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Financial ResultsQ3 2015
November 12, 2015
Time: 8:30am MTN
Domestic: (877) 201-0168
International: (647) 788-4901
Confirmation Code: 58855409
Safe Harbor Provisions
2
Certain statements made in this presentation are forward-looking statements under the Private Securities
Litigation Reform Act of 1995. These can be identified by words such as "intend," "believe," and "expect," and phrases
using those or similar terms. Specifically, statements relating to projections of future proceeds, revenue, income,
profitability, cash flow, non-GAAP financial measures such as Adjusted EBITDA and Estimated Remaining Proceeds, also
known as “ERP”, and our ability to expand and utilize flexibility under our credit facility are forward-looking statements.
These forward‐looking statements are not guarantees of our future performance and are subject to risks and
uncertainties that could cause actual results to differ materially from the results contemplated by the forward‐looking
statements. Factors that could affect our results and cause them to materially differ from those contained in the forward
looking statements include those that we discuss in “Risk Factors” or comparable headings in our most recent Annual
Report on Form 10-K.
Adjusted EBITDA and ERP, as presented today and in our earnings release we issued this morning, are
supplemental measures of our performance and purchased debt asset value, respectively, that are not required by, or
presented in accordance with, accounting principles generally accepted in the U.S., also known as “GAAP.” They are not
measurements of our financial performance or asset value under GAAP and should not be considered as alternatives to
net income, asset value, or any other performance measures derived in accordance with GAAP, or as alternatives to cash
flows from operating activities or a measure of our liquidity.
We believe adjusted EBITDA is representative of our cash flow generation that can be used to purchase charged-
off receivables, pay down or service debt, pay income taxes, and for other uses. ERP represents the expected cash
proceeds of our then-current purchased debt portfolios over a nine year period. You are, however, cautioned not to place
undue reliance on adjusted EBITDA and ERP.
Our Strategy
Paul A. Larkins, Chief Executive Officer
Key Strategic Goals
4
Our People
• Inspire a culture of leadership by living our core values
Our Services • Pursue systemic operational and compliance excellence
Our Channels• Create an outstanding network of call centers and exclusive
branch offices
Our Customers• Deliver the Fair Square Promise
Our Financials• Deliver solid financial results
Third Quarter Highlights
5
• Continued Improvement in Costs to Collect
• Customer Connection Strategy Drives Liquidations
• Continued Expansion of Fintech Relationships
• Largest Portfolio Acquisition in Canada’s History
6
SquareTwo and the MarketEvolving Debt Sales:
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Ret
urn
to
Mar
ket
Charge-Off Growth
Money
Center Banks
FintechCommercial
Regional Banks
Canada
Financial Results
John D. Lowe, Chief Financial Officer
ERP and Adjusted EBITDA
8
• Consolidated ERP of $592M
• Adjusted EBITDA of $40M
Q3 2014 Q3 2015 Q3 2014 Q3 2015
64.7% 74.7% 1.95x 2.66x
Company Debt as a %
of Consolidated ERP
Company Debt ÷ TTM
Adjusted EBITDA
681655
612 600 592
100
200
300
400
500
600
700
800
Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Consolidated ERP Trending($ millions)
Canada US
4842 42 43
40
0
10
20
30
40
50
60
Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Adjusted EBITDA Trending($ millions)
Returns by Purchase Year
9
• Active Portfolio Returns Maintain Strength
• 2015 Returns Improve
1.9x
1.3x
0.8x
0.3x
2.2x
0.4x
0.5x
0.8x 1.6x
0.00x
0.50x
1.00x
1.50x
2.00x
2.50x
Active Portfolio 2012 2013 2014 YTD 2015
Consolidated Return on InvestmentPurchase Years 2012 through YTD 2015
Actual Returns Estimated Returns
Purchasing
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• Disciplined Purchasing Maintained
• Canadian Purchases Up Significantly
2015 2014 $ Variance % Variance
Credit Card/Consumer
Loan - Fresh*Face $120,401 $135,678 ($15,277) (11.3%)Price 14,601 20,355 (5,754) (28.3%)Price (%) 12.1% 15.0%
Credit Card/Consumer
Loan - Non-Fresh*Face 251,724 151,853 99,871 65.8%Price 8,562 6,971 1,591 22.8%Price (%) 3.4% 4.6%
Other**Face 38,866 54,584 (15,718) (28.8%)Price 3,888 2,340 1,548 66.2%Price (%) 10.0% 4.3%
TOTALFace $410,991 $342,115 $68,876 20.1%Price 27,051 29,666 (2,615) (8.8%)Price (%) 6.6% 8.7%
* Includes both Domestic and Canadian purchases.
** Other includes commercial, student loan, and other purchased debt assets.NM Not meaningful.
Purchasing (in thousands)
Quarter Ended September 30,
Proceeds
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• Mix of Legal as % of Total Collections Increased from 52% to 56%
• Commercial Proceeds Continued to Increase
Cash Proceeds (in thousands) 2015 2014 $ Variance % Variance
Credit Card/Consumer Loan Collections
Non-Legal Collections $30,003 $44,278 ($14,275) (32.2%)
Legal Collections 45,418 51,058 (5,640) (11.0%)
Other Collections* 9,005 5,172 3,833 74.1%
Total Collections 84,426 100,508 (16,082) (16.0%)
Sales, Recourse & Bankruptcy 1,845 1,593 252 15.8%
Total Cash Proceeds on Purchased Debt $86,271 $102,101 ($15,830) (15.5%)
Quarter Ended September 30,
*Other includes non-legal collections, legal collections, and court cost recoveries on commercial,
student loan, medical and other accounts
Unadjusted Results
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• Purchased Debt Revenues, Net:
›$51 million, 11% decrease from $57 million in Q3 2014
• Costs to Collect as % of Purchased Debt Collections:
›Including Gross Court Costs: 41.2%; -391bps from Q1 2015
›Excluding Gross Court Costs: 30.8%; -623bps from Q1 2015
›Non-Legal/Legal Mix: 46%/54% (Q1’15), 44%/56% (Q3’15)
• GAAP EBITDA:
› $4 million, increase of $3 million from Q3 2014
• Net Loss:
› $10 million net loss, decrease of $3 million from Q3 2014
Liquidity Update
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• Investment Strategy + Cost Reduction = Net Returns+
• Consolidated ERP of $592 million
• Liquidity = $32 million
Q & A