- Highly favorable purchasing conditions continue in U.S. market
- Global portfolio purchases up 23% to $282 million
- Global collections up 18% to $550 million
- GAAP EPS of $1.26
"Encore's strong third quarter performance was largely driven by our MCM (Midland Credit Management) business in the U.S.,” said Ashish Masih, President and Chief Executive Officer. "U.S. market supply continues to grow to record levels, driven by the highest U.S. charge off rate in more than 10 years coupled with growth in lending. Amid these favorable market conditions, MCM continues to deliver on this robust opportunity with portfolio purchases of $230 million, up 28% compared to the year ago quarter, while collections in the quarter were at their highest level since 2021.”
"For our Cabot business in the U.K. and Europe, the portfolio purchasing market remains competitive. We are maintaining discipline and our selective approach to purchasing portfolios in the region as we continue to see slow improvement in portfolio pricing, although pricing still does not yet consistently reflect the higher cost of capital. This approach has led to better purchase price multiples compared to a year ago.”
In the third quarter, the company exited the secured NPL market in Spain, which was a small, niche portion of Cabot's business. The sale of these assets resulted in a pre-tax loss of $8 million, or ($0.27) per share.
"Due to our continued strong operational and investment execution, we are again raising our 2024 guidance which we originally established in February and revised upward in August. We now anticipate our global portfolio purchasing this year will exceed $1,250 million and we expect our year-over-year collections growth to be approximately 15% to over $2,125 million. As always, we 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 Third Quarter of 2024:
| Three Months Ended September 30, | ||||||||||
| (in thousands, except percentages and earnings per share) | 2024 | 2023 | Change | |||||||
| Portfolio purchases(1) | $ | 282,485 | $ | 230,559 | 23 | % | ||||
| Estimated Remaining Collections (ERC) | $ | 8,648,886 | $ | 7,877,621 | 10 | % | ||||
| Collections | $ | 550,268 | $ | 465,339 | 18 | % | ||||
| Revenues | $ | 367,071 | $ | 309,619 | 19 | % | ||||
| Operating expenses | $ | 260,981 | $ | 234,101 | 11 | % | ||||
| GAAP net income | $ | 30,643 | $ | 19,339 | 58 | % | ||||
| GAAP earnings per share | $ | 1.26 | $ | 0.79 | 59 | % | ||||
(1) Includes U.S. purchases of $230.2 million and $179.3 million, and Europe purchases of $52.3 million and $51.3 million in Q3 2024 and Q3 2023, respectively.
Conference Call and Webcast
Encore will host a conference call and slide presentation today, November 6, 2024, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, to present and discuss third 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
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) | |||||||
| September 30, 2024 | December 31, 2023 | ||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 247,353 | $ | 158,364 | |||
| Investment in receivable portfolios, net | 3,719,260 | 3,468,432 | |||||
| Property and equipment, net | 103,550 | 103,959 | |||||
| Other assets | 295,422 | 293,256 | |||||
| Goodwill | 628,131 | 606,475 | |||||
| Total assets | $ | 4,993,716 | $ | 4,630,486 | |||
| Liabilities and Equity | |||||||
| Liabilities: | |||||||
| Accounts payable and accrued liabilities | $ | 222,841 | $ | 189,928 | |||
| Borrowings | 3,550,574 | 3,318,031 | |||||
| Other liabilities | 172,196 | 185,989 | |||||
| Total liabilities | 3,945,611 | 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 September 30, 2024 and December 31, 2023, respectively | 237 | 235 | |||||
| Additional paid-in capital | 17,016 | 11,052 | |||||
| Accumulated earnings | 1,135,234 | 1,049,171 | |||||
| Accumulated other comprehensive loss | (104,382 | ) | (123,920 | ) | |||
| Total stockholders' equity | 1,048,105 | 936,538 | |||||
| Total liabilities and stockholders' equity | $ | 4,993,716 | $ | 4,630,486 | |||
| September 30, 2024 | December 31, 2023 | ||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 28,740 | $ | 24,472 | |||
| Investment in receivable portfolios, net | 818,540 | 717,556 | |||||
| Other assets | 5,485 | 19,358 | |||||
| Liabilities | |||||||
| Accounts payable and accrued liabilities | 2,129 | 1,854 | |||||
| Borrowings | 484,105 | 494,925 | |||||
| Other liabilities | 2,915 | 2,452 | |||||
| ENCORE CAPITAL GROUP, INC. Condensed Consolidated Statements of Income (In Thousands, Except Per Share Amounts) (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenues | |||||||||||||||
| Revenue from receivable portfolios | $ | 328,119 | $ | 302,687 | $ | 965,901 | $ | 899,545 | |||||||
| Changes in recoveries | 12,675 | (17,067 | ) | 6,020 | (30,054 | ) | |||||||||
| Total debt purchasing revenue | 340,794 | 285,620 | 971,921 | 869,491 | |||||||||||
| Servicing revenue | 22,772 | 19,893 | 64,258 | 63,486 | |||||||||||
| Other revenues | 3,505 | 4,106 | 14,563 | 12,316 | |||||||||||
| Total revenues | 367,071 | 309,619 | 1,050,742 | 945,293 | |||||||||||
| Operating expenses | |||||||||||||||
| Salaries and employee benefits | 107,502 | 95,067 | 318,294 | 294,772 | |||||||||||
| Cost of legal collections | 67,339 | 56,274 | 190,309 | 167,525 | |||||||||||
| General and administrative expenses | 38,808 | 35,559 | 111,828 | 108,053 | |||||||||||
| Other operating expenses | 31,804 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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