Encore Capital Group, Inc. (ECPG) Q4 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to Encore Capital Group Fourth Quarter and Full Year Earnings Conference Call. [Operator Instructions] Now as a reminder, this conference call is being recorded. I would now like to hand the conference over to Mr. Bruce Thomas, Vice President of Investor Relations for Encore. Sir, you may begin.

Thank you, operator. Good afternoon, and welcome to Encore Capital Group's Fourth Quarter and Full Year 2014 Earnings Call. With me on the call today are Ken Vecchione, our President and Chief Executive Officer; Paul Grinberg, outgoing Executive Vice President and Chief Financial Officer; and Jonathan Clark, Executive Vice President, Chief Financial Officer of our Midland Credit Management Business and incoming Chief Financial Officer of Encore Capital. Ken and Jon will make prepared remarks today, and then we'll be happy to take your questions. Before we begin, we have a few housekeeping items. Unless otherwise noted, all comparisons made on this conference call will either be between the fourth quarter of 2014 and the fourth quarter of 2013 or will be between the full year of 2014 and the full year of 2013. Today's discussion will include forward-looking statements subject to risks and uncertainties. Actual results could differ materially from these forward-looking statements. Please refer to our SEC filings and especially our Form 10-K filed today for detailed discussion of potential risks and uncertainties. During this call, we'll use rounding and abbreviations for the sake of brevity. We will also be discussing non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our earnings release, which was filed on Form 8-K earlier today. As a reminder, this conference call will also be made available for replay on the Investors section of our website, where we'll also post our prepared remarks following the conclusion of this call. With that, let me turn the call over to Ken Vecchione, our President and Chief Executive Officer.

Thank you, Bruce, and good afternoon. This afternoon, we posted fourth quarter and 2014 full year financial results for Encore. We are extremely pleased with our performance. We significantly grew our collections, expanded our capital deployment through our platform and delivered another year of high-teens percentage growth in EPS. We believe that our progress this past year in growing our business has positioned us well for the future. A number of accomplishments in 2014 enabled these results and helped us to reduce our exposure to the challenges facing the domestic debt buying market. 2014 marked the continued successful execution of our asset class and geographic diversification strategy. We started this year by continuing the expansion efforts we began in 2013, having just acquired the controlling stake in Refinancia, a leading debt purchaser in Colombia and Peru. This transaction has provided us with an entry point into Latin America and an important perspective as we consider additional expansion opportunities in the region. Although Refinancia's business model is modest in size, we see attractive returns in the markets they serve. We follow that with Cabot's acquisition of Marlin Financial Services, along with the sizable portfolio portable and estimated remaining collections of over $600 million. Marlin brought the capital litigation focused platform that added value and synergies from the day 1. Marlin's high success rate in collecting on nonperforming debt has proven to be an ideal complement to Cabot's strength in semi-performing paper. We're now beginning to see this powerful combination driving accelerated earnings contribution to Encore's bottom line with more than 100,000 of Cabot's accounts benefiting from Marlin's enhanced collection capabilities. In the second quarter, we acquired a controlling interest in Grove Capital Management. Grove has allowed us to expand our footprint in the U.K. to its expertise in buying and servicing IVAs or individual voluntary arrangements, which are the rough equivalent to Chapter 13 bankruptcies in the United States. Grove has proven to be an excellent entry point for us to begin learning about buying debt in Spain. During the third quarter of 2014, we acquired Atlantic Credit & Finance to augment our domestic debt buying business. Atlantic provided us with greater collection and deployment opportunity in the high balance fresh paper channel. We consider this an extremely important skill set to either acquire or develop given this significant opportunity in the market for fresh paper. Our instincts have been proven correct as Atlantic has delivered on the promise of their expertise, and our business is significantly better positioned today as a result of this acquisition. Finally, I'd like to add that Propel's acquisition of a nationwide tax lien portfolio and servicing platform in 2014 helped the business expand dramatically. During 2014, Propel expanded its operational footprint from 9 states to 22 states, greatly increasing our ability to deploy capital in the tax lien market. The key to our powerful acquisition strategy is execution and focus. While every acquisition has its unique challenges, I am pleased to share that all of the acquisitions we made over the past couple of years have now been assimilated into Encore. We're quite happy with the performance of each new addition, even so, it's important to understand that we are constantly working towards improving the returns generated by each of our platforms. We dedicated ourselves to a formula for success that depends on us to be superior operators. Continuously working towards improving the performance of our existing book, while at the same time, requires us to be effective asset managers. Seeking out the best returns for our capital across the growing list of asset classes, and a widening global footprint. By incorporating these new organizations into our worldwide structure, Encore exited 2014 a much stronger and more diversified company with a truly global reach. We believe that more consolidation and acquisition opportunities exist, both in the U.S. and abroad, and we'll apply our disciplined approach to evaluating each opportunity, moving forward only when the criteria for financial return or strategic value are satisfied. Our intent is to drive improved shareholder value by continually strengthening our company, diversifying our business and growing and protecting our core. Now for the results. Encore's fourth quarter GAAP EPS rose to $1.04 per share compared to $0.87 per share in the fourth quarter of 2013. Excluding onetime items and convertible noncash interest, non-GAAP economic EPS matched our all-time high established last quarter at $1.17 per share compared to $1.05 per share, an increase of 11% from the fourth quarter of 2013. GAAP net income for the quarter was $28 million and adjusted income was $31 million or 8% greater than the same quarter last year. Cash collections increased 12% to $394 million, this increase was driven primarily by the strong performance of Cabot and Marlin in the U.K. Adjusted EBITDA was $241 million, an increase of 17%. Our overall cost-to-collect this quarter was 39.8%, reflecting the favorable impact of our international business in our results this quarter. Our estimated remaining collections or ERC at December 31, was approximately $5.2 billion, an increase of 30% or $1.2 billion, compared to the end of the prior year. On a full year basis, GAAP EPS from continuing operations attributable to Encore grew 30% to a record $3.83 per share. After adjusting for onetime in certain noncash items, we generated economic EPS of $4.52 per share in 2014, up 17% compared to 2013, representing yet another successful year. After crossing the billion-dollar threshold for the first time in our company's history last year, collections grew 26% to over $1.6 billion in 2014, thanks in large part to our expanding global platform. Our adjusted EBITDA grew 27% in 2014 to approximately $1 billion, providing our investors with a clear picture of the strong cash flow generated by our business. And our overall cost-to-collect was 38.6%, a 50-basis-point improvement compared to 2013. The hard work and dedication of our global workforce has positioned us well for the future, and we wouldn't be where we are today without their drive and determination. When we began our geographic diversification strategy with the acquisition of Cabot in July 2013, we described our strategy of deploying capital markets throughout the world where we could generate the best return. Our capital deployment in the fourth quarter reflected the successful execution of that strategy. We deployed $100 million in the U.S., $113 million in Europe, and $61 million in Latin America, demonstrating our versatility in seizing opportunities and the strength of our global platform. Our ability to deploy capital solid returns in multiple markets protects us from the supply-demand imbalances in any one market and insulates us from the volatility that reliance on one market could cause. In 2014, this strategy allowed us to be more selective in the U.S. market, which is still challenged by pricing pressure and the continued absence of the market's largest issuers. We deployed over $1.4 billion around the world in 2014, with the majority of our capital spend occurring outside the United States for the first time. Within the U.S., we deployed $700 million in total, of which $526 million came from our core business. I would like to note that this is the third year in a row that we've purchased at this approximate level within the core domestic business. We deployed the equivalent of $632 million in Europe during 2014 and another $93 million in Latin America. With regard to our core markets, pricing in the U.S. remains challenging. In some segments, pricing rose after remaining relatively flat for most of the year. Supply in the U.S. market did not materially change during the fourth quarter. As I mentioned at our Investor Day in June, our 2015 purchasing plan was developed with the assumption that some of the larger issuers would not be returning to the market in 2015. I know there has been some speculation about when certain issuers would begin selling. We have always planned on achieving our growth objectives as if the large issuers do not return to the market this year. In the U.K., pricing remains competitive and the supply in the seasonally stronger back half of the year improved as expected. Consolidation opportunities continue to emerge within the debt buyer market, and we expect that there will be only a few large players over time, similar to the U.S. Grove's strategy to invest in the Spanish market through telecom has paid off. With the large number of telecom accounts acquired since late 2012, we were able to build out our data sets and gain significant experience with various services in Spain. This enabled us to deploy approximately EUR 40 million in Spain in the fourth quarter at solid returns. With many of the financial buyers in Spain shifting their focus to secured assets, we are well positioned to increase our market share in the unsecured consumer market. In Colombia and Peru, 2014 was a period of constant supply with attractive returns. We expect to see a seasonal slowdown as we enter 2015. In other Latin American markets, we continue to come across interesting expansion opportunities. I'd now like to provide a few updates on a couple of our subsidiaries beginning with Cabot. Cabot delivered solid performance in the fourth quarter and for the year. Cabot's economic EPS contribution to Encore's results rose $0.26 this quarter as they gained traction on enhancing their collections through Marlin's capabilities on nonpaying accounts. And for the year, Cabot contributed $0.87 to Encore's overall profitability. Cabot enjoyed a solid year from a purchasing perspective as well, as they deployed $565 million in 2014, including $357 million for portfolios purchased directly from issuers and $208 million for the acquisition of Marlin's portfolio. As a result, Cabot has grown their ERC to over $2.3 billion. The performance of our call center in India in servicing Cabot's accounts continues to meet our high expectations in both the quality and quantity of collections, and we expect to continue to increase India's capacity in the coming year. Propel continues to grow and contribute to Encore's financial performance. Propel's receivables secured by property tax liens grew 22% in 2014 and now exceeds $259 million. With that, I'd like to turn it over to Jon, who will go through the financial results in more detail. Before I do that, I'd like to take this opportunity to thank Paul for his financial and strategic leadership as CFO of Encore over the last 10 years. Paul's deep understanding of our business positioned him to assume responsibility for our European and Latin American operations while continuing to manage our global M&A activity. After several months of transition and working closely with Paul, Jonathan officially becomes CFO of Encore today. Working with him over the past 5 months and seeing how he thinks about the business and addresses his business challenges has reconfirmed my excitement about having him on board. His experience with complex financial organizations and his depth of experience in raising capital will be crucial as we continue to evolve Encore into an international specialty finance company. Jon?

Thank you, Ken. Before I go into our financial results in detail, I would just like to remind you that as required by U.S. GAAP, we are showing 100% of Cabot, Grove and Refinancia's results in our financial statements. Where indicated, we will adjust the numbers to account for noncontrolling interest. We generated $394 million of collections in the fourth quarter. This performance reflects especially solid execution by our call centers in what is typically a seasonally slow quarter. It also reflects the continued growth of our overseas operations. 26% of our total collections, $104 million, were generated from accounts in Europe, compared to 19% of our total collection in Q4 2013. For the quarter, our total -- our call centers contributed 47% of total collections, rising to $185 million, compared to 40% of total collections or $140 million in Q4 of 2013. Legal channel collections accounted for 41% of total collections and grew to $160 million in the fourth quarter, compared to $155 million in 2013. As we transition accounts away from collection agencies and onto our own platform, the portion of collections from agencies are declining. Agencies accounted for 12% of total collections, down to $49 million in the fourth quarter, compared to 16% of total collections or $56 million in Q4 of 2013. For the full year, we generated over $1.6 billion of collections, up 26% compared to 2013. Overall, in 2014, we generated $415 million of collections from consumers outside the United States, or 26% of the year's total. This reflects the progress of our international expansion, particularly in the U.K. Recall that in 2012, we had no collections from consumers outside of the U.S. For the full year, revenue grew 39% as we generated over $1 billion of revenue for the first time in our history. Overall, in 2014, we generated $320 million of revenue from our international business or 30% of the year's total, once again, reflecting the early success of our geographic expansion. Overall, we've nearly doubled revenues over the past 2 years, growing 93% since 2012. For the quarter, revenue was $277 million, an increase of 17% over the $237 million in the fourth quarter of 2013 and was the 8th consecutive quarter of revenue growth for Encore. Our revenue recognition rate, excluding the effects of allowance reversals, was 63.5% compared to 63.3% in the fourth quarter of 2013. For the quarter, we had $5 million of allowance reversals compared to $4.5 million of allowance reversals in the fourth quarter of 2013. We had no portfolio allowances in the quarter. As many of you know, once we have evidence of sustained overperformance in a pool, we will increase that pool's yield. Consistence with this practice, and as a result of continued overperformance, we increased yields in the fourth quarter primarily in the 2009 through 2013 vintages. Turning to cost-to-collect. Excluding acquisition related and other onetime costs, our overall cost-to-collect for the fourth quarter was 39.8%. Breaking the overall cost-to-collect into its components, Cabot's cost-to-collect in the quarter was lower than our overall cost-to-collect, as Cabot's portfolio includes many customers who are already on payment plans and therefore, involve very little litigation. Marlin has marginally increased Cabot's cost-to-collect due to its litigation focus. However, we expect that over time Cabot's investment in Marlin will drive incremental net collections and a higher overall return. Within our U.S. business, direct cost per dollar collected in our call centers remained steady at 8.9% in the fourth quarter, the same rate as last year. Direct cost per dollar collected in the domestic legal channel was 35.9%, a 120-basis-point improvement from 37.1% in the fourth quarter of 2013. While cost-to-collect is an important metric, we don’t focus on it in isolation. Overall, success in our business is driven by generating the greatest net return per dollar invested. We accomplish this by collecting more gross dollars per investment dollar at what we believe to be the industry's lowest cost. Our legal channel in the United States, which includes both legal outsourcing and our internal legal operations, contributed greater collections in 2014 versus 2013. Our legal outsourcing channel in the U.S. collected $494 million at a cost-to-collect of 35.6%, representing a 30-basis-point improvement over the 35.9% cost-to-collect in 2013. For the year, we collected $117 million in our internal legal channel at a cost-to-collect of 39.3% compared to 47.3% in 2013. Even though we expect that our internal legal cost-to-collect will continue to improve over the time as we place more volume in this channel, it's important to understand that, above all, our primary financial goal is to maximize the net present value of each collection opportunity. Put simply, in some instances, it makes sense to spend more in order to collect more. I'd also like to reiterate that our long-stated preference is to work with our consumers to negotiate a mutually acceptable payment plan tailored to their personal financial situation. These plans almost always involve substantial discounts from what the consumer owes. We not only believe that this is the right thing to do for our consumers, but the right thing to do for our business. For Encore, legal action is always the last resort and is pursued only after numerous attempts to communicate and reach an acceptable agreement with a consumer. Adjusted EBITDA is one of the most important ways we measure our company's operating performance. It helps us to determine amounts available for future purchases, capital expenditures, debt service and taxes and it gives investors a clear picture of the strong cash flow generated by our business. Our strong collections performance in the fourth quarter led to improved cash flows. Adjusted EBITDA increased 17% over Q4 of last year to $241 million. For the full year, adjusted EBITDA grew 27% to roughly $1 billion, reflecting the strong cash generation capability of our global business. Our estimated remaining collections or ERC at the end of the fourth quarter was $5.2 billion, an increase of 30% over last year. This increase was driven primarily by Cabot's acquisition of Marlin and a portfolio we acquired as part of the Atlantic acquisition. We believe that our ERC, which reflects the value of portfolios that we have already acquired, is conservatively stated because of the cautious approach to setting initial curves and our practice of only increasing future expectations after a sustained period of overperformance. For the year, Cabot contributed $23 million to Encore's 2014 results, which equates to $0.87 of economic earnings per share. Because we own our interest in Cabot together with our partner, JC Flowers, Cabot's contribution to Encore's profit is calculated by backing out JC Flower's interest and management's interest, along with the preferred equity certificates attributable to Encore, which eliminate in consolidation. After a financing -- from a financing standpoint, Cabot recently amended their senior revolving credit facility increasing its size to GBP 195 million and negotiated a lower fixed interest rate. Before I finish my remarks about Cabot, I'd like to make a comment about the recent movements in foreign currency exchange rates. We have received a number of questions recently about this topic and its potential impact on our business. Cabot is the focus of this discussion as it is by far our largest international business. Simply stated, because we'd largely finance this business and deploy capital in the pound sterling, from a cash or economic standpoint, we are naturally hedged against the impact of changing exchange rates. This is, therefore, predominantly a financial reporting matter. Since we're not repatriating cash to the U.S. from the United Kingdom, this translation of results alone should not impact the value of the company. For Encore as a whole, there were certainly onetime and noncash items that affected our results this quarter. $0.06 were related to the noncash interest and issuance costs associated with the convertible notes and $0.02 were related to onetime acquisition and integration costs. After these adjustments, we ended up with $1.12 per fully diluted share and $1.17 on a non-GAAP economic basis. In calculating our EPS on a non-GAAP economic basis, we exclude those shares associated with our convertible debt that are reflected in our EPS denominator from an accounting perspective but which will not be issued as a result of the call spread we entered into at the time we issued the convert. For the fourth quarter, we excluded approximately 1 million shares from the calculation as result of the call spread. For the full year, we had onetime and noncash items that affected our results. $0.23 were related to noncash interest and issuance costs associated with our convertible notes and $0.36 were related to onetime acquisition and integration cost. These charges were partially offset by a tax benefit related to our Asset Acceptance acquisition. After making these adjustments, we end up with $4.34 per fully diluted share and $4.52 a non-GAAP economic basis. In this case, excluded from the calculation were approximately 1.1 million shares associated with our convertible debt, because of the call spread protection. With that, I'd like to turn it back over to Ken.

Thanks, Jon. As regulatory and technology requirements in our industry continue to rise, so do the barriers to entry. The cost to implement and maintain an effective compliance program is expensive, requiring companies to possess substantial market share to absorb these investments. The industry has consolidated as investment costs and compliance management systems have reduced competitors' returns and competitive strength. This phenomena will continue as smaller and mid-sized firms in our industry are subject to increasing regulatory scrutiny as new rules are established, and as issuers impose greater demands on increased oversight on their narrowing list of approved debt buyers. Although, regulatory and compliance is expensive, we believe our thoughtful implementation of our compliance program has become a competitive differentiator for Encore. At this time, I'd like to mention some important information that we included in our Form 10-K, which has been filed today. The Consumer Financial Protection Bureau or CFPB is currently examining the collection practices of participants in the consumer debt buying industry. We are currently engaged in discussions with the staff of the CFPB regarding practices and controls relating to our engagement with consumers. In these discussions, the staff has taken certain positions with respect to the interpretation of existing legal requirements and the retroactive application of potential requirements from future rule making. We agree with the staff on some items under discussion and disagree with the staff on others. As we seek to resolve those areas of disagreement, we intend to defend our interpretation of the law and consequently may ultimately reach a negotiated settlement or become engaged in litigation. If Encore and the CFPB reach a negotiated agreement, it is reasonably possible that we could agree to pay penalties or restitution and could recognize a pretax charge in excess of $35 million and could agree to additional terms that may impact our future operations, collections or financial results. We share much in common ground with the CFPB on policies and practices intended to move our industry forward. And Encore's commitment to treating consumers fairly and respectfully is reflected in our Consumer Bill of Rights. We know you all have many questions about the CFPB regulations -- sorry, we know you all have many questions, but the CFPB regulations limit our ability to discuss specifics, yet we do hope to resolve our positions amicably. We believe that our actions have been lawful and appropriate, and we are dedicated to meeting or exceeding legal requirements governing our industry. We believe that CFPB's ongoing rule-making process provides the most appropriate method of driving change and ensuring a level playing field across the industry. In summary, the Encore team delivered a strong fourth quarter performance and record financial results in 2014. As a result of all these efforts, we're evolving into an increasingly diverse international specialty finance company. And now, we'll be happy to take your questions. And operator, please open up the lines.

[Operator Instructions] And our first question comes from Michael Grondahl from Piper Jaffray.

In the release, you talk a little bit about operational improvements driven by some strategic combinations and they're delivering some increased efficiencies. Can you give a couple of specific examples of those?

Yes. So let's take it from 2 sides, actually. On the collection or liquidation side, we've put a number of programs in with catchy phrases like, Connect with the Consumer, Innovate and Win, but they are designed to increase our liquidation, both on existing pools and future pools, so that we can outpace the increase in pricing that has occurred over the last 1 or 1.5 years. So that's what those on the liquidation side are all about. On the expense side, we are -- continuously look to reduce our expense base and then take that expense reduction and reinvest it into litigation expenses. We see that we have a number of accounts that are NPV positive, and we funded that NPV positive approach to those accounts by reducing our expense base. Now that you'll see more into 2015.

Okay. And then maybe just secondly, it seems like Cabot, Marlin are sort of leveraging each other's strengths. Where are you in sort of -- is that in the early innings, middle innings? Kind of how much more is there to go there?

So very early innings. So we have identified -- we started with the synergy value of identifying about 78,000 accounts that we thought could be put through -- from Cabot put through the Marlin process. We then continue to up it. We're at about 100,000. We just got back from the board meeting, it will probably rise again by the next time we have a conference call. So we've identified all these accounts, and now we're putting them through the channel. So far we're in the very early innings, I would say, maybe top of the second in terms of putting them through the Marlin pipeline in order to start recoveries on those accounts.

Okay. That's helpful. Just lastly, ZBA collections, did you guys call that out?

Yes. We said it was $5 million this year compared to $4.5 million last year.

Our next question comes from Hugh Milller from Macquarie.

I guess, first, a question with regard to your comments on the call about you mentioned in the U.S. in certain particular areas for pricing, you did see a period where, before, they were relatively flat, now you're kind of seeing maybe some creep up in pricing. Can you just give us a little bit more color around maybe what areas that would be and what may be causing that?

Sorry, we seem to have a lot of feedback here, operator? [Technical Difficulty] So Hugh, back to your question. We see the rise really in the fresh market segment, all right. And just to give you some perspective on this, as the existing issuers -- large issuers, have been selling their backlog and seeing pricing rise, they have now -- are putting more debt to market that's considered fresh paper, say, from charge off to about 6 months. And that has become a more active market for debt buyers. And we've seen a few players look at volume over price, and we've been trying to be, I'll say, more disciplined in that market. In the -- in what we consider our wheel house, sort of the older accounts with lower balances, the pricing there has not really moved much over the year. And that also brings me to why we bought ACF, which was we saw this activity occurring, and we needed to have a better model to collect in the fresh paper. And that's why we bought ACF, Atlantic Credit & Finance, and they're doing an outstanding job for us.

Okay, great. And for the credit issuer who came back to market after being out for a period of time, are you seeing them sell portions of the backlog or are they just kind of taking a strategy of charging or selling current charge-offs?

A clever question there, Hugh. I'm going to pass because I don't want to give any direct feedback on any one particular issuer. I'll just say, maybe the volume that we saw in 2014 for deployment will look very similar, in our estimation, to the volume that we think is coming in 2015. And maybe to give you a little color, we kind of see about half of that volume, more or less, 45%, 50%, all coming in the fresh market.

Okay. That's helpful. We also saw some news headlines with regard to a credit issuer going through a legal dispute over vicarious liability and kind of being held accountable for the actions of the third-party agency that they placed with. Was wondering if you're hearing any discussions from kind of the credit issuers about a change in sentiment between either selling versus placing accounts or reducing their number of partners that they work with and sell to, anything that's going on in that area?

Well, just because of the guidelines and the bulletin that the OCC put out, because the CFPB has been more active in this space, both from the issuer perspective as well as the debt buyers perspective, the issuers have begun to call down that list, and there is only just a handful of approved buyers. So that's number one. Number two, we've gone through probably, I'll say, more than 2 dozen very thorough issuer audits over the last 2 years, and I don't see the issuers slowing down or backing off selling, because I think, in our case, we can outcollect and outdeliver in terms of NPV for them than if they did it in their own shop. So they have not indicated to us that they are pulling back at all.

Okay. And with regard to kind of there was the potential for some noise in domestic collections during the tax season this year because of the potential for repayment of the Affordable Care Act's tax subsidies, was wondering if what you guys are seeing so far in February, if there's been any influence on that with regard to tax returns and therefore, cash collections that you would have normally assumed so far in February?

No. We're not seeing that. In fact, we're actually quite pleased so far with January's collections and we're pleased with February's collections.

Okay. And I know that you guys always talk about individual consumers are all going through their own personal recessions. Historically, as we've gone through periods where there has been at some point rising wages, has that been a positive with regard to either collectability or repayment rates, any real influence their from a historical standpoint?

It is real hard to kind of dice the onion that fine. We've got so many different programs and strategies in place. I will say that our account managers now have another weapon at their disposal, which is lower gas prices. And now, you can talk to a consumer and say, "You know that Suburban that used to cost you $100 to fill up is now costing you $40 to $50 per week. And let's talk about how we can use that excess cash flow to help pay down the debt." So we're trying to use that more than anything else. But really, it is very hard for us to cut it that fine, given all the programs we have in place.

Okay. That's helpful. And then I assume that there's no questions on the CFPB then, correct?

I don't know what I could say other than my stated remarks.

Our next question comes from David Scharf from JMP Securities.

I think a lot of them have been covered. But, Ken, I want to just drill down a little more on the market in the U.S. I mean just setting aside the issues of the 2 large card issuers for now, which has been speculated for so long. We've got card balances returning to 7-year highs finally and we've got more subprime lending taking place now, loss rates are still at depressed levels but starting on the past normalization. I mean are you actually feeling any of the benefits or do you expect to over the next 18 months from these tailwinds? Or on the margin or are these just very, very incremental developments?

I think on the margin, they're incremental developments. As I said, we're looking at '15's deployment volume without the 2 large issuers coming back to the market to be equal to what happened in '14. On the edges, yes, these are some good signs for us that there will be more volume coming our way. What's happened is, issuers are moving sooner and quicker to sell their debt, because again, they do the NPV, and our price paid is greater than what they can collect. And I think that's what's kept the volume at a very nice level over the last several years even with large issuers out of the market.

Got it. And just curious, to the extent over this last kind of 18 months, a difficult period for supply, is your understanding that a lot of the issuers who have, if not entirely pulled back, pulled back somewhat from selling, have they actually been outsourcing to third-party contingency shops or is a lot of this just kind of residing in-house?

Well, they do both, right? They do it through their shop and then after it runs a 180-day cost, they do put it out. But what they'll do is they'll put it out to the first collection agency, then they'll take it back there for a period of time, put it out to the second; they could either sell at that point or sometimes some of them go to a tertiary. But that whole process has been condensed now, and they're putting that paper out sooner rather than have it to go through several different collection channels -- or shops, not channels.

Got it. Okay. You know what, I might was well offer up a question on the CFPB, and I'll let you shoot it down or however you wish to proceed. But can you at least give us a sense for, when you referenced disagreements over or different interpretations over existing either statute or regulations, just trying to understand, are these disagreements over the Fair Debt Collection Practices Act, some of the statutes in there? Is it over interpretations of some of the various courts and AGs regarding the litigation process and affidavits, just trying to get a sense for how narrow or broad the scope of disagreements are?

Yes. Let me just try to say a few things that I can and then probably I have to cut it off there. I think it's obvious that the CFPB clearly intends to drive regulation and increase consumer protection in the financial services industry. And that debt collection is one of their high priorities. And we've seen that through their rule-making that is underway and you can kind of go to their rule-making and begin to get a sense of at least the themes of what they'd like to see. From our point of view, we keep pointing out to all that we think we've been a leader in this market. We are treating consumers fairly and with respect. We really believe strongly in the Consumer Bill of Rights and we practice that. And I would also probably say that, it would be my hope that the CFPB rule-making process that's underway will provide an appropriate method to drive the changes that the Bureau would like to see and thus, ensure a playing field that's very level across the entire industry rather maybe focusing on the larger players in the market. How does that work for you? It's probably the best I can do.

No, no, no worries, we understand the constraints. I am curious, you threw out a figure, $35 million, and I was scribbling down. I'm trying to get a sense what that was grounded in. I mean that's a number that probably didn't come out of thin air.

Yes, true. Listen, here, I'll say that the Bureau rules limit our ability to address this. So I would ask you to maybe, if you're interested and curious, go back and look at prior settlements with other issuers, other companies, and you'll see that the Bureau takes an approach of many components that make up that dollar amount. Some of it is consumer restitution, which includes refund, some of it is debt forgiveness, it could be penalties in there, it could be operational commitments and there could be enhancements to compliance programs. So it's a combination of that, if you go look at other issuers, but I won't comment specifically on what we're talking to the Bureau about.

Okay, fine. Maybe switching gears overseas. I know you're either in the process or you're pretty close to getting kind of the final joint venture partner for Indian purchasing approved. Is that segment supposed to be up and running by the end of this calendar year? Do you expect to be deploying capital in India by the end of 2015?

My hope is that we would be up and running by the end of the year. How much capital we'll deploy will be a function of how long it takes us to still finish up the joint venture agreements and also get approved by the regulators there. I'll say that everyone knows a little bit that IFC is one of our partners now and they've disclosed that. We're still working on the final partner or 2 that needs to come in. And it's an interesting joint venture because you've got to have a longer-term strategic commitment to the business, because there's not an immediate liquidation event that could occur, i.e. we, Encore, can only own 50% of the company based upon Indian rules today, or we are starting off at 50%. So a lot of the potential investors love what we're doing, love what we -- where we think the industry is going. They struggle a little bit about how to monetize their investment over time, and we are trying to work out some structures that will allow them to monetize. But we've been -- it's been a little bit slower go than we'd like on this. But we're still gung-ho about the opportunity, we just got to get the right structure in place. So again, I've said this, Manu Rickhye runs India for us and I've said this to him a thousand times, you can be late to this market. They got $35 billion of charge-offs and only 4% of that was sold. So if we come a couple of months late, we still have a huge opportunity in front of us.

Got it. Okay. For some reason, I thought the IFC was maybe the last kind of piece of the puzzle, but it sounds like you still need 1 or 2 other partners then.

Yes, correct.

All right. And then on the regulatory side in the U.K., I know a quarter ago we were talking about some issues out of the Ministry of Justice regarding documentation requirements for legal action there, any developments on that front?

No. They have accepted comments and we have added our comments, submitted them, and we have not heard anything back from them yet.

Our next question come from Sameer Gokhale from Janney Capital.

Firstly, I just want to thank Paul, it's been a pleasure to work with you in your role as CFO. So congratulations again on your new role, but I just wanted to call that out, it's been a real pleasure. And Jon, congratulations to you again on your new role, and I think this is the -- it seems like it's your first day as -- officially as CFO, so congratulations on that. I'm glad to have you on board also. I had a question -- I'm going to -- I know you're very limited, Ken, what you can say about the CFPB in the negotiated settlement, but I thought I heard you say penalties could be in excess of $35 million. So then the question that raises is if you're using that as a starting point, should we assume that maybe it could be a bit more than $35 million, maybe $40 million, even maybe $50 million, but not $70 million. How should be think about that in terms of order of magnitude relative to that number? Some context would be helpful there, if possible.

Unfortunately, the Bureau limits our ability to address these issues further. What happens between regulator and debt provider is -- stays. What they say, what happens in Vegas, stays in Vegas; what happens on our conference calls, stays within those barriers. So I need to respect that and I'm sorry, I appreciate your question, but I just can't go any further than where I've gone so far.

Okay. No that's fair enough. The other question I had was I know you talked a little about gas prices and you've got a number of initiatives in place, it's typical to parse out kind of what the benefit from gas prices is, but I would have thought that there would have been a more pronounced benefit to your cash collections in the quarter, more noticeable benefits. Simply because when you look at other types of companies, I mean in different industries, like say pawn-lending for example, probably I would assume there's a significant overlap in the demographics there. They have actually seen significant negative impact on their pawn-lending volume and partly they attribute that to lower gas prices in Q4 and then there's just less need to borrow, because of the discretionary cash. That was helpful to that. It's a little bit surprising that there isn't more of a noticeable impact on your collections. I mean, are you surprised by that also or maybe not?

I mean, look, globally, we collected $394 million. I don't know that we can parse it that fine. I'll just say that to one of the other questions that came in earlier, the early signs into this year, our collections are exceeding our estimates -- our projections rather. So maybe we're seeing a little bit of a delayed reaction on the gas, but quite frankly, we have so many different programs that we have in place to encourage consumers to pay down their debt. I don't know that we can point to any one item that is really the single contributor moving it one way or the other. I mean MCM's -- Encore's domestic collections are $282 million and that's -- it still hard to see that. And then I'd also say, sometimes when you look at collections, say year-over-year domestically, you also have to take into account, we are moving around our deployed dollars. So we just can't look at total dollars collected versus the prior year, because we shift them more internationally or we could buy it later, so it's really hard to get a real read of that and take it as a trend.

Okay. And then the -- on another note, I know your guidance -- your EPS growth guidance is, I think, 15-plus percent, that's sort of a long-term trajectory that you want to have. And as we look into 2015, it sounds like you're quite comfortable with accomplishing that 15% -- reaching that 15% growth target. You've laid out some purchasing targets at Investor Day, but in addition to those, should we assume that you'll have other acquisitions that will help you get to that 15% or should we assume that as of now, based on what you've seen, you can get to that 15% as is without any other large company acquisitions. In other words, should we assume you pulled the trigger on other half of Cabot you don't own already to get to that number or not?

That all comes down to return on investment for us. And if we can pull the trigger on the other half of Cabot and that's a better return than maybe other areas that we want to deploy into. We would stop deploying into the lower areas and put our money into Cabot. So I don't know that I would make an absolute statement that acquisitions that come in would be an increment to what we are planning today. We look to increase our returns for every dollar spent, and we look to spend our money in the best way possible. If that happens to be in acquisitions -- more in acquisitions and less in traditional portfolio deployment, then so be it. But I wouldn't get myself locked into one way or the other on this.

But it sounds like you can get to that 15% number, the mix of acquisitions may change, but relative to kind of the general target you laid out for your purchases at your Investor Day, with those purchases, then it sounds like with that sort of guidance in mind for purchases, you should be able to get to that 15% EPS growth guidance. If you find additional opportunities, sure, you'll pull the trigger. But even without those, you get to that 15% EPS number. Is that fair?

So I think our standard line is that we'd be very proud of this company year-over-year if we can achieve 15%. In certain years, I think you'll see us succeed it. There may be 1 or 2 years that we may want to do more investments in legal, and it may be a little lower than that. But we go in with the idea that, over a long term, we're going to hit 15%. So I'd leave it there and I don't want to make any -- look at it this way, I don't want to have a big sign across the battleship that says, Mission Accomplished yet in the third week of February. I'd rather do that towards the end of the year.

Okay. And then just my last question on consolidation. You referred to it in your comment, and I was curious if you could lay out a little bit for us, how you think about the landscape of consultation. Let just focus on the U.S. for now. Are you surprised with the fact that there hasn't been more consolidation at this point given the constraints in the supply so far, what's going on in terms of the regulatory requirements from companies or do you think that there are just some companies that have been hanging on that will eventually decide to sell, because it does seem like we've been in this environment for a while now and there has been consolidation, but one would assume that there would have been maybe a lot more, so how do you think about that?

Yes, I think -- first, I think the mid-sized and the smaller players are going to be shocked over time as the advanced notice of rule-making gets rolled out, and their compliance level and expense for that compliance level is going to rise. And I think it's going to squeeze their profitability. And I think that's going to be an eye opener. To date, I don’t think they've seen that, because again, the Bureau is talking to the larger players rather than talking to the small players. And I think as that gets rolled out, I think there will be a realization that it will be difficult to continue the returns that they have. And at that point, I think, they will look to sell. Now having said that, I'll tell you that every seller calls us up and just because there hasn't been enough as much consolidation as you think, that could also be because we don’t want to pay the price that they're asking for, right? And we have alternatives, and we'll move the money to Latin America to Europe and we're not desperate. And I think a lot of the mid- and smaller-sized sellers think that with supply being stagnant at the same levels as 2014, that they could get a price that's far greater than what their portfolio is really worth. And for us, and for minding the shareholders money, I think you want us to be very disciplined and we are trying to be very disciplined.

Or Sameer, it could mean that the -- we're not comfortable with the practices of those buyers and we've seen some deals where we've spent a lot of time looking at them and have not been able to get comfortable with how -- with their collection practices and the liability that would be associated with those that we would take on if we acquire their business or portfolio.

That's a very important point, just so you understand, because that reflects back into pricing and we reflect that back into pricing, and that's where the bid-ask spread really widens, on what we think -- where we know the industry is going in terms of regulation versus what some of the small and mid-sized players have seen.

Our next question comes from Mark Hughes from SunTrust.

Understanding that most of your foreign assets are -- will stay over in the U.K., when you translated the earnings into U.S. dollars, was there an EPS impact? Was that a little bit of a headwind?

If you look at -- as an example, right? If you look at the fourth quarter, depending on -- the translation gets a little bit complicated because it depends on what you use as benchmark. Someone actually have moved it up a whole $0.01 and some would have reduced it a whole $0.01. So the reality is let's just -- when it's amongst us, I just call it flat.

Okay. So the CFPB, as you look at the potential impact on the business, how much of it would be infrastructure investment in those systems client folks versus collection procedures?

So again, I'm going to be careful what I can say, but let me just give you a broad statement and maybe this will help you with that. I think the CFPB's actions are going to have negatives and positives. On the negative side of the ledger are cost of operations will probably increase as the regulatory expectations increase. On the positive side, whether it be the CFPB or the OCC, there will be improvements in the support we get from issuers, i.e. post sale media that we get, media availability and account quality shall all improve, and that's going to improve our liquidation. So whether the positives outweigh the negatives or vice-versa, it's hard for me to see, but I do think it's going to happen of both sides of the ledger and we just have to wait for the process to finish out.

Okay. The potential sellers who are not selling now, understanding that you do not expect them or you're not including them in your assumptions for 2015, have you seen any marginal signals that were either more positive or more negative as you have progressed over the last few months?

Yes. One of the sellers is getting ready to do issuer audits, and that would probably lead me to think back half of the year to be safe but that's a guess.

Okay. That's helpful. The -- you mentioned that the percentage of fresh would be I think 45% to 50% in 2015. Do you have a similar kind of rough estimate what it was in 2013 -- I'm sorry, in 2014, which has gone up to 45% to 50% in 2015?

Yes, it was about the same level, let's call '14, 40% to 50%, I think it's just going to be 45% to 50%, we're really splitting a small difference here.

Right. Will the total spend be up a little bit more as the pricing is up? The volume is the same, the mix is the same, but pricing is little bit higher, so I guess spend would be up a bit?

We are assuming spend is flat. But it's a better place to be than to assume that the spend is up and then have to scramble.

Got you. If pre-CFPB, you're going to pay $100 for a portfolio, post CFPB how much you might be willing to pay based on the things -- the rough things that you're seeing now, $95, $98, $90?

That's a pretty clever question. And I'll come back and say, I need to stay away from that. Listen, I think overall, as the industry evolves, and we see what's going to happen both on the issuer side, again through the CFPB and through the OCC through their bolt-in and they need to clarify that and we expect some FAQs to come out on that, we'll just see how all that shakes out in terms of how much more it costs us to collect and how much of more liquidation we can expect. And eventually, all this stuff should find its way into pricing.

Then the retroactive nature of the potential things under discussion, how meaningful is that? What -- should we be worried about that or is it -- will it be kind of a rounding error?

I'm going to have to default to the standard line that the Bureau's rules and regulations limit us to address those issues further.

Our next question comes from Robert Dodd from Raymond James. Robert J. Dodd - Raymond James & Associates, Inc., Research Division: At the risk of driving you insane, one about the CFPB. Do you think it is feasible that this could be resolved during 2015 or do you think it's going to be a longer-term discussion with them to get everything resolved, be it dollar amounts, or et cetera, with regard to you rather than the market as a whole?

Listen, probably the only thing I could say is that we actually value our relationship with the Bureau. We are also strong advocates for improvement. We are committed and have always been committed to following the laws and regulations and that we have much more in common than we have in differences. Having said that, there is a place that we need to balance. We need to balance what's good for the consumer, what the regulatory environment is all about and we need to balance what's best for our shareholders. And we've got to make that calculus and that calculus will take some time as we have discussions, but I can't get into projecting any time frame at this moment. Robert J. Dodd - Raymond James & Associates, Inc., Research Division: Fair enough. Just on the competitive -- again, ignoring that the big 2 kind of issuers in the U.S., you talked about some of the others being flowing a little bit more fresh to the market, do you think this noise or anything like that around the CFPB is going to have an effect or is having an effect or not even necessarily the CFPB, but overall, that some of these issuers may be selling more aggressively, and take that with a grain of salt, in the near term to try and get -- take advantage of this elevated pricing before some of the buyers, who perhaps aren't as up to date on their compliance, realize that actually they can't make money at these levels with what the compliance costs are going to be. So do you think there's a -- call it, a bubble of fresh coming to kind of take advantage of that market? Or do you think it's actually going to have -- is there going to be any disruption as people kind come to terms with not just, obviously, the bank rules, which came out in August, but now this other set of overhang?

I don't see a rush to the market, as I guess that's your question. I think the flow out of Q4 and the flow into Q1 has been rather steady. I think any of the issues that we're talking about, the issuers already are experiencing the same thing. Again, coming through the OCC or their interactions with the Bureau, I really think -- and I may be wrong here, but I really think the issuers also do a very simple calculus. How much can I get for the account, if I collect it myself? How much can I get if I sell it? Do that NPV and they bring it to market as such. And I think they know that supply is far less, and if 1 or 2 of the big guys come back, I think it changes the supply dynamics, which may shift more pricing power over to the debt purchasers. Robert J. Dodd - Raymond James & Associates, Inc., Research Division: Got it. Just finally on Europe, to put I think it was EUR 40 million in Spain with Marlin in the quarter. I mean that's a pretty sizable chunk. Do you expect -- is that conceptually kind of your test? You've been building the file, get the data, is this a purchase that's then going to be run for a while to see how it works out? Or do you think the Spanish market is developing where there may be more of a steady flow going forward, maybe on not quite that level, but a steady flow that Grove and you can take care of? Or is it just still very flippy and lumpy?

I'm going to let our new group executive of Latin America and into -- and Europe pound his chest on that one because this was a good deal and let him flex his muscles a little bit.

Can everyone see these muscles flexing? Spain is definitely a lumpy market, so that is the case. And many markets in Europe are lumpy because the banks don't have a regular process at this point to sell inflows like they do in the U.S. and the U.K. Although, hopefully, over time, as we work with them and educate them on how things work in markets where issuers have been selling for a longer period of time, they'll get to that flow. So I think we expect it to be lumpy. We're going to see how this portfolio performs. Early indications are that it's going well, it's exceeded our collections expectations for the first couple of months. If it continues to go well, you can see us deploying more capital in that market. And we do expect to spend money in Spain during 2015 and beyond as Ken had mentioned in his remarks. Some of the financial buyers who used to buy the unsecured portfolios are now shifting their focus to more secured portfolios as the -- as buyers -- as strategic buyers like Encore come into the market and can drive more sophistication in the collection process for the financial buyers that drives their returns down. So we expect to see more supply available on the Spanish market and ultimately other European markets as some of the financial buyers shift their attention elsewhere. So we do see it as a great opportunity and expect to deploy more in Spain. It may not -- it's not going to be EUR 40 million a quarter, we want to make sure this one is performing up to our expectations first.

But the good news -- addition, is that, having bought this, people know that we are now prevalent in that market and more opportunities are beginning to flow across the desk of the folks at Grove Capital.

Our next questions comes from John Rowan from Sidoti & Company. John J. Rowan - Sidoti & Company, Inc.: I have a couple of CFPB questions and I apologize, to start with. But so the CFPB, is this a result of a normal compliance review? Or is this a separate investigation by the CFPB?

I'll just say that the CFPB has a greater interest in this part of the market and that's probably all I can say. John J. Rowan - Sidoti & Company, Inc.: Okay. And then, looking at the potential fine or whatever you -- your $35 million that you said, are there any covenant issues that would prohibit you or limit your ability to use your revolving credit facility to pay that or if we have, if you want deploy more capital in the U.S., any covenant issues to get the accordion feature? I just want to judge kind of how you're looking at any potential penalty -- and you referenced the $35 million number, juxtaposed against your liquidity demands just in the U.S.?

$35 million wouldn't negatively impact our covenants nor would it impact -- materially impact our liquidity and change our plans for a capital deployment in 2015. John J. Rowan - Sidoti & Company, Inc.: Okay. So right now, you could get at the accordion that's available, right?

We could, but we wouldn't need to tap into the accordion for this or to execute our plans for 2015. John J. Rowan - Sidoti & Company, Inc.: Okay. And then are there any statutory limits on what the CFPB can go after, whether it's a civil penalty or restitution or any type of ceiling that we could hang our hat on?

There is nothing I'm going to -- I can't touch that question. Sorry. John J. Rowan - Sidoti & Company, Inc.: All right. We'll move on from the CFPB. The -- you mentioned the call centers in India picking up volume for Cabot, right? Does that change your FX dynamic at all, right, as you're going to have expenses in different currencies and have -- than your revenue? So I'm just curious how you look at your FX exposure going forward, where you have a mismatch?

Well, what will happen in Cabot is what we do here in the United States. So in the U.S., we've been paying -- we've had labor in rupees and we've been paying in dollars, we've had that mismatch and what we've done is put in place forward hedges for 3 years to ensure that we can lock in the rupee-dollar at a specific exchange rate, which we've put into our valuation model, so we know the cost-to-collect is going to be on the portfolio, and Cabot is doing the same thing. But instead of hedging the dollar against the rupee, they're hedging the pound against the rupee. So we ensure that we know exactly what the cost-to-collect is on any given portfolio, given the mix of India collections versus either U.K. or U.S. collections and we hedge accordingly.

I would have given a shorter answer and just said that we only have 45 to 50 people collecting right now. So that operation is still evolving as we continue to learn the U.K. market and continue to get comfortable with both the regulatory environment there and how you collect and then the behavioral environment, which is what the folks in India also have to learn. So that continues to get better and better for us and over time, we'll put more and more people into India. But I don't think it's a real meaningful number today and nothing, I would add, nothing I don't think you should worry about. John J. Rowan - Sidoti & Company, Inc.: Okay. And then just last question. Kind of housekeeping. I thought I heard you reference a number of cost-to-collect of 38.6%, down 50 basis points, but then I thought I heard another number, can you just tell me what the cost-to-collect in the quarter was and how that trended year-over-year?

Yes. Sorry. We put our decks to the side here for a moment.

The overall cost-to-collect was 39.8%. Is that what you're looking for? John J. Rowan - Sidoti & Company, Inc.: And that was in the fourth quarter, not for the year, right?

In the fourth quarter, correct. John J. Rowan - Sidoti & Company, Inc.: And what was that on a year -- what was the year ago or what was the delta?

Last year? Last year was -- well, fourth quarter last year -- look at it this way, full year had ended about 39% last year. It actually rose during the cost of the year, specifically in the U.S. because we did some acquisitions like for example, Atlantic Credit came on at the tail end of the third quarter into the fourth quarter, and it takes us a while to work down the redundancy and operations at Atlantic and also in the other parts of our domestic operations.

And for 2013 in Q4 it was 42.1%.

Our next question is from Brian Hogan from William Blair.

My question is centered around capital deployment and where you're finding most attractive returns today.

So I think nothing has changed from the last time we've chatted, which is we see the higher returns in Latin America. And we are starting to increase our deployment there as we begin to find interesting opportunities and get comfortable with the performance of those opportunities. From there, I probably move over to the U.K that has probably the next best set of returns, followed very closely by Spain and then by the U.S.

All right. And then on capital deployment and interest in Europe, obviously you're -- come more in Spain now. What about the rest of continental Europe? What is your interest there to expand geography there? And then actually even take it a step further, any other geographies globally?

Yes. So that's Paul's -- one of Paul's major responsibilities, is how do we continue to expand in Europe or in Latin America. And we're going to be agnostic to where we go first, but we will be very much in tune where the best returns are. We think that some of those best returns may very well be in Latin America before other parts of Europe. But again, it's always a question of who's selling and when and then who's also showing up at the table to buy. So we're looking at different things in Europe. We would buy them through Cabot -- and then probably the way we do it, buy through Cabot, and then we're looking at different things in Latin America. And I've said this several times too, we have, every quarter, 3 to 5 deals we're working on at all times, and we haven't done anything. Over the last 2 quarters we've been executing against our plans to ensure that everything has been -- that we bought has been assimilated and it has. But also, at certain points, we just don't like price and then we're not going to buy for the sake of buying.

The competition in the U.K. and even Spain, how would you characterize that? Has that taken a step up?

Yes. Certainly in the U.K., it's taken a step up. There are 3 competitors that -- I think 1 has already sold and the other 2 are in the process of being sold. So you're beginning to see the same consolidation in the U.K. that you saw in the U.S. So that's beginning to happen. And pricing has risen and which we expected it that it would as you would thought to begin to see some consolidation in the country.

And then my last question, a little bit strategically. Different asset classes or even I know over in Europe they have a third-party collections, and it can be attractive business over there. In the U.S. historically, it hasn't been. But it was a consolidation, CFPB, and is there an opportunity to do third-party collections and be interest in other asset classes in the U.S.?

Well, in the U.K., Cabot does third-party collections. They have that as part of their operations. In Refinancia, which is Colombia and Peru, they have a debt collection company that's part of their company. And we have said that we like debt collections and we haven't found the right company is to step -- to work a deal with at the moment. But we do like debt collections as an ongoing business and as a nice business expansion or adjunct to what we currently do.

Our next question comes from Michael Kaye from Citigroup.

Over the last couple of quarters, I mean you kind of alluded to it, but you mentioned some interesting expansion opportunities in Latin America. Is there any more specifics you can give me, maybe some sort of products or specific countries you're looking at?

Not at this time. I think we're saving that for Investor Day. We've got some -- we're early stages in some of these countries, and if they work out right, then I want to get a little bit of a first mover advantage. But we'll talk more about it, we think, on Investor Day in June.

Our next question comes from Hugh Miller from Macquarie.

I'll be real quick. I was reading in the K and I think you guys had talked the exact same language on the call, you guys mentioned you could agree to additional terms that may materially impact your future operations, collections or financial results with regard to the CFPB. Does this seem like the type of thing that could cause you to reevaluate your ability to target a long-term 15% earnings growth target for the company?

So some of the increased scrutiny from the regulatory side we mapped out early on, and we said, in the U.S., that's going to happen as well as we saw our supply constraints and we saw pricing increasing. So we try to, as I said, move with the purchase of Cabot with Marlin with Grove and Refinancia and then other things we're looking at Mexico, to augment the U.S. so we're not U.S. dependent for our long-term growth rate. So that's how we take -- that's the holistic approach. Anything else other than that, I really can't make any comments about, but we have a holistic approach here to continuing to grow.

Okay. And then just a quick follow-up. Of the things that you're in discussions with, would you say that they are more likely to be company specific to Encore or is it probably more a reflection of industry practices at large -- at the large market participants?

I'm going to just come back to the standard line. I just don't think we have the ability to get into detail about that at this time. When everything is -- when the dust settles, we're happy to talk about it in greater detail but not now.

I'm showing no further questions. I'd like to hand the conference back over for closing remarks.

Well, thank you, all. We think we had a good quarter and as I said to the board, I think our expansion strategy has transformed our business. Diversification makes us a flexible debt buyer to deploy capital in different asset classes and geographies to maximize our expected returns. And I like what we're doing on our operational improvements to improve liquidation and also address costs and then reinvest that cost savings back into future NPV actions that will drive more value to the company. So thank you, all, for attending and we'll speak to you all soon.