Encore Capital Group, Inc. (NASDAQ: ECPG), an international
specialty finance company, today reported consolidated financial
results for the third quarter ended September 30, 2023.
“The third quarter was another period of strong purchasing for
our U.S. business at attractive returns while our collections
performance remained stable in each of our key markets,” said
Ashish Masih, President and Chief Executive Officer. “The continued
growth in U.S. portfolio supply, driven by credit card lending
growth and rising charge off rates, has led to improved portfolio
pricing and returns. As a result, our MCM business deployed $179
million in Q3 at an attractive 2.4x purchase price
multiple(1).”
“Our third quarter global collections of $465 million were in
line with expectations and continue to reflect normalized consumer
behavior and a stable collections environment.”
“In Europe, the portfolio purchasing market remains very
competitive. We continue to constrain Cabot portfolio purchases,
reallocating capital to the U.S. market, as we believe European
market pricing still does not yet fully reflect the higher cost of
capital caused by higher interest rates.”
“With growing supply and improving pricing in the U.S. debt
buying market, we expect 2023 will be a record year of capital
deployment for our MCM business at strong returns. Looking ahead,
we see a robust supply pipeline in the U.S. for 2024 at even better
returns.”
“Given our outlook for the favorable purchasing environment in
the U.S. continuing for the foreseeable future, we added
approximately $175 million of liquidity since the end of the third
quarter at attractive terms. Our ability to incrementally improve
our purchasing capacity amid challenging capital market conditions
is a testament to the strength of our global balance sheet.”
“As a result of the continued, disciplined execution of our
strategy and both higher portfolio purchases and strengthening
returns in the U.S., we expect to see steady growth in ERC and
earnings. 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.
______________________
(1) Purchase price multiple is calculated as
(cumulative collections + ERC) ÷ purchase price.
Financial Highlights for the Third
Quarter of
2023:
|
Three Months Ended September 30, |
(in thousands, except percentages
and earnings per share) |
|
2023 |
|
|
2022 |
|
Change |
Portfolio purchases(1) |
$ |
230,559 |
|
$ |
232,652 |
|
(1 |
)% |
Estimated Remaining Collections
(ERC) |
$ |
7,877,621 |
|
$ |
7,312,336 |
|
8 |
% |
Collections |
$ |
465,339 |
|
$ |
458,256 |
|
2 |
% |
Revenues |
$ |
309,619 |
|
$ |
307,752 |
|
1 |
% |
Operating expenses |
$ |
234,101 |
|
$ |
227,235 |
|
3 |
% |
GAAP net income |
$ |
19,339 |
|
$ |
31,494 |
|
(39 |
)% |
GAAP earnings per share |
$ |
0.79 |
|
$ |
1.22 |
|
(35 |
)% |
______________________
(1) Includes U.S. purchases of $179.3 million
and $176.6 million, and Europe purchases of $51.3 million and $56.1
million in Q3 2023 and Q3 2022, respectively.
Conference Call and Webcast
Encore will host a conference call and slide presentation today,
November 1, 2023, 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 www.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,
performance, supply and pricing, liquidity, ability to access
capital markets, 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 ThomasEncore Capital Group, Inc.Vice President, Global
Investor Relations(858) 309-6442bruce.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)
|
September 30,2023 |
|
December 31,2022 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
144,711 |
|
|
$ |
143,912 |
|
Investment in receivable
portfolios, net |
|
3,320,544 |
|
|
|
3,088,261 |
|
Property and equipment, net |
|
102,208 |
|
|
|
113,900 |
|
Other assets |
|
366,815 |
|
|
|
341,073 |
|
Goodwill |
|
826,010 |
|
|
|
821,214 |
|
Total assets |
$ |
4,760,288 |
|
|
$ |
4,508,360 |
|
Liabilities and Equity |
|
|
|
Liabilities: |
|
|
|
Accounts payable and accrued liabilities |
$ |
190,646 |
|
|
$ |
198,217 |
|
Borrowings |
|
3,114,175 |
|
|
|
2,898,821 |
|
Other liabilities |
|
256,684 |
|
|
|
231,695 |
|
Total liabilities |
|
3,561,505 |
|
|
|
3,328,733 |
|
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, 23,529 and
23,323 shares issued and outstanding as of September 30, 2023 and
December 31, 2022, respectively |
|
235 |
|
|
|
233 |
|
Additional paid-in capital |
|
8,106 |
|
|
|
— |
|
Accumulated earnings |
|
1,319,933 |
|
|
|
1,278,210 |
|
Accumulated other comprehensive loss |
|
(129,491 |
) |
|
|
(98,816 |
) |
Total stockholders’ equity |
|
1,198,783 |
|
|
|
1,179,627 |
|
Total liabilities and stockholders’ equity |
$ |
4,760,288 |
|
|
$ |
4,508,360 |
|
The following table presents certain assets and liabilities of
consolidated variable interest entities (“VIEs”) included in the
condensed consolidated statements of financial condition above.
Most assets in the table below include those assets that can only
be used to settle obligations of consolidated VIEs. The liabilities
exclude amounts where creditors or beneficial interest holders have
recourse to the general credit of the Company.
|
September 30,2023 |
|
December 31,2022 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
1,470 |
|
$ |
1,344 |
Investment in receivable
portfolios, net |
|
445,653 |
|
|
431,350 |
Other assets |
|
1,107 |
|
|
3,627 |
Liabilities |
|
|
|
Accounts payable and accrued
liabilities |
|
116 |
|
|
150 |
Borrowings |
|
408,680 |
|
|
423,522 |
Other liabilities |
|
18 |
|
|
105 |
ENCORE CAPITAL GROUP,
INC.Condensed Consolidated Statements of
Income(In Thousands, Except Per Share
Amounts)(Unaudited)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
Revenue from receivable portfolios |
$ |
302,687 |
|
|
$ |
297,219 |
|
|
$ |
899,545 |
|
|
$ |
907,606 |
|
Changes in recoveries |
|
(17,067 |
) |
|
|
(13,080 |
) |
|
|
(30,054 |
) |
|
|
179,293 |
|
Total debt purchasing revenue |
|
285,620 |
|
|
|
284,139 |
|
|
|
869,491 |
|
|
|
1,086,899 |
|
Servicing revenue |
|
19,893 |
|
|
|
21,992 |
|
|
|
63,486 |
|
|
|
71,926 |
|
Other revenues |
|
4,106 |
|
|
|
1,621 |
|
|
|
12,316 |
|
|
|
5,526 |
|
Total revenues |
|
309,619 |
|
|
|
307,752 |
|
|
|
945,293 |
|
|
|
1,164,351 |
|
Operating expenses |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
95,067 |
|
|
|
89,241 |
|
|
|
294,772 |
|
|
|
285,077 |
|
Cost of legal collections |
|
56,274 |
|
|
|
52,891 |
|
|
|
167,525 |
|
|
|
163,756 |
|
General and administrative expenses |
|
35,559 |
|
|
|
37,274 |
|
|
|
108,053 |
|
|
|
105,775 |
|
Other operating expenses |
|
27,959 |
|
|
|
28,286 |
|
|
|
81,864 |
|
|
|
82,718 |
|
Collection agency commissions |
|
8,046 |
|
|
|
7,884 |
|
|
|
26,583 |
|
|
|
27,412 |
|
Depreciation and amortization |
|
11,196 |
|
|
|
11,659 |
|
|
|
32,768 |
|
|
|
35,134 |
|
Total operating expenses |
|
234,101 |
|
|
|
227,235 |
|
|
|
711,565 |
|
|
|
699,872 |
|
Income from operations |
|
75,518 |
|
|
|
80,517 |
|
|
|
233,728 |
|
|
|
464,479 |
|
Other expense |
|
|
|
|
|
|
|
Interest expense |
|
(50,558 |
) |
|
|
(39,308 |
) |
|
|
(147,376 |
) |
|
|
(110,995 |
) |
Other income, net |
|
5,103 |
|
|
|
1,205 |
|
|
|
5,080 |
|
|
|
3,392 |
|
Total other expense |
|
(45,455 |
) |
|
|
(38,103 |
) |
|
|
(142,296 |
) |
|
|
(107,603 |
) |
Income before income taxes |
|
30,063 |
|
|
|
42,414 |
|
|
|
91,432 |
|
|
|
356,876 |
|
Provision for income taxes |
|
(10,724 |
) |
|
|
(10,920 |
) |
|
|
(27,162 |
) |
|
|
(89,194 |
) |
Net income |
$ |
19,339 |
|
|
$ |
31,494 |
|
|
$ |
64,270 |
|
|
$ |
267,682 |
|
|
|
|
|
|
|
|
|
Earnings per
share: |
|
|
|
|
|
|
|
Basic |
$ |
0.82 |
|
|
$ |
1.31 |
|
|
$ |
2.72 |
|
|
$ |
11.00 |
|
Diluted |
$ |
0.79 |
|
|
$ |
1.22 |
|
|
$ |
2.62 |
|
|
$ |
10.06 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
23,712 |
|
|
|
23,958 |
|
|
|
23,644 |
|
|
|
24,344 |
|
Diluted |
|
24,382 |
|
|
|
25,919 |
|
|
|
24,535 |
|
|
|
26,601 |
|
ENCORE CAPITAL GROUP,
INC.Condensed Consolidated Statements of Cash
Flows(Unaudited, In Thousands)
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Operating
activities: |
|
|
|
Net income |
$ |
64,270 |
|
|
$ |
267,682 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
32,768 |
|
|
|
35,134 |
|
Other non-cash interest expense, net |
|
12,526 |
|
|
|
11,984 |
|
Stock-based compensation expense |
|
11,017 |
|
|
|
12,231 |
|
Deferred income taxes |
|
952 |
|
|
|
2,127 |
|
Changes in recoveries |
|
30,054 |
|
|
|
(179,293 |
) |
Other, net |
|
(1,958 |
) |
|
|
14,319 |
|
Changes in operating assets and
liabilities |
|
|
|
Other assets |
|
(21,820 |
) |
|
|
36,768 |
|
Accounts payable, accrued liabilities and other liabilities |
|
(11,598 |
) |
|
|
(46,076 |
) |
Net cash provided by operating activities |
|
116,211 |
|
|
|
154,876 |
|
Investing
activities: |
|
|
|
Purchases of receivable portfolios, net of put-backs |
|
(772,101 |
) |
|
|
(569,032 |
) |
Collections applied to investment in receivable portfolios |
|
504,672 |
|
|
|
567,775 |
|
Purchases of asset held for sale |
|
(24,645 |
) |
|
|
(38,604 |
) |
Purchases of property and equipment |
|
(16,765 |
) |
|
|
(21,068 |
) |
Other, net |
|
38,113 |
|
|
|
20,257 |
|
Net cash used in investing activities |
|
(270,726 |
) |
|
|
(40,672 |
) |
Financing
activities: |
|
|
|
Payment of loan and debt refinancing costs |
|
(8,224 |
) |
|
|
(1,659 |
) |
Proceeds from credit facilities |
|
630,079 |
|
|
|
637,342 |
|
Repayment of credit facilities |
|
(446,724 |
) |
|
|
(432,424 |
) |
Repayment of senior secured notes |
|
(29,310 |
) |
|
|
(29,310 |
) |
Proceeds from issuance of convertible senior notes |
|
230,000 |
|
|
|
— |
|
Repayment of convertible and exchangeable senior notes |
|
(212,480 |
) |
|
|
(221,153 |
) |
Proceeds from convertible hedge instruments, net |
|
12,421 |
|
|
|
— |
|
Repurchase and retirement of common stock |
|
— |
|
|
|
(76,753 |
) |
Other, net |
|
(16,890 |
) |
|
|
(16,735 |
) |
Net cash provided by (used in) financing activities |
|
158,872 |
|
|
|
(140,692 |
) |
Net increase (decrease) in cash
and cash equivalents |
|
4,357 |
|
|
|
(26,488 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
(3,558 |
) |
|
|
(16,122 |
) |
Cash and cash equivalents,
beginning of period |
|
143,912 |
|
|
|
189,645 |
|
Cash and cash equivalents, end of
period |
$ |
144,711 |
|
|
$ |
147,035 |
|
|
|
|
|
Supplemental disclosure of cash
information: |
|
|
|
Cash paid for interest |
$ |
120,113 |
|
|
$ |
94,828 |
|
Cash paid for taxes, net of refunds |
$ |
50,605 |
|
|
$ |
63,710 |
|
ENCORE CAPITAL GROUP,
INC.Supplemental Financial InformationReconciliation of
Non-GAAP Metrics
Adjusted EBITDA
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
(in thousands, unaudited) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
GAAP net income, as reported |
$ |
19,339 |
|
|
$ |
31,494 |
|
|
$ |
64,270 |
|
|
$ |
267,682 |
|
Adjustments: |
|
|
|
|
|
|
|
Interest expense |
|
50,558 |
|
|
|
39,308 |
|
|
|
147,376 |
|
|
|
110,995 |
|
Interest income |
|
(1,315 |
) |
|
|
(749 |
) |
|
|
(3,382 |
) |
|
|
(1,774 |
) |
Provision for income taxes |
|
10,724 |
|
|
|
10,920 |
|
|
|
27,162 |
|
|
|
89,194 |
|
Depreciation and amortization |
|
11,196 |
|
|
|
11,659 |
|
|
|
32,768 |
|
|
|
35,134 |
|
Stock-based compensation expense |
|
3,092 |
|
|
|
3,191 |
|
|
|
11,017 |
|
|
|
12,231 |
|
Net gain on derivative instruments(1) |
|
(3,512 |
) |
|
|
— |
|
|
|
(3,512 |
) |
|
|
— |
|
Acquisition, integration and restructuring related expenses(2) |
|
594 |
|
|
|
13 |
|
|
|
6,574 |
|
|
|
1,179 |
|
Adjusted EBITDA |
$ |
90,676 |
|
|
$ |
95,836 |
|
|
$ |
282,273 |
|
|
$ |
514,641 |
|
Collections applied to principal
balance(3) |
$ |
188,872 |
|
|
$ |
179,163 |
|
|
$ |
562,511 |
|
|
$ |
402,842 |
|
________________________(1) Amount represents a
$3.7 million gain recognized as a result of the partial
dedesignation in September 2023 of a derivative instrument
previously designated as a hedging instrument, net of a $0.2
million loss recognized on the change in fair value of the portion
of the derivative that is not designated as a hedging instrument
after the dedesignation. 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. For the three and
nine months ended September 30, 2023 amount
represents costs related to headcount reductions in Europe. The
remainder of the costs relating to the headcount reductions in
Europe are included in stock-based compensation
expense.(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 September 30,
2023.
Grafico Azioni Encore Capital (NASDAQ:ECPG)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Encore Capital (NASDAQ:ECPG)
Storico
Da Giu 2023 a Giu 2024