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Encore Capital Group Announces Third Quarter 2024 Financial Results
Источник: Nasdaq GlobeNewswire / 06 ноя 2024 15:05:00 America/Chicago
- 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
SAN DIEGO, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the third quarter ended September 30, 2024.
“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
bruce.thomas@encorecapital.comSOURCE: 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,
2024December 31,
2023Assets 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 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.
September 30,
2024December 31,
2023Assets 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 27,959 93,016 81,864 Collection agency commissions 7,370 8,046 22,308 26,583 Depreciation and amortization 8,158 11,196 23,467 32,768 Total operating expenses 260,981 234,101 759,222 711,565 Income from operations 106,090 75,518 291,520 233,728 Other expense Interest expense (66,906 ) (50,558 ) (184,047 ) (147,376 ) Other income 1,578 5,103 6,291 5,080 Total other expense (65,328 ) (45,455 ) (177,756 ) (142,296 ) Income before income taxes 40,762 30,063 113,764 91,432 Provision for income taxes (10,119 ) (10,724 ) (27,701 ) (27,162 ) Net income $ 30,643 $ 19,339 $ 86,063 $ 64,270 Earnings per share: Basic $ 1.28 $ 0.82 $ 3.61 $ 2.72 Diluted $ 1.26 $ 0.79 $ 3.54 $ 2.62 Weighted average shares outstanding: Basic 23,912 23,712 23,859 23,644 Diluted 24,407 24,382 24,324 24,535 ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)Nine Months Ended September 30, 2024 2023 Operating activities: Net income $ 86,063 $ 64,270 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,467 32,768 Other non-cash interest expense, net 12,379 12,526 Stock-based compensation expense 11,731 11,017 Deferred income taxes 1,718 952 Changes in recoveries (6,020 ) 30,054 Other, net 7,477 (1,958 ) Changes in operating assets and liabilities Other assets (35,277 ) (21,820 ) Accounts payable, accrued liabilities and other liabilities 31,086 (11,598 ) Net cash provided by operating activities 132,624 116,211 Investing activities: Purchases of receivable portfolios, net of put-backs (844,868 ) (772,101 ) Collections applied to investment in receivable portfolios 641,982 504,672 Purchases of property and equipment (20,451 ) (16,765 ) Other, net 47,632 13,468 Net cash used in investing activities (175,705 ) (270,726 ) Financing activities: Payment of loan and debt refinancing costs (18,164 ) (8,224 ) Proceeds from credit facilities 458,844 630,079 Repayment of credit facilities (1,292,578 ) (446,724 ) Proceeds from senior secured notes 1,000,000 — Repayment of senior secured notes (29,310 ) (29,310 ) Proceeds from issuance of convertible senior notes — 230,000 Repayment of exchangeable senior notes — (212,480 ) Proceeds from convertible hedge instruments, net — 12,421 Other, net 11,695 (16,890 ) Net cash provided by financing activities 130,487 158,872 Net increase in cash and cash equivalents 87,406 4,357 Effect of exchange rate changes on cash and cash equivalents 1,583 (3,558 ) Cash and cash equivalents, beginning of period 158,364 143,912 Cash and cash equivalents, end of period $ 247,353 $ 144,711 Supplemental disclosure of cash information: Cash paid for interest $ 138,951 $ 120,113 Cash paid for taxes, net of refunds 61,255 50,605 Supplemental schedule of non-cash investing activities: Investment in receivable portfolios transferred to real estate owned $ 4,617 $ 9,558 ENCORE CAPITAL GROUP, INC.
Supplemental Financial Information
Reconciliation of Non-GAAP MetricsAdjusted EBITDA Three Months Ended
September 30,Nine Months Ended
September 30,(in thousands, unaudited) 2024 2023 2024 2023 GAAP net income, as reported $ 30,643 $ 19,339 $ 86,063 $ 64,270 Adjustments: Interest expense 66,906 50,558 184,047 147,376 Interest income (1,909 ) (1,315 ) (5,037 ) (3,382 ) Provision for income taxes 10,119 10,724 27,701 27,162 Depreciation and amortization 8,158 11,196 23,467 32,768 Stock-based compensation expense 3,737 3,092 11,731 11,017 Net loss (gain) on derivative instruments(1) 7 (3,512 ) (267 ) (3,512 ) Acquisition, integration and restructuring related expenses(2) 162 594 4,364 6,574 Adjusted EBITDA $ 117,823 $ 90,676 $ 332,069 $ 282,273 Collections applied to principal balance(3) $ 223,292 $ 188,872 $ 666,766 $ 562,511 ________________________
(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 September 30, 2024.