
cash
proceeds
of
our
then-­‐current
purchased
debt
por[olios
over
their
en/re
remaining
life.
You
are,
however,
cau/oned
not
to
place
undue
reliance
on
adjusted
EBITDA
and
ERP.

3. Our Strategy
Paul
A.
Larkins,
Chief
Execu6ve
Officer

4. 4
Closed Loop Network

5. Key Strategic Goals
5
Our
People
• Inspire
a
culture
of
leadership
by
living
our
core
values
Opera6onal
and
Compliance
Excellence
• Pursue
systemic
opera/onal
and
compliance
excellence
Growth
• Grow
and
diversify
Partners
• Create
an
outstanding
network
of
Partners
Financial
Performance
• Deliver
solid
financial
results

6. 6
• Fresh
View
Solu/ons
Expands
• eAGLE
Enhancements
=
Efficiency
+
Returns
• Deep
Customer
Data
Improves
Experience
Operational and Compliance Excellence
Pursue systemic operational and compliance excellence

7. Growth
Grow and diversify
7
• Disciplined
Capital
Deployment
Strategy
• Recent
Bank
Visits
=
Op/mism
• Diversifica/on
Posi/ves
Con/nue

8. Partners
Create an outstanding network of Partners
8
• Partner
Investment
Con/nues
• Integrated
Account
Management
and
Compliance
• Consistency
Drives
Uniform
Customer
Experience

9. Financial Performance
Deliver solid financial results
9
• Performance
Meets
Expecta/ons
• Lower
Volumes
=
Lower
Adjusted
EBITDA
&
ERP
• Purchasing
Discipline
Con/nues

10. Financial Results
John
D.
Lowe,
Chief
Financial
Officer

11. ERP and Adjusted EBITDA
11
• Consolidated
ERP
of
$655
million
• Adjusted
EBITDA
of
$198
million
(1)
(1)
(1)
Domes/c
only
$-­‐
$50
$100
$150
$200
$250
$300
$350
$400
2010
2011
2012
2013
2014
Adjusted
EBITDA
Trending
($
million)
Company
Debt
÷
TTM
Adjusted
EBITDA
2010
2.08x
2011
1.65x
2012
1.22x
2013
1.42x
2014
2.18x
Company
Debt
as
a
%
of
Consolidated
ERP
2010
68.8%
2011
57.7%
2012
45.8%
2013
52.0%
2014
65.7%
$0
$200
$400
$600
$800
$1,000
2010
2011
2012
2013
2014
Consolidated
ERP
-­‐
Trending
($
million)
CAN
US

12. Returns by Purchase Year - 2014
12
• 2014
Returns
Lower
in
Compe//ve
Market
• Ac/ve
Por[olio
Returns
Maintain
Strength
• Ini/al
12
Months
=
Conserva/sm
2.2x
1.7x
1.0x
0.4x
2.1x
0.4x
0.5x
0.8x
1.2x
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
3.00x
Ac6ve
Por[olio
*
2011
2012
2013
2014
Consolidated
Return
on
Investment
Purchase
Years
2011
through
2014
Actual
Returns
Es/mated
Returns

13. Purchasing – Q4 2014
13
• Long-­‐Term
Investment
Strategy
=
$29M
Purchased
• Diversifica/on
Con/nues
2014 2013 $
Variance %
Variance
Credit
Card/Consumer
Loan
-­‐
Fresh*
Face
$157,411 $159,923 ($2,512) -­‐1.6%
Price
19,693 22,824 (3,131) -­‐13.7%
Price
(%)
12.5% 14.3%
Credit
Card/Consumer
Loan
-­‐
Non-­‐Fresh*
Face
83,089 6,459 76,630 NM
Price
4,067 498 3,569 NM
Price
(%)
4.9% 7.7%
Other**
Face
79,641 147,810 (68,169) -­‐46.1%
Price
5,505 3,793 1,712 45.1%
Price
(%)
6.9% 2.6%
TOTAL
Face
$320,141 $314,192 $5,949 1.9%
Price
29,265 27,115 2,150 7.9%
Price
(%)
9.1% 8.6%
*
Includes
both
Domestic
and
Canadian
purchases.
**
Other
includes
commercial,
student
loan,
and
medical
purchased
debt
assets.
NM
Not
meaningful.
Purchasing
(in
thousands)
Quarter
Ended
December
31,

14. Purchasing - 2014
14
• Disciplined
Inves/ng
Results
in
Scale-­‐Back
• 80%
=
Fresh
Consumer
Debt
2014 2013 $
Variance %
Variance
Credit
Card/Consumer
Loan
-­‐
Fresh
Face
$714,681 $1,572,612 ($857,931) -­‐54.6%
Price
101,102 197,420 (96,318) -­‐48.8%
Price
(%)
14.1% 12.6%
Credit
Card/Consumer
Loan
-­‐
Non-­‐Fresh
Face
284,554 800,694 (516,140) -­‐64.5%
Price
14,346 40,912 (26,566) -­‐64.9%
Price
(%)
5.0% 5.1%
Other*
Face
224,625 450,368 (225,743) -­‐50.1%
Price
11,299 19,778 (8,479) -­‐42.9%
Price
(%)
5.0% 4.4%
TOTAL
Face
$1,223,860 $2,823,674 ($1,599,814) -­‐56.7%
Price
126,747 258,110 (131,363) -­‐50.9%
Price
(%)
10.4% 9.1%
*
Other
includes
commercial,
student
loan,
and
medical
purchased
debt
assets.
Purchasing
(in
thousands)
Year
Ended
December
31,

15. Proceeds – Q4 2014
15
• Mix
of
Legal
as
%
of
Total
Collec/ons
Increased
from
43%
to
53%
• Legal
&
Other
Collec/ons
Maintain
Strength
Cash
Proceeds
(in
thousands) 2014 2013 $
Variance %
Variance
Credit
Card/Consumer
Loan
Collections
Non-­‐Legal
Collections $37,785 $62,588 ($24,803) -­‐39.6%
Legal
Collections 49,099
50,538
(1,439) -­‐2.8%
Other
Collections* 5,966
5,332
634 11.9%
Total
Collections 92,850
118,458
(25,608) -­‐21.6%
Sales,
Recourse
&
Bankruptcy 1,037
6,103
(5,066) -­‐83.0%
Total
Cash
Proceeds
on
Purchased
Debt $93,887 $124,561 ($30,674) -­‐24.6%
Quarter
Ended
December
31,
*Other
includes
collections
and
court
cost
recoveries
on
commercial,
student
loan,
and
medical
accounts

16. Proceeds – 2014
16
• Mix
of
Legal
as
%
of
Total
Collec/ons
Increased
from
39%
to
50%
• Non-­‐legal
Collec/ons
Impacted
by
Lower
Purchasing
Volumes
Cash
Proceeds
(in
thousands) 2014 2013 $
Variance %
Variance
Credit
Card/Consumer
Loan
Collections
Non-­‐Legal
Collections $184,974 $306,222 ($121,248) -­‐39.6%
Legal
Collections 207,420
212,529
(5,109) -­‐2.4%
Other
Collections* 21,385
23,198
(1,813) -­‐7.8%
Total
Collections 413,779
541,949
(128,170) -­‐23.6%
Sales,
Recourse
&
Bankruptcy 6,353
21,760
(15,407) -­‐70.8%
Total
Cash
Proceeds
on
Purchased
Debt $420,132 $563,709 ($143,577) -­‐25.5%
Year
Ended
December
31,
*Other
includes
collections
and
court
cost
recoveries
on
commercial,
student
loan,
and
medical
accounts

17. Unadjusted Results – Q4 2014
17
• Purchased
Debt
Revenues,
Net:
› $52
million,
30%
decrease
from
$74
million
in
Q4
2013
• Costs
to
Collect
as
%
of
Purchased
Debt
Collec/ons:
› Including
Gross
Court
Costs:
45.3%
;
+411bps
from
Q4
2013
› Excluding
Gross
Court
Costs:
37.3%
;
+336bps
from
Q4
2013
› Non-­‐Legal/Legal
Mix:
53%/43%
(Q4’13),
41%/53%
(Q4’14)
• GAAP
EBITDA:
›
-­‐$1
million,
decrease
of
$12
million
from
Q4
2013
•
Net
Loss:
›
$15
million
net
loss,
decrease
of
$11
million
from
Q4
2013

18. Unadjusted Results – 2014
18
• Purchased
Debt
Revenues,
Net:
› $247
million,
27%
decrease
from
$338
million
in
2013
• Costs
to
Collect
as
%
of
Purchased
Debt
Collec/ons:
› Including
Gross
Court
Costs:
44.4%
;
+274bps
from
2013
› Excluding
Gross
Court
Costs:
35.7%
;
+172bps
from
2013
› Non-­‐Legal/Legal
Mix:
57%/39%
(2013),
45%/50%
(2014)
• GAAP
EBITDA:
› $19
million,
decrease
of
$45
million
from
2013
• Net
Loss:
›
$38
million
net
loss,
decrease
of
$43
million
from
2013

19. Liquidity Update – Year End 2014
19
• Disciplined
Buying
Con/nues
• Consolidated
ERP
of
$655
million
• Liquidity
=
$72
million

20. Q & A