Good day, ladies and gentlemen, and welcome to the Encore Capital Group Q2 2015 Quarterly Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to you, Mr. Bruce Thomas, VP of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Encore Capital Group's second quarter 2015 earnings call. With me on the call today, are Ken Vecchione, our President and Chief Executive Officer; Jonathan Clark, Executive Vice President and Chief Financial Officer; Ashish Masih, Executive Vice President, US Debt Purchasing and Operations and Paul Grinberg, Group Executive, International and Corporate Development. Ken and Jon will make prepared remarks today, and then we will 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 be between the second quarter of 2015 and the second quarter of 2014. 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 for a detailed discussion of potential risks and uncertainties. During this call, we will 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 will 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 a good early morning to everyone. I appreciate everyone joining us today. This morning, we posted our second quarter 2015 financial results and we are pleased with our performance. We established new records for total collections, revenues, adjusted EBITDA, adjusted income, estimated remaining collections, and non-GAAP economic EPS. Additionally, we deployed over $500 million in the quarter including the portfolio we acquired through DLC transaction that we announced on investor day. Our success in the quarter was driven primarily by two of our strategic initiatives within the company. First, our international platform is delivering strong growth in collections, revenues, and earnings; and second, we are successfully sustaining our core U.S. business through sizable capital deployments and commitments for forward close. Turning to our results, Encore’s second [ph] quarter GAAP EPS rose to $1.03 per share compared to $0.86 per share in the second quarter of 2014, an increase of 20%. Excluding one-time items and convertible non-cash interest, non-GAAP economic EPS reached a record $1.27 per share compared to $1.10 per share, an increase of 15% from the second quarter of 2014. GAAP net income grew 17% in the quarter to $28 million, and adjusted income grew 14% to $33 million compared to the same quarter last year. Cash collections increased 7% to a record $437 million. Adjusted EBITDA, one of our most important measures of underlying performance grew to a record $277 million; an increase of 8%. On a trailing 12-month basis, adjusted EBITDA grew 10% to $1.036 billion compared to $943 million a year ago. Our overall cost to collect this quarter was 37.6%, down slightly from the 37.9% a year ago reflecting a greater percentage of our collections coming from our lower cost international business. Our estimated remaining collections or ERC at the end…

Thank you, Ken. Before I go into our financial results in detail, I would 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 non-controlling interest. In total, we deployed $505 million in the second quarter, of that total, we purchased $419 million of credit card receivables, including $128 million in the U.S. and $290 million in Europe. The European deployment included $216 million for the purchase of DLC's portfolio in the UK. An additional $86 million was deployed by Propel for tax liens. Our ability to deploy capital and solid returns in multiple markets allows us to allocate capital to the areas with the highest returns and insulates us from the pricing and volume volatility the reliance on one market can cause. Ken covered some of the information about our second quarter collections during his remarks. Worldwide collections grew 7% to $437 million compared to $409 million in the second quarter 2014. For the quarter, our call centers contributed 45% of total collections increasing to $197 million compared to 47% of total collections or $192 million in the same quarter a year ago. Legal channel collections accounted for 43% [ph] of total collections and grew to $189 million in the second quarter compared to $168 million and 41% of collections a year ago. Agency collections in the second quarter remained at 12% of total collections, the same percentage as last year. In the past as we have transitioned accounts away from collection agencies and onto our own platform, the portion of collections from agencies has declined. However, in Q2 this impact was offset by the growth of gross business in the UK which employs agencies…

Thanks, Jon. Before we wrap up our prepared comments, I’d like to summarize our second quarter progress and provide you our outlook going forward. First we grew economic EPS by 15% in Q2. Our competitive position in the U.S. is excellent. We made strong progress during Q2 in securing our domestic deployments for the full year and are on track to satisfy our full year purchasing goal in the U.S. We’re also on track to deploy capital globally within the $1.2 billion to $1.4 billion target range for the full year of 2015. Cabot’s recent purchase of DLC has strengthen our market position in the U.K. and we continued to pursue new opportunities to improve and expand our business internationally. And finally, we bought back shares of Encore stock in Q2 completing the most recently authorized share buyback programs. Now we’ll be happy to answer any questions that you have, so operator, would you open up the lines please.

[Operator Instructions] And our first question comes from Bob Napoli of William Blair. Your line is now open.

Thank you. Good morning. Thanks for doing a morning call and it's kind of nice for us on this side, but a little early for you guys. Now a question on the IRRs, I guess, if you could compare the IRRs that you’re buying out today in the U.S. market, the European markets versus say, a few years ago versus historical levels and versus your targets, where are those IRRs today, and do you need more leverage to get the same returns that you did in the past, a little color there would be helpful?

Yes, so IRRs are down from the glory years of 2010, 2011, and 2012. Everything that we do buy is above our hurdle rate, and to offset some of the decline in the IRRs, this has been our strategy. We've moved internationally where I think we’ve said this before many times where we see Latin America having the potential to have the highest IRRs going forward. IRRs are still rather decent in the U.K., although they are. We do see some pricing increasing there. So, I'll leave it at that, I mean I think as we expand internationally, our IRRs will continued to increase in Latin America.

Okay and then the -- if you can give any updated comments on the CFPB, you guys had put out a comment a few quarters ago about $35 million expected, I just want to know what kind of progress, I mean the CFPB is, you see a press release out of CFPB and some company just about weekly where are they with the debt collection industry today?

Yes well, without doubt, I’d just tell you we continue to have conversations, those conversations are fluent. We continue to track and monitor any settlements or announcements that come out of the Bureau relative to some of the other larger banks, and really there is nothing much more to say other than what we talked about on Investor Day, so our conversations continue with the Bureau.

And then just in the U.S. market competitively, and I'll turn it over to the next, but in the – are you seeing anything different, are you hearing – are you any more confident about the big guys coming back, are you seeing any of the other based on the JPMorgan settlement, are you seeing any of the other debt sellers pulling back or using that as a guideline for their operations?

No, we don’t see anyone pulling back. I think we’re consistent with what we’ve said on Investor Day. We see one of the large guys coming back towards the end of this year, and we see the other large player probably coming back in the middle of next year, but no one has pulled back in terms of selling based upon any of the announcements that have been made.

Thank you.

Thank you.

And our next question comes from David Scharf of JMP Securities. Your line is now open.

Hi good morning. I echo Bob's sentiment about the morning call. Thank you. On the U.S. market, Ken just curious, your comment about pretty much already moving towards achieving the lower end of your 2015 goal, can you give us a sense for how much of domestic purchasing is accounted for by forward flow arrangements versus kind of auction just to give us a sense for how visibility shapes up in the market here?

I prefer not to break out between what we bought in bulk and what is forward flows going forward. Maybe the best thing I can say is, as we move forward for the rest of the year, I think you’ll see the purchasing volume be higher than what we announced in Q2.

Got it, got it. That’s helpful, and shifting to India, I know you discussed it on the Investor Day and on previous calls, but any update on the purchasing outlook there as you put the final pieces of the joint venture together?

Yes, so we’re going for regulatory approval, and one of the two regulatory agencies that we need to get approval from has recently given us approval. And we’re working with the second one, and probably my timeframe of having it done by the end of the year or very early into next year is still on track. And we are looking to buy some portfolios and have them serviced by others towards the end of the year, and we’re looking to do that and I don’t think there is any change of plans at this moment.

Okay, got it. And then on Latin America, you had mentioned you expected the banks to be picking up the pace of selling in the second half, is this a seasonal phenomenon in the market down there in terms of when they tend to sell assets or were you referring to more just the increased acceptance of the practice down there in the maturation of the market?

I’m going to let -- Paul is in town, so which is a rare day for us, so I’m going to let him talk about Latin America.

Hi, David. So a part of it is seasonality, so in some of the markets, the back half of the year are much more active than the front half of the year. So there is definitely that phenomenon, but I think a lot of what we’re starting to see is more acceptance by the banks. So the number of transactions that we’re looking at in some of the markets down there now are much greater than they have been historically. So many of the banks are beginning to do their first and second sales, they’re starting to do some pilot selling. So we believe our timing was right in terms of getting into that market, so that we are ready for what we see are many opportunities in the back half of this year.

Got it. And could you just remind me what kind of competition currently exists if much at all down there for this time?

Most of the competition there is are largely master servicers who are buying or bidding on portfolio and then raising money from third-party investors. There aren't a lot of strategic buyers in many of those markets which we think is very positive from our perspective because obviously we are strategic. We bring a lot more than just capital to those markets. We bring know-how in terms of servicing capabilities, in terms of analytics, in terms compliance, which goes a long way when we bid against others. The banks down there are very much like the story of a strategic buyer who cares about their consumers and how they're treated. We believe that the know-how that we bring from 15, 20 years of buying debt in the U.S. will enable us to be more competitive than the master servicers down there, which over time will allow us to not only gain market share, but also create differentiated returns from some of the other buyers in those markets. And so we are very excited about what's happening in Latin America right now.

Got it, thank you. And then just one last question on the regulatory front, is there any update you can provide, both in terms of kind of what the industry is doing from a lobbing standpoint as well as how it might affect your collection practices about the FCC's rulings a few weeks ago on the TCPA and what seemed to be kind of more restrictive definitions of how cell phones can be called?

Yes, I'll say that we were disappointed in what is ultimately a vague and messy position outlined by the ruling. We'll note that there was a split decision with a forceful dissent from two FCC commissioners. Several parties have appealed the decision including the ACA and we are monitoring those activities closely.

Got it. Thank you very much.

Thank you. And our next question comes from Hugh Miller of Macquarie. Your line is now open.

Hi good morning. Thanks for taking my questions.

Good morning.

So, a couple on DLC, you guys had categorized DLC I guess during the Investor Day as an irrational bidder, looks like another UK company, Compello Holdings was acquired since that DLC acquisition, I was wondering if you would kind of say that they were also an aggressive bidder or not as much the case?

Hugh, it's Paul. I mean I think they were, I am not sure Compello was an aggressive bidder or not an aggressive bidder. They were an active bidder in the market. They were relatively, they are mid tier player. They along with DLC along with some of the other mid tier buyers of portfolio in the UK struggled just from a size perspective. So they couldn’t make the investments in analytics and compliance in some of the other things that the large players like Cabot in the UK have been able to do. So like their peers in the U.S., the midsize players over time it's just more and more challenging for them to generate the types of returns they need to and their ultimate strategy is to sell their business. And so I think we're seeing the final stages of that consolidation in the UK. We've been very active in doing that. The acquisition of DLC enables us to secure our purchasing targets for the year in the UK. There are still as we mentioned at Investor Day a couple more players that are in that tier that remain and I assume those will follow the way of Compello and DLC and others and we'll continue to be active in that consolidation.

Yes, you know, I'll just a add couple of things, that are important here. The UK market is following the pattern of the U.S. market and market share means everything. You have market share, you've got size, you've got scope. You can absorb all the increasing compliance costs which are beginning to build in the UK and also the investments needed. But I'll just bring you back to when we did make the purchase of Cabot we said we like the purchase of Cabot for two reasons, one the underlying growth of the industry and two, the platform consolidation opportunities. So I think we are right on both items. We did Marlin and we did DLC and we're in the process of integrating DLC. It's going well so far and we'll see what other opportunities pop up as we go forward.

Okay, and you guys had mentioned, this is very helpful, you guys had mentioned that pricing has continued to kind of increase over time in the UK. Is there an expectation that as some of these mid tier players that don't have the scale to kind of cost-effectively compete as there's consolidation there that we should start to see some of that though, may be the returns on investment improved for core paper there or is it more likely to expect things to kind of plateau with where we are looking at now?

I think there's more of an opportunity for it to plateau before it starts heading down. I will say that the larger acquisitions for us whether it be Marlin or DLC allows us to buy portfolios at a price that’s somewhat cheaper than if we go out for these individual bidding portfolios. So because size brings only a few players to the market and through that we generally get a better price. So that's one of the reasons why we've liked buying the platforms as well as - and the Marlin platform brought us litigation capabilities, the DLC platform besides having a big book that we can acquire as a DCA business and an emerging BPO. So we get some other benefits as well when we acquire some of the other mid tier players in the market.

And I would just add also here that in the U.K. as we've discussed in the past a lot of the paper that we're buying there is, relates to consumers who are on payment plans. And so we'll be working with those customers for a very long period of time and there is an opportunity for us to uplift the performance that's coming out of those portfolios because of the length of the curves and because of the relatively steadiness of those payments. So we do have opportunities to improve performance and improve returns as we continue to work with those consumers in the UK.

Absolutely, I completely understand there and then it looks like the purchase price for DLC was roughly about $215 million, as I take a look at kind of the marginal change in goodwill on the balance sheet it looks to be just over $100 million. I guess, I think you guys had mentioned that DLC was more kind of a consolidating transaction relative to more of a strategic deal. Can you just comment as to, I guess why goodwill was as high as it was for the deal?

Well. Goodwill for the deal was about $63 million and that will be, we think about conceptually, we also looked at asset acceptance as being primarily a portfolio purchase. That goodwill is about 17%. In this case is about 23%. There are some ancillary businesses, not a pure portfolio purchase, but the vast, vast majority of the purchase price here was for the portfolio.

Okay, that's helpful. Thank you. And then one other from me, it looks like kind of the yield on the PFS portfolio in this particular quarter just came in a little softer than what I was looking for. Can you just comment about the yields that you're seeing out there in the marketplace right now and may be the timing of the capital deployment during the quarter was it bank-end weighted or something like that?

Yes, the capital was back-end weighted. It comes in towards the very end of the quarter. Q2 is the bigger quarter for Propel and the rates that we're getting are down a little bit from previous years, but not all that much.

Okay, and then just one final question, just following up on kind of the Latin America, I know in India there when people are buying portfolios are only putting up a portion, you call it roughly 15% of the purchase price in cash. How should we be thinking about kind of the market there in Latin America, is that similar to the U.S. where you're paying for the entire portfolio or is it a discounted price that you're coming up with, any color there will be helpful? Thanks.

Yes, in Latin America we are coming up with 100% of the purchase price for the portfolio. So unlike in India where the sellers will retain some of the economics in Latin America we're acquiring all the economics.

Thank you very much Paul, I appreciate it.

Thank you. And our next question comes from Mike Grondahl of Piper Jaffray. Your line is now open.

Thank you. Could you guys talk a little bit about the synergies you're getting from the acquisitions, just kind of overall and I think you mentioned a $0.14 charge due to some restructurings and what not, could you just clarify that?

Yes, so I'll split the conversation up. I'll take the first part and I'll let Jon take the second. So every acquisition gives us something different. With asset we've got a better BK platform that was part of the asset acquisition that we've been able to use and it's been very helpful for us going forward. DLC as I mentioned has both a DCA business which we combined with Cabot's DCA business and also has an emerging BPO business which is interesting and we're going to try to move that forward in time. The ACF acquisition really gave us the opportunity to move into the press space in a bigger way and a more effective way. So we got that. Marlin gave us the ability to do legal capabilities in the UK. So with these acquisitions we get something else, we usually get a platform or possible platform plus refinancing was a pure platform for Columbia and Peru. Rowe was and an IVA platform in the UK. So we do get other things with each one of the businesses and we look at those other things and that's sort of why there is goodwill on the balance sheet to account for those other benefits that we get besides just buying a purchased portfolio. Jon, you want to take the other piece?

Sure. In terms of the $0.14, some of that was due to our restructuring charge due to our call center closure and downsizing which we waited until after tax season to do that but that hit this quarter. A larger part of the charge was actually due to the DLC acquisition and we had an additional amount of the deal related charges came from a deal which we first started to pursue, pursued quite deeply and decided not to execute on.

Got it and then just next, one of the themes at your Investor Day was kind of investing in your own portfolio in kind of collecting a little bit more, can you give an example or two in the quarter, how you kind of executed on that?

Ashish is with us today, I'll let him take that one.

So existing in our order portfolios a couple of examples would be portfolios that are ZBA and we look for opportunities and apply at analytics to find accounts that have the ability to pay and haven't in the past. So we apply differential strategies whether using legal channel or perhaps a little bit of agencies and our specialized internal call center teams. So these are combination of those things to improve the performance that we have talked about in the prior earnings call as well as in the June Investor Day that you see an improved performance from 2009 tranche for example compared to the 2012. That's the example we showed and we continue to do that on prior tranches.

Okay.

Thank you. And our next question comes from Mark Hughes of SunTrust. Your line is now open.

Thank you. Good morning.

Good morning.

Good morning.

I think you've touched on some of this, but could you talk about the pricing in the U.S. market and then give us some sense of the underlying supply, is it stable, down low, or is it starting to pick back up?

So the supply is stable you know, I think we said that you will see about $1.1 billion to $1.2 billion in total deployed. That's been rather steady for the last couple of years and pricing has remained somewhat elevated. There have been certain instances when pricing has dropped on a couple of pools, but for the most part it really hasn't declined much in the U.S.

They are pretty steady sequentially?

Yes, pretty steady sequentially.

Then how about, what you think about the UK and Europe, you might have touched on this, but what should we think about the supply picture there, how does it change in 2Q and what do you expect through the balance of the year?

So we actually had a decent Q2 as well besides the buying the DLC portfolio. We deployed about $62 million, $63 million outside of the DLC portfolio. We see an active supply coming for the back half of the year and we will look at that supply vis-à-vis how we're integrating the big transaction here and we hope to be active as we go forward, but we don't need to be active in terms of the rest of the year. So we're going to be opportunistic as we go forward depending on how fast we integrate the DLC transaction.

Thank you.

Thank you. And our next question comes from Robert Dodd of Raymond James. Your line is now open.

Hi everyone. Can you just give us kind of a breakdown on your liquidity? Obviously the Encore of over 126 actually you generated, obviously you have cash, you generated a tremendous amount of cash flow, but hypothetically if the big seller does come back towards the end of this year in the U.S. and we may see a fresh lump of a supply rather than a steady supply, what do you think your capital position is particularly in the U.S. to be able to take advantage of that and are you doing anything to free up some more flexibility on that front?

You take it, I'll take the second.

Okay. Well, in terms of how we view our liquidity and I think we've been pretty open about our goal to increase the depth and breadth of our access to the capital markets. Right now we have as you know, a number of converts outstanding and we have a bank facility that's in place and I expect tapping a number of different sources, pockets of money within the capital markets over the next 12 months to broaden or deepen our access to liquidity.

Also challenging on one thing, I don't think when some of the sidelined issuers come back, they're going to come back in big bulk. I think what you're going to see is they're going to work their way back into the market. They have been out of the market for a while and I think they're going to build their pipeline over time and during the course of the year.

Okay, got it. Thank you.

Thank you. [Operator Instructions] And our next question comes from Bob Napoli of William Blair. Your line is now open.

Thank you. Just on the legal, your U.S. legal internal versus external, we think has been your goal to grow that internal a lot more, but the mix shift hasn’t taken places fast as we were looking for, is there, what do you expect in the future, because I would expect that internal legal would probably have much higher margins then external once it gains more scale, is that correct?

This is Ashish Masih. In terms of our strategy or internal legal versus the external legal channel, we continue to look at opportunities in different states. We got the platform from our asset acquisition that was also operating in internal legal and some states were overlapping and some were not. We continue to look for opportunities to optimize the internal, external mix and the intent is not just to focus on cost to collect. For example it's to maximize our returns and states have varying performance characteristics. So that's being the objective as opposed to just growing internal legal. It's at a pretty and decent size right now and we continue to look for opportunities to optimize the mix and the return to the company.

Ashish, what would you like that mix to be, we have couple three to four years from now?

It will probably grow a little bit, but I cannot really predict as to what the number would be. It will depend on state regulations, which states we would enter more, and requires an investment as well as how the firms are performing in those key states. So it's a fairly complex set of criteria that drives our entry and then growth in a stage.

Okay and then on a competitive front in the U.S., are you seeing anything different, are you seeing any, are there any old players reemerging, any I mean, I know it's very difficult or do you think that yourself and the one other big public company have close to 90% market share yet today in the core business?

No, I think the players that are out there are still out there and we've got a couple of guys that are sitting on the sidelines and we'll look forward to when they come back and when they do we'll be ready to engage them.

But I mean on the buying side, under debt buyer side, are you seeing anything, any debt buyers, any?

Oh, I am sorry. No not really. You know, the market share is controlled by just two of us and the others they may show up at the bid, but they don't stay around long and some of these guys are private. So they take their capital and they go elsewhere.

Okay, and then Paul, you seemed at the Investor Day, you guys seemed pretty excited about, Latin America broadly and Mexico or do you still see the opportunities, what countries do you see those opportunities, is Mexico still viewed as something that you guys are excited about or is more that can come out of Columbia, what markets are you in Latin America are you most excited about?

Colombia and Peru are relatively small markets and we have pretty decent market share in those markets right now. Those economies are growing a little bit, but given the size of the countries we’re not going to see significant growth there. Where we’re going to see the bulk of our capital deployment is from Mexico. The banks are just beginning to sell their - we did our first transaction late last year, but we are seeing since then many more banks come to the table. They’re taking their time to executing on deals which is why you haven’t seen us deploy much more capital since then, but there are many more opportunities and a lot of capital to deploy in Mexico. The other market which we talked about at Investor Day is the market in Brazil. We’re spending time there. And as I mentioned, I think to David's question earlier, the banks are starting to test, do some pilots and when they do actually begin selling in force we expect to see a lot of opportunity. It’s a very large market. The fifth largest banking market in the world and there will be a lot of capital that we can deploy there over time.

How would you handle Brazil from an operations standpoint, do you have a partnership down there with a collection agency or I mean, what would you, how would you handle Brazil?

We’ll do in Brazil, what we have done in other markets like Spain and Mexico where we partner with a local servicer and depending upon ultimately our strategy. Our goal is ultimately to earn servicing capabilities in each market that we're in. So over time we will look to partner and then depending upon the specific market may ultimately own the capabilities.

Thank you. Last question just on the M&A front, I mean you guys have deployed a lot of capital obviously in the second quarter here and made an acquisition. Looking at these markets I know that, I think you have been interested in entering through acquisition, what are your thoughts around M&A today and your ability to execute on M&A from a capital standpoint.

Yes, I'll say what I say every quarter Bob and that is we’ve usually have three to five deals working any day, any quarter and we have a very active M&A pipeline and we will pull the trigger when we see good deals and that’s probably all I'll say on M&A at this point.

All right, thank you.

Thank you.

Thanks Bob.

Thank you. And our next question comes from John Rowan of Janney. Your line is now open.

Good morning.

Good morning.

Just two kind of housekeeping questions, what's your blended cost embedded at this point, I'm trying to make sure that this step up and that doesn’t kind of mess up the average?

For the U.S., yes what is the - for the U.S. it’s going to be, it’s a different number, I’m not sure I’ve the blended for the entire company right here. I'd have to get back.

Okay, we can follow up on that and then just 37% that's still an appropriate tax rate?

For corporate wide it will be in that zip code, yes.

Okay, thank you.

Thank you. And our next question comes from Michael Kaye of Citigroup. Your line is now open.

Hi, good morning. This year you expect, $1.2 billion to $1.4 billion of capital deployments, but at the Investor Day you said 2016 should come in around that level of 2015. May be you could talk about some of the puts and takes and then may be why you’re not getting more of a year-over-year uplift considering some of the large U.S. players are returning and you are entering a bunch of on mark if I can in India and Mexico, Brazil et cetera? Thanks.

Right, as we get closure to the 16 we will have a better feel for what our total capital deployment will be throughout all our platforms, but I’ll also tell you that, the deployment also goes hand-in-hand with returns and if we get better returns in Latin America, we won’t need to deploy as much capital, so we look at those two things together.

Okay. Thank you.

Thank you. And our next question comes from David Scharf of JMP. Your line is now open.

Hi, I had a follow up on the CFPB status, Ken I realize there are limits to how specific you can get on your discussions, but I’m curious is the nature of the discussion you’re having now still or is it primarily confined to the topics that you discussed in the past, namely retroactivity, if they are trying to apply of some proposed rules as well as the dollar amount of the settlement or are there other compliance topics that keeps surfacing?

No, the scope of what we've been talking about has remained relatively constant over the last several months.

Got it. And then lastly in the U.S. collection environment is there any commentary you can provide on just how healthy liquidation rates are in terms of this consumer behavior in the employment backdrop and whether or not kind of the elevated pricing is entirely supply driven or do you get a sense that banks are actually being more discriminate about what accounts they kind of keep in-house if they feel like the consumer is improving?

No, I think it is mostly supply driven on the pricing and generally as the economy improves our liquidation should improve and we have seen better performance based upon our own estimates over the last several months. So we are collecting more than we had anticipated and I think part of that is it is always hard to kind of separate the meat sauce from the sauce I guess, whatever that expression is, but it is a little early in the morning here. But it is hard to really know how much comes from the economy and how much actually comes from our improved liquidation strategies. But I will say that overall we are performing better than our expectations.

Got it, got it. Thank you.

I think we have time for one more operator.

Thank you. And our last question comes from the line of Hugh Miller of Macquarie. Your line is now open.

Thanks. I feel so fortunate to close it out. One question just on U.S. M&A, you guys have talked about obviously there are a handful of smaller players in the space. You guys had mentioned that eventually over time you would anticipate that they would kind of start to understand the regulatory landscape and how much more it is going to cause them to run their shops. Are you seeing any of those players that are kind of maybe coming to terms with the regulatory landscape and maybe growing more comfortable or willing to sell or is that not changed much?

So some of the smaller players have really two choices I think, one is to sell or the other is to take their platform, see if they could augment it somewhat and look for other asset classes to go after. And I think there is one group of players that are thinking about selling in the news and another group of players that are looking to modify their platform and look for different asset classes to collect on.

That is helpful, thank you so much. Kenneth Vecchione Thank you. That was the last question. Thank you very much. Thank you all for attending and we look forward to talking to you in the future. Thanks again.