Encore Capital Group Inc (ECPG) 2005 Q1 法說會逐字稿

Good afternoon, and thank you for standing by. Welcome to the Encore Capital Group first quarter 2005 conference call. At this time, all participant are in a listen-only mode. Following today's presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded Monday, May 9th of 2005. I would now like to turn the presentation over to Tony Rossi with the Financial Relations Board. Please go ahead.

Thank you, operator. We'd like to welcome everybody to Encore Capital Group's first quarter 2005 conference call. With us today from management are Carl Gregory, Vice Chairman and Chief Executive Officer; Brandon Black, President and Chief Operating Officer; and Paul Grinberg, Chief Financial Officer. Management will discuss first quarter results, and we'll then open up the call to your questions. Earlier today, Encore Capital Group filed its 10-Q for the quarter ended March 31, 2005. This is a complete report of Encore's results, and we encourage you to reed it thoroughly, as it contains a great deal of useful information.

Before we begin, I'd like to note that certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any financial results, performance or achievements expressed or implied by such forward-looking statements. For a discussion of these factors, we refer you to the Company's annual report on Form 10-K for the year ended December 31, 2004, filed with the SEC. Forward-looking statements speak only as of the date the statement was made.

The Company will not undertake, and specifically declines, any obligation to publicly release the results of any revision to forward looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events, whether as a result of new information, future events or for any other reason. With that, I would now like to turn over the call over to Carl Gregory. Carl?

Thank you, Tony and good afternoon. Our first quarter performance was in line with our expectations, and we continued to generate increasing levels of collections, revenue and earnings per share. Our first quarter highlights compared to the first quarter of 2004 included the following: Net income was up 24% to $7.5 million; earnings per fully share came in at $0.32, 23% higher than the same quarter last year; revenue increased 19% to $50.5 million; and collections increased 3% to $65.9 million. In the first quarter of last year, we sold our portfolio of rewritten notes because we exited that business. That sale contributed $4 million to our gross collections last year.

Excluding the impact of that sale, our gross collections increased 10% over the prior year. We continue to achieve deeper penetration of our more seasoned portfolios. This is driven by the improvement of our consumer level account management process that segments individual accounts into collectability profiles, and the continued development of alternative collection channels. The net result is that we are collecting on accounts that we don't believe would have yielded profitable results through more traditional collection methods. As a result, we continue to exceed the total volume of collections from these more mature portfolios, even when compared to our most recent forecast. From the expense perspective, this is the first quarter that we began to see the benefit of the runoff of our contingent interest expense.

In the first quarter, our contingent interest expense was approximately 80% of the level we experienced in the first quarter of 2004. Contingent interest expense will start off higher in the first half of the year and get progressively lower in the second half. By the fourth quarter, we expect contingent interest to be approximately 60% of the level we saw in the fourth quarter of 2004. As a footnote, if we continue to collect at an increasing rate on our older portfolios, contingent interest could be higher than we presently forecast. Earnings at a purchasing market conditions remained highly competitive, although we continue to find portfolios that we believe can deliver a satisfactory return.

During the quarter, we spent $19.5 million to purchase approximately $530 million in face value portfolios for a blended purchase price of 3.68% of face value. All of the purchases were credit card portfolios. Our strong financial position allowed us to purchase these portfolios with the cash on our balance sheet. Our strong cash flow also allowed us to pay down more than $20 million of debt on our credit facilities during the quarter, which included the repayment of all of our outstanding balance on the new revolving credit facility.

As we've previously discussed, Paul Grinberg joined us last year in anticipation of Barry Barkley's retirement from the CFO position. His transition to the CFO role has gone very smoothly, and we are quite pleased to have someone of Paul's talent and experience still in this position. And Paul will now take you through the financials in more detail.

Thanks, Carl. As Carl indicated, gross collections in the first quarter of 2005 were $65.9 million, an increase of 3% from gross collections of $64 million in the first quarter of 2004. Excluding the sale of our portfolios rewritten notes in the first quarter of 2004, our collections increased 10%. The growth in collections is attributable to our continued refinement in utilizing more specialized collection strategies to penetrate our portfolio.

As we've discussed in the past, we use these alternative collection channels, including litigation and specialized collection agencies, when our consumer level analytics indicate that these channels are either more cost effective or will generate greater portfolio penetration than our internal collection sites. Revenue recognized as a percentage of collections was 77% in the quarter compared to 66% last year. The increase is primarily attributable to deeper penetration of our portfolios and the timing of purchases. Our total operating expenses for the first quarter were $30.3 million compared with $23.3 million last year.

The increase in operating expenses is largely attributable to the mix of our collections. Collections from sales, for which there are little to no associated costs, were approximately $6 million lower in the first quarter of 2005 than they were in the first quarter of 2004. We also increased our collections from alternative channels, some of which have a higher cost of collections. While the cost from some of these channels are higher, the penetration of our portfolio is deeper, resulting in higher net collections than if we were to only utilize our internal collection sites. When evaluating our expense levels, it's important to note that when we exceed our expected collections on a given portfolio, as we did during the first quarter, we recognize the expenses associated with generating those excess collections during the quarter they are incurred, but not the revenue.

For revenue recognition purposes, unless we increase forecasted portfolio collections, revenue is reported on the original forecast, regardless of collections. On our last call, we indicated that we expected the new accounting rule related to the expensing of stock options would decrease our pretaxed income by approximately $700,000 per quarter. With the delay of the implementation of the new rule, this will not impact us this year. Finally, we adopted the new accounting rule, SOP0303, during the first quarter. And as expected, we did not record any impairment charges on our portfolios.

However, over time, it would not be unusual to periodically record small impairment charges. I would now like to turn the call over to Brandon, who will provide some closing remarks.

Thanks, Paul. Although we indicated in our last call that it could be challenging to increase collections in 2005, we are pleased with the level of growth in the first quarter despite the more moderate purchases, and we are confident that we will continue to execute well in the future. Our purchases in the first quarter were below expectations, driven primarily by the continued irrational portfolio pricing. While we continue to look at and evaluate all available portfolios in the market place, we have placed an increased emphasis on the larger portfolios, where we believe there is less competition.

This may exaggerate the lumpiness of our purchases this year, and could cause our quarterly results to vary. However, this attention to portfolio profitability protects our ability to generate long term growing. While we can't affect what others are willing to pay for portfolios, we are intensely focused on optimizing the areas of our business that are within our control. These areas include the productivity of our flexion efforts, expense management and the evaluation of potential acquisition opportunities that can enhance shareholder value. Our success in developing the consumer level account management strategies and alternative collection channels has had a positive impact on our ability to penetrate portfolios to the point that collections have exceeded our estimates for these portfolios.

If this continues long enough, it will result in an increase in the collection multiples. We also continue to evaluate potential acquisitions that can expand our footprint in the [INAUDIBLE] consumer debt space. This remains a highly fragmented market with a number of interesting opportunities, and our balance sheet strength enables us to consider a wide range of companies that can help generate profitable growth. In summary, we are optimistic about the long-term prospects of the debt collection market. We believe our expertise, sophisticated analytics and disciplined approach to portfolio purchases provide the Company with a long-term, sustainable competitive advantage.

While it remains a challenging operating environment, we believe the solid foundation we have built will enable us to generate profitable growth over the long term. Now, we'll be happy to answer any of your questions. Operator, please open up the call.

Thank you, sir. Ladies and gentlemen, at this time, we will begin the question-and-answer session. If you would like to ask a question, please press the star followed by the one on your push button phone. If you'd like to decline from the polling process, please press the star followed by the two. You will hear a three-tone prompt acknowledging your selection. If you are using speaker equipment, we do ask that you please lift your handset before pressing the numbers. One moment, please, for our first question. Our first question comes from Joe Chumbler. Please state your company affiliation, followed by your question.

Thanks, Joe Chumbler, Stevens, Incorporated. Hello, everybody.

Hey, Joe.

Paul, did you give the zero basis revenue in the quarter?

I did not, but it was $10.4 million.

Okay. And I think on the last quarter call, you indicated you expected to decline this year. Do you still expect that to happen?

As we indicated, we do expect the zero basis of portfolio revenue to decrease over time. However, as I indicated, we are seeing that we are penetrating some of our older portfolios a little more deeply; and to the extent that we continue to do that, it could go up and down. But we do expect it to decrease over time.

Okay. And then earlier today on a competitor's conference call, the tone was pretty positive regarding the pricing environment, somewhat inconsistent with what you guys were saying. Any explanation as to the variance there?

What I think -- you know, what I heard on the call was the -- pricing had leveled off. And quite frankly, leveled off is at a reasonably high number. And so maybe we're saying the same thing. What we haven't seen is a decline in pricing. I will concur with some of the comments made earlier that we are seeing resale portfolios from other debt buyers -- again, not knowing the motivation, but we could beginning -- or see the beginning of people starting to struggle with some of the portfolios they bought last year. But we have not seen a decrease in pricing.

Okay. And then finally, your purchases in the quarter, you said, I think, were all credit card. Can you describe a little bit more as to the age mix in the purchases?

We do not give out kind of guidance on age mix. And we continue to look at portfolios across the entire spectrum.

Okay. Thank you.

Thank you, our next question comes from Charles Trafton. Please go ahead with your question.

Thanks. Relative to face value, I think this quarter you paid three and a half cent, 3.7 cents on the dollar. Something like that. And well, not trying to get too caught up in the quarterly purchase pattern, that's above the $0.02 or $0.03 you paid last year. But going back to '99 and '00, he portfolios you bought that are giving all the zero basis today, you bought -- you were paying four and a half cents or $0.06 to the dollar today. Could you compare the purchases you made recently here with those made in '99, '00 that were, again, at $0.06 to the dollar?

Sure. One factual difference. But I think most of the ZBAs from portfolio purchases in 2001 and 2002, there is some component of it on the older portfolios, but if you happen to at our estimated remaining collections, there is not a lot left in the oldest stuff -- most of it's in the '01, ' 02. You know, I think ultimately, what we are seeing is that back then you had pricing that was driven primarily off very fresh, expensive paper. And so it's hard to compare what was $0.06 then to 3.8 today. You know, we've tried to stay way from looking and comparing absolute levels of purchase price, because ultimately, that's not the measure of value. And so I -- you know, it's tough for us to comment on it in apples to apples. But we have seen fresh paper that, you know, was bought in the '99, 2000 time frame, and approach that pricing today. And so there's a similar level of pricing, and then I think drawing profitability conclusions are tough to do.

Okay. Your amortization rate was up quite a bit. But I guess that obviously relates to your lower collection multiples that you had at the end of last year and this year. Should I assume that because the 2.2 multiple you had at the end of last year is now 2.3, that your -- and the amortization rate went from 86% to -- I mean, a [INAUDIBLE] went from 86% to 77. Where do you see that 77% going in the next couple of quarters, I guess, if not this year?

As we indicated in the last call, Charles, we would expect the revenue recognition rate to continue be in the 70s. Although, as we explained last quarter also, the rate is impacted by the timing of the purchases. So, last quarter we did have a large purchase late in the quarter which significantly impacted it; and in the future, the timing of purchases could also have an impact on it.

Last quarter -- you mean the Q4?

Correct.

What about this quarter? Was purchases towards the end of the quarter or the beginning?

In Q1?

Yes.

They were earlier in the quarter rather than later in the quarter. Earlier in the quarter, to mid in the -- to middle of the way through the quarter.

A year ago, when you had sales of 9 million versus the 3 million this quarter, what was the -- what is the profit differential? Forgetting the collections number for a moment.

The profit number meaning kind of a dollar collected through sales versus a dollar collected through somewhere else?

Well, I mean, of the 9 million you collected last year through sales, how much of that was -- was that all profit?

No, most --

What was the cost associated with that? It obviously wasn't all profit. Sorry.

No, that's all right. Generally, our sales last year, where when we were taking -- part of our strategy was taking accounts that were sold, and we could buy a large pool and break it up into some smaller pools and sell it for a markup, and so let's say we were getting a 20% premium on the deals. I don't have the exact numbers, but as an example, you could envision the cost of the pool being seven and we sold it for nine, something like that.

So a couple of million. Same kind of ratio this year?

This year, actually our sales were less from portfolio purchase and more from finding -- portions of our inventory, where we thought that, in this kind of difficult expensive price environment, we could sell parts of the older inventory at a level of higher than our expected value. And so these were more out of our inventory. We sold -- for example, we sold some skip accounts that we had a large expected value and someone was willing to pay us.

Okay. And last question, is the volume of options that you are seeing meaningfully higher than a year ago or higher than a quarter ago? Thank you.

We saw great portfolios in the first quarter, and actually up from the year prior. So we feel like there is a very nice supply of portfolio. At least there was in the first quarter. The quarters tend to accelerate towards the middle and the end of the quarter, so we expect to hopefully see a big burst in this quarter.

Thank you.

Thank you. Our next question comes from Richard Shane with Jefferies & Company. Please go ahead.

Afternoon, guys.

Hey, Rick.

You know, one of the interesting things is it seems like in the last couple of quarters you have become refocused on credit card receivables. What's going on in sort of the -- in the other business lines? Are you continuing to look at portfolios there? Are you not finding them as attractive? Given what you've talked about in terms of the competitive environment, it would have made sense to us that you would have continued to aggressively look outside the card space.

It's a great question. What we continue to see is, you know, most people highlighted the fact they were pursuing alternative asset classes. And so for a while, we were alone in that space. (Technical difficulties)

Ladies and gentlemen, please continue to stand by. At this time, we have seemed to lost connection. Please continue to stand by. Ladies and gentlemen, we do have management back on line. Please proceed, sir.

Rick, what did you last hear? Hello.

We'll move to the next question. Our next question comes from Richard Eckert with Roth Capital Partners. Please go ahead.

Actually, I was going to ask the same question as the last caller, so if you'd continue, I think we'd all appreciate it.

Sure. I don't know where we lost you, so I will restate the entire answer. You'll have to hear it again.

Okay, that's fine.

Our shift away from -- or what would appear to be a shift away from alternative asset classes -- is not so much a function of us saying, "let's move this credit card" as what we're seeing as a lot of people, I think, piling into the alternative paper space. Virtually every competitive of ours has -- has alluded to the fact they want to buy alternative paper, and have now announced purchases. And what we're seeing is in that space, the pricing has gone up dramatically -- probably the most dramatically in the past year. And so what we've done is as we looked at all the deals available, the ones that we felt met our profitability targets were in the credit card space, and it's not, again, shying away from the alternative paper classes, and it could turn around. But the pricing pressure now appears to be uniform across all of them.

And would you continue to look for opportunities for acquisition in different companies specializing in some of these alternative asset classes?

Yes, I think that's a great question. It's a key part of our ongoing strategy, is identify people who we think can bring a management team and a platform that can allow us to grow the Company. That may be alternative asset classes. That may be another -- kind of areas related to the defaulted consumer space, and that could take a variety of forms. But looking at acquisitions is a key part of what we are doing, and a lot of -- where Paul has spent his time initially, and where we spend a lot of time today.

Okay, thank you.

Thank you. Our next question comes from Richard Shane with Jefferies & Company. Please go ahead.

Hi, guys, we're back.

Hey, Rick.

The second question I had is when we look at the last 12 months collectable -- when we look at the collection terms, which is a metric you guys have shown in the past, the number has trended down sort of close to one. Where should we see that going over the next 12 months, given purchase prices and current collection rates? Is that something we would expect to dip below one or will it continue to be sort of in that one range.

Quite frankly, that's going to be driven by the pattern of purchases for us. For example, buying a lot at the end of the year makes it hard to kind of get that multiple up in a shorter period of time. So I think depending on what the purchase pattern is, you could see that number fluctuate in a reasonable amount.

Okay. One of the other things we noticed is that you did take up the estimated -- the expected collections on the '03 vintage -- or excuse me, on the '01 vintage. How is the '04 vintage going, given how -- you know, how back end loaded that was? Do you have any sort of insight at this point? Is that performing on track, and where is it versus plan?

Well, you look -- you know, we took up the '04 multiple from 2-2 to 2-3. And so that's an indication that, at least what we've seen thus far at the beginning of this year and what we see in the foreseeable future, that that portfolio is going to outperform where we originally had pegged it. Again, it's hard to compare it back to an older vintage. But we believe we are conservative in our estimates and will continue to be so. And so it's my hope that over we could see that number go up sequentially over a period of time, but it's hard to go back to say, "hey, we'll compare it to the same rate or the same increase as the '01 vintage.

Okay. Thank you.

Thank you. Our next question comes from Frank Dusentis with Copper Beach Capital. Please go ahead.

Good afternoon, gentlemen. Forgive me if I missed this, because I am multi-tasking here. But when you look at the total estimated gross collections that you list in the Q, it looks like they were revised up. How much of that was just the first quarter collections coming in above, how much of it is just raising the forecast?

We go through an exercise of looking at the total estimated remaining collections from the -- from our -- from the forecast every quarter. So it is based upon our estimate of the remaining forecast of those collections.

Did those -- did those go down last quarter sequentially?

The estimate of our remaining forecast?

Yes.

No.

All right, never mind. I wanted to also ask if you could elaborate on the comment that you made -- you said something that I found very interesting, that pricing has leveled off in terms of, you know, no longer going up, and that you're starting to see some other debt buyers resell portfolios that perhaps they're having trouble collecting with. Could you just elaborate on that? Because I think that's fairly significant -- that's, you know, fairly broad based.

Well, part of it was the reaction to the question about what was said on another earnings call today, where I believe the management team there used the word "leveled off." And I think that's probably a pretty good characterization, that we've not seen any raised pricing over the last few months. However, the pricing is still at a high level. So it's just a question of when we'll start trending down. An early indicator of pricing potentially come onto the market -- and in some cases, large resale portfolios, where you -- you know, it's one of two things. One of two things. Either the buyer is looking to kind of monetize the profitable asset or they're struggling to meet their collection returns and are moving into something else. It's hard to tell. If you would ask them, they would say we've done great, and we're just trying to take advantage of pricing in the marketplace. But we've certainly seen enough of it to give the indication that there might be something else there.

Okay. And as you start to move, you made the comment that you're going to move towards larger purchases, and that might be bulky. What are -- is there anything particularly different about the strategy for sourcing these things in large purchases versus your more traditional bite sized?

I don't think there's anything in particular. I think that, you know, you have to demonstrate you can close a large deal, which we've done a couple of them over the past year. From a valuation perspective, the larger the sample size, the greater the accuracy. And so we think that from a valuation perspective, We'll be better buying larger deals rather than many few or small deals, and it's just about kind of concentrating, focusing on them when they come in, putting in the effort. But if we think there is sufficient levels of big deals -- and by big deals, I'm talking about 20 million or more in purchase price. That, you know, this could be a great opportunity for us.

And so what was the largest portfolio purchased in the nineteen and a half this quarter? What was the biggest piece?

The biggest piece was slightly less than 10.

And we -- we might possibly see purchases going forward that are over 20 million in any one single transaction?

That's correct.

Does that crowd out your ability to do all the other little ones, too, or it just totally additive?

I think it's completely additive and it actually relieves the need to go and do a bunch of little ones. You know, the bunch of little ones are harder to do, a lot of effort, a lot more bidders. You know, when we look at these larger deals, we looked at a very large deal in the first quarter that we ultimately lost on, where we think we are one of two or three bidders versus one of 20 or 30.

Okay. And then last thing, where do you stand kind of philosophically on the slower contracts? Would that be a possible way of just kind of locking down some, you know, predicable future purchase volume?

Under the right circumstances, we would love to do one. You know, and so we would love to be in a situation where we could appropriately value the portfolio, have the right kind of contract that if quality changed over time, we could get out of it and find the right partner. Quite frankly, we had a great one that we lost it at the beginning of the year, and would love to replace that with another one.

Okay, all right. Thanks, gentlemen.

Thank you. Our next question comes from Justin Hughes with Philadelphia Financial. Please go ahead.

Good afternoon. A part of this question was answered earlier -- I dropped in the line for a minute. But did you say that your purchases this quarter were mostly at the beginning to middle of the quarter?

Yes.

Okay. So if I look at the '05 collections to date, you're about 1.9 million. The '04 pool at this point had 3.4 million. Can you just tell us what's going on there?

I'm not sure what number you are referring to, Justin.

If you look at how much has been collected thus far in the '05 pool, it's 1.9 million. But on -- on almost 19.5 million of purchases that were mostly at the beginning of the quarter. And your '04 pool, you bought 17 million. So less number, but you had collected almost twice as much at the end of the first quarter.

Are you pulling that number from -- the second number from last year's --

From last year's 10-Q, yes.

I think -- and we'll pull it out, but I'll give you an answer and we'll -- we'll give you the final number. But it goes back to the question earlier about the sales, where we're selling portfolio, that was fresh paper where we buy it and turn around around sell it. So that kind of goes back to my answer a little while ago.

Okay. But exclusive of the rewrite portfolio that you sold last year?

That's right. The new portfolio will not have any new originations in it. So you know, anything we would have sold last quarter that was not rewrite sales largely would have been stuff that was bought recently.

Okay. And then on your revenue recognition rate, we talked about this earlier, but just looking quarter to quarter you went from 86% to 77%. And your zero basis collections actually went up from quarter to quarter. And I notice a little bit of variability, but I've just never seen a move that big, either you guys or any of your competitors. Can you just go into that in a little bit more detail?

There was -- as I had mentioned, Justin, the purchase in the fourth quarter -- a large -- the large purchase was virtually the -- was in the last month of the quarter, which drove the revenue recognition very high in the fourth quarter. And that's one of the significant reasons for it, as well as just the mix of the various portfolios that we've got, whether they're zero based portfolios or accrual basis portfolios.

So a single purchase of a portfolio can SKU your whole recognition rate?

[INAUDIBLE] portion of it.

Okay.

The other thing is, you know, ultimately, one of the real challenges we have -- and we saw it from the fourth quarter to the first quarter -- is that, especially under the new SOPs, you know, we actually outperformed our collection forecast, but we didn't increase beyond our arc in those pools; and so we had in the first quarter was, as Paul alluded in the call, higher collections debt expected and no revenue associated with it. And so it drove up costs and zero collections, but revenue was -- lagged because of our desire to be conservative on the estimate for those pools. And so we beat our forecast by several million dollars and we got virtually no credit for that in revenue recognition.

Okay, but it's collections that you expect to get later on, is that what you're saying?

That's correct, that's correct. Ultimately, you will get it over time. You just won't get the benefit in that quarter. And so rather than kind of revise up in this quarter, over the life, we'll either see higher revenue recognition or ultimately zero basis rather than receiving it and taking it into the first quarter.

Okay. Thank you.

Thank you, our next question come from Charles Trafton with Americas Growth Capital. Please go ahead.

Okay, thanks. How much Sarbanes-Oxley expense did you have in the quarter? And how much of that do you expect to be recurring?

One second, Charles, we're just trying to look it up.

Okay. And while you're looking that up, do you think the -- your internal collections sites, your call centers, will be growing revenue -- will be growing collections year-over-year the second half this year, or put another way, are you hiring there now? Or how many collectors do you have internally?

We are hiring, although we are not growing the staff; and so we are investing in maintaining the sites, but we are not growing the staff. And so depending on productivity enhancement and the mix of portfolio, you could see that number grow over time, or you could see it come down a little bit.

Can you give us your thoughts on productivity there? Collections per hour, how we measure it?

We do not measure collections per -- well, we do measure, but we think that's a little bit of a misleading number. We like to focus on dollar per employee [INAUDIBLE] per month in a quarter, which is from right around 29,000 or right around 31,000.

Per -- so per month is how much?

Per month, per employee this quarter was right around 31,000.

Okay, is that total employees? Not collectors?

That's correct.

And it was 31,000 this month. What was it this quarter? What was it a year ago or a quarter ago?

27 or 8.

29. 29,000 in the first quarter of last year.

All right. And do you have the Sarb-Ox number?

Yes, Charles. There was not -- there weren't significant external costs this quarter from SOX -- although what we have done is we have an internal audit group that -- that we brought on board middle to late of last year that we recruited to handle our 404 compliance and to do other things that are associated with Sarbanes-Oxley. So there will be that group of, you know, three to four people throughout the year. So those costs will be spread throughout the year. In terms of our external costs, we would anticipate that those would be quite a bit less than they were last year.

What was the total last year?

It was in excess of a million. Probably around a million two.

Okay. Okay. Thank you.

Thank you. Our next question comes from Richard Shane with Jefferies & Company. Please go ahead.

Hi, after you guys cut me off -- or after I got cut off, I got a lot more questions. Just wondering, in terms of large portfolios, we don't have any sense as to how many portfolios, like, you know, like north of $20 million, might trade in a year. Can you give us a sense as to how often you might be reviewing something like that, and what types of players would be competing with you to purchase those pools?

Rather than giving you the exact number, let's suffice it to say that there will be, we think, several in each quarter. And we'll be competing generally with some of the private players, and occasionally one or two of the public players. But we generally see the private players in those transactions.

Okay, would the private players be carving them up amongst a number of different guys, or would they be buying them outright themselves?

Very hard to tell. We generally don't know who the lead bidder is. And if we find out at all, we wouldn't know whether they had a team of people or not.

Okay. Thank you, guys.

Thank you, sir. Management, at this time, we appear to have no further participants who would like to ask a question. If you would like to conclude with any remarks, please make those remarks at this time.

Thank you all for joining us today. And we look forward to speaking with you after our next quarter.

Thank you, management. Ladies and gentlemen, at this time, we would like to conclude today's teleconference presentation. We thank you for your participation on the conference call. If you would like to listen to a replay of the presentation, please dial 1-800-405-2236 or 303-590-3000, and you need to enter an access code of 11029699. Once again, ladies and gentlemen, if you would like to listen to a replay of today's conference, please dial 1-800-405-2236 or 303-590-3000 with the access code of 11029699. We thank you for your participation on today's conference call. At this time, we will conclude, and you may now disconnect. And please have a pleasant day.