Good day, ladies and gentlemen. Welcome to the Encore Capital Group's Fourth Quarter 2017 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I would now like to introduce your host for today's conference, Mr. Bruce Thomas, Vice President, Investor Relations. Sir, you may begin.

Thank you, operator. Good afternoon, and welcome to Encore Capital Group's fourth quarter 2017 earnings call. With me on the call today are Ashish Masih, our President and Chief Executive Officer; Jonathan Clark, Executive Vice President and Chief Financial Officer; and Paul Grinberg, President of Encore's International Business. Ashish 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, comparisons made on this conference call will be between the fourth quarter of 2017 and the fourth quarter of 2016. We’ll also be comparing full-year 2017 results for those from 2016. 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 presentation 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 Ashish Masih, our President and Chief Executive Officer.

Thanks, Bruce, and good afternoon, everyone. Similar to a year ago, positive trends in the expansion of consumer credit and higher charge-off rates continued to drive favorable market for debt buyers in the U.S. In particular, we are seeing significant, continuing growth in the supply of charged-off receivables, as well as pricing at levels that are lower than they were last year. Looking forward to the future, we believe supply in the U.S. will continue its solid growth as delinquencies and charge-offs amongst the issuers are expected to continue to raise. In addition, our consumer-centric liquidation programs continued to differentiate our business and help to drive better returns. As we look at the competitive landscape in the U.S., we believe we are well positioned to take advantage of this intersection of favorable market dynamics and our operational scale and expertise. In Europe, our scale and scope in the United Kingdom, differentiated our business and allowed us to secure a number of larger portfolios. These deployments contributed to a strong purchasing year, particularly in the UK, which accounted for nearly three quarters of our European deployments. From an operational perspective, significant progress in liquidation improvement initiatives lead to better collections and stronger financial performance in 2017. Cabot has poised to have another solid year in 2018, particularly in the United Kingdom, where its effectiveness and unmatched scale provides competitive advantage. I'd like to begin today's presentation by reviewing Encore's U.S. business. Consistent with recent trends, buying conditions in the U.S. market remains favorable. A year ago, we estimated that the supply of charged off credit card receivables sold to debt buyers in the U.S. grew more than 15% in 2016. We believe supply in the U.S. grew even more rapidly in 2017 and was up more than 20%. The Federal Reserve…

Thank you, Ashish. 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 percent of the results for Cabot, Refinancia and Baycorp in our financial statements. Where indicated, we will adjust the numbers to account for non-controlling interests. Turning to Encore’s results in the fourth quarter Encore earned GAAP net income from continuing operations of $30 million or $0.48 per share. Adjusted income was $28 million or $1.05 per share. The largest factors and difference between our GAAP net income and adjusted earnings results were the expenses related to the withdrawn Cabot IPO and the acquisition cost and restructuring expenses related to the purchase of Wescot. Cash collections in the quarter were $438 million and our ERC at December 31 was $7 billion a new all time high for our business. For the year, GAAP net income of $83 million or $3.16 per share was also heavily impacted by the expense related to the withdrawn Cabot IPO. Adjusted income was $106 million or $4.04 per share in terms of economic EPS. We collected nearly $1.8 billion in 2017, which was up approximately 5% compared to the prior year. Let's now take a closer look at some of the underlying financial metrics. Deployments totaled $301 million in the fourth quarter. In the United States all of our $170 million of deployments represented charged off credit card paper and were almost exclusively fresh accounts. The European deployments through Cabot and grow totaled $110 million during the fourth quarter with majority attributed to portfolio purchases in the UK. We deployed $22 million in other geographies in the fourth quarter including purchases in Australia and in Latin America. Overall in 2017, we deployed $536 million in the U.S. and…

In closing, I'd like to summarize a message and share some of our expectations with you for 2018. To begin the U.S. market remains strong and we are buying portfolio at better returns than a year ago. We have made great progress in locking up attractive contracts for the New Year. In fact, forward flow commitments for 2018 have already surpassed our total deployments in the U.S. during 2017. Internationally, Cabot deployed a record amount of capital in 2017 positioning us well for 2018. As we look ahead, we see strong growth opportunities in the U.S. market and we will continue to invest in collections capacity to capitalize on them. Even with these investments, we expect our year over year earnings growth in 2018 to be at a rate comparable to 2017. Now we'd be happy to answer any questions that you may have. Operator, please open up the lines for questions.

Thank you. [Operator Instructions] Our first question is from the line Mark Hughes with SunTrust. Your line is now open.

Thank you very much. To be clear the 2017 growth rate, could you refresh my math for EPS?

Yes, Mark. So what we said is -- given the investments despite the investments we talked about and all the factors, we expect our year-over-year earnings growth in 2018 to be at a rate comparable to 2017, so same rate.

And then what was that rate?

About 16%, yes.

What was the contribution in terms of the EPS from Cabot this quarter?

The GAAP from Cabot for this quarter, due to all the charges that we discussed -- that discussed earlier, which primarily fell on Cabot, made Cabot from a GAAP perspective for the quarters just above breakeven, and there were as I mentioned in my discussion there were $0.40 of expenses that were tied to the Cabot IPO and the acquisition of Wescot restructuring, vast majority of that expenses were at Cabot.

So, the EPS contribution was around $0.40 was, are you trying to get a little higher or a little lower than $0.40?

Yes. That’s a good number.

$0.40. Okay. The tax rate that we should use on a go forward basis, any guidance there, relative to…

Yes, I’ll put all the appropriate caveats, Mark, that you'd expect from, we don't know exactly where the mix of our business will come from domestic and international, et cetera, et cetera, but if you assume our expectations more or less are matched. In 2018, we would expect the effective tax rate in the mid-to-high 20s.

And so when we think about your annual EPS growth target, the 16%, how much of that comes from tax versus underlying improvement?

Well, I think the important thing is to look at it holistically. And I’ll let Ashish way in here, but a lot of the -- we think we're making significant investment in -- as Ashish said in his comments in our infrastructure -- infrastructure, meaning that our capacity in order to achieve our earnings growth. So, we're getting 17% earnings growth in spite of making that investment and one of the benefits that we're taking advantage of next year is the extra income that we're going to have from our -- from the tax -- recent tax nature.

And so the EPS number, what do you think the economic EPS, is that the $4.01 number that we should think notionally the base 15% on?

$4.04.

$4.04, and to be clear that $4.04 included the meaningful reversal, is that right?

It did include in reversal, correct.

Right, and presumably, you’ve got a tough comp with the net reversals which were a strong contributor to earnings and run rating that is difficult but that presumably is a little bit of a headwind on earnings and you get tax which is a help, you've got the extra expenses that are -- headwind and so the net effect of that is 16% growth, but that's on top of again a year that included meaningful net reversal gains. Is that a fair way to think about that?

Yes, I think so. You summarized it all, which I think is from my perspective the important point, right, is that we've got a number of factors that work here. Only one of which is tax, but we are there is a lot of momentum and we're generating significant from my perspective, significant earnings growth even though we're making these investments in the U.S. operation.

Thank you. Our next question is from John Rowan of Janney. Your line is open.

The reversal on the quarter was $10.7 million correct, total reversal? I think you gave a number that was a little bit lower, but I think that was just for European operations, correct?

Yes. You're right in that the net -- the reversals total for European pools was just below $10 million.

What was the reason for the relatively big increase on a sequential basis in depreciation and amortization?

We did some tax planning related to the recent tax legislation and we had some various things that we had inability to potentially right off which we did.

So does that mean that the run rate goes that down next quarter which is stayed at the $14 million rate going forward?

I was -- sitting here today, I would expect that that will go down some. I just don't know today how much some of that will be impacted by Wescot et cetera, right. Some of the acquisitions that will material, but in that view that will move back down, correct.

And then I'm just trying put off kind of the comments about operating expenses. Obviously, you reported $253 million of operating expenses you're saying that the more of the operating number is $182 million. But within those actually I mean there are some big add backs especially for operating expenses related to non-portfolio purchasing, but that includes corporate expenses. I mean are we to really assume $181 million run rate operating expenses because that doesn't --when I look back at these numbers that you reported here in this last table and historical numbers. Obviously, the run rate number is quite a bit lower than what you've reported. And I just want to make sure that you understand kind of the methodology of why you're saying that there is a $182 million kind of run rate operating expense?

Well, as an example, the line operating expenses related to non-portfolio purchasing covered business. You're going to expect that that number is going to increasing with the addition of Wescot, right, because it is a big servicing company. So and that would if you look across of what has changed materially, you have the expenses related to withdrawn Cabot IPO, which wouldn't expect we're going to have another period with an expense like that. I'll phrase it that way and we have the step up and operating expenses related to businesses like Wescot, which I think you wouldn’t expected to those pop up.

Well, that's fine I'm just looking at the footnotes here though I say there's some corporate overhead not related to portfolio purchasing recovery. It's just, that's just not, you know, for me it's not necessarily something I would adjust out of operating expense. If there's a real corporate expenses that are not part of portfolio purchasing.

Yes, our view is that these are expenses that are associated with non-portfolio purchasing recovery business and our expectation is that these expenses would go away if we weren't in that business.

Thank you. Our next question is from David Schraf of JMP Securities. You're line is open.

Maybe following up on the last discussion. Can you give us a sense, maybe order of magnitude based on the U.S. purchase environment that you're seeing in the degree of flow deals? Just how much capacity you're planning to add this year whether it's just, percentage wise and headcounts either in call center or legal just to give us a sense for how much of the tax savings is being reinvested in capacity.

David, this is Ashish, it's a great question and we are really excited to see how the market is turning out. So that's the positive. We are seeing growth in volume from outstanding growth and loss rate, but also in the fresh category where we become very strong. And so we are investing. We started investing in capacity a year ago. We did that in 2017, but we're going to do it at an accelerated rate in 2018 and we'll invest in capacity in call centers, we will invest in capacity in our legal capacity which is internal litigation operation, which is in-house as well as with the firms and some of the support that goes with it, that there's recruiting, hiring, training, and so forth. So we'll be investing well in excess of any tax savings and that you would expect to see much more than that in growing our capacity in anticipation of a volume. I'd like to underscore the point that we are seeing very good purchasing environment and very stable environment in which we've been able to sign on the forward flows and we have commitments that are more than all of 2017 deployments in the US, so we are building capacity in anticipation for that volume, but also as we see more and more losses coming to an industry and that we will be able to deploy against.

And once again, just to give us a sense for how to think about the margin structure as you continue to staff up? I guess looking at that $181 million, $182 million of OpEx in the fourth quarter. Can you give -- we've got the major add backs in your summary table, but is there any way you can give us a sense for what the operating expense line items individually, particularly salary and G&A looked like in the fourth quarter on an adjusted basis because we really don't have any sense for what the jumping off point is?

Right, well, if you -- I'll take a stab at it. This is Jon. If you look at salary and benefits, that Q-on-Q change was $26 million. There’s some non-recurring in there and they’re related to some of the -- I’ll call it the personnel impact of restructuring and some additional costs as well in IPO, related to the IPO, due diligence et cetera, which I expect round numbers, let's call that $5 million or $6 million would be non-recurring. The stuff for recurring, I think you can expect that -- you'll have some higher costs from the fact that we’ve acquired Wescot in August and there will be some – as we do go through our capacity expansion, you’ll get some an increased cost relative to that. And so of the $26 million plus call round number $20 million would be kind of a recurring number.

I'm sorry, what is $20 million relate to -- I'm just looking at the reported GAAP salary and employee of $94.5 million…

So, if you look at salary and benefits for 2017 are $94 million.

Right.

And then in 2016, $68 million, the deltas is $26 million, right.

Okay. But what you're saying is maybe alternatively just subtract $5 million or $6 million from the $94 million?

Right and call that $20 million, so yes.

So maybe that was about $89 million, and did that include -- can you remind because I don't have the press release in front of me, how much of the quarter included Wescot?

It was -- Wescot was closed in November.

November, okay. So it’s about half of the quarter. So the jumping off point for salary and benefits, notwithstanding some of the seasonality of fourth quarter collections in the U.S. is maybe the low mid-90s?

Yes.

Got it. And alternatively on the G&A side.

Yes.

It was…

$24 million, there's a bigger portion there I’d say here is non-recurring because that’s smack in the middle of the IPO expenses and a number of other moving parts. So I’d say recurring, you had $55 million in the 2017 and $31 million in 2016, right, so the difference of $24 million, you got me.

Yes. Yes.

And that difference of $24 million, I’d say $4 million is probably recurring – $4 million to $6 million maybe recurring.

Got it. Okay. So about $35 million and then if we add a little bit for Wescot. And it looks like, I mean, we were relied light on servicing fees, obviously we didn't factor in Wescot. What is there kind of run rate top line?

Yes, we don't have that for you.

Okay. Does all of their revenue show up in that line now, maybe could other revenues in service?

We’re fully consolidated. So, yes.

Yes. Got it. And then the lastly, I know as of now we know the status of Cabot, I guess is there anything that you can add vis-à-vis the options that are available to JC Flowers or at this juncture. Is it's just what's been announced and we just treat it as such?

At this stage, I think we should just treat it as such. I mean Cabot has always been a strategic investment for us. They're performing well and they're continued to expect to perform even better and generate strong returns and strong results for Encore. So that's what we can say at this point. The conditions were unfavorable at the November, so we pull the IPO. But they're performing well and they're continued to be strategic to Encore.

And last question on the regulatory front here in the U.S. You may be one of the few industries that was almost coping for organization of proposed rules since it seems like based on your unilateral settlement with the bureau. You're operating under some different rules than some of your competitors. Have there been any communications, approaches or discussions with the bureau about rolling back any of the settlement you entered into a couple of years ago?

So, we cannot comment on any communications with CFPB. CFPB is in a state of exchange right now. That new interim leadership and we expect in the next few months, the director will be appointed. We feel that we've taken some positive steps which balances consumer protection as well as appropriate regulation of the industries they will e regulating. And we've seen communications about public comments about their process and supervision and rulemaking and so forth and enforcement. So we are waiting and seeing and observing kind of what's going to come out. We are excited to -- we're eager to work with the new leadership that will be in place. And we already operating at a high standard that our issuers expect us to. And that is most important. Our issuers are regulated by OCC by other regulated including some CFPB regulation. So, we have high standards from our issues we care about protecting their reputations, we care about passing audits as we mentioned earlier with issuers. So we are very comfortable in a place we're in, in terms of regulation for the industry, and if and when some of the changes come, we will be available for discussions and support for that process.

Okay got it. And I apologize I know this was asked before, but the total number of net reversals on the allowance side was what for the quarter?

9.9.

Okay, for all geographies. 9.9. got it thank you.

Thank you. Our next question is from Bose George of KBW. Your line is open. Please check your mute button.

Hey guys, thanks. My questions have been answered. Thanks.

Thanks Bose.

Thanks, Bose.

Thank you. Our next question is from Brian Hogan of William Blair. Your line is open.

You mentioned previously and you're talking about Wescot. Can you tell how much -- tell us how much revenue it contributed during the quarter?

I don't have that number available now.

Okay. Discuss your approach to expanding your collections capacity? I mean how do you rationalize the number of collectors obviously balancing productivity and investment returns? How do you continue to discuss from a big picture and how you go about that?

And that's a very good question and we kind of think through that Brian, on a regular basis. So as we look at the supply of portfolio that comes through and significant part of that is in forward close and a very significant portion of that is fresh. We tend to look at how we match our capacity and what capacity we expect in call centers and our internal litigation operation as well as in our law firms, and we factor in any productivity impacts that new hiring of account managers and their training and coming up the ramp would require. So, we factored in all of those in our returns and we continue to see better returns than previous year as we make our deployment decisions right now. And those are all factored in, and our capacity increases not in a step function, it has been going on for about a year over a year in a steady manner where we can ramp up the account managers, train them, make sure our selection processes is bringing in the right ones and they're performing at a high liquidation expectations because we have improve liquidation to a consumer centric programs over the years. And they expect those liquidation and we are observing all of those. So that's how we think about when making decisions for incremental deployment and how best to get capacity to kind of match against that deployment decision.

And the returns on new produces, you mentioned embedded there year-over-year. How much better and how do they compare to the long-term average? And is that just U.S. or is that broadly, maybe you can even discuss returns by geography?

There's a couple of questions there so on the first one. They are better than -- they are significantly better than a year or two ago, and they have been improving as a result of two factors over the last three years since we have steps in 2015, 2016, 2016, 2017 and now 2018. And the factors are improved pricing which moved materially between 2015, 2016 and 2016, 2017. And also improve liquidation. When you combined the two, you get better returns. And I'm primarily talking United States market in this case. And globally the returns vary by asset class, by geography, and we make decisions, investment decisions kind of depending on the opportunities that are available and the types of opportunities in the asset classes. I throw the word to Paul who heads up international, who's here with me to jump in with any additional color on the international side.

Yes, I would just comment that internationally the returns have been relatively stable over the, over the past year and our strategy has been to -- with a global business has been to diversify as many markets because the returns are different in markets in different periods of time and in different asset classes within markets, at different points. And continually looking to expand into new markets, new asset classes within those markets, so we can manage the cycles that exist in our business globally. So right now returns are very, very strong in U.S. and that expanding in other markets they've been stable and two or three years from now could change. But the goal is to have a diverse portfolio of businesses and asset classes so that we can continue to grow the business over the long-term.

Paul, maybe continue with the -- how competitive is Europe? Obviously, your big purchases or in the UK, but you've expanded into a little bit of the other European regions. How competitors within returned to -- they're stable. But what drives your purchases still there today?

First, Europe is a pretty big place and so the comments I gave around being stable that’s overall, they're stable, in certain markets their returns are little better, in some markets they're down a little bit. One of the benefits that we have in our largest market which is the UK, it’s being the dominant player there and investing a lot there, we had a rating here, purchasing there and by deploying a lot of capital in the UK, where we are able to build very strong analytical capabilities, servicing capabilities, we’re able to develop different, means of financing. So we have some very innovative financings, asset factor financing this year which allowed us to lower our cost of capital in UK, which is our best return perceptive. So, I can't comment specifically because there are so many markets and so many asset classes, but given the scale, we have in certain markets and you may hear things about returns, but for us given our scale and given the capabilities which we have the operating capabilities, the analytical capabilities and the financing capabilities. Our returns are better than other players in some of these markets because of those capabilities and we're always working to enhance those, like we have in the U.S. with our fresh capabilities which -- if you recall a few years ago, we spent a lot of time talking with all of you about how we were making investments there because we saw that to be a growing part of the market and now with that being 75% of what’s being sold. Those investments have paid off dramatically.

And last question is about you purchases in other geographies. You mentioned Australia and Latin America, and obviously the jump up in the quarter, I’m sure you have a lumpy year than at that time, but you didn’t mention India, which has been an initiative. Can you discuss what you see in Australia and Latin America and then also expand on India the way you see in there?

Yes, so each one of those markets are smaller than Europe and the U.S. and in each one of those markets, we're learning, we're growing, we are making investments that to understand how different types of asset classes perform. So, we have made several investments in India this year and those have -- and we've been generating good collections and we’re achieving the collection expectations we have in that market. So as we continue to perform as we have been, we’ll expand that over time. So right now, I don't want to comment on how much we're investing in each one of these individual markets because they're still very early on in their life cycle and over time as they get bigger and they become more material, we may break them out, but right now we’re not going to be specific about how much in each market.

Thank you. [Operator Instructions] Our next question is from Robert Dodd of Raymond James. Your line is open.

Hi guys. Most of my questions have been answered. But on -- you talked about expanding capacity pretty much across the board. Could you give us any color on what you’re seeing or maybe purchases per account or average payment size in terms of where the wheezing [ph] for both you know all your collections strategy and then in terms of expansion? And then also maybe how much of this expansion is related to your improvements and expected collections from the existing pools that more forward flow contracts? Or how much of that's kind of on spec so to speak given you think purchasing opportunities are going to increase seems fairly material over the next couple of years?

Robert, couple of questions I think I heard. In terms of payment size and consumer behavior, we're not seeing any material changes in the trends. So we see pretty stable consumer behaviors in terms of payment plans and things of that nature. Regarding capacity increases, it is in all aspects of our business and operations that supports U.S. deployment, which is where we are focused and increasing capacity across geographies in multiple countries that we have operation sensor support to U.S. And it's in call centers it's an internal legal, it's in a law firm capacity and so forth. And so it's we want to stay ahead of the market with the volume is coming. We monitor very carefully the lending trends and the charge off rate trends that are going on and the volumes that might come. And our business development team has a very good ear to the ground in terms of what's happening and what might the sales be? And that's why they have very strong forward commitments for the year as I've said. We have committed more than what we purchased or deployed last year for all of last year in the U.S. So we expect the volume to keep coming. And we are prudent in spending the money. We are not overbuilding and just hoping for it to get used. We stay ahead of the curve because we also want to be very careful and increasing capacity at a steady rate as appose to a big step changes when suddenly you need to do it because then the performance doesn't come through. So we want to steadily build capacity through the year, hire the right people train them, so that they'll liquidating at our high expectations, which in turns allows us to get the high returns that I talked about.

Thank you. Our next question is from Mark Huges of SunTrust. Your line is open.

Yes thank you. In considering the Wescot revenue, your fee item had been running at about $20 million per quarter, bumped up to $30 million and I know the deal closed maybe halfway through the quarter. Would you assume maybe another $10 million? If we think about the 1Q run rate, is that a reasonable way to look at it?

I'm sorry Mark. You're trying to get a run rate exactly for what?

This is for the fee income line. Just trying to think about what the run rate for that would be with the full contribution from -- assuming you picked up about $10 million of the prior run rate. And it was gone in the middle of the quarter to get another incremental $10 million when we think about first quarter for run rate?

Yes, you get might not be bad, but we're not planning on providing line item guidance here for Wescot. We breakout Cabot because it's still material so we can, we let you guys know whether the next company. But we'd -- I don't know we really don't have any intention going down this line of breaking Wescot out because remember there is other servicing businesses in Spain, Latin America, Australia, New Zealand, they're not clearly as big Wescot, but they're -- they're not on a relative basis they can’t be so.

Right understood, just kind of rough it out for the next quarter. The zero basis collections, what did you say they were in the quarter, I missed that number?

Yes, it was 33 million.

33 versus 38.

I think that’s right, yes, correct.

And then do you still have a intention or desire to be consolidated, If you could do a kind of a smaller transaction that restructured your Cabot ownership, would that be something that's desirable and presumably achievable without the going back to the market?

I think I'm not going to speculate. I, we're, we the whole Cabot transaction obviously we work very closely with our board and we continue to do so and those kinds of decisions are board level decisions and I'll leave it at that.

Okay and then final question any comment on UK forward flows?

No, nothing specific, Mark, I think we the fact that the market in the U.S. for forward flows is probably one of the more robust globally in terms of the volume that's sold through the flows, which is one of the reasons we've been able to lock ups so much volume for 2018. You don't have that level of flow activity anywhere else in the world and it's not a disclosure that we're going to start commenting on in terms of what's been locked up in different markets.

Due to general expectation about supply growth in the UK, based on similar measures of credit card activity?

As Ashish said when you talk about the outlook for 2018, we expect 2018 to be a very strong year for in terms of growth.

Thank you our next question is from David Scharf JMP Securities. Your line is open.

Just a follow-up, I apologize in advance for going through a math problem online here, but I know it was asked earlier, so to, excluding the tax savings from the new rate. What kind of growth you maybe forecasting? And you know, I'm calculating kind of adjusted pretax, EPS, taking last year's adjusted EPS divided by one minus the 40% rate then based on your 16% percent growth guidance this year, dividing that by one minus, call it 28%. And I'm showing your pre-tax guidance even after a full year of Westcott actually is negative. Is there something flawed with that analysis or should we conclude that more than a 100% of the tax savings as being invested in additional headcount?

I can try. You're right. We are definitely investing significantly in capacity growth. And again, given the forward flows you locked up. So if you're looking at pretty solid deployment opportunities at good returns, improved returns. There are multiple factors and drivers that go in trying to estimate whether it’s pre-tax or post-tax earnings, which is our capacity, which is the timing of acquisition by Cabot or Wescot, the deployments across the world, the tax rate. So doing over the phone that kind of calculation may or may not to achieve the outcome you're looking for, David, I think. So I’ll let our CFO jump in more wisdom.

Yes. It’s -- we’re happy to talk about this offline and try to figure out the math you’re doing there, but we holistically after impact from taxes, and after the impact from having investments in our capacity in the U.S., we still expect to grow EPS on a comparable level to last year. So, I think it’s a strong statement and I’m happy to discuss with you offline. Good luck.

Thank you. Our next question is from Mark Hughes of SunTrust. Your line is open.

Hey just within that conversation, the number for 2017 if I’m looking at this properly included in that reversals of $41 million. So that $41 million one might or might not assume as recurring item, I think I would have generally not assume the recurring item. And so if you strip that out and do the comparison year-over-year on pre-tax, it might inform the math, so maybe I’ll ask that in the form of the question, but that summarizes the total net reversals were $41 million and presumably those are not necessarily predictable or recurring, but your assumption is underlying business will be strong enough that you'll be able to overcome any kind of headwind related to a lack of those sort of the reversal gains, is that fair?

Very good summary, yes.

Thank you.

Thank you. And that does conclude our Q&A session for today. I’d like to turn the call back over to management for any further remarks.

Thank you and that concludes the call for today. Thanks for taking the time to join us and we look forward to providing our first quarter 2018 results in early May. Thank you.

Ladies and gentlemen, thank you for your participation in today’s call. This does conclude today’s program and you may all disconnect. Everyone have a great day.