• Encore Capital Group Announces Second Quarter 2024 Financial Results

    المصدر: Nasdaq GlobeNewswire / 07 أغسطس 2024 16:06:00   America/New_York

    • Highly favorable purchasing conditions continue in U.S. market
    • Global portfolio purchases of $279 million including record $237 million in the U.S.
    • Global collections of $547 million up 15% compared to Q2 2023
    • GAAP EPS of $1.34

    SAN DIEGO, Aug. 07, 2024 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the second quarter ended June 30, 2024.

    “Encore’s second quarter results are a continuation of our strong performance trajectory,” said Ashish Masih, President and Chief Executive Officer. “Our year-to-date growth in portfolio purchasing, collections and cash generation reinforces our belief that 2024 will be a turning point in Encore’s operational and financial results.”

    “In the U.S., the market for charged-off receivable portfolios continues to grow to record levels, driven by growth in credit card lending and rising charge off rates. Amid these favorable purchasing conditions, we deployed a record $237 million in the U.S. at strong returns.”

    “In Europe, the portfolio purchasing market is showing continued signs of improvement but remains competitive. Although we continue to see examples of improved pricing, we believe European market pricing still does not consistently reflect the higher cost of capital caused by higher interest rates. As a result, we are maintaining discipline and are continuing our selective approach to purchasing portfolios in the region.”

    “Our second quarter global collections of $547 million were up 15% compared to a year ago, reflecting the influence of our strong portfolio purchasing in the U.S. over the past two years as well as the stable collections environment in our key markets.”

    “Due to the strength of our position in the favorable U.S. market for portfolio purchasing and the continued execution of our strategy, we are raising our 2024 guidance provided in February. We now anticipate our global portfolio purchasing this year will exceed $1,150 million and we expect our year-over-year collections growth to be approximately 11% to over $2,075 million. We also remain committed to the critical role we play in the consumer credit ecosystem and to helping consumers restore their financial health,” said Masih.

    Financial Highlights for the Second Quarter of 2024:

     Three Months Ended June 30,
    (in thousands, except percentages and earnings per share)2024 2023 Change
    Portfolio purchases(1)$278,692 $274,325 2%
    Estimated Remaining Collections (ERC)$8,396,696 $7,979,353 5%
    Collections$546,728 $476,522 15%
    Revenues$355,285 $323,044 10%
    Operating expenses$253,446 $234,972 8%
    GAAP net income$32,181 $26,305 22%
    GAAP earnings per share$1.34 $1.08 24%

    ______________________

    (1)      Includes U.S. purchases of $236.8 million and $213.4 million, and Europe purchases of $41.9 million and $61.0 million in Q2 2024 and Q2 2023, respectively.


    Conference Call and Webcast

    Encore will host a conference call and slide presentation today, August 7, 2024, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, to present and discuss second quarter results.

    Members of the public are invited to access the live webcast via the Internet by logging in on the Investor Relations page of Encore's website at encorecapital.com. To access the live conference call by telephone, please pre-register using this link. Registrants will receive confirmation with dial-in details.

    For those who cannot listen to the live broadcast, a replay of the webcast will be available on the Company's website shortly after the call concludes.

    Non-GAAP Financial Measures

    This news release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has included information concerning adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Company’s ability to generate cash collections in excess of operating expenses through the liquidation of its receivable portfolios. Adjusted EBITDA has not been prepared in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income and net income per share as indicators of the Company’s operating performance. Further, this non-GAAP financial measure, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure is below.

    About Encore Capital Group, Inc.

    Encore Capital Group is an international specialty finance company that provides debt recovery solutions and other related services for consumers across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions, and utility providers.

    Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with a Consumer Bill of Rights that provides industry-leading commitments to consumers. Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. More information about the company can be found at http://www.encorecapital.com.  

    Forward Looking Statements

    The statements in this press release that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements may include, but are not limited to, statements regarding our future operating results (including purchases and collections), performance, supply and pricing, liquidity, business plans or prospects. For all “forward-looking statements,” the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking 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 future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, each as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.

    Contact:

    Bruce Thomas
    Encore Capital Group, Inc.
    Vice President, Global Investor Relations
    (858) 309-6442
    bruce.thomas@encorecapital.com

    SOURCE: Encore Capital Group, Inc.

    FINANCIAL TABLES FOLLOW



    ENCORE CAPITAL GROUP, INC.
    Condensed Consolidated Statements of Financial Condition
    (In Thousands, Except Par Value Amounts)
    (Unaudited)
     
     June 30,
    2024
     December 31,
    2023
    Assets   
    Cash and cash equivalents$250,621  $158,364 
    Investment in receivable portfolios, net 3,583,322   3,468,432 
    Property and equipment, net 102,291   103,959 
    Other assets 277,799   293,256 
    Goodwill 602,811   606,475 
    Total assets$4,816,844  $4,630,486 
    Liabilities and Equity   
    Liabilities:   
    Accounts payable and accrued liabilities$197,555  $189,928 
    Borrowings 3,455,130   3,318,031 
    Other liabilities 176,032   185,989 
    Total liabilities 3,828,717   3,693,948 
    Commitments and Contingencies   
    Equity:   
    Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding     
    Common stock, $0.01 par value, 75,000 shares authorized, 23,691 and 23,545 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively 237   235 
    Additional paid-in capital 13,257   11,052 
    Accumulated earnings 1,104,591   1,049,171 
    Accumulated other comprehensive loss (129,958)  (123,920)
    Total stockholders’ equity 988,127   936,538 
    Total liabilities and stockholders’ equity$4,816,844  $4,630,486 
     

    The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. The liabilities in the table below can only be settled from assets in the respective VIEs. Creditors of the VIEs do not have recourse to the general credit of the Company.

     June 30,
    2024
     December 31,
    2023
    Assets   
    Cash and cash equivalents$26,714  $24,472 
    Investment in receivable portfolios, net 774,104   717,556 
    Other assets 9,294   19,358 
    Liabilities   
    Accounts payable and accrued liabilities 2,266   1,854 
    Borrowings 466,267   494,925 
    Other liabilities 7   2,452 
            


    ENCORE CAPITAL GROUP, INC.
    Condensed Consolidated Statements of Income
    (In Thousands, Except Per Share Amounts)
    (Unaudited)
     
     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
      2024   2023   2024   2023 
    Revenues       
    Revenue from receivable portfolios$321,930  $301,184  $637,782  $596,858 
    Changes in recoveries 5,754   (3,486)  (6,655)  (12,987)
    Total debt purchasing revenue 327,684   297,698   631,127   583,871 
    Servicing revenue 21,107   21,008   41,486   43,593 
    Other revenues 6,494   4,338   11,058   8,210 
    Total revenues 355,285   323,044   683,671   635,674 
    Operating expenses       
    Salaries and employee benefits 106,608   95,855   210,792   199,705 
    Cost of legal collections 64,249   57,150   122,970   111,251 
    General and administrative expenses 36,779   34,529   73,020   72,494 
    Other operating expenses 30,845   26,349   61,212   53,905 
    Collection agency commissions 7,504   10,387   14,938   18,537 
    Depreciation and amortization 7,461   10,702   15,309   21,572 
    Total operating expenses 253,446   234,972   498,241   477,464 
    Income from operations 101,839   88,072   185,430   158,210 
    Other expense       
    Interest expense (61,376)  (49,983)  (117,141)  (96,818)
    Other income (expense), net 2,047   (1,755)  4,713   (23)
    Total other expense (59,329)  (51,738)  (112,428)  (96,841)
    Income before income taxes 42,510   36,334   73,002   61,369 
    Provision for income taxes (10,329)  (10,029)  (17,582)  (16,438)
    Net income$32,181  $26,305  $55,420  $44,931 
            
    Earnings per share:       
    Basic$1.35  $1.11  $2.33  $1.90 
    Diluted$1.34  $1.08  $2.28  $1.83 
            
    Weighted average shares outstanding:       
    Basic 23,883   23,670   23,834   23,610 
    Diluted 24,097   24,280   24,282   24,611 
                    


    ENCORE CAPITAL GROUP, INC.
    Condensed Consolidated Statements of Cash Flows
    (Unaudited, In Thousands)
     
     Six Months Ended June 30,
      2024   2023 
    Operating activities:   
    Net income$55,420  $44,931 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Depreciation and amortization 15,309   21,572 
    Other non-cash interest expense, net 7,941   8,660 
    Stock-based compensation expense 7,994   7,925 
    Deferred income taxes (810)  2,785 
    Changes in recoveries 6,655   12,987 
    Other, net 3,357   985 
    Changes in operating assets and liabilities   
    Other assets (25,896)  (35,730)
    Accounts payable, accrued liabilities and other liabilities 16,727   (1,492)
    Net cash provided by operating activities 86,697   62,623 
    Investing activities:   
    Purchases of receivable portfolios, net of put-backs (566,960)  (544,721)
    Collections applied to investment in receivable portfolios 419,833   342,020 
    Purchases of asset held for sale (212)  (24,645)
    Purchases of property and equipment (14,251)  (9,503)
    Other, net 29,704   22,603 
    Net cash used in investing activities (131,886)  (214,246)
    Financing activities:   
    Payment of loan and debt refinancing costs (17,201)  (8,151)
    Proceeds from credit facilities 393,455   444,805 
    Repayment of credit facilities (1,234,189)  (259,843)
    Proceeds from senior secured notes 1,000,000    
    Repayment of senior secured notes (19,540)  (19,540)
    Proceeds from issuance of convertible senior notes    230,000 
    Repayment of exchangeable senior notes    (192,457)
    Proceeds from convertible hedge instruments, net    10,050 
    Other, net 16,967   (14,238)
    Net cash provided by financing activities 139,492   190,626 
    Net increase in cash and cash equivalents 94,303   39,003 
    Effect of exchange rate changes on cash and cash equivalents (2,046)  1,956 
    Cash and cash equivalents, beginning of period 158,364   143,912 
    Cash and cash equivalents, end of period$250,621  $184,871 
        
    Supplemental disclosure of cash information:   
    Cash paid for interest$80,945  $79,167 
    Cash paid for taxes, net of refunds 42,365   36,822 
    Supplemental schedule of non-cash investing activities:   
    Investment in receivable portfolios transferred to real estate owned$3,098  $6,244 
            


    ENCORE CAPITAL GROUP, INC.
    Supplemental Financial Information
    Reconciliation of Non-GAAP Metrics
     
    Adjusted EBITDA
     
     Three Months Ended
    June 30,
     Six Months Ended
    June 30,
    (in thousands, unaudited) 2024   2023   2024   2023 
    GAAP net income, as reported$32,181  $26,305  $55,420  $44,931 
    Adjustments:       
    Interest expense 61,376   49,983   117,141   96,818 
    Interest income (1,760)  (1,123)  (3,128)  (2,067)
    Provision for income taxes 10,329   10,029   17,582   16,438 
    Depreciation and amortization 7,461   10,702   15,309   21,572 
    Net gain on derivative instruments(1) (78)     (273)   
    Stock-based compensation expense 4,637   3,873   7,994   7,925 
    Acquisition, integration and restructuring related expenses(2) 1,883   454   4,202   5,980 
    Adjusted EBITDA$116,029  $100,223  $214,247  $191,597 
    Collections applied to principal balance(3)$228,923  $190,658  $443,474  $373,639 

    ________________________

    1. Amount represents gain or loss recognized on derivative instruments that are not designated as hedging instruments or gain or loss recognized on derivative instruments upon dedesignation of hedge relationships. We adjust for this amount because we believe the gain or loss on derivative contracts is not indicative of ongoing operations.
    2. Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
    3. Amount represents (a) gross collections from receivable portfolios less (b) debt purchasing revenue, plus (c) proceeds applied to basis from sales of real estate owned (“REO”) assets and other receivable portfolios. A reconciliation of “collections applied to investment in receivable portfolios, net” to “collections applied to principal balance” is available in the Form 10-Q for the period ending June 30, 2024.

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